question for t4p, page-16

In my view we can expect Turnberry to be as pro-active as anyone else to get the ball rolling here...

But then will likely use any stock picked up in the process of lifting it to cap the stock at whatever level they feel is about right.

This makes sense.

At this point, it will be a case of who has the biggest cheque-book, as CVI supporters will clearly want to see the acquisition completed for minimum dilution via higher prices, whilst Turnberry will obviously not.

But remember, Turnberry's direct exposure to Matanda is much bigger than their exposure via CVI...so it simply would not make sense for them to risk the success of the project for the sake of squeezing a few extra percent via CVI.

I feel this is a critical issue for all parties...and one which, when push comes to shove, will see Turnberry less likely to cap the stock than push it higher.

It is obviously a fine line all parties here tread...as with any deal...but in the end, the benefits to Turnberry of progressing this project far outweigh their eventual percentage holding in CVI.

But just how much in control are Turnberry here?

I think we should perhaps pay more attention to the agreement between CVI and the other 28.5% holder of Turnberry to treat the combined 57% interest in Turnberry as "concert parties".

Unless you missed this subtle point, this effectively gives CVI control of Turnberry, rather than the other way around.

This is a critical move in this game of corporate chess in my view and one that provides a view to the likely play here...which of course is a possible precursor to CVI eventually increasing their ultimate exposure...and possibly even gaining full control of the project?

In many ways, we now have a rather aggressive element in this game of corporate chess...one which sets up CVI with the potential to gazump Turnberry, rather than the other way around.

Mechanics are such...

In gaining 20% exposure to Matanda through 28.5% of Turnberry, we can deduct that prior to this deal, Turnberry held 70% of the project.

With CVI's 20%, the remaining Turnberry shareholders now directly hold just 50% of the project...a level I suspect they will not want to fall below.

But this is where it gets interesting...

In electing to treat their joint holdings as "concert parties", CVI and the "other" partner effectively now control Turnberry (57%) and if they so choose, can dilute Turnberry to a "friendly" third party, thereby shifting the balance of power on Matanda and Cameroon.

I am not sure, but I assume the remaining 30% or so of the permit not held by Turnberry would be held mostly by the government and perhaps one or two other minor parties?

Anyway...think about that for a minute...the minute CVI proceed with the acquisition of Matanda, they will have voting control of Turnberry.

Voting control!

As long as Turnberry do not get more than 50% of CVI, then CVI has won...and over time, can vote out "friendly" dilution of Turnberry until eventually, they take them out entirely!

Now...all of this hinges on the acquisition price and level of dilution in acquiring Cameroon!

As I said, a few million spent on market can reap 10 times this via the inherent value it creates.

Perhaps one of the biggest flags I have read from the company in this regard...

Mark Smyth said..."CityView is keen to complete the feasibility study to quantify the technical and commercial aspects of North Matanda. We are under no illusion that this project has the potential to be extremely profitable for all of the joint venture partners and we intend to bring it to fruition as quickly as possible.

Subtle, but clearly a heads up to likely price activity.

Cheers!