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Morning all. Just about to vote, and have looked over resolutions again. I cant see why wouldnt vote in favor to all ? Could anyone suggest why you would vote against ? Appreciation in advance. Cheers.
ATB
DK
I relented and voted for everything yesterday afternoon.
Not happy, as I would have liked clarification on the strategic review before the vote.
Vote against for a cheap BHP takeover...
Quady on balance you’ve done the right thing
Quady indeed you've done the right thing there imho,now should I say it or should I let novice say it !!:)
What clarification are you looking for Quady?
I really wouldn't want to be out of this over the next couple of weekends !!!
ONWARDS & UPWARDS!!! ;))
You need a real holiday novice :)
Good afternoon Bozi, I would like to know the outcome of the strategic review.
Quady - so what you mean to say is that you'd vote against the board at the AGM if the strategic review favoured anything other than a JV or continuation of development?
You honestly can read through quite easily right now and say that's not going to be the case.
Sangha and Cornerstone are geared towards one outcome only. The only question is if they will lock stock us to the first acceptable bidder or whether they will be smart and retain the regionals for future growth. That is the only option in play here.
And before you ask what I'm basing that on, just read the recent RNS', form an opinion on Cornerstone's motives all along. It's clear to me and anything else would come about as a huge surprise, and only because there's a lack of interest at the price point that would be sufficiently agreeable.
Also, the strategic review was never going to be a one month process. Its a 6-12 month job. It will only gather true pace once the first matter at hand, the merger, has been ratified and closed.
Q2 2023 is when things will come to a head here either way.
As you know, I don't say any of the above to spite you or look for a row. It's just how it is for me.
Careful Bozi- that 3rd rail is live! Don't mention '12 months' here: people get *very* upset...
Bozi you misunderstand me.
I do think a JV to production is the most likely outcome.
But if we were to get over 1 pound a share that would be a decent outcome.
I make my investments for the long term for part of my portfolio and some are speculative.
My investments in Solgold and VRS are speculative.
My investments in DLG, BP, VOD and Lloyds are long term and income providing.
I haven't Quady.
Please give me one reason why a Cascabel JV is the most likeliest outcome?
In a JV world SolGold would need to fund their share of Cascabel, all the regionals exploration and development and that's after making a return to shareholders because quite simply they wouldn't get away without making one of some sort.
Also, if we're to attain a £3bn valuation for the company based on a partial holding in Cascabel, what needs to happen in the short and long term?
We'll have 3bn shares in issue or thereabouts post the merger with CGP. If we go straight 50/50 how do you suppose we're going to raise the finance bearing in. Ins the points I made the other day about the rapidly growing cost of capital?
You know once upon a time I banged the production drum with you. The economics were astounding. It was a fantastic albeit speculative proposition.
But that ship has sailed. It's already off on the horizon. There isn't a chance SOLG is going to farm out half of Cascabel, allocate the proceeds to shareholders and other projects and the sell streams and off takes on the remaining half we will own to fund construction. There will be nothing left for us. It's a zero sum game.
The only way Cascabel delivers value from here is to someone who is rich enough to invest in development without the need of banks and smelters.
OK Bozi.
It's the complete picture.
No one is going to buy us unless they can get us cheap.
No one is going to sell because they want full value or close to it.
So no one makes a bid.
We carry on and eventually we keep raising funds.
Or we build it ourselves.
If the CGP deal is completed we own 100% of ENSA and we can finance this cheaper and quicker.
If in a JV it becomes even more affordable.
Q, I asked you yesterday for the reasons you think a jv is better than a disposal. You said you'd explain, but thus far I haven't see it.
I think that is just too simplistic and overly naive..we would not get even half way down that road before being swept aside and more than likely far worse off financially
Hi Quady. "No one is going to buy us unless they can get us cheap."
You don't know that though, aren't you just basing that on comments from Mike Henry? There are more potential buyers than just BHP. History is littered with examples of M&A where the buyer paid way too much for the target, it happens all the time. Additionally I would say that what even is cheap when it comes to a mine with a 55+ year life of an in demand metal? Considering the cashflows at peak capacity you could say that $2bn or $3bn right now is good value to secure all that copper and gold, especially if prices go up as anticipated.
"No one is going to sell because they want full value or close to it."
Yes but there reaches a point where selling is the only way to realize any value for it, because if they continue to hold and Solg reaches a point where it cannot fund construction, value will be destroyed. Likewise if you hold too long and Solg is forced into a poor value JV or similar to try to cling onto some ownership of Cascabel and move it forward, you might be staring down the barrel of a SP in the single digits for years to come and 40p today will in hindsight look like a massively missed opportunity.
Quady - having an extra 15% interest in Cascabel is not going to change the cost of the finance. It might open up more options but the cost will remain the same, and frankly it would be extortionate as things are right now.
The absolute best we can hope for, is that such a package is 2yrs+ away by which time interest rates will fall and debt may be slighly more palatable. In any event we'd still be looking at 8-10% in my opinion and that isn't an area we should be straying into for a project this size.
There's going to be a compromise Q. Put this in your diary and hold me to it.
Those who want to sell are revising their previous demands lower and those looking to buy will need to meet them half way. So, for example, we could end up looking at 50p as a half way house to the upper target of 80p and a low ball target of 20p. BHP and the likes can afford this. They just need to be warned off causing carnage and burning us all, which I know they'd like to do.
If you want to justify a JV you need to start setting out some figures. You need to put a compelling argument together instead of repeating the same 2 or 2 lines verbatim.
What I mean by this Quady, say for arguments sake,
We farm out 50% of Cascabel for £750m. An implied price of c.50p per share on an asset valuation of £1.5bn.
SolGold distributes 50% as a special dividend - 25p/£375m.
The other £375m is allocated:
£150m to fund Cascabel development over 2/3 years
£125m to fund Porvenir development over the next 2/3 years
£100m to fund regional exploration over the next 2/3 years.
At the end of say 3 years that leaves us still on the hook for $1.5bn plus an increase in costs (say +10%) allowing for inflation since the initial PFS. How might this look?
$850m debt
$500m offtakes
$300m equity
On the debt - even assuming an 8%pa lend - we're looking at a total repayment in the order of $1.2-$1.4bn over 5-7years.
Meanwhile, the off takes will reduce Cascabel's upside at higher spot prices from 2030 onwards (as the copper deficit grows) if struck before then.
On the equity, at this level and assuming a 30p share price (£900m valuation) which you could probably argue is fanciful given where we are now, that's an extra 1.2bn-1.5bn shares.
So we end up with over 4bn shares in issue, still comfortably over $1bn in debt and a fair chunk of Cascabel output spoken for.
Would it not be better, to seek an exit at Cascabel of 40-50p but retain the regionals in a new company? SolGold ends as a result of entity and the new company does an IPO fundraise to cover development costs at Porvenir and exploration elsewhere. Production can then become a more realistic dream at Porvenir where the asset is much shallower and can be exploited without a block cave. Finance still has to be sought for Porvenir but it should be a smaller scale project than Cascabel. NewCo eventually funds itself with Porvenir produce and at the same time everyone has had their payout from SolGold.
Q
“I do think a JV to production is the most likely outcome.
But if we were to get over 1 pound a share that would be a decent outcome.”
It does sound like your position may be changing again ?
Have a good weekend all
Anyone who hasn’t voted to back the company yet….please do your bit !!
Quady - I've just realised my initial calculation is wrong. We'd have farm out 50% for £1.5bn, distributing £750m to shareholders for a dividend of 25p.
Bozi, I'm looking forward to the response.
DBW I have always said that production was the most likely outcome.
I didn't see us obtaining 100% of Alpala.
But since we have, I agree a JV is possible and now looks more likely.
I have always looked at the most probable outcome looking at the facts and evidence.
I don't see a bid for all the reasons I have previously mentioned.
But if we get over a pound at this point in time.
Then lots of high yielding dividend shares out their with good dividend cover.
Good evening rcgl2.
I just think if anyone was going to bid for us they would have done it before now.