Capricorn Metals Garners Non-Binding Letter of Intent and Provides Company Update

Capricorn Metals Ltd (ASX: CMM) operates as an exploration and production company. The company specialises in gold exploration and production services. Capricorn Metals serves customers in Australia.

The company, today on 2 April 2019, provided a recent update that it has garnered an unsolicited non-binding indicative and incomplete LoI (letter of intent) from Emerald Resources NL and Hawkes Point Holdings LP (the proposed consortium) indicating the intention of the consortium to submit an offer to buy the whole of the issued share capital of Capricorn for a purchase price of $0.11 per Capricorn share.

Post the perusal of the advice received from its advisors and after following with the consultations with few of its largest shareholders; the company has scrapped the approach, which it believes undervalues the company and its assets.

However, the company has advised Emerald and Hawke’s Point that it remains open to considering a superior proposal, should one be submitted.

Regarding the data room, post the recent interest in Capricorn and the Karlawinda Gold Project (KGP), the Board of directors are of an opinion that the value for its shareholders will be maximised by running a process to garner Expression of Interest from other parties that may want to buy the KGP, buy Capricorn as a whole, form a JV or progress the KGP as per the current structure.

Capricorn's earlier Board of Directors established a well-populated data room and permitted various parties to view the company's confidential information during the period from February 2018 to February 2019. The current Board suspended this process, while a review of Capricorn and its financial position was conducted.

Many companies have expressed interest in accessing the virtual data room. Hence, now the Board intends to re-open the virtual data room upon the successful completion of the previously announced entitlement offer and once a formal process been confirmed.

As regards the financial position and capital raising update, the company is currently in the closing stage of the terms and structure to a shareholder entitlement offer. The management intends to use the proceeds to fulfil future outgoings and expenditures of the company. At this stage, the management is anticipating a 1:5 entitlement offer at 6.5 cents to garner approximately $10 million.

Also, the letter of commitment and credit approved term sheet from Macquarie Bank announced on the 13 December 2018, included a key signing date, which was not achieved, causing the offer to lapse. Macquarie has today confirmed that it might, in its discretion, agree to extend its offer of finance to the company, subject to Macquarie being satisfied as to the outcome of its review of the new management and Board structure, the company’s financial position and any other further due diligence, which it may require.

On the stock-performance front, the stock has posted a YTD return of 2.86%. The company also has posted returns of 7.46% and 5.88% over the past six and three months, respectively. At the market close on 2nd April 2019, the stock of the company was trading at a price of A$0.082, up 15.49% during the day’s trade with a market capitalisation of A$55.41 million. The stock opened the trading day at A$0.080, reached an intraday high of A$0.086 and touched an intraday low of A$0.079 with a daily volume of 5,968,777. It had a 52-weeks high price of $0.094 and a 52 weeks low price of $0.055, with an average volume of 933,966.


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