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Agreed Miagi365, and indeed, a lot we could do to defend from takeovers. But I believe, that should the nuclear option be required, then we have it. Who knows, we could offer extra shares to DGR. Probably unacceptable, but not impossible. All the best.
Quady, if they could raise equity at 50p then more than happy for them to do so and turbo-charge the regionals. But I'm dead against issuing any more confetti shares at 20p unless it is absolutely necessary to keep the lights on - yes, it had the added benefit of diluting the sharks a little but that's quite enough of that thankyou!
That's my whole point Miagi365. For BHP to take this out. They would need to offer full value, or close to it, as the other parties, won't sell cheap, and using my example given. 20% of the shares, would be unattainable for five years. So they would need to hover up 62.5% of all obtainable shares, from a base of around 14%. Just to own 50%. Calculation is thus. Issuing 500 million shares, brings us to 2.5 billion shares total. But 500 million unavailable for 5 years. So to get half of 2.5 billion is 1.25 billion. But only 2 billion obtainable, meaning to acquire 1.25 billion of 2 billion, would equate to BHP, owning 50% of all shares, but 62.5% of available shares. Let's see what that would do to the price. It would stop us being taken over on the cheap.
" I don't see anything less than about 60p start to get interesting)."
Should qualify that in this environment I don't think £1 is unreasonable and fairly soonish. Be a real shame not to have attacked the regionals in a meaningful way before any offer though...£1 still undervalues what SOLG has by far but it gives an immediate return and reduces the investment risk to zero.
Brings us roughly to 2.5 billion shares in issue, I don't believe we would have to go cheap, we could get say. 50p a share, and that would raise 250 million. Enough for exploration of many tenements. Or one, though to DFS. No further funding required, apart from financing of Alpala, and that's done on different terms.
Good morning Miagi365, the problem is how to defend a takeover . If BHP, CGP and NCM collaborate, then roughly they own 37% of Solgold, plus the 15% ENSA share of Alpala. By issuing say 500 million shares, and tieing another major in, let's say Five years. Then we have 25% more shares in issue, and everyone gets diluted by 20%. So BHP, CGP and NCM, now only have roughly 29%. This would make a takeover virtually impossible, as the major, would hold 20% of the company, but could not sale the shares, and by then we would be in production, and would have attained some real value. Doubt anyone would want to pay full value. So we are defended, and producing. Just an idea. All the best.
TbTT, I'm shifting to the camp that believes that NM has a very reasonable chance of pulling off the financing...why? Because we are entering the perfect storm: 1) Super strong gold prices 2) Strong copper prices 3) Trillions of dollars sloshing around the world looking for a home 4) Alpala - world class resource with excellent metallurgy and low CAPEX ($4-5b would be more typical for a project this size).
I think financiers are lining up around the block, with the prestigious FN leading the way, and why wouldn't they.
Giving away 50% of Alpala on the cheap (not going into the numbers again here as did so last Friday with CD), doesn't seem like a good deal. NM has always been consistent in his stance on JVs and I think he is right.
Hi Miagi! I don't know about Quady, but I do regard a farm-out of Alpala as a viable takeover defence. If they did it, Solgold would be left with a stake in Alpala (free-carried - c. 25%?) plus all the exploration licenses. In many ways, a farm-out would be the best outcome all round. Despite NM's confident bluster, Solgold aren't in a position to finance Alpala on their own without issuing huge amounts of dilutive equity. The market knows this, that's why the share price is where it is. And that leaves Solgold very vulnerable to a full hostile takeover at a relatively low price (40p to 60p?).
As discussed with CD last week, a farmout agreement along those lines would be a pretty poor deal for SOLG, in comparison to the rates that they can achieve with stream financing/offtakes. I get that it removes the risk, but is the removal of risk worth $1b+? I don't think so.
Good morning, addicknt, you are of course correct, joint ventures always possible. Unclear on standstill, if even conversations are allowed at this stage with Cornerstone. However, if NCM were to acquire CGP, this makes your scenario more likely. But they would require other parties to come on board, as still a long way off 50%. I think if NCM, acquired CGP, and they attempted a joint venture. Then we may see Solgold issue more shares. Say 25-50% more, and do a deal with say Barrack, and tie them into a two year standstill agreement. Maybe longer, to dilute, NCM and BHP, and make Barracks shares unattainable . Imagine if Barrack or someone else, was tied into a 5 year standstill. That would be game over, and production would be the destination. All guess work, but just one possible way to defend. All the best.
Not only can BHP , not make an offer, they cannot even talk to CGP. Imagine, if an offer came in after 15th October, just days after the Solgold offer expired. I think an investigation would be called for. BHP will not behave unprofessionally, however although unlikely, CGP could be bid for by NCM. That would in my mind make a takeover, virtually impossible. As NCM would not acquire CGP, just to sell on, and they have no chance of bidding for Solgold. They would be increasing their stake, in a very profitable enterprise, some years down the line.
Hi Mrshiba! IMO, what BHP can do - should do, may already be doing - is to approach Solgold in private right now and offer a farm-out arrangement for Alpala. (I.e. Something like a 75%/25% split BHP/SOLG in return for BHP funding and building the mine). I would hope that the board of Solgold have enough sense to accept such an offer. As far as I can see, going it alone to production isn't really a viable option. And a friendly farm-out arrangement would represent a better outcome for them than a full hostile takeover.
TBT, as I said at the weekend, it's not a two-horse race between Newcrest and SOLG. Newcrest can't just trot up to CGP and give a cash offer to beat SOLG and then walk away with the prize...there will be many other players watching, and Newcrest will know that. This will stay their hand until they are ready to go all the way with their very best offer, if they have enough in the tank that is.