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TSXV-listed Cornerstone Capital Resources (stock symbol “CGP”) was a first mover in Ecuador. It acquired the Cascabel copper-gold porphyry property in 2011, brought SolGold in as funding partner under a farm-in arrangement in 2012, and was project operator through to the discovery drill hole in February 2014, transferring operatorship over to SolGold in September 2014. The Alpala deposit on the Cascabel concession will become Ecuador’s largest mine, and one of the world’s most important copper producers, when it begins production in 2029. It also contains more gold resources than Ecuador’s largest current gold mine, Fruta del Norte.
Cornerstone retains a 15% direct stake in Cascabel carried (financed) by SolGold to completion of a bankable feasibility study and repayable out of Cornerstone’s share of dividends or earnings from a mine at Libor plus 2%, plus 6.9% of the shares in SolGold, for a combined project interest of 20.8%.
The recently completed Pre-Feasibility Study (PFS) shows: (1) an after- tax NPV (@ 8% discount rate) of US$2.9billion, 19.3% IRR and 4.7-year payback @ Base Case (Cu-$3.60/lb; Au-$1,700/oz; Ag-$19.9); (2) an initial capex of US$2.7billion for the initial block cave development, first process plant module and infrastructure; (3) average annual production of 467MM lbs copper equivalent (291MM lbs Cu, 358kozAuand1MMozAg)@anall- in sustaining cost of US$0.06/lb Cu; and (4) an initial 26 year project life @
25Mtpa, with the potential for a mine life of >50 years.
The project has already attracted investment from majors such as Newcrest and BHP Billiton, BHP having a 13.6% and Newcrest a 13.5% stake in SolGold (or~11.5% of Cascabel each) so Cornerstone’s strategic 20.8% interest makes it an attractive acquisition target says H. Brooke Macdonald, Cornerstone’s CEO:
LatAm INVESTOR
24 Q32022
“There are simply not enough copper projects in the development pipelines of major mining companies to meet the anticipated demand for electric vehicles and low-carbon electrical infrastructure by 2030-2050, and underinvestment by the majors in early stage copper exploration means to maintain their production profiles and market valuations they will need to buy reserves - by acquiring juniors like Cornerstone and SolGold - to replace reserve depletion, so we anticipate a frenzy of M&A activity for existing copper projects like Cascabel as well as companies willing to fund drilling in potentially large porphyry system
environments in good jurisdictions like Ecuador.”
Macdonald expects Cornerstone Capital Resources to be bought out within the next 12 months. At present the company’s market cap stands at around $119million with a share price hovering around CAD$3.19. Yet analysts believe the recent pre-feasibility study for Cascabel means Cornerstone is worth much more. A conservative estimate from David Davidson, the Senior Analyst, at Paradigm Capital, has a $6.50 target on the stock, which he rates as a speculative buy.
he is saying "sooner rather than later" so I don't think he plans to get to end of year before raising..... I expect a short term primary bid type scenario
SolGold boss Darryl Cuzzubbo says the in-demand copper hopeful has enough cash to get through at least the end of the year, playing down the impact of a stalled capital raising effort on the company’s future.
Shares in London-listed SolGold dipped sharply last week amid rumours some of the company’s shareholders had baulked at proposed capital raising, aimed at funding the next round of work at SolGold’s copper project in Ecuador.
Speaking on the sidelines of Kalgoorlie’s annual Diggers and Dealers conference on Wednesday, Mr Cuzzubbo confirmed the company had “tested the market” on a raising, but had not gone ahead amid tension between shareholder groups over the structure.
SolGold has had somewhat a fractious relationship with its two biggest shareholders – BHP & Newcrest Mining, who each control about 13.5 per cent of the company – for much of the last two years after a falling out over the debt-focused funding strategy of former boss Nicholas Maher.
Mr Maher also remains a major shareholder, partly through DGR Global, and the company also has a number of activist funds on its register.
“BHP and Newcrest have a view on how we should be raising capital funding. Other shareholders have a different view on that. And we need to work through what’s best for all typical shareholders. But we have time,” Mr Cuzzubbo said.
Mr Cuzzubbo said SolGold had about $26m in the bank, enough to get the company through until the end of the year, but acknowledged the company would prefer to head to the market sooner rather than later.
SolGold is chasing big copper and gold targets in Ecuador and has been the subject of ongoing takeover speculation after both BHP and Newcrest took substantial equity positions in the company a few years ago.
Mr Cuzzubbo said that, despite the ongoing speculation about potential bids, his focus remained on the development of the company’s Cascabel tenement group.
“I’m not worried about getting funding through the definitive feasibility study. I’ve had multiple calls with investors. I’m not worried about it. And DFS, by the way, and the bankable feasibility study, that then opens up offtake options and funding related to that as well. So you get to that point, it opens up other options,” he said.
“When you talk to people they always ask him about the acquisition angle. But our primary focus is to optimise Cascabel and derisk it. That’s how you build value.”
Mathers - 12:47 post is wildly inaccurate.
What will dictate anyone's return on investment is market demand for the stock outstripping supply by such a factor that the price has to increase to a level the individual finds acceptable.
Here you are Red
“Shares in the Brisbane-based, London-listed developer dropped last week on rumours of an unsuccessful capital raising.
CEO Darryl Cuzzubbo confirmed the company tested the market.
"We'll need funding for the DFS. We've still got $26 million in the bank, so we've got some runway there," he told reporters on the sidelines of Diggers & Dealers in Kalgoorlie this week.
"We did see if we could get it in the in the short term, but we've got some time."
Cuzzubbo said the company would consider a variety of funding options.
BHP and Newcrest Mining each own about 14% of SolGold.
"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. And again, we've got time to do that," Cuzzubbo said.
While the relationship between SolGold and its two major shareholders was strained under Cuzzubbo's predecessor Nick Mather, it has been on the mend since Perth dealmaker Liam Twigger joined the company in 2019.
Cuzzubbo, a former BHP and Orica executive, joined the company in December last year.
He said the first thing he did was reach out to BHP and Newcrest.
"In fact, I met with Newcrest on day one and BHP in the subsequent week," he said.
"Look, I think we've got a very open relationship. We share what we're doing with them. They saw the value in Cascabel and in Ecuador more broadly.
"Their support means a lot, right? So a lot of investors look at us because of BHP's and Newcrest's support, so it's an important relationship, and I would say it's a respectful relationship."
Cuzzubbo pointed out that SolGold's recent Cascabel prefeasibility study showed the project would generate free cashflow of US$1.4 billion a year, peaking at $1.6 billion per year, based on a copper price assumption of $3.60 per pound.
"So if you take BHP or Newcrest, or any majors' view, they're looking at this as multiple decades and they're seeing SolGold as a mining jurisdiction, not just Cascabel," he said.
"So it's a long-term game being played out here."
SolGold is targeting the release of a PFS addendum in the December quarter, which aims to add $1-1.8 billion in pre-tax net present value.
The April PFS returned a post-tax net present value (8% discount rate) of $2.9 billion and internal rate of return of 19.3%.
https://www.heraldsun.com.au/business/solgold-expansion-plans-wont-cop-capital-issues-says-darrly-cuzzubbo/news-story/ebec28b759b6d97a2bd31e41cc067326?amp&nk=91cb0bb8eb80f6bbb1d257195d4c3429-1659701942
SolGold expansion plans won’t cop capital issues, says Darrly Cuzzubbo
SolGold boss Darryl Cuzzubbo says the in-demand copper hopeful has enough cash to get through at least the end of the year.
The Australian Business Network
SolGold boss Darryl Cuzzubbo is chasing big copper and gold targets in Ecuador amid capital constraints.
SolGold boss Darryl Cuzzubbo is chasing big copper and gold targets in Ecuador amid capital constraints.
SolGold boss Darryl Cuzzubbo says the in-demand copper hopeful has enough cash to get through at least the end of the year, playing down the impact of a stalled capital raising effort on the company’s future.
22.55/22.83 in 100k...
Down into the 22s now.
Does anyone have a subscription?
https://www.mining-journal.com/events-coverage/news/1437266/solgold-weighing-up-funding-options-for-cascabel-dfs
Can buy 150k but only sell 50k...
Blame the funding 'fail' brad...and the hiatus since...the SP closed at 27.45 the night before the fated RNS...since down over 16%...
5 days and all it does is fall, some one really wants this cheap or we are all being taken as fools.
Sharketmare,
What will determine the return on your investment is real news, factual posts and then a opinion on that real news is worthy of a post
As you put it Solgold has a prized asset in a tier 1 mine, so why would a major walk from that?
Not many tier 1’s around is there, in business you don’t cut your nose of to spite your face, even if you don’t like the BOD’s or some other silly reason, 50+ years of mining, only a fool would walk from that imo
Atb
Mathersfinger, in absence of actual news from the company, of which we've had very little this year, investors are going to speculate as to what is going on behind the scenes. And discussing the possibility of one of our majors deciding to no longer pursue SOLG isn't just the fatuous 'making up of scenarios' you make it out to be. The SOLG story is one of a years long struggle of ownership of a prized Tier 1 copper gold asset in Ecaudor. How that plays out is certainly worth speculating about, as it will determine the return on our investment.
I have been in this share for ever and I don’t have a clue what’s going on it’s very depressing
I see our most unintelligent poster is back with a rac.ist name.
He will be removed.
Where will it bounce from...?
Thats the price to sell 100k or more dave...just dummy checked...
Looks like someone based out well under bid for 2 chunks....stops getting triggered I assume..
Thats exactly what I was saying.
Sliding now...sub 23p...
Why not just wait for the RNS’s to come, what if and this did that, such sh*ti is posted at times.
Why would a major lose a tier one? Ecuador is open for business as it really needs to pay it’s debts, Lasso is doing all he can, Solgold we will have to wait to see what they can do, but they are well in with Ecuador and the government and the people
Yes there is always risks to any investment, that’s why there is a sell price if you are worried, but to make up scenario’s none stop is just bloody silly, good reasoned debates on what you actually know is much better, just my opinion.
So let me get this right, you expect there to be a bidding war by year end, so you sold out 800k earlier this year and just recently another 500k and this week you are now buying them all back ready for the bidding war, "stocked up".?
A great strategy.
Z
Was their a market pause between 10.10 and 10.43...? No stock traded...unlikely to be in auction given the low volumes today...interesting...
A well reasoned post rcgl...
If one of the two 'walked away' I think they would sell their entire stake to another major rather than work them out through the market...
Both BHP and Newcrest paid significantly above the present price. If you think what a $50m cash raise would do to the SP, what would a c$100m stake being 'worked' in the market would do...which means it would be steadily reducing the ultimate proceeds.
When Newcrest withdrew Craig Jones, they carried out a strategic review of what to do with their stake and decided to keep it as a strategic investment. That means they expect to more than recoup the cost over time...or by a straight sale.
The most obvious buyer would be BHP, which with buying in the market could take them to 30% PDQ, but...
If another major bought it, it would give them a strategic foothold and starting point before a bid.
I'm certain the Chinese would pay well for Newcrest's stake, whether or not the Ecuador government wants a threatened stranglehold on mining as well as oil...
So I'm not worried about a stake sale by either. The most likely is Newcrest. If it went to BHP I would expect a final exit price on takeover to be lower than if it went to a major such as Barrick...look what happened at Noront...