Petro Matad CEO Mike Buck confirmed that he believes the Exploitation Licence for Block XX in Eastern Mongolia is likely to be awarded in Q2. Watch the full video here.
55p is too low for what we have. £1.50 would be fairer value, but with the share price down around 22p we would be lucky to get 30p in a sale at this moment in time. I think the price will drift until after the result of the presidential election and probably the PFS so it is likely to be in these doldrums for some time.
I think today's RNS tells us why NM resigned and it has nothing to do with the vote results at the AGM. Knowing how the Alpala Committee's findings were coming together, he is/was on the committee, I guess that he had to resign then rather than wait for the report to be published and be pushed.
Just my thoughts on the matter based on my knowledge of how company boards work.
I was waiting on the report from the Alpala Committee and that some changes to the PFS would be required. I was not expecting it to be this significant. However, I believe it to have been oversold but I see that there has been some clawback already.
I would doubt if any bid will be forthcoming before PFS as I would think any bidder would want to know what they will be buying. The fundermentals remain unchanged which do rely on proving up some of the other sites as well as producing the PFS on Alpala. The former has become even more important than before while we wait for the latter.
We just have to sit tight!
We had news yesterday, lots of it. News about La Hueca, Rio and Blanca, probably not what most on here wanted, but it was what people were asking for. Porvenir was pretty good. I guess what is holding the share price back is the report from the Alpala Committee, the Ecuador elections and the PFS in whatever order. So after that with a bit more good news from Porvenir and the share price ought to start rising.
Ever since I started following this board in January last year, people have been saying that there will be a bid tomorrow, next week, or soon! It still hasn't happened! Perhaps it will go to production!!!
In response to those that have disagreed with my earlier post, the money to build the mine is only required after BFS, i.e. 3 or 4 years until interest and capital repayments will start. OK, I agree that there are likely to be problems, cost overruns and the like. Hence the margin would have to be sufficient for that. If it is not then the mine is not worth building, whether it is owned by Solgold/CGP, BHP, Chinese or anyone else. The mine, as Quady says, will be built by contractors again whether it is owned by Solgold/CGP, BHP, Chinese or anyone else, and it will probably be the same contractors whoever owns it!
If what I have said does not convince or agree with the deniers on her, then we will have to agree to differ.
I am sure NM was not planning to resign before the AGM. If he were, he would have announced it before hand and the big boys would probably have abstained on that vote. I don't believe that the other directors forced him out. The long standing ones are his 'friends' and the new ones have not been in post long enough to want him gone and, anyway, they were all appointed by him. I am well aware boards 'gang up' to achieve the sacking of board members, including the CEO and chair, but I don' believe it happened in this case. I believe NM's attempt at conciliation failed and that he was told that "we will only provide funding if NM is gone". However, by voting him back in, it did give Solgold the opportunity for an orderly handover to a new CEO. If he had been voted out, he would have lost his job there and then. As for BlackRock voting with the three, that is unlikely. The voting against was roughly 45% of the 80% of shares which were voted, NOT the 100% of shares in issue. The shares of BHP, NCM and CGP add up to about 44%.
As for Tiger's statement that Solgold does not have assets to secure loans to build the mine and take it to production. I am afraid that is not true. It has oodles of the stuff in the ground and banks would be able to lend against it probably as a consortium. Where the big boys would have the advantage is that they could probably arrange cheaper finance, which they would probably do if they owned the mine. (I was in banking almost all my working life.)
The problem that Solgold has is that it would be unlikely to be able to fund the other mines to production unless it has got one already producing.
Up until now, I have tended to agree with Quady but, because of recent developments, we seem to have lost our way. If we are going to be taken out, I would like £1 a share at the very least, I would prefer £1.50 a share but I suspect, as things are at present, we will be lucky to get 50p.
I was in discussion with a number of you on this board regarding the voting by funds at AGMs, in particular by Black Rock.
As some of you know, I am a trustee on a company pension fund. The parent company is listed although it is not a big pension fund like BT or Lloyds Bank. It is approx. £200 million and we are in surplus, but we are a mature fund, i.e there is no money (subscriptions) coming in, only money going out, i.e. pensions in payment. I have looked into how the funds which we are invested in use their votes at AGMs, etc.. We use 4 such funds, plus another one for bonds, gilts, etc.
Three of the funds state that they are advised by either ISS or Glass Lewis. One states that they do not use proxy voting advisory services. Three of the funds state that they vote at fund level, whereas Black Rock state that they vote at company level. It would appear that the default voting instruction is always to vote "for" a company resolution. They all state that where there is an issue, this will be discussed with the company before a final decision is taken on which way to vote. I don't know how true that is in practice. I would presume that all the funds would have voted in support of the Solgold board at the last AGM than with say BHP at their AGM.
We are a relatively small fund so I don't know how representative our fund managers are when it comes to voting. We do, as a trustee board expect engagement by the funds we use in the policies and direction of the companies that they are invested in. We do employ an investment adviser who acts as an interface between us and the fund managers we use.
I would not expect any of the funds we use to be invested in Solgold, after all we are looking to de-risk, but to keep ahead of inflation and the other variables, e.g. longevity of our pensioners.
I hope this is helpful.
I notice that all my shares are down this morning, most quite significantly, except Diageo. Perhaps the MMs feel we will all be wanting a stiff drink to make up for it!
On a more serious note, I see that the RNS today refuted most of the claims in Crux, but not the one about the costs of Alpala. I presume these will be shown to be false in the PFS which we will at least have an update on soon. I guess the directors will want to get it out soon to counter the distractors.
By winning the vote at the AGM, at least Solgold is able to arrange an orderly hand over of power. Had NM lost his position, he would, in theory be marched out of the door that day. That situation is very difficult for anyone talking over the position on a temporary basis. It would have been even more difficult for Keith Marshall as, I understand, he is based in London especially as it is next to impossible for him to travel to Australia at the present time.
However, the handover period is, in my opinion, overly long and I would expect, if all goes reasonably well, that it will be shortened.
I would guess that Marshall will want to be his own man and not have his strings pulled by NM, or anyone else.
From bitter experience, it is very difficult to be spirited into a position when the previous incumbent has had to leave and then have to have an extended handover to the new permanent appointee who wanted to change everything virtually from day one. I would say that, in my case, I did turn down the permanent position as it would have meant that I would have had to move away from London where my life was and still is.
I would hope, for the company's sake, that Marshall is able to embrace the CEO position and that he can be appointed CEO permanently. It will be interesting to see where the company goes under his tutelage. If he is able to make his mark on the position, I would expect NM to resign after say 6 months.
It will be interesting to see where the company goes in the future. I hope it does not mean a low ball take over by BHP or NCM but fear it might happen in return for funding, etc.
Just my thoughts.
This is a very sad day for me and for Solgold. I am sorry to see Nick go as he has brought Solgold to this stage despite many setbacks along the way.
I do believe that the AGM was a success in that NM did not get voted out, in fact he was re-elected by a 10% margin, so a good result bearing in mind that 3 of the largest shareholders had control of over 40% of the votes of those voting against him. What the vote achieved was that he was not voted out so did not have to leave there and then, and also could not stay on as a NED. In other words he could go at time to suit the company and so there can be an orderly hand over.
Both the new board appointments and those of the senior managers recently appointed and the comments in the RNS, quoted by Quady, confirm that it is the board's intention to continue to production. Whether this remains the case after the new CEO is appointed remains to be seen.
I guess that it will remain the case, but funding may come from a different source, eg BHP, or perhaps we will have a rights issue which will probably have the effect of moving power over to the big boys. In the end it may result in Solgold being taken over. Nevertheless, I hope Solgold does survive in a form that it can develop some of the other Tier 1 assets even if it means losing Alpala.
Earthling and Schlemiel.
I repeat what I said in an earlier post: BHP/NCM have agreed to fund Solgold in exchange for NM's head. They will each place someone on the Solg BOD as is their right. One will be CEO and one chairman. After that they will call an EGM to pass the two resolutions which failed to be passed at the AGM then new shares will be issued to both companies so between them they have over 50% of the shares. They will then make a take over offer at say 30p and divide the spoils between them.
Alternatively, NM may be ill and wants out within the next 6 months. The BOD wanted time to find a replacement, hence the exercise to defeat any vote which we would result in his dismissal at the AGM.
Take your pick!
To add to my post a few minutes ago:
A large number of the board are recent appointments, so loyal to NM at present, also expecting a long term job. The longer serving ones will probably be loyal to NM to have survived. In other words, this is probably being driven from outside, e.g. BHP. A case of we will put up the money, but NM must go and we will replace him as CEO with our appointee.
The way the news was tabled means that it came from only one source. If it is true, I will be sorely disappointed as it can only result in Solgold being sold for a disappointingly low price, not taking any account of the value contained in Porvenir, Rio and the other sites and probably under valuing Alpala as well.
It will be very difficult to recruit a CEO in the current circumstances, i.e. Covid. I guess either BHP and/or NCM will exercise their right to place representatives on the Solgold board. One will be CEO, one will be chairman. After that, there will be an EGM to change the share issue rules, that is the ones voted down at the AGM. Shares will be issued to both companies so that they have a majority between them. Then there will be a joint takeover for a low price, e.g. 30p, and the spoils dividend between them.
This is NOT what I want, but is what I fear will happen.
By only doing the original Franco deal for $100million, I had presumed that it was the intention at the time not to take up the additional $50million, even though most of us on this board believed that we would need it. Therefore, as we haven't heard anything, I am presuming that the $50million was not taken up.
Thank you for your post. You obviously have considerably more relevant experience than I do. I agree that a rights issue and any convertible instrument would cause shareholder dilution probably with the 'wrong' shareholders picking up shares in the company. I have for sometime concluded that a rights issue will be necessary as part of the scenario which I described, but not as the major part of any money raise. We will just have to wait and see what happens. What I am conscious of is that a sale at this time would be at a low ball price that would please few on this board. I agree that a suitable JV or possible sale of one site, preferably not Alpala as it is Solgold's flagship, although, of course as potentially a very difficult and costly mine to build, it might be better to unload it and concentrate on the easier mines to bring to operation.
These are just my thoughts
The question about whether or not it is possible to go it alone keeps coming up. If we are not going it alone, why have we arranged finance to take us to DFS/BFS? People on this board keep saying that we will never be able to finance the building of Alpala nor any of the other mines that we are planning to build. First we have to build Alpala.
Why are we not able to build Alpala? The mine contains x million tons of copper multiply this by the price of copper (use a fairly conservative price) , take off a percentage (say 5%) as some won't be possible to extract, etc. This gives the value of the asset and can be used as security. Provided the cost of building the mine is considerably less than the value of the asset, we can borrow against the asset. OK the loan may be too big for one bank to provide on its own, so the lender will probably get together a consortium of lenders. This is normal banking practice, OK BHP might achieve a better interest rate compared to Solgold, but we are only talking 1 or 2%. This is doable and in the unlikely event that we should go bust, then the bank/s sell the asset to a major or the Chinese, etc, at a good price., i.e they get it cheap!
I used to work for an American bank in London a good few years ago and we did this sort of lending, usual as part of the consortium not usually the lead. These days there are more sophisticated instruments available than there was in my day and in any event I decided that I was more interested in other forms of banking and my career took a different course.
Anyway, my point is that there is all sorts of ways we could raise money, not only by bank loans, as above, but secured bonds, convertible or otherwise, royalty deals or even a rights issue, or more likely a combination of all of them.
It is certainly possible to do it alone, we could do a JV but these, from what I have heard, often finish up with winners and losers. So only a 50:50 or more favourable to us JV please. Or we could sell off one of the sites. In other words there are plenty of possibilities without us having to sell up cheap!
This is all my opinion only.