Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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anyone had a stab at working out how many shares will be in issue once the merger is completed? Obviously the possible cash element will have a bearing.
Our current share price seems to be reflecting the combined market cap on a fully diluted basis.
Btw, I noticed some comments about the issue price of the latest fund raise and how this may set a benchmark for any deal. Personally, I wouldn't get too hung-up about this - in a competitive situation it will become irrelevant, and naturally Citi and Maxit's task is to create some competitive tension.
To answer my own question:
Assuming it's an all share deal there will be just over 3bn shares in issue. The current combined market cap of both companies based upon todays price is £474m. In other words, it seems to me that my hypothesis is correct; the current price already reflects the post-merger company.
I'm pretty much stating the obvious, but I wanted to see if we are currently trading at a discount or premium to the post-deal structure. It seems we're pretty much spot on, so I guess we can conclude the market is neither positive nor negative about the deal.
Hi all
After some lobbying, Ecuador is planning some changes including security for mining projects--
https://www.mining.com/ecuador-to-launch-security-program-for-mining-projects/?utm_source=Daily_Digest&utm_medium=email&utm_campaign=MNG-DIGESTS&utm_content=ecuador-to-launch-security-program-for-mining-projects
Apols if this has been posted already. This may help get majors to move on SOLG. The pic is of Cascabal btw.
(Long SOLG since 7/20)
Good morning all, hoping everyone had a good Christmas.
Addicknt that is not how you currently value Solgold today.
All you have done is take the market cap and divide by the number of shares.
Of course that will always come out at the share price.
We have the NPV which I believe is roughly 3.6 billion pounds.
We then multiply it by 30% to 40% to give us our range for PFS, which is where we are at .
Then divide by 3 billion.
So 30% of 3.6 billion is 1.08 billion divided by 3 billion is roughly 35 pence a share.
40% of 3.6 billion is 1.44 billion divided by 3 billion is roughly 47 pence a share.
So a rough current valuation is between 35 and 47pence a share for Cascabel alone, with no further money spent.
This is ludicrously low, as it increases substantially should we obtain funding and start production.
At a conservative estimate these figures double giving us between 70 to 94 pence a share, which increases as we proceed.
Q, you misunderstood what I was trying to establish. I was simply looking at how the market currently regards the combined entity. And yes, it's hopelessly undervalued at the moment.
Q, one other point: It's exactly how the market currently values the company.
Q “This is ludicrously low, as it increases substantially should we obtain funding and start production” …. Pretty sure Bob Sangha not on board to steer us to production. Anyway hopefully all the bickering will be done in a few months when Solgold is a thing of the past
$2 billion plus funding, including massive equity dilution, however its achieved, would severely depress the SP until first copper was mined...
Jjust look at the history of ATYM...
addicknt,
I thought the projected shares in issue were circa 2.8bln with CGP gaining 550m shares??
SOLG previous 'market' valuation was between 18p and 44p based on a 3 or 4 year trading basis. It was also based on 85% ENSA interest and excluded the 6.7% (approx) CGP SOLG holding.
The extra shares in issue for the merger and recent funding round should be close to neutral and have no effect if you assume that the 15% ENSA interest was approx what CGP were valued on in first place inc the 6.5%.
You can't just look at the shares in issue number and then ignore the minority ENSA acquisition and stock in treasury. Also, some would say that by holding 100% of ENSA it simplifies the selling and potential takeover process so an added premium compared to prior should also be included.
All in all, the market is not reflecting anything other than pure boredom at present. The market is a woeful valuation tool so do not rely on it. The market rated Noront at 23 cents. It sold for 110 cents. Markets are pretty poor at doing proper asset valuations. They are good at spread bets, shorting, CFD's, algo bots and all the other casino bookie type things.
Fort, we currently have approx 2.5bn in issue and, assuming an all-share take-up, will be issuing a further 550m shares. Of course on a fully diluted basis we need to take into account the options as well.
Since the announcement the market has marked us down whilst CGP has been marked up. In simplistic terms, the deal is better for them than us...although I don't see it that way.
As you say, there will be no re-rate until some form of corporate action emerges from the SR.
Has any estimate of time been given for the completion of the strategic review?
Not that Solg ever meet it’s milestones..
Orthern, not that I've seen. In fact, we're not even sure when it started and therefore, how far down the track we are.
Current issued share capital is 2,476,051,501. For sake of round numbers and some cash payments on merger instead of shares lets go with 524m shares to be issued post merger and 26m shares paid in cash at 16p.
That gives us 3bln shares in issue (options lapse or get added so lets them out of it). Then take the circa 5% CGP SOLG shares (diluted) and let's say they go into treasury. So that's 2.85bln which is what I was indicating.
Market rated SOLG at almost £900m not long ago, so lets us that as a top benchmark. Take 15% of that equates to £135m, add in 5% shares worth around £30m, and that's close to £165m in 'merger' worth. If the idea is that CGP will hold approx 20% of post merged SOLG company, then take the £900m I mentioned above and x 20% = £180m.
Throw in the 10% premium for the consolidated 100% ENSA interest rather than fragmented, add in the $85m cash raised and bingo, you are not that much shy of £1bln which is around 33p a share diluted.
So that's the bulk of it... what was once 42p levels (the high) is no 33p. So I think it's fair to say that if at 42p the market was expecting a double on fair value (84p) then the same double on fair value now would be 66p.
All in all... not ideal. But I think Maxit are capable of getting a high 30's bid tabled which at end of the day is a starting gun for BHP and others to counter. If they don't... then it goes for 33p. Majority of NCM, Norges and BHP will be in profit based on 33p but not much gained. Hence I think most would want at least 50% premium to that especially considering inflation of late.
It'll last however long it needs to last Orthern.
The longer it goes on, the more worried we will probably all get.
Lets be honest. Company says to all interested shareholders and the rest of the market send us your best proposal and they draw a line in the sand. Anything submitted goes forward for BoD discussion.
Personally, I reckon the company will give it 30 days from the merger ratification assuming it goes ahead and then how long it takes from there will depend on the strength of what is being put to the company.
Fort, I take your point about the shares CGP currently own, although we don't know what the intention is at the moment. As long as they're held in Treasury they count towards the total number of shares in issue.
Agreed, hence I think it best to await the merger conclusion and then see what cash SOLG have left. I think that's the reason why the sp is going no where fast and why several involved have arbitrage trades in place (shorts). Post merger, SOLG might have $80m+ at best. Or they could have $60m etc. All depends on who wants shares vs cash and how SOLG wants to go about it up to 20% level.
$50m is ring fenced for ENSA so to do some exploration in 2023 while they seek. buyer or asset sale for ENSA (my assumption pending SR), they will need to raise another $25m+ is my guess. Much depends on the companies ambitions for doing exploration and the their appetite or skill at doing partner deals with interested parties like Solaris, or Lundin or Codelco or Chinese. Plenty ops out there to get those 50 odd licence blocks moving in right direction.
Morning all ….. My view may be seen as over simplistic but to me it’s fairly obvious that Bob Sangha / Maxit are on board to find us a (first) bidder and the rest will take care of itself. Sangha is very good at what he does and the asset should sell itself….. whether the strategic review ever comes to fruition who knows. The Chinese will not want to settle for 5/6% and BHP will most likely not want this taken from under their noses.
I realise there are plenty who see this differently but that’s what makes for decent debate.
“ The longer it goes on, the more worried we will probably all get”
That is certainly true… I am just hoping with the new guys on the board, it doesn’t slide off towards Easter before a decision is announced. Solg always slides on no news, and we seem to have no other developments running alongside the review to support the price..
Surely the outcome of the review is a foregone conclusion…
how long does it take to get around a table and decide to monetise the asset…
shouldn’t take more than a couple of weeks after the merger to publicly announce a data room is open for all interested parties with support from Ecuador gov…
You'd think so Orthern but what happens if all interested parties get round the table and talk about valuations of between £600-800m for the lot (so 30-60% upside post merger)?
There will be a lot of unhappy people in that price range, and so all the wrangling will start again.
I think Maxit will be happy to get this sold as seen for that price range. Folks like DBW put a lot of stock in Bob Sangha- maybe he (DBW) works in the industry and has had positive professional dealings with Bob in the past, but I'm going to be a bit more reserved.
I think with all the will in the world the intention will be to drive a hard bargain the likes of those spoken by Redknight, but it's all theory until we see it in RNS, isnt it...
Hi Bozi
Afraid I don’t work in the business but I do know people in the sector who rate him second to none at what he does. The view is he will take this (for want of a better expression) to market and it should be “fairly easy” to find willing bidders. I’d just like to add that anyone I speak to is not directly associated with Solgold, but their story is well known and a takeover widely seen as inevitable.
For all I know we could be having the same conversation in six months time but I doubt it.
These people thrive on their reputations “fast and smart” seems to be the message.
Happy new year to you …. DBW
Unfortunately Bozi I think any price range will be lower than many fantasise about.. and Maxit will be happy with a lower exit point than pretty much everyone, having just printed themselves a load of shares at 16p. Any sale in the 30s from there, in short order, would be a nice earner in their eyes.
My worry from here now, is how much interest is there really? Bob can’t induce offers if interest has waned and the Solg story has now gone stale and mouldy…
I keep returning to the question… if there was genuine interest out there, why sell such a large stake at just 16p?… surely a much better price, for such a large position, could have been achieved if our asset was so sought after…. That recent 16p price was both worrying and revealing to me, and will be used as a starting point for any deal.. and all the 300% plus Noront comparisons in the world don’t get us anywhere close to £1 from 15p.
Ortherncopper,
I wouldn't get too tied to that 16p+ placing price. It's not far off the 20p placing price seen a year or so back. You have to account for the fact that the entity taking the placing had full knowledge of the dilution coming from the merger. Hence likely baked in. Furthermore (and this might be the reason for the swift action) regulators across the pond would need to see SOLG's cash balance swell before they could sanction and approve the merger. Sometimes you have to discount a little when you are in a rush. It's up to you if you you want to dwell on the placing price but remember, BHP paid 45p for a slice a few years ago. Norges bought over 3% at averages near 30p. Valuestone took some at 32p. We've had plenty of placings before in mid 20's and this taking the placing had firm sights set on 40's and 50's I'm sure.
And remember, Noront moved from 23 cents to 110 cents. Not sure where you got 300% from? Noront example would get us exactly where we need to be... just need. bidding war to commence. Incidentally, could you name me one tier 1 gold/copper mine that hasn't been sold for a fair price?? Just name one... and if you can't then perhaps you can dampen down your negativity and gloom posting.
Orthern, bear in mind they are about to be diluted, which they obviously knew about, so the 16p reflected that fact.
Hi Fort.. Your post earlier highlighting that 33p is now the new 42p equivalence makes the point I’ve raised previously about people needing to review new high point expectations given where we are now, only you phrased it all far better than me, using examples.
The naming a tier one that didn’t sell at a fair price came from Irwin if I’m not mistaken? And it’s a fair point…. But what is a fair price for one person is a poor price for another.. and it’s negatively and gloom, it’s just an acceptance of where we are.. everything is not rose tinted at the moment. I guess we will see at some point in the new year what parties consider fair value.
It’s only fair that alternative viewpoints are expressed when certain posters post ludicrous claims of up to £2 a share…
absurd, misleading ramps are dangerous for any potential investor viewing this board, that is not aware of all the background.. and history.. an alternative dose of reality, not fantasy, can stop the echo chamber effect.
Ortherncopper,
I don't spend much time on the bb's these days as am invested in SOLG and believe it will pan out just fine. I think all this 'ramp' stuff lives in your head a bit and yes there's been a fair dose of it but not exactly unusual for BB's. Have you read the GGP BB?? On the whole, I think the SOLG BB is pretty grounded and if anything it's posters like yourself that have been dishing out more doom and gloom than ever before. Why you think it appropriate now when we are at rock bottom puzzles me as you were not exactly doom and glooming when the sp was in the mid 30's were you?
The dose of reality you talk about is what exactly? What's the fantasy exactly? Echo chamber? What echo chamber? All these things seem to live in your head as I can't see them on this BB at all.
Everything looks fine here. The sp will sort itself out pretty quickly once the merger is done and the ARB traders have settled their books.
Certainly more doom sayers of late than rampers... that's for sure. I have a hunch why.... because most are not invested lol!