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Morning Jezzoo it's not a paywall, you just have to register, no money required.
Struggling SolGold cuts Cascabel mine bill
Mining hopeful publishes new study for mine with new cheaper route to production
February 16, 2024
by Alex Hamer
**New Cascabel pre-feasibility study cuts over $1bn from upfront bill
**Company will have to raise cash this year
Mining exploration company SolGold (SOLG) has knocked just over $1bn (£790mn) off the upfront cost of its Cascabel copper and gold project in Ecuador as it continues to face an uphill funding struggle.
The company’s share price has dropped by half in the past year as investors remain sceptical of its ability to build the mine, made tougher by political volatility in Ecuador.
Hopes of a buyout remain, although given the share price weakness and blocking stakes of heavyweight shareholders, this will also prove difficult to pull off and would leave most shareholders sitting on a loss given the shares are sitting around 6p. As recently as two years ago, the company was trading at 40p.
The new pre-feasibility study sees production of 123,000 tonnes of copper and 277,000 ounces of gold a year, over a 28-year mine life. The cost is forecast at $1.55bn, down from $2.7bn in the previous study two years ago. The net present value of the project is up 10 per cent to $3.2bn, helped by increased copper and gold price estimates.
The cheaper mine build has largely come from shifting more development post-startup. Post-production capex has gone from $2.1bn in the previous study to $2.6bn, while this slower ramp up comes alongside a higher forecast for the copper grade in the first 10 years, going from 1.35 per cent copper equivalent to 1.45 per cent.
The company is also running a strategic review, looking at sale or partnership options to develop the mine. In the meantime, SolGold has slashed spending in a bid to stay afloat, cutting administrative costs in the second half from $14mn in 2022 to $5.9mn in the six months to 31 December.
It had $12.8mn in cash on 31 December, so more financing will be needed in the current year. SolGold has burned through cash at a breakneck speed in recent years, after selling off royalties for Cascabel to raise just over $150mn between 2020 and 2022.
Equity investments have also been used to raise cash, the most substnantial being a $36mn sale of shares to Jiangxi Copper in late 2022, giving the company a 6.3 per cent take at the time. The other major shareholders, with around 10 per cent each, are BHP (BHP) and Newmont (US:NEM), through its buyout of Newcrest Mining.
Investor unhappiness is clear beyond just looking at the share price. The December AGM saw another significant vote against former chief executive and shareholder Nick Mather, and 33 per cent of shareholders voted against giving the company approval to allot shares.
Solgold's shares were up 10 per cent on the release of the new study.
Get through 7.50 and me go to 9p
Paywall
Https://www.investorschronicle.co.uk/news/2024/02/16/struggling-solgold-cuts-cascabel-bill/
Good morning addicknt, I don't disagree with you.
However we are shareholders as well, and they need to communicate something meaningful in one way or another.
Ship they don’t bother to reply to investors emails
Orthern, you need to send that comment to Scott and the bod in an email.
Nobody is working on a strategic review. The strategy is to sell the lot.
The strategic review process is dirt in the eyes of the gullible to make them think that work is being done in this time
Jezzoo, I think we are at the stage whereby it's the chinese vs anyone else. As mentioned over the weeked, The Chinese railway construction group already have many infrastructue projects underway in Ecuador and have been there for donkeys years. Hence it's no surprise to see the early producing mines in Ecuador all owned or run by Chinese.
In Ecuador, if you need a road made, mountain cut through... bridge... dam ... whatever.. it's contracted out the chinese.
So lets just assume that BHP get ENSA and the chinese lose out. Assuming BHP use their own staff and Ecuador locals etc or multi nationals, then not only do the chinese lose out on the resources, but they ALSO lose out on the infrastructure spend. So that $1.55bln capex is in effect a contract LOSS for the chinese. So look at this way... Tonguan... may already have some 'rights' or ownership of the railways or over that potential route to export for Alpala. SOLG mentioned using an unsued railway line and putting the pipe under it. But what if the chinese have the licence or rights to that railway based on past contracts or legacy agreements??
There's loads of stuff that is important and essential to this Tier1 project happening. There will always be ways around things and alternatives but these may come at increased costs. Sometimes, it just makes sense for someone like the chinese to take ENSA on as they make money from production but also from the construction. They can do it cheaper than BHP... that's the simple reality. Wouldn't surprise me if BHP actually use or have to use chinese firms in Ecuador anyway due to past Chinese/Ecuador agreements on infrastructure. In summary... there is $1.55bln (and lets get real here... it will be more than that) and much of that spend is not on equipment but on man hours.
So bottom line... there's much more in this for the chinese than there is for BHP and I genuinely think the Chinese and Bob are trying to find a way of making this monetisation event happen without BHP being able to interfere. Goes against the bidding war scenario... but I think Ecuador and Chinese are very close and Noboa will have been told by high up powers (inc chinese contacts) about who wants what.
But there's haggling involved like all things that involve billions of dollars. The chinese need to be sure Noboa is 'their' man before they potentially get a deal done which could seal his presidential campaign set to begin in 6 months (the election campaign has really already started etc).
Back in operation today 14 entries on buy and ask using three similar sizes and identical time stamps
I made the point last week we are long overdue a progress update/clarity on the review…. Even if it’s not the final outcome, shareholders deserve a progress update.
Just for comparison, Barclays, with a market capital of over 22bn, employing more than 80,000 people all over the world, servicing practically every industry globally began their strategic review in June/July last year and are due to announce its results this month..
Solgold, currently employing less than a dozen people, with a market cap of 200m and only focused on one small sector, have been labouring with theirs for over a year.. still silent, with no end in sight.. it’s unacceptable.. pitiful even.
Q, yes, an update and some clarity would be helpful, but would it make tactical sense?
They may have put certain options on the back-burner, but perhaps they don't want to rule them out in case something interesting comes out of the blue? Additionally, they may be in quite detailed negotiations which are at too early a stage to disclose, and they must not mislead the market.
It seems to me that there is one of the options that is in their own control and they could have completed by now; the spin-out into Newco of the regionals. Does failure to do so imply it is no longer being considered?
A decision to mine would get the attention of prospective buyers.
Okay, we have PFS3 and to me it looks good, no surprises and a decent route to production.
I know we are awaiting the strategic review, but because of the share price at the moment.
I believe Solgold should issue a statement of intent.
In other words, what the strategic review is still mulling over and what is excluded at this stage.
Also as the strategic review aims are about how to advance Cascabel, then any finance options that are currently being looked at.
They can do this as a statement of intent has no legal standing, but it would give us an idea about what is being considered and what is not.
"We were blind-sided by Friday's announcement "
Not sure I follow on that one. The pessimists were blind sided. Scott said 'early Q1' 2024 and he delivered a day late. So his guidance was pretty much spot on albeit right up to and a tickle over the wire. Hardly blind sided??
But I know what you mean... any news that comes from SOLG is a surprise these days. Although we all expect a sale deal RNS... I suspect when it comes it will indeed surprise all in a good way.
The MD&A lays out very clearly what's still required before Cascabel can be described as being de-risked, and the fact is there's still a lot of work to do, especially as the company only has six full time employees. (Anyone still thinking SC is twiddling his thumbs is mistaken)
It's possible we could enter a conditional agreement with an interested party, with subject conditions related to the work-flow, but is that likely? Or will will wait until we've ticked the boxes?
It it's decided that waiting would put us in a stronger negotiating position, then it would seem likely that we'll see some action on the regionals (Porvenir?) before anything happens at Cascabel.
We were blind-sided by Friday's announcement so let's hope SC can repeat the trick with some of the other requirements, particularly the IPA.
We saw what happened when DC left raising funds to the last minute. Hence, I would have thought that lessons were learnt and that funding will be sorted out in good time. Hence, the longer we don't see a funding rns, the more likely that it might not be needed due to pending corporate action?
Another late night post dittyman.
HIC.
I see you now have aquinaga in your team.
Dittyman, novice and aquinaga. The three amigos.
Conjures up all sorts of images.
Love it Padmaster!
Hope this brings the rewards we hope for!
For you Aquinaga
POTY MOUTH POLLY
Potty Mouth Polly, the Galah clown,
Spewing nonsense, wearing his frown.
Our Solgold share, his target to diss,
His words hold no weight, they're simply amiss.
With feathers ruffled, he squawks and he squalls,
His antics are empty, his voice only stalls.
For Solgold shines bright, amidst his dark shade,
Our green line infestor, his antics degrade.
Oh Potty Mouth Polly, with feathers askew,
Your antics are tiresome, your ban’s overdue.
Rise above pettiness, and soar with grace,
Leave behind bitterness, find a better place.
So let's lift our spirits, and leave Polly behind,
In the realm of Solgold, there's treasure to find.
No room for clowns or negative plight,
We will rise above it, with all Solgold's might.
I’m bringing relevant arguments to those who aren’t too obstinate to grasp what’s happening
JP Morgan and Blackrock are stepping back from the climate rubbish.
You can put your head in the sand or you can try and understand that it’s a busted flush and it’s never going to happen
It’s your choice and your money of course. But I can assure you right here and right now that this is purely a gold play and will be taken out on failing fiat rather than fantasies about a carbon free future
'84, really? I never knew that. The point is you simply repeat yourself endlessly and you will never change the minds of those who disagree with you. So perhaps it's not me being thick.
Addick, you might be too thick to see it but the whole viability of cascabel as a copper asset is underpinned by the nutty move to net zero. It is not only important to this stock, it is absolutely vital
If we aren’t sold before net zero crumbles then we’re only viable as a gold play. If you can’t see that, you shouldn’t be investing in metals
By far the most interesting and relevant post today was hfm's. It received two comments.
By contrast, the tedious and repetitious climate balls receives multiple posts, just as it does every weekend.