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witnessing the denouement of the power struggle between the company and BHP/NCM? Has their strategy been to fund us to the point where we know just how important the asset is and at a critical moment to then attempt to starve us of cash? When that article in AFR (I think) said BHP/NCM were not prepared to put in more cash, what did they actually mean? Were they referring to the structure of the proposed fund raise or, was it a statement of general intent?
If this is their game it strikes me it's a high risk manoeuvre. The company has proved in the past that it can raise money from other sources and even if this proved difficult, would BHP really push us towards administration? The risk of that route is that in an auction of the assets an administrator has to accept the highest offer and there's no guarantee that BHP would win, particularly with their recent track record. There's also the risk that the Ecuadorian government simply take back the assets/concessions and then parcel them out to other parties.
In the light of yesterday's site visit, it seems possible we are targeting new sources of capital in attempt to circumvent BHP's influence. If this is the case it will be fascinating to see how they react.
Of course, I could be totally mis-reading the situation and everything is sweetness and light between us and them and we are cruising towards another successful fund raise with them contributing their share. But somehow it just doesn't feel like this to me.
The problem as I see it addicknt is slightly different.
If BHP and NCM take part in the latest fund raise.
Then we get to DFS and the game changes.
Because as Darryl says other funding options open up and we can construct Alpala with minimal dilution.
So they need to take part to maintain their percentage, but don't want to as that gets Solgold to where it wants to be.
We will have no trouble fund raising, but will be interesting to see what form it takes.
Q, yes, the DFS is a milestone for us, but not for BHP. They'll already know that the project is feasible and of course, they don't need a BFS as they'll be funding it themselves.
In fact, your post highlights the reason why BHP wouldn't want to allow us to get to a DFS. 1) it will increase our value (hopefully) and 2) since they don't need it they could easily be thinking "we're not stumping up any more cash for SOLG just so that they can increase the value and benefit their shareholders when the study is of no value whatsoever to us"
As you know, I fundamentally disagree with you about the dilution question.
Well it’s q4 next week… it’s been a long wait… and I’m expecting the RNS for either PFS or Porv in October. Darryl and the board must deliver something before AGM, and must be seen to be capable of hitting milestones.
They also have to address our funding path to DFS.. If they disappoint again by releasing the PFS update, without clear funding to DFS, the market will simply give another shrug of the shoulders to our news, regardless of how large an increase in NPV they attribute. If there is no funding news, then Solgs traditional spike and immediate sell off will occur.. only this spike will not get over 30p
Genuine question (I could not get an answer about from SOLG): does anyone know what happened to the Swiss entity? Is it still there or has it been unwound? From what I remember and understood at the time, it was set up as the funnel to all big funding coming up and closely managed by Nick Mather, and if I got that right I wander 1) if this is still the case, and 2) whether this is one additional issue that the big guys have with SOLG.
Anyone?
Its still there...scroll down to 'Corporate Structure'
https://www.solgold.com.au/about-us/
addicknt, I could be wrong but think you've got the wrong assumptions there. BHP and NCM are very willing to pile more cash into SOLG for an equity slice. That's always been clear. That's been their game plan since day one. Get as much of the company on cheap equity raises makes sense for them as huge discount to the final offer price. That said, BHP did pay 45p for a wedge some moons ago.
Darryl has already told you that the funding discussions did not arrive at a conclusion due to differing opinions on the 'structure' of that finance. So I think what happened was SOLG presented a structure to BHP and NCM among others and that structure likely resembled this.... $100m via Boliden for ENSA works and $75m for exploration/working capital etc. Basically a rinse and repeat of last year. On the basis of that funding structure... I believe it was likely BHP and NCM said...we don't want that structure and if you go ahead with that we won't be putting in any cash at all. More likely they said they only way they would invest cash into the business is if they got a larger equity slice back eg, they wanted an extra 5% each or something like that fro a £50m each investment and no boliden stream.
Remember.... there was a clear reason why Mather went for the Franco stream deal and the smaller equity raise. It's called dilution. Why would Mather deliver that in 2021 and then just roll over and go with a deeply diluting equity raise in 2022? Why not just do the same again? Of course that's the preferred option and we know NCM and BHP don't like that scenario... and voila here we are with some kind of Mexican stand off with the clock ticking being used as a weapon by some it appears.
Try to look at the events that have past and you'll see the logic and thinking behind them will not have changed. Why would it?
Right Fort, so using your own logic (or imagination), why did SOLG back down to BHP/NCM instead of just cutting them out of the equiry raise and pushing on with a smaller amount of £35-40m (5% of the share capital)?
The downside is that package would have hindered what regional exploration we could do but it would be to the betterment of the development of Alpala. As it is, we're limping along on both fronts.
There were 3 options. The sort of deal you mention, the equity or the deferral. Our management opted for the latter and it has delivered the worst possible outcome.
Where do you get this stuff from Colonel:
"So I think what happened was SOLG presented a structure to BHP and NCM among others and that structure likely resembled this.... $100m via Boliden for ENSA works and $75m for exploration/working capital etc. "
Nick would have approved a Boliden at the drop of a hat!
Barrenjoey brought a cashbox deal. BHP and NCM didn't like it.
A rights issue was suggested instead. The Board said no.
And here we are...
RK why has the board not approved a rights issue?
Fort, on August 5th our CEO said in print that he was not considering offtake agreements until the DFS is published. I don't know how many times this needs to be repeated before you stop claiming that SOLG presented an option to BHP and NCM that involved $100m from Boliden.
I have no idea...if true, it was catastrophic.
I wonder why the CFO and Corporate Finance Director left?
Just suppose for a moment there is a subterfuge going on...?
I repeat...Nick and DGR have lost £70m and CGP £35 million since April...nobody else is selling either...why are they all so quiet...?
Sharket if we continue on this road I reckon he won't be our ceo come December.
Well, you just don't sell into bear market lows RK.
It doesn't mean everyone is happy/satisfied/content. After all, how can they be when they are suffering on paper to the tune you mention?
It's about battening down the hatches and hoping we can emerge unscathed IMO.
Redknight you say this is what happened but is this your opinion or is it FACT? If the latter where can I read about these facts?
Thank you
I don't think there is any subterfuge or clever machiavellian scheme going on.. this has been suggested at every point where the share has collapsed over the last 3-4 years..
we are holding back amazing drill results to release just before the AGM...
we must be holding back amazing drill results as part of our take over defense....
we have the best hole ever drilled... we are just not announcing it yet...
this is the sort of positive reinforcement of mad ideas simply because we are invested here, and want it to be true..
Our board are clearly not taking in part of some grand masterplan, which involves trashing the share price for the greater good! they are just inept.... and at every opportunity have refused to generate the funding, that EVERYONE knew was needed for later in the year, while the share price was in the 30s..
Thank you @redknight1, I should have been less lazy and check that one myself.
I think it's still very relevant then, that ENSA is dependant on funding or trading proceedings originating in the Swiss entity. This might be one reason the "structure" of the deal was impalatable to BHP and NCM.
FYI, the business purpose of Solgold Swiss is:
Trading in raw materials and financing from their direct or indirect parent companies and their or their direct or indirect subsidiaries (collectively the SolGold Group) and project companies that do not (yet) belong to the SolGold Group
Hi anon...
I'm on a private feed at Twitter, where someobody posted definitive evidence of what was stated below.
Of course it isn't fact as far as I'm concerned, but the cashbox was as good as confirmed by Darryl; there was the Berry Street letter; the AFR article(s); and I remember a posted picture I saw which was headed 'Refinitive' if I remember correctly.
But in any case, what I posted below makes total sense.
We know Barrenjoey led an ettempted funding and BHP and NCM were upset because after the previous cashbox, SOLG said it was a 'one off'.
So then you say how else could they raise funds. Of course another royalty deal would have been a no brainer, but if the cashbox was unacceptable to BHP/NCM then a royalty deal would certainly have been after BHP's public criticism of the FNV deal and NCM withdrawing Craig Jones as Board Member as a result.
So that leaves only a rights issue, which of course BHP/NCM would have approved, but there was no cash raise and therefore my conclusion is that the Board vetoed it.
Ingo had been actinf CFO but more important was Corporate Funding Director, so would have worked with AS on possible funding.
Supposing they took a rights issue to the Board and it was vetoed, with no other solution.
If I had been CFO that would have gone to the core of my role.
So I accept this is all supposition, but as you know, I spend many hours a week researching and engaging with some well informed people.
Thats how I camt to the conclusion below.
Hope this helps...?
Smick, I don't disagree. The frustrating thing is that Darryl started off so well. He took over a business that had started to build a reputation for overpromising and underdelivering with the PFS debacle. Mather tried to shoot the moon and failed - we had the crux report and the various delays to the revised PFS.
DC took a more conservative approach and stuck to the the timelines he set out at the start of his tenure. Yes, the market reaction was ultimately subdued and we tracked back into the 30s, but at least we had made robust, tangible progress.
Where he has totally b*llsed up is through not raising funds post publication of the PFS, to allow the business to progress towards DFS and explore the rest of the portfolio. This has meant the SP has (quite understandably) come under pressure from shorters and the macroeconomic environment (dwindling commodity prices, inflation, rising interest rates etc.) and will likely mean we have to raise funds with much more dilution.
As I stated on here the other day, if he can pull something out of the bag that addresses the funding issue without dilution and starts to transform the company in the process - whether that is through a JV, an asset sale or something different altogether - then I think we as shareholders should give him the benefit of the doubt at the AGM. However in absence of something truly transformational, I will most likely be moving on from SOLG as an investment.
And, again about the Swiss entity, they have just changed the auditor to PWC, who knows if that's because there is indeed some big financing package to rate and they wanted one of the big companies for that.
Morning Red
Not trying to oversimplify things but I believe the reason BHP haven’t moved with a low ball offer is because they know it wouldn’t work and would inevitably spark a bidding war …. Thus weakening their position. With years of experience/ contacts in the sector and 25% (at least ) of voting rights to call upon Nick will have an “alternative “ up his sleeve.
Hence the stalemate….. no one wants to make the first move.
Biggest copper/ gold / silver find in the last decade there will be no shortage of interested parties
I really don't get this about Darryl and the BOD.
Why not wait till the end of the year before commenting.
We have had all the communication required.
We know what is happening up till the end of the year.
We also know a fund raise is on the horizon.
So don't pretend that the BOD hasn't done their job because they have.
The share price is unimportant because we are recovering from worldwide Covid, massive worldwide debt leading to money supply problems and hence inflation and thus rising interest rates.
So surprise surprise, people are exiting stocks and shares.
Prices are falling. Something I didn't think I would see is I have lost a third of my portfolio on paper in the last year. That trust me is a lot of money even for the great Redknight.
However am I worried ?
Well of course I am, but as a seasoned investor I am aware things happen.
So am I selling. No I am not, I am buying more Vodafone, more DLG and am not increasing my holdings in BP, Lloyd's or Solgold.
I did however increase my small holding in VRS a bit.
Still a small holding, but now five times more than I had a week ago
We just shouldn't be concentrating on Solgold. In my opinion bargains to be had in lots of places.
Just to add great time to build a dividend portfolio.
I have been buying DLG at 2 pounds.
1.85 pounds this morning.
That's a yield if over 12%
This is not a recommendation.
In fact don't buy them, as I will have some money next Wednesday to buy some more.
Good luck everyone.
You're much more succinct than me DBW.
Agreed...again...why can't we fall out like the others...say something outrageous...!
Off to play golf...
1. Cornerstone would not likely take up any rights issue/equity raise (they would be forced to sell the rights)
2. DGR would not likely take up any rights issue/equity raise (they would be forced to sell the rights)
3. Telstar would not likely take up any rights issue/equity raise (they would be forced to sell the rights)
4. Mather would not likely take up any rights issue/equity raise (they would be forced to sell the rights)
These guys collectively hold near 25%.
Hence if they were not up for a rights issue or placing, then there's a 25% short fall. Furthermore, you can add a bucket load of pi's and HNWI's which also would not be up for it. Lets say about 15% to 20%.
In a nut shell it's nigh impossible to get away a large fund raise based on open offer or rights issue basis if nearly 45% would not take the rights or placing up. You'd have an overhang that would last for a year+.
Getting away $50m would not be a problem.
At end of the day... it's about getting the funds secured and trying to avoid a broker unwitting which sees bucket loads going into unknown hands. You want to issue equity 'strategically' where possible. So that's why I was hinting that you need a new player to come in like Fortescue or Wyloo or Gina etc as that would avoid BHP and NCm gaining an almost near controlling stake (if the raise was £100m+ or more).
Redknight, I don't think the BoD's vetoed the RI plans (if there were any) I think 25% of shareholders just said NO.
BHP and NCM can cry all they like but if a partner deal is announced (bit like Wyloo and GGP) then it will need a vote at the AGM. And if it gets voted through then BHP and NCM have no reason to complain. Of course... BHP can always offer a buyout. lol!
That's democracy and it's better than being bullied around by the likes of BHP and co.