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If someone offers us too much, then the answer is obviously yes. But otherwise, I would prefer the exploration properties IPO'd to us remarkably long-suffering longs. And dgr. And the ultimate cascabel buyer, I guess.
Those licence blocks Fort, whilst in demand, won't carry much value until a resource is declared in line with JORC requirements.
So we'd have to sell Cascabel or Porvenir and use one to fund the other and the remaining folio.
I think now he holds 100% Solg shares, you can assume that cascabel auction becomes a Solg auction.
I'm still pondering on hoe Mather gets to continue exploring but guess that will become clear post strategic review.
There's a lot in the folio that the market and buyers like to value at zero but the truth is ... drill ready licence blocks hard to find in Ecuador and be interesting to see if the exploration folio gets flogged off leaving solg with just ensa.
This article from 2020 is worth re-reading and is very relevant to where we are today:
https://www.afr.com/companies/mining/solgold-seeks-funds-ahead-of-bhp-s-unshackling-20200211-p53ztp
“Cornerstone has argued the Cascabel project should be auctioned to the highest bidder.
Prominent Canadian mining investor Bob Sangha confirmed this week he also believed Cascabel should be auctioned rather than SolGold take the long and expensive journey to mine development.
Mr Sangha is the biggest shareholder in Cornerstone with more than 16 per cent and his company also owns more than 1 per cent of Solgold.”
When can we realistically expect to hear the results from the strategic review?
RichBetter - I might have this wrong but I think you might have the wrong end of the stick.
Had we gone lock stock with the 100% of the reserve, i.e. full development, then the capex would have been $5bn+ for ultimately very little improvement in economic output. Totally unrealistic.
Plus, why would you pay an extra $2bn up front to develop it if it isn't going to yield anything extra?
My interpretation of the PFS optimisation (and this may well be me with the wrong end of the stick) is that reserve usage would start to be built back up and additional capex phased into the plan, drawn from phase 1 revenues. So, back towards a multi-generational life of mine but with a more gradual phased approach and ultimately slower ramp up.
Also, it was Keith M who advocated that approach just before the initial PFS under Mather was going to drop, hence the initial delay whilst they went back to the drawing board, but I do get why you think Cazzubbo did this intentionally for BHPs benefit. Just not sure I agree.
Addicknt - I feel better now than I did in August and September (I couldn't have felt much worse and I think that came across) but my thoughts are still conflicting.
I'd try and sum it up like this:
Cards on the table, the options right now as they appear today are:
1) Short term transaction falling out of the strategic review, as DGR says, to "restore" value for SOLG shareholders.
This language is very deliberate IMO. The strategic review and short term deal puts us back to 30-45p IMO. I have the rationale for this in a post yesterday so won't labour the point.
2.) Medium term value creation. This probably pushes us out to 2025/26, potentially the early ounces and pounds of Tandyama America. Much more risk involved if we assume the wider markets will be a write off in 2023/24. I don't think you could be fooled for thinking that a DFS doesn't get seen until late 23/early 24 and financing would very likely have to wait until markets start to recover.
3) long term value creation - simply holding on. Fixing the boardroom, meeting our milestones, further enhancing the opportunity in Ecuador working with the government in office. Creating a settled company that can see true value creation ahead, wait for it and execute to obtain it.
My confliction comes from the apparant thinking from some that we can achieve the value creation from 3) in a timeframe associated with 1). By the very nature of each outcome, you can see that risk grows with each one and that factor alone is going to place a ceiling on what we can achieve.
I'm resigned to somethinf barely acceptable will materialise from the strategic review and we'll all move on, some happier than others. We'll then find out closer to 2030 whether our collective decision to lobby the company so forcefully now will be the right one. Some won't care and that's fair enough, but I do think they'd be hard pushed to find another opportunity like Cascabel and Ecuador in the resource space anyway.
More optimistic.
We have more cash, hopefully the merger goes smoothly and we then have a simpler structure for all options going forward.
We are not holding all the cards, nor has anyone played a blinder. Sick of hearing that. We are, in effect, in a position whereby we either
a) Sell off future value tiny piece by tiny piece to pay staff and keep the lights on
Or
b) Go cap in hand back to our long suffering shareholders and ask them to further dilute their holdings to pay staff wages and keep the lights on.
Neither option is beneficial to the small shareholder, and meanwhile BHP and other majors can, as they have done for years now, just sit on the sidelines and let it unfold.
Mathers - of course the original offer for Cornerstone was a Mather initiative but do you not remember the disdain that CGP shareholders had for the terms and for the charade with the French translator? It was a bit of a farce if we're being honest with ourselves.
There has obviously been some mediation between all parties at SOLG and CGP and that much was RNSd last year. But as Better Rich points out, it wouldn't have been a deal struck up overnight. There would have been a case of all compromising and that would have taken some soul searching. DC would have played a part.
Yep, couldn't agree more and mirrors my post from yesterday MF. Hopefully a slow steady build in stock confidence and price over the coming months to get us back to a market valuation of around 700 -800 million then let the bidding begin :))
have a fantastic weekend all, I know I will
For people to react the way they did in the news about BHP there must have been much more we don’t know.
D.C brought Cornerstone and Solgold together did he? That was a plan by NM years ago, D.C hired and fired people, was this to destabilise Solgold and make them look incompetent?
D.C was quick to get in on the Ecuador mining community as a (*******) let you fill that in, D.C fired and shown the door, caught with his pants down?
Solgold have settled in Ecuador, they have shown respect for the place and the people, maybe D.C was trying to do deals on behalf of BHP and some loyal local government Ecuadorian informed Solgold.
That is my take on it from what I have read, plus filling in gaps, maybe wrong but going like that smells of dirty dealing. The market seems to be happy enough as to what has happened or we would have seen a much bigger drop than what happened imo.
Hope Solgold now really start stamping their authority on things here, show all what they have and the value of investing in them, bring on news of all the work of the geologists who have been looking at all the tenements.
I feel more confident now in Solgold than I did before, they have woke up I believe, anyway that’s my take on things
Atb
Just out of interest, following the events of the past few weeks, what is the sentiment of people on here? Are you feeling more, or less optimistic about things?
My point was less about the sentiment but more about the wisdom and professionalism of saying things like that in public.
At some stage Sangha may have to sit around the table with BHP and it never helps if there's a strong undercurrent of animosity. Good deals are never made in such circumstances and it's best to keep emotions out of negotiations.
I enjoy argy bargy as much as the next man, but...
RichBetter - I actually don't disagree with much of that, until the last bit anyway. Cash is an ongoing issue now and in my view, SOLG needs to use a hybrid solution. That hasn't really been an option in recent weeks but it should have been earlier in the year when the SP was close to 40p and investors were awake to this at the time.
The problem with just relying on royalty is that it's eroding away at the profitability of the project it's secured against and the size and scale of Cascabel means that the streamer is getting an even better deal. Look at FNV with their 1% of future profits. If Cascabel needs total EBITDA over LOM of £10bn for them to get their capital back. I'm sure the base case assumptions are 1.5-2x that and if our basket prices move higher again there's really no ceiling on how much they'll receive back. I don't think it's inconceivable they see £400-600m. So the point I want to make, is given the sheer size of Cascabel, why 0.75 or 0.8% wasn't a fairer deal?
If for example, we do a PEA on Porvenir and it shows a smaller tonnage project (as we know) but with an IRR of 30-35% then I think there's more scope for a royalty deal or two, but with Cascabel a shade under 20% post tax we do have to be very careful.
Completely agree about what SOLG have created for BHP in Ecuador. Have made the same point before.
I'm aware of just how long the merger took to achieve ;-). It wasn't straightforward given the years of acrimony and whilst Darryl. Might not have been the top dog to many, I do respect him for his role in getting that done.
BHP always has a say. They're awash with cash. They can compete and better anyone. It's in their hands, but I do think that if SOLG goes too heavy on royalty at Cascabel they won't just force BHP to step aside bit everyone else too.
I agree addicknt, but it makes sense.
BHP or NCM are never going to bid for Solgold.
That was never their plan.
The plan was to acquire a bigger percentage as fund raising went on.
This is why Solgold have played a blinder and kept the book diverse, so no one entity has enough to make a bid that is hostile. As the other parties would have to sell up cheap.
Each time a offtake or royalty is enacted, Solgold get funds and the value is reduced for bidders.
I can now see something like a ten percent offtake for a billion and loans to support most of the remaining money with minimal dilution. Just as Solgold have always said.
We await the strategic review.
Lastly how about Solgold can reduce the ten percent offtake by half over the first five years with a buyback.
Add I think the sentiment was along the lines of
Go **** yourselves and stop trying to **** us …. And I heartily agree
There was a recent presentation where it was stated that if the likes of BHP wanted a greater stake they were free to buy shares in the open market like any other shareholder, those were clearly shots fired and this has been smouldering away for years.
They’re like vultures circling over a wounded animal it just so happens this animal has made a miraculous recovery and they’re being denied their free meal.
Nice insightful summary.
I prefer the plain speaking, and also endorse the sentiment.
everyone else I'd love to read the mining journal article, but I'm too mean to pay for it. Assuming the snippet we can read is accurate, I find it extraordinary that a person who runs a retained advisor would use such language about a major shareholder of the company he's representing, particularly as you would expect the target of his abuse to be a potential bidder. I can't see Citi resorting to such behaviour - at least not in public. I've never seen anything like this before and it doesn't strike me as being very professional.
Having said that, I understand the frustration and am not in any way supporting BHP's behaviour.
I suppose the key question is how will BHP react? Will they walk away, or will they respond aggressively?
One thing's for sure, the run- up to the AGM is going to be absolutely fascinating. Bonfire night was last week, but I reckon we're going to have our very own fireworks. Funny how all the action here takes place just before an AGM.
RichBetter - it's hard to say with certainty given the strategic review taking place rignt now. I think all options and proposals have to be considered.
I'm not against anything. I would have a preference for the company still having control of it's assets coming through the other side of the forecasted downturn because that is when copper prices will start to bite as you say and that is when SolGold will be at it's most valuable. It'll be transformed from where we are now at 18p/£420m anyway and there will be a buegeoning spot price to support it.
However, if we have to move Cascabel on in 2023 and there's both a decent offer on the table and a way to mitigate an excessive tax take then it's going to be worth looking at. I think there's some merit in sellimg Cascabel off, letting an acquirer buy back as much of the royalty deals as they can. SOLG then starts developing Porvenir and exploring the regionals with half the loot (other half back to shareholders via a special dividend.
That should give holders a nice cash kicker and it should provide some sort of exit from the stock for those who want it.
I'd then be looking to Porvenir as an asset where SOLG can become a producer in their own right. It makes much more sense than Cascabel. The regional work would involve capitalising the 4 subsidiaries and setting them to task to find the nest top assets.
Bozi ignore him I've filtered him
Cornered rat, my hole, sounds like a film I once saw….
Covgaz - he's just asked if BHP are a "cornered rat". Yet you like that analysis?
You and 13 others. It's ridiculous. Cornered rat my hole.
It's going to be pretty interesting to see the reaction on this board if the strategic review doesn't yield the outcome plenty on here want, and with SolGold hiving off future profits in favour of cash up front, it's more likely SOLG will be the cornered rat, as we have been for much of this calendar year. Only next time we'll end up flogging a stake in Cascabel to someone like Mitsui for much less than fair value.
There's not much thought going on in terms of what impacts our actions now can have on our future outcome. Everyone just seems to think it'll be an easy sell, as they have for the last 5 years. Well we're still here, unsold and propping ourselves up with deals that have prompted war across the boardroom table.
That isn't something to crow about.