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4/14/09

Candente (DNT.to) and Canaco (CAN.v): This deal makes a lot of sense


Candente Gold is the new vehicle being spun out of Candente (DNT.to) and to be owned (to begin with at least) 50/50 by DNT.to and Canaco (CAN.v). Once DNT.to offers up shares in the new company to its existing shareholders it will keep 10% to 15% for the longer term. Below are all the details so I won't start rattling off the list of terms, but my quick comment on the concept behind the new company is "I like it".

For years now, DNT.to has been valued by Mr. Market almost totally on its Cañariaco copper project in Peru. This isn't a big surprise, because CEO Freeze and her team have made it by far the most advanced project on the company books. However, DNT.to has a lot (I mean a lot, check out the website) of greenfield gold, gold/silver, gold/copper etc prospects on its books that have been sitting there doing nothing.

This deal brings them out of the shadow of Cañariaco and will give thema decent asset value. It will also mean that the projects might even move forward slower than the snail's pace of thje last couple of years. The most advanced project is their majority owned El Oro project in Mexico, but most (if not all, I'd have to check) of the others are in Peru, including some promising plots of land (a couple of real potentials in there, too). So all in all good job and explains the recent share price run-up (see three month chart above).

I'm not making any reco's here right now. The dynamic is new and it needs study to see if either the old DNT.to, the new DNT.to, CAN.v or the new Candente Gold company are worthy buys with a longer term perspective (though I strongly suspect DNT.to shares will benefit today,as everybody likes a spinout offering). Here's the PR:

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VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 14, 2009) - Candente Resource Corp. (TSX:DNT - News; BVL:DNT)(WKN:GW4) ("Candente") and Canaco Resources Inc. (TSX VENTURE:CAN - News; "Canaco") are very pleased to report that they have agreed to create a new company, Candente Gold Corp. ("Candente Gold"), to focus on exploration and development of precious metals projects in Latin America. Each company will transfer to Candente Gold its respective 50% interest in the El Oro gold-silver property in Mexico and in addition, Candente will also transfer to Candente Gold its Peruvian gold-silver properties.

Candente Gold's first focus will be the El Oro property, which has very significant past gold and silver production (20 million ounces gold equivalent), a substantial historic (non NI 43-101 compliant) gold and silver resource and excellent exploration potential. (for details see http://www.candente.com/i/pdf/El_Oro_Mexico_Summary.pdf).

Candente Gold's second focus will be the earlier stage Peruvian properties where exploration by Candente has identified gold and silver mineralization and drill targets in geological settings similar to some of Peru's world class mines. (See Candente Gold Properties Powerpoint presentation http://www.candente.com/i/pdf/GoldPropertiesApril2009.pdf).

Candente Gold will issue to each of Candente and Canaco, 5 million common shares and a promissory note for future reimbursement of their respective expenditures to date relating to the El Oro property (Cdn$1.3 million each) to be received in cash or shares. El Oro is under option from Luismin (now controlled by Goldcorp) by Minera CCM S.A. de C.V., which is owned equally (50% each) by Candente and Canaco and is being sold to Candente Gold.

For the Peruvian gold-silver properties, Candente will receive 10 million shares in Candente Gold upon transfer and an additional 10 million shares once a minimum of US$5 million has been spent cumulatively by Candente Gold on these properties.

Candente Gold will seek to list its common shares yada yada continues here