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HI Addicknt, when it comes to dilution, aren't this year's resolutions actually more favourable to the major holders than last year's (i.e. the power the company already has as of today)? From last year the company is authorised to issue up to 1/3 additional shares which could be by way of an open offer (and a load more for the CGP offer but that was a one off). But they are also authorised by special resolution to disapply pre-emption rights on up to 15% of the share capital.

This year's resolutions would authorise up to 1/3 capital again by way of open offer or up to 2/3 with the extra being a rights issue. And the disapplication of pre-emption rights this year is only in relation to 5%, with an additional 5% if it's for a takeover or investment. So the end result will be that the company could do a placing of the same size as it already has power to do, but the amount that can be offered to a new holder without pre-emption is smaller. Or they can do a larger equity raise, but with the extra being a rights issue so again the existing shareholders have the right to participate.

We as PIs may face dilution in these scenarios because we might not have the funds or the desire to participate, but as the largest shareholders and with deep pockets, it seems that BHP and NCM are actually in a better position in respect of any equity raises than they would be under the current powers, in terms of dilution. So would BHP and NCM really be against this year's resolutions?

It was a bit of a ham-fisted attempt to make breakfast, but I wouldn't accuse him of telling porkies.

"the share price which is the true barometer, has been anaemic for years"... The market cap is a better barometer of the value of the company. 1 Dec 2017, there were approx 1.7b shares in issue at 27p for a mcap of approx £460m. Today there are just over 2b shares in issue at 35p for a mcap of approx £730m. You could say not bad for company with no revenue and a large portfolio that needs to spends millions of dollars a year proving up its licences.

Saturday night and all that's being discussed is Solg for a change. Nice.

Hi Miagi, yes I didn't mean park it as such. I mean being hell bent on building the mine by themselves is risky. If NM is determined to become a producer, other licenses could be better to start on...

I honestly don't know what the solution is, but as BNC just mentioned, if there was another prospect that could be brought online quickly and easy and start generating revenue, it could unlock the whole of the rest of the portfolio without having to issue much equity.

I realise Alpala has effectively been the making of Solg, but it's not the easiest or cheapest to mine is it. In fact might even not be the biggest. Porvenir looks to be a bigger and cheaper mine. Just don't want to derail all the other prospects by getting summit fever over Alpala.

I'm not arguing against these resolutions per se, but thinking about this discussion on dilution in order to finance building Alpala, I'm wondering if it's actually worth it because of all the other prospects that Solg has in its portfolio.

Tier 1 discoveries don't come along every day. If Alpala was essentially all that Solg had, then it would probably be worth a fairly large equity raise and some degree of dilution in order to finance the mine (leaving aside being taken over).

But Solg looks like it has two Tier 1 assets. Potentially even three if one of the others comes up trumps. And it has multiple other priority targets and a whole load of licences across Ecuador. So is it really worth having a material dilution just for the sake of trying to build Alpala? Is that giving away too much value for existing shareholders?

Would it be better to somehow monetize one of the assets in order to fund the proving up or even development of the others? Now that Porv looks like an even bigger tier 1, is large dilution for the sake of Alpala construction really worth it? Isn't there a better way, considering the portfolio Solg has. Just thinking out loud here.

Miagi, the amounts in 11 are not cumulative. They can only issue up to 2/3 in total, not 2/3 + 1/3. In clause (b) the words "as reduced by allotments under paragraph (a) of the resolution" mean that the two amounts are not cumulative.

Have a look at the last RNS. It explains what is being done and gives some worked examples.

Guys seriously what are you all talking about? Have you not read the resolutions or the RNS that explained them?

They can issue up to 2/3 of the capital by way of a rights issue. Only 5% can be offered without pre-emption rights. The rest most be offered preemptively to current shareholders, i.e. giving them the chance to subscribe i proportion to their existing holdings to avoid dilution. BHP and NCM are not getting diluted into oblivion or at all.

In fact if they did a huge equity issuance BHP and NCM are exactly the shareholders who will have enough money available to be able to participate and avoid dilution.

These resolutions do not them the power to issue a massive chunk of equity to some new investor or to pick and choose which current holders get to invest. They can only do that with 5%. BHP and NCM can't just be diluted to nothing that easily.

Don't worry about gold, it's the day after Thanksgiving so half of the US is still on holiday, doesn't take much selling on Comex with low volumes to smash the price down. Long term, you can't really argue with trillions of freshly printed dollars.

CGP's intention is to monetize their interest in Cascabel, which I assume means sell it. Is it surprising that they haven't been able to sell it so far, or should we expect that any interested buyer would be waiting for PFS to buy it?

By the way I know Solg has ROFR but I guess that means if CGP can find a buyer, they either sell to Solg or that buyer depending on if Solg wants to match the price, but either way CGP would be selling their stake.

Lack of Funding to Satisfy Contractual Obligations
The Company may, in the future, be unable to meet its share of costs incurred under agreements to which
it is a party and the Company may have its property interests subject to such agreements reduced as a
result or even face termination of such agreements. The Company has an agreement with SolGold with
respect to the Cascabel project. Pursuant to the agreement, SolGold will finance the Company’s 15%
interest in the project to completion of a feasibility study on SolGold’s schedule and budget.
Cornerstone’s intention is to monetize its interest in Cascabel, but if it is unable to do so on acceptable
terms prior to completion of the feasibility study, then it intends to finance its 15% of Cascabel
expenditures following completion of such feasibility study, which would be US$150 million for each
US$1 billion of capital cost in the event of a positive feasibility study leading to a production decision.
If Cornerstone fails to fund its proportionate share of ongoing expenditures following completion of the
feasibility study and its interest is diluted below 10%, such interest would be converted to a 0.5% net
smelter return (“NSR”). In the unlikely event Cornerstone were to dilute to a 0.5% NSR, SolGold would
have the right to buy out this 0.5% NSR and other royalties on Cascabel for payments of US$7.5 million
(US$3.5 million to buy out the Company’s 0.5% NSR and US$4 million to buy out an underlying 2%
NSR to a third party). SolGold may recover the Company’s financed costs to completion of the feasibility
study at Libor plus 2% from 90% of the Company’s share of the cash flows from the Cascabel project

Hi Mathers - there is no magic to ENSA as far as I can see, it's just an Ecuadorean private company that holds the licences and permits to Cascabel. In fact, CGP used to own 100% of ENSA, before Solgold came on board and acquired its 85% in various chunks through earn ins. CGP's ownership of 15% of ENSA is not dependent on their holding Solg shares. It will become dependent on them funding their share of capex after BFS though, if we get to that stage.

He seems to answer a lot of questions on twitter by giving cryptic responses or replying with another question. Also in that thread when they are asking about board changes, he comes back with "Have you ever dealt with Nick? That would answer your question."... Well, no, funnily enough I haven't worked with Nick, so please enlighten us as to exactly what you are thinking other than "I hate Nick".

Speaking of Warren Irwin have you seen his recent comment on Twitter when being pressed about how CGP will fund its share of Alpala development?

"If Cornerstone is not bought by a larger entity who wishes to be involved in the project, Cornerstone will borrow the money, secured by their 15% stake in ENSA. Please refer future questions to the CEO of Cornerstone."

I still find it strange that Solgold have claimed on numerous occasions that CGP cannot use their ENSA shares to secure financing, while CGP are saying they can. Brian Moller is the head of the corporate practice at Hopgood Ganim and drafted the termsheet between Solg and CGP, so you would have thought Solg would be on fairly certain ground when they make that statement.

Ahhh my mistake, I read that as Crossrail instead of Crossrail 2 and thought Steve was referring to the press stories about it being mothballed. Even more stupid of me as I actually wrote the "2" in my own post!

I see, cheers.

Hi addicknt, can you clarify which of the resolutions/powers you think is problematic, and what you mean by "if he does a deal"? You mean some sort of funding package that involves Solg issuing a chunk of equity? I'm just trying to understand what you think are the implications if each is passed or rejected. Is it the ability to issue up to 2/3 new equity in a rights issue, or the 1/3 not in an open offer, or the disapplication of pre-emption rights for 5%? Thanks.

What will devalue your investment more than anything is if Solgold isn't able to raise the necessary financing to keep proving up its resources and/or extract them from the ground. If their hands are tied and they run out of money, then in will come the majors to take the lot for a bargain basement price.

Resolutions 1 - 12 are ordinary resolutions and require 50% of the votes cast at the meeting in order to be approved.

Resolutions 13 , 14 and 15 are special resolutions and require 75% of the votes cast at the meeting in order to be approved.

Obviously if a bid came in for £1 in the next few months I would take it and be very pleased with my return... but I don't think NM is thinking along those lines. But if I have to wait 5 years to get £1+ I wouldn't be that disappointed... Personal circumstances again tho, I've got time on my side ;-)