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Cuzzubbo is a former BHP executive and while that doesn’t mean he was aligned to BHP’s cause at SolGold, insiders say he wanted to continue patiently growing and defining the value of Cascabel in the belief it will be worth much more in a couple of years time when the connection to nearby geology is better understood.
That strategy suits BHP and Newcrest’s deep pockets just fine, but the small guys are less patient.
‘Fast and smart, rather than slow and stupid’
The third and most significant thing to occur at SolGold since the announcement of the Cornerstone merger is the initiation of a “strategic review” that will consider “value creating alternatives” for Cascabel.
The strategic review will be run by Sangha and Citi and will consider selling part or all of Cascabel, among other options. Sangha says the strategic review heralds the end of an era where SolGold was “pretending they were going to build a block cave” mine.
It now seems far more likely that SolGold will sell part or all of Cascabel and use the proceeds to return to its core competency; greenfields exploration.
“We are going to do what we should have done six years ago; monetise this in whatever way maximises value for shareholders,” said Sangha. “We are bringing it to an end fast and smart, rather than slow and stupid.”
A sale of Cascabel could leave BHP and Newcrest owning little more than shares in an exploration company they don’t control.
Citi’s involvement in the review means Sangha won’t have it all his own way; Citi were this year an adviser to BHP on the $8.3 billion bid for OZ Minerals and are perceived by most observers to be a balancing force against Maxit.
Talks with OZ revived this week, building optimism that BHP will be able to strike a deal for its South Australian copper assets, which shape as a more strategic and important addition to its portfolio than Cascabel.
BHP and Newcrest would be free to bid for Cascabel should SolGold attempt to sell it. But either way, the big Australian miners’ might have their hand forced sooner rather than later.
“This is going to be a very exciting story in SolGold going forward,” said Sangha.

SolGold’s Queensland-born chief executive Darryl Cuzzubbo exited last week after just 345 days in the job, while his chief financial officer Ayten Saridas had served just 45 days when she exited in August.
While it was short, Cuzzubbo’s stint saw the delivery of two significant events.
The first came in April with the long-awaited publishing of a feasibility study into building a $US2.7 billion mine at Cascabel, which helped define the size of the prize.
For that investment, SolGold would get a 26-year mine that could pay for itself in less than five years at current copper prices of $US3.75 per pound. The study only considered 21 per cent of the known resource at Cascabel, but still found the mine would produce 210,000 tonnes of copper per year at its peak; about the same as BHP’s Olympic Dam mine in South Australia.
The second major milestone of Cuzzubbo’s tenure was the agreement to merge with Cornerstone. The transaction was logical in that it put 100 per cent ownership of Cascabel under one roof, but it also eliminated a source of uncertainty and friction.
In the battle for control of SolGold, the scrip merger shapes as a big win for the underdog faction and could be the moment that Cascabel started to slip away from BHP and Newcrest.
It will see more SolGold shares issued to Sangha (who owns almost 20 per cent of Cornerstone) and some of his friends, and it will dilute the power the BHP and Newcrest faction wield on the SolGold faction.
Small guys in charge?

In the five weeks since the merger was announced, three big things have happened at SolGold that suggest the small guys are now in charge.
The merger gave Cornerstone the right to appoint two directors to the SolGold board. Insiders say the appointments of Sydney-based Dan Vujcic and Canadian-based Scott Caldwell have been significant in shaping the balance of power on the board against the BHP and Newcrest faction.
Vujcic was part of the Citi team that gave Fortescue its first major funding round, a $US2.5 billion bond, in 2007. He has also advised copper giant First Quantum on multibillion-dollar deals and is currently working with former Fortescue boss Nev Power at Metals Acquisition Corp as it seeks to finalise the acquisition of the Cobar copper mine in NSW.
The new board had been together for barely two weeks when the second big thing happened; Cuzzubbo exited as chief executive.
Cont…..

BHP walked away from that battle in the belief Forrest’s private company Wyloo Metals had overpaid for geology that was very remote and at an early stage of scientific assessment. Forrest walked away with the prize.
With a track record like that, Sangha feels very comfortable with how the unofficial factional lines are being drawn at SolGold after a turbulent six months.
While there is no suggestion of collusion, BHP, Newcrest and the funds management giants BlackRock and Norges Bank are perceived by most observers to vote the same way on most matters at SolGold. Collectively, those four owned about 36.5 per cent of SolGold shares before the merger with Cornerstone.
The perception those four are unofficially aligned is based on their similar public commentary, accounts provided by insiders, and the proportion of shares voted against known enemies of BHP and Newcrest at SolGold annual meetings.
An unofficial coalition of convenience

The former SolGold chief executive Nick Mather is one of those enemies; more than 44 per cent of SolGold’s register tried to kick him off the board in December 2020, suggesting the big corporate faction was within a whisker of collectively controlling the company at that time.
Mather owns almost 4 per cent of SolGold directly, but has close links to other companies that also rank in SolGold’s top eight shareholder list, including ASX-listed DGR Global.
Mather is widely perceived to be joined on the small side of SolGold’s factional fence by those other companies, Sangha and a few of the other originals who were SolGold shareholders before BHP and Newcrest showed up.
Together, they form an unofficial coalition of convenience, desperate to prevent the big miners from collectively controlling more than 50 per cent of SolGold and diluting their shareholdings into oblivion.
oblivion.
“No one would be happier than me if we end up with a great outcome for shareholders and BHP and Newcrest end up with zero stake in Cascabel,” said Sangha. “It’s all about taking these big companies down and embarrassing them.”
Distrust and mutual loathing

The battle for control of SolGold encapsulates the tension, distrust and mutual loathing that seems to frequently exist between the big end and the small end of the mining industry.
The colourful, entrepreneurial risk-takers who go searching for geological jackpots in exotic and sometimes questionable parts of the world are perennially dismissive of big miners’ bureaucracy, conservatism and political correctness.
The big multinationals, on the other hand, seem perennially frustrated that their treasured reputations could be influenced by what goes on at the smaller end of the sector, where far less time is spent on sustainability briefings and corporate governance.
The cultural fault line between big and small has flared for years at SolGold, and with both factions having somewhere between 35 per cent and 65 per cent support, running the company has been difficult.
Cont…..

‘A case study for junior miners’
Sangha bristled at BHP and Newcrest’s criticism of last week’s deal with Osisko Gold Royalties, which will see SolGold get $US50 million immediately in exchange for 0.6 per cent of all future revenues from the Cascabel tenement.
“For six years the biggest liability on SolGold has been Newcrest and BHP. They’ve talked down the asset,” Sangha told The Australian Financial Review. “This is a case study for junior miners as to why you wouldn’t want these guys involved in your project.”
Sangha helped to arrange the Osisko royalty deal under Maxit’s new role as a financial adviser to SolGold. Maxit was appointed to that role on October 7 when SolGold announced plans to merge with the company that owns 15 per cent of the Cascabel discovery; Cornerstone Capital Resources.
Sangha is a major shareholder in Cornerstone and a small shareholder in SolGold; he will control just under 5 per cent of SolGold if the merger goes through, which is likely.
Sangha is close to Osisko president Sandeep Singh; the pair were investment bankers together at big Canadian firms and co-founded Maxit together in 2013.
To avoid confusion between Singh and the Newcrest chief executive Sandeep Biswas, Sangha pointedly refers to the Osisko boss as “smart Sandeep”.
Those sorts of sledges are all part of the Sangha experience; he has declined to be in a photograph for The Australian Financial Review on more than one occasion. But despite his reluctance, he assured this publication he was better looking than Biswas, BHP boss Mike Henry and Newcrest chairman Peter Tomsett.
Wrongfooting the mining giants

Osisko was a good client of Sangha’s long before Singh took the reins in 2020; a previous incarnation of Osisko gifted Sangha that famous baseball bat.
The bat bears the label “stupidity reset device” in honour of Sangha’s work in outfoxing the much larger multinational GoldCorp when it made multiple hostile moves on Osisko between 2009 and 2014.
When Sangha helped thwart GoldCorp’s hostile takeover by arranging for most of Osisko’s assets to be sold at a higher price to Agnico Eagle and Yamana Gold in 2014, it was not the last time he took delight in wrongfooting a mining giant.
Sangha was in Forrest’s corner last year when Australia’s second-richest man launched a six-month bidding war against BHP for control of Canadian critical minerals explorer Noront.
Cont….

The baseball bat in Bob Sangha’s Toronto office is a monument to his favourite pastime of “taking down” big mining companies in acquisition battles, and he’s itching to take a swing at BHP and Newcrest.
“They are about to enter a scrap with guys like me, and BHP and Newcrest’s rumble in the Ecuadorian jungle,” says Sangha about the fight for control of turbulent copper explorer SolGold.
Recent events have entrenched Sangha’s private firm Maxit Capital as a pivotal player in the future of SolGold, the explorer that lured Australia’s most powerful mining names into the jungles of Ecuador in 2016 in the hope they would find a big new copper province.
They have found plenty of copper there, but they’ve also found plenty of the governance concerns, boardroom brawls and fast-shifting allegiances that make junior mining fun for retail punters and infuriating for big corporates with reputations to keep.
Now, after six years of internecine squabbles, a recent merger and leadership coup at SolGold has left BHP and Newcrest beholden to a colourful crew of junior mining street fighters, who might be about to sell SolGold’s prized asset from right under the noses of the big Australian miners.
‘The SolGold rush’
Newcrest was the early mover on SolGold, acquiring just over 10 per cent of the company in October 2016 after outbidding BHP.
BHP circled back in 2018 and took a slightly larger bite, giving it bragging rights as SolGold’s biggest shareholder with 11 per cent at the time and now just over 13 per cent.
Other big players joined “the SolGold rush” in different ways; Gina Rinehart’s private companies snapped up tenements surrounding SolGold’s Cascabel discovery, Andrew Forrest’s Fortescue Metals Group ramped up Ecuadorian exploration, while Chile’s state-owned copper giant Codelco also claimed ground in the jungle surrounding Cascabel.
But rather than engage in the sort of bidding war that seemed likely six years ago, BHP and Newcrest have come to sound more like a frustrated unity ticket when they speak about SolGold.
Last week. they were again expressing disappointment that pre-revenue SolGold had raised funds through “high cost” forms of debt such as royalties rather than conducting the sort of share issuance that would advantage cashed-up firms like BHP and Newcrest at the expense of smaller investors who may struggle to afford to participate.
No one disputes that SolGold needed the cash; the pre-revenue company burnt through more than $US14 million ($20.7 million) in the three months to September 30 and had less than $US12 million remaining on that date. But SolGold’s choice of funding was the issue.
Cont ….

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