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The departure of Darryl Cuzzubbo as MD and CEO of Ecuador copper-gold junior developer SolGold has exposed a growing rift between key shareholders about the future of the company, as its merger with fellow Ecuador junior explorer Cornerstone Capital Resources brings a new burst of energy to the stalling company.
Maxit Capital chief executive Bob Sangha believes BHP and Newcrest Mining have dishonoured themselves in their attitudes towards SolGold.
Maxit was a 19.5% shareholder in Cornerstone and co-owner of the subsidiary which holds the Cascabel project in Ecuador. Now it holds around a 5% stake in SolGold as a result of the merger.
BHP and Newcrest said they were unhappy with a US$50 million royalty deal SolGold recently struck with Osisko Gold Royalties for a 0.6% net smelter return (NSR) on its Cascabel licence area.
After its recent general meeting, BHP chief executive Mike Henry said SolGold has come up with a "disappointing high-cost" finance option, telling shareholders that SolGold is just one option in the BHP portfolio.
"It's but one of the many options that we're creating across the company for future growth in these future-facing commodities. … We've taken a toehold position in Filo Mining in Argentina, another potentially large copper deposit, there's Kabanga Nickel in Tanzania, a large nickel deposit, plus everything else we're doing inside the portfolio," he said.
Newcrest chair Peter Tomsett called the financing "expensive" while Newcrest CEO Sandeep Biswas told reporters after its annual general meeting on Wednesday, "that sort of expensive financing really is negative to the long-term shareholders of the company. … This is sacrificing the return for shareholders in the long-term and I don't understand it."
Sangha didn't mince his words when Mining Journal called him. "[BHP and Newcrest] are self-serving in their actions at the recent annual general meeting and in talking down a tier one discovery to the detriment of other shareholders. If they don't like what we are doing they can get out," Sangha told Mining Journal
After the failed financing attempt this summer Cuzzubbo spoke of disagreement among the principal shareholders on the best way to bring money into the company. "BHP and Newcrest have a view on how we should be raising capital funding and the shareholders have a different view on that, and we need to work through what's best for all typical shareholders," said Cuzzubbo at the time.
While BHP says it has other options, Sangha clearly thinks so with other major miners including Fortescue Metals, Anglo American, Rio Tinto, First Quantum Minerals and Barrick Gold and more all circling Ecuador looking for opportunities.
Cont …….
Shake-up
The ejection of Cuzzubbo follows a shakeup which began with the Cornerstone-prompted merger announced in October. Under the deal, Cornerstone has appointed two directors to SolGold's 10 person board, with former SolGold director Scott Caldwell and Dan Vujcic joining as independent non-executive directors in October. Caldwell has become interim CEO following the departure of Cuzzubo.
"There is no more bluffing that we are going to build Cascabel [Mather previously told MJ that he aims for SolGold to become bigger than BHP]. We are going to maximise shareholder value by bringing in an appropriate partner to do it. We have wasted five years. Since 2017, our share count has increased 50% and our share price has fallen 50%," said Sangha.
"Scott is well known to us, we are very supportive of him, he has the skill set for the job and he will do what is right for shareholders," Cornerstone investor Warren Irwin of Rosseau Asset Management told Mining Journal.
"There is no more bluffing that we are going to build Cascabel" - Quady didn't you say you'd read this article? I'm glad that myth has finally been put to bed. No wonder the SP has started to wake up.
Dbw, many thanks for sharing. Looks like we're not messing about anymore. Time for BHP and NCM to sh*t or get off the pot. Well done Bob Sangha.
My favourite bit
"There is no more bluffing that we are going to build Cascabel“
No one fell for it anyway …. Did they ??
Music to my freakin ears. Bob spits fire.
I dunno, I'm still waiting for the French translation, wink.
Cheers DBW!
‘ We have wasted five years. Since 2017, our share count has increased 50% and our share price has fallen 50%’
THIS!!!!!!!!!
Finally it seems the powers that be seem to realise what us Private investors have been screaming for years…. And now they are putting their previous disagreements to one side to make some progress..
JV it is then
Another bluff ….. he’s calling them out I reckon
Either way good news Orthern
Is this the significant comment... "We are going to maximise shareholder value by bringing in an appropriate partner to do it. "
And is he bluffing...inciting BHP to "put up or shut up" before they arew diluted to 10%...
I can see the threat to JV as a worm on a hook
Mitsui already been pictured with smiles and openly saying they are excited to be investing in Cascabel. Whether they end up with a slice is anyones guess but stick the interested parties in a ring and let them slug it out.
Auction process on ENSA best way to go.
Henry... go xxck yourself!
I do question what our previous, long existing board members have been doing for years, and what it says about Twigger et al.. It seems like it has taken, previously considered outsiders, people who were treated almost with contempt before the merger news, to come in and get a grip of our mess..
I’d happily get rid of some of the old wood and bring in some more new.. at the AGM
There was always an assumption on this board that the BOD knew what they were doing.
The cornerstone boys always had the opposite view, even of Mather I'm afraid.
Ortherncopper, it's easy to look back and use some hindsight now. I don't think it's fair or realistic to apply that view. I've ben invested here for 3 years+ (since just before covid days) and the story was a good one. The delays to PFS were imho the beginning of the cracks appearing and BHP were suddenly ready to just sit it out. IMHO... Mather cast out enough bait for BHP to bite but they didn't. Then this years market turmoil and inflation bubble not to mention covid all mixed in has made the last 2 years tough on most. All that's ha da factor in progress. In the end, BHP and NCM had us cornered heading into the AGM and SOLG needed to pull a rabbit out of the hat. Instead, what we actually got was a 'Warren'!
Humour aside, now is just as good a time to sell or JV Cascabel as in 2020 or 2021. We needed the 'take it to production' plan A as without it, SOLG looked directionless. It also was designed to draw BHP out but didn't work. As CGP said... the bluff didn't work so now we'll just opening seek a partner or asset sale etc.
Anyway, I guess I'm saying it's not really of any use to look back with hindsight and chastise.
Looking forwards, the next 6 months should see inflation peak and rate cuts slow into Spring 23. China coming out of lockdowns matters more for mining/metals than anything else. But I guess what I am saying is that the next 6 month are prime time for M&A as in 12 months time everything mining related likely to be much more expensive.
Orthern I think we need to fully support the board at the AGM…. The biggest piece of deadwood now removed
I’ve been chastising the board for the last few years… half of my posts are practically Sanghas quote . “We have wasted five years. Since 2017, our share count has increased 50% and our share price has fallen 50%”
Anyway.. finally we have some people who want to get things monetised… and quickly!! And I’m grateful for them.
And I agree.. China cranking up their economy will cause the metal prices to bite, as global inventory warehouses would be empty had it not been for their covid policy madness
"It is what it is" as they... no point in looking back and venting off. It's time to look forward with optimism. Monetisation is on the way and it's what many of us called some months ago.
The Strategic Review is going to be an interesting one as apart from ticking the governance box, most know it's going to be about returning value to shareholders. What's going to be fascinating is how that pans out. Will SOLG still be listed or sold completely. Will some assets/regionals be packaged up and sold off to Mather INC and a few others before the auction process?? I just get the feeling that Mather wants some of those blocks to try and rinse and repeat and any buyer of SOLG will want the same but won't pay a dollar for them. At the moment my guess is that there are about 45 licences in SOLG's folio that would have near zero attributed to them if the company was SOLG tomorrow. So that's got to be resolved as that's just a waste of resource and a freebie to any buyer. I like the idea of SOLG selling off ENSA, return funds to shareholders and then go after RIO or other blocks and try and repeat but this time with firm knowledge that they will be selling after MRE2 phase or PEA. They can't repeat the 6 or 7 years+ ENSA style progress or the market will send them a blunt message. Far better to communicate that aggressive exploration phases that are successful will be monetised or JV'd within 2 years etc.
Anyway for that blueprint to work and the market to get excited, SOLG need to prove they can sell one of the cabs off the rank first. They need to prove the model works. As yet... that's not happened. But it's about to!
I could have written those words myself. 5 wasted years. More shares printed but no extra value for the poor bloody infantry.
I don't care whose feelings get hurt now at Solg. I want an exit at 50p+ and I want it ASAP.
Glad I'm not alone.
Weird that Quady apparently had access to this article but couldn’t copy and paste ?????
Fort … CGP going well … so far
So, all along it was a bluff! You'd have thunk it?!
Not surprising really.... buy CGP and get SOLG shares in a few weeks time. Can understand why TSX buyers are choosing to buy CGP shares rather than SOLG.
It will get interesting post merger time when there is only SOLG (both on use and TSX) and loads of new SOLG shareholders. I think they will want to give those shareholders reasons to hold and hangin for the big sale so expect everything to unfold in a very well worked out timely manner!!
Thanks DBW for sharing this article - appreciated!
r's
Bn.c
Wrong DBW, I tried to paste and copy but my PC wouldn't let me. I use it only for investment and astro physics.
I post on here by Android phone.
My PC is nailed down so uncertain which setting is affecting the link.