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If you're thinking of the takeover route then the merger would have to complete and then SOLG would maybe even have to consolidate on the one exchange (presumably London as Toronto would cause uproar).
Then you'd see a proposal.
So even the full bid isn't straightforward. The spin out in my opinion is no more complex than a straight sale. In fact, I'd say it's cleaner in certain respect.s.
Bozi I've unfiltered you to answer your post...
I don't think anybody would pay remotely near 95% of the 'full value'...
And what is full value...its a circular argument because Cascabel is pivotal to 'full value'...
But look at what Newcrest paid for 75% of Havieron before walking away. I believe it was a fraction of what GGP shareholders would have thought 'full value' was...
So for me 'full value' is the highest amount that the ultimately successful bidder ends up actually paying...
In the case of OZ Minerals, it doesn't look so good at $28.25AUD but thats if you overlook the SP being $8.50 in May 2020 and $16.05 in July 2022...
In the case of Noront it looks miles better because the SP went from 23c to 110c in 5 months when Wyloo came up with a knockout bid..
So DBW I don't think we can rule out the possibility even of Warren Irwin being wrong, in the context of Goldman Sachs' $20,000/tonne forecast and a structural deficit in copper for the rest of our lives, either because new copper isn't being mined, or it isn't being developed, or even found, while the copper reserves of the majors continue to deplete, with consequences for their long term earnings...
The Chinese are hellbent on getting an armlock on all 'strategic' metals, especially REMs and EV critical metals such as copper. So as the CCP is behind Jingxiang I don't believe even £2 can be ruled out.
Equally if a bidder who isn't involved in SOLG comes along, determined to secure the prize, they would have to bid enough to knock out all interested parties which at the moment we know includes:
BHP, NCM, Jingxiang, Mitsui (plus FNV, Osisko and Boliden for different reasons).
But how many other credible miners are already in Ecuador
Solgold lists BHP, Newcrest, Fortescue, Han****, First Quantum, Codelco, Southern Copper, Anglo American, Solaris, Lundin, FNV...
But surely Rio, Mitsui, Glencore, Barrick, etc can't afford to missout, because theres gold and silver as well as copper.
Remember Pierre Lassonde (FNV) said gold could hut $30,000/ounce...
There's more chance of finding some rocking horse poop than an offer being made for the company before the merger completes though?
Just think whether Sangha, Irwin, Caldwell and Co are going to stand for someone coming in for SOLG before the merger completes.
It's a non-starter.
Minus 150m debt.
If project value and full value are one and the same, full value is c£1 a share...
I'e' $2.7 billion/2.296 billion shares...
And before somebody mentions the new 180 million...
It hasn't completed yet...
So we need to consider what would happen if there was a bid(s) PRE merger
And what if its POST merger, because I don't think Sangha/Mather factored in how long it would take the merger to complete for a number of reasons, especially;
The pace at which regulators move and...
CGP shareholders being denominated in CDN receiving SOLG shares in GBP unless...
They issue 500 million Canadian shares, which I think makes everything unbelievably complex, so...
Maybe part of the delay is that Canadian investors in CGP don't want SOLG shares and that is part of the reason why all this cash is being raised...
the key phrase is
"endorse project value"
Which is a minimum of 78p...
£24.9k plus £14.8k
Why not..
Bozi I agree a full sale doesn’t suit everybody and that it may not extract maximum value but I think that’s what is coming …
Redknight - I'm not following your thought process here.
What difference does it make to anyone if the Imbabura province assets are retained by SolGold and everything else spun out?
Cascabel is the main driver of value.
SolGold (Cascabel) can then be sold for c.95% of the value the full company would be worth. More acquirers with just an interest in Cascabel would potentially come to the table which betters the chances of getting a bidding war.
A full sale doesn't suit everybody. A spin off can work for everybody.
Agreed rcgl2.
The problem rcgl2 is that is everything.
So tells us nothing.
The company has already telegraphed this possible outcome twice in it's description of the strategic review:
"As previously disclosed, the Strategic Review includes, among other things, evaluating and pursuing value enhancing opportunities for the Company such as:
· evaluating financing alternatives for the Company that endorse project value;
· a spin-out of assets, other than the Cascabel project, to all shareholders;
· the direct or indirect sale of an interest in the Cascabel project at prices that endorse project value howsoever effected; or
· any other transaction or series of related transactions."
Bullet number 2, spin out everything except Cascabel to all of us, the newco operating as an explorer and early stage developer, basically Solgold Part 2. Keep Cascabel within the Solgold wrapper and someone buys out Solgold, avoiding any poor tax consequences of selling ENSA itself out of Solg?
This seems like a better outcome than the current status of Solg being valued almost solely on Cascabel with no value attributed to anything else, and if someone bids for the entirety of Solg now they get all the regionals chucked in for peanuts/nothing and we never benefit from any future value contained within them.
'Full value' will b e determined by the final bidder...
I can't see why CGP would want to throw their lot in with SOLG and then accept a JV that still leaves production 7 years away and only a microscopic participation.
I would sruggle to believe you would get even half of full value with a JV and that would leave us struggling to get any v alue for the other projects without having to invest all the money we got for Cascabel...
Just look at GGP and Havieron...a cautionary tale...
The announcement of a 90% J/V might spike the price to, say 40p from which I would expect it to drift back again...
Nothing less than a takeover battle will do for me...
FTJNY top of the range you quoted is 500%...
That’s the price range I’m expecting for the whole lot Bozi..
Disappointing
I won't dispute any of that Orthern.
But a sale of Cascabel, even for 40-50p, gives everyone options. Whether it's full cash or part cash part scrip.
The risk from our side as investors is we get strong-armed out of Cascabel on the premise that it's economically a bit marginal for anyone looking to borrow to fund construction only for the acquirer of SolGold whole to go and find a blockbuster tier one in one of our other areas.
That would be a sickener for me.
Add - I appreciate why you say that - some will be disgruntled at not being able to sell NewCo straight away but they'd have to just lump it whilst SOLG got prepared. Plus, if a demerger was done 1:10 then any NewCo holding would only be minor anyway, assuming that the company carried an opening value of £20-50m.
The main benefit is that everyone would still get their sale of Cascabel. It also paves the way for the likes of Mitsui who might have just an interest in that asset to compete with the BHPs and the Jiangxi's.
NM wouldn't be in the chair for me. I'd appoint independently. If there's any managers of promise in SOLG then I'd consider them along with the rest of the labour market.
Good posts Mike, just had a read.
Irwin is undoubtedly close to the action being a significant holder of CGP and I'm sure he fancies himself as a dealmaker as well.
I definitely thought it was worth raising again on the premise that I can't see a downside for anybody.
Bozi, I agree it would not release full value, but have come to the conclusion, we are not going to see full value… not in any true sense.
I wrote on the 15th that
“Our board need to get the PFS out this quarter.. the full PFS is already 2 years behind schedule….. it was originally delayed due to it needing to be reworked to be more efficient. When it was released, it was released with just OK IRR figures and a caveat saying it would be updated promising improved finances. (I don’t have to figures to hand, but was in the region of several hundred million of improvements).
To delay it now, would signal to be markets the improvements promised have not been found..
It could be this has forced the strategic review.. and understandably, Irwin, and CGP and now Mather, just want an out at a respectable price now the fantasy of becoming the next major has died.”
I believe this is where we are now.. I believe the IRR was never amazing, and the PFS update was a failure when it comes to improving it… it was due to be released any time now, and we had been told on more than 1 occasion it was on schedule… so if the figures were great, it would have been released…
I believe both sides have now accepted the only way for an acceptable pay out is to merger and try to sell.. or do a 90% JV to production with someone more capable than our lot..
Just my opinion of course…. But it’s why I do not expect anything close to what we were led to believe could be full value
Bozi, perfectly feasible, but I suspect the delayed IPO would be a problem.
Simply stating that the company "intends" to go public in due course is unlikely to be very appealing. Of course, a team could be lined-up now and would be ready to roll once the deal had been announced - and who knows, that may be the plan...with NM in the chair?
I've always said I wouldn't mind this approach provided Cascabel was sold and the proceeds distributed to shareholders.
Fully aligned with that thought process Bozi,
See previous posts
10 Oct 2022 17:44 : Tax Hypothetical
24 Nov 2022 09:47 : RE: Irwin tweet
Thing I don't get however is how much actual sway and insider knowledge does Irwin actually have? His tweets imply he knows something but surely if he knew something it would have to be disclosed via RNS. Whilst I note and read his tweets with interest, I treat with some caution for the above reason and I suppose only really give them any attention at all because of his perceived 'expert' status and experience. We all know however how perception of knowledge is not always closely aligned to actual knowledge.
That would be disappointing Orthern.
Flogging the lot in one go is the lazy approach and cannot possibly be the best way to attain full value for all shareholders.
With a full sale, plenty of shareholders who aren't desperate for an out, lose out.
With a spin out everyone gets to make their own decision and NewCo can still progress in Ecuador.
The IPO isn't important. It just needs a company creating, the assets rolled into it and a corporate action to do a demerger and maybe even a rights issue.
It's a no brainer.
I’m assuming that I was a typo, and you meant ‘on going miss management’
Without a CFO any spin out seems unlikely… same could probably be assumed for a JV… and Mather has said on multiple occasions, that any sale of just Cascabel has large tax implications..
Announce the date of the merger vote, followed swiftly, ideally same RNS, that a data room is open for a sale of the whole of Solg.. but Solg in all the years I have held their shares, don’t do anything swiftly
Add - I don't disagree at all on that.
But what is stopping the following:
SolGold announces completion of strategic review and announces two initiatives.
1.) SolGold decides to proceed with a spin out of the regional licences into a new vehicle. It names a full management team and board including new people.
2.) SolGold updates the market on offers for Cascabel and surrounding licences.
Shares of the spin out company would probably be unlisted to begin with, with an IPO tbc. SolGold would likely allocate a small amount of cash to NewCo for G&A and maybe a small budget to carry on working at Porvenir and attack the next licence with the necessary permits.
SOLG shareholders could be awarded shares in NewCo at a rate of say 1:10 SolGold.
NewCo then does an IPO after say 6 months with the necessary knowledge and expertise in situ.
In the meantime everyone gets their payout from a SolGold sale and can then go do as they please with those funds.
Once NewCo IPOs everyone can then stick, twist or bail.
This is something Atlantic Lithium have done in the last 12 months with great success. They now have a quality and growing lithium asset packaged up and gold (and lithium) assets in the spin out.
It sticks to the 'next cab off the rank' mantra and it gives shareholders multiple bites at the cherry.
I can't see any downside to this. Can you?
Bozi, that's not the point - I'm not talking about the process, but the ongoing management of the company. The market needs to see permanent board members, their track record and ability to manage the company. It's a non-starter without a CEO/CFO.