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I can't get it to open Quady when I tap on the link? Would you copy and paste it here please buddy if you can open it.
Thanks in advance.
David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, SolGold Plc (LON:SOLG) does carry debt. But the more important question is: how much risk is that debt creating?
When Is Debt A Problem?
Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.
See our latest analysis for SolGold
What Is SolGold's Debt?
The image below, which you can click on for greater detail, shows that at December 2022 SolGold had debt of US$139.4m, up from US$113.0m in one year. However, it also had US$77.2m in cash, and so its net debt is US$62.2m.
debt-equity-history-analysis
LSE:SOLG Debt to Equity History February 18th 2023
How Strong Is SolGold's Balance Sheet?
We can see from the most recent balance sheet that SolGold had liabilities of US$12.0m falling due within a year, and liabilities of US$144.3m due beyond that. On the other hand, it had cash of US$77.2m and US$9.72m worth of receivables due within a year. So its liabilities total US$69.4m more than the combination of its cash and short-term receivables.
Since publicly traded SolGold shares are worth a total of US$386.6m, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine SolGold's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
Since SolGold has no significant operating revenue, shareholders probably hope it will develop a valuable new mine before too long.
Caveat Emptor
Over the last twelve months SolGold produced an earnings before interest and tax (EBIT) loss. Indeed, it lost US$23m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. For example, we would not want to see a repeat of last year's loss of US$1
Is Macron a total joker? How can he be President of a country ffs. Russia is crushing Ukraine , but lets not crush Russia because he has no balls for that. Typical French , roll over.
Thanks for that Quady, I'll have a read of it later, I'm a bit busy at the moment.
Good luck buddy.
No problem Copperpot.
I posted it as it may give an indication as to why the share price is what it is and none of the rubbish sprouted by people on here saying the price is being walked down.
It's not.
This is a joke. You're saying that losing 40% of its market cap. because of a ****y 60m in net debt, whereas there are mining companies ( never mind things like tech unicorns ) with BILLIONS in debt, but have solid market caps in the billions also. Pure fantasy and scaremongering.
Kat …. Exactly 99% of companies carry some form of debt. , completely pointless article.
Wonder what Scott Caldwell meant by this
“I believe it is imperative to take bold action now, ahead of the close of the Cornerstone transaction”
Does that mean something is imminent prior to the merger completion? Or are they just talking about cost cutting ….. is that bold action?
That's a computer-generated article, you dingbat.
FTF, glad you pointed it out... SimplyWallStreet is a nonsense website.
kat2008
Poss look to ecuador itself for clues to some of our v poor sp performance
bn.c
DinnerMoney, I doubt you'll get a reply.
I'm also wondering how someone who has been doing this for 40 odd years can read that and think it comes even close to explaining the recent fall in share price.
Talking of interesting articles, I referred a good friend of mine who is interested in investing in Solg back to this article as its still one of the best and most recent accounts of how the next chapter may unfold. Obviously, now Jiangxi have thrown their hat into the ring since and the China / Ecuador bilateral agreements on trade have in all liklihood positioned them as prime contenders. Anyway, its worth another read a couple of months on ...
https://12ft.io/proxy?q=https%3A%2F%2Fwww.afr.com%2Fcompanies%2Fmining%2Fhow-bhp-newcrest-may-lose-their-copper-prize-to-a-scrappy-crew-of-minnows-20221114-p5bxxy
DinnerMoney I put up the article as a discussion point.
At no point did I make a judgement unlike the two posters who were quick to dismiss it.
As for the debt, it could be they are referring to the offtake.
“This is going to be a very exciting story in SolGold going forward,” said Sangha.
Yes Bob.... a few months on and we are at Multi year lows and you've knocked out the lowest equity raise (16p) in 6 years and stuttered your way to concluding a merger which to date still has happened.
Bit of fast, smart, slow and stupid rolled all into one.
A fun article nonetheless. Bob and Maxit will be the laughing stock of the mining industry if this one ends up looking Luke warm on a monetisation event. Reputations at stake here as well as some ageing ego's .... so that bodes well!
Q, which offtake? Our facilities are royalty deals, not offtakes.
As others have pointed out, this 'article' is nonsense. For example, they appear not to aware the interest is being rolled-up (which is another reason we need to sell) and does not currently affect cash flow. Sure, it worsens the balance sheet, but is not an immediate concern.
Good morning addicknt.
I do believe we have offtake agreement's.
I believe an offtake agreement is where the company gives up a percentage of rights in order for an upfront payment.
Royalty agreement's apply to intellectual property rights.
I do not believe this is what we have.
But happy to be corrected .
Add sounds like royalty to me
https://www.juniorminingnetwork.com/junior-miner-news/press-releases/2150-tsx/solg/76853-solgold-plc-announces-royalty-funding-package-for-alpala-project.html
https://www.globalminingreview.com/mining/01122022/solgold-announces-completion-of-us50-million-osisko-royalty-financing/amp/
Really DBW, what intellectual property rights has Solgold given in exchange for monies received.
Q, I suggest you look at the RNS dated 1st Dec - its heading specifically refers to a royalty agreement. Neither of our two funding arrangements are off-takes. The observation about intellectual property rights is a irrelevant in this instance.
Have done Addicknt I believe the wording is wrong.
As far as I am aware a royalty agreement is a royalty paid on a intellectual right.
Perhaps you should tell them they got it wrong - twice.
Can you show me where in the agreements there is any reference to off-take? I'm assuming you understand what an off-take agreement is?
Sorry old boy, you've got this completely wrong and have gone down the rabbit hole of google whilst looking for a definition of a royalty agreement.
I think Sangha will have moved fast looking to get this sold ( question remains whether Cascabel or the lot) ….. He’ll have seen us going backwards for years and (as we all know) realised there was no way the existing company were capable of taking h to his to production.
I’ve always assumed the merger is the main ( and maybe last) obstacle to clear but could it be the extraction license? Get this alongside the recent trade deal with the Chinese and we could be off to the races.
Whatever it is I think big news will break very soon.
Addinct… you’re wasting your breath
Thank you DinnerMoney you have provided the clarification I sought.
Sorry, Q, I hadn't realised you were 'seeking clarification'. Your comments appeared to be statements of facts, not questions. Perhaps it's best to read the company announcements?