RE: 4p17 Oct 2024 13:47
"There's loads of possible outcomes, and picking a price should be based on the asset value rather than share price as the latter is just a marker for a said day at a said time."
The issue Fort, even if you wanted to take the view that Cascabel is valued at 150p a share (it isn't) is that the fundamentals mean there is a significant mark down due. The fundamentals in question here are technical risk and geopolitical risk. For me, SOLG haven't even scratched the surface on the former and the latter will always be kicking around to some extent with this being South America.
"When Noront was 21 cents, the market was suggesting 55 cents+ as likely winning bid. It went for 110cents."
The first part of that is a complete fabrication.
"The important thing to remember is don't use the current share price as your start point. That's proven to be naive at best. Use the asset. The asset has a benchmark industry value. It's either + or - based on turnkey status, geo location and general metal prices etc. At present ENSA/Alpala alone is worth around 80p+. Porvenir probably around 10p to 15p levels with some derisking/permits. Rest of the folio.... take your pick but Gina R and Barrick have both been buying into licence blocks in Ecuador lately so there's value in those 60 odd blocks."
If that were accurate, SOLG would have a baseline value of 30p and it would trade anywhere in the range of 30p to a quid, even accounting for your view of markets which is accurate. The price would also be positive as we cross off the deliverables to turnkey status.
As things stand, we're struggling to break 10 and there's probably just as much chance we slide to 5. To put it plainly, your view isn't shared despite a bullish spot price environment, a vibrant M&A situation and a bullish outlook over the medium to long term.
"20p to 35p is not going to fly. Doesn't matter how long the sp is sub 10p. It won't make a jot of difference as the asset is only getting more expensive for buyers with derisking events... not cheaper."
We all hope it won't fly but ultimately there is very little basis for that. Higher metals prices means producers are throwing off cash they've not seen for a long time. That will make them more amenable to writing down losses on strategic stakes. BHP for example, I think they'd dump SOLG and consolidate into Filo at the drop of a hat, and they'd get all their capital back at 30-35p. Don't write this price level off. I could see them take a loss at 25p for sure.
"Take a look at Hoshchild Mining (HOC). That was deserted by the market when they hit some political / licence block issues in South america. Sp was 50p back in Nov 2022. Now, the market can't get enough of it and sp is 225p+"
The reality is, for every HOC there are 3-5 CEYs, SHGs, etc. Worth remembering that when we tell each other our SOLG price hopes.
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