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Quady what j/v?,it's all being sold isn't it?
Addicknt how many times have I answered that.
Please read my replies.
It all depends on how the JV is achieved and what format it takes.
I am sorry but I cannot be any clearer.
Q, gawd blimey! I wasn't talking about the financing, I was talking about the financial implications of a jv for shareholders. To make ot simple, show me your arithmetic which demonstrates a jv is a good option.
Hi rcgl2
I agree with DinnerMoney and have in the past posted estimates at PEA and PFS and we are not too different. But that's for a bid.
PEA= 30% of NPV
PFS=40% of NPV
However the dynamics of a JV are different and depending what form it takes I do believe we get minimal or zero dilution and shortly after we are no longer valued on NPV.
Once we start producing we are valued on NAV and also revenue and as we all know that's a different ballgame and massively to our advantage.
Hi Quady. If you think a JV is the most likely outcome, then that has to mean that the financials of a JV result in a more favourable position for current shareholders than selling Cascabel today. Otherwise the current major shareholders who are controlling the company (Nick and connected entities, CGP) would not go for it.
DinnerMoney just provided a reasonable attempt at valuing Cascabel today around 60p. If you assume current management also think a sale for that amount is achievable, what do the financials for a JV look like?
What would the flows be once production was achieved? Considering Solg's share of the returns would likey be much less than 50% and its share of financing would need paying off, what would the return to shareholders ultimately be? A miniscule dividend starting a decade from now?
I just don't see how you can claim a JV is the most likely outcome without providing some estimate of the resulting financials that would justify it. Which I guess is addicknt's point.
Without a bid, SOLG will just drift for years until there is one.
With a JV, SOLG will just drift for years until there is a bid. ( for peanuts by the JV partner/s)
With a bid and a fair wind we can all log out of this monotonous merry-go-round of a BB in 12 months or so.
Addicknt I think I have worked out why you misrepresent me so often and make out I say things I haven't said.
I could not have been any clearer in my reply.
You are now on about the financing of a JV.
That was not your question, so I suggest you ask the question that you want an answer to.
So let's tackle your second question on financing a JV.
Many ways to finance a JV, so depending on how it's achieved we have different outcomes.
I am on the more positive end and believe this can be done with minimal dilution which is also the company position.
Hence taking this to production in so many ways really doesn't bother me.
If we get a bid then I want as close to a full value offer as possible.
I am happy either way.
But as I have so often stated the chance of a bid looks distant for all the reasons I have stated over the past 7-8 years.
Q, that's not an answer to my question; it's merely your opinion based upon some pretty dodgy thinking. Incidentally, I've also suggested that given you've ruled out the production route and you don't like the idea of a sale, you are, de facto, in favour of a jv - there being no alternative.
The question I've repeatedly asked is about the financial implications of a jv and why anyone would think they are beneficial. Until someone provides a cogent argument in favour of a jv i.e how it will benefit shareholders and also why Sangha and Mather would change their minds, I'll continue to be highly sceptical.
That all sounds about fair DM. I can’t see a buyer just taking Alpala, I’d see any buyer taking Cascabel,.. and id expect all the site would be included in the valuation of Alpala. (not really much added to be price)
however there are so many variables, you could tie yourself up in knots trying to consider them all… for example, you mentioned cost of funds… Any major that buys Cascabel could fund all of the construction of the mine from their current profits made elsewhere. So cost of raising finance is only an issue, if it was part of the deluded dream, of a badly managed minnow to become the next copper major, starting with a giant block cave, of which they have no experience.
Also any major that buys, if it buys, will not want to pay a fair price… they know CGP and Solg want a sale…. They will drive a very hard bargain… it’s inevitable.
Most plausible critique of the various moving parts I’ve seen in a while Dinner. And nothing I’d query in your rationale. Thank you.
The emerging thought in my head is the Chinese. Will they or won’t they. A normal company board has responsibilities to its shareholders which sets a few boundaries, .. I’m not entirely sure how the Chinese business model works when we factor in the ‘phone a friend’ with international ambitions.
Addicknt I have answered you many times on this, this is the last time.
It's not necessarily that I think a JV is a good or bad idea.
I look at the evidence and the facts and believe this is the most likely outcome for all the reasons I have given.
FTJNY
Well done for reverting to the insults.
As of 15 December Mather was interested in 11.9% of the stock via his personal holding and DGR. Once the CGP shares are issued that will drop to around 9%.
No one person has control of any matters that go to a vote of all shareholders. That is why we've seen a significant hatchet buried - in the hope that those who took all the early risk can fend off a creeping takeover.
I'm not saying this won't make at least 40p FTJNY. I hope it goes for a lot more. I'm simply trying to make the point that it isn't as straightforward as you and others think.
The first job Bob needs to do is illicit an opening proposal the company wants to put to shareholders. Why? Because failure to do so wl mean the company is continuing development at Cascabel and that will result in a similar share price reaction to the one seen at Landore resources last week.
Ta again. At my age I should do the sums on paper then type it up rather than in real time using my multitasking skills. I was scratching my head wondering why I was suddenly contradicting my previous estimated range! I’m happy now, .. mathematically if not financially !!
Scrat - you need to factor in post merger share issuance.
So $1.8bn / 3bn x 0.8 so 48p.
Yep DBW, point taken. However, I'd maybe argue Mather had more to lose by not acting. Both personally and through DGR.
Nothing was stopping CGP seeking an alternative deal with an outside party. Mather could never do that.
If you seriously think that after all these years of effort Nick and his associated companies would approve a buy out at 35p then you must be even more deluded than I thought! Never in a million years would Nicks 19 or so percent support such a bid so as I said before anything not starting with at least a 4 is a complete non starter!
And I did mess up. On checking, PI is future revenue / capex so the 2:1 ratio would allow total capex up to 4.5Bn. Knock off 2.9 for the mine build and that allows 1.8 to buy the scenery. 1.8 / 2.2 shares x 0.8 exchange rate comes out at 65p. I’m glad I don’t do this for a living, I’d have even more ulcers.
Ta Dinner. I’m tying myself up in knots with all the moving parts here but I keep coming back to 40-50p not being at all outrageous, 60p tops and that requires some credit for the factors you draw out, and an appetite for strategic geopolitics which any major PLC might struggle with internally if their head of risk is doing their job. And before anyone brands me as a de-ramper, im bloomin well gutted. But perhaps getting myself a bit more grounded for what may transpire.
Bozi
“This is why Mather has, begrudgingly in my view, succumbed to CGP, Maxit and Warren. Because the same was happening to him and he needed allies for the fight ahead”
The same was also happening to CGP so I think it was more a meeting of minds and a few egos had to be shelved in order for common sense to prevail.
The clear plan now is to monetise the asset and move on .
Addinct…. There is no benefit & NM has made clear many times over the years that a JV was not an option from his point of view. Bob Sangha and co clearly aren’t here to oversee a JV either …. It’s not “what they do”
Q, may I ask you again, why do you think a jv is such a good idea for us? I'm afraid I don't recall having seen a coherent and compelling argument from anyone with regards to this possible outcome. Nor do I see how it in any way achieves the stated ambition of Sangha &co.
FTJNY - The fact that BHP and NCM would be underwater on the averages of their own shareholdings is completely and utterly irrelevant. I really don't know why you and others are playing on this, almost using it as a comfort blanket.
After the merger completes, if SolGold issues the shares previously held by CGP to someone that isn't NCM or BHP, both parties drop to under 10%. They lose their influence in shareholder votes.
This is why Mather has, begrudgingly in my view, succumbed to CGP, Maxit and Warren. Because the same was happening to him and he needed allies for the fight ahead.
Now, should an offer come through from someone that isn't BHP or NCM they can both vote against it, but they'll be struggling to muster 20% between them. Add in a few disgruntled PIs who staunchly believe this would be worth more and they're probably closer to 25%. However, they'd be up against Mather and associates, CGP and potentially Jiangxi. They'd be on the wrong side of the fight.
By the way, I'm not necessarily talking about 40% from tomorrow. 40% from 25p takes us to 35p. A fast and smart 100% for Irwin and many PIs would cut and run at that price too given recent performance.
It's about time we started taking notice of the dynamics around us. BHP and NCM coming away from SolGold at a loss is not a factor here. They're multi billion pound companies and they'll make poor investments. It was on them to buy the open market and bring their average down.
Copperpot before AGM and after that's first thing ,second spot prices increasing massively,third interest in buying solgold has increased with Asia interest ,so indeed my prediction can be all over the place and vastly different but facts speak for themselves not fiction ,it's always imminent same with many other explorers which such huge resources proven up ,enough?, Please tell me if am wrong ,off walking now lovely up in the lakes today and around the bay ,fish and chips on the prom the order of the day ...and maybe a pint or two lol!!:):(
Just to round this off. The NPV aggregates all expenditure on, and income from the project, adjusting for inflation. Early years capital out, middle years mining the best, later years chasing what’s left with diminishing margins. One on the tools companies use to compare projects is a ‘profitability index’ where you divide the NPV of the project (basically the profit after costs adjusted back to year 0 values) divided by the up front capex to get it up and running. Ratios of 2-3 were expected in the firm I worked for. So we could be looking at a share price from Alpala derived from Alpala NPV / 2 = (project capex + asset purchase price). And having derived a theoretical asset purchase price, divide that by the number of Solgold shares in circulation. Anyone care to have a go at that sum if the logic stacks up. We can bicker over the assumptions and tune it up of course.
Ta quady. So in my head, the NPV shows an attractive investment. If the game is to sell this as a project for others to take forward, then somewhere in the calculation is a return on investment criteria for eg BHP, whoever, taking it on. So taking that into account, I wonder what the asset value of the well-defined, but undeveloped Alpala is to a major so they can still make an acceptable return. Price of raw material at the factory gate in a sense.
My last post was obviously regarding Cascabel/Alpala.