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Yes I wasn't attacking your 100% statement as such, I realise that was just an example. Was just highlighting that it may have touched on the issues surrounding the plan for Alpala in terms of attitudes towards upfront costs and timing.
Hi Quady - last night you made a comment about the potential Capex cost for Alpala: "if it was a 100% increase then it would still be a bargain, go back and read the PEA. Under 4 years on current PEA, even with the increased cost, the payback will be shorter." I wonder if actually this goes to the heart of why Nick Mather came a cropper over the PFS once the new directors came on board.
Being an explorer, and very keen to become a producer, perhaps his views on costs were at odds with what people with a background in major miners would see as acceptable. Alpala is expected to have a 55 year life. As you said the payback period for the Capex is expected to be a 4 or 5 years. Maybe Mather had a more cavalier attitude to upfront spending because he was focused on the goal of producing and the eventual rewards. If the $5bn estimate was creeping up to $6bn, perhaps his attitude was "who cares, we'll just have to pay it off in 6 years instead of 5, and then get our billions." Therefore he had little appetite to drill more of Cascabel, re-design the mine and delay the PFS for a year.
Maybe Keith Marshall and Kevin O'Kane had a much more rigid focus on costs and couldn't stomach a large 10-20% increase in Capex. Irrespective of what happens after payback period, their attitude was perhaps more like "hang on, we can't tolerate a 20% capex increase, if we could re-design the mine and reduce it by even 5% then it's worth delaying the PFS to achieve that."
After all, NM was happy to grant the 1% NSR, which in and of itself sounds small, but raised serious concerns for NCM about diluting the future value of Alpala... Small cost percentages matter.
If someone controls 50%+ of the voting shares then they can effectively control the company by voting out the board and voting in a new board that will do what they want.
If a bidder makes a contractual offer (i.e. tender your shares for us to purchase) then I think it needs minimum 50% uptake to be successful and the bidder would normally include a conditional threshold in the offer, e.g. 90% or whatever. So if they didn't achieve the threshold, then the offer is not binding and the tendered shares are not taken up (such as Solg's bid for CGP). If a holder manages to gain 90% of the shares, then can make a compulsory purchase to squeeze out the remaining 10%.
If the bidder structures their bid as a scheme of arrangement, then I believe it only requires 75% shareholder acceptance in order to bind all holders (and squeeze out the remaining 25%). However a scheme of arrangement involves obtaining a court order from the High Court so is less likely in a hostile situation, more likely under a friendly bid with board recommendation.
If a shareholder acquires 30% of the voting shares then it must make a mandatory offer, which I think can only be conditional on 50% acceptances.
Also minimum consideration requirement is that if a bidder has acquired shares in the 3 months prior to the beginning of the offer period, or after the start of the offer period, then the offer cannot be on less favourable terms.
Isn't the whole point of a pre-feasibility study that it's not confirmed yet that it's either practically or economically feasible to build the mine? Hence the "if a development decision is made". It's just prudent corporate comms isn't it? If they were making statements at this stage like "when the mine build commences" they would be misleading the market because as a point of fact, the decision hasn't been made and it isn't guaranteed, no matter how likely it is to go ahead.
I took this as another sign they are attempting to rein in the hype (e.g. "this hole is the single biggest discovery in the history of Solgold" or whatever he said about Porv) and strike a bit more of a balanced tone.
Hi Rich3r, yes I was wondering about that myself.
Also speaking of BHP, when they did their Nov 2019 placing, the RNS stated "SolGold has invited, and BHP may provide, secondees for the technical effort for the completion of Feasibility Studies at SolGold's 85% owned Cascabel project in Northern Ecuador and regional exploration effort." I wonder if BHP did ever provide any secondees for the PFS effort, and if so what influence they may have had. I don't think we did ever hear that they had so maybe not.
Perhaps if they had taken technical advice from NCM who are meant to be the experts in this field, it would now look less bad for the Solg board.
Changing the title to focus on the company not the arguments. Pillar26 raised a good point. Whether we like them or not, NCM are a mining major, they are one of Solg's larget shareholders and they are recognised as block caving experts. When they openly criticised Solg's strategy, pulled their director from the board and made noises about the Alpala core potentially having been mis-defined, maybe those were warning signs we all should have listened to. Must admit, I was probably blinded by the view that of course they would be critical because their goal is to squeeze the junior with dilution and then snap it up on the cheap, and that NM was valiantly standing up to their bullyboy tactics.
However, that raises two questions for me. Was pulling their director about more than just financing? The reason given was the FNV deal, but could there have been broader doubts for them about the way the PFS and plan for Alpala was developing? And secondly, if they weren't happy, why pull their board director? They clearly intend to stay invested, why not have a person on the board to try to influence the direction of travel? Giving up their board seat seems to give them less direct influence. He may have been running up against a brick wall in NM, but NM is now gone but NCM doesn't have a seat at the boardroom table.
I think zoros posted a comment that Warren Irwin made on the CGP CEO board the other day. I also thought Irwin's previous comment was interesting (he is BDMinefinder):
@Pete Blaming it all on Nick would be too much, mgmt & BoD are well aware of the progress and big decisions along the way I would image.
@BDMinefinder @pete I think it is fair to blame it all on Nick, he was a bully and would not listen to anybody
Sounds like he was going against the advice/wishes of key stakeholders not just on funding but also on strategy for developing Cascabel. We know CGP wanted to monetize it earlier, maybe NCM and BHP were warning that they needed to do more work on the Alpala satellites and explore alternative mine designs? Which to me begs the question what did Nick think would happen differently that would have avoided this situation coming to a head? Was he expecting a bid to have landed by now? Did he think they could have pushed out the PFS on the old plan regardless and sod the concerns of the big shareholders? But what then, just magic up billions of funding and then carry on?
I'm still pretty positive about the assets and I've not sold any, just feel a bit surprised at such a major "reset" happening in the space of a few weeks.
MM thanks very much for the info, and to be honest that does all sound very positive from the Comms department.
It's good that they realise the last couple of weeks have been a complete car crash for the SP and that they see it as a fresh start for the company, things will be different from now on, they are going to be a more professional outfit etc. But that also implies they agree that things were not well run up to this point, the over-hyping was a problem, strategy for Alpala wasn't optimal. What annoys me a bit is that up until two weeks ago they were happy to cheerlead the old strategy and still blow smoke up everyone's backsides about the direction the company was taking.
My takeaway from DBW's previous videocall with them a few weeks ago when we were all eagerly awaiting regional results and the PFS was that they were practically bouncing up and down with excitement as if to say "just you wait, great news is on its way!"
BP1234 this is what Warren Irvine had to say on twitter
Lots of criticism of the board, but shouldn't that be the old board, before the new arrivals joined? Looks to me like the new arrivals have taken this by the scruff of the neck at the last minute.
Kevin O'Kane and Keith Marshall (who ran OT!) arrived in October last year, wasn't that around the time Jason Ward had promised very casually in a webinar that the PFS should be released in 2-3 weeks? So should we infer that the PFS was pretty much finalised and about to be published, but O'Kane and Marshall got hold of it and said absolutely no way are you releasing this before we've gone over it properly? Which they have then done and basically ripped it up and decided to start again.
Those are the guys with genuine mining experience, and they have effectively decided to re-write the whole thing. Nick Mather having brought them on board then realised that he had completely over reached himself in his desire to rush out the PFS as soon as possible and decided to quit then because building mines is actually a lot harder than he thought. As DartFrog said, maybe that's the real reason he quit. He probably has the brass neck to have tried to ride out the AGM experience because he had deliberately provoked BHP and NCM anyway, but this tearing up of his Alpala plan was what made him see the reality of the situation?
Putting takeover bids aside, isn't there an argument that this is a better state of affairs IF Solg were to achieve its stated end point of building Alpala? Under the "old" plan they were never likely to pour their first gold until what 2028? Now the "new" plan should bring production sooner and with lower initial capex, even if it will mean a year's delay in publishing the PFS. In timing terms wouldn't the net result be about the same (production around 2028) but possibly with lower initial capex?
Maybe that's overly charitable and just clutching at straws given the SP action, but as JungleJane said, it's better to take longer over the plan and get the build right than rush the plan and mess up the build.
I think many of us would benefit from not watching every tick of the SP all day long, as it shortens time horizons to virtually zero and makes everyone impatient. When I first bought Solg it was intended to be a multiyear investment like everything else. In fact it went down and I topped up more at lower prices. When I was in the office I would read this board occasionally for interesting information but I couldn't post from work so was less engaged. Now I've been working from home for nearly 11 months, I'm reading this all day long, posted over 500 messages and frankly think I've become a bit obsessed with checking the SP, which is silly. Might be better to just ignore it for a few months and let it do its thing.