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With the dust having settled, I've taken the opportunity to speak to my contact in the City and, while she has no direct relationship she is very well connected with market participants, including those who advise prospective subscribers. Also anyone who works in the City knows it is a village and you can't keep a secret, viz the two 'informed' articles in the last couple of years saying there will be a takeover bid, e.g. "the hottest takeover story in town..."
I have some understanding of FCA regulations, having been both a broker and a principal in capital markets, but its moved on a great deal since my time and it was refreshing to catch up on stuff relevant to last week's debacle...so...
We need to put the TWO RNSs together (the 'inept' one and the 'voting rights' one).
They are BOTH clarifying statements required under FCA regulations as a result of the failed equity issue.
So...because certain parties would have been approached and some might even have indicated or made a commitment, they would have been precluded from dealing in Solgold shares while the issue was 'live'. Furthermore, they will have been given an up to date story of where SOLG is at because in the absence of a Prospectus they would have needed a rationale to buy.
Once the issue failed, they remained in that privileged information position and would continue to be precluded until these clarifying statements were released. So the first RNS simply summarised everything the prospective investors would have been told and nothing more that wasn't already in the public domain. The second confirms no shares were issued. Together they release those prospective investors to deal again in the market.
I referred to the first RNS being inept, but the ineptitude was in being persuaded by a bank to embark on the issue and then having it fail. We may never know whether it failed completely, I think it is more likely that it was pulled because the terms weren't sufficiently attractive for enough investors to commit and fill the subscription.
That is the ineptitude: an ill judged and failed fundraise; and then the requirement to as good as admit that to the world (later confirmed by Berry Street).
So where does it leave Solgold and us?
Any prospective investors that were approached are left in no doubt that Solgold needs a raise, which makes the company a 'hostage to fortune'. The SP has already fallen as a result. There may well be sufficient interest from existing investors such as Norge, Blackrock, Valuestone and of course BHP and Newcrest (and DGR and CGP if they can raise the cash) to be the bedrock of a successful issue which I believe would have to be pitched at c20p.
For some there is a sound logic in holding on for a bid(s) that surely cannot be later than end December.
Others, like Max, may already have sold with the intention of buying back; others may have spare firepower, waiting for their target entry point. Good luck to all of you whatever you
RK, that's very interesting, thanks.
Very impressive post redknight1..........!
Thanks Lunch...
Meanwhile surely SOLG wouldn't have tried to hawk the whole deal to BHP because that could have increased their percentage holding to almost 29%...inviting a bid...
Please don't say you're also part of the 'this is all a stitch pop by Darryl the BHP stooge' conspiracy group...
stitch up...
Redknight, many are aware of the transparency requirements and that's hardly 'getting to the bottom' of the reason it failed. I'm surprised the city insiders don't know what amount was going to be raised? And at what price. More over, why it failed? As I said, pre agreements are always sought before finally taking the little piggy to market. So something happened with one of the main players for it to fail. Was that deliberate? It's very rare for a professional book runner or advisor to collectively get everyones agreement and then proceed toward the market only then to have something go wrong. That's why it's likely something changed and it may have been a deliberate ploy by an entity keen on causing disruption and leaving SOLG in a weaker position.
As for 20p? The argument could also follow that now the SP has fallen almost 20% from the 27p/28p pre equity raise level, it no longer suits SOLG to go ahead with that option thus BHP and co shooting themselves in foot. Now the royalty option looks better for SOLG investors (majority of them). Franco has $50m ready for when we needed it. So perhaps SOLG are now being forced to avoid equity issue and seek alternative funding which may well deliver treater shareholder value to majority??
It's not all about raising cash via equity share issues. And the lower the sp the less likely that scenario imho.
Red, good and interesting post. Think that ties in with the point I was making about market soundings the other day.
Lunch I think it was addicknt who said that raises do fail all the time.
Lunch.....I think this December's AGM certainly draws a line in the sand.
With cash burn last quarter at circa 12m we still have some headroom though very little by way of wiggle room. All the time the shadow of a raise looms over us the price will struggle so we need it sorted ASAP.
As for the deadlines for the Cascabel Addendum & Porvenir PEA , I'm confident they'ii be delivered on time ..... what they my contain is up for debate. Ayton has been hired to fund the company and then potentially the project itself..... though I don't see it getting that far. Like Red I can't see any other outcome than an offer preceding the AGM or one immediately thereafter.
Once someone finally makes a play the share price will be rendered totally irrelevant ....NM still has a big role to play here and he could easily sell shares in DGR/Samuels to a third party at any point if he felt so inclined and that's what I believe he was referring to in his recent presentation whilst talking on behalf of DGR
Any raise at 20p-25p now, after a 'successful' PFS and progress at Porvenir, would be embarassing.
‘I appreciate external factors influence the market and hence ease of raising funds. But I suspect there was an opportunity to raise earlier in year, including after PFS, on better terms.‘
I totally agree with this sentiment….. even Alastair Campbell would blush at trying to claim the boards success in any equity raise in the mid/low 20s at this stage.
DBW, Im also of the view Mathers holding, and what he chooses to do with it before December is key… I would like to see him execute the DGR corporate event and sell their share to anyone but BHP, however I believe it will be far below many peoples long touted £1 plus valuations.
There won't be a royalty deal...
Solgold has rebuilt relationships with BHP and NCM. Why would it trash those again?
The current FN deal is costing us 12%pa if we want to redeem it.
So what other avenues do they have other than an equity raise?
Why not do another cashbox. Ingo pulled off a winner with that one...?
Hi Lunch...so why not ring fence it for Cascabel?
Then the $26m is available for Admin and regionals including Porvenir.
And then the quarterly cash balance would look very much better irrespective...
Ortherncopper 11.31:
"DBW, Im also of the view Mathers holding, and what he chooses to do with it before December is key… I would like to see him execute the DGR corporate event and sell their share to anyone but BHP, however I believe it will be far below many peoples long touted £1 plus valuations."
Hear hear. This will be the most exciting SOLG development in 2023, whichever way it pans out.
2022* of course!
Thats a very good point Lunch.