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Fort, it is fairly minor but it's there as you say, to get us through the winter and to a position where the company can budget 2023 spend at both Cascabel and the regionals. We have the investor protection agreement to think about as well and I'd like to think there will need to be talks with Lasso to get some of the spending/investment requirements amended to take account of both the lost time arising from Covid and also the true worth of SolGolds social and environmental investment into community projects.
The market has let the price drift down because it doesn't agree with me. It feels that something more significant is going to be required and that cash would rather wait on the sidelines until it has clarity.
You could also argue, at the time of writing at least, that the market requires this clarity over the perceived benefit of the catalysts you mention.
Personally I think both the Porvenir PEA and the Cascabel PFS addendum will both be value accretive for SolGold and the fundamental investment case will be enhanced. Whether that will translate to a higher share price I wouldn't be so sure, purely because I think we're nearing a market that will basically ignore good news and hammer anything remotely negative.
On the subject of regional JVs, I think we have to examine the context. I believe there's more nuance than simply saying "a deal with (for example) Barrick for 10 tenements will warm the share price". I think we'd see a little spike but I'd expect traders to sell it off like they did the initial PFS.
The crucial elements to any regional JV deal include:
1. Which tenement or group of tenements is it?
2. What are the deal terms - does this represent good value for SolGold?
3.How does the JV interact with the rest of the story including Cascabel, the corporate wrangling, etc?
I agree that the certainly has been a lot of posturing from SOLG on this. What we have is in fairly high demand after all, particularly given the ongoing restrictions with the Ecuadorean mining cadastre. It wouldn't have been too difficult for the company to do a few tie ups, particularly for those areas that don't fall under the priority regionals but have displayed some first pass exploration promise. The inference here given we've supposedly been engaged on this for the best part of 18 months is that we're simply poles apart with interested parties and whilst conversations may well have taken place, deals cannot be reached right now.
As far as I'm concerned there's an interesting story with Helipuerto. Have Solaris received any JV interest for Warintza and is there any interest in joining forces with SolGold and packaging up even more land and letting a major in on the action? I'm sure SolGold would be happy with a 20% stake in the larger project with the 80% split evenly between Solaris and a Barrick type.
CD, you raise 3 interesting points on potential catalysts of our SP. Personally, as it did with the PFS, I think the market will shrug its shoulders at 1 & 2 if we publish both of these pieces of news before raising funds. 3 is a different kettle of fish, particularly if we announce a JV with someone like a Barrick.
I'd also note that BHP will be in no rush to bid for SOLG before those two updates are published. If they do so beforehand with a lowball offer they will be playing into SOLG's hands, who would hopefully say the offer doesn't represent fair value, and then publish the Porvenir and PFS news to support their case. I.e. if you were willing to pay 50p a week ago, you should be paying at least 80p now we've derisked Provenir and improved Cascabel (numbers just examples).
We need cash in the coffers ASAP as Bozi suggested in his (great) last post.
SOLG not mentionned, but should be there in big fat lettets.......
Garimpeiro doubts BHP (ASX:BHP) chief executive Mike Henry takes much notice of his mumblings. But you’ve got to wonder.
Just three weeks after Garimpeiro mentioned that the copper stocks were over-sold, Henry lobbed an $8.3 billion takeover bid for OZ Minerals (ASX:OZL).
The spurned offer was a pitched at $25 a share – a 32% premium to OZ’s share price on the day of the offer (August 5).
That allowed BHP to present the offer as being generous. OZ has other ideas, with BHP now having to decide to increase the offer or walk away.
Whatever the outcome, BHP’s initial attempt to snatch OZ was opportunistic in the extreme.
It sought to take advantage of the over-sold situation in copper stocks in response to earlier general equity markets weakness due to global interest rates/economy fears, and the accompanying commodity price retreat.
Copper fell to low as $US3.17/lb in mid-July. That was down from the FY2022 average of $US4.37/lb. So copper stocks like OZ should have been feeling some pain.
But the pain was over-done, leading to Garimpeiro’s call at the time that the copper price was set to rally, and that copper stocks would bounce back. The argument was that copper’s key role in global decarbonisation had not gone away and if anything, it was accelerating.
Copper has since rallied to $US3.61/lb and there has been no better confirmation that the copper stocks had been over-sold than BHP’s attempt to snare OZ for a 32% day one premium or $8.3 billion (OZ is now trading well ahead of the bid price in anticipation of a higher offer).
Copper price year-to-date.
BHP is a super bull on copper’s outlook.
Apart from the OZ tilt, this week’s commodity outlook report accompanying BHP’s FY2022 said as much.
BHP said a “durable inducement pricing regime’’ is expected to emerge from the mid–to–late 2020s for copper, with a “take–off” in demand from renewable power generation, the electrification of light duty transport, and the infrastructure that supports them both, expected to be a key feature of industry dynamics.
“Looking even further out, long–term demand from traditional end–uses is expected to be solid, while broad exposure to the electrification mega–trend offers attractive upside. Grade decline, resource depletion, water constraints, the increased depth and complexity of known development options and a scarcity of high–quality future development opportunities are likely to result in the higher prices needed to attract sufficient investment to balance the market,’’ BHP said.
Sounds like a good reason to try your hand with an $8.3bn bid for a company like OZ that expects to more than double
Bozi, raising $25m or $30m via equity is so minor it makes you wonder why the market has let the share price drift down to 21p. A raise of $30m would deliver almost nothing in terms of dilution. 3% to 4% ish assuming current sp.
I tend to agree that perhaps a small raise making it through to Q2 next year might be better than trying to raise larger funds now (via share issuance) to see us through to end of 2023.
But then there's the scratchy upcoming AGM. I guess the 3 questions we should all ask ourselves are...
1. Do we think that Porvenir PEA is going to be good and will it add value to our share price?
2. Do we think the market we like a PFS2 that indeed adds another $400m value to the project?
3. Do we think we'll see a JV or partner deal on some grass root licence blocks?
You see, I've been around the block for a while and I know that if SOLG announced a JV deal with someone like Lundin or better still someone like Barrick for say 20 licence blocks (grass roots) free carry on first 20 holes or something like that...etc etc then the share price would do very well indeed. After a market warming deal like that.... then look to do a raise at much higher share price.
The trouble is... I get the idea that SOLG are just talking the talk when it comes to partner / grass root deals. I get the feeling BHP don't like it. NCM don't like it. But hear we are again... treading on egg shells when the best deals to be done out there such as Boliden or Barrick go unwanted.
Sometimes I do wonder whether SOLG have any interest at all to get the share price moving as to date they done nothing but kick the can down the road and talk a good game. Time to deliver.... and fast as that AGM approaches.
Just realised some paragraphs got morphed and the last point cut off.
All I was trying to say is that SOLG shareholders will be so fatigued with the tit-for-tat that come Q1 next year they'll be happy to forego a good return for an average one and it's this sort of shift in thinking that let's a BHP get a foot in the door.
Really we need to hunker down right now, see what the company can do to keep us financed and hear how they plan to come out fighting ASAP.
Fortissimo,
The messaging appears to be that further streams are not an option at this moment in time. There's also a fair bit to be said for openly exploring another of these deals prior to a DFS and investment decision given that the funds would be for G&A and not directly for project development.
The use of too many streams will impact the economic robustness of the project and you could argue harm the prospects of a takeover. Who wants to buy an asset that is a good few years away from first production but highly geared before a shovel has broken ground? Every stream SOLG does now works in the favour of Filo, Solaris and Co.
This appears to have been overlooked.
I do absolutely agree that one faction of our register is going to be happier than the rest. That is absolutely the dynamic in play. Now, do you think BHP are going to be scorned or do you think it'll be Mather, given everything else going on around us? I've got an idea given that an important AGM is approaching but I suspect you'll see it differently.
The strategic review card is a bit of a red herring in my view. Why does SolGold need to announce a strategic review to bring others to the table? They don't. The fact of the matter here is that our door has been open for years now, ever since the standstill agreements with NCM and BHP expired...and what have we seen? A measly £7/8m from Valuestone. Everyone else knows where they stand. They know they can wait, remove the risks that come from being stuck in the market and potentially make their play by stepping in as a white knght with a counter offer to a low ball bid. I don't like that as much as you Fort but that's the reality of it from where I'm sitting.
Also, it's about time we stopped thinking that SOLG are bombproof because we have a tier 1 asset. There's a lot to be said about that misplaced arrogance. We are, for all intents and purposes, still a resource junior. Our funding options are somewhat reduced due to a weak capital market, we have a large shareholder who would like very much to comandeer what we have at a cheap price and furthermore they have ample motive to make that play a reality. I do see a placing as being the easiest way out of our current predicament and whilst Mather won't like it, there is at least something he can do about it (participate to maintain his stake). The same can't necessarily be said for many of the long term holding PIs.
My read from here, and I'm happy to say it because I'm happy to be wrong is that SOLG does the obligatory placing and open offer, by the end of September, raising about £25-30m. Same rubbish open offer as last year. Then, as we move into January, with at least one NED out on his ear, copper prices plunging as the economy teeters, then and only then will Mr Cazzubbo get something he wants to put to shareholders, maybe after a few weeks of BHP accumulating on the open market.
SOLGers, who let's be honest have been ready (in the main) to hand this ove
I'm not surprised to learn that Fort is actually ColonellDrake. He's your best friend when you post something he agrees with, but as soon as you say something critical or negative he cracks his diaper and accuses you of not being invested
Rightly filtered.
I doubt very much that the £4 million was stolen by an individual but has rather been used - in cash - to grease the palms of various official and politicians on this deeply corrupt country over the last few years. Its all part of the process and just a fact of life, hence no criminal investigation or charges - but the loss had to be acknowledged at some point. And llets face it , it was probably £4 million well spent.
Bozi,
It's like you simply just ignore the news and go with your own made up assumptions. Seriously... you seem convinced of the idea that SOLG will do an equity placing. Why would they do this if the share price is weak? SOLG have many options of which royalty stream is one and Darryl has said they have other financial options to explore. The lower the sp goes the less likely a find raise via share issuance and the stronger the reason for SOLG to go down an alternative. NCM and BHP might niot like this but lets face it, we are highly likely seeing a share price of 21p now due to them pulling the plug on the recent fund discussions.
Finally, SOLG may just decide to explore a completely different fund raise model which involves a JV or even an asset sale.
You make it sound like SOLG have limited options. You make it sound like a cheap equity placing is the only option. That simply isn't true and has been proven before. The only complication that I can see, is the one that involves various shareholders agreeing in the same thing. That's not going to happen. So someone or one portion of the shareholder base are going to be unhappy and another portion (majority) happier. That's just the way it is. If we agree to be bullied by NCM and BHP and give them cheap shares, then I really don't see the point at all. That's as good as handing the keys on the cheap. May as well put the cat amongst the pigeons and hoist the 'strategic review' flag and invite Barrick, Rio and the Chinese to discuss how they might help SOLG and Ecuador move Alpala forwards. Because as yet, I've not heard one supporting quote from BHP or NCM on how they they see Alpala moving forwards. Funny that! All options are on the table and the lower the sp goes the less likely a share equity raise imho. The market will eat itself as they say. The market is stupid. If not careful, it might well see another deal entirely.
We went to the market to raise , we failed because we didn’t raise any money end of ….. very glad to hear it’s you last post .
Last post this evening DBW.
The only person saying night is day is you.
Your example is of buying eggs.
Solgold is raising finance we are not buying anything.
Buying and raising are completely different.
But then you cannot see that.
What I do know is that you’d argue night is day and these days it appears that you are simply here to stifle any intelligent debate.
Let’s leave it there if you can ….my guess is you can’t
There is a difference between buying and raising.
When you buy eggs you use existing cash.
When you borrow or raise you are giving equity or taking on debt in one form or another. We are not raising eggs.
Surely DBW you understand that. Or maybe you don't?
Quady of course we are buying cash and we’ll either pay for it with shares or future profits…. Surely even you can see this ?
The 'resignations' were nothing to do with the $4.5 million...
"If you can keep your head while all others around you are losing theirs—you haven't got a grasp of the situation. "
DBW the point is you never bought any eggs, we are not buying we are raising cash.
Completely ridiculous.
Maybe they invited them around for tea to discuss a fund raise but could not decide on which cup cakes to go for? So everyone left empty handed.
C. Fail (miserably)
So I go out to get some eggs ….. no one sells me any and I come back empty handed
Did I ….
A) Test the market
B) Put out feelers
C) Fail
????….. I know how my wife would see it
The point I was making about the 4.5 m is, did that have anything to do with some of the resignations we had? Possibly all the resignations? The bigger the company the more tentacles the octopus has.
Good afternoon Bozi while I find myself in agreement with you on most occasions.
I do disagree now. This was just putting feelers out.
If we issue shares then NCM and BHP have a chance to participate, however other forms of funding would I feel exclude them.
Let's see what happens.
All the best.
Quady.
In Darryl's own words, we "tested the market". This is quite a clear statement that isn't open to interpretation.
SOLG approached the relevant parties to confirm the terms it was willing to execute on and put the feelers out to see if there was sufficient interest. This didn't materialise, either due to significant shareholders refusing or potential new investors not showing the necessary interest meant that we did not proceed any further. The attempt failed or was not pursued.
Addicknt's point to you this morning about which battles you choose is good and sage advice IMO.
Any fundraise between now and December is very likely to be on poor terms I'm afraid to say. This isn't an assumption. It's virtually guaranteed given that funds weren't raised last month when the SP was at 25p. Those who know anything about the market and how placings are conducted will know that a recent lack of appetite will work against us and with market facing record levels of uncertainty on a 3-6 month timeframe, the coming weeks are going to be even trickier environment to raise new cash.
The company is therefore going to do very well to raise funds at 20p even. It will all depend on timing but should we go another week or two and see an SP sub 20p then the best we can hope for would be 17/18p.
Basically, every week we step closer to the AGM our position weakens. Everyone knows how long our current treasury lasts and can therefore form their own play.
Link this back to the BHP comments from Mike Henry from yesteryear. BHP have to make the price come to them. This is how they do it.
Everything happening now is not a surprise. It was on the cards the moment the SOLG board had to relieve Nick Mather of his CEO position. This isn't me saying Nick never made a wrong decision, but what it has done is create openings within our board. Openings BHP can use to strengthen their position.
Good morning addicknt we don't know why they left.
However we do know that no fund raise was executed.
It was a discussion, and Solgold decided not to proceed.
Deciding not to proceed means no fund raise attempted.
We at some point will get a fund raise.
When we see the format that may give us some indication what the discussion was about.
Especially if we get a streaming deal and exclude BHP and NCM.
Yes Monte. That is generally what is meant by the term "misappropriation".
In basic terms we were scammed, quite possibly something that was facilitated by an employee.
In terms of how it takes place - it can range from overpaying for a product or service through to plain old fraud.
A lot of the higher uppers in the mining game have their own company which they eill use to sub-contract. Same as pretty much any walk of life where those greedy enough have worked out that there's a few ways to skim off the top.
The $4.5m was probably an extra month's funds. To think it could be so instrumental in our future (it absolutely can for those willing to analyse all eventualities) is sad and slightly scary.