Member Info for Pbow

Its a meeting happening tomorrow - given its not happened yet how is it old news?

"the annual tax rate for its exploration projects would represent a value equivalent to more than 30% of its value."

"We fully agree with the Ecuadorian government that we need to firmly combat illegal mining and all illicit gold extraction, as well as strengthen oversight institutions. What we disagree with is the formula, how the rate is calculated," Darquea explained.

The chamber proposed several alternatives, such as applying the tax starting in the production phase, when a resource is already defined and such taxes can be afforded, or resorting to advance royalty payments against the issuance of permits, which would help provide investors with greater certainty for their projects.

The responsible and formal mining industry in Ecuador "understands the Ecuadorian government's need to fund efforts to combat criminal mining and also understands the need for greater oversight," Darquea said. 

"If there are no changes to the rate, illegal mining will benefit. This would create a perverse incentive because companies investing in exploration in Ecuador will have to abandon their projects and leave the country, creating more room for illegal mining to continue expanding their operations in Ecuador," he warned. 

Ecuador begins talks with mining sector over controversial inspection fee

Daniel Noboa's government and representatives of Ecuador's mining sector will begin discussions on Wednesday regarding the new mining inspection fee, which has the industry concerned about its impact on exploration.

The working group, convened by the regulatory agency Arcom, will be attended by industry associations and mining concession holders.

With the tax, which is now in effect following its publication last week in the Official Registry, the government seeks to raise approximately US$230 million annually to strengthen oversight and combat illegal mining by hiring additional personnel and acquiring vehicles, surveillance satellites, and other technological equipment, among other purposes.

The fee will be charged semiannually for medium- and large-scale mining operations and annually for small-scale mining.

Since the rate will be applied per hectare of land under concession, companies with projects in the exploration stage fear a disproportionate impact because their operations cover larger areas.

For large-scale mining, the rate will range from US$118 to US$470 per hectare, depending on the stage of the project. For medium-scale mining, it will fluctuate between US$94 and US$235 per hectare.

On Friday, representatives of the Ecuadorian Chamber of Mines and the Canadian ambassador to Ecuador, Stephen Potter, met with the Minister of Energy and Mines, Inés Manzano, to express their concerns regarding the tax.

"We welcome this openness to reopening dialogue and listening to the arguments as to why the tax would eliminate any incentive for investment in formal exploration, because, as calculated, it makes that activity unviable in the country," the chamber's vice president, Rodrigo Darquea, told BNamericas.

Canadian junior Aurania Resources recently expressed concern about the impact the tax would have on its operations.

Aurania, which is exploring in the province of Morona Santiago and whose main project is Lost Cities-Cutucú, announced it will have to pay US$24 million in July in the inspection fee. According to the company, this amount is unsustainable and represents approximately ten times what it pays for its annual concession fees.

"If the resolution is implemented as planned, it would result in an unsustainable cost burden for companies in the sector and could undermine confidence in regulatory consistency and Ecuador's commitment to mining development," the company said in a statement.

In the meeting with Minister Manzano, representatives of the Chamber of Mining pointed out that, in some cases, the fee would exceed the total budget for investing in a concession, and in others, it would even exceed the total value of the exploration companies.

Darquea cites the case of Aurania, "whose tax rate is more than 100% of the company's value, estimated at between US$17 million and US$19 million," and Salazar Resources, for which

Pleasure. I think the mining minister has gone on the trip to China as well. The picture of her is side on / facing away so not 100% sure but it certainly looks like her.

Https://www.bnamericas.com/es/reportajes/ecuador-inicia-conversaciones-con-sector-minero-por-polemica-tasa-de-fiscalizacion

Bit before my time that.

I know you are just saying your thoughts. I just genuinely cant see what they can possibly announce. Other than something to do with the mining tax (they were planning to announce exploreco this month - but surely that will be delayed?) Im not suggesting the plan will be abandoned but they will surely need longer to come to commercial terms with this tax. Maybe they get Franco to give them a pass on the CPs. Other than that really dont see anything. I hope I am wrong of course.

Rodney what news can there be other than some sort of update on what concessions we are giving up? I honestly cant think of anything realistic.

I had a look and found this from May.

https://lundinmining.com/news/lundin-mining-announces-initial-mineral-resource-a-123197/

That uses metal prices of $4.43/lb Cu, $2,185/oz Au and $28.80/oz Ag. Copper close to spot, Gold not so much nor silver. Doesnt mention NPV in the document though. Also not clear when they changed the rates.

There is nothing in the announcement where they agreed to buy Filo about NPV though it does reference the premium to the share price.

The PFs from 2019 uses $3.00/lb copper, $1300/oz gold and $20/oz silver. So it has indeed increased the rates

Could you please share the Filo July presentation you refer to Rodney

I asked a follow up question which I thought was key. I asked if the mines stated are in production. All but one of the examples were in production Adriatic.

I then asked why it does and why solgold doesnt and it gives a reasonable answer mostly in table format so I cant copy and paste but would ask you to ask the question.

1st one was Chat GPT (a paid one not the free one) thr second was google AI - which prior to that I didnt even know existed.

I think if there was a legal requirement to do what you are asking then lots of mining companies would be issuing updates. As Ive never seen one do it I would confirm my answer is no. I also think that updating the project NPV only to reflect the increased commodity prices and nothing else would actually be misleading and probably a breach of regulations.

Ive just asked a different AI that I have never used before and it gave a very similar answer.

SolGold released an updated Pre-Feasibility Study (PFS) for its Cascabel project on February 16, 2024, with an effective date of December 31, 2023. This PFS used relatively conservative metal prices:

Copper (Cu): US$3.85/lb

Gold (Au): US$1,750/oz

Silver (Ag): US$22.50/oz

At the time of its release, these prices delivered a post-tax NPV8% of US$3.2 billion.

While metal prices have seen significant increases since the PFS was published, there are several reasons why SolGold might not have immediately updated the NPV with new metal prices:

PFS is a snapshot: A PFS, by its nature, is a preliminary economic assessment based on a set of assumptions at a specific point in time. It provides a robust framework for further development, but it's not typically re-run every time commodity prices fluctuate.

Focus on Feasibility Study (FS): SolGold is actively advancing the Cascabel project towards a Definitive Feasibility Study (DFS). The DFS will incorporate more detailed engineering, cost estimations, and likely updated market assumptions, including metal price forecasts. It's more common for a company to issue updated economic analyses at the DFS stage, which provides a higher level of confidence.

Long-term vs. Spot Prices: Mining projects are typically evaluated based on long-term consensus commodity price forecasts, not short-term spot price volatility. While current spot prices might be higher, a company needs to be confident that these higher prices are sustainable over the multi-decade life of a mine before incorporating them into a formal economic study like a PFS or FS.

Other Factors Affecting NPV: NPV is not solely dependent on metal prices. Other significant factors include:

Capital expenditures (CAPEX)

Operating costs (OPEX)

Production volumes and grades

Metallurgical recoveries

Discount rate

Royalties and taxes

Project schedule and ramp-up Changes in any of these factors could also significantly impact the NPV, and a comprehensive update would need to consider all of them.

Strategic De-risking and Funding: SolGold has been focused on de-risking the project, including securing funding agreements (like the gold stream with Franco-Nevada and Osisko) and advancing permitting. These steps are crucial for the project's overall viability, regardless of short-term metal price movements.

Internal Re-evaluation: While a formal public update of the NPV might not be issued, it's highly probable that SolGold's internal teams are continuously re-evaluating the project economics under various scenarios, including current higher metal prices. Companies often provide sensitivity analyses in their presentations, which show how the NPV would change with different metal pri

It applies in so much as if Solgold have updated the NPV they should release it. But I dont believe they have so no requirement. The information you want to be provided has already been provided. Both in the PFS and in a couple of investor presentations. Are you expecting them to update it on a daily basis each time metal prices move? Its not logical.

They included the sensitivity analysis with the PFS so its not been held.

Ive asked AI the following question. "Why doesnt solgold show its updated NPV given much higher commodity prices" The answer matches what the CFO said.

SolGold hasn’t released an updated NPV outside its formal Pre‑Feasibility Study (PFS) in February 2024—even though metal prices have increased notably since—because of several key reasons rooted in both regulatory norms and prudent project management:

1. PFS Includes Sensitivity Analysis—Adding Standalone NPV Updates Would Be Insufficient

The February 2024 PFS (effective date Dec 31, 2023) already includes comprehensive metal price sensitivities for after-tax NPV 8%, showing how the project's value shifts with different price assumptions

Since sensitivity ranges are in the PFS, a fresh NPV based purely on current prices wouldn’t reflect important variables such as:

The Franco-Nevada/Osisko gold stream, which affects weighted economic returns.

Current capital expenditure estimates (likely higher than PFS inputs).

The fact the PFS covers only 18% of total resources initially

A simple NPV tweak could be misleading if it neglects these evolving project dynamics.

2. Regulatory Expectations: Updated NPVs Require Updated Studies

NI 43‑101 (Canada) and JORC (Australia) guidelines generally only allow revised project valuations to be published alongside a new or updated formal study (PFS, FS, or Technical Report).

SolGold reaffirmed in its February 2024 PFS that it has “no obligation to update” the study outside formal contexts

3. Market Commentary Reflects Concern on Standalone NPV Updates

In forums like LSE’s ShareChat, investors express frustration that an off-cycle NPV increase would ignore key structural factors:

“It will not reflect the gold sold to Franco… increased costs… even a fair reflection of upside”

This highlights the risk such figures can mislead if not grounded in a full economic model.

⚖️ Bottom Line

SolGold isn’t just being cautious—it’s acting responsibly:

Its formal PFS already models price impacts and has appropriate caveats.

Any standalone NPV update would omit critical variables (streaming, capital, resource coverage) and risk regulatory or investor confusion.

A proper NPV recalculation will likely be included in a future Feasibility Study or updated technical report, where all moving parts (resources, costs, financing structure) are reassessed together."

I really dont think there is anything nefarious. The NPV section was removed as part of quite a large change to the slide deck. Keep in mind also that the presentation does seem to be more aimed at institutional investors which is why it hasnt been updated in June as they had no corporate presentations this month. You will likely get an updated NPV in December (inshallah) if we finish the DFS. That will include TAM (if viable) and the various other changes. I highly doubt it will use spot prices though. Hopefully G-Mining has everything ready but TAM and that wont take too long if viable. I suppose in theory they could have proceeded with the Tailings on the basis that TAM is viable and it only becomes a problem if it isnt.

It also has the following statement.

COMMODITY PRICE UPSIDE:

FS Project Economics based on US$3.85/lb Cu, US$1750/oz Au

Slide 13 it shows additional free cash flow based on increased rates. The rates used are admittedly odd.

Notwithstanding that I will repeat that the NPV slide was in for a couple of months and had zero impact on the share price.

You are aware Rodney that the impact of the increased commodity prices is still detailed in the latest presentation right?

I think its stranger that you suddenly arrived and are continually ramping the share, and getting things wrong - like your statement the PFS includes the Franco deal - it doesnt because that was announced later. Ill also note you have done rather a large number of posts yourself.

Im in Riyadh, im in a hotel and am travelling round a lot by taxi for meetings. If you have ever been to Riyadh you will find there is not a great deal to do in the evening with no pubs as an example. It is also notorious for bad traffic - even with the new metro.

I'm stating facts. I'm not downplaying anything. Jiangxi buying the shares is clearly important, because if they didnt we would have run out of money.

You keep saying that there increased commodity prices are not mentioned in the company presentation when that is not true. They are there if you look. The figures are also available in the PFS which is available to anyone.

These are further facts. We cannot complete the FS or submit the permit application, until the drilling is completed at TAM and the results provided which is likely September or October. (slide 11 of the latest presentation clearly states that the waste rock from TAM is to be used for the tailings embankment - so if the results of TAM are bad its back to the drawing board again). We also know we wont get the next tranche from Franco till the drilling is completed as its condition precedent as per the contract which was placed on SEDAR+. Maybe Franco will waive the CP but I doubt it. Once we apply for the license we know it will take a year based on other companies. Once we start we know it will be year 5 before we get positive cash flow (unless TAM is viable which will bring this forward). The reason for this is you need to build a tunnel to get the the ore body at Cascabel.

The problem of course is that Solgold repeatedly miss their own deadlines.