It is convoluted. It depends on a couple of things regarding share structure of AURYN’s IPO. If they remain private (AURYN isn’t though), then it would simply be a “buyout” of Cerro shareholders using the 5% (5,000,000) shares of the 100M in AURYN’s private share structure. It would be a share-swap deal and AURYN would issue pro rata certificates for shares. This would vastly shortchange existing shareholders unless there was much more to it.
A dividend situation where CDCH shareholders remain in both companies, still holding CDCH shares and the AURYN dividend shares, is what I envision. I am just throwing out my ideas also. Thanks for pointing out that Cerro’s earlier posted information is quite imprecise and lacking in details. We’ll just have to await and see what the details of AURYN’s shareholder and AHC’s oral offer to provide a longer-term solution to the issue of the cash call. We won’t really know what occurs thereafter until AURYN IPOs and we can see all the details.
What I would anticipate is that Cerro does not change it’s share structure and just issues a dividend declaration pro rata of AURYN’s new IPO shares to current shareholders. AURYN maintains it’s 100M control share structure, but issues say 300,000,000 IPO free trading shares at an initial offering of 0.20 ($ 60 M total). Cerro shareholders would be issued initially a total dividend to be distributed of $3M (5% of the intial $60 M offering) worth of AURYN shares pro rata ( a reduction of 1 AURYN share for 20 or 25 CDCH shares in the form of an AURYN dividend). AURYN would have about $40M of working capital to further exploration, and fund exploitation.
Initially, this would be free trading AURYN stock for Cerro holders to do as they please, sell or hold. If/when AURYN is successful the shares would grow in value as AURYN slowly becomes profitable through production. The 5% control shares would be the shares still held by Cerro that have no liquid value, only minority voting power. Later, as the claims are proven up and developed by AURYN there will be incentive for a “buy out” of the 5% equity still held in AURYN.
Anything less than this arrangement would be paramount to Cerro shareholders only receiving $0.01 for each share of Cerro. Shareholders would have to wait for AURYN to grow in value and the benefit gained would primarily be liquidity. Eventually, once the 5% Control (read ownership) shares are on the Auction block for sale back to AURYN, or possibly a JV partner, a cash deal would be in order.
Also, after the dividend distribution, the Cerro shell would be available for a reverse merger of some kind using something like the the 1-for-15 split that was approved in May 2016, and/or debt financing to pursue other opportunities. One such possibility may be available with one or more of the MASGLAS projects. This would be a double bonus to existing shareholders. A closeout of all shares into AURYN stock alone at this time would be very pre-mature until such time AURYN has proven Market value.