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This week has shown us how absolutely insane the paddle our own canoe fantasy about going into production ourselves actually is. Wars, corruption, earthquakes, pandemonium, revolutions and anarchy... we are investing in a poor third-world country. Every year longer means more risk, risk that could wipe us out in a week. Let tge big boys take the risk. We need sold. Anything else is madness.
Be interesting to see if we get another 1m block bought after hours. Price very solid today so perhaps the mm's have a few million to print at 30p+ today. Pre ordered from yesterday!
https://www.mining-journal.com/investment/news/1434757/miners-underspending-massively-says-bofa
RK - yes exactly - I don't think it implies that they are desperate to trigger a change of control a week after the meeting because nothing much would have been awarded anyway at that point. Hardly surprising if DC and AH wanted some sort of insurance against them being out of a job shortly after starting in any event (under this or the previous arrangements).
Some people keep blatantly ignoring the fact the non-execs don't participate in the new arrangements because it doesn't suit their agenda, but bear in mind they could participate in the old arrangements... so if you're worried about the board of directors trying to feather their nests, this arrangement is better.
Anyway, despite trying to provide some factual based balance, I'm not sure how I feel about these new arrangements in terms of timing and also the fact that the maximum potential comp for the CEO is massive. I may just not vote either way and see how it plays out (aka see what the big shareholders decide since their votes will carry the day anyway).
Excellent summary rcgl1 however...
Two of the principal potential beneficiaries have not been there for years, I.e. 6 months and minus 6 days (or +3 days after the EGM) and...
They are being rushed through on 30 June so that 2021/22 is a qualifying year and just in case there is a Cascabel sale/JV pre AGM or at the latest 30 June 2023...
So I believe they are part of a golden 'welcome'/insurance package for DC/AH and a bonus for Ingos hard work...
Fair point, Bozi.
Fortissimo, when this was first announced I made the assumption the board had already consulted our main shareholders. Not for the first time, I was wrong.
Frankly, after the various agm humiliations and subsequent protestations from the board (and public statements), I thought they were committed to dialogue with our main shareholders. Of course, it has been portrayed that the very fact a change has been made is proof they are talking. However, it beggars belief it wasn't done beforehand and that they've now been forced into yet another embarrassing climb- down. It's also embarrassing that they tried to get something through which reeks of snouts in the trough. Makes you wonder, doesn't it?
What this might imply is two fold...
1. They need all the votes they can get so have agreed this to bank votes
2. If BHP and NCM not supportive then point 1 necessary.
3. If BHP and NCM are supportive - than incentive to jv or deal on a 30% farm out seems replaced by an all out 51% sale situation. Certainly suits BHP and NCM.
The sad thing is, it's pretty clear to me that the BoD's seem driven by their incentives to reap as much reward as possible rather than making the right decisions to shareholders. That might be a bit harsh so lets hope they are aligned with shareholders which due to NM being a major one, is the obvious assumption!
There was a clear focus on it anyway Addicknt. One or two displayed their unhappiness but many didn't, instead looking to potential motives for the resolutions in the first place
Bozi, the reason there's been a heavy focus on the change of control provision is that it's the feature which has had to be altered. Clearly, it had a purpose in mind and our main shareholders and many of us private investors didn't like it.
Good post rcgl.
Rcgl2 - you're right. There's definitely been heavy focus on the change of control scenario. After all it's what everyone wants.
The crux of it for me is what constitutes the remuneration (whatever it's form) being awarded in the first place?
Fortissimo - I suspect you could well be CD after that war and peace drivel.
Can't one paragraph do - you're much better that way?
Z
The Italian exactly the right time for a bid let's see
Let's try to be clear here in the interests of balance. This is my interpretation so of course could be incorrect...
Several posts here and in other groups are coming at this from the perspective that the proposal is "if the company is sold or sells off 50% of its assets, the directors get a massive payday, and therefore they are incentivised to flog off the assets on the cheap asap in order to reap a large windfall." This is not what is being proposed in my opinion.
The annual short and long term incentive schemes consist of potential for cash, options, performance related options, restricted stock units (RSUs) and performance stock units (PSUs), most of which will have a vesting schedule over a period of time in order to incentivise the employee to stay with the company. I assume these will be, for example, a grant of RSUs that vest in 1/3 chunks over a 3 year period, or such like. If the employee quits before their awards have vested, they forfeit any unvested awards.
The change of control provision means that the vesting of already granted awards is brought forward:
"In the event that the Company undergoes a change of control by way of sale of greater than 50% of the voting shares
in the Company, or 30% [NOW 50%] of the assets of the Company, or any resolution to wind-up, dissolve, or liquidate the
Company, or there is a change greater than 50% of the Company’s directors as a result of a reorganisation, all Awards
will vest early."
This doesn't mean the employees get gratuitous bonuses that they were not otherwise entitled to. It means that the awards they have already earned but which haven't vested and which they would have received anyway if they had stayed with the company, will vest immediately under a change of control.
You could see this as an incentive to sell the company or the main assets, but then again it's also protection against likely losing your job and losing the value of compensation that you have been awarded for past years but not yet received. As an example, if Solg is bought out and taken private, it would be unfair for an employee to have part of their compensation for prior years vest next year in worthless delisted or non-existent Solg stock.
These incentive schemes are designed to withhold compensation over a period of time to ensure actual performance metrics are met and also try to engender loyalty to the company, rather than just paying it all up front in cash based on some short term metric and the employee just pockets it and leaves. Therefore it isn't unreasonable to have a vesting clause for earned but not yet paid compensation in the scenario that the company potentially ceases to exist or the employees lose their jobs.
I would also reiterate the point that non-executive directors are not eligible to participate in any of these schemes, which currently includes all of the directors except Darryl.
I always thought that a company could not sell off it's prime asset (value wise) and avoid full takeover rules. Rules are in place to protect shareholders from 'cherry picking'. Not sure if it applies to SOLG but think they'd have to split the business into various parts before being able to do such a transaction. The liabilities (currently) that rest with SOLG as a whole are close to $420m across the full folio. These liabilities are based on $7m spend (approx) per licence block within a set period of time. SOLG have 60 of these remaining after relinquishing 10 or 11 last year.
It makes sense to discuss Porvenir and other blocks in the south with Codelco, Lundin and Solaris as they are all in control of the infrastructure hubs in the region which effectively control the economic transportation of all production. Whilst infrastructure is better in the North, heavy Capex pipelines and other requirement are needed before that can be another major mining hub. There is a common sense and economic reason why SOLG should look at splitting into two or 3 parts. based on reorganisation of folio on a regional basis. I believe this is what they are close to announcing but need the new lady to work it all out in best possible way.
SOLG has 5 subsidiaries. (In order of current value)
1. ENSA (flagship in Cascabel/Tandy/Moran)
2. Green Rock (Porvenir + 4 other priority targets)
3. Carnegie Ridge (Rio + 2 other priority targets)
4. Cruz Del Sol (4 priority targets)
5. Valle Rico (one priority target - Salinas)
Total targets = 13
Drill permits received outside of ENSA = 5
Awaiting drilling permits = 8
We know via PDAC that Barrack and Rio are interested in blocks and Lasso is doing or has done an MOU with Barrick. What we don't know is what blocks or licences this includes in the absence of the mining cadestre.
So one assumption could be.... some of the SOLG targets awaiting drill permits might well end up as a drill ready pack to JV farm out. But in current climate... permits are all that matter and they don't get handed out very often and when they do, I believe they trigger a minimum spend of $7m.
So watch this space. The new lady is not coming on board to sort the board room flowers out. She's potentially there to restructure the assets ready for sale or JV. Well, that's the way I see it. Lundin and co would obviously be interested in Greenock. That goes without saying. Makes sense to SOLG too as better economics across that southern region with more mines sharing infrastructure.
Eish - if you have no idea what's going on in the background how do you know that there's something afoot?
If there was something afoot, would SOLG bother with an EGM?
If there was something afoot, would certain shareholders waste time lobbying against said EGM?
The fact we have an EGM and a new CFO coming in suggests SOLGs board is trying to plan for the medium to long term.
Just my view.
addicknt, we don't have the faintest idea what's going on in the background is the best summary! You said it, but there is something afoot!
For one thing, aligning incentives to a sale of properly high share of Solgold, coupled with a low copper price (courtesy of the economic slowdown) and relatively low gold price (courtesy of the stability of the financial system), could amount to enough incentive to finally put a bid in. I doubt that this perfect storm will present itself again soon and this is factually the best time as a buyer to attempt a takeover.
GLA
DBW, agreed. The "optics" (ughh, ghastly new management speak) do look strange. The argument that the proposal would allow them to recruit top bods doesn't really hold water. If a candidate was really interested in working for us, he/she could be persuaded that the option/bonus scheme would be in place post-agm in December. And why any new starter should benefit from a scheme if a bid occurs before the agm is way beyond me.
The truth is we don't have the faintest idea what's going on in the background, but something like this does raise questions.
As Bozi and others are saying, isn't Cascabel something like 95% of the value of Solg anyway? Selling off some of the lesser licenses is hardly going to trouble the scorers. Whilst I'm not averse to having a market standard compensation and incentive plan that should attract decent talent and (IF administered properly) actually incentive the executives to unlock shareholder value, I agree 30% threshold for change of control when they could effectively retain almost 70% of Cascabel was ridiculous.
I for one didn't spot that, I just skimmed over the change of control definitions thinking they would be market standard, as the board claimed the whole package was... Guess it pays to read every word!
I also agree with what Lunch and others said, optically this looks poor - again. There was plenty of time to canvass the views of major holders before they released the EGM details. In fact I assume that's the only way they can get to a point where it's worth putting it to the vote, since it only takes a few of the larger holders to make things very difficult for the company so they have to get them onside in advance. No need... especially the day after a 15% whacking to the SP!
Thank you SharketMare, I also am reading addicknts posts with interest. You have a good weekend also.
DBW - the company year reason provided earlier is very likely to be spot on. You wouldn't want a completely different remuneration policy getting introduced mid year.
I might well be wrong but nothing else to see here as far as I'm concerned.
FWIW my opinion is it’s an amendment in anticipation of a sale of Cascabel, being by far the most valuable asset.
Also, with regards the selling of other assets (and I'm referring to non Cascabel /Porvenir here), I think I'd be right in saying they're not worth very much at all.
There hasn't been a significant discovery, no reportable resources etc. Whilst soil sampling and rock channelling has been positive across a number of them, they are too early stage to be worth anything significant.
It's worth bearing this in mind when almost baying for the company to be carved up piecemeal.
The tenement package was put together en masse in a land grab. The priority areas were identified and now the lesser priority areas are being handed back slowly. Result should be a more manageable portfolio of fantastic prospects. Completely and utterly the correct strategy. Far too early to be talking about selling subsidiaries IMO.
Addinct I agree with that but what’s still nagging at me ( other than the Mrs) is the need to get this through in a hurry by calling the first EGM in 12 years. By doing that it probably drew more scrutiny and raises the question why couldn’t this wait until December (AGM) …… because something is going to happen prior to that
Fair enough Quady not sure I've understood what you're getting at.
Addicknt has summarised it all quite well in his last two posts.
Have a good weekend