Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>In its second supplementary bidder's statement on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02295721-6A1001904?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">19 October</a>, <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> said its $1.00/share off-market unconditional offer was "<em>best and final in the absence of a higher competing offer</em>". The practical effect of this statement is that unless there is a higher competing Offer than Shandong's offer, Shandong cannot increase its offer price. </p>
<p>Shandong's offer is unanimously supported by Cardinal's board. As per its most recent regulatory filing, Shandong held <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02292439-6A1000653?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">11.86%</a> in Cardinal.</p>
<p>At the time of the "best and final" statement, Nordgold's Offer was $0.90/share, an Offer that was expected to close on the 3 November (after its <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02294128-6A1001310?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">fourth extension</a>), unless extended. Nordgold held <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02276760-6A994412?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">28.39%</a> as per its recent regulatory filing on the 2 September. Cardinal viewed Nordgold's Offer as being inferior to Shandong's. Furthermore, Cardinal considered the lack of price increase from Nordgold since Shandong's revised Offer could result in unwarranted delays in the development the Namdini project, and will "<em>continue to frustrate the decision-making process for Cardinal's shareholders</em>". </p>
<h3>New News</h3>
<p>Yesterday, Nordgold increased its Offer rice to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02296571-6A1002232?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">A$1.00/share</a>. </p>
<p>But then it gets messy - does Nordgold's improved Offer constitute a higher competing offer? Shandong says <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02297278-6A1002505?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">yes</a>. Nordgold says no. </p>
<p>The fact Nordgold matched Shandong's offer after six weeks of crunching numbers suggests we are approaching full value for Cardinal.</p>
<p>In the meanwhile, Cardinal continues to recommend shareholders accept Shandong's Offer.</p>
<p>As always, more below the fold.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/166/636/original/image_18779035421603327929176.png?1603327931" class="editor-image img-responsive" data-smartkarma-image-id="166636"></figure>
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<p><em>Past insights on Cardinal:</em></p>
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<table class="table table-striped">
<tbody>
<tr>
<td style="width: 218.75px;">
<h3>Date</h3>
</td>
<td style="width: 484.782px;">
<h3>Insight</h3>
</td>
</tr>
<tr>
<td style="width: 218.75px;">22-Jun-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/sVxVB" target="_blank" rel="noopener">Shandong's Competing Offer For Cardinal</a></td>
</tr>
<tr>
<td style="width: 218.75px;">15-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/E1Wgv" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Nordgold Reloads</a></td>
</tr>
<tr>
<td style="width: 218.75px;">23-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/tVkqj" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer</a></td>
</tr>
<tr>
<td style="width: 218.75px;">2-Sep-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/eGXfx" target="_blank" rel="noopener">Cardinal Resources (CDV AU): Nordgold's Knockout Offer. Read more:</a></td>
</tr>
<tr>
<td style="width: 218.75px;">7-Sep-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/4gYtj" target="_blank" rel="noopener">Cardinal Resources (CDV AU): Shandong Trumps Nordgold’s Knockout Offer</a></td>
</tr>
</tbody>
</table>
</div>
</div>
</div>


In its second supplementary bidder's statement on the 19 October, Shandong Gold Mining Co., Ltd. (1787 HK) said its $1.00/share off-market unconditional offer was "best and final in the absence of a higher competing offer". The practical effect of this statement is that unless there is a higher competing Offer than Shandong's offer, Shandong cannot increase its offer price. 
Shandong's offer is unanimously supported by Cardinal's board. As per its most recent regulatory filing, Shandong held 11.86% in Cardinal.
At the time of the "best and final" statement, Nordgold's Offer was $0.90/share, an Offer that was expected to close on the 3 November (after its fourth extension), unless extended. Nordgold held 28.39% as per its recent regulatory filing on the 2 September. Cardinal viewed Nordgold's Offer as being inferior to Shandong's. Furthermore, Cardinal considered the lack of price increase from Nordgold since Shandong's revised Offer could result in unwarranted delays in the development the Namdini project, and will "continue to frustrate the decision-making process for Cardinal's shareholders". 
New News
Yesterday, Nordgold increased its Offer rice to A$1.00/share. 
But then it gets messy - does Nordgold's improved Offer constitute a higher competing offer? Shandong says yes. Nordgold says no. 
The fact Nordgold matched Shandong's offer after six weeks of crunching numbers suggests we are approaching full value for Cardinal.
In the meanwhile, Cardinal continues to recommend shareholders accept Shandong's Offer.
As always, more below the fold.




Past insights on Cardinal:








Date


Insight



22-Jun-20
Shandong's Competing Offer For Cardinal


15-Jul-20
Cardinal Resource (CDV AU): Nordgold Reloads


23-Jul-20
Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer


2-Sep-20
Cardinal Resources (CDV AU): Nordgold's Knockout Offer. Read more:


7-Sep-20
Cardinal Resources (CDV AU): Shandong Trumps Nordgold’s Knockout Offer







Cardinal Resources: Nordgold's "Competing Offer"

<div>
<p>After shares were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0929/2020092900255.pdf" target="_blank" rel="noopener">halted</a> after trading closed on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, <a href="https://www.smartkarma.com/entities/hengxing-gold-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:8874:1" rel="noopener">Hengxing Gold Holding (2303 HK)</a> (HGH) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0930/2020093001586.pdf" target="_blank" rel="noopener">announced</a> on the 30 September a pre-conditional Scheme from <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> ("SGM").</p>
<p>Under the terms of the Scheme, SGM is offering 0.17241 SGM shares (5/29) for every HGH share. A special dividend of HK$0.3585/HGH was declared on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0929/2020092900669.pdf" target="_blank" rel="noopener">29 September</a>, for which the record date will be 16 October 2020. The scrip terms will not be adjusted for the special dividend. The offer, inclusive of the dividend represents a discount to last close of 2.2%. Terms will not be increased. </p>
<p>The pre-conditions concern approvals from the NDRC and the Ministry of Commerce of the PRC or the Department of Commerce of Shandong Provincial Government, for outbound direct investment.</p>
<p>Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against. The headcount test applies as HGH is Cayman incorporated.</p>
<p>SGM has received irrevocable of 75% of shares out from Ke Xiping (60%) and his son Ke Jiaqi (15%).  No HGH shareholders are required to abstain. The vote appears a formality.</p>
<p>This deal is effectively done. The only question mark is over the timing of the PRC regulatory approvals.</p>
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<p>As always, more below the fold.</p>
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After shares were halted after trading closed on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, Hengxing Gold Holding (2303 HK) (HGH) announced on the 30 September a pre-conditional Scheme from Shandong Gold Mining Co., Ltd. (1787 HK) ("SGM").
Under the terms of the Scheme, SGM is offering 0.17241 SGM shares (5/29) for every HGH share. A special dividend of HK$0.3585/HGH was declared on the 29 September, for which the record date will be 16 October 2020. The scrip terms will not be adjusted for the special dividend. The offer, inclusive of the dividend represents a discount to last close of 2.2%. Terms will not be increased. 
The pre-conditions concern approvals from the NDRC and the Ministry of Commerce of the PRC or the Department of Commerce of Shandong Provincial Government, for outbound direct investment.
Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against. The headcount test applies as HGH is Cayman incorporated.
SGM has received irrevocable of 75% of shares out from Ke Xiping (60%) and his son Ke Jiaqi (15%).  No HGH shareholders are required to abstain. The vote appears a formality.
This deal is effectively done. The only question mark is over the timing of the PRC regulatory approvals.


As always, more below the fold.


Hengxing (2303 HK): Offer From Shandong Gold

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

<div>
<p>Last Wednesday, Nordgold <a href="https://www.asx.com.au/asxpdf/20200902/pdf/44m7p0lx0p11z0.pdf" target="_blank" rel="noopener">bumped</a> its Offer for <a href="https://www.smartkarma.com/entities/cardinal-resources-ltd" target="_blank" data-smartkarma-citation="entities:12256:1" rel="noopener">Cardinal Resources (CDV AU)</a> by 36.4% to A$0.90/share from A$0.66/share. This was an unconditional on-market takeover Offer; and will remain open to acceptance until the close of trading on the 10 September - unless extended. Nordgold increased its stake to <a href="https://www.asx.com.au/asxpdf/20200903/pdf/44m8y5qsvdhhlf.pdf" target="_blank" rel="noopener">28.39%</a> (from 18.71% previously) as at 2 September. </p>
<p>Under the Bid Implementation Agreement, <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> had the <a href="https://www.asx.com.au/asxpdf/20200903/pdf/44m8xnxdz73rfh.pdf" target="_blank" rel="noopener">opportunity</a> (but not the obligation) to match or provide a superior proposal to Nordgold by today. </p>
<p>This morning CDV <a href="https://www.asx.com.au/asxpdf/20200907/pdf/44md5nxqtpr7sz.pdf" target="_blank" rel="noopener">announced</a> that Shandong intends to increase its Offer Price to A$1.00/share. This Offer remains subject to a minimum acceptance condition of 50.1%. </p>
<p>Shandong's offer is a 118% premium to Nordgold's initial proposal back in March, and 300% above the one-day undisturbed price. The price of gold is up ~30% since Nordgold's March Offer.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/514/original/image_51673227451599469081750.png?1599469083" class="editor-image img-responsive" data-smartkarma-image-id="157514"></figure>
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<div style="text-align: left;" class="content-caption">Source: CapIQ, ASX</div>
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<p>What now?  Shandong immediately responded to Nordgold's punchy proposal, but Shandong also had the benefit of two and a half months since its last offer to crunch numbers.</p>
<p>Currently trading through terms. My back-of-the-napkin calculation suggests there <em>is</em> upside, based on the current gold price and estimated IRR. Neither Shandong nor Nordgold declared their offers "final". And the price of gold remains high. </p>
<div>
<p>As always, more below the fold.</p>
<hr>
</div>
<p><em>Past insights on Cardinal:</em></p>
</div>
<div>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 218.75px;">
<h3>Date</h3>
</td>
<td style="width: 484.782px;">
<h3>Insight</h3>
</td>
</tr>
<tr>
<td style="width: 218.75px;">22-Jun-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/sVxVB" target="_blank" rel="noopener">Shandong's Competing Offer For Cardinal</a></td>
</tr>
<tr>
<td style="width: 218.75px;">15-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/E1Wgv" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Nordgold Reloads</a></td>
</tr>
<tr>
<td style="width: 218.75px;">23-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/tVkqj" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer</a></td>
</tr>
<tr>
<td style="width: 218.75px;">2-Sep-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/eGXfx" target="_blank" rel="noopener">Cardinal Resources (CDV AU): Nordgold's Knockout Offer. Read more: </a></td>
</tr>
</tbody>
</table>
</div>
</div>


Last Wednesday, Nordgold bumped its Offer for Cardinal Resources (CDV AU) by 36.4% to A$0.90/share from A$0.66/share. This was an unconditional on-market takeover Offer; and will remain open to acceptance until the close of trading on the 10 September - unless extended. Nordgold increased its stake to 28.39% (from 18.71% previously) as at 2 September. 
Under the Bid Implementation Agreement, Shandong Gold Mining Co., Ltd. (1787 HK) had the opportunity (but not the obligation) to match or provide a superior proposal to Nordgold by today. 
This morning CDV announced that Shandong intends to increase its Offer Price to A$1.00/share. This Offer remains subject to a minimum acceptance condition of 50.1%. 
Shandong's offer is a 118% premium to Nordgold's initial proposal back in March, and 300% above the one-day undisturbed price. The price of gold is up ~30% since Nordgold's March Offer.


Source: CapIQ, ASX

What now?  Shandong immediately responded to Nordgold's punchy proposal, but Shandong also had the benefit of two and a half months since its last offer to crunch numbers.
Currently trading through terms. My back-of-the-napkin calculation suggests there is upside, based on the current gold price and estimated IRR. Neither Shandong nor Nordgold declared their offers "final". And the price of gold remains high. 

As always, more below the fold.


Past insights on Cardinal:







Date


Insight



22-Jun-20
Shandong's Competing Offer For Cardinal


15-Jul-20
Cardinal Resource (CDV AU): Nordgold Reloads


23-Jul-20
Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer


2-Sep-20
Cardinal Resources (CDV AU): Nordgold's Knockout Offer. Read more: 






Cardinal Resources (CDV AU): Shandong Trumps Nordgold’s Knockout Offer

<div>
<p>Don't always believe what you hear (&amp; read).</p>
<p>Many in the market felt the agreement and placement of shares with <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> in early July could be construed that Nordgold was not interested in lifting its then Offer for <a href="https://www.smartkarma.com/entities/cardinal-resources-ltd" target="_blank" data-smartkarma-citation="entities:12256:1" rel="noopener">Cardinal Resources (CDV AU)</a> of A$0.45775/share. Nordgold subsequently bumped its Offer to A$0.66, then Shandong came over the top with A$0.70/share.</p>
<p>That was how things stood until last week when media articles appeared saying Nordgold was still keen, but A$0.70/share - where <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> has tabled a revised Offer for <a href="https://www.smartkarma.com/entities/cardinal-resources-ltd-9e1d58d4-8d9b-48dd-a059-3f04f896e3ee" target="_blank" data-smartkarma-citation="entities:28182:1" rel="noopener">Cardinal Resources Ltd (CDV CN)</a>  - would be challenging to justify for IRR reasons.</p>
<p>I chose to ignore the news. Archie Koimtsidis, Cardinal's CEO, is quite the negotiator and I thought there was still considerable upside compared to Shandong's revised Offer.</p>
<hr>
</div>
<div>
<div>
<h2>The New News</h2>
</div>
</div>
<div>
<p>Nordgold has <a href="https://www.asx.com.au/asxpdf/20200902/pdf/44m7p0lx0p11z0.pdf" target="_blank" rel="noopener">bumped</a> its Offer by 36.4% to A$0.90/share from A$0.66/share. This is an unconditional on-market takeover Offer.</p>
<p>Its Offer will remain open to acceptance until the close of trading on the 10 September - unless extended.</p>
<p>That's a full Offer. If you were already in - then now's the time to cash out. If you are just coming to this, one could probably find an excuse to buy a spread or two above Nordgold's terms on the expectation Shandong comes in over the top, and Nordgold hasn't declared it "final" but that's still a pretty full offer. That said, the price of gold remains high. </p>
<p>As always, more below the fold.</p>
<hr>
<p><em>Past insights on Cardinal</em></p>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 218.75px;">
<h3>Date</h3>
</td>
<td style="width: 484.782px;">
<h3>Insight</h3>
</td>
</tr>
<tr>
<td style="width: 218.75px;">22-Jun-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/sVxVB" target="_blank" rel="noopener">Shandong's Competing Offer For Cardinal</a></td>
</tr>
<tr>
<td style="width: 218.75px;">15-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/E1Wgv" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Nordgold Reloads</a></td>
</tr>
<tr>
<td style="width: 218.75px;">23-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/tVkqj" target="_blank" rel="noopener">Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer</a></td>
</tr>
</tbody>
</table>
</div>


Don't always believe what you hear (&amp; read).
Many in the market felt the agreement and placement of shares with Shandong Gold Mining Co., Ltd. (1787 HK) in early July could be construed that Nordgold was not interested in lifting its then Offer for Cardinal Resources (CDV AU) of A$0.45775/share. Nordgold subsequently bumped its Offer to A$0.66, then Shandong came over the top with A$0.70/share.
That was how things stood until last week when media articles appeared saying Nordgold was still keen, but A$0.70/share - where Shandong Gold Mining Co., Ltd. (1787 HK) has tabled a revised Offer for Cardinal Resources Ltd (CDV CN)  - would be challenging to justify for IRR reasons.
I chose to ignore the news. Archie Koimtsidis, Cardinal's CEO, is quite the negotiator and I thought there was still considerable upside compared to Shandong's revised Offer.




The New News



Nordgold has bumped its Offer by 36.4% to A$0.90/share from A$0.66/share. This is an unconditional on-market takeover Offer.
Its Offer will remain open to acceptance until the close of trading on the 10 September - unless extended.
That's a full Offer. If you were already in - then now's the time to cash out. If you are just coming to this, one could probably find an excuse to buy a spread or two above Nordgold's terms on the expectation Shandong comes in over the top, and Nordgold hasn't declared it "final" but that's still a pretty full offer. That said, the price of gold remains high. 
As always, more below the fold.

Past insights on Cardinal




Date


Insight



22-Jun-20
Shandong's Competing Offer For Cardinal


15-Jul-20
Cardinal Resource (CDV AU): Nordgold Reloads


23-Jul-20
Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer





Cardinal Resources (CDV AU): Nordgold's Knockout Offer

Australia

Cardinal Resources Limited operates as a mineral exploration and development company in Ghana, West Africa. The Company also develops multiple projects through expansion drilling programs, pre-feasibility studies, and metallurgical test work. Cardinal Resources serves customers in Australia, Canada, and West Africa.

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Cardinal Resources Ltd (CDV CN)

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Hengxing (2303 HK): Offer From Shandong Gold

After shares were halted lunchtime on the 22 September pursuant to the Hong Kong Code on Takeovers and Mergers, Amvig Holdings (2300 HK) last...

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Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

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Cardinal Resources (CDV AU): Shandong Trumps Nordgold’s Knockout Offer

Don't always believe what you hear (& read). Many in the market felt the agreement and placement of shares with Shandong Gold Mining Co.,...

David Blennerhassett

Cardinal Resources (CDV AU): Nordgold's Knockout Offer

There have been numerous developments in Cardinal Resources Ltd (CDV CN) over the past year, not just the competing Offers from Nordgold...

David Blennerhassett

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