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Interesting comment from Mather...
Confirms my thoughts that he's not done with exploration yet and if anything that comment suggests he thinks the main drivers for restoring shareholder value is through exploration.
It's a curious one as Irwin and CGP bunch see to be beating the 'For Sale' drum.
I'm beginning to think that we are looking at an ENSA sale and then SOLG continuing on with the exploration folio to see if they can rinse and repeat.
Ofcourse, the likes of BHP or other predators out there might have other ideas or for balance they might well be happy with just ENSA.
If you think you have another 10 Alpala's in the folio then it makes perfect sense to flog ENSA and prove the model works. Then find another and Flo that. Problem is, I don't think investors have the patience to wait another 10 years for another tier1 transaction. That said, we know Maxit exited 4 years ago and CGP wanted to sell out many years ago... perhaps the new model could see 18months to 2 years of exploration drilling, deliver a PEA and then flog it on. Then repeat. That would be less rewarding than going to PFS levels but it would be less Capex drain and faster return for shareholders.
One thing is sure from that DGR statement... Mather thinks shareholder value (or the restoration of it) will come from exploring the rest of the folio. Mmm... what about the sale of ENSA Nick?? Surely restoration of value will come from that alone and I would use the word 'realisation' of value in that instance. Not restoration.
Also, clear from that DGR note that $50m royalty is for ENSA alone. SOLG RNS did not specify that like they did with Franco deal hence good to get some clarity albeit from DGR.
If SOLG are not careful, they will pi55 the market off if they continue to have various key investors all putting out public comments that don't quite dovetail up. They need to look cohesive. Also, Maxit doing the Strategic Review says it all! What about Citi's involvement? Or are they now gone? Or are they just there to defend against low balls?
To be honest, when years ago SOLG announced that they had created the four subsidiaries, I interpreted it as the way to separate ENSA from the rest of the exploration program in case of corporate events, and I still think it's the case.
So I doubt that SOLG need to spin off ENSA, rather they can spin off the four subsidiaries and sell SOLG as it is.
Fort, provided shareholders receive a significant share of any proceeds and the company doesn't hoard the cash, the rinse and repeat strategy has always had a good deal of appeal. Mind you, it requires a strong and stable management team and far less shareholder agitation than we currently have.
Paul thanks for sharing this. Interesting to read Mather's comments - it very much looks like the plan is to go back to the SOLG of old and start exploring again. Only problem is we don't have any cash to do so (it specifies the Osisko royalty deal is to be used at Cascabel).
So are we going to sell Cascabel and rinse and repeat across the rest of the portfolio? That is not what Irwin and I imagine the other CGP lot want to see - they want the whole company sold.
Apologies, I did not see that Fort had covered this off before I responded. Agree Fort.
I think a lot can lost in translation (lol!) but the CGP bunch basically owned 15% of ENSA and 6.7% of SOLG. So when Irwin says SOLG sold etc I think he's broadly implying a sale of the main asset - ENSA. Let's face it, he's right... the market values SOLG's folio (outside ENSA) at zero. So SOLG is ENSA and ENSA is SOLG. But... as we all know there are other opportunities in the folio and majority have a minimum $7.5m spend. Porvenir is advanced and may well be sold on or JV'd in future.
Cash to 'explore' will come from ENSA sale. No doubt about that. But how do the CGP exit or get their cash out?? By selling their 18.5% stake in SOLG to whom??
It's a puzzle but I think Mather is not done here and does not want to see SOLG sold lock stock and barrel. He wants to rinse and repeat. He's right, growth does lie ahead via exploration and discovery. Find another 2 or 3 Alpala's and that's going to make ENSA look like a starter on a 4 course meal.
Going to be fascinating to see how this unfolds. But one thing is sure, the share price should be doing very well indeed whether that be through ENSA sale or future exploration success.
There will be plenty of ops for people to exit I'm sure.
How much influence will Mather have on the strategic review, As a NED?
I think ot will come up with a clear for sale sign. Just ask the cornerstone boys who jumped on the merger this time around.
Fortissimo - Warren was asked on Twitter about sale meant cascabel or what and he replied SOLG.
They constantly talk of future exploration and value adding just like they talk about becoming miners.
The truth is solg is a poorly run company with low quality management.
Hopefully the strategic review will enlighten the board into excepting this fact and the best way forward is to sell the whole company to someone who can take it further. Mission accomplished. I'm pretty sure that's what irvin and crew have been told.
Monte don't disagree there it's exactly what I'm does with an explorer imho,so onto the sale
May I remind people of everything we read yesterday.
Nowhere does it even suggest selling anything.
I keep seeing the word partner.
Quady possible on other tenaments nit cascabel I think but nm might want a full sale tbh
Bubble NM has said eventually DGR'S shares would be sold.
He does not want a sale of Cascabel, quite the opposite.
As I said we are talking about partners.
This strategic review won't be just about Cascabel, it involves all our concessions.
Agree all concessions under review
Lunchmoney, agree the $430m+ commitment across those 60 licence blocks is not required tomorrow or next year etc. Or at all. They can relinquish them like they did with the 10 blocks of late. I'm merely using the guide by the company of the commitments based on those current 60 licences. You'd have to go back to the previous RNS on relinquishing the 10 blocks to see the finer details. I've crudely divided the $430m Capex number by 60 to arrive at a broad stroke $7m to $7.5m spend per block.
We know they have been looking to partner up on many of the blocks (grass root level) and doing rock chip sampling all this year. We even had the 'package' comment from one SOLG member of staff alluding to the fact that they are trying to divide the folio up or get a nice basket of licence blocks together to suit interested parties needs.
What we don't know is the outcome on that. But my gut says we are moving to a more CGP style process of getting others to pay and do the leg work on many of these blocks and we retain a 20% or 25% interest. Better than giving them back isn't it!!?
Thanks again for your pointers, really appreciate your views.
sire_frugalman,
That would make sense and be a cleaner solution for all. But for Mather to sign up to that and to be working with CGP, I can only assume that Mather has been promised something that ensures he continues exploration. Now that might be a new company?? Let's call it MatherGold for fun. SOLG gets sold but prior to sale, a bundle (let's call it a package lol!) of licence blocks get sold or moved over to MatherGold Inc. Lets face it, if the market and future buyer out there is not going to price much in for those blocks, then it's not cost much more than prob $10m or $15m at best for MatherGold Inc to acquire various blocks. Let's face it... some could be relinquished soon anyway. Would not surprise me to see MatherGold Inc then do the rinse and repeat process. In effect, it's Mather doing what Mather does best. It's a new SOLG with old SOLG licence blocks lol! I doubt it will fall under insider scrutiny as most blocks are not explored and just rock chips. Acquisition costs 5 years ago were minor etc.
So yes... a full sale could still be possible but the way Mather is talking... he's sees growth being restored to shareholders through exploration. That's clear.
Perhaps the Swiss entity set up a while ago is the way out for the CGP boys or the other way around... the way to park the new ongoing business?
Lots to think about here but that DGR note tells you all you need to know about Mather and Ecuador. He's not done exploring. Not at all.
Strategic review means scrap the "progressing to production" nonsense - small fish in a big pond and, We are not immortal and nor are NM and co....monetise the darn thing, all or parts of it. I know they are listening....saga continues !
GLA
AROK1975 that is the one thing they haven't said.
Think about it the statement is to increase shareholder value. It doesn't say over what period of time.
Getting the updated PFS on Alpala and continuing to DFS increases shareholder value.
Getting a PEA for Porvenir increases shareholder value as we have a stated NPV for Porvenir.
Partnering other tenements increases shareholder value, and bringing Alpala to production increases shareholder value the most.
We hopefully don't have long to wait. A bit more patience required.
It is nice to see NM back in control lol as if he ever went away .. he once said Cascabel would be sold at the right price..if not they would take it to production so nothing has changed there at the moment..as far as the financing was concerned I am sure the 2 big boys were given the chance but at a certain sp which they turned down and NM sorted it in his own inimitable way !! and they did not like it lol..well they should have paid fair value then otherwise NM will source the finance elsewhere which he is very good at
Exactly Not2sure.
You are stating the company position.
NM July 2020:
“The market capitalisation of SolGold is well underneath the value of Alpala alone without considering the value of the 13 other projects. There is of course continual speculation that the company may receive takeover offers. It would need to be very hefty to receive my recommendation.”
BHP don't really need to do anything until SOLG announce an offer. Let's assume the maxi bunch engineer a consortium bid for SOLG of say 55p.
Let's assume that it's recommended by the BoD's.
So now what happens... it goes for 55p? Well that would likely require BHP and NCM, Black rock and Norges et al to agree to 55p. At that point you'll know whether BHP want to make a higher offer. They simply can't stand by and just sit on hands. They'll need to put up or sell out.
SOLG can force BHP into a decision simply by continuing to do royalty deals and eating into the asset. They don't have to find a buyer for ENSA. But one thing is sure... BHP will be forced into making a decision at some point in the near future. (within the next 4months is my guess).
Fort @13:50
55p would be the absolute maximum that I think Maxit would be able to extract and if I'm being honest I think their rather public riposte has made that job nigh on impossible from the big two shareholders. They will not appreciate being told where to go in the press.
55p is going to be in the region of £1.5bn based on post merger fully diluted share capital. The only companies that will spend that amount will be those who can finance the initial Capex from existing cash resources. Anyone else who needs to borrow simply won't pay 55p/share.
Your point about Norges/BlackRock et al rejecting an offer at that level is an interesting one. It's not inconceivable to assume that certain parties may reject offers at various levels given the return on their investment that represents.
That sounds like a diverse book in action to me.
The suggestion that SOLG can just carry on doing royalty deals is another Fortissimo brain fart I'm afraid. Each royalty deal is a drag on future profits as you know. Why would SOLG continue to keep shooting itself in the foot like that. It makes zero sense as what happens is a tier 1 asset ends up with a very marginal return on investment due to the cost of debt and the project then relies on very high metal prices.
Every royalty deal SOLG does now is SOLG ushering potential buyers towards Filo, Solaris etc etc. It's self sabotage on a ridiculous scale.
Be very careful what you wish for folks,and think this through before you recommend Fort's posts. He's creative, eloquent and articulate but by golly he's also a little naive.
Bozi,
Read the royalty deal clauses. Understand the structure of them.
There's only one naive person around here and it's not me!
Any buyer of ENSA will have deep enough pockets to buy significant % of royalties back.
Anyway... I don't think there will be more royalty deals, I was just suggesting that if Maxit wanted to rub BHP's nose in it and force them into making an offer (one assumes they want this world class tier 1 project??) then Maxit just have to knock out another $50m royalty deal and watch BHP's thunder! Of course... they can buy it back... but at a fee.
The message is clear.... play silly games and it's going to cost you more.
That's my last post to Bozi. I wish you well but no longer see any point in engaging with you. I just can't be bothered any more with your snipe like posts. Time to move on.