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Miagi, I too have been wondering why NCM chose to make their intentions public. Normally, this sort of thing would have been done discretely , as it's difficult to see what benefit is to be had by going public. However, is it not the case that it emerged via. a leak and they responded after the event?
@phat, a comment and a question.
Comment: I do some modelling myself and I have a current fair price estimated at 64.5, so I suppose we are looking at the same ballpark.
Question (unrelated): by any chance have you got a model for calculating Hurst points from a timeseries?
Thank you, and GLA!
Redknight - "By using RBC to discretely sound out the market, he can decide what to do withe their holding. "
There's nothing discrete about this latest move by NCM. It's positively noisy. Why are NCM making so much noise, apart from that they are obviously hacked off at not getting more share of SOLG on the cheap? Is the answer that they are looking to sell off (at a discount) a very valuable and significant stake in one of the most prospective explorers around? I seriously doubt it - only if they have thrown good business sense out of the window along with their dummy and favourite toys. Good business sense dictates, at the very least, holding on to their share of SOLG for decades to come; it's not just Alpala we're talking about here, it's all the other future discoveries too. So why the noise? They are stirring the pot for what reason? I don't think the answer is clear yet, but one thing I'm sure of is that they would love to own SOLG. Those who go on about SOLG never being mentioned in Newcrests presentations etc, don't understand how sensitive negotiations work (you pretend disinterest if you are really interested - since they have already scooped up 70% of GGP for a pittance they don't need to play down that prospect - in fact they play it up to show their shareholders how great they are and what a wonderful future Newcrest has with it...).
What I can see as a bid for SOLG outright, balancing the risk in Ecuador with potential huge rewards of the other projects included.
Difficult to guess a figure at this point, possibly around the 70p range considering we are at 19/20p.
The NPV of Alpala is of course a big factor in the strike price of any predator looking to buy out SOLG. However, the BODs of such predators must also be looking at protecting their income streams 10, 20 30 etc. years hence as existing mines come to the end of their lives and new discoveries become far less frequent. Alpala, with it's projected 50 year life as a Tier 1 deposit and the possibility of more in it's portfolio, has to be an attraction to any predator wishing to secure future income streams, even if it means paying more than would have wished to do so.
Just a bit of coffee break whimsy before I go out to check up on the rumour of a good barber where the queue is non existent. (I get a reduced 'senior rate' and a lovely young lady smiles and chats to me - worth double the money even without the haircut!) GLA
I agree with that current fair price estimate, for Alpala alone, especially based on the risks in Ecuador.
However, I can't see NM seeing that as a success. not for the whole of SOLG, hope a bid does come around that price or higher, for Alpala, Nm has stated a partial sale wouldn't work for tax reasons, although he didnt give details. we will all find out in time
Being a financial modeller I have a spreadsheet with my numbers which I update periodically.
Using the following assumptions:
Copper price average of $3.30/lb over 55 years
Gold price $1,820
Silver price $18.20
Discount rate 6% (used in recent Latin America deals)
The current NPV on Alpala is $7.527bn.
Adjusted for FX to GBP and 85% ownership, and assume we receive only 40% of this NPV at takeover....(big realistic assumption), ALPALA is worth a massive 93p a share excluding all other prospects.
As we are at PFS stage we should be a minimum of 20% of NPV which is 46p.
If a bid arrives anytime soon then I believe 70p is a fair price. The longer they leave the bid the higher price they pay.
Ties in With Peel Hunt.
My comment was contextual and SOLG specific...
In terms of the inevitable here, the SP is irrelevant right now unless you've put yourself in a situation where you have to sell...
Peel Hunt buy note:
Milestones from Q2 not priced into stock
We believe SOLG’s achievements in Q2 have not been given
due credit in the market with the distraction of Covid-19.
Improved M&I resources, met test results and the addition of a
third partner with the FNV offtake agreement have created a
stronger project and financial profile for SOLG in Q2. We see
SOLG’s momentum gaining as we near the Alapala PFS stage.
SOLG’s Q2 achievements more significant than market gives credit
SolGold made greater strides in progressing the Alpala project than in any other
quarter we can recall. In April, the MRE3 stated a 30% uplift to the M&I
resource for Alpala, while Phase 2 met test results detailed improved gold
recoveries and copper concentrate grades for the full 50+ year mine life. SOLG
then delivered a US$100-150m royalty agreement with Franco-Nevada in May
and by early June raised an additional ~US$40m in equity. SOLG also relaunched
an all-share offer for Cornerstone Capital on the last day of June.
Royalty agreement offers substantial financing flexibility through 2021
After the royalty agreement is finalised in Q3/Q4, we forecast SOLG to have a
significant cash buffer in place through all of 2021. The additional US$50m
royalty agreement option also allows SOLG further flexibility without having to
time any additional fundraise with volatile market sentiment, a big positive. With
the company fully funded for both the PFS and the FS for Alpala, attention can
be turned to realizing fuller value for the broader pipeline of projects.
Newcrest reassessing options on its stake is not unexpected
BHP now holds a slightly larger stake in SOLG than Newcrest, and FNV offers
good near- and long-term Alpala financing options. We believe it’s only logical
that Newcrest reassesses stake options at this point given the significantly
stronger financial position of SOLG in Q3 and as we approach PFS stage.
Benefits from Phase 2 met tests offset dilution, maintain 70p target price
While we estimate a 2-3p/share value dilution due to the increased share count
(US$40m fundraise) and the 1% NSR royalty, the met test results add back
4-5p/sh value accretion. Phase 2 met tests of higher gold recoveries and copper
concentrate grade of 26-30% are strong positives, but we still use a conservative
concentrate grade of 26.2% (up from 25%). With a minor increase in fair value
estimate, we maintain our share price target of 70p per share.
Onward ever upward all goldies except Solg. Would have been happier if shenanigans had happened during a quiet spell for gold. Never mind everything else is gung ho. Pur setting new highs almost every day, Gpm and Gpss are only going one way and that’s the way of gold except Gpss multiply it by 10, hum, Shan, paf, even the thriving Russkis. So we just have to hung in here awaiting the big pay off. Mind you it will be worth it in the end, unless I die whilst waiting!
the share price is NEVER irrelevant!
it determines whether or not your investment is making money or losing money - it is therefore ALWAYS relevant!!!
NM appointing Citi shows he is serious about predation...
When I was preparing a £860m flotation we appointed GS to come up with options to prevent/prepare for an unwanted bid...
One of them was the classic 'white knight' defence.
Nick keeps insisting this is going to production and one obvious way to do this while remaining on board is to get a 50/50 partner, as happened with Barrick and Newmont...
The question is, who would be acceptable to Mather...clearly not Newcrest; almost certainly not BHP; Barrick would be my bet, but actually Franco Nevada makes huge sense...
Whatever happens there are plenty of candidates for SOLG, whether as partners or owners...
Its a waiting game and the current SP is irrelevant unless you've got more cash to invest...
AIMHO as usual..
this is the excerpt from said article
"Australia’s biggest listed gold producer is seeking advice on its options for the stake it holds in SolGold, but no conclusion has been reached on whether to sell or buy more, two sources close to the matter said on condition of anonymity."
lets not confuse bs with facts hey???
schlemiel that is NOT what the article from reuters said
it said and I quote that NCM were seeking advice as to whether they "buy more OR sell"
Good morning BNC, thank you for your thoughts, broadly what I think, however I am somewhat surprised to hear Newcrest say, we need to hire someone, as we are clueless on the board, and we don't know if we want to stay invested in Solgold, buy a larger holding or sell. I think they are testing the market.
The price action today suggests that nothing is going on. Obviously thats not the case, so there appears to be two different markets atm. One for piddling PIs like most of us on the board and another for the majors who are deciding whether they want to play in Solgold and if so, who's stake do they buy or bid for.
20p is obviously the wrong price in medium term but some seller thinks it too high today. Bots?
I believe NCM's move to appoint RBC is what it says it is...
Their self serving advice was rebuffed; they were snubbed for the Placing; and NM has appointed block caving experts...
Biswas now has to decide whether to double, twist or bust...
By using RBC to discretely sound out the market, he can decide what to do withe their holding.
For my own part, I would be very surprised if they made a bid, because they would have to rationalise SOLG at the same time as they are taking forward the major Havieron project and their other five.
In terms of financing the latter, it would make sense if they sold the shares if RBC found a buyer at, say 40p...
AIMHO as usual...
Newcrest Exploring Options to Offload its Stake in SolGold
Jul 08, 2020 AEST Team Kalkine
Newcrest Mining Limited (ASX:NCM) exploring options to offload its stake in the gold and copper producer SolGold.
As per Reuters, the Company has hired RBC Capital to explore options for offloading 13.57 per cent stake of the Company in SolGold.
In May, SolGold- an Ecuador-focused company, agreed for a financing package of USD 150 million along with a USD 15 million bridge loan, defying NCM request to raise funds via equity.
And stuff all the resident NM bashers who keep chirping up.
TBTT CGP have merely repeated their rebuff from 2019, so don't be so sure...
My view is SOLG have enlisted the help of Citi to help them defend against the wolves trying to get SOLG for nothing......
Newcrest are clearly put out by the latest fund raising news - however it is not NCM 's company & why would NM give away SOLG on the cheap - regardless of what NCM think - they dont own or run SOLGOLD end of! They've not been allowed to get their noses in the equity of SOLG.
So they clearly want to do something and have hired RBC as advisors as to what to do with there SOLG investment - Buy more or sell on.......... This is why they had to remove Craig Jones from the bod.......
In my novice opinion as posted last night, NCM, WI & Sangha can all go n fk themselves.......it is not their company and they dont run it so if you dont like it - bu-gg-er off!
The Frnaco Nevada deal is by far the best option available to SOLG at this time regardless of what those tools whine about - it's just sour grapes they're not getting their own way - end of.
Good morning redknight1, maybe Newcrest can suppress price short term, by leading out their stock, however this is going to blow eventually. My only concern is the timeframe. All the best.
How on earth will Newcrest suppress the price...?
Do you honestly think they're prepared to sell at 19.46 or less...
Yes pinot - seems smith-trader is the alleged irwin on tw-att-er tea boy - spreading his bs on these boards too
all a bit pathetic imo
getting poorer...are you actually invested here? Because if you are you should know that we have at least six other prospects that "could be as big as `Alpala"
Alpala will be the biggest silver mine, the 3rd biggest gold mine and the 6th biggest copper mine in the world...
That's JUST Alpala...
Now please tell me precisely how SOLG resembles Amerisur...?
There are prospectively at least NINE majors who would love to take this out...
There may be a lowball offer but this is going to auction...
Meanwhile see my post later this morning...
AIMHO as usual...