"No" to Yorbeau Resources sale of Rouyn property to Kinross

By KCGrainger / December 09, 2016 / www.canadianmineanalysis.com / Article Link

After studying the possible sale of the Rouyn property to Kinross, we do not find it satisfactory. We recognize that we still are in a bear market, particularly for much of the junior mining sector, but we expect that to change soon. Most importantly, we have recently seen juniors that have been bought out/taken over at exceedingly low prices and low valuation levels by larger mining companies at prices that are unfair to the junior companies' shareholders.

I recently spoke to a junior mining executive who complained that "larger more cash rich mining companies come to see me (and other companies as well) and make incredibly low price bids for my company. They are trying to buy us at fire sale prices." When he told me the recent low buy out prices suggested for his company, I could not believe it. I suggested that he tell them to get lost, he did.

There are valid reasons for Yorbeau shareholders to turn down the offer from Kinross.

1-I have followed Yorbeau and the valuation of Rouyn for years and believe it to offer much more value in the reserves and more potential than the offer indicates. My analysis and others (Non 43-101) suggests that there is a strong likelihood and indications of over 1,000,000 ounces of gold resources at the Rouyn property. In my opinion, there is a strong possibility of much more.

2-I believe that we will soon see the price of gold in U.S. dollars at the $1400-$1500 level which will change conditions for many of the juniors. You will note that since 2014, producers such as non-junior Richmont have risen over 700%. Junior golds such as Claude Resources and Niogold were selling at fire sale prices and shareholders saw appreciation of over 800% due to their being acquired. Both Claude and Niogold were acquired by larger companies and my point is that their shareholders have participated in the substantial price appreciation of their acquirers' shares.

3-Since Kinross would own the Rouyn Property, any appreciation in the value of the property would benefit Kinross and not Yorbeau shareholders. So, do Yorbeau shareholders have any chance of appreciation of their stock from the Rouyn property? Not really, perhaps a small portion of the value in my interpretation.

4-Upon exercise of the option, Kinross would pay US $25 million in cash. With 278 million Yorbeau shares outstanding, this equates to a mere nine cents per share, it is not worth it at all.

5-Yorbeau's zinc holdings while potentially substantial do not engender exceptional investor interest and would not create the appreciation potential of gold holdings.

6-As Kinross would be in charge, they could put the entire project "on the shelf" or on the "back burner" thus delaying any potential profitability to Yorbeau. Moreover, the NSR of 2% is not why Yorbeau investors have been there and is quite small.

7-The $1 million private placement in Yorbeau by Kinross certainly favors Kinross. It will get units at .09 which would be approximately 11,000,000 shares and half a warrant; That is below the current market price for Yorbeau shares and is quite generous...... to Kinross.

8-Who or what firm would be doing the "resource estimate" and what parameters are to be used in the resource estimate?

9-The information circular states that Yorbeau has invested over $18 million in the Rouyn property since 2006. There are exceptional values and assets involved here. The mining infrastructure itself is quite valuable as well.

10-If my analysis of the gold mining market and gold bullion are accurate and we soon see over $1400 U.S, I believe that a better agreement can be found with another mining company.