The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
I just think on a point of principle and in terms of good corporate governance it's not great for a UK registered company with it's main listing in London and secondary listing in Canada to hold its AGM in Australia with no remote access option. It's frustrating the vast majority of shareholders' right to attend the AGM.
If I read that right Condor announced they had instructed advisors to find a buyer for the project in Nov 2022. It's open pit and they have a BFS completed on it, fully permitted and drill ready. They have 5 non binding offers, and lots of site visits etc completed, but they still don't have a binding offer, 13 months later.
Doesn't that illustrate that Solg attempting to sell Cascabel which is only at PFS stage subject to revision, not fully permitted and is absolutely massive is a process that was never likely to be completed in 6 months. People calling for Bob Sangha's head, claiming he hasn't delivered etc should think about just how long selling these sorts of assets can take in this market.
This isn't a junior mining bull market frenzy where bids are being thrown around like confetti. DD takes time.
When Solg was exploring and regularly releasing drill results whilst claiming they would defend against a takeover, many voices on here were claiming a takeover was nailed on and Solg wouldn't exist by Christmas (every year).
Now the company has wound down exploration spending while it tries to sell itself or monetise Cascabel and there are calls on here shouting to get back to exploring!
I just don't understand it... This schizophrenic strategy of flipping back and forth between trying/hoping to sell and drilling/defending against selling cannot keep going on. It achieves nothing but constant dilution and the ever present risk of a funding failure and the wheels coming off the whole thing. Solg has too much on its plate to develop Cascabel and try to explore the rest of the licences. It needs to do one thing and do it properly, then do the next (if there is anything left in Solg after the first major monetisation event).
Wild speculation/fantasy: one of the parties in the data room wants to acquire more shares in the market or perhaps some of the CGP shares from Solg. They have seen the additional Porvenir results and are of the opinion that they are MNPI. They are concerned about committing an offence under MAR if they buy whilst in possession of that information, so requested Solg to publicly release it to alleviate their concern. Perhaps Solg hadn't released it to date as they didn't judge it to be material, but that's a subjective judgement for each party to make.
In the absence of any clear narrative from the company I guess we may as well invent our own to keep us amused!
Not really sure what the takeaway of this RNS is meant to be. They've done a little more drilling since the MRE1 and they plan to do some more... and they needed to release this update because they have the extra assay results and don't want to sit on them? Why now? I'm probably missing something here.
Fort I find your logic very confusing sometimes. Mather, Caldwell, Maxit, the former CGP shareholders are all holding tens or hundreds millions of shares each. They are extremely incentivized to get the shareprice much higher than it is today, most likely by selling the company or Cascabel. You seem to think that their master plan is in fact the opposite, to keep trashing the share price ever lower so they can "issue shares to their buddies at low prices". Or grant themselves "free shares" (in fact they are usually options, which will never vest in the money if the SP keeps going down, which would render the whole exercise pointless, but you seem to ignore that as it doesn't suit your narrative).
How would issuing shares to their buddies at ever lower prices be in anyone's interest? The price will keep going down, they are diluting themselves and the rest of us on existing holdings so the final exit price will also be ever lower, and quite frankly it's just a bizarre idea that anyone holding millions of shares in a company want the price to keep going down.
Even if it were their actual intention to keep letting their mates load up at bargain prices, the only way that achieves a favourable outcome for those mates is if the company gets taken out or otherwise gets the SP up to a much higher price than it is now... and trashing the SP today to issue millions more shares is just diminishing the chances of that ever happening.
And finally, if the directors who are all aligned with us or are acting on behalf of the shareholders who want to see a high takeout price are voted off, who is going to replace them? There are other major shareholders who are diametrically opposed to our interests in the form of BHP, Newmont and Jiangxi, and they will surely jump at the chance to stick their own directors on the board and then what will the strategy be? It will be massive dilution and a creeping takeunder by the majors. BHP literally already said this. In response to the FNV NSR deal they said they wanted to see the project developed by equity finance, which means massive equity issuance funded by themselves so they take more and more of the company until they have majority control. It doesn't matter whether pre-emption rights apply or not, none of the other major or minor shareholders have the financial means and/or appetite to keep putting more and more millions in to maintain their holdings. BHP, Newmont and Jiangxi do. Solg will then end up developing Cascabel, as a mere wrapper for a BHP/Jiangxi joint venture and we will all be squeezed out for single pennies at best.
Most of these articles are written by junior hacks who just seem to do a bit of cursory online research, grab a couple of quotes and stick it all into their piece. I guarantee every one of us who follows Solg and this forum will know way more about Solg than the authors of the majority of these sorts of articles.
If you want my two p it's just referring to Solgold, but is poorly phrased. Clearly Solg is investing into the Cascabel project as they have mandatory spending (investment) commitments they have to meet as part of the development phase. And Solg inked the preliminary agreement earlier this year. The "also" I take to mean in addition to whatever agreements have been signed re Warintza and the preliminary agreement reached in July 2023 re Mirador which is specifically mentioned above.
If Jiangxi had signed an agreement with Ecuador to fund Cascabel I really don't think this obscure 7 paragraph article is how investors would be finding out for the first time...
Hi Eloro, yes I thought it must be that but then the item above is "Acquisition of property, plant and equipment" on which they only spent $120k. So I'm assuming land acquisition for pipeline etc would be included in that. Hence I'm confused what the $6m exploration and evaluation assets spend is on.
Hi fort, cash outflows approx $9.5m, of which approx $3.2m from operating activities and approx $6m on "Acquisition and addition of exploration and evaluation assets". Which on the one hand sounds like 2/3 of the quarterly cash spend was one off costs rather than general burn... But on the other, what are these exploration and evaluation assets?
ESG isn't just about environmental issues... Solg could have done with a bit more focus on the G (governance) considering they were defrauded out of several million dollars and managed to lose a CFO after one month, amongst other things...
Add, really interesting thanks for sharing.
Darren, good post, some clear thinking there. Hope it's good for better than 30p but who knows...
Slug, "Why? What were they thinking?" I'm guessing because they were thinking that BHP or NCM were the most likely buyers and they still needed to raise money from institutional Investors, and whether we like it or not ESG is now extremely important to western companies and investors. You pretty much have to tick all those boxes or you won't pass their screening.... Now they think that Chinese companies are the most likely buyers and I assume they don't care so much about ESG, therefore Solg has much less need for local employees. Also they aren't drilling anywhere, so they don't need all the local geo workers to deal with all the cores, samples etc.
TheItalian, great posts as usual. And I think in a way you've pretty much summed up exactly what Scott is trying to do here.
Management seems to have a fairly firm view of the value of Cascabel at the feasibility stage. And that doesn't just mean going through the motions of doing the studies, it means actually delivering a viable, low cost mine plan and getting all the other licences, approvals, plans etc in place. As you put it, a turn-key project delivered on a plate, with a bow on. That is why Scott is re-doing the PFS and also working on the other outstanding items like exploitation agreement, pipeline, land acquisition etc.
Also, as you pointed out this is currently not a sellers market. I'm sure they'd rather hold out a bit longer and hope the copper M&A market picks up a bit, rather than just sell it asap at a lower valuation to appease impatient shareholders. Hence they have totally scaled back the size of the company and its overheads and paused the expensive exploration activity. None of us are thrilled about the lack of news flow and exploration, but if you want to sell Cascabel in a more favourable market then you need to last long enough to get there without running out of funds. There's absolutely no point burning through cash in the meantime and having to raise more funds through yet more dilution or giveaway even more future profits through royalty deals (and impact the economics).
And in the meantime, there are over 20 active NDAs in place with interested parties, more than 5 of whom have conducted site visits and some are arranging follow visits. And people on here are moaning that Scott and Bob/Maxit aren't doing anything! Seems to me that they are doing a lot of work to make this as saleable as possible.
There's an irony to the fact Berry Street were the ones publishing letters criticising the management for not unlocking shareholder value, and have ended up absolutely slaughtering the share price themselves due to their fire sale.
BBG - if you ever used your brain instead of flying off the handle with insults at everyone all the time, you'd realise that what I just said about XIB is good for Solg, not bad. XIB sold some shares short, they have been proven correct, it's just a very minor part of their BAU investment strategy. What would be bad for Solg would be if XIB were part of some sinister conspiracy to manipulate the share price down and engineer a low ball takeover, which is what some on here seemed to be suggesting.
No doubt you'll start a new thread with "RCGL2 = TWAT" as the subject line. No need, I saved you the effort of typing it.
Agreed SM. Spot on. Also while we're at it.... XIB.
XIB is a hedge fund. XIB Asset Management Inc is the manco, the fund they manage is called the XIB fund. The two principals are Sean McNulty and Peter Hatziioannou, both former investment bankers at CICB who obviously decided to set up their own shop.
The clue is in the name with hedge funds... in simplest terms, they run both a long and a short book, to try to make money in all markets and not suffer the same drawdowns that long only funds suffer regularly. XIB has a short position in Solg, it's really not that large and it really doesn't imply anything sinister.
The fact that they happen to have their office in the same financial district as Maxit is hardly that much of a coincidence given they are both Canadian outfits (Canada being one of the global centres of mining M&A after all). How many banks are neighbours in the City or in Canary Wharf? Wander round Mayfair and you'll see countless brass plates of all the hedge funds and asset managers next door to each other or often all in the same mansion block on different floors... Doesn't mean they are all colluding together in some grand conspiracy.
The idea that XIB's short is somehow linked to Maxit or DGR or frankly anyone else involved in Solg is just ridiculous. Take a look at their September fact sheet and the monthly commentary: "Additionally, relative value trades in the precious metals sector were a source of alpha this month, as higher quality operators outperformed those with challenged balance sheets and capex overruns." Pretty much explains it doesn't it, they are long quality majors and miners and short minnows and explorers like Solg who are in constant need of cash and whose projects keep getting more expensive.