I’m not, and never have been a CXB shareholder. BTO’s investment in CXB attracted my attention when it was announced April 19th, 2012 and I’ve been closely following the company since.

The following is not meant to bash, merely to shed some light on the situation from another perspective…i.e. from the perspective of an investor who chose not to invest in CXB.

CXB has a number of properties in its portfolio, some wholly owned/operated, some jv’d with others (as in the Primavera property that BTO has been earning an interest in).

Since the drilling results announced jointly by CXB and BTO 20 January 2012 propelled CXB’s share price to 5-year highs, the market (particularly, imo, in the form of retail investors looking for a multi-bagger) has been accumulating CXB shares, while waiting for further drill results…likely in the expectation that confirmatory drilling results would propel the share price to new highs and, possibly bring a takeover offer. Realistically, only more glory drill holes that bettered those detailed in the news release were ever going to propel CXB’s share price higher than the levels it reached after that January news release. And, in the absence of such confirmatory drilling results (whether through a lack of drilling results being released, or merely unexciting drilling results), there was no real reason for CXB’s share price to trade much higher than the $0.17-0.19 range it was trading in over the week before the 20 January 2012 news release.

BTO’s investment in CXB in April 2012 gave it a 10.6% equity stake in CXB…and should’ve shone a realistic light on CXB’s share price, being done at $0.25 per unit (share + ½ warrant).

Now that BTO has completed the required $8m expenditures, it has earned a 51% interest in Primavera, with CXB owning the remaining 49%.

But, very little drilling has been done on the Primavera property…and the news release of yesterday indicated that a Phase 1 drilling program in the amount of $2 million would be conducted in 2013. BTO will be the operator, but the proportion of the $2m expenses for the Phase 1 drilling program weren’t disclosed. I would expect that BTO will be responsible for 51% (i.e. ~$1,020,000) with CXB on the hook for the remaining 49% (i.e. $980,000)…subject to the new formal Joint Venture Agreement discussions currently being held between BTO and CXB.

It is entirely possible that the drilling expenses of this and/or future phases of drilling will be borne by BTO in exchange for an increasing percentage of the Primavera property.

If that is not the case, CXB will have to raise money to continue to fund its share of future drilling…likely meaning dilution for current shareholders.

Regardless, given that BTO is the largest gold producer in Nicaragua, that it already owns +10% of CXB and that it already has a 51% interest in Primavera…it is very unlikely that any takeover offers for CXB will come from anyone other than BTO.

And, as honourable as Clive and the management of BTO may be, their fiduciary duty is to the shareholders of BTO, not CXB. So, it would make sense for BTO to perform its proper due diligence by proving out the resource before making any kind of takeover offer for CXB.

In that interim, BTO is likely to earn a higher interest in Primavera and/or the share price of CXB is likely to drift…and drifting is usually downward in direction. So, if and when a takeover offer for CXB shareholders ever appears, it will only be at a premium to its then trading price, which might only be at current levels (i.e. $0.10-0.12)…and CXB’s interest in Primavera might be somewhat, or considerably, lower than its current 49%. Not particularly enticing for investors, a situation not unlike that many other juniors are enduring as a result of jv’s with majors in this current environment.

BTW, I also happen to think that Clive Johnson and BTO management are shrewd but honourable executives. I would be very surprised to learn that BTO were selling yesterday, less so if it comes out that they were buying…but doubt BTO was doing either. They only have to continue funding drilling on Primavera to get control of it, and that will inform them of Primavera’s economic viability much more than buying CXB shares at these prices.