Information on the Target

Compass Gold Corporation is a mineral exploration company primarily focused on the discovery and development of gold resources. The company is strategically positioned in Mali, a country in West Africa that is rich in geological potential for gold exploration. As of November 24, 2011, Compass Gold has made significant strides in its exploration efforts, positioning itself as a promising candidate for growth in the competitive gold market.

On November 24, 2011, Pinetree Capital Ltd. announced the acquisition of a substantial stake in Compass Gold, including ownership of 3,385,000 common shares and an equivalent number of common share purchase warrants. This investment decision highlights Pinetree's confidence in Compass Gold’s potential within the dynamic gold industry.

Industry Overview in Mali

The mining industry in Mali has garnered considerable attention due to the country's significant gold reserves. As Africa's third-largest gold producer, Mali boasts numerous mining operations and exploration projects. The favorable geological conditions, combined with a supportive regulatory framework for mining investments, make Mali an attractive destination for resource exploration.

In recent years, global demand for gold has surged, primarily driven by its status as a safe-haven asset during economic uncertainty. Mali's mining sector has benefited from this trend, with both international and local companies eager to capitalize on the country’s rich mineral wealth. The government of Mali has also made efforts to enhance infrastructure and streamline permitting processes, further encouraging foreign investment in the sector.

However, challenges such as political instability and infrastructural limitations can affect the sector. Investors must navigate these risks while assessing potential mining projects in the region. Despite these hurdles, Mali's gold market remains robust, as miners continue to explore and develop new projects, contributing positively to local employment and the economy.

As a result, the gold industry in Mali presents numerous opportunities, particularly for companies like Compass Gold, which are in the early exploration phases and have promising prospects for finding economically viable gold deposits.

The Rationale Behind the Deal

Pinetree Capital’s acquisition of a 8.1% stake in Compass Gold reflects a strategic move to leverage the growing opportunities within the Malian gold sector. By investing in Compass Gold at this stage, Pinetree aims to position itself advantageously should Compass Gold achieve success in its exploration endeavors, leading to significant value appreciation of its shares.

The transaction underscores Pinetree’s investment philosophy of identifying and supporting early-stage resource companies that exhibit potential for substantial growth. The warrants acquired alongside the common shares provide Pinetree with the option to increase its investment further, signaling a committed interest in Compass Gold's long-term prospects.

Information about the Investor

Pinetree Capital Ltd. is a diversified investment and venture capital firm based in Ontario, Canada. The firm is publicly traded on the Toronto Stock Exchange under the symbol “PNP” and specializes in small-cap investments, particularly within the resource sector. Pinetree's investment strategy revolves around identifying macro trends within the resource industry and building positions in micro-cap opportunities that align with those trends.

With expertise spanning various commodities, including precious metals and rare earths, Pinetree Capital is recognized as a value-added partner in the resource industry. The firm employs a disciplined investment approach, emphasizing market analysis and strategic exit planning to maximize returns on its investments.

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Considering the complexities of the mining environment in Mali, Pinetree Capital's investment in Compass Gold could be viewed as a calculated bet on future expansion in the gold market. Pinetree’s significant stake in Compass Gold allows it to potentially capture substantial upside if the exploration efforts prove successful. The acquired warrants present further upside potential, enabling Pinetree to increase its holdings should conditions be favorable.

Moreover, the current landscape in Mali supports ongoing exploration, and Compass Gold is positioned well to capitalize on these opportunities. However, Pinetree must remain vigilant regarding geopolitical risks and the timing of the market as these factors could substantially influence the investment's performance.

In a sector inherently fraught with uncertainty, this investment aligns with Pinetree's mandate to enhance its portfolio through discerning choices in the resource domain. Overall, while the investment carries inherent risks, the potential for high rewards makes it a compelling opportunity in the current market environment.

In conclusion, Pinetree Capital’s acquisition of shares in Compass Gold not only positions the firm strategically within the burgeoning Malian gold industry, but it also demonstrates a commitment to leveraging its expertise in resource investments for potential high returns.

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