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Apologies for the delay...there was another major factor that led to me reducing my holding, but I haven't had the time until today to do the background research.
My observation on the 'inept' RNS was that it could imply the need for up to $100m funding between now and the end of 2023, or whenever the DFS is completed. I now have to revise that figure upwards substantially, based on the below.
Here is an extract from the IPA RNS on November 23 2021:
"The terms of the IPA, submitted by application to the Ministry of Production, Foreign Trade, Investments and Fisheries ("MPCEIP") of Ecuador, includes an intention to invest a total of approximately US$430 million over the 10 years between 2013 and 2023 in minerals exploration activities in the Cascabel mining concession, in the canton of Ibarra, province of Imbabura, Ecuador. The US$430 million total includes both historical investments, with a total of approximately US$238 million estimated through to the end of 2021, and planned future investments through to the end of 2023 when the Exploration Phase of activities as defined under the mining law is anticipated to finish."
So if the Company's estimates are correct, that left $192m to be spent IN CASCABEL by the end of 2023.
The MD&A for Q/E 31 March 2022 shows $30.3 spent on Cascabel
It also showed planned expenditure on Cascabel for the quarter to 30 June 2022 of $6.9m
That totals $37.2m this year so far, leaving $155m to be spent on Cascabel alone by end 2023.
Which might in part explain the low volume of drilling on other regional projects and the desperation for J/Vs in those.
Now, Solgold has 800 people working in Ecuador and they have increased their management salary package expenditure with the additions of DC and AS, let alone the other three or more appointments. There may also have been severance costs for Ingo and Lisa and compensation for Jason being demoted.
Nevertheless, if we assume $26m was left in the coffers at the end of June and a quarterly 'admin' cost of $5m (based on the March quarter plus an uplift for the above), this produces $30m to the end of 2023.
So the maths goes like this:
$155m + $30m, less $26m (balance at 30 June), i.e. c$160m to be raised to get through to the end of 2023 with a nil balance.
And this also assumes zero expenditure on regional projects such as Porvenir, where there will be ongoing expense. It also takes no account of the fact that a $100m fundraising for example has its own costs, leaving the company probably with proceeds between $90/95m net.
So Solgold either has one or two major fundraising exercises to complete in the next 12/15 months or a series of top ups or both.
The above explains my current caution and make of it what you will. I think it makes a bid even more inevitable, but when?
As always I'm open to factual corrections where my assumptions or calculations may be wrong. There was undoubtedly a failed fund raise last week, leaving SOLG a ho
Sound comment Lunch...however, this was a signed agreement and despite 'intention to invest' I doubt that The Ecuadorian Government would look kindly on what they might regard as reneging on the deal if it was any less than that.
And like us they have access to MD&A figures...
This is a pretty good summation Red.. and highlights my opinion and why I continue to say the board are totally out of heir depth, and have been for a few years.
I am at a loss as to why they seem incapable or have been so unwilling to monetise/JV our assets over the years to fund ongoing commitments. Head in the sand, it will all be ok, someone will buy us, do a short/medium term equity raise, kick the can down the road until after the next milestone attitude seems to be rife at Solg towers..
The very dictionary definition of stupidly is continuing to vote in the same Solg board members and expecting a different result.
What you have outlined is not any new information, just a clear description of where we find ourselves.
What an asset we have at a time of a global push to electrification and of copper need…. What a sorry state we are in. Not one person invested here 3,4,5-8 years ago would have assumed we would be sat at 25p post PFS, post Porv discovery, post drilling beginning at Rio, post signed investment protection agreements. The snails pace just continues…
The board must know they are done for in December..
This company started to lose its way the moment it changed strategy, and started to have ideas of grandure. Many years ago the idea was to find deposits and sell them to majors and more on the the next one .One morning many years ago Nick Mather woke up and said; I want to be the next Rio Tinto. Its been a slow train wreck ever since.
BHP if you are listening, please bid first thing; you can get the whole lot for 50p.
Mather kicked out as CEO, ward resigned from the board. Ingo out. Cornerstone detest the board. Major shareholders unhappy. Irvin constantly critical. Lies about translations . Areas bigged up for years then they don't even announce assey results. The board toast at next AGM. Is there a pattern here?
Monte, you forgot $4.5m going awol.
Forgot all about the $4.5 m. I wonder who walked away with that? Not that the board would bother to keep us informed.
This is a life style company. Sack the board, get the thing sold.
I've no idea what that pattern is.