Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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GGP should be an object lesson for us. As I've said many times, a jv with a major would be a very poor outcome and should be avoided. Incidentally, GGP is a minow by comparison to Cascabel and doesn't possess anything like our strategic importance.
Interesting comparison with GGP. They’ve shown exactly why a JV is the worst possible route and we know from what the big faces have said that we wont make that mistake.
Perhaps those who agree that standing back is the best thing to do will do exactly that rather than spend the coming months knocking a share they claim to be involved in
Perhaps those said wise old owls will have the wisdom to sell a stock they truly believe will fall?
As for those of us with risk appetite, not many catalysts are needed for an inevitable rerate.
"it’s still wise to stand back and watch GGP -instead of assuming that its large project means a large profit for its small shareholders."
I know from experience how unpopular this accurate statement will be. By Monday, this will have been turned into a reason to buy by the happy clappy rampers... 🤦♀️
Some people just can't be helped
Thanks interesting article
He’s right about the shadow of dilutive funding hanging over us …… the sooner they put that to bed the better.
So many other options available…..
It was that basic strategic mistake stemming from Mather’s ambition that has been playing out up to now, with a series of management clear-outs including Mather, and a share price too low to maintain spending on the 10-12 other exploration projects he was pursuing, and, more seriously, even to maintain development on Cascabel
Now, following a long needed merger with key Cascabel shareholder Cornerstone, the latter’s management has taken over, although hadn’t yet been able to lighten the gloom.
Since the 2019 feasibility study, Solg has been bending to shareholder demands for a more easily funded plan, if not for a sale of its various projects, so now it has come up with a new Cascabel study for a cut-down plan showing an initial capital cost of only $1.6bn, still (at a higher $1,750/oz gold price) showing a 24% rate of return, but over a mine life half the much-too-long 55 years of the previous plan. At what are fairly conservative copper and gold price assumptions, and with scope to expand production from other nearby resources, Cascabel looks a much more feasible proposition, with a far better chance that some bidder or funder will come along.
But the shares are still depressed – not only through uncertainty how any funding will affect value for shareholders, but also because Solg has spent most of its remaining cash on the new study, so that investors worry about another fund raise (which the company has said might have to be) to keep the company running.
What happens next I don’t know. But maybe things can’t go on like this? Even if funded now, it will take ten years before Cascabel is making the $450m annual cash profit the feasibility study estimates for the first 5 years in production, before doubling over the next five – at the conservative $1,750/oz gold price it assumes, and $3.85/lb for copper. The current $2,000 gold price would add nearly 20% to those economic returns.
But meanwhile could be the sale of one or more of the other projects (to help fund Cascabel – a step Mather was refusing to take) among which Porvenir in southern Equador has already found over 7Moz of gold equivalent (mostly in copper) – a substantial find in its own right
So what lesson for Greatland Gold and its 30% owned Havieron project? It has now been confirmed by Newmont that it will be divesting its 70% Havieron stake, which – with substantial cost to develop (that Newmont seemingly thinks not worthwhile) looks to be much too big a mouthful for GGP to swallow on its own. It means, like Cascabel’s effect on Solgold’s shares, that investors will worry about the effect on GGP’s share price of whatever large new partners might demand to come aboard and help fund Newmont’s 70% Havieron stake. Its why it’s still wise to stand back and watch GGP -instead of assuming that its large project means a large profit for its small shareholders.
end
https://masterinvestor.co.uk/commodities/february-mining-update/?mc_cid=18
I haven’t mentioned Solgold – market cap £204m @ 6.8p – for some time. But its experience also provides a lesson right now for Greatland Gold, which is why it’s timely to update.
Although SOLG is in that dangerous category of miner with project not yet built, it has just published an up-to-date economic study for a drastically revised mining plan at its flagship Cascabel copper/gold project in Ecuador (which we can assume takes account of that frightening cost inflation) which looks so much more easily handled than previous ones, that investors are starting to take more interest. Especially because, as a result of a long recent history of disappointments and problems, Solgold’s valuation has sunk to a level that would have seemed unbelievable only 18 months ago.
Now, at 1/5th its then share price, Solgold’s £204m market cap compares with £117bn worth of gold and copper measured and indicated resources ‘in the ground’ at Cascabel alone – regardless of other promising exploration prospects. That is a value only 0.2% % of high quality resources, when in healthier mining markets valuations for most mining projects would be in the 1-2-3% ranges.
I first recommended Solgold here in March 2016 at around 3p, and made a healthy packet as I hope readers did – that was at first when the size of its find at Cascabel made it seem destined to be one of the largest in the decade. But then, despite BHP and Newcrest taking key stakes, things started to go pear-shaped – essentially because management did as well.
By about 2019, fears Cascabel would be too expensive to develop were confirmed by the first of a series of feasibility studies, which showed an initial cost of $2.5bn, and would be followed by $6.7m of discounted cash profit over an enormously long 55 year mine life subsequently (although most would have been earned in the first 15 years).
And although that would have delivered an annual rate of return of 25-26%, it was considered a bit too marginal for such a risky project in a risky-looking Ecuador, quite apart from the cost being too hefty for a small company like Solgold to manage.
Allied with that, a key issue was – as I started warning here – that then CEO and founder Nick Mather was following the wrong strategy to monetise his fast growing portfolio of other attractive looking finds. He wanted to create a monster mining conglomerate – whereby all would be kept within one financial group, whatever each project’s different needs and timetables would be for development funding. That meant that coming to shareholders to fund each project as it developed would produce a share price below what the furthest advanced would have attracted on its own.
cont.....
Shaketmare, I agree... it would be too early for NMM to decide to sell off their 10% SOLG stake. If it was meaningless... then then they would have as it would be a binary decision. The fact that they still haven't decide suggests there is some merit in their view on Ecuador as we know NCM were quite big in Ecuador which means NMM are now quite big in Ecuador. Whether they have bigger plans for Ecuador... I guess we'll find out when they've decided what they are doing with growing assets.
I don't believe NMM were in Ecuador before they bought NCM... so it's interesting to see that they are happy for now to retain Ecuador as part of their folio. Bodes well.
BLUE
Cheap shares, just brough a few more.
GL ALL
This report is required for all listings on the TSX, where most of the mining companies trade on.
IMHO this is being delayed, due to advanced discussions with the 5 Majors that viewed the dataroom.
Until this report is RNS, we wait until the offer/strategic decision.
GL ALL
Fort, whilst I haven't sat down to do a formal analysis, Newmont's CEO said this in December:
“In terms of the listed Newcrest things on the plate, SolGold is down, down the list quite a bit in terms of where we are focusing our energy,” he said. “It is too early for us to be forming a judgment just yet.”
Given that the priority was to put a broom through the PF and look for sysnergies/costs savings, I think it's fair to assume the stake in SOLG didn't form part of this initial workstream.
For both BHP and NEM, the obvious play is to continue to sit back and do nothing. Caldwell has wound the company up completely and overseen a massive fall in the value of this business. I imagine both firms are having quiet words in the Naboa administration's ears, when possible, to sow seeds of doubt, but beyond that they're probably happy watching us flounder.
If we manage to eke out a bid from Jiangxi / another suitor both BHP and NEM will have a chance to counter it. Sitting on hands is a win-win for them.
Tight range
Big chunks of volume going through price doesn't blink. 855k block and then 750k block and so on.
Of course... there's always a seller and always a buyer... but as some have noticed over the last few months it seems to be the same outfit and US market time based or access via canadian timelines.
I wonder what happens when a chinese firm like Jingxi sell their stake to another chinese firm like CRCC Tonguan? Like selling to the same person really.
mmm
IMO when Newmont sit down to assess whether they want to stay invested in any of their projects it’s not about the value right now but about the opportunity value and given Solg are sitting on a Tier 1 asset it would make perfect sense for them to retain their interest so they can either participate as an active player or sell for a handsome profit on their balance sheet when corporate action occurs
Yes agree SharketMare but do you know the worth of the other assets being divested?? If some of those are around $30m or so then you know that SOLG was retained for a reason. If they are all over $100m+ etc then you know that you original guess work 'might' be right.
@mrprt it's the opposite, you have misread the tweet. SOLG is NOT in the list of 6 projects that they are divesting from
I see the most unintelligent poster on here still doesn't accept evidence or facts.
Getting boring.
"+$1bn initial capital expenditure savings compared to previous estimates"
Have to wonder how intelligent the person or team was who did the previous estimates.
Pocket change and not worthy of the review. What are the investment levels in those they have announced? If you think otherwise, you've misunderstood what a super major is.
Nice the think Sandeep remembers solg but cascabel as it stands won't be an investment target. We're a very very long way from moving rock, yet alone concentrating anything. There are several targets that press release might have been alluding to, but solg ain't one.
We will have to wait until the next fundraise (won't be long) to see who gets the next cheap slice here. If it is Jiangxi then we can expect a horrible display of government knife twisting for at least a year.
I don't believe their 10% stake in SOLG (worth approx £20-25m) was even considered in this review process.
Mrpt
Don’t believe anything posted like that, where big money is involved, people intend to lie, like in poker, you don’t show your hand until you have to
Atb
Apologies.
Hi Add ….. sorry was talking to 1984
DBW, I haven't filtered the bloke because his stuff makes me laugh, particularly his inability to differentiate between someone who's positive about the share and a deramper. The other Aussie idiot remains the only person I have in the bin, mainly because he's never said anything amusing or interesting in his life.
Mrpt, how have you concluded they're not interested from that post? As far as I can see, Hubris says the exact opposite.
Not interested or not not interested?
Lol ….. do you still read his twaddle?
Here was one that sprang to mind
https://www.mining.com/solgold-advances-plan-to-sell-flagship-ecuador-copper-project/