Member Info for Fortissimo

Very sunny and warm here although minor bit of fog around 5.30ish when out for a run

chill bozi... life's good... SOLG soon to deliver long awaited monetisation.

Cheer up

I gather Ecuador CGS day yesterday went well. Don't get disappointed Ortherncopper ... you need to get some new rose tinted glasses or borrow Bozi's GGP ones as he's fed up with them but still remains positive.

Plan B begets plan A as they say... or have done for some moons now. The reality is... you must always cover all basis especially when the clock is ticking. Or you really do become a sitting duck with no time to react.

Chin up.

The contract news today was known to the market on May 18th, but today's RNS confirms the 'signing' of the deal. Hence it's not really market moving news but equally you could say that the market has yet to price this in as not much added since the May 18th RNS date. The professional II / hedge fund market that is in play at present is bearish on equities. They keep talking the market down as clear they moved bets to the downside knowing Fed rate rises coming etc etc. But more recently some of those big banks seem to be repeating the message that equities are over priced almost like a kid shouting that they want something to happen. It's as if they can't believe the market is not giving them an easy entry point.

The fact is... PFC is already priced to fail. It most certainly isn't priced to succeed. So the moment the market decides to go on the inevitable bull run phase (after Fed starts to pause and then cut rates to combat weak growth and counter Chinese impetus etc etc... that's when you'll get some major shifts up in equities. Might be H2 or Q4. But buying PFC at these levels is like getting them half price in 2024 imho. No guarantees but I buy for the future and the future looks bright for PFC. just sad we have a rather reluctant and ignorant market backdrop at present.

Bonds now 72.5.

Last time Bonds were priced at that level PFC equity was 101p to 107p levels (October 2022).

Market giving away almost 50% discount on Equity price which is bonkers. Market got it to 85p on $13bln deal RNS. Absolutely no reason why sp should be sub 85p especially as we've had Adnoc and a few other deals announced since Tenet deal.

I'm a buyer as market asleep at the wheel on this one at present.

Https://www.mining-journal.com/london-to-a-brick/opinion/1428389/joint-bhp-newcrest-bid-for-solgold-‘within-months”

and we know what happened shortly after that big failed to materialise... CGP and SOLG announced merger.

Prior to the above article BHP and NCM were said to have met Lasso. Share price was around 35p then. Double today's level and we only had 85% ENSA then.

And remember this one from just a few months ago?

https://www.thisismoney.co.uk/money/investing/article-11713193/CITY-WHISPERS-Miner-SolGold-target-rich-seam-rumour.html

Plenty of obvious reasons for thinking SOLG is a takeover target as we know.... Tier1 assets do not stay stuck on a shelf. They always get developed. Name a Tier1 asset that has not been developed. There's too much money in them. Alpala is so huge that even 20% of the total resources delivers a robust economic story and that with Copper around today's levels never mind doubling in the years to come when Alpala is expected to produce. A super major or chinese outfit could have 50 years+ of cheap copper available to them at a time when copper is valued at all time highs.

Mining Journal or another well respected Aussie mining site speculated that Newcrest and BHP were lining up a bid around this time last summer. The share price was well over double what it is today. Did SOLG comment on the rumours? NO.

Bozi... on that basis, why do you expect them to comment on an article that is from an uncooked source and even as some posters have said looks unverified albeit to non subscribers. FWIIW, from what I've heard it is a valid story/rumour.

In my opinion ... it's the old adage... 'no smoke, without fire' and I think there are numerous parties that would like to see some feathers ruffled. The Story might have been leaked to unsettle chinese as Brazilian firm included. Or could have been dropped into rumour mill to agitate the likes of Newmont and BHP? Or... could just be Maxit generating some interest via the usual PR rumour wheels.

The fact is, the chinese names to be expected but it's the suggestion of a Brazilian firm and possibly Canadian firm in the mix which has got my attention. That's potentially something we didn't know! Chile have Codelco involved with chinese in south Ecuador, could Brazilians be interested in North Ecuador?

One thing for sure is that the share price is very very cheap at 17p levels compared to when the last BHP/NCM rumour circulated last year.

Great info and research Harry, much appreciated.

Looking very good here over the next 6 to 12 months.

Https://www.forexlive.com/news/funds-are-bearish-on-copper-but-its-the-go-to-metal-for-the-energy-transition-20230609/

Pokerchips, understand your reference to $129m, but that's not how you value equity on a forward looking basis. Majority of p/e's are x 10 on valuation and much higher on growth stocks.

PFC not that far away (assuming another decent contract win or two) from having a forward order book that resembles the old PFC days when market was happy with £2bln+ market cap.

No sure I agree with the 'next to no equity' in the business comment poker chips but think you need to focus on where the company was with bonds and equity prior to the covenant / debt renegotiate deal. That's where the high risk was for equity as fund raiser posited and bond holders looking for further security whether that D4E or something else eg capital raise. That's all been put to bed now and the rise in bonds does not reflect a choice over bonds v equity. Often they are different investors involved but the key takeaway is 'risk'. When bonds rise it suggests appetite for risk v reward. Bonds have steadily risen over the last two weeks to reach 8 month highs reflecting bullish sentiment toward PFC. The Equity has been suppressed by shorters who ironically may well include some of the bond holders/buyers so the hedge is buy more bonds and sell some equity?? Putting other financial instruments/methods aside, historically the Equity is usually much higher than the bond percentage. Obviously 100 on the bonds is full value although they have been above that. The sp correlation to bonds is around 20% off so I'm expecting PFC to be into the 80's very soon .. possibly ahead or post AGM later this month, maybe sooner.

There is plenty of equity in PFC. It's a £2bln market cap style/type of company and has an order book that may well back that up. But margins are down and times are tough but they will improve and when they do, PFC becomes one of the best plays on inflation falls in coming months and next year.

Zoros,

Have you read EY's recent Chile review? Keep yourself informed and you'll do ok. Have you changed your GGP Len's colour yet? Try yellow? Nice glow on that one.

https://assets.ey.com/content/dam/ey-sites/ey-com/es_cl/noindex/doing-business-mineria-2023.pdf

Be interesting to watch for the AT's again come 2pm / 2.30pm time as yesterday saw a bucket load fire in around this time.

DM,

In my experience, businesses that operate in a region and get along with the gov ultimately get first dibs at new licence blocks when they arise. SOLG is a classic example of a first country entrant of which gained them many licence blocks. But let's get real here. The new SOLG (CGP guys included) are not going t be splashing $50m or $100m a year on exploration even if they had permit licence' drill ready' approvals.

I think most are expecting SOLG to split the business into two parts. ENSA part 1 and Exploration folio part 2. How many licence blocks and exploration plays do you want in part 2? Do you want 50 licences with $7m commitment each as minimum? For many investors, monetisation is priority right now. Not all want anything to do with part 2 (if that happens).

I'm not sure where you got the idea of a firesale? Where did that come from?

And yes as Mr Mather has said on numerous times... growth comes from exploration. But for now, SOLG is preoccupied with selling or negotiating terms on Ecuadors first tier1 mine ever. It's a shame exploration has had to take a back seat but maintaining a healthy cash balance to see us through the SR and ENSA discussions actually adds value and strengthens our position.

In summary, I think I'm with the indigenous groups in that they would prefer mines to be the big mines that are well managed and protect the land vs having loads of little mines doing small scale production (illegal or legal) and creating many many scars and environmental issues across the green green land of Ecuador.

Far better to have a few mines that are the big producers. One area is then effected but carefully managed.

DM - what's the point of all the other licences if nothing comes from them. SOLG will be relinquishing a bucket load soon in my humble opinion. As for future growth... do me a favour... Cascabel has more than any super major needs. And there is much to do in and around that area. Porvenir is in the south and very much within the Lundin/codelco/chinese regional play with infrastructure and mining already accepted. What else do SOLG have?? Plenty but we are years and years away from finding out what that holds and most of us would have cleared off long before that.

If SOLG were one of a handful of operators that had the only permits and mines in Ecuador... then can't you see how that boosts our value several fold?

I don't think it's fair to pepper all Ecuador with small mining operations. Just stick with the big established ones for now and things will no doubt change in 10 years+ time. Walk before you can run is the phrase.

Ecuador can continue to live off oil, shrimp, bananas, coffee, cut flowers, cocoa, and Panama hats if they want to. But these are tough jobs and the 'new' youth of Ecuador are not interested in 'tough jobs'. They want white collar jobs. Engineering etc. Mining is far from easy but there are many more lucrative jobs in that industry than there is in Panama hats or shrimp!

At end of the day, you have ingenious groups that are right to fight mining that is not legal. It's a real danger to the country in terms of environmental and health. But as I said, they are not against mining 100%. They know that mining done correctly is actually good for environment. Good for communities and good for jobs.

In past there was no real limit on mining activity or permits. By limiting these the indigenous groups are doing a great job. Ecuador doesn't need 1000 mines all working at the sometime. Cascabel by itself could run for 50 years and would not require a huge amount of environmental change to where things stand today. Cascabel would deliver multiple rev compared to existing mines. So is it better to approve several 'MAIN' mines which do the lions share and then close down all the damaging minnow mines that are mostly illegal??

In years from now (20 years) Ecuador might be doing 5 to 10 main tier 1 mines. Do they need more than that? Business gurus will say yes but gaining the right compromise between where they are now with zero Tier1 mines and loads of little illegal mines to having 1 or 2 tier 1 50 year long mines makes more sense to me. But you gotta discover those tier 1 mines first! And SOLG have done that already. No one else has. Fact!

I should add, that after the last consultation between these groups and the gov it was agreed that there would be around 10 or so mining concessions that would be deemed 'professional' and SOLG was one of them. If that means that all other licence blocks become illegal then sobeit. That's a major win for indigenous groups. It's also a major win for SOLG shareholders as we effectively become almost a state backed company and with licences in short supply, the likes of BHP or Forstescue only have one way into Ecuador (near term) and that's through buying up SOLG lock stock and barrel.Chinese know this and appear to be ahead of the game which bodes well for them when 2025/2026/2027 copper deficit hits home across the globe.

It's important to understand the issues in Ecuador surrounding mining. Ironically, many of the indigenous groups are ok with likes of SOLG and other mining firms that have taken care to relocate locals and reimburse them handsomely. Not to mention doing environmental and school/community works.

The biggest problem and damage to the environment is from the cowboy miners. These are illegal miners which are now prolific in Ecuador due to surge in Gold price over last 2 years. These are not professionals... but criminals. They don't have permits and just leave pollution and devastation behind them. What the indigenous people need to do is work with Ecuador government to sanction the projects under 'professional' mining firms based on committed environmental promises. And then fight hard against the cowboys which ironically are mostly local people lol!

Article below worth a read

https://www.context.news/nature/will-ecuadors-illegal-mining-crackdown-protect-indigenous-people

Bonds now at 71 the highest level they have been for 7monthssuggesting renewed interest and lower risk perception on PFC. Equity price 7 months ago was 125p.

On day of $13bln Tenet contract (shared) sp hit 85p. Bonds jumped to 70.8.

At 73p today, PFC is 20% lower than where it should be aligned to bonds sentiment. And 52p lower than previous benchmark levels.

Remember, PFC's share price is discounted based on perceived risk vs reward, forward earnings and market sentiment.

Yes, earnings will be subdued in 2023. There's no block buster rev generating period in 2023. It's a period of stabilisation and writing down the poor inflation sensitive contracts due to expire or be completed within next 5 months. But after that... PFC is looking very strong for 2024. Order book building and we are heading into main H@ contract win territory soon.

Market is forward looking (supposed to be) so in theory, 2024 (better year for PFC) should be reflected in sp from July onwards. Not without risk of course but my view is that sub 80p levels will not be around for much longer.

We know Chile gov active in Ecuador with Mirador and clear relationships with Chinese. Interesting dynamic if Brazil are following same path as Chile especially as Brazil is much closer. Potentially opens up Pacific Ocean exposure via Ecuador which has additional benefits vs Atlantic Ocean export routes. Maxit certainly mixing it up with the right parties if article accurate. Can't wait to see this unfold!