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Strategic review means scrap the "progressing to production" nonsense - small fish in a big pond and, We are not immortal and nor are NM and co....monetise the darn thing, all or parts of it. I know they are listening....saga continues !
GLA
sire_frugalman,
That would make sense and be a cleaner solution for all. But for Mather to sign up to that and to be working with CGP, I can only assume that Mather has been promised something that ensures he continues exploration. Now that might be a new company?? Let's call it MatherGold for fun. SOLG gets sold but prior to sale, a bundle (let's call it a package lol!) of licence blocks get sold or moved over to MatherGold Inc. Lets face it, if the market and future buyer out there is not going to price much in for those blocks, then it's not cost much more than prob $10m or $15m at best for MatherGold Inc to acquire various blocks. Let's face it... some could be relinquished soon anyway. Would not surprise me to see MatherGold Inc then do the rinse and repeat process. In effect, it's Mather doing what Mather does best. It's a new SOLG with old SOLG licence blocks lol! I doubt it will fall under insider scrutiny as most blocks are not explored and just rock chips. Acquisition costs 5 years ago were minor etc.
So yes... a full sale could still be possible but the way Mather is talking... he's sees growth being restored to shareholders through exploration. That's clear.
Perhaps the Swiss entity set up a while ago is the way out for the CGP boys or the other way around... the way to park the new ongoing business?
Lots to think about here but that DGR note tells you all you need to know about Mather and Ecuador. He's not done exploring. Not at all.
Lunchmoney, agree the $430m+ commitment across those 60 licence blocks is not required tomorrow or next year etc. Or at all. They can relinquish them like they did with the 10 blocks of late. I'm merely using the guide by the company of the commitments based on those current 60 licences. You'd have to go back to the previous RNS on relinquishing the 10 blocks to see the finer details. I've crudely divided the $430m Capex number by 60 to arrive at a broad stroke $7m to $7.5m spend per block.
We know they have been looking to partner up on many of the blocks (grass root level) and doing rock chip sampling all this year. We even had the 'package' comment from one SOLG member of staff alluding to the fact that they are trying to divide the folio up or get a nice basket of licence blocks together to suit interested parties needs.
What we don't know is the outcome on that. But my gut says we are moving to a more CGP style process of getting others to pay and do the leg work on many of these blocks and we retain a 20% or 25% interest. Better than giving them back isn't it!!?
Thanks again for your pointers, really appreciate your views.
Agree all concessions under review
Seanhunter,
That's the way to go for sure but the model of exploring, derisking and then selling on as yet to be proven as a success. The market will buy into that strategy if or when SOLG sell ENSA. So I think that's what we should expect.
Some will then ask how much of the ENSA proceeds will be distributed to shareholders? All of it I would hope. They can then go to market and raise capital as before $50m+ and go and find another Alpala.
My only issue is understanding how they return that ENSA cash to shareholders. Does it get distributed through a special divi? That's not great for tax efficiency by any means.
The rinse and repeat strategy going forwards can only work or get the markets attention if they commit to selling earlier in the cycle. Basically, get the discoveries to MRE2 and PEA but flog it before PFS. Yes you get less bucks in the pocket as someone else carries the risk on pre-development but you get quick bucks! I'd be more than happy to remain invested over the longer term (next 10 years) if SOLG can deliver 3 or 4 cabs off the rank within that time frame and each going for £1bln+.
Based on Mather's recent comments, I think ENSA sale inevitable and exploration to kick off possibly as early as 2023. The sooner they get drilling again the better. But you need cash to do it and we don't have any at the moment for non ENSA projects but there's always a chance of JV's and partner deals (remember the grass root 'package' comment some months ago??!
Bubble NM has said eventually DGR'S shares would be sold.
He does not want a sale of Cascabel, quite the opposite.
As I said we are talking about partners.
This strategic review won't be just about Cascabel, it involves all our concessions.
Quady possible on other tenaments nit cascabel I think but nm might want a full sale tbh
May I remind people of everything we read yesterday.
Nowhere does it even suggest selling anything.
I keep seeing the word partner.
Monte don't disagree there it's exactly what I'm does with an explorer imho,so onto the sale
Well done stack.
They constantly talk of future exploration and value adding just like they talk about becoming miners.
The truth is solg is a poorly run company with low quality management.
Hopefully the strategic review will enlighten the board into excepting this fact and the best way forward is to sell the whole company to someone who can take it further. Mission accomplished. I'm pretty sure that's what irvin and crew have been told.
Fortissimo - Warren was asked on Twitter about sale meant cascabel or what and he replied SOLG.
How much influence will Mather have on the strategic review, As a NED?
I think ot will come up with a clear for sale sign. Just ask the cornerstone boys who jumped on the merger this time around.
I think a lot can lost in translation (lol!) but the CGP bunch basically owned 15% of ENSA and 6.7% of SOLG. So when Irwin says SOLG sold etc I think he's broadly implying a sale of the main asset - ENSA. Let's face it, he's right... the market values SOLG's folio (outside ENSA) at zero. So SOLG is ENSA and ENSA is SOLG. But... as we all know there are other opportunities in the folio and majority have a minimum $7.5m spend. Porvenir is advanced and may well be sold on or JV'd in future.
Cash to 'explore' will come from ENSA sale. No doubt about that. But how do the CGP exit or get their cash out?? By selling their 18.5% stake in SOLG to whom??
It's a puzzle but I think Mather is not done here and does not want to see SOLG sold lock stock and barrel. He wants to rinse and repeat. He's right, growth does lie ahead via exploration and discovery. Find another 2 or 3 Alpala's and that's going to make ENSA look like a starter on a 4 course meal.
Going to be fascinating to see how this unfolds. But one thing is sure, the share price should be doing very well indeed whether that be through ENSA sale or future exploration success.
There will be plenty of ops for people to exit I'm sure.
Apologies, I did not see that Fort had covered this off before I responded. Agree Fort.
Paul thanks for sharing this. Interesting to read Mather's comments - it very much looks like the plan is to go back to the SOLG of old and start exploring again. Only problem is we don't have any cash to do so (it specifies the Osisko royalty deal is to be used at Cascabel).
So are we going to sell Cascabel and rinse and repeat across the rest of the portfolio? That is not what Irwin and I imagine the other CGP lot want to see - they want the whole company sold.
Fort, provided shareholders receive a significant share of any proceeds and the company doesn't hoard the cash, the rinse and repeat strategy has always had a good deal of appeal. Mind you, it requires a strong and stable management team and far less shareholder agitation than we currently have.
To be honest, when years ago SOLG announced that they had created the four subsidiaries, I interpreted it as the way to separate ENSA from the rest of the exploration program in case of corporate events, and I still think it's the case.
So I doubt that SOLG need to spin off ENSA, rather they can spin off the four subsidiaries and sell SOLG as it is.
Also - the boost just about every share received yesterday between 1.30pm and 2,30pm (due to good news from the US) saved us from dropping down into the 15s, where it would have been hard to recover from. Had nothing to do with our CEO news in the end. We were very lucky, expecially if we can now hold here in the 17s or even climb. Excellent timing, psychologically speaking - with all that bad press we could have gone through the floor. Instead it looks like the "bad" news was actually good.
I believe it was good news anyway. What we we paying him for exactly?
No need for any lengthy strategic review now - one simple announcement required:
WE ARE *NOT* GOING INTO PRODUCTION. WE ARE AN EXPLORER. WE DISCOVER AND WE PROVE UP ASSETS - AND THEN SELL THEM ON.
30p right there.
Don't jest! Mergers and major changes in company strategy often see management changes and all kinds of staff changes. Twitter being the most recent high profile example. A change of power or merging of power results in a need to remove some previous power holding individuals. That's par for the course. It's very likely that you might see more non exes or directors leave or not go up for election at AGM. So expect it, as it's highly likely. Nothing 'chaotic' about it at all. Just business.
Interesting comment from Mather...
Confirms my thoughts that he's not done with exploration yet and if anything that comment suggests he thinks the main drivers for restoring shareholder value is through exploration.
It's a curious one as Irwin and CGP bunch see to be beating the 'For Sale' drum.
I'm beginning to think that we are looking at an ENSA sale and then SOLG continuing on with the exploration folio to see if they can rinse and repeat.
Ofcourse, the likes of BHP or other predators out there might have other ideas or for balance they might well be happy with just ENSA.
If you think you have another 10 Alpala's in the folio then it makes perfect sense to flog ENSA and prove the model works. Then find another and Flo that. Problem is, I don't think investors have the patience to wait another 10 years for another tier1 transaction. That said, we know Maxit exited 4 years ago and CGP wanted to sell out many years ago... perhaps the new model could see 18months to 2 years of exploration drilling, deliver a PEA and then flog it on. Then repeat. That would be less rewarding than going to PFS levels but it would be less Capex drain and faster return for shareholders.
One thing is sure from that DGR statement... Mather thinks shareholder value (or the restoration of it) will come from exploring the rest of the folio. Mmm... what about the sale of ENSA Nick?? Surely restoration of value will come from that alone and I would use the word 'realisation' of value in that instance. Not restoration.
Also, clear from that DGR note that $50m royalty is for ENSA alone. SOLG RNS did not specify that like they did with Franco deal hence good to get some clarity albeit from DGR.
If SOLG are not careful, they will pi55 the market off if they continue to have various key investors all putting out public comments that don't quite dovetail up. They need to look cohesive. Also, Maxit doing the Strategic Review says it all! What about Citi's involvement? Or are they now gone? Or are they just there to defend against low balls?
We appear to have got through the last 24 hours without losing another director!
Stack, I for one appreciate your good grace.
Lots more news incoming!
That's my bad. Can't argue that it hasn't made his desk now. Still don't think he'll be forced to make a bid 'the put-up-or-shut-up' argument, but that quote is at least evidence that we are on his radar.