Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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SharketMare the hydroelectric power part is part of the strategic review.
Quady, as rcgl2 pointed out yesterday, hydroelectric power (I can't believe how much airtime has been spent discussing this nonsense, it's becoming the new French translation) is NOT part of the strategic review. Read the RNS.
So Quady your argument is that the share price is so decimated because no one believes a deal will be done and the market Still fears they may actually still be stupid enough to attempt production?
You also said “no one believes there will be a deal”
Well that’s just simply not true
Q, I sort of agree with you about the 50m and don't deny it's confusing. But I also believe that quite a bit of the cash will be set aside for employment and other costs associated with keeping the lights on at Cascabel, which is essential both in terms of pr and making the asset attractive to bidders. We could not mothball the place and expect to achieve a decent price.
I disagree addicknt, it's not about helping out each others argument or world view.
It's about being factual.
The share price show's no interest from any party acquiring us.
Also for production argument.
Why have we raised 50 million that can only be used to advance Cascabel, and cannot be spent on anything else.
The strategic review not only mentioned hydroelectric, but also looking at how to bring Alpala along to production quicker and cheaper.
It seems to have the same outcome as the PFS.
Spot on Addinct well said …..
Q, no, it should remain where it is as it may help your argument.
Morning addicknt.
I think you should move current share price from production list to the list indicative of a deal.
As current share price shows not only no deal, but also no one believes there will be a deal.
these are the indicators:
1) Publicly stated intentions from Sangha, CGP, DGR and Berry Street.
2) Media reports.
3) Cash position.
4) Management situation i.e no full time CEO, CFO or personnel flunkey.
5) SR.
6) State of debt market (although this is a current concern)
7) Inability of a small explorer to take things to production.
8) Composition of new board i.e we are now in the hands of CGP.
9) Reality.
For the Productionistas.
1) Continued reference to funding in SR.
2) Reference to hydroelectric power (for Q)
3) What the company has said up until a few weeks ago (we know this was BS especially as we now know the board have been in discussion with CGP since the summer)
4) Current share price.
5) erm....
Please feel free to add.
Indeed bubble james Clare took a million as well as Scott
Good to see more skin in the game…. Not sure quite what it’ll take for the market to wake up here, it honestly couldn’t be any clearer
Nice timing before an offer
I thought they had too, but I can't see anything on their web site relating to a cash raise. As at 30th Sept they had $1.7m in cash.
addicknt, how much cash does CGP have on their books? I thought they did a placing a while ago to raise $3m?
Once merger sorted, I think we might see another 5% placed... probably at 10p with Irwin and Maxit taking the lion share lol! I am kidding of course or am !?
RK, sorry, just realised you were referring to the director purchases.
Time they bought some
RK, not sure what you mean.
They were part of the recent placing...
RNS - directors purchases in recent fund raising
£160k director buy - that's a hefty chunk.
I should add we will have to keep quite a lot to one side to pay for any documentation which becomes necessary as a result of a transaction.
CGP will be paying $8.3m in fees related to the transaction, which I'm assuming will be paid post-merger by the combined entity. Our fees will not be as substantial as we're not producing a document, but let's assume they're a few million dollars.
So, approx $10/12m of the recently raised $36m will be spent on the deal. Given that the royalty funds are hypothecated, there wouldn't appear to be a huge amount left over for an extensive drilling campaign and general expenses. Yet another indicator as to the intentions.
The new board had been together for barely two weeks when the second big thing happened; Cuzzubbo exited as chief executive.
Cuzzubbo is a former BHP executive and while that doesn’t mean he was aligned to BHP’s cause at SolGold, insiders say he wanted to continue patiently growing and defining the value of Cascabel in the belief it will be worth much more in a couple of years time when the connection to nearby geology is better understood.
That strategy suits BHP and Newcrest’s deep pockets just fine.
The third and most significant thing to occur at SolGold since the Cornerstone merger is the initiation of a “strategic review” that will consider “value creating alternatives” for Cascabel.
The strategic review will be run by Sangha and Citi and will consider selling part or all of Cascabel, among other options. Sangha says the strategic review heralds the end of an era where SolGold was “pretending they were going to build a block cave” mine.
It now seems far more likely that SolGold will sell part or all of Cascabel and use the proceeds to return to its core competency; greenfields exploration.
“We are going to do what we should have done six years ago; monetise this in whatever way maximises value for shareholders,” said Sangha. “We are bringing it to an end fast and smart, rather than slow and stupid.”
A sale of Cascabel could leave BHP and Newcrest owning little more than shares in an exploration company they don’t control.
Citi’s involvement in the review means Sangha won’t have it all his own way; Citi were this year an adviser to BHP on the $8.3 billion bid for OZ Minerals and are perceived by most observers to be a balancing force against Maxit.
BHP take over of the copper assets of Oz will shape as a more strategic and important addition to its portfolio than Cascabel.
BHP and Newcrest would be free to bid for Cascabel should SolGold attempt to sell it. But either way, the big Australian miners’ might have their hand forced sooner rather than later.
END
Z
In April with the long-awaited publishing of a feasibility study into building a $US2.7 billion mine at Cascabel, which helped define the size of the prize.
For that investment, SolGold would get a 26-year mine that could pay for itself in less than five years at current copper prices of $US3.75 per pound. The study only considered 21 per cent of the known resource at Cascabel, but still found the mine would produce 210,000 tonnes of copper per year at its peak; about the same as BHP’s Olympic Dam mine in South Australia.
The second major milestone of Cuzzubbo’s tenure was the agreement to merge with Cornerstone. The transaction was logical in that it put 100 per cent ownership of Cascabel under one roof, but it also eliminated a source of uncertainty and friction.
In the battle for control of SolGold, the scrip merger shapes as a big win for the underdog faction and could be the moment that Cascabel started to slip away from BHP and Newcrest.
It saw more SolGold shares issued to Sangha (who owns almost 20 per cent of Cornerstone) and some of his friends, and it diluted the power the BHP and Newcrest faction wield on the SolGold register.
Since the merger three big things have happened at SolGold.
The merger gave Cornerstone the right to appoint two directors to the SolGold board. Insiders say the appointments of Sydney-based Dan Vujcic and Canadian-based Scott Caldwell have been significant in shaping the balance of power on the board against the BHP and Newcrest faction.
Vujcic was part of the Citi team that gave Fortescue its first major funding round, a $US2.5 billion bond, in 2007. He has also advised copper giant First Quantum on multibillion-dollar deals and is currently working with former Fortescue boss Nev Power at Metals Acquisition Corp as it seeks to finalise the acquisition of the Cobar copper mine in NSW.
cont'd
With a track record like that, Sangha feels very comfortable with how the unofficial factional lines are being drawn at SolGold after a turbulent six months.
While there is no suggestion of collusion, BHP, Newcrest and the funds management giants BlackRock and Norges Bank are perceived by most observers to vote the same way on most matters at SolGold. Collectively, those four owned about 36.5 per cent of SolGold shares before the merger with Cornerstone.
The perception those four are unofficially aligned is based on their similar public commentary, accounts provided by insiders, and the proportion of shares voted against known enemies of BHP and Newcrest at SolGold annual meetings.
The former SolGold chief executive Nick Mather is one of those enemies; more than 44 per cent of SolGold’s register tried to kick him off the board in December 2020, suggesting the big corporate faction was within a whisker of collectively controlling the company at that time.
Mather owns almost 4 per cent of SolGold directly, but has close links to other companies that also rank in SolGold’s top eight shareholder list, including ASX-listed DGR Global.
Mather is widely perceived to be joined on the small side of SolGold’s factional fence by those other companies, Sangha and a few of the other originals who were SolGold shareholders before BHP and Newcrest showed up.
Together, they form an unofficial coalition of convenience, desperate to prevent the big miners from collectively controlling more than 50 per cent of SolGold and diluting their shareholdings into oblivion.
“No one would be happier than me if we end up with a great outcome for shareholders and BHP and Newcrest end up with zero stake in Cascabel,” said Sangha. “It’s all about taking these big companies down and embarrassing them.”
cont'd