Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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I genuinely didn't see a single post that convinced me that a mine is not only not on the cards but not financially feasible. So it is "clear" unless someone out there can come up a tiny bit of evidence that a mine is on the cards and a viable option.
I asked a genuine question, but didn't get a direct answer because no one has an answer, including Scott Caldwell.
So why on earth are we sleepwalking towards this option - unless people are just so sick and tired of waiting for a bid that they are prepared to believe anything.
I honestly thought I was missing something, that everyone had access to information I hadn't seen, but I'm more worried now than before that if we don't get a bid we are going to do something very, very stupid and costly.
If nothing else today has served to showcase how thoroughly entrenched every poster here is. No minds are going to be changed. Lots want to impose their views on others, or be validated by seeing similar thinking. Sean asked for feedback, got some opinions and then said 'it is clear', which quite evidently it isn't!
I think we'd almost be better with two boards operating as uncontested echo chambers, and for news, people can just set up a search alert on the word 'solg' (which is all some posters here do, copying and pasting articles that all tech-savy members have already read)?
It would save fort and red feeling the need to tell us everything is rosy when the SP is half what it was a year ago, and it would save Quady having to explain why he thinks production is more likely than a TO at least twice a week.
Q, there's a huge difference between saying "Yeah, we could be interested. Come back to us when you're further down the track and have something tangible for us to look at" and actually handing over the readies. I've sat in enough meetings where this sort of thing has been said and learnt through bitter experience not to place any faith in the comment.
No evidence ever emerged to confirm his statement and I'm of the opinion it was misleading - to put it politely.
Honestly, I really do wish this was fundable, for the simple reason it would add value, but as it stands I just can't see it.
"Ideally we need a guarantor, maybe the Ecuador government to finance this on loans which are staged."
You are well and truly through the looking glass here Quady.
What would come first - paying back the loans, greasing the palms of everyone involved, fending off the constant threat of nationalisation under a new government... or us getting some dividends 15 years from now?
If we are really in a position to go cap in hand to the Ecuador government then we never deserved a shot at this in the first place.
Thanks to everyone who posted - it is clear that not only is a mine not really on the table, if it were it would be 100% disastrous and completely unfeasible and would wreck us financially, costing our independence and diluting current shareholders out of existence.
Annoying that Scott Caldwell even mentioned it - distraction, straw man, or smokescreen or whatever he meant it as.
Addicknt I accept he had expressions of interest, but that's still one billion.
We don't require all of that as this would be funded in many ways.
But that can be achieved without a JV.
I suspect a JV and keeping control.
So let's see what the strategic review comes up with.
The company certainly never received $1bn, unless I missed it.
Those investors back then certainly won't be investors now, I think that is fair to say.
Q, he didn't have $1bn. How could he? There was absolutely nothing upon which to base a lending decision.
I've said it before, he may have had expressions of interest, but no more than that.
So let me get this right Bozi, you are saying if we can get a start up production for one billion to start generating revenue to complete construction, we cannot do this today, even though Ingo had one billion of funding ready to go years ago.
What percentage did we have to give up for $50m? Granted people can now see how unlikely a block cave is anytime soon, but the numbers are there. I don't think the SR will advocate going it alone on a multi-billion block cave, by the way. I assume it will be simpler, cheaper means to lower hanging fruit and faster revenue.
Maybe that will catalyse a bid, but if it doesn't I think we'll find the cash to start small. All of this is 2024 and beyond though, once we've got the exploitation licence. As I might have mentioned once or twice before...
Couldn't agree more, Bozi.
Financing now is a no no. Three years ago however when we were talking about the PEA, the first draft PFS, etc I still think it would have been viable with some good execution.
I also did a post on this some months ago and a few of us discussed the increasing cost of capital, and well, that has happened and some.
So pigs will fly before we secure Cascabel funding.
It needs to be absorbed by a huge organisation with free cash flow to manage the build without debt financing, unless of course it can be secured by them on attractive terms.
There's no chance of SOLG achieving that without any revenues or near term path to revenue generation.
SOLG have used a couple of royalties to extend the runway but it now has to be full sale or Cascabel sale and spin out.
Ideally we need a guarantor, maybe the Ecuador government to finance this on loans which are staged.
So, how much will the slimmed down new mine cost? $1bn? $1.5bn?
How much new equity? $250m? $500m? Think of all that lovely dilution!
Royalty deals are a non-starter, so how much will the debt cost us? 10%? 12%? More? Do the maths on the compounding effect of the rolled-up interest.
Convertible bonds? aka death-spiral financing.
An opening balance sheet that would look truly awful.
I'd love to think financing was a realistic option, but I'm struggling to see how on earth it'd work.
I thought it was fairly clear that "advancing" Cascabel meant bringing the project to a state of readiness so that plan-A we could sell it, or plan-B JV it, or plan-C do it ourselves at great cost and dilution.
The negotiation with the government and the updated technical plan for extraction are two of the most critical aspects that hopefully the strategic review will clarify.
In the current state of affairs, no buyer is understandably in a hurry to show a bid, and this will remain the case for as long as we insist on trying to obtain full value for the shareholders; I believe NM lost that bet at least 4-5 years and we have little leverage to force a higher price, especially as we cannot afford to get into 2024 without an agreement.
The only smart and fast option to monetize is to negotiate with those in the data room for a reasonably low price. The price will only get lower as we run lower on money.
2023 is the make or break year I think.
No doubt financing will be tricky, but we've had several other moments in our history where that's been true. JV, royalty deal, offtake... All of them could be awful or, if the terms are right, decent.
Remember that, as a company, we only need to may £30m per year from our assets to pay 1p on each 16p share. If it's worth the billions the 'sale imminent' crowd believe it is, then we only need to keep a tiny fraction of the profits
With all the discussion of it as if it's a reality (thank you Scott Caldwell) I thought I might be missing something. I'm tired of waiting for a bid too but we just can't replace one hope with a far more unlikely one.
DBW I am genuinely willing to look at a viable mining route case. I'm just shocked that there's absolutely nothing there.
That’s the point Sean (as I’m sure you’re already aware ) no one in their right mind seriously believes construction is a possibility…. Suicide
Back to waiting for the Strategic Review. Ok.
Anyone out there have the foggiest idea how we would get from here to dumping the first tonne of ore into a truck without financial disaster? What are the steps? Other miners have clearly done it but no one at Solg can even envisage it or lay out the basic route? How can we possibly be even contemplating it when no one has a clue how we would even start?
My apologies DM
While the Cost engineering was done to the requirtemnts of a US organisation below, it appears that all the engineering work was done by Australians...now why would you do that...?
"The capital cost estimate meets the requirements for a pre-feasibility study consistent with the Association for the Advancement of Cost Engineering ("AACE International") cost estimating guidelines for a Class 4 estimate. "
AACE is a non-profit organization with about 15 employees at its headquarters in Morgantown, WV.
Experts:
Mineral Resource Estimate Cecilia Artica, BSc MSc RMSME (formerly) Mining Plus
Mineral Reserve Estimate Aaron Spong, BEng FAusIMM CP (Min) Mining Plus
Environment, Social, Tailings & Water Tim Rowles, BSc MSc FAusIMM CP RPEQ Knight Piésold Pty Ltd
Metallurgy Peter Gron, BSc FAusIMM Wood plc
Process Plant & Infrastructure Steve Klose, BEng MSc FAusIMM Wood plc
Seanhunter that's what the PFS is about. We await the strategic review.
Seanhunter thats
Sketch the scenario for me to help me see how this would result in that first tonne of ore in that truck. I know we have cash but I'm genuinely curious
Seanhunter why not look at the financial information on Cascabel.
We could have this built and paid for on loans alone and the loans all paid off in six years our costs are really low, compared to what we have.
Quady when you announce to shareholders that you are committing to a vast amount of spending with money you do not have, without a partner to shoulder the costs, they will run for the hills - because the best case scenario will be that value will be created many, many years down the line.
That's fine for you if you are prepared to wait 15 years to get back into the 40s and above, but for most of us it will be the last straw and we will sell up. The price will crash (regardless of the value of the asset, which might as well be located on the moon if we can't exploit it). Look how easy it is to fall, and how hard it is to climb again.
Then we will enter a financing death spiral - the SP way too low to effectively dilute anymore. Jeez our last placing at 16p confirms we are already in one. BHP paid 45p!
There will come a point where the SP is so low that printing more shares is pointless. The company could go private at that point, or it could simply run out of money with no means to raise more.
A mine is nothing but cost, cost, cost into the foreseeable future. I asked you when we would get the first tonne of ore into a lorry and you can't tell me - you, of all people, who so badly want a mine.
I can tell you that a bid is possible, and I can tell you roughly how it would pan out.
I'm told that a mine is possible but absolutely no one can tell me how it would even begin to become a reality, least of all not Caldwell.
This situation isn't a shock to me - I knew from the merger that we were in a race between a sale and catastrophe.
I remain very optimistic, and the trading is very good right now, but I think all this "all dressed up with no place to go" is wearing people down month after month and now what was once patent nonsense - that we will build our own mine - is starting to appeal to those who are desperately tired and willing to grab at straws.
I was willing to look at the case for a mine but no one can give me one - or sketch even the scenario - that doesn't involve debt, dilution, loss of control, or bankruptcy.