This is a quick update.
When I first featured Coral Gold back in January of 2020, the stock was trading at roughly $0.44.
Based on its most recent close at $1.09, we’re looking at a potential gain of 149%, or more if you caught the lows back in mid-March of this year.
Here’s the acquisition headline:
Quoting from the August 24th press release:
Pursuant to the Transaction, Coral shareholders will be entitled to receive, for each Coral share held, consideration consisting of C$0.05 in cash and 0.80 of a unit of Nomad, as described below.
The consideration payable to Coral shareholders by Nomad represents total value of approximately C$1.21 per Coral share, based on the closing price of C$1.37 of Nomad common shares on the TSX on August 21, 2020 and including the C$0.06 estimated value per Coral share of the one-half common share purchase warrant included in each Unit. Based on Nomad’s and Coral’s August 21, 2020 closing prices on the TSX and TSX Venture Exchange respectively, the Transaction represents a premium of approximately 45% to Coral shareholders.
So, the transaction is valued at roughly $1.21 and Coral Gold common shares are currently trading at $1.09. There could be an arbitrage opportunity here, especially if Nomad rallies from current trading levels.
If you’re unfamiliar with Nomad, I cover the company, as a client, over at Equity Guru. My most recent Nomad coverage was just yesterday…
The question many of you are asking is, “should I sell my Coral Gold into this recent strength, or hold on and take the Nomad paper (common shares and warrants)”.
I’m biased. You need to conduct your own due diligence, but from where I sit, I’m happy to take the Nomad paper. That’s my plan for the Coral Gold shares I control.
To assist you with your Nomad due diligence, my maiden Equity Guru article might help bring you up to speed…
Adding an element of enticement to the acquisition news, Nomad dropped the following headline today (August 26th, 2020):
Vincent Metcalfe, Nomad’s CEO re the initiation of this annual dividend:
“Launching the dividend policy enables Nomad to differentiate itself by joining a group of companies that are committed to returning capital to shareholders. We are very happy to achieve this objective and look to build on this initial dividend level“.
Joseph de la Plante, Nomad’s CIO:
“The annual dividend of C$0.02 per common share represents a 2.2% yield for investors who participated in our initial financing only a few months ago, and represents, based on our last closing price of C$1.30 on the Toronto Stock Exchange, a significant yield of 1.5%, which will position Nomad as a leading dividend payer in our sector“.
Of course, there’s always a possibility that another royalty company will swoop in and challenge Nomad’s current offer. But this is a friendly deal.
There it is.
Full disclosure: Highballer does not have a marketing relationship with either Coral Gold or Nomad Royalty. Nomad Royalty is an Equity Guru marketing client where Greg Nolan’s role is Senior Resource Writer. We own shares in Coral Gold and plan to accept Nomad units (shares and warrants) when this transaction settles.Disclaimer - Legal Notice
Highballerstocks.com (Greg Nolan) is not a licensed financial advisor and does not give investment advice.
The content of this report is for information purposes only.
Nothing contained herein should be construed as a recommendation or solicitation to buy or sell any security.
Always consult a licensed qualified investment advisor in your legal jurisdiction before making any investment decisions.
Though Highballerstocks.com (Greg Nolan) believes its sources to be credible, and the statements contained herein to be true, readers must conduct their own thorough due diligence, and or consult with a qualified investment advisor before important investment decisions are made.
Highballerstocks.com (Greg Nolan) accepts no responsibility or liability for the accuracy of the contents of this report.