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as share prices go down and in SOLG's case ' halved' in just a couple of months, you get squeezes on all kind of investors whether cfd's or long positions, spread bettors due to leverage and margins. So you get forced sellers. That often can be seen when TA is involved. Breaks of 20p support normally result in corrective moves to next support levels and so on.
One thing is pretty clear, and that is volume is still low and the big boys are not selling at all. The reason why they are not buying in the open market like before is because they are all awaiting the SOLG's guidance on equity raises or other funding structures. Like I said... if SOLG go down the Boliden route then I think you'd see a huge share correction back to the mid 30's in no time. Why? Because that would signal several things... 1. no equity dilution... although still need a $20m tranche or more for regionals... 2. BHP and NCM put in their box... so will they come out fighting with an offer or bid. 3. fully funded and no risk to downside ahead of PFS2 and porvenir pea.
Get the royalty deal done pronto and this could double as those on sidelines scrabble to get back in after selling out on the basis of an equity raise.
The Franco deal was great and really showed the market we can monetise without equity dilution. That was a big turning point so it's no wonder NCM and BHP want to knock that one on its head.
Sharket yes absolutely, as I believe the market has zero faith in our ability to deliver it.
Get the PFS update out ASAP and announce at the same time a strategic review for Joint ventures to expedite to production…
https://www.kitco.com/news/2022-09-01/-As-cheap-as-I-ve-ever-seen-them-Rick-Rule-on-beaten-up-resource-stocks.html
"The beaten up precious metal space has compelling valuation, said Rule.
Gold stocks relative to their net present value at current gold prices are as cheap as I've ever seen them in my career."
‘ The point is... there comes a point whereby you have taken a project fair enough. Then you seek a strategic deep pocketed partner or an asset sale and rinse and repeat.’
I totally agree here… I’d even add there comes a point ( or should come a point) where you realise it’s now just too big for little Solgold, and you just need to get it monetised with someone with much deeper pockets and more firepower to move it forward.. and that has to be in the interests of shareholders…
Orthern, conversely, do we not run the risk of the market ignoring those updates, knowing that a fundraise is imminent?
If you take out the COVID BLIP we pretty much touched a 6 year low today since the time of NCM's first major foray into SOLG helped propel the SP from 6p to 46p in 9 months...
I think the Porv and PFS update must be what Solg are hoping to change our sentiment…. And I’d like to think it’s common sense to get those out before doing any raise at todays depressed price. But my faith in the board is extremely low.
Looks like we are all just crossing our fingers and hoping. Something has to give soon
You can't take short term share prices as a basis for a sudden 'bite your hand off' attitude. That's nonsense. Look at Rio and turquoise hill. Shareholders didn't bite their hand off and their share price was at multi year lows. Rio then came back and upped the offer and shareholders still seem reluctant. Same could be said of Oz Minerals.
I think some on here forget that we have a monster size resource folio with Tier 1 project status. Ironically, NCM were calling Fruita Norte 'tier 1' when they did a stream finance deal. Compare that mine to Alpala and see what you get.
Unfortunately markets are markets and the share price reflects the markets view not the asset values. The latter only really catches up in full when a bid or offer arrives. Until then it's as discounted as the market pleases. Share prices go up and down and all over the place but they usually arrive at proper market value when the hammer falls or ink is dry. If Darryl or SOLG did a large equity raise now at 18p levels I think they'd be guaranteed to see their P45's come Dec AGM. They may as well hoist the for sale sign and book their nice options. SOLG have been flip flapping around buying time or stringing out time for the last 3 years and in that period they have eventually delivered PFS and a share price that is at multi lows!! What's to say that they don't arrive at DFS and are at even lower multi lows?? The point is... there comes a point whereby you have taken a project fair enough. Then you seek a strategic deep pocketed partner or an asset sale and rinse and repeat.
We've lost a completed year when not comes to exploration which is a huge shame. We might have found some huge holes with resources greater than Alpala hole 5 etc by now. And that would have only costs a small raise of $30m back in April.
And remember we've still got Porvenir and PFS2 to come...must be soon...
10 to 20 million eases the short term cash worries and gets us through the AGM...if we get that far...
If it goes ahead you could be left with just MAA and EG on the Board and then watch the vultures fight over our corpse at 50, 75, 100 or even 125...
Several people have said in the past that this share can't be shorted and certainly if you search on Ortex I couldn't find any shorts for SOLG...
However, that takes no account of CFDs, IG Index, etc....
We are perplexed because the SP is going down despite none of us selling and as somebody pointed out, during days where apparently there were more buys and sells...and a day where there was an over 2 million share UT at 19.9p...assuming that was a net buy to settle that makes no apparent sense, so...
Supposing in a general bear market, with no news and all the incompetence of the last few months, 'shooters' were hammering SOLG...this suits BHP or anyone else if they are either a prospective participant in a Rights Issue or if they have a predatory interest...
And surely a way could be found for 'friends' of BHP to 'short the shares as well...or the Chinese, for example...they don't care about anything other than their own self interest...
So if my suspicions are correct, if there was either or both a sharp correction in markets in general, to a piece of news even as simple as Valuestone buying $10m and short term money worries ameliorated, a spike in the SP could become pretty sharp if 'shorters' closed in droves...
This company is the same company as it was when Norge were buying like there was no tomorrow at 30p or more, except there's a few million less in the petty cash and they've lost IH, AS, KM and JW...
All opinions welcome...
Red, Surely doing another modest 10-20 million raise, only gets us a few months down the road with absolutely no exploration done anywhere?
Within a month the market would just pull us back down to the teens, knowing we would be back scrabbling around for funding ideas in a matter of weeks..
ColonelDrake you will not get 100 million for one percent offtake. That deal was on the larger mine design and longer life over the first 25 years.
When the PFS was announced that deal was scaled back and now to he sum is greater than one percent.
Ship - I'm not a huge fan myself but have you weighed up the other, fairly limited options?
Fort keeps insisting on another stream by DC has stated that he wouldn't look for one pre DFS.
Depressed equity prices are here for a while I suspect. Raise or no raise.
I just want to see SOLG financed. Keep the wolves from the door.
Thank you for making the points on streaming Bozi. Your example is I find a good representation.
However it may well be included in the fund raise for construction of Alpala, along with loans and some dilution. I am beginning to see a second cashbox to get us to DFS. I don't think NCM and BHP has any choice apart from to participate.
That beggars the question.
At what price ?
Quite possible to get a cashbox above the current share price. Let's see what happens.
I was thinking while I was away, that a modest 'placing' could do the trick...
Say another $10 million to Valuestone...they paid over the odds last time...or Norge....they were buying at 32p...
This would get us another 3 months, i.e. close to Easter and maybe into calmer stock market waters when a raise could b e done at a significantly higher price...
But right now, I suspect that if BHP offered NCM, Norge, and Blackrock 75p they would bite their hand off...
Then it would simply come down to whether there was a countered by someone with large cojones, such as Jinxiang, with the final price paid by a global major such as BHP, Blackrock, Glencore, of say £125p...
I thought we already put this to bed?? AFR article is just quoting BerryStreet Capital. These guys are no one special. Some tiny outfit based in suburbs of London. Meanwhile, the elephant in the room is the two global banks involved and all the advisers who normally take a wedge of around $5m (yes $5m) for just cleaning the mm's desks ahead of a book build or placing deal. It's big money... $5m is typical for a $100m raise. So tell me this... how did someone like Barclays not ensure that they had NCM and BHP on board before they even started filling out the timesheets??
Darryl has already told you that there were disagreements between various shareholders on the 'structure' of the finance. Could be cash box or could be part royalty and part cash box which would be identical to the last $40m raised (regionals) and $100m Franco stream deal. Berry Street may have referred to the fact that SOLG didn't understand that NCM and BHP did not want a combined deal with royalty involved. Ermmm no sheet Sherlock! But we are not servicing NCm and BHP... we are servicing ALL shareholders needs.
And the last point... Berry Street Capital were the ones that were vocal about SOLG raising funds BEFORE the PFS dropped. They wanted SOLG to raise funds AFTER the PFS. Sure, sounds like a good idea... but the market sentiment (inflation crisis) then came in and it because tougher to do post PFS. So well done BerryStreet Capital... I guess they failed to include that in the AFR article then?? Perhaps if SOLG hadn't listened to them and did a placing before PFS then it would have been done in the mid 30's?? So now doesn't understand simple market mechanics?? Eh MR berry street?? I think it's you guys that don't understand.
Now... lets just get real here. If Boliden want to offer $100m for 1% royalty and that sees us through to DFS but means we have to farm out exploration folio... then sober. Lets get it done and BHP and NCM can go do one. They haven't offered up a fair alternative as far as I can see. Have they offered $100m for 1% royalty?? If not ... why not?
Fort-it applies to virtually everyone. Everyone would get the opportunity, either via a raise, open offer and through the open market to top up their stake.
Now granted, some may not want to or may not be able to. That's the individuals decision.
I'm amused that you consider the streams to be worth "about 5p" but then go and calculate the precise impact of equity dilution.
If we did $100m in a stream this month then we'd have a balance of $200m plus accrued costs to date. Add the costs of early repayment, which Franco ensured would be meaty. You'd be looking at somewhere in the region of $250-300m to get out of two streaming deals.
So, subtract that off your notional offer amount of $2.2bn and what do you get? About 90p.
Then there's the added issue of what the two deals would do to the bank-ability of the project. Having $300m of debt on the balance sheet won't be a good look when we need to secure $2.5bn more. Every streaming deal backs us further into the corner of either
a) being reliant on a change of control
b) reliant on our basket of prices being higher than our current base case assumptions to preserve robust economics.
And equity raise at deliberately depressed share price.
Sounds like a poor idea to me
I feel an rns coming by shortly.
Bozi,
"but you would get the opportunity to maintain your % stake"... I think that's a valid point but doesn't apply to all shareholders and suits the ones with deep pockets or who sold out weeks ago in expectation of an equity raise.
The royalty deal / stream is the best way forwards when looking to raise $100m or more. Who cares what a major does in the future if we have an offer of 75p or 100p a share?? Yes the royalty might be taken into account but you're talking nothing more than 5p or so. Would I prefer $100m raised at 18p vs nothing raised and a stream deal of $100m but instead of a bid offer of 80p, we get 75p?? Ermmm... that's a no brainer.
What you fail to explain is what the effect of the $100m equity dilution would have on all shareholders? Say you 2.2bln shares in issue and the offer is 2.2bln... that's £1 per share. Now say we do 15% dilution at 18p raising around $100m... shares in issue jumps to over 2.5bln. If offer comes in at £2.2bln then that's 88p.
So that's why dilution is the devil!!! And that's why Mather and others want to avoid it. The royalty deal suits the little guy and not the majors. That's the point and the reason we are currently in limbo or discussions about finance structures.
She resigned...
Eish - I'm not sure why so much apprehension about an equity raise. I it's part and parcel of investing in a non-revenue generating resource junior.
Don't get me wrong, the share price and market conditions now aren't conducive to a fair deal for existing shareholders, but you would get the opportunity to maintain your % stake.
SeanHunter has been guilty of saying that dilution is the devil. Take no notice of that claptrap. Dilution is a necessity for a company in our position.
Besides, if SOLG went out and did another streaming deal, any bidder would take that finance into account when making an offer for the company because they have to pay that debt back, so it only ends up being dilution to your equity, albeit in a slightly different way.
The upside story is clear - see my post from yesterday - and the most important thing here and now is for SOLG to secure themselves enough cash to get through to DFS.
Thanks Bozi, that does make the most sense and hope one way or another they get it done.
Just not an equity raise to dilute us further. Would prefer other options. Wonder if a threatening streaming deal behind the curtains is causing a major problem here for us?
Eish - when the company secures finance.
As things stand we're edging towards insolvency and a breakthrough is needed in the apparent stalemate between our major shareholders.
Come on SOLG. Get it done.