RE: New AFR article -14 Aug 2022 15:26
Thanks BBG ……
“Now that BHP has the chequebook out for a big copper deal, the spotlight has turned on other potential targets in the sector.
Analysts reckon OZ Minerals is just one of about a dozen future-facing commodities plays in the $1 billion to $10 billion range, all of which could hold appeal to BHP and/or a big mining copycats.
The list includes Australia’s IGO Ltd, Nickel Mines and Chalice Mining, Toronto-listed Lundin Mining and Ivanhoe Mines, and a bunch of overlooked African base metals plays trading in South Africa.
But the one in the analysts’ lists that caught Street Talk’s eye was SolGold, which is based in Brisbane, listed in the UK with about a $1 billion market value, and has a following among Australia’s resources fund managers and analysts.
Unlike BHP’s current target OZ Minerals, SolGold is attracting headlines for all the wrong reasons. The company lost its new CFO after only a month or so last week, butted heads with some shareholders over a pulled equity raising in July, and is short on near-term cash.
What SolGold does have is a big and promising copper/gold/silver project in Ecuador, called Cascabel, that it is trying to develop at a $US2.7 billion ($3.8 billion) pre-production cost this decade.
If all goes to plan, SolGold reckons it could mine Cascabel for 26 years at 210,000 tonnes of copper equivalent a year (about the same as BHP’s Olympic Dam mine), and generate $US14.4 billion cash flows after tax, based on copper at $US3.60 a pound. (At recent spot prices, it would be $US16.3 billion in after tax cash flows, according to SolGold’s presentation to fund managers dated last month.)
SolGold owns 85 per cent of the Cascabel project.
While SolGold couldn’t raise equity at the drop of a hat last month, it’s not because it doesn’t have deep-pocketed backers. Quite the contrary.
SolGold’s two biggest shareholders are Australia’s BHP and Newcrest Mining, with toehold stakes worth 13.6 per cent and 13.5 per cent of the company, respectively.
With SolGold reported to have only enough cash to see it through to the end of the year (after scrapping its recent $50 million top-up), there’s bound to be a time in the next few months when its two big Australian shareholders will have to decide how much they want Cascabel.
If it’s a bit, then the two shareholders will have to tip into an equity raising and try to maintain the status quo.
But if it is a lot, like some analysts suspect, then we could see a pair of Australian heavyweights in a ding-dong battle.
The company’s annual general meeting, slated for November, is a key date to watch”
It’s hitting up now …. Someone best get on the blower sharpish to BHP/ NCM and tell them we’re taking this to production …. Surprised they don’t know that already ??
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