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Whatever way you put it, Ship, it's cheap :)
Honestly Q, you say you've been doing this for 40 years and yet you appear to have learnt the square root of f all.
Oh well, you carry on believing whatever you want, I feel you'll be in for a very nasty surprise if a funding package were ever to be implemented.
Addicknt, I begin to doubt who you are.
This is basic accounting. When we get funding, the equity part is a small percentage. With the advent of construction, we are leveraged in such a way that the books balance from the extra money and extra equity. From that perspective nothing changes.
However the way we are valued changes big time.
We have seen this even in this share.
When we had just over 600 million shares, I brought in at 4.6 pence. Today we have nearly four times as many shares and we are at a higher price. This is because we moved from two donkeys and a drill rig, to our current position. Financing Alpala will move us on again.
LM, you're referring to buying in the market. I'm talking about a fund raise with new equity which, if it were to happen today, would be in the 24/25p range...if we were lucky. The dilution would be significant. There are no funding options which would help private investors, hence the need to flog the asset. Bear in mind NM would be in the same boat as us and can you really see him being willing to have all his influence disappear, because I can't.
Q, virtually none of what you said is true, particularly the bit about the sp rising once new shares have been issued.
Bargain price is a kind way to put it
Sorry not 300 million shares, I meant 300 million dollars worth of shares.
Good morning addicknt, as I said been doing this over 40 years.
If 300 million extra shares issued along with bonds, loans and offtake.
Then the share price increases with the increased shares.
This is because we would finally move from an NPV valuation to a NAV valuation.
Remember we now have the capital to construct Alpala, and with funding arranged the market will be factoring in future earnings.
As I am sure you know when we have a NAV we are valued in a totally different way.
Next it makes it far easier to raise funds for our other exploration projects.
Yes some further dilution but also loans against the company, because we will have a large asset that has future earnings.
I am sure you get the rest.
It's Sunstone but Solgold gets a mention and it's all very positive. We're at an absolute bargain price right now. GLA
https://www.proactiveinvestors.co.uk/companies/news/986478/sunstone-metals-ecuador-projects-continue-to-deliver-taylor-collison-986478.html
Following mining optimisation studies, the production profile for the Cascabel
project is based on a capacity of 25Mtpa, fed by the underground block cave at
Alpala. The project is expected to reach nameplate capacity in the fourth year
from the start of process plant operations with first ore expected in mid-2029.
The initial Mineral Reserve represents only 21% of Measured and Indicated
Resources tonnes and approximately 38% of contained metal, providing
significant opportunity for conversion of further M&I Resources in time. This is
likely a reflection of the technical work required to add subsequent caves to the
current operation which would add little to today’s NPV and IRR due to their time
horizon, but which may otherwise have delayed the study. As such, SOLG
estimates there is potential to extend the mine life by in excess of 50 years (76
total). This could be accompanied by a modular expansion in processing capacity
to >30Mtpa, supporting a longer peak production profile as grades begin to
decline around year 9...."
Really, truly, the end!
Z
"...Whilst TAM has potential to add cream to Alpala’s NPV, we believe the benefits go
beyond our hypothetical mine plan. In our modelled scenario, with TAM giving
way to Alpala’s higher grade feed from FY30 and reduced to nil in FY31, there
remains potential to extract a further 254Mt @ 0.29% CuEq based on Indicated
material within the updated MRE. This could provide flexibility and cash flow
‘insurance’ as the block cave develops. TAM’s underground mineralisation also
appears promising and we believe is likely to grow substantially from the current
resource (Indicated: 172.0Mt @ 0.35% CuEq and Inferred: 69.4Mt @ 0.36%
CuEq)...."
Z
"...TAM open-pit mineral inventory could boost NPV…
Whilst TAM was not included in the Alpala PFS, we believe the deposit shows
clear potential for eventual incorporation into the mine plan at this early stage.
SolGold has also planned work including assessment of potential near-surface
mining options at the Cascabel project. The premise appears compelling with
production able to be brought forward and reduced funding risk, in our view, as
TAM offers cashflow whilst SolGold initiates the cave at Alpala. We therefore
model a conceptual scenario below to highlight potential upsides (based on our
updated 25Mtpa operation). Capital expenditure is assumed to commence in
FY25 (in-line with our Alpala only model) and an additional ~US$250m of
growth capex is estimated, including US$80m of pre-production mining at TAM,
in line with other near-surface porphyry projects in Latam.
We then leverage TAM’s higher-grade outcropping zone containing 28.0Mt @
0.43% CuEq and 10.5Mt @ 0.55% CuEq to kickstart production in FY27, ramping
up into a complimentary mine schedule with Alpala in FY30. Recoveries are
estimated as in-line with Alpala at 87% for Cu and 77% for Au and opex costs are
assumed flat with lower open pit mining costs offset by an uptick in transport
costs to the Alpala hosted plant. The result would be a US$239m increase in our
Jun’23E NPV to US$3,598m...."
Z
"...Aladdin’s cave: By-product production will make Alpala one of the
world’s largest gold mines…
Whilst no surprise given the 21.7Moz gold contained in M&I Resource grading
0.25 g/t Au, Alpala is set to produce an exceptional 7.6Moz of by-product gold on
the initial PFS mine plan. Production is expected to peak at 829koz and average
680koz per annum in the first five years following initial cave ramp up. This
would place the project within the top 15 gold mines by production worldwide
based on 2021 figures, and the third largest in Latin America. We believe the
significant by-product output will likely prove advantageous project financing
discussions, with potential to issue a precious metal stream or royalty...."
Next Step:
"...SolGold is currently progressing additional optimisations to be included in a PFS
Addendum, slated for H2 CY22, ahead of completion of the DFS, expected in H2
CY23. Engagement with the relevant government departments is anticipated from
Q2 CY22 to commence fiscal discussions and the permitting process. This could
lead to a potential construction start in Q4’24 and first ore in 2029 in an Alpalaonly scenario. SOLG has a cash position of US$58.4m (Feb’22) to progress its
studies; at a guided cash burn rate of US$70 – 80m per annum, additional
funding is likely required prior to publication of the FS...."
Z
"...Specific tax incentives at Solaris’ Warintza project include a 5% reduction of
income tax, fixing the income tax rate applicable to the Company at 20%,
exemption from the capital outflow tax, as well as the exemption of all import
duties for the import of goods needed for new investments in the Project. SolGold
itself announced an initial IPA in November 2021. The agreement included
investment intentions as well as tax stability for 15-years and international
arbitration in London if there are any disputes in relation to the Cascabel Project.
We would expect to see an updated IPA in early 2024, with the current agreement
covering planned investments through to the end of 2023 which would be aptly
timed with the upcoming Feasibility Study. The expected 3,000-person strong
camp is also a significant source of skilled employment within the area...."
Z
"....Ecuador has been subject to civil unrest in recent weeks, sparked by indigenous
group protests surrounding the cost-of-living crisis. On Thursday the government
agreed to concessions including a 15c cut in fuel price. The government also
pledged to cancel an executive decree to increase oil output, and change a mining
decree spurring development to add additional environmental protections and to
respect archaeological remains. Whilst the situation appears delicate, Ecuador has
made significant strides towards attracting FDI in mining projects. The country
has risen from a score of 45 (2015) to 73 (2021) on the Mining Investment
Attractiveness Index according to the Fraser Institute, surpassing Chile (69) and
Peru (61).
Several Ecuadorian explorers have announced work towards Investment
Protection Agreements (IPA) with the Government of Ecuador in the past weeks
including Solaris Resources and Adventus Mining. The IPA provides a foundation
of certainty with respect to the legal framework governing future projects,
including stable mining regulations, security of title and investment for the term
of the agreement, as well as new tax incentives to accelerate development. ..."
Z
"....Alpala now contributes ~US$2.3bn to our SOTP based on 85% ownership and a
target P/NPV of 0.8x our ~US$3.4bn DCF (as at Jun’23E). We add a further
US$72m assuming 0.3x our ~US$240m DCF for the conceptual inclusion TAM.
We then include US$150m for SolGold’s regional portfolio including US$75m
for Porvenir and adjust for net cash and outstanding options and warrants to
derive a GBp85/sh target, implying ~200% upside. SOLG has a cash position of
US$58m (Feb’22) to but we note that at a cash burn of US$70-80m pa
additional funds will likely be required during H2’22...."
END
Z
"....SOLG is assessing optimisations that will be included in a PFS Addendum due in
H2 CY22, in preparation for the Definitive Feasibility Study (“DFS”) planned for
completion in H2 CY23. This is likely to include upside which we believe could
be unlocked through a satellite open pit at TAM. Our conceptual scenario
estimates TAM could bring forward first output from the Alpala plant by two
years, enhancing the NPV by US$240m whilst also providing flexibility and
derisking the Alpala cave operation. The Alpala Mineral Reserve is another
avenue of upside, currently representing only 21% of Measured and Indicated
Resource tonnes and ~38% of contained metal. Inclusion of additional material
could see the throughput jump to over 30Mtpa by adding another module,
though follow-on caves are beyond the scope of key technical work at this stage.
Enhanced fiscal terms could be agreed in an updated IPA (early 2024), with
Solaris Resources recently announcing a 5% reduction in income tax to 20%
amongst other incentives, setting precedent and providing further confidence in
Ecuador for FDI..."
cont'd
".....The PFS initial mine plan targets the Alpala high grade core within one cave,
with copper grades expected to average over 0.75% (~1.35% CuEq) within the
first 10 years of production. As a result of strong by-product contribution and
highly productive bulk mining methods, Alpala enjoys low cash costs of
US$(0.40)/lb Cu and AISC of US$0.06/lb Cu on a post by-product basis. This
places the project well within the first decile of the global copper cost curve
(according to WoodMac 2032 estimates). Within this is an exceptional negative
AISC average of US$(1.38)/lb in first five years from achieving nameplate
capacity (190ktpa Cu, 680kozpa Au and 1.3Mozpa Ag average annual production
in that period). These quantities would place Alpala within the top 15 and 30
projects globally for gold and copper production respectively (vs. 2021 global
production figures), and in the top ranks of undeveloped junior held projects...."
cont'd
"....The revisions to our estimates follow release of PFS results on 20th April and the
technical report filing on 1
st June. Key changes include a reduction in throughput
to 25Mtpa vs. 30Mtpa in our previous, pre-PFS model, as the study “right-sized”
the project to a robust base case compared to the 50Mtpa PEA. Reserves of
558Mt @ 0.58% Cu & 0.52 g/t Au (vs. our previous 959Mt assumption) offer a
25-year mine life (vs. 33-years). We also tweak assumed royalties in-line with
the PFS, increasing the Franco-Nevada royalty rate to 1.27% (from 1.00%) due to
production provisions in the agreement, and reducing the government royalty
rate to a flat 3% vs. 5-8% previously. Assuming prices of US$8,500/t Cu and
US$1,850/oz Au, this generates life-of-mine EBITDA of US$27bn and FCF of
US$14bn, giving a 4.2-year payback and an NPV8% of US$3.4bn at Jun’23E (or
US$3.6bn immediately pre-capex), a ~30% like-for-like cut vs. previous H&Pe. ..."
cont'd
".....We have updated our valuation for SolGold (“SOLG”) following the filing of the
Cascabel PFS technical report. The changes result in a US$3.6bn NPV8% and
22% IRR (immediately pre-capex) at US$8,500/t Cu and US$1,850/oz Au,
driving a modest cut in our target to 85p/sh (Jun’23E) from 101p. Nonetheless,
we view this as a solid base case, with tangible potential upside through:
inclusion of the open-pit Tandayama-America (“TAM”) deposit 3km away;
additional caves and throughput capacity to capture the remaining 79% of M&I
tonnes outside the 26-year PFS mine plan; capex efficiencies; and positive tax
regime changes within an Investment Protection Agreement (IPA) for extraction. ..."
cont'd
LM why would BHP, or anyone else for that matter, pay 41p for a fund raise wen our current sp is 27p? What they did in the past is irrelevant.
Anyone have full access to the new research note on SolGold ?
Snip it below
SolGold: Model update following PFS filing; de-risking continues with optimisations expected by year end
We have updated our valuation for SolGold (“SOLG”) following the filing of the Cascabel PFS technical report. The changes result in a US$3.6bn NPV8% and 22% IRR (immediately pre-capex) at US$8,500/t Cu and US$1,850/oz Au, driving a modest cut in our target to 85p/sh (Jun’23E) from 101p. Nonetheless, we view this as a solid base case, with tangible potential upside through: inclusion of the open-pit Tandayama-America (“TAM”) deposit 3km away; additional caves and throughput capacity to capture th.........
Q, you appear to have accepted the argument that at least 300m will have to be raised via equity funding. However, you seem reluctant to accept that this will cause significant dilution. How do you reach that conclusion?
Seanhunter : "Going into production ourselves? Really? I'd rather they spent the money on magic beans."
Correct
I think somebody already has, that or mushrooms.
Definition of Walter Mitty
: a commonplace unadventurous person who seeks escape from reality through daydreaming.