Core Gold Inc. (fka CGLDF)

[NYBob]

Press Release from Core Gold Shareholder
Core Gold investor urges holders to reject Titan deal

2019-05-28 10:15 ET - Shareholders Letter

Source:

[url=]https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aCGLD-2764808&symbol=CGLD®ion=C[/url]

Mr. Paul Tadeson reports

CONCERNED SHAREHOLDER PAUL TADESON RELEASES OPEN LETTER TO FELLOW CORE GOLD SHAREHOLDERS ENCOURAGING THEM TO VOTE AGAINST THE CORE-TITAN MERGER



Paul Tadeson, holding approximately 600,000 of the issued and outstanding shares of Core Gold Inc., has issued a letter to shareholders asking them join him in voting against the plan of arrangement, pursuant to which Titan Minerals is seeking to acquire all of the issued and outstanding shares of Core Gold.

The text of Mr. Tadeson's letter to shareholders is included below.


Dear fellow shareholders,

Shareholders of Core Gold have long recognized the high potential of discovery of not just one, but two, or even three multi-million-ounce gold, and gold-copper, deposits located within the Company's district sized Dynasty Goldfields, Copper Duke and Linderos Projects.

The Dynasty Goldfields Project is already in production through open pit operations, averaging over 3.0 gpt in 2018, and has over 2.1 million ounces of gold in indicated and inferred resources with the potential to double or triple that resource with further exploration below the current depth of 150 meters that initial exploration drilling extended down to during the 2005 - 2007 time period.

In 2016 Dynasty Metals and Mining (Core Gold's previous name), shareholders were appreciative that Keith Piggott, Greg Sedun and Javier Reyes decided to invest in our company which was in extreme financial distress and on the verge of bankruptcy due to the flooding of the underground Cabo de Hornos mine on the Zaruma Project.

Unfortunately, over the past few months, it has become very evident to shareholders of Core Gold that four members of our board of directors appear to be not acting in the best interests of Core Gold and its shareholders. Lead director Gregg Sedun, Mark Bailey, Leonard Clough and Javier Reyes have shown a bias to exclusively promote their agreement with Titan Minerals, a merger proposal that, in many shareholders opinion, is unnecessary and extremely dilutive, and would see Core Gold shareholders relinquish control of our Company's highly prospective assets. As shares will be delisted from North American markets, many shareholders would no longer have the ability to execute trades in North America and would incur commissions exceeding US$100 per trade regardless of the transaction value because the shares of the new company will only trade in Australia.


What Happened to the Debt Facility?


Chief Financial Officer Sam Wong and Lead Director Gregg Sedun have been stating that Core Gold had no other viable option when they entered into the Plan of Arrangement with Titan Minerals. Shareholders believe this statement to be disingenuous.

On December 1, 2017 and again on January 19, 2018 Core Gold announced that it had negotiated a US$15 million debt facility (the "Debt Facility") with a financial institution controlled, in part, by one of its directors, Javier Reyes. (Referenced Below)

Shareholders have been repeatedly told by representatives of Core Gold that the debt facility would be completed once the Company, in particular its Ecuador subsidiary Elipe S.A., was returned to "Good Corporate Standing" in Ecuador. The Debt Facility would be secured against the assets of Elipe S.A. and, as there were liens held over the properties while it was in administration, the Debt Facility could not be completed.

On September 4, 2018, Core Gold announced that the Company had been returned to "Good Corporate Standing. However, there has been no further statement from the Company regarding the US$15 million debt facility. This long-term debt would have provided the Company with the needed funding to complete the promised upgrades to the Portovelo processing plant to 2000 TPD capacity, and would have taken care of most of the remaining short term obligations. This US$15 million Debt Facility is equivalent to the A$20 million that Titan Minerals would supposedly provide in the Plan of Arrangement.

The Debt Facility would have seen total additional dilution of 7,500,000 "Agents Warrants" and 7,500,000 "Financer Warrants". The agreed upon interest rate was 12% annually.

Core Gold shareholders are now left asking why the four directors of Core Gold consider the Debt Facility option to be less attractive than forcing shareholders to swallow dilution that will see over 700 million shares of the proposed new Titan Minerals and loss of majority control of the Company's assets. Where as, if the Debt Facility were completed, shareholders would still control the company and see potential dilution of only 15 million additional shares, if the warrants attached to the Debt Facility were exercised.


The Core Gold Board of Directors Obstructed an Alternative Value-Maximizing Deal

The second, and most significant, concern Core Gold shareholders have is the actions of the four directors of Core Gold regarding the circumstances surrounding the presentation by then President Keith Piggott of a negotiated deal that would see a significant multi-billion-dollar market cap company from China enter into a partnership with Core Gold.

Shareholders recognize that the offer was not complete, but included letters of intent, and a C$4 million financing by the company from China was already approved by the board of directors. This offer could have seen a total investment in our Company of approximately US$100 million for a 19.9 % equity stake in Core Gold and a 60% share of our Dynasty Goldfields Project. This offer included the potential construction of a new 2000 tpd day mill to be built on the Dynasty Goldfields Project site, if this suitor had been allowed to complete its due diligence on the Dynasty Goldfields.

However, for some unknown reason, the four members of our board of directors refused to allow this other suitor to complete their due diligence by rejecting their request to do some confirmation drilling to verify assay results of some historic drill holes on the Dynasty Goldfields. Apparently, this company was already to go, with drill rigs and personnel on site, just awaiting permission, because time was of the essence, as only 45 more days remained in the 60 Day Go Shop Period stated in section 6.1 of the Plan of Arrangement.

On numerous occasions, shareholders have asked why this suitor was denied the opportunity to carry out their due diligence during the 60 Day Gold Shop Period. Each time questions have been posed to the Company, CFO Sam Wong has responded that it was "in the contract that no confirmation drilling was allowed". Shareholders have repeatedly requested that Sam Wong provide us with the wording in the Plan of Arrangement. To date, he has failed to provide shareholders with the requested information.

Shareholders have noted that in Sections 6.1 of the Plan of Arrangement that:

"Core Subsidiaries and their Representatives shall have the right to, directly or indirectly:

(i) solicit, initiate, facilitate, entertain, encourage, permit or promote inquiries, proposals, expressions of interest or offers from any Person that are designed to facilitate the making of a Core Acquisition Proposal; and

(ii) participate in, or continue, any discussions or negotiations with any Person regarding an Acquisition Proposal, and otherwise cooperate with, respond to, assist, facilitate, encourage or participate in, in any way, any effort or attempt by any Person to make a Core Acquisition Proposal."


This is exactly opposite to the actions of the four members of the Board of Directors, when they denied access to Dynasty Goldfields, immediately terminated the 60 Day Go Shop Period, raised the break fee from $500,000 to $3 million, went to Titan Minerals, which borrowed U$ 3million to replace the C$4 million offered by the company from China, and then terminated Keith Piggott's contract as President and CEO of Core Gold.

It is to the dismay of Core Gold shareholders that Titan Minerals was required to use the Core Gold shares as collateral to the loan that provided the US$ 3million for the March 2019 financing. Is Titan Minerals in such a weak financial position that it had to borrow money and use our equity as collateral?


The Core Gold Directors Have Let Us Down: The Titan-Core Deal is Not in the Best Interest of Shareholders

A third concern that Core Gold shareholders have expressed to the Company is that Lead Director Gregg Sedun has stated that Australia offers better financing opportunities for the mining sector than does Canada. If this is true, then why have Core Gold and Titan continuously amended the Plan of Arrangement to such an extent that Core Gold can now actually wave Titan's obligation to meet their commitment to raise A$20 million cash and have a US$10 million credit facility in place 5 days prior to the Core Gold Shareholder Meeting?

Does Lead Director Gregg Sedun know that Titan Minerals is having difficulty in raising the required funds? Wouldn't it be better to force Titan to raise the full amount by the date in question, and if they do not, then terminate the contract and demand the $3 million break fee for not fulfilling Titan's contractual obligations.

Shareholders of Core Gold consider the Plan of Arrangement with Titan totally inadequate when considering Core Gold's current production assets, and our highly prospective district-sized properties. The perceived " value" we're being offered in the 20 Titan shares for each Core Gold share owned is a slap in the face to Core Gold shareholders. Titan has virtually no tangible assets in comparison to Core Gold's and the A$20 million equates to only A$0.008 per share considering Titan has 2.563 Billion shares issued and outstanding. The four board of directors should be ashamed of themselves for even considering bringing this proposal to Core Gold shareholders.

The four Core Gold directors are also attempting to scare shareholders into voting in favor of this highly dilutive merger by telling shareholders if they vote against the Titan offer, there is no alternative financing and Core Gold's share price will go to zero. Publicly available information indicates otherwise, and it could be concluded that these four directors have purposely been preventing our company from obtaining the necessary funds to move forward since as far back as September 2018.

Had it not been for Keith Piggott's courage to come forward and disclose the details of the offer of partnership with the company from China, Core Gold shareholders would still be questioning why the US$15 million Debt Facility was not seen as a better, far less dilutive option. Again, why has there been no disclosure regarding the Debt Facility since September 4, 2018?

Core Gold shareholders who oppose this travesty of a proposal are encouraged to vote NO, and contact Kingsdale Advisors as soon as possible stating their intention to oppose this deal, and indicating their disgust for the Titan merger and the actions of their board of directors.

Thank you,

Paul Tadeson, Core Gold Shareholder


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VOTE NO

VOTE AGAINST


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