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Last night...
I was checking the share price and it was 10p...then it was 21p..then 43p...
And I thought how has this happened...
It was a FOMO feeding frenzy in SOLG shares...
So I thought..its just a dream...
But how could it happen...?
And then it came to me...
Read on...
Part 1
On 21 February Jiangxi inked an offtake deal with First Quantum for the delivery of 50,000 tonnes of copper for the first three years of the Kansanshi MIne in Zambia.
Average annual production at Alpala in PFS3 is 123,000 tonnes a year.
In simple maths that grosses up to $1.23 billion for a 3 year deal or $1.64 billion for 4 years.
The CAPEX for Alpala is $1.55 billion
It doesn't matter if the assumptions are too simple...its the principle...
And I haven't even taken account of the average annual production of 277,000 ounces of gold...
Current street value $600 million a year...
On 1 March Jiangxi bought 26 million shares in First Quantum for $212 million...
First Quantum has "vast debts" currently $6.42 billion and rising...
Part 2
Hannam Partners have just valued SOLG at 63p...they're not stupid...
Ingo was a partner in Hannam before he joined SOLG
After PFS2 there was no point in going ahead with the DFS because the North American markets, primarily Canada, were in effect closed to mining finance, especially for a minnow like SOLG, irrespective of how powerful the story was.
To have raised the CAPEX would have meant massive dilution, either by straight equity or convertibles.
Ingo left SOLG when Darryl was in the process of trashing the company...
So what's changed...?
He’s gone all Martin Luther King.
His leverage must be really hurting…
Part 3
Page 235 of PFS3...
And why hasn't it dawned on the market...?
Especially with gold and copper surging...the assumed prices in PFS3 are $3.80 for copper and $1700 for gold
Cascabel alone is now worth $8billion more than PFS3 ($2.32bn copper; $4.9bn gold; $0.8bn silver), in the ground...
But what about P235...?
"SolGold has to date received ten qualifying Expressions of Interest..."
"SolGold has also received material offers of funding in exchange for offtake from a number of traders...."
SOLG has received offtake offers for the first unknown number of years of production that amount to MORE THAN the total CAPEX for Cascabel...
So lets say $1.6 billion...
So if those conditional offers were signed tomorrow, why wouldn't SOLG immediately be worth $1.6 billion, or £1.2billion...
Or 40p/share...?
But the after tax NPV of Cascabel is $3.2 billion so if the mine was fully funded by offtake agreements...and that was at $3.80 copper and $1700 gold...
So why wouldn't SOLG be worth at least $3.2 billion, or £2.46 billion...
Or 82 pence per share...
So when will the market filled with doubters wake up to this simple logic?
Or will it take the announcement of conditional offtake agreements sufficient to fund Cascabel...?
Or will it take the first...and subsequent bids...?
Have a good day...
Reds the same as the rest of us hoping something is happening in the background
Without cash SOLG is vulnerable. It needs both short term liquidity to see it through commercialisation and capex commitments to derisk Cascabel and by extension related assets
I don't believe this is a SXX ala Potash in Yorkshire scenario but should the company be deemed to be insolvent then they're open to threats. Someone will try and steal SOLG's assets and pick them up for next to nowt
Summut triggered?
Luvly jubly guys
What a load of waffle. Can't be bothered to unpick some of the issues with what has been posted.
Former GFD? Wow. Worrying.
So Redknight, Slug and DBW are completely wrong according to Redknight.
Apparently according to Redknight we have been offered limited offtake that completely could fund Cascabel with no dilution or minimal dilution.
Remember the three stooges said this was Impossible.
Don't be taken in by these clowns.
This is making more sense.
Two new finance guys and we know that we have funding to construct Cascabel with or without a JV.
I suspect soon we will appoint someone to oversee the civil engineering build.
Foot firmly on *****
Lol
Schlemiel...you've just hit on why the SP is 8.7p (apart from it being held down...)
But we still have c$10 million, which funds operations for 5 months at $2 million a month...
And there is non dilutive funding coming...
You're right to point out that this isnt SXX...they were mining polyhalite, not even potash...
But they couldnt raise the £500 million...even with convertibles...
But SOLG already has offtake offers to more than fund Cascabel, from just the first few years of production...
Which means that say another 0.5% royalty for $50 million would be a walk in the park...two years funding...or more...
And when the non dilutive funding is announced you do not want to be out of this share...
If we get that far...
There are between 30 and 40 parties now in the dataroom...copper has broken out and there us a large smelter and output gap looming...
But gold is going bananas...
So with the second biggest Tier 1 copper prospect in the world, how long before a copper (Jiangxi) or gold (Barrick) or coppef/gold miner makes the first move.
To remind.when Wyloo embarked on their takeover battle for Noront they had 37.5% of the shares. And the price went from 25 to 110 in 8 months...
Nobody at SOLG has more than 10%...
And ask yourself, why have Newmont walked away from Havieron, but stayed AG Solgold...?
An Expression of Interest (EOI) is a formal document prepared by a buyer for a seller, demonstrating the former’s willingness, ability, and a price range for purchasing the latter’s business, asset, or security.
Under an offtake mining agreement, a buyer or offtaker commits to purchase a specified quantity or portion of a seller’s future mining output. Offtake mining agreements run for varying lengths, including spot, short-term, and long-term. Under a spot contract, the purchase price is a one-time price that the buyer and seller agree on. Contract length varies but can be as long as 30 years.
An offtake mining agreement offers various benefits. From a seller’s perspective, it guarantees revenue from the sale of output, which can be a key determinant when trying to acquire project financing. The buyer benefits from the guaranteed receipt of a specific amount of output over a specified time frame.
Ok redknight, I'll bite...
- current cash will be more like $7m. ($13m at end-Dec, reducing by c$3m+ a month).
- any offtake will, I believe, restrict cash solely for Cascabel. Still need working capital and funds for regional exploration/development
- "There are between 30 and 40 parties now in the dataroom" Source? Highly unlikely.
- your reference to p235 of PFS is still wrong. As I flagged before, the EOIs were different to offtake offers for funding. The offtake offers were "material" but nothing stated these were sufficient to cover initial or total capex
- your suggestion that, should an offtake offer be received to cover capex, the SP should automatically jump to the NPV value is completely ridiculous. Companies aren't valued at NPV at the pre-construction/construction phase, and aren't valued at what is expected over the next 40 years. What about the political, operational risks etc.
Despite redknight's constantly changing speculation, I'm looking forward to Solg's big reveal over the next 1-2 months. I genuinely think it will re-rate the SP. Significantly.