Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

Cardinal Resources: Nordgold's "Competing Offer"

Cardinal Resources: Shandong's Indicative Bump

Cardinal Resource (CDV AU): Shandong Reloads, But Not A Knockout Offer

Cardinal Resource (CDV AU): Nordgold Reloads

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

Quiddity Advisors

Event-Driven

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<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>
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<p>As always, more below the fold.</p>
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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>
</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