Shares in Solgold PLC (LON:SOLG) rose by more than 5% to 14p after the company announced that Maxit Capital had offered to arrange a cash investment into the company at US$0.16 per share.
The offer for subscription is priced at US$0.16, a 100% premium to an offer already on the table from Australian gold major Newcrest (ASX:NCM).
Newcrest had offered to take nearly 136 mln new Solgold shares in return for a cash injection of US$10 mln in the company. Under this subscription agreement Newcrest also had anti-dilution rights which would have ensured its stake stayed over 10%.
Maxit’s offer has changed all that.
By offering to pay twice as much for the same amount of shares, Maxit is offering to inject around US$20 mln into Solgold. Not surprisingly, the board of Solgold has stated its’ view that the Maxit offer is “more favourable” to the interests of its shareholders.
However, under the terms of the previous agreement, Newcrest will also be offered the chance to participate on the same terms. In that event, Newcrest would end up investing US$20 mln and Maxit US$10 mln, taking the total raise to just over US$30 mln.
This is a significant turnaround for a company’s who’s shares were trading at less than 2p on the Aim market in London at the end of last year.
Following the latest share price strength Solgold’s market capitalisation has risen to over £156 mln, based on the new interest from investors and the value of the Cascabel asset in Ecuador.