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Exactly!
So if they don't have any interests in Ecuador my scenario makes perfect sense and Mike Henry has started the charm offensive already...
And remember BHP had a massively expensive and embarrassing $5 billion catastrophe in Brazil a couple of years ago...
So in my opinion this is how it plays out...
The AGM is fast approaching and Twigger is honour bound to put the entire Board up for re-election.
If nothing changes before then (10 weeks...?) potentially the entore Board is toast, so...
BHP/NCM announce a merger
BHP has to announce its intentions re SOLG so almost certainly increases to 30% and launches a bid at say 35p
Surely the Board, Nick, CGP, Tenstar and DGR won't wash that so...
A counter bid emerges that they can support at say 60p...
An auction unfolds with the winner paying £1.
BTW I have said before that I couldn't see a lowball and that BHP would probably have to pay 75p for NCM's stake.
If they merge a low ball is more lilely and BHP don't have to buy NCM's stake...
Redknight, I can't argue with BHP's website. And I don't disagree that they like to work from home. But I also didn't miss the very public and media driven meeting between Lasso and BHP some months ago. Seems odd for a company not really interested in Ecuador (according to their website) don't you think?
Actually Colonel, if you look at the map of BHP's global operations in its latest Annual Report there are no blobs in the Americas at all...a few in Asia and a massive concentration in Australia...hence its strategic withdrawal to Australia...OZ adds significantly to this concentration.
All the best to you SharketMare.
addickt...
NCM is weaker
BHP wants Solgold but
BHP has no significant presence in the Americas whereas NCM does.
NCM is a gold miner; SOLG has loads of gold, including undiscovered
BHP has no meaningful presence in Ecuador; NCM does
NCM is a block caver
Using BHP's much greater financial/capital resources, the NCM 'division' would be able to buy CGP and Havieron
BHP's new strategic structure is:
Centring themselves around their substantially Oz based businesses
Divesting and merging (Woodside)
Divesting non core (coal)
Battery metals (copper, nickel so far)
So at face value it makes no sense for BHP to acquire SOLG/CGP unless they merge with NCM who also have North American interest, as well as South American (including Fruta del Norte, Lundin Gold and Solgold in Ecuador)
Fortescue is the second largest player in Ecuador on a licence block basis. BHP and NCM are active in Ecuador outside of SOLG interests. Do some research and you'll see the dynamics on o e of the most desirable and sought after regions in South America. Every other region has basically been tapped up, secured or wobbling under lefty uprisings.
Ecuador, Lasso IMF et al...are keen to find a solution that meets the worlds copper needs and grows Ecuador. It's coming, not long now. Oh and remember... there are some crucial land purchases still remaining on ENSA blocks. So the big boys like this matters sorted before extending the cheque book pages.
Sutherland is excellent and one of the best contributors to the Spectator. I love the way he looks at problems and he never fails to make you think.
Quady, am nursing a hell of a hangover and admittedly being trite.
I am reading a good book at the moment by Rory Sutherland, called Alchemy. It's about the pitfalls of thinking too rationally and logically to explain the world as we see it, to the detriment of what he calls 'magic'. I definitely fall into this trap, so it's been a real eye opener.
Have a good day fella.
RK, why would BHP want to merge with NCM?
Medar...BHP has consolidated back into Oz...why would they reach out to South America with no business in Ecuador when they ahve a ready made 'partner'....?
Part 2...
Remember this article:
https://www.mining-journal.com/london-to-a-brick/opinion/1428389/joint-bhp-newcrest-bid-for-solgold-%E2%80%98within-months%E2%80%9D
So maybe there is some substance there...?
A joint BHP NCM bid sounds messy, so why not merge and launch a bid for Solgold...?
If BHP announced such a merger the SP of Solgold would rise substantially because the new company would own over 27% of SOLG. They would immediately have to announce what their intentions for the 27% stake were (it being in excess of the 15% threshold).
Indeed this may partly explain why BHP hasn't increased its stake in the market...
1 This would be as good as announcing their predatorfy intentions to the market
2 If they got to 15% they would have to state their intentions and...
3 If they were intending to merge with NCM (a takeover by any other name due to the disparity in size...) why bother buying more shares until that happens and then its only a hop and a skip to 30% at which point they are required to make a bid...
"Where a bidder is interested in shares carrying 30% or more of the target’s voting share rights, the bidder must make a mandatory offer in cash at no less than the highest price paid during the preceding 12 months. Mandatory offers can only be conditional on the bidder receiving acceptances that, together with any shares already held or acquired during the offer, would give the bidder and its concert parties more than 50% of the voting rights."
""The announcement of a firm intention to make an offer (commonly referred to as a "Rule 2.7 announcement") is a significant event and will commit the bidder to proceed with the offer and to post its offer documentation within 28 days."
Sp why does this make strategic sense?
1 Newcrest's share price has underperformed BHP's for some time. They are mainly regarded as a gold miner, but...
2 They have proven and credible block caving expertise
3 BHP has rationalised its coal business and divested its gas business through the Woodside merger. Its portfolio is now iron ore, coal, copper, nickel and potash. It has NO gold division, but SOLG has masses of gold, so SOLG's gold production could be merged into a new gold division run by NCM. Indeed given that BHP has 'stepped back' into Australia where much of its business is based (88%) (and especially if it acquires Oz Minerals, which now seems likely).
4 BHP is in Oz, but NCM is in Oz AND South America
5 NCM could run the whole of the Ecuador operation.
6 From BHp's Annual Report:
"We seek to add high-quality Tier 1 copper and nickel interests through our exploration activities and early-stage entry and
acquisition options."
So at face value a BHP only bid for SOLG doesn't make any sense because BHP have consolidate into Australia and this will increase with Oz Minerals, so...
They need a 'partner' to run the Ecuador division with expertise in gold and block caving..
and Fruta del Norte...Lundi
Worth a watch..
This asset could more than double, energy crisis …: https://youtu.be/mBRvq16P9Ek
Worth a watch...
https://www.kitco.com/news/
SharketMare read the whole post and don't take it out of context.
Ah wait a minute I see the problem, that's what you always do.
SM, yep, agree with all of that.
addicknt, you said in an earlier post something along the lines of "this time it feels different". I/you/we all have said this for at least the last two years as we headed in to the AGM. This year the difference, for me at least, is two-fold.
1) the funding situation, which is unprecedented since I've been invested here
2) the silence from major shareholders who are set to either win or lose big here despite the decimation of the share price
If I genuinely thought the company was just planning on releasing the PEA and revised PFS and continuing BAU into next year I'd be 1) f*cking livid at the mismanagement this year and 2) looking for a swift exit
Thankfully it's now pretty clear something is brewing and we at long last will have one of NM's "exit points" presented to us before long.
"So as I said don't get Hung up about shareholder value as that is not in Solgolds hands or Indeed anyone elses."
Comedy gold, second only to "the share price is doesn't matter" from this 'seasoned investor'.
in this ERA of ESGs, it makes sense for BHP to announce operations in Ecuador through an entity which is doing ok on this side. Problem is, what are the risks for PIs for a deal that kills competition for the assets? is BHM and NM co JV a plausible situation? what are the risks?
So heres a left field idea...
In July 2020 "Australia's Newcrest Mining Ltd NCM.AX has hired investment bank RBC Capital Markets to explore options for its 13.57% stake in gold and copper producer SolGold..."
https://www.reuters.com/article/us-solgold-m-a-newcrest-idUSKBN2482A6
This was immediately following the FNV deal, public criticism of Solgold and withdrawing Craig Jones from the Board...it was also only 3 months before the brakes came off BHPs stake in SOLG...
Eventually they decided to keep their stake as a 'strategic investment...'
In September 2020 an obscure German finance journal published the following article...
https://news.financial/comments/bhp-group-newcrest-mining-solgold-getting-bogged-down-or-putting-all-your-eggs-in-one-basket
Including these quotes:
"It is possible that, as in the past, acquisitions will help BHP to get off to a good start...."
and
"When it comes to mergers and acquisitions, the name Newcrest Mining is always mentioned in the resource industry. ..."
and
"Although the shares of the established companies offer stability and indirectly also a participation in the success of SolGold, speculative investors may well be interested in the emerging company."
In August 2022 Newcrest withdrew from a Cornerstone project...
https://au.finance.yahoo.com/news/newcrest-withdraws-option-farm-agreement-114500732.html
That was only two days after it had decided not to increase its exposure to Havieron...
https://www.australianresourcesandinvestment.com.au/2022/08/19/newcrest-says-no-to-extra-havieron-stake/
Read on for my theory in part 2...
Red … agree
Addinct yes I accept your point , especially when it comes to raising funds.
The talk amoungst miners is that the M&A season is about to really kick off so hopefully it's time to fasten the seat belts, I'm back in yesterday:-)
DBW, yes, possibly, but I assume you accept my argument about the start point? It's far easier to negotiate from a position of strength, but we are not currently in that position.
We all have our own views about an exit valuation and I'm sure none of us are happy with where we are now. I don't want someone to nick this whilst we're at a bargain basement value.
precisely... and just for the record, I don't think Noront would have gone for more than 110cents had their share price been 70 cents when the first offer came in. The fact it was 23 cents when BHP made the 55 cent offer just shows how 'asleep' at the wheel the market was.
A rumour in a newspaper over the weekend on a bid approach whisper could see SOLG back into the 30's before a bid even materialises.