Member Info for Bozi

RK1 - are you making that comment about OT as a qualified geologist?

Just checking... ;-]

TheBasher - no offence taken whatsoever and I wish Kazera well.

You're well entitled to ask the question as well, but just be expecting that investors have confidence in this asset and the licence application process.

Atlantic have worked closely with all levels of government out in Ghana for 5 years now and whilst we can expect there to be some give on both sides, we have to be hopeful if we aren't confident about the process.

Well said 9billion.

That's 255kt a year as well. We'll process virtually the whole of Kazera's contained reserve in one year.

Ewoyaa has a 12 year, and growing, mine life.

Add - I can see where you're coming from but I'm not so sure.

I would imagine that BHP and others have had access to technical data and have been able to plug the numbers released into their own models. Geology is the biggest unknown, but SOLGs metallurgical work here has likely helped would be suitors form their own opinions.

Further DD before parting with the sums we talk about still a must, though.

Add - don't disagree. Think in all likelihood we're looking at the lower end of that timeframe which I tried to point out by saying I thought it would be Q2 when any action happens.

There are things however that might drag this out. I don't expect to till be waiting in Dec 23, but if the SR kicks off squabbling between BHP, Jiangxi and maybe even Matsui then I think we'll be waiting a little longer.

I just don't expect us to be hearing in the first couple of weeks of January. The outcome of the SR needs agreement between multiple parties who have managed to agree on virtually nothing in recent times and so it's going to take some finessing and some compromise.

And if it's going to be a good compromise then nobody will be truly happy, and I suppose that includes us.

But Quady, do you not see how a finance package for the 50% we keep in a JV scenario would be expensive, inhibiting and unlikely to be value accretive for us unless there's absolutely no issues with mine build, no overruns and the ramping up to nameplate production goes without a hitch?

The reward would be unlikely to match the risk and that alone makes it a bad option. ATB.

Quady - I've just realised my initial calculation is wrong. We'd have farm out 50% for £1.5bn, distributing £750m to shareholders for a dividend of 25p.

What I mean by this Quady, say for arguments sake,

We farm out 50% of Cascabel for £750m. An implied price of c.50p per share on an asset valuation of £1.5bn.

SolGold distributes 50% as a special dividend - 25p/£375m.

The other £375m is allocated:

£150m to fund Cascabel development over 2/3 years
£125m to fund Porvenir development over the next 2/3 years
£100m to fund regional exploration over the next 2/3 years.

At the end of say 3 years that leaves us still on the hook for $1.5bn plus an increase in costs (say +10%) allowing for inflation since the initial PFS. How might this look?

$850m debt
$500m offtakes
$300m equity

On the debt - even assuming an 8%pa lend - we're looking at a total repayment in the order of $1.2-$1.4bn over 5-7years.

Meanwhile, the off takes will reduce Cascabel's upside at higher spot prices from 2030 onwards (as the copper deficit grows) if struck before then.

On the equity, at this level and assuming a 30p share price (£900m valuation) which you could probably argue is fanciful given where we are now, that's an extra 1.2bn-1.5bn shares.

So we end up with over 4bn shares in issue, still comfortably over $1bn in debt and a fair chunk of Cascabel output spoken for.

Would it not be better, to seek an exit at Cascabel of 40-50p but retain the regionals in a new company? SolGold ends as a result of entity and the new company does an IPO fundraise to cover development costs at Porvenir and exploration elsewhere. Production can then become a more realistic dream at Porvenir where the asset is much shallower and can be exploited without a block cave. Finance still has to be sought for Porvenir but it should be a smaller scale project than Cascabel. NewCo eventually funds itself with Porvenir produce and at the same time everyone has had their payout from SolGold.

Quady - having an extra 15% interest in Cascabel is not going to change the cost of the finance. It might open up more options but the cost will remain the same, and frankly it would be extortionate as things are right now.

The absolute best we can hope for, is that such a package is 2yrs+ away by which time interest rates will fall and debt may be slighly more palatable. In any event we'd still be looking at 8-10% in my opinion and that isn't an area we should be straying into for a project this size.

There's going to be a compromise Q. Put this in your diary and hold me to it.

Those who want to sell are revising their previous demands lower and those looking to buy will need to meet them half way. So, for example, we could end up looking at 50p as a half way house to the upper target of 80p and a low ball target of 20p. BHP and the likes can afford this. They just need to be warned off causing carnage and burning us all, which I know they'd like to do.

If you want to justify a JV you need to start setting out some figures. You need to put a compelling argument together instead of repeating the same 2 or 2 lines verbatim.

I haven't Quady.

Please give me one reason why a Cascabel JV is the most likeliest outcome?

In a JV world SolGold would need to fund their share of Cascabel, all the regionals exploration and development and that's after making a return to shareholders because quite simply they wouldn't get away without making one of some sort.

Also, if we're to attain a £3bn valuation for the company based on a partial holding in Cascabel, what needs to happen in the short and long term?

We'll have 3bn shares in issue or thereabouts post the merger with CGP. If we go straight 50/50 how do you suppose we're going to raise the finance bearing in. Ins the points I made the other day about the rapidly growing cost of capital?

You know once upon a time I banged the production drum with you. The economics were astounding. It was a fantastic albeit speculative proposition.

But that ship has sailed. It's already off on the horizon. There isn't a chance SOLG is going to farm out half of Cascabel, allocate the proceeds to shareholders and other projects and the sell streams and off takes on the remaining half we will own to fund construction. There will be nothing left for us. It's a zero sum game.

The only way Cascabel delivers value from here is to someone who is rich enough to invest in development without the need of banks and smelters.

You do Kabaa, and I can't deny the recent investors have got a bite of the cherry at an attractive price. Part of that is just circumstance I suppose.

It wasn't so long ago that KAV was a potential 100 bagger. However, we've doubled our share count in the last 18 months or so given the deals with Power Metal and fundraises to chase the KSZ prize.

In my view, priority should have been given to the KCB given it was our lowest risk asset and exploration campaign. However, I understand that if the lower risk play fails then it can be more difficult to then sell the higher risk ones to the same investors.

For those who took averages in the 0.6-1p region in 2020 there may still be 100 bags on the table but everything has to go right from here. It's very much pie in the sky and is expect we'd need multiple KCB deposits or a huge breakthrough on the KSZ.

From here and based on my thoughts today and as long as the company is frugal with equity issuance from here, I think we're looking at:

Base case - 5 bags
Mid case - 15 bags
High case - 30 bags

If we find all three projects are barren then we're into downside territory. All the geophysics doesn't suggest that, but it's the drill bit that tells us.

Quady - so what you mean to say is that you'd vote against the board at the AGM if the strategic review favoured anything other than a JV or continuation of development?

You honestly can read through quite easily right now and say that's not going to be the case.

Sangha and Cornerstone are geared towards one outcome only. The only question is if they will lock stock us to the first acceptable bidder or whether they will be smart and retain the regionals for future growth. That is the only option in play here.

And before you ask what I'm basing that on, just read the recent RNS', form an opinion on Cornerstone's motives all along. It's clear to me and anything else would come about as a huge surprise, and only because there's a lack of interest at the price point that would be sufficiently agreeable.

Also, the strategic review was never going to be a one month process. Its a 6-12 month job. It will only gather true pace once the first matter at hand, the merger, has been ratified and closed.

Q2 2023 is when things will come to a head here either way.

As you know, I don't say any of the above to spite you or look for a row. It's just how it is for me.

What clarification are you looking for Quady?

Kaaba-it's a good question.

On a discovery in the KCB I'd be inclined to agree with Mr Robo. 10p would be a fair sort of level quite quickly assuming that some of the warrants are exercised. 150m of them puts us up to 850m in issue and 10-12p puts us at £85-100m market cap.

That would be very fair and reasonable and if the drill result showed we were on to a commercial deposit I'd see this as a base level for a move to £200-250m in 2H 2023 and early 2024.

We have to remember who operates in the KCB and a major discovery now we own the KCB 100% would push us even further onto their radar and ultimately I'd expect M&A action. 1bn shares in issue after warrant holders have had their fill and we're looking at 20-25p on a successful KCB discovery.

Before then however there is another potential price catalyst, from this £10-12m level at least. Ben alluded to it in his interview and the proof will be in the pudding in the new year.

In general, there's still upside from this price in a bull market for junior explorers. Price will be dictated again by how the company manages capital and it's strategy in that environment.

Basically, I think we're at a low right now. I think a discovery opens us up to a valuation of £30-50m and multiple drill hits double again.

But that's the game we play with these companies. You have to turn your process on its head, not chase them when they're frothy, but instead deploy capital at times like the present. You have to position as close as you can to new money to give yourself the best chance of winning.

Paul - you won't be needing the prayer mat in my opinion.

That interview with Matt Gordon was highly promising. For those who don't watch much of Matt's work with Crux, he pulls no punches. He asks the questions that shareholders and market investors really want the answers to and there's rarely little place to hide.

Ben, to his credit, put up a strong showing there in my view. I've aired my opinion of him generally before and whilst that hasn't really changed, I do have to give him immense credit for securing the level of finance he did earlier this year. It will remain to be seen how sticky the new investors prove to be as we see the rather obvious catalysts in 1H 2023 but the signs are decent, particularly if the KCB delivers in a similar way to how it has for Cobre lately.

The theme of the interview encapsulates the markets position pretty well and I don't think anyone can begrudge the efforts that Ben and KAV have put in, both in terms of presenting to new investors and out in the field. Yes, we now need a breakthrough to justify that hard work and transform the company, but ultimately when we're playing these pre-discovery minnows we have to condition ourselves for disappointment.

At the end of the day there aren't many better opportunities than the three diverse project areas out in Botswana and as investors we want to be holding stock in a company that is going pedal to the metal to deliver something tangible. It might happen, it might not, but this is a dice I'm happy to roll.

Just one final pickup for me from the interview - Matt pressed Ben on actual numbers and actual plans. That's the stuff a lot of investors like to see, particularly in times like the present. Let's keep seeing those cold hard facts that can be consistently overdelivered on and the time for the fluffier commentary will come when the market is risk on.

SM - he presumably thinks that BHP are going to assume control, pay everyone a fat premium and off we all sail into the sunset.

In reality that's not the case at all.

If any of the directors or Chairman loses re-election then you can expect a mammoth tussle as BHP then attempt to remove Caldwell and Vujcic from their positions. After all, their goal will be to remove the influence of Bob, Warren and Maxit. Their nominated director would then seek to bring other BHP allies onto the board, marginalise other major shareholders like Jiangxi and basically set us down a path of cheap equity dilution.

We'd see 5bn shares. 29% in the hands of BHP, and a share price of about 3-5p and only then will BHP chuck us a 30% premium, buying the remaining 3.5bn shares for about £250m.

Job done.

And for those who don't believe me (I know SM does), check my posts this time 2 years ago. It's good to see RK1 and others now waking up to the danger now it is staring us in the face.

Agreed Add. A JV is the worst possible result for shareholders.

I've asked Quady similar questions a couple of times and they've never been properly answered. He just moves off on a tangent and changes the discussion.

Quady - we a few reasons why there has been no bid before now:

- Cascabel has proven painstakingly slow to push through feasibility, and current shareholders expected to slowly creep up the share register via a steady stream of equity dilution. SolGold has offered resistance to this as we know.

- Many potential acquirers have been waiting to see whether a satellite target for an open pit could be developed. SolGold has gone some way to prove this at Tandyama over the last 18 months.

- Potential acquirers are still naturally reluctant to make a big move in a country like Ecuador without helping shape the direction of their policy on mining. After all, nobody wants to invest multi-billions of dollars to be stopped by future governments.

- Potential acquirers have developed their own strategies, many using the last 5 years or so to attain a serious level of cash richness, letting explorers like SolGold bear the exploration risk, possibly in the expectation that commodity prices may fall before they next rise, thus providing a bargain opportunity.

Add all of that to the fact that SolGold have been heavily defensive towards an approach. Mather has always set his stall in a completely different price postcode to where an acquirer wants to deal and his influence has been a deterrent. There is simply lower hanging fruit.

But what has changed now? The merger and the strategic review. SolGold has told the market is is exploring all options. That itself draws a line in the sand in terms of everything that happened before whilst the company held aims of becoming a major minor and developing a multi project portfolio.

The goalposts haven't just moved. We're playing a different game. It's time for you Quady, if you do wish, to take solace from the fact that SolGold wasn't sold before the merger despite many saying it would be, despite the press saying it would be, etc.

But it really is now the time to come down off this hill, because dying on it is going to look very silly.

To quote David Lloyd,

"Start the car!!!!!!"

*I was making