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Monte bhp are too late imho they had there chance and blew it ,NCM and others waiting on the offer to see how much they make out of it imho
rcgl, he's going to be a powerful voice in this process. By the way, has anyone heard either him or anyone else associated with CGP, say they want this to go to production?
Thanks Jerry, I did wonder whether I was going mad, but it's very clear that we are less diverse off the back of this merger.
Why will it not be sold by Xmas quady?
I see Jerry mathematics is not your strong point.
We will not be sold by Christmas.
That is obvious
Please tell me how we are less diverse.
Numbers would be good.
SharketMare's post was incorrect and corrected by LunchMoney.
Then SharketMare tried to spin it another way and failed again.
I eagerly await your calculations as to why the book is less diverse.
I won't wait too long as I don't think you will be forthcoming.
Sangha effectively owns more like 20% of CGP by the way. On Sedar you can see details of his and Greg Chamandy's support/lock up agreements.
"Sangha, together with Maxit, beneficially owns and has control or direction over 7,184,993 Common Shares and 200,000 options to purchase Common Shares, representing approximately 19.89% of the issued and outstanding Common Shares (calculated on a partially-diluted basis)"
The argument seems to be around BHP not paying a decent price, ie no low ball offer because of the so called diverse book.
Most companies seems to over pay for take overs. BHP are obviously going to say they are not over paying for anything. Everyone would do that.
The reality is if you never pay the going rate for something of value, you will most likely never get anything of value. Applies to buying a mine just as much as buying a house or a car etc.
Simple supply and demand economics
Cont…..
“On the one hand it simplifies the ownership of Cascabel, making SolGold a more attractive takeover target.
But the scrip offer for Cornerstone will also dilute the two companies – who currently each control about 13.5 per cent of SolGold shares – to holdings worth about 11.5 per cent each.
While there has been no suggestion that Mitsui is looking to take a place on SolGold’s register, both BHP and Newcrest have previously expressed an interest in taking a role in Cascabel’s development. Potential competition from majors such as Mitsui is likely to add to the competitive pressure over control of the company.
At stake is a major copper and gold deposit that, on current projections, would have an average annual output of 207,000 tonnes of copper, 438,000 ounces of gold and 1.4 million ounces of silver in the first 25 years of its mine life.
SolGold is expected to release a definitive feasibility study on Cascabel in late 2023.
“Japanese commodities giant Mitsui could emerge as a rival for BHP and Newcrest in the development of the big South American copper project controlled by Brisbane-headquartered SolGold.
SolGold boss Darren Cuzzubbo told shareholders overnight on Wednesday that Mitsui was one of a number of potential partners for the company’s giant Cascabel project in Ecuador, with the Japanese giant taking part in a visit to the copper and gold project last week.
SolGold is conducting a strategic review on Cascabel, regarded as one of the hottest emerging copper properties around the world, and Mr Cuzzubbo said SolGold had recently hosted companies that had an interest in investing directly into the mine, and at least one major interested in an early-stage offtake deal for its output.
Mr Cuzzubbo was responding to questions asked by shareholders about a comment made on October 6 by Ecuador’s deputy mining minister regarding a meeting with Mitsui executives over potential involvement in Cascabel.
“Parts of the strategic review had already commenced sometime ago and that includes bringing in parties that are interested in taking a stake at the asset level at Cascabel,” Mr Cuzzubbo said.
“There‘s been a number of visits to Cascabel of which one was tweeted. This is one of the options that we’re looking at – organisations that could take a strategic interest at the asset level. We’ve had an off-taker come and visit the site as well.”
Mr Cuzzubbo was speaking on an investor and analyst call to pitch the company’s recent friendly tie-up with Canadian-listed Cornerstone Capital Partners, which will hand SolGold complete control of Cascabel.
Under the terms of the deal SolGold will issue 15 of its shares for each Cornerstone share on issue, giving Cornerstone holders about 20 per cent of the combined company. Cornerstone owns 15 per cent of Cascabel, as well as a suite of other exploration properties in South America, and the deal on offer valued the company at about $US108m ($172m)
The friendly agreement is the latest in a series of offers by SolGold to buy out Cornerstone.
Cornerstone also holds about 7 per cent of SolGold shares, offering SolGold the opportunity for a short-term cash injection, without diluting other shareholders, if Cornerstone holders approve the takeover and SolGold then puts the stake on the market.
SolGold had $26m at bank at the end of June, and in July suffered an embarrassing setback when a group of its major shareholders knocked back a potential capital raising, triggering the departure of chief financial officer Ayten Saridas after only a few weeks in the job.
Mr Cuzzubbo told shareholders SolGold was spending about $3m to $3.5m a month on its projects, and the company believed it had enough cash to last until at least December without raising additional capital.
The Cornerstone deal is mixed news for London-listed SolGold’s fractious relations with its two major shareholders, BHP and Newcrest.
Well said sharket. You understand the concept of diverse/concentrated perfectly. Quady doesn’t. We are now less diverse and more concentrated post the CGP deal.
IMO the boliden/off takers etc are just to tease out a proper bid from a large company.
Hopefully all will be sold by Christmas and Quady can say ‘I told you so’…..!
Agreed LunchMoney.
However if we get a streaming deal for Alpala then it shows the market we are heading to production.
This is two fold.
First it makes it less attractive to a bidder.
Second the money would be ring fenced for Cascabel only.
Miketrix great post with some meat on the bone.
My figures are a little different, but not enough to make any difference.
The big part of this for me is this diluted BHP and NCM, and this is clearly why the fund raise never went ahead.
I believe we will have a clearer picture when we see the fund raise and how it works.
I worked out the CGP conversation by market capitalisation of CGP divided by number of shares times 15.
Came to just under 18%.
Include to agree...my opinion (please don't shoot down those that clearly don't tolerate opinions - I am entitled to one...)
-Funding is pretty much in the bag... for what however we don't know (short term cash flow, fund to sale of asset, build phase of mine?)
-Would be extremely surprised if any full funding to move towards build phase is done given current market conditions and PFS2 still to be released
-Off take agreements support my view they are still planning to take to production, however, it also supports any sale if agreements show the viability of upfront CAPEX investment
- Personal opinion, whilst I hope they take it to production, (would be a great 10 year down the line revenue for my pension and yes I can wait at least that long as I have over 30 years till retirement) I actually think everything is now positioned for a sale of Cascabel.
-Darryls comparison of value JUST BASED ON CASCABEL supports this in my opinion
-Then the problem becomes what to do with any tax issue from sale (see one of my previous posts that also welcome thoughts on)
Based on current share price
CGP : £80m or approx $120 CAD
SOLG : £375m
20% new share issue of £375m = £75 m (round to £80m)
Solg shares diluted by 20%
CGP sells its SOLGS shares for £30m, loans them to SOLG.. once friendly merger complete is there a need to even pay this loan back??
If not, net cost to SOLG becomes £50m, for that we get the 15% ENSA stake, and any other CGP type resources (not familiar to know if they are worth much)
In terms of dilution, yes we are diluted by 20% but does the £30m + 15% ENSA value + any other CGP assets make up for that?
Added bonus BHP and Newcrest are diluted by approx 1-1.5% (according to the finance guy)
Another point, if CGP do loan the £30m pre- merger, SOLG can elect to pay 20% of the deal in cash (so £16m)... they could in theory use CGP's loaned money to pay for that (lol) with the benefit of, reducing the dilution due to the current distressed share price.
Welcome thoughts if the interpretation above is correct, struggling to see anything not to like here. What have I missed?
Morning Sharket
It’s blindingly obvious this is being tidied up to ease the sale process …. Don’t get drawn in.
No way Irwin and co would have signed up otherwise and Sangha is an M&A genius …. Watch this space and wait for the spark
Eish the market is blind.
This will recover when we get volume.
Fair enough SharketMare but the review is exactly that.
Again note the offtake companies are involved in the future.
Where do they fit in.
We will leave it there.
When does the market actually believe in a unified Solgold/Cornerstone success at securing finance and the ultimate goal of a successful sale? It seems to be a case of "Tick-Tock", close? Are we going to linger down the bottom until this is either leaked or announced? Time is not on our side as there could be a market collapse at any point soon. A worry!
Hi Quady, I don't really understand your latest post on the diverse book argument and I suspect not many others do either.
As for "keeping my worldview alive" (this did make me laugh)...
We have just appointed a company (Maxit) to assist with a strategic review of SOLG. Maxit Capital is run by Bob Sangha, who has an 11% interest in Cornerstone. Cornerstone have been very open about wanting the company to be sold. Warren Irwin also claims the latest merger puts us closer to a sale.
Given the above facts, what do you think the outcome of the strategic review is going to be?
I will leave it there as I know we could go tit-for-tat all day long and there is better discussion to be had!
SharketMare you completely miss the diverse book argument.
Lets say you are correct and the majority of shareholders want the same outcome.
Only one or a concert group can buy it.
The others know the value of their holdings.
So unless they give them what they want we continue to production.
It's that simple.
Exactly…. A change of direction
Correct LunchMoney.
But CGP shareholders may well sell.
And as Darryl said BHP and NCM don't get to keep their percentage.
If they want to do that they can buy in the open market.
I was punching the air with that comment. Nearly dropped my mug of coffee.
We are much more diverse.
I suspect SharketMare is just trying to keep his worldview alive.
We still have a way to go, but once funding sorted we proceed to DFS, which is the next stage.
Of course now with the changes someone may start talking to us. But we become more expensive every month.
The thing to bear in mind about Boliden was that they visited when IH was in situ. Is it not possible that his departure was in part due to the company moving away from a deal with them?
SM but then yesterday on the call DC said they have also off-takers visiting them currently in Ecuador.