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The trouble with the perennial "diverse book" argument is that you are coming at it from different perspectives with different meanings of the word diverse in mind.
If I understand correctly, Quady had a poor outcome from an oil company that was majority owned by an unscrupulous family. Something along the lines that the majority shareholders then took it private at a low price and managed to get rid of the minority shareholders for less than fair value. So yes, compared to a stock where the majority shareholder has >40% control already, I can see what Quady is saying when Solg has several largish shareholders who each control between 5 and 20% of the company. None of them is really incentivised to give up their shareholding at less than what they perceive to be full value, and they are not all incentivised to work together. Is a buyer going to want to take control of Solg but still have Cornerstone and Nick Mather & Co still on the register with approx 25%, potentially causing a nuisance? So a low ball offer seems unlikely to get 90% acceptance when there are a few large blocks who will hold out for much higher.
I assume Addicknt and others are coming at this from the opposite angle that having a few largish holders each controlling between 5 and 20% each and cumulatively about 50% is not diverse at all but in fact very concentrated in comparison to a lot of larger publicly traded companies where even the biggest shareholders only control a few percent. You often hear of an activist hedge fund taking a stake of less than 5% and start throwing their weight around demanding spin-offs and seats on the board etc. So in that sense, an offer that is pitched at the right price will be difficult to defend against because there are only a small number of shareholders who need to accept it and you quickly get a significant chunk in the bag, which probably means the smaller shareholders like us will follow suit.
I think what I'm trying to say is, you're all probably correct. Solg won't be able to defend a takeover offer at the right price, however that price seems unlikely to be the low ball we all dread.
The problem for NM is not his current holding but the fact he doesn't have to cash to stand his corner in any form of fund raise. His executive influence has diminished and his equity position will be eroded over time i.e some time this year. Q, you say 'we are bought out, but no one can do this because of the diverse book'. So what happens if a deal is agreed and recommended by the board? (which is what I see happening) Your diverse book thing is and always has been, a complete red herring. Sorry.
Good afternoon Bozi and DBW. My take is slightly different, although agreeing with much of what you both say. NM was always going to step down and be replaced with someone who could take Alpala forward. It just happened sooner than a lot of us thought. As you say NM controls directly or indirectly about 20% of all Solgold shares. So is the biggest shareholder. He can stop BHP or NCM mining increasing their percentage unless they make an offer for someone else's holding or buy directly on the open market. I don't see that happening. So we are left with two options.
Option one We are brought out, but no one can do this because of the diverse book. It would just be too expensive for a project that hasn't started. We start to construct and along the way someone buys us, when certain parts of the project are derisked and if we have a low price to debt ratio.
We get the CFP and construct Alpala. The financing is done in such a way that we slowly gain in share price while knowing our rough costs. We also have a contingency for cost overrun.
DBW - thanks but I was aware of all of that. I would also like to think he's aware of the dangers on the horizon and has options at his disposal but a lack of useful company communication leaves me unsure. Having defended him in the face of all sorts of criticism down the years (both constructive and less constructive), I'm not sure how i feel about those same shareholders relying on him whilst he has been shunted into a NED role.
Your worst case scenario is the best worst case I've seen. Unfortunately things could get much much worse than that if our hand is not played correctly in the coming months. Some may view that as a deramping comment (it's not and in any case i don't care). Mather may have his collective interest for want of a better phrase but lets not kid ourselves that he has control. There are a myriad of things that can happen pre AGM, and well, post an meeting where we lose him, Twigger and others, I'm not sure the reality bears much thinking about.
Bozi I disagree to an extent ..... Nick is still around and was very happy with the new appointment, I'm sure he's fully aware of the dangers ahead and has a few aces up his sleeves ..... He has influence over more shares than either BHP or NCM (dgr, Samuels plus the stuff in his name ..... not forgetting Tenstar are "friendly") ..... Worst case he sees things going badly at the AGM so simply let's a third player enter the fray via one of these entities (Or CGP do it for him) Of course he's not at the helm anymore (and that's not necessarily a bad thing) we needed some new blood, but he has kept BHP in their box for several year now, something for which we will all one day be grateful
I think it is good we are working towards production. In my opinion this is the best way to generate value. At some point there could be / will come an offer. If the price is right it might get accepted, but if not the company carries on towards production. And that might cause for an updated offer. Anyway, if an offer comes it will immediately raise the share price and some of us might opt to sell at that point. It is just a waiting game at the moment and I do believe suitable exit points will come. But each of us will have their own targets and exit points.
Quady possibly but don't think the board want production they want a sale ,just look at NM history ,rewards all shareholders imho but it will be well over £1 imho the offer I think ,my target is £1:32 gl.
Good morning Italian. I had similar thoughts, but was thinking along the lines of the 10 locations ( 20 tenements that we are looking for partners. ) This would fit in with Ingo's earlier announcements and still be part of the plan to take Alpala to production.
One of the things that really bug me is the Swiss entity. I asked Ingo about it after he kindly wrote me "email me if you want to speak" but he went into blackout when I asked him more specific questions. Now I wander since CD mentions it, since the Swiss entity will presumably channel the funding package (it it materializes), could that be the corporate vehicle that gets spun off? There must be tax and regulatory reasons why of all countries they have created the company in Switzerland, which would point to a setup that a prospective buyer would be keen to engage with. And that's where I think CITI might have had a role in. Just thinking out loud really, not sure what to make of it.
Rio have started works on Oyu. It's been years and years but they appear to be going ahead now. Interestingly they have floated the subsidiary business / spun off and wondered if this is something SOLG might look at nearer the finance stage subject to having other assets more established like Porvenir.
It gives key financiers / debt holders a clean investment rather than funding the larger business which is always open to management destruction through poor decisions etc.
Floated on North American markets might see more interest liquidity.