Member Info for rcgl2

Warren Irwin made an interesting comment recently, I can't remember where, but it was something along the lines that now Solg and CGP are best buds again, it means that Solg effectively have the benefit of Bob Sangha's expertise and input as (in WI's view) one of the most experienced mining industry dealmakers around. Sangha/Maxit being one of the major CGP shareholders. You would imagine that Sangha will want a corporate transaction, it's what he does.

Regardless of my own feelings in the perpetual production vs takeover debate, that does seem to suggest that CGP and WI are happy with the current situation because a deal of some sort is brewing, whether for CGP or Cascabel or Solg itself.

Companies nearly always overpay for acquisitions. It's been shown time and again that takeovers are often value destructive for the acquirer. They pay too much, they take on too much debt to fund it, the mythical "synergies" don't materialise, unexpected surprises come out of the woodwork, integration issues become costly or insurmountable and so on...

So what makes BHP so different? How do we know that BHP possesses the skills to calibrate their bid perfectly to the exact value that would represent "fair value" for Solg, if such a concept can even be defined precisely, which it probably can't? Do BHP have access to financial advisers who weren't available on literally every previous takeover deal ever? No, it will be the same advisers who advise on all deals. Is there something about a mining deal with the heavily defined resource analysis that makes it easier to value the assets, unlike for example a media or manufacturing company? Not sure there is since most targets have years of fully audited accounts, sales figures etc behind them.

Is it down to CEO ego? A huge part of why companies overpay for acquisitions seems to be down to management hubris, empire building and compensation incentives. Are we saying that Mike Henry is an egoless Warren Buffet style capital allocator who ruthlessly enforces financial discipline and will actually respect all the PR talk he's just pumped out in the press about not wanting to overpay for assets?

The drilling happens and people are complaining that the results aren't out quick enough, even though it takes weeks/months to process and assay.

Then drilling stops and analysis is underway but results haven't been released and people are saying it must be bad news, bad results being held back, BoD aren't doing enough to meet investor expectations.

Now results are coming through, as demanded, and people are saying the BoD are releasing too many results, just attempting to jack the SP up, dilution on way...

It's a junior explorer! A fund raise is always somewhere on the horizon, that's how it works. Results so far have been positive I reckon, let's try not to talk it all down too much!

Yes I think the Sedar website was coded by Charles Babbage. See if this link works for Solg filings

https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00043090

Scroll down to 25 Oct 2018, the SSA is filed as Material Document(s)

Addicknt - yes, I believe the SSA is still extant. The 2 year standstill is just one part of the terms, amongst other things.

The wording of the clause is "for so long as the Subscriber (by itself, its Parent or by a Wholly-owned Subsidiary of the Subscriber or its Parent) holds at least 10% of the fully paid Shares of the Company (Minimum Shareholding), then the Subscriber may at any time, but is not obliged to, nominate one person to be appointed as a director of the Company (Subscriber Representative)."

There is no proviso about a time limit of 2 years and no connection to the Standstill clause which is a separate provision of the SSA. The only provisos are about the minimum shareholding.

BHP still has the right to appoint a director, provided they maintain a 10% holding in Solg.

SSA refers to the Share Subscription Agreement dated 16 Oct 2018, which is available on SEDAR (filed 25 Oct 2018). The "standstill agreement" is just a part of the wider SSA, and is limited to a period of 2 years.

The right to appoint a board representative is set out at clause 6.1 of the SSA. It is not time limited and therefore BHP still has the right, provided they maintain a 10% holding.

The standstill period may have come to an end last year, but the rest of the terms of the SSA are still valid and binding imo.

Bijar and BBG who also mentioned it earlier - yes the Noront situation is quite interesting at the moment.

https://www.mining.com/bhps-noront-bid-hits-impasse-with-wyloo-refusing-to-budge/

The BHP offer premium to the SP for most of this year doesn't look too bad either.

Someone should remind the people who like to "sell the news" that you are meant to "buy the rumour" first...

Nice RNS this morning. As far as I can see the various results that have been coming in are doing exactly what the company intends them to do, showing hopefully commercial deposits that will likely be desirable to miners like IAM who will want to develop them. Just need patience here for value to play out.

Thanks for the info. Very interesting. If all is as the company is implying, it seems to me this really has the potential to be as big as we all hope, IF Solg play their cards right. And also it will take patience and a few more years to realise the really substantial gains in SP that we all want.

David a few days ago: "They seem to have no defined strategy"

That's not true though. Their defined strategy is 1) develop cascabel, by issuing PFS by year end, sorting financing next year and aiming to begin construction of the mine in the next couple of years, 2) continue to prove up other priority targets with multiple drill programs and aiming for Porvenir MRE sometime fairly soon and 3) seek JV arrangements for 20 non-priority targets, with DD currently underway.

There is a defined strategy, it just might not be the one that everyone here wants who are looking for a quick exit at 55p.

Why not name names and make it actually easy for us?

We're all anonymous here it's not like they'll beat you up for grassing.

DBW - lol!

Zoros why don't you ask Wazza if he thinks 50p is good value for Solg? Assuming he says no, why are you so keen to sell out as soon as the SP hits that level?

Surely you can see there is much more value in Solg than that, I don't really understand why you're so desperate to sell out at that point.

If BHP made a formal offer tomorrow for 50p I'm sure the board would not recommend it on the basis they'd say it undervalues the company. Mather and associated entities would refuse it so that's about 20% rejections from the get go, I'm sure a few other PIs and smaller funds would reject based on the board's lack of support. If they all came out and said they were rejecting it, it'd be in the interests of NCM, Blackrock, Valuestone etc to reject as well because then it is clear that BHP want the company and they are not going to want a take up rate of barely 50%... If they bid for the lot they will want 90% and compulsory squeeze out no?

I think Solg was caught in the downdraft of the mining sector generally over the last month or so. Sentiment on gold miners was at rock bottom a few weeks ago. PMs took a bit of a beating despite favourable macro tailwinds, markets somewhat tying themselves in knots trying to figure out inflation vs deflation expectations, likelihood of tightening, dollar breakout or continued downtrend etc... Miners were looking like they'd been repeatedly kicked in the gonads despite the fact that even at $1750 gold and $25 silver most will be making money hand over fist. Copper also wobbled but long term there's simply too much demand and not enough supply so prices are only going one way in the medium term IMO.

I think as the sector picks up now and PMs and copper are picking up Solg will run back up into the 30s again as we await news. Well, I hope anyway.

You can't short Solg on IG, in either SB or CFD. It won't let you open a sell position, only buy. As originally pointed out by BNC.

Looking at the last two Blackrock holdings RNS, the financial instruments they held are listed as Securities Lending. I assume this means they have lent out Solg shares under an SLA with title transfer. Since they have the unconditional right to receive the shares back at the end of the stock loan and assuming the borrower doesn't intend to exercise the voting rights then any loaned shares would still be disclosable by Blackrock in the aggregate holdings - it was 4.92% held outright and 0.08% via securities lending for a total of 5%. This is probably just part of their BAU stock lending operations to boots fund returns or offset management costs... The borrowers of stock are normally borrowing to short though so make of that what you will. It's a tiny percentage of the total shares in this case.

Speaking of CFDs and spread betting, I have wondered if some of the blocks we see on the order book are the spread betting companies hedging themselves. I think they try to hedge their books internally if possible, offsetting customer longs vs customer shorts. Obviously only possible if there is enough volume on the book in both directions and if they can't do that I assume they hedge themselves in the market by buying and selling the underlying shares.

BNC pointed out that you can't short Solg on IG, so presumably they have to hedge all their customer longs in the market. Knowing how Solg trades I wonder if there are a lot of day traders who trade Solg via CFD or spreadbetting and set limits to capture the gains of any spikes. Could these large blocks at round number prices above the market price be spread betters hedging?

People seem to forget that if it wasn't for the designated market makers, there wouldn't actually be a market in half the stocks people here invest in. The volumes on a lot of these smaller names are pitiful. Try selling your investment when you need to cash out if there weren't market makers willing to make a bid to you every day.

Obviously they have to make a profit as they are not charities. But if a market maker was bidding 27.9p this morning and now they are only bidding 27p and no one is bidding higher than that then there we go, that's the best price anyone is willing to buy your shares at. If there were loads of people bidding higher than that then you'd get a higher price but clearly they aren't.

Short term and intraday price movements are just noise. The market makers don't arbitrarily decide the price just to screw over PIs, the market ultimately dictates the price and the market makers are a large part of that market for low volume stocks. If investors were falling over themselves to get their hands on Solg shares then the price would rise but obviously they aren't right now, or at least not so much that the price rockets to the moon.

I'd rather have MMs making a market so I know my investment is liquid if I ever needed to get cash out rather than buying some tiny illiquid name where you can't even get a bid most days.

And let's face it, if you think MMs are deliberately suppressing the price so their hedge fund mates and clients can load up on the cheap, then great! So can we! And why would they be loading up in the first place? Not just so they can watch their investment stagnate while their market maker chums sit on the price forever. If you really believe an evil cabal of banksters and hedgies are loading up on the cheap then that's actually a good thing.

Personally I don't believe that, I think the market just doesn't value Solg at much more than £600k-£700k until it delivers Alpala PFS, funding package, more amazing regional news or some sort of corporate action. Until such time as those happen, the SP waits.

Red, what's even more ridiculous is Miagi getting banned for a week from LSE for posting on the GGP board that it was overvalued and people buying at 35p+ might lose a load of money. Apparently telling them it was massively overvalued was disruptive, abusive and not the type of thing that's allowed... I pity the people who were putting their entire SIPPs into it at those prices, even though it's an idiotic thing to do in the first place.