Member Info for rcgl2

BN.c yes agreed, that's what I meant. The delay seems endless to us lot because we are all hungry for news, in reality the delay may be perfectly reasonable. The drone thing may have just been one of various contingencies and nothing to get too excited over. I don't think the FN deal is smoke and mirrors whilst a takeover is arranged, I think it's real and will sign once they do the final DD.

Personally I am taking it at face value... they haven't recorded it because the deal hasn't been signed and it could be misleading to record it in the accounts if it might yet not be finalised.

I'm not in favour of the view that the FN funding hasn't been signed off because in reality Solg (and possibly FN) know full well a takeover is imminent. Both Solg and FN have put out and continue to put our regulatory announcements saying the deal is agreed and will be signed subject to completion of the final DD. It would be misleading the market if they were just using it as a decoy whilst all the time intended to be taken over and never sign the FN deal.

The bit I am not sure about is why the final site visit etc is taking so long to get completed. Having said that, maybe neither Solg or FN expects anything material to happen that would derail it between now and say October, and therefore what seems like an excruciating delay to all of us is in fact just immaterial to them. Maybe FN's team had such a backlog due to Covid that jetting into Ecuador literally as soon as the travel restrictions were over simply wasn't their main priority. Maybe the team had other visits to make. Maybe the administrative personnel who arrange all the travel and visas simply couldn't get it processed that quickly as they are all working from their kitchen tables with small children swinging off their elbows? Who knows.

Maybe I'm being a bit dense here but I don't see how a lowball offer (say 40p - 50p) would succeed based on the percentages held. NM and associated companies control 20%. NCM and BHP each control approx 13%. I'm assuming a major wants to buy SOLG and gain 100% control.

Under UK takeover rules if a bidder makes a contractual offer they need to obtain 90% acceptances in order to squeeze out the remaining minority holders. Clearly NM and associates alone have enough to prevent this threshold being met. If the bid is structured as scheme of arrangement (likely under a friendly bid with board approval, but less likely for hostile bid) then they require 75% acceptances in order to bind all holders. That would only require NM's 20% plus 5% additional holdouts to scupper the bid. I would guess at a lowball 50p bid Solg could muster 5% extra rejections on the basis the board thinks the company is worth north of £1 a share.

And then you have NCM and BHP with their approx 13% each. Assuming both want this for themselves, why would either of them sell to each other or a third party for 50p? Especially when BHP bought a lot of their stake at 40p. If they can't have Solg for themselves, wouldn't they want a very generous offer in order to part with their stake?

So where does that leave a low ball bid? If a bidder just got enough to take a majority stake but not squeeze out everyone, for example they end up owning 70%, what happens? How do they squeeze out the rest, massive dilution? If they can't take it private, but they take majority control, they run Solg as an ongoing concern and take it to production? In which case holders who didn't sell in the bid hang on to their stock and see its price keep rising?

I'm not massively familiar with corporate takeovers so I feel like I must be missing something here. But with 3 large but not majority shareholders (NM & co, NCM and BHP), plus a load of interested PIs all wanting a big payday, I just don't see how a lowball offer gets there.

Now an offer at £1 or £1.25 or whatever, that surely would get more traction?

Seems pretty decent RNS to me...
- Solg has been operating like the smaller explorer it was, the CEO and directors run the show and the board is a bit of a fig leaf. Aim to find something big and either sell it or get taken out.
- Solg is now transitioning to a bigger, better run entity, with a view to becoming a producer. It doesn't matter if it ends up as a producer or gets taken out, the stated plan is to become one and therefore progress needs to be made. As such, it now needs a proper board, proper governance practices, proper remuneration committees etc.
- ESG matters. Those of us still working will be well aware, ESG is everywhere in finance nowadays. You can't go to the loo without taking ESG into account. You definitely can't invest millions into Solgold without thorough ESG screening.
- The RNS says this process has been underway since the beginning of the year. It is not a kneejerk to CGP's antics.
- What it handily does do is negate CGP's attempt to sack the board and replace it. The board is now being completely reformed anyway, I can't imagine major shareholders will want to suddenly derail this entire refresh process in late October and go back to the drawing board again to get a new board in place.
- RNS again mentions up to $190m in funding. Don't think that they would be mentioning that in regulatory filings if the FNV deal was all a ruse and never intended to get signed.

BN.c ah ok, I stand corrected... Said the man in the orthopaedic shoes

Wonder what BHP and NCM think about tweets like that. The word "endorsed" sounds like some official stamp of approval or something. No one has "endorsed" Cascabel. They have bought stakes in Solg, which has many irons in the fire. Obviously we know why, but the wording used in the tweet carries certain implications.

Very strange Tweet, they have publicly denounced the SOLG board in large part because of the FN deal and now they are touting it as an endorsement of their main asset?

And what is that picture? They haven't even used the correct name and logo for BHP, they dropped the Billiton bit several years ago. Total amateurs.

They are getting desperate, must have had their latest electricity bill through in the post.

Agreed on both points and in this case I think the rewards clearly outweigh the risk and that is why the majors will be coming into Ecuador bigtime. However, it is a higher risk jurisdiction that only has a nascent mining industry and therefore the global majors need to come in carefully and at a slower pace, rather than just piling in willy nilly. Contrast that to Haverion where it's basically right next door to an established facility (Telfer) in a country with a long history of mining.

As you say addicknt, it's been a slow process, but Solg in particular have inched towards certainty, making sure to do everything possible to keep within the rules and keep locals and protesters happy along the way.

There was some discussion a couple of days ago about the upcoming election and the political risk to the mining industry in general. Also agree with you there addicknt. Do governments of all stripes in most countries desperately crave money and jobs for their citizens? Yes. Will mining in Ecuador provide both money to the government and jobs? Yes. Will any government that isn't totally bonkers want to row back on mining? No.

I think the relevance of the court case to us is that it demonstrates why jurisdictions such as Ecuador present more risk than jurisdictions such as Australia where the rule of law is taken as a given and companies can have faith in the fairness of the legal system.

If you read the quotes from the Constitutional Court they seem to have already decided what judgment they are going to make before hearing the case: "...the Constitutional Court of Ecuador, agreed to hear the ENAMI appeal, saying that it hoped to set a precedent concerning mining in Protected Forests using the Rights of Nature. The Court specifically cited the biodiversity at Los Cedros, and the presence of the last populations of the spider monkey, as well as the endangered Andean (spectacled) bear."

Solgs concessions may not be in protected areas, but it shows that judicial activism can be a real issue in these jurisdictions even if you have government support. As I said the other day, when people were wondering why GGP was surging and SOLG isn't, 1) at Haveiron they have a clear route to production with NCM at Telfer, and 2) it's in Australia.

Fidelity lists the top 5 SOLG shareholders as below (apols for wonky formatting), and apart from Blackrock, doesn't mention any of the actual top shareholders such as BHP, NCM, CGP, DGR, Tenstar, NM. Guess they exclude insider holders and lump NCM, CGP and BHP in there with them, who knows. Blackrock's holding appears to be double counted as well, it's not very clear.

Either way, there are a couple of open ended funds holding Solg, BGF World Mining and Ninety One GSF Global Gold. Not sure what the other Ninety One holding or the Franklin holding are wrapped in but likely could be other open ended funds.

Anyway, largeish block trades don't necessarily have to mean someone is building a position with a view to takeover. Could be that managers of open ended gold and mining funds have had some decent inflows in the last few weeks with the rising gold price, and if they want to keep their portfolios consistently weighted without investing in new holdings then I assume they would just top up their existing holdings in proportion as they issue new fund units.

Owner name No. of shares Share as % of port. Last change Portfolio % change Date of portfolio % Total assets
BlackRock Investment Management (UK) Ltd. 86,155,942 0.75742 -5471 - 31 Jul 2020 4.67
BGF World Mining Fund 86,155,942 0.75742 - - 31 Jul 2020 4.67
Ninety One UK Limited 39,685,754 3.07229 17289537 - 31 Jul 2020 2.15
Franklin Advisers, Inc. 27,850,000 0.97422 9000000 - 31 Jul 2020 1.51
Ninety One GSF Global Gold Fund 21,968,265 0.72753 11480875 109.473139 31 Jul 2020 1.19

Hi Wyndrum, I hope that the mention of the RI in the recent update was just to keep all avenues open, so that in extreme circumstances they would be able to fall back on that option and say we did warn you. However, I think your Xeros example is a good reminder that it is not a route that Kier would like to go down after their previous disastrous fund raising that tanked the share price. It feels like another RI would just result in the same negative feedback loop... the RI would lower the share price and they would raise less cash than they needed and investors would flee like rats from a sinking ship.

Colonel I agree and I think over the next few years that combination is a killer because gold is kind of racheted up by the money printing whereas copper is more floating with the economy.

The simplistic view is that gold is a safe haven asset and goes up in times of crisis and then money will flow out again when things pick up. I don't think that's accurate. Gold over the long run holds its value, as fiat currencies lose their value against it. So although gold is going bananas now, I don't think when covid is over it will come back down to pre crisis levels, because of the massive amounts of money printing and the huge debts that are being racked up by governments. We have reached debt levels now that cannot be serviced through tax or belt tightening. They will have to be inflated away, which means currency devaluation. Good for gold.

Copper on the other hand may be more clearly bound to the state of the economy, but the world economy is on its knees at the moment. It will pick up, maybe next year, maybe in 3 years, but it will. And as demand increases commodities like copper will go up.

So to me just seems like it's a win win on gold and copper in the next 5 years or so... Which can only be good news for the owner of a tier 1 copper gold asset.

It just encourages them.

I'd say keep it simple and know your limits. Aim to get wealthy slowly, not get rich quick.

Read a couple of how to invest books but you don't need to read every book ever written, they will all be telling you the same things. As Jerry said, consume the amazing free information that's out there, on the internet and listen to podcasts. You should use that to learn and follow trends in the market, not to pick up hot stock tips.

Personally the majority of my portfolio is in very low cost index trackers and ETFs. Have a little bit in active funds and I only own 4 individual shares for a little special sauce on top. Solg obviously is one of them. Picking individual stocks is hard, otherwise we'd all be Warren Buffet.

You must minimise fees and taxes or they will erode your returns over the years. Wrap it all in an ISA or SIPP. If you're buying funds you can get trackers for for like 0.1% fee. Never ever pay the likes of Willem Middelkoop 2% to run a closet index tracker.

Know the difference between investing and trading.

Don't overpay. Work out what you think your entry point should be for a good return, and don't chase performance. Work out what's undervalued as opposed to what's cheap for a reason. Applies to indexes and markets as well as individual equities.

Time is on your side, many people don't start investing til they're years older than you. If you keep investing for the long run and don't sell out when the markets dropped you'll be up over the long run. Expect occasional big drawdowns, it's part of investing.

And if Solg does go through the roof as we all expect it to, be very careful. Winning big on your first investment can be dangerous. You start to think you have this nailed, it's not as hard as it sounds etc... Very easy to then blow all your profits through overconfidence. I used to play fruit machines in my youth... They usually allow you to win a few quid on your first few spins so you're hooked in. You always end up piling it all back in and more.

Silver is gold on steroids. Much smaller market than gold and much more volatile. I bought it a couple of years ago because it was a pretty undervalued levels on a gold silver ratio of about 85, compared to recent historical average of around 60ish. During the march sell everything panic the GSR hit 120! Anyway, my thoughts are that when PMs move, silver really moves and amplifies the gains in gold. However it comes back down to earth just as fast. Look at the spikes up to around $50 in early 80s and in 2011. So it's not a good long term hold, my plan is to get off the rollercoaster when the spike occurs. Risky I know but I'm confident it will spike even higher than current levels. If it hits around $50 I'll bail, I'm not going to be seduced by wild prophecies of $125 silver... I hope!

I know the majors want Alpala mainly for the gold and copper, but it could also potentially be the world's largest underground silver mine as well. It's the gift that keeps on giving.

1971 Nixon ended the USD gold standard, end of Breton Woods system. Currencies fully fiat. Beginning of rampant currency devaluation against gold, rise in sovereign debt levels, beginning of long decline in interest rates, beginning of huge govt deficits...

Basically the beginning of the road that brought us to where we are today, where policy response to the crisis is insane levels of money printing, which will lead to even more fiat currency devaluation, meaning rocketing precious metal prices...

Which is a long winded way of saying that gold is going up and Solg is literally sitting on a massive gold mine :)

https://wtfhappenedin1971.com/

Seeing as gold is now sitting around $1971...

I wonder if the recent equity raise, the FN funding and the CGP hostile bid are all actually doing us favours even if they have annoyed the majors a little.

Everyone knows that the PFS is coming and it's clear to everyone that with metals going to the moon it should raise the value of Alpala substantially. But this in a way is where NM sees the problem - Solg's value is currently just anchored to Alpala. And he has stated that he thinks in the other prospects they could have 3 or 4 more Alpalas up their sleeve. Right now it seems that if a decent PFS drops and someone ends up buying Solg for say £1.25 a share, there will be much back slapping and popping of champagne corks, but NM will think they basically bought Alpala and got everything else for free.

What we need now more than the PFS are a couple of stonking drill results from the other prospects. If we had a few of those first, and then the PFS and the end of the standstill, maybe then Solg would get taken out on the basis of not just Alpala but also some of the additionals. They are early stage, it's unrealistic to think Solg is somehow worth Alpala x 3 or whatever, but there needs to be some consideration in the price for everything else that a successful buyer would be getting.

Maybe NM knew a bid was incoming? The recent placing, the FN funding and the CGP bid are essentially flies in the ointment. That's what the Aussie mining analyst said, they are creating uncertainty. But they are just inconveniences. If the true value of Alpala plus the other prospects is a bit more clearly proven, any major can and will pick those flies out of the ointment. If they had the effect (planned or otherwise) of putting off a bid until after some amazing drilling results have landed, then all the better.

What would CGP's proposed board look like? Bob Sangha (Chairman), Greg Chamandy (CEO), Warren Irwin, Craig Jones and Willem Middelkoop on drums?