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Schlem, you're discussing it on a discussion board.
But we are buying in the expertise to build a mine, a big block cave mine. We can do it! Have confidence in Mather and his team!
Frog
hi schlemiel, i agree with much of your last post, but today's majors were once explorers too, so it's not unreasonable for SOLG to have aspirations of becoming a major too - given the stellar assets it has.
It's not about raising $3bn or even $4bn. Projects WILL ALWAYS overrun in terms of cost. SOLG is in no position to take a project of Alpala's size to production. Costs will balloon, they always do and they always will. What does SOLG when that happens? They'll be in deep crap
Projects are dynamic, real world entities not something discussed on a bulletin board
Prove our projects up to a certain level of confidence and sell the fecker's to as a many majors as possible
SOLG is an EXPLORER not a MINER
Hi DartFrog, agree with your post, however I wouldn't worry about flooding the market. The world is in recession now because of Covid. When we come out of this, the metals market is going to go wild. We will never have enough copper, so some businesses, won't get the copper they need, and production will be lowered, or prices will increase.
My knowledge of JVs, although rather sketchy, is that a major takes over as lead and the minnow only gets the crumbs. I would be very nervous if we went into a JV in case we, the PIs, lose almost everything. I believe NM is nervous about that happening. As I mentioned on Sunday, all our tenements can be developed and financed separately, obviosly the security is the ore in the ground. They can be progressed at their own pace without reference to the other licences. However, again as I mentioned on Sunday, if all the licences are developed and are producing at more or less the same time, I'm talking of say 14 blocks, we would be flooding the market with copper, gold and silver which would depress the prices of the metals. Surely it would better if they could be spread out a bit so that we, and Ecuador, would be earning money well into the next century. This approach would need the agreement of the government of Ecuador, also, of course, as we haven't produced our first wheel barrow of ore concentrate, these ideas are a long way off coming to fruition. I will be pushing up the roses by 2050 at the very latest, so I will not see the long picture.
Frog
Hi rcgl2, it's a good question.
What I think, is that because we have the facility to reduce Franco Nevada to 0.5% of NSR, then any future financing to build Alpala, will be financed on more favourable terms for the takeoff part, which I hope would form the smaller part of the debt.
On loans, we would arrange the facility, and it would be advanced slowly, at different parts of the build, and so reduce our interest payments.
Also let's see the revised figure for the amount of years to pay back the debt in the PFS.
Hi rcgl2, I’m not knowledgeable in any way how the financial aspect could be worked out. I’m only trying to find a route that could be acceptable to most of the main players. Funding, control, percentages owned by each party would be negotiated. I also believe NM will look after the pi’s.
To clarify, that wasn't an attack on what has been posted! Just trying to wrap my head around the possible options if we want to progress Alpala without selling it, doing a JV or being taken over wholesale. Especially as Solg itself keeps mentioning they are working on this as the financing solution.
What sort of split between debt and streaming finance are you envisaging? Total required is approx $3bn isn't it?
At what rate would Solg be able to raise debt funding and how would it service the interest payments if Alpala production is 5+ years away?
Good afternoon Almostdone, the reason NM has said no to JV's are many, but the main reasons are, they don't control the project and hence the build, they have to share the profits, and they would find financing more difficult.
I know some would say the opposite on financing, but we don't want finance from Newcrest or BHP, as this is not something, that Solgold would have control of, as financing could be removed, or held up, at various stages.
Hi Quady, if there where jv deals with the other majors I would assume that would stop any possible t/o for solg and might include leaving cgp alone as well. This also allows NM to realise his ambition of running a mine. Debt would be at a minimum, allowing dividends to be paid to shareholders while getting a substantial rise to the share price.
What if FN have said to NM..."We are willing to fund Alpala to production, so don't dare go elsewhere for future funding, we have first refusal" Funding any future developments could be written into the Alpala financing deal! If Nick tries a sly detour from FN, they could simply pull the plug on Alpala. Once Alpala is up and running Nick will have more cards in his hand.
Good afternoon Addicknt, No certainly don't think that, however I do believe that if Alpala can as a project obtain the funding to go to DFS, with just the PEA, and obtain full funding through debt and offtake agreements, to build Alpala.
Then any project, that proves to be the size of Alpala, or anything bigger, can be developed in the same vein.
My point is the further we go to production on Alpala, the easier it becomes for a financing model, for other proven up tenements, as we develop the finance model, by progressing Alpala.
Q, you seem to be of the opinion that a company can simply rack-up debt without any obstacles or consequences. I'm afraid it just ain't that easy.
Good afternoon Almostdone, yes it's possible.
But ask yourself a question. Why not fund further exploration from debt, once Alpala funding is sorted.
I personally don't believe we get CGP for 3.5 million, someone will offer above that and pay up for construction.
We don't require JV's as, we can fund and finance further developments, from debt, once we have a PEA for them.
Solg go to production on alpala with CGP in tow with FN funding, then jv the rest on a ongoing basIs. Cgp will not be able to get the finance and solg will then be able to buy them out. Solg would then be able to reduce their funding from FN with the profits from the jv’s. This surly could meet any deadlines that are in place and everyone gets a piece of this vast cake except cgp. OR is this to simple.