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Sean do you know the end result of solg?
No, really then how can you predict who wins and loses?
It is wearying Zoros, and easy to feel "you can keep the cheese, I just want out of the trap". I gave up on the misty eyed "Solg journey" long ago. You have to try to make money out of this one in the most ruthless detached way, not believing in a happy ending.
The tragedy of this one at the moment is that a share that went from 2p to 23p managed to generate so many casualties - namely anyone who bought in over 30p in the 3 or 4 spikes to 42p. And that's what they were, spikes.
It's very hard as the rulebook seems to have been tossed out with this one and the nice guys will probably finish last.
I think you raise some valid points...
In the case of Diamond Fields there were three major players all interested...Teck thought they'd sown up a deal for 10% but Friedland was playing the three against each other and ultimately a bidding war between Inco and Falconbridge made Friedland a multi billionaire...
We would have no idea at this stage if a major or majors had made an approach to buy a stake or further stake in Solgold, or especially any joint venture talks for the major or minor projects. It is only when a deal is done that we would be told.
We also don't know what Solgold's bid defence strategy is. The Alpala PFS wouldn't stop it, it would only make SOLG more attractive and/or enhance bidding interest if its out there.
So you're right...an outright bid makes more sense, but...
In order to do that, either a non-player has to acquire a position through the markets (e.g. by buying a stake from another player, such as CGP or NCM) but the price would have to be much higher than 45p this time around...
Or a 'player' i.e. BHP, NCM or even Valuestone would have to persuade another stakeholder to sell a chunk. This was the basis of BHP's initial strategy. They bought the Guyana Goldfields stake and then made a bid approach.
CGP would increase BHP's stake to over 20%, which is meaningful, but what price would they or NCM would be prepared to sell at...in the former case I believe way north of today's price (although their need is greater than NCM's and they could still retain their stake in ENSA)...NCM might sell for less given that their holding is now 'strategic'.
So either might be prepared to sell for say 60/70p....
But as soon as that was announced, I'm certain it would trigger a bidding war.
You make a very good point about a takeout of SOLG at even £1 being 'small change' (i.e. $2 billion plus from a 'warchest' of $20 billion or more.
But other major players have plenty of bidding power, even if they don't hold a stake...because they could offer shares plus cash.
Barrick MCap $32.47
Fortescue $52.65
RIO $101.5
Glencore $63.02
Vale $61.82
China Shenhua $63.64
Freeport $54.06
AA $53.12
Southern Copper $42.9
Newmont $42.71
Zijin Mining $40.6
etc etc
Add in the massive STRATEGIC importance of copper to China and the fact that they would have strong government support and the sky is the limit...
After all...name me another company with such riches as Solgold that is a copper/GOLD play and currently capitalised at £534 million
The AGM is going to be very interesting and I don't anticipate any bidder moving before then and probably the PFS as well (because that gives them the ammunition to persuade their Board of Directors)...
But the bottom line is that for one of these majors, the STRATEGIC need for massive new copper and/or gold resources in order to retain their earnings growth is, to my mind, far more important than the price they ultimately have to pay...
Alpala is close to
Seanhunter - I'm way past the point of caring now. 8 years of my life reading bo llox on here, being suckered in by NM telling us "shock and ore" (or whatever the old fart stated), telling us we're on a role...blah...blah, 8 yrs of the SP sliding downhill, little, dull or no news......gets to the best of us. I just want out at the earliest profitable point.
I guess if Rio doesn't do it....all eyes are on the PFS and we all know why this has been delayed (because NM thought he had it in the bag until KM came along and wet himself!). It's been delayed because it is 'mediocre' at best and they are desperate to bulk it out with additional resources.
My only hope is a JV @ Alpala/Cascabel.......please god make it happen and soon.
Z
RK, thanks for the reply. I can see the attractiveness to us, but fail to see why BHP would be interested. As it stands, they can get their hands on Cascabel, as well as everything else, for a sum which, in their terms, is relatively insignificant. I just cannot see why they'd wish to share the spoils with us.
The most puzzling question for me is; what are they waiting for? We all understand the macro copper picture and we all know BHP's strategy is to make copper a central plank of that strategy. How many other resources like ours are out there? There must be something which is holding them back.
Oops again..."That can now be increased to up to 70%." should of course be 75%...sorry
Really interesting, pro-active & positive comments on BB today tks all..............
Huge apologies addickt...I thought I had...
I was thinking of GGP/NCM and Diamond Fields/Inco...
Newcrest entered into an 'earn in' on Havieron where they were entitled to acquire up to 70% of Havieron by agreed drilling commitments. That can now be increased to up to 70%.
I don't think SOLG would have to give up that much, but could condition it on BHP leading the financing of Alpala.
"In May 1995, after much posturing between Inco and Diamond Fields executives, Inco bought a 25% stake of Voisey’s Bay for US$386.7 million in preferred shares and cash, as well as 8% of Diamond Fields from company co-founder Jean-Raymond Boulle and early investor Robertson Stephens." i.e. 33%
At the time, Voiseys Bay was the biggest new nickel prospect in the world.
But of course here I'm talking about a direct stake in Alpala, NOT in Solgold. But with their shareholding, BHP would effectively 'own' 46.5% of Alpala, i.e. 35% plus 13.5% of 85%...
The Inco deal included global rights to sell all the nickel, so why not also give BHP global rights to sell all the copper and gold from Alpala (assuming CGP would agree and I can't see why CGP would resist the whole deal, because it would create an immediate spike in the SOLG share price).
In conclusion, it gives BHP the interest in Alpala they were desperate for when they bid for SOLG and settled for shares at 45p;
I also gives (as was the case with Inco/Diamond Fields) a short term ability to at least interfere with any bid for Solgold, while giving them an advantage if anyone else bid (but only until the Porvenir/Rio etc. stories take off)
It gets BHP off the Board's 'backs'...
And the footnote...?
Ingo's first foray into Diamond Fields was at an effective price of c$18 a share; only 7 months later, Inco and Falconbridge embarked on a bidding war, starting with Inco offering $31/share; then Falconbridge $36/share.
It culminated nearly a year after Ingo's original proposal with Inco bidding $43.50/share.
When Diamond Fields hit hole number 2 in December 1994, the share price exploded from $4.65 to $13.50. It then fell back to $11.00 a share in January 1995. 14 months later it was taken out for almost four times that price...
If the same thing happened here, we could ultimately see Solgold taken out at c£1 a share, BUT...Diamond Fields' only viable asset was Voisey's Bay...here we have 13 other major prospects including at least two that could be bigger than Alpala, so...
I could see either other majors bidding for some or all of the other projects and ultimately one winner taking Solgold out for £1/2 a share...
So in conclusion: a JV with BHP for Alpala secures the funding for development and gets BHP off our backs, but...
It could light the blue touch paper on a bidding war more than comparable to Diamond Fields, which eventually was taken out for $4.3 billion...
https://www.visualcapitalist.com/the-story-of-voiseys-bay-the-auction-part-2-of-3/
Zoros given the number of shares in issue (which will only increase) I very much doubt even the last stubborn shareholder standing will be offered anything over 50p. Which is a pretty poor show, given that you could have got out at 43p back in 2016.
50p means someone coming along and offering around £1.2 Billion for us lock stock and barrel.
i learned in the end that it doesn't matter what the small investor wants or thinks. A share that was hitting £11 at one point got sold from under our feet for £7.50. The big boys have their own way of making a quick buck, and loyalty is a worthless commodity - at least on the stockmarket.
RK, you mentioned the jv route yesterday and suggested a 35% stake for BHP. I asked the question why you think BHP would accept a minority stake when they can simply buy the lot, but I didn't see your response.
zoros....are you seriously saying you would sell out at 35p....
I know a profit is a profit but....
Hi mwv...
I've said for some time (including to my contact) that there is a simple middle road...
JV Alpala with BHP; use BHP to lead the residual financing; use the funds released to monetise the remaining assets.
I still believe the latter is why Solgold is structured as a holding company with Solgold Finance AG and 4 subsidiaries:
Green Rock
Valle Rico
Carnegie Ridge
Cruz del Sol
seanhunter....Worse case - BHP buys us out at a 50% premium! I'll take it and run...so frsutrated...
Z
Both options longer term than most of the angry pensioners on here can cope with I imagine mvw1, some of them can't wait till teatime.
Personally I think option 1 will be ruinous to an existing loyal shareholder in terms of dilution.
Option 2 should have always been the way forward, but relations with BHP soured so early on - and for no good business reason - that we now find ourselves in a such a tangled mess we are no longer the "prize" a big boy would reach for, but a football the big boys are happy to kick around. As ever in these things, the retail shareholders are the poor bloody infantry.
What in your opinion - for someone sitting on a pile of SOLG shares today and determined to ride it all out - is the worst case scenario?
Totally agree re Rio though early days
Interesting how many have said the reason no updates on Porvenir or Sharug is because results aren’t stellar ….. we’ll if that’s the case then it’s interesting they to the decision to RNS the results of half a hole at Rio …. Hmmm
The two main schools of thought are Solgold:
1) will develop into a producer by successively developing mines in Ecuador
2) will be bought out by BHP or someone else over the next couple of years after PFS/DFS at Cascabel
Both have their merits and drawbacks. Solgold must demonstrate they can and will follow path 1 otherwise they will end up being bought out for a pittance. Best way for shareholders is to minimise risk along the way, so a small open pit at Cascabel fits the bill, this also keeps the Ecuadorian government happy and will meet their commitment to spend on Cascabel over the next 2 years. No Brainer in my opinion. But they need some higher grade material – hence the need for a near vertical shaft to access some material from the Alpala core. This is all achievable with smaller up front investment and dilution than the original PEA plan.
Will someone bid for Solgold and When? – I don’t think anyone knows for sure. The ongoing macro situation with Copper and the green revolution makes it an attractive prize and it’s current shareholders show some are interested. However, it is in a new jurisdiction and in Latin America – both amber flags when looking at a large investment. Various arguments say both of these are being addressed, time will tell. The difference is that a large miner could just start the decline for Alpala block cave tomorrow as financing isn’t a problem, the timelines for a major would be very different.
Which of these people favour is more driven by personal circumstances – do you want a fast pay back and take risk off the table, or is the investment longer term and the potential greater reward worth the risk.
Personally, I think Rio could be the game changer. Will be interesting to see the next drill results. Still want to see the Molybdenum results for the first hole (not sure if analysis for this is in the plan).
Also noticed they have gone from 5 rigs at Tandayama (MDA) to 4 rigs (latest RNS), has the other rig gone to Rio or Celen – will give us an idea of what they have found so far at Rio.