Member Info for Fortissimo

Pbow, the chinese have been in Ecuador for many years if not decades. They know Ecuador politics as they do world politics and they've been getting on 'with it' regardless of the swings and roundabouts. They have significant interests in mining in the South and are showing few signs of being put off by governmental issues. If anything, Noboa has been very supportive of mining ... more so than the likes of Lasso and co.

I think the main reason holding back larger buyers (who want to add 3%+) is that the stock simply isn't there. Well... not at these levels. So it suits them to sit tight like everyone else.

That said, I am surprised they haven't soaked up at least 1% or 1.5% in open market especially when MSCI were exiting and gifting 3% holding to anyone that wanted it at sub 11p.

I don't think there's much to worry about in political terms. Noboa is doing a fine job. Alpala is a 25 to 35 year project. You can't look at it on a 2 or 3 years basis.

On side note, I see Hochschild Mining (HOC) are up from 40p+ lows to almost 200p based purely on improving SA mining regions with Peru / Argentina. Mmm!

The market is on summer hols right now and not going to be back into major volumes/business until late Sept. Same every year... always a bit luke warm (excuse the pun) in August.

What I think is a fair point is ... why haven't the Chinese added?? They bought about 6% at around 17p yet haven't added at all. What's Mr Liu doing on SOLG's board these days?? Perhaps they can't buy as are tied into NDA's??

Norges bought at 36p+. As did Blackrock. Yet at 10p... Norges seem happy with their 3% (or just below) and blackrock sold out yonks ago pre CGP merger once they realised they were not going to get a nice equity slice at a discounted price. Generally, large II's don't like buying in open market if they can help it. They prefer to get positions in equity raises or buy large blocks when other large holders are seeking an exit.

Buyers were absent at 5.8p a while ago. But buyers were all over it at 12p+ recently. How does that work then?? Sometimes... it's just about momentum rather than actual price. You'll likely see larger volumes and more buyers at 20p range levels than at 10p. Why?? Because that's markets for you. Highly inefficient... clueless and poor valuation tools. Don't complain though... as that's where money is to be made. A sloppy market makes for a very nice profit to those that can seek out value gaps. Remember, Noront was 21 cents before BHP made a move on them and priced ended up at 110 cents final offer. Market was asleep at the wheel there. Same for Filo corp. Was $1 per share in March 2020 and eventually sold to BHP and Lundin 4 years later for $33 a share.

The market is useless these days. M&A proves that... as buyouts are often multiples of share price lows when in the old days they used to be all about 30% premiums to closing prices.

Different world now where a reddit post or several reddit posts can turn a admin destined business into a billion dollar sensation.

True, and note, Franco recently signed a 1.8% NSR with guess who??? Yep... Newmont (yanacocha assset).

Now... Newmont have blockcave experience. I wonder whether their mates Franco are helping them (indirectly) to gain a better grip on SOLG?? Interesting times. Going to be interesting to see how cash Newmont get from divestments.

Might indicate that the final phase of funding ($900m) will come from Copper stream which will go to Franco. Of course only upon completion of the $750m staged payment deal. I can't see how Franco can have the security over entirety of ENSA when ineffect the whole point of the deal was to strip out the copper aspect and leave for later date.

Franco don't look like mine builders to me, but these are changing times.. and who knows, they might decide to take SOLG out (or ENSA) rather than simply fund another $900m based on copper stream. Lets face it, they could buy the lot if they wanted to and then sell a chunk to a super major further down the line and derisk.

Still need a seriously experienced block cave outfit (proven brains/know how) to get this mine to production and not many of them around.

Scott hasn't got a clue and is well out of his depth when it comes to block cave mining.

So what's Mr Liu up to these days??? And where's our new chairman Bob? You won't get many investment banks or fund managers getting stuck into the SOLG story until you do the basics at management level.

"BHP might be satisfied with their purchase of Filo, which is a bigger better cascabel anyhow"

No it's not. It's no where near as good as cascabel.

Crazy thing is... Solaris have been plagued with issues on Warintza from locals. And on finance. Basically their asset looks a very risky play compared to SOLG's flagship Tier1 mine. Yet the market has chosen to value them at £285m and SOLG at £300m and Porvenir at £0m. Even Porvenir is in a region that seems to have no major issues compared to Solaris.

So anyone out there that thinks the market derisks and reduces share prices based on licence issues or Indigenious issues etc... just look at Solaris... £285m. How cheap does that make us look!!

https://amazonwatch.org/news/2024/0522-solaris-resources-faces-major-setback-as-deal-with-zijin-mining-falls-through

I see on Aug 15th they reported soke decent holes... I say decent... but not exactly in same league as Alpala. In fact, SOLG's Porvenir is not that far behind Solaris's Warintza. Not much in it at all.

For benchmarking purposes:

1. Solaris Resources (main asset Warintza and not much else) Market cap £285m

2. SOLG (main asset Alpala and about 6 to 7 times the size of Warintza) Market cap £305m

3. SOLG Porvenir (not far off Warintza numbers and some might say just as advanced) £0m

This market is utterly bonkers!

Bozi,

I think you're just applying your narrative to the share price rather than benchmarking against previous narratives. Which was my point .

So you're saying the market doesn't believe (I'm not disagreeing but humour me..) with SOLG positioned with more permits than in 2021, almost half the finance package sorted and 100% interest in ENSA (no longer fragmented)... and $1.55bln reduced capex/ phased PFS???

Mmm... so using your logic and alignment, then the market believed in Darryl and his PFS whe the shareprice was 36p+??? The market believed in SOLG when the capex was a whopping $3.4bln and the IRR was sub 20% on highest risk basis?? When Ecuador politics and anti mining / eco lefties were the flavour of the year?? When SOLG had zero finance sorted.

Yep... the market had SOLG down as 36p then (it did test 40p I think).

I think you need to decide whether the market was right then... or wrong now, or wrong then and right now??

Logic says you can't have it both ways... Franco and Osisko's potential $750m would also suggest the market is dumb as xxck.

NMM, I'm aware that of thought 15% of ENSA gained offset that and don't forget 5% SOLG shares gained too. So not that much difference when you take that into consideration.

The point is

Copper price doubled since March 16th covid low. (as of now)

Gold price almost doubled circa 15% shy of $2800oz

Silver price doubled.

There's also a plethora of stocks out there that have double. Not to mention the DOW jones which was 19000 level and now 40k.

Basically it pretty obvious that the covid lows was a key point of crisis in the markets.

So against that, and considering the progress SOLG have made since Covid days (100% owned asset, permits sorted, improved ecuador politics, $750m finance deal and so on)

Yet we are still at covid lows.

That tells me that the market is bonkers and SOLG is due a major rerate and even then at 20p levels it would be back to the average or general expectation without any extra speculation added in.

Markets don't lie... and the covid bottom represented complee and utter unknown fears not to mention liquidity issues.

Today, we are over 4 years on and SOLG should not be valued at half the level we were pre covid or just 25% of a recent highs.

Virtually everything has doubled.

Look at the Filo deal. March 16th 2020, Filo were $1 a share. The BHP/Lundin buyout deal valued them at $33 a share (cad).

Let it sink in.

And today

Here's another remarkable covid March 16th 2020 comparison to ponder against SOLG's current share price.

Aug 18th 2024

1. Gold Price $2500oz

2. Silver $29

3. Copper $4.14

4. SOLG share price 10p

Here's another remarkable covid March 16th 2020 comparison to ponder against SOLG's current share price.

March 16th 2020 March 16th 2020

1. Gold Price $1485oz

2. Silver $14.50

3. Copper $2.17

4. SOLG share price 10p

Eloro, if you look back over the last 2 and half year since Bob and co took over, there does appear to be a plan to reduce the PFS of $3.4bln by at least half to near today;s $1.55bln level. The purpose of that was so we could credibly derisk it while the market for once believes we can actually deliver on the full deal. $3.4bln+ budgets are for Super majors not juniors. So Darryl backed us into a tight corner there. Bob has backed us out of that corner and now we are in a position where everything is believable and doable whether that JV, go it alone or stream deals etc etc. It's phase 1 which means next mine life stages can be built upon thus moving toward the original $3.4bln Darryl PFS. Just doing it all in smaller chunk stages.

So not much has changed on the derisking front regards the asset... but the capex required has reduced to workable levels that bring in more players than just the likes of BHP and as such that causes competitiveness and more interest.

Not sure if that's well defined by fast and smart but it certainly ticks the latter.

It's well known that BHP were trying to destabilise the SOLG board and acquire SOLG through equity dilution. All very under hand and typical of arrogant super mjaors that want to throw their weight around and suppress the little guy. So I can't blame Bob for his initial bullish remarks and rebuffles toward BHP. He's known for getting deals done that do not involve super majors... and instead players like the chinese.

From what I am aware, this time last year, the chinese (or someone interested) had asked for the tailings issue to be resolved before they can make an offer. Scott was set to drill test areas and then suddenly we find out months later... he didn't do the works or he did and we don't know how far he got.. who knows.. he might have mucked up or it might have failed... or it might have got put on hold pending more funds required?? Fast forward 10 months... and here we are again... apparently about to test tailings sites. So just a hunch... but if they sort the tailings in the next 2 to 3months as projected, then suddenly we might see a bid or deal appear. Remember, Noboa ony got in officially last November, so it's possible that the Ecuadorian political crisis (Lasso removed, mid term elections in Aug/Sept last year) curtailed some SOLG plans.

I get the feeling it is going to get 'fast' from here on. I see the SP tracking higher albeit slowly to mid teens to high teens prior to the AGM (which as you know... I and many did not expect to see another one). Sometimes things get strung out and have zero to do with management ... sometimes out of their control.

HfH,

I think you'll be surprised at what happens from here on. I don't think you'll see a stagnant sp as you describe. I think you'll start to see the stock rerate as each phased milestone is accomplished. I think we've seen the bottom of the Lassonde Curve and are now about to embark on the recovery climb. If we were trading at 22p levels right now then yes, I agree we might see some sp sideways action. But the sp is currently on the floor right now. It's at covid lows. There's no justification for that at all apart from a lazy market backdrop and tight interest rate era keeping cash in safer investments... for now. That will change fast as rates drop and punters have to try harder to make their cash work for them.

You are right about the partnering with juniors etc. That rarely happens. BHP or another wouldn't partner SOLG. They might partner up among themselves to reduce risk like recent Filo deal with BHP and Lundin Group.

Regarding 'turnkey' status. We've had the debate for sometime now and the reality is that with block cave mining, you really need to derisk by drilling the decline as Darryl outlined some years ago. It's not cheap. I think he said around $400m+.

SOLG have the funds to do it... so possible. I also wonder whether Franco/Osisko deal (when you look closer) includes Tandy?? Does it? If it does, then in theory that would mean the $750m finance package is potentially secured based on open pit easy access gold resources. So not much risk to Franco or Osisko as if something goes wrong with the block cave, then they can just do the smaller open pit Tandy production which would still deliver handsome profits on smaller scale.

Copper is the big one. That's what all the majors want right now. And that's very much a block cave story. So anyone interested in the copper might want to see a few more derisking events ticked off. The decline being one of them as well as obvious essentials ike the tailings.

My guess is that Bob has already lined up a deal on the copper and the interested parties are either CRCC-Tongguan or Jiangxi Copper... the latter have 6% holding in SOLG and Mr Liu is very much their man.

So in nut shell... I think it's easier to get stream deal on 'gold' than it is on copper. One in effect funds the derisking of the other.

But like Filo deal... don't sit back and think that's it for now. BHP or another can make a move whenever they like. They can do the decline themselves... rip up the PFS and go back to Darryl's version. For the moment, the works SOLG are doing to get the Environmental permit are not much different to what BHP or another would need to do. So suspect BHP are happy.

The copper funding will not happen for a while. That's obvious to anyone that knows how deals are put together. The Gold aspect is based on a phased approach with milestones/permits required along the way. Go read the the $750m funding RNS... properly.

Once you've done that, you'll soon understand that the remaining $900m can only be agreed and signed off ONCE the first couple of phase and stage payments have been delivered. You are looking at around mid 2025 to late 2025 before there will be any sign of copper based funding. Why?? because they don't need it. They don't need the $900m until a development decision has taken place and until Franco has released last batch of funds. The gold finance is there to get us over the line so we can secure the copper finance. One is delivering the derisking and the other will deliver the main mine building funds.

So forget about copper funding coming. It's years away.

BBG, Cascabel is far more advanced so the Filo story on resources very much open whereas Cascabel is well defined.

The most interesting point is that BHP have got involved to the tune of $2bln+ without really seeing significant derisking.

Either they are getting desperate or we're afraid to let Filo slip as most would have expected them to work out a deal that has a stage earn in. That said, it is Lundin involved... so perhaps they feel more reassured by having a large player also involved.

Hard to compare IRR's when you don't have both sets of numbers and hard to compare Alpala with Filo if using just 18% of Alpala resources. No point in using 100% of Alpala resources as there simply isn't enough years in the mine life to deliver it all. So you have to start with the 18% I think and compare that with Filo. See how you get on.

As I set out last week, the Filo example really does add some weight to the SOLG story and value.

Don't forget, BHP and Lundin Mining agreed to "jointly acquire Filo Corp".

And we all know Lundin Mining are knee deep in Ecuador mining. Interesting collab there. Shows BHP can and do work with others. I wonder whether they'd like to work with Newmont Mining on Alpala or whether they'd prefer to shoe them out and bring in someone like Lundin with in country experience at regional and government level??

Newmont must be close to their disposal plans now in terms of agreeing sale deals as market is moving fast and they are missing out on ops. Get $3bln+ in their sky rocket and they could take out SOLG lock stock and barrel.

"If what solg has is so magnificent, why has no one bid for it?"

Eloro... no idea. Perhaps you could have a ponder on why someone like Franco might want to risk close to $650m on it?? Or why Osisko would risk $300m. Or why BHP or NMM hold 10% stakes.

I mean seriously.... just what are they one??? Here they are getting stuck into a stuck that no one wants to bid on.... well.. the latter is you conclusion is it not??

Perhaps they want the tailings sorted out?

I think over the last 2 or 3 years we've had a few rumours of 'bids' in the mining press being lined up. None have been announced... so who knows... perhaps the journo's sources were poor??

Not many expected the bid on Noront when it arrived. Not many expected the bid on Wood group. Or the bid on Shanta. Or the bid from BHP on Anglo. Or the recent bid on Filo or the bid on Oz minerals. Did you expect any of those? Proir to those bids arriving did you question their assets and decide no one wants them??

Tier1 mines never end up on the shelf... they always get developed. And none as far as I know are ever developed by the Junior on a 100% owned basis... not even Ivanhoe mining.

So chill.

SOLG's website shows the regionals (under projects) and covers off majority of main regional targets highlighting the 'concessions' available and the km coverage.

However, on Porvenir, it doesn't state 'concessions' and instead refers to '12 sub-blocks' being granted.

Been like that for a while.

Agree, Pbow... I think that would be the most impactful and also always for a potential resources update should they hit an unexpected sweet spot. Of course, the target areas are likely delineated due to their expected 'poor' resource mapping but as we know, sometime mother nature hides the good stuff where you least expect to find it.

Assuming calendar Q3 relates to the normal calendar world and not SOLG's unusual upside down accounting year, we should be looking at some decent news September onwards. I'm sure they'll be doing their best to keep some nice bits lined up for the lead up to the AGM. They always seem to find something to glow about... I wonder why lol! Sarcasm aside, lets hope we can get the tailings put to bed and then we are a long way forwards on the environmental permit journey.

Thanks for all your research - greatly appreciated as shines through all the green lines on these BB's.

Great work Pbow, I genuinely missed that in the PFS.

So 4 targets which we assume they have permits for all. I wonder whether they will drill all four and then pick the one with least mineralisation. Make sense if the areas are all relatively the same when it comes to access and eco issues.

Knowing SOLG, we'll probably hit the motherload / sweet spot on all 4!

Be the most expensive toilet in the world.