Member Info for rcgl2

To be honest Quady I'm not particularly convinced that it will ever happen either. I just think the whole thing is intended to light a fire under the current board to try to force them into either upping their offer for CGP, or arranging/accepting/engineering a fairly quick takeover of Solg by one or several majors, at a price that will by extension massively increase CGP's value (or the value of its Solg stake).

The message to the current board is, you are on borrowed time now so chuck us a huge load of cash asap or you're gone... and we have NCM and (by implication) BHP on our side, so chop chop.

In terms of if it ever did happen and who the new board would be, I don't really know or understand myself how their proposal would be favourable to the other major holders. All they seem to be proposing is a new "independent" board that will "independently" come to a pre-determined conclusion that the FN deal is bad and must be stopped...

"Cornerstone intends to propose that all members of the current board be replaced with five new nominees, each with the requisite skill set and independence to direct SolGold for the benefit of all shareholders. Cornerstone further intends to vote its entire 7.58% equity stake in SolGold in favour of such proposals at the requisitioned General Meeting.

Cornerstone expects that any new board would seek to conduct a strategic review to maximize value for all SolGold shareholders. As part of that process, we expect that the new board would carefully review the terms of the Franco-Nevada Royalty Financing and take appropriate action to terminate the deal if, as we expect, the board determines that the financing is not in the best interests of SolGold and its shareholders. In light of the foregoing, Cornerstone expects that the current SolGold board will not proceed to completion of the Franco-Nevada Royalty Financing"

Hi ToS - yes CGP have virtually said as much if you read the various releases, the dates are deliberate. In the formal rejection of the Solg takeover offer they state:

"SolGold Has Neutralized its Largest Independent Shareholder until October while SolGold’s Second Largest Independent Shareholder has Clearly Lost Confidence in the SolGold Board
BHP is SolGold’s largest independent shareholder, holding 13.64% of SolGold’s ordinary shares. BHP is required to vote alongside the non-independent SolGold Board until October 19, 2020 on certain matters. This arrangement provides Mr. Mather and his associates with significant influence over SolGold until that date and provides one obvious reason for why the Hostile Bid expires on October 14, 2020."

I don't think we can know for sure one way or another what BHP thinks. CGP are just trying to create the impression that BHP are unhappy with the board. The fact they are waiting to call the meeting very pointedly until after the standstill agreement comes to an end is just intended to imply that they know BHP will vote down the board once they are legally allowed to.

Which may be true... but equally may not be true at all.

Just had a look at what Willem Middelkoop (he of loss making, insanely high fee commodity fund fame) posted on twi tter again, the discussion is very interesting... several responders really press him on what his and WI's alternative proposals will be for funding Alpala and realising SOLG value and he simply does not answer! All he can say is "replace the board" again.

And then, he throws in a completely scandalous #metoo allegation about Nick Mather!!

"(.. and women warn each other for his behavior)"

What is that all about? Absolutely appalling tactics, lobbing that sort of unfounded rumour around.

https://twitter.com/wmiddelkoop/status/1287612320856899584

BTW I assume that's you TheIceberg getting stuck into him there.

I'd rather have my trusty Mirror dinghy back than all the floating gin palaces in the world.

Agreed! Come on guys, clean slate today. Let's focus on Solg and related topics.

BN.c thanks mate

Haha! And a lovely new pond in your back garden?

Hi Zoros - for a car making analogy, maybe Dyson's failed attempt to make an electric vehicle would be more fitting? The real core of an electric vehicle is the battery and the motors, both of which Dyson has considerable expertise in. Since vacuum cleaners went mainly cordless, Dyson has huge expertise in the battery and motor department. Seemed a neat step to upscale that to car size batteries and motors. Apparently their SUV could have done 600 miles on a charge if it got built. You could see this as the equivalent of the Alpala deposit, their knowledge was a tier 1 asset.

I think they thought once you had that nailed, building a car around it couldn't be that hard could it? After all, you can buy the car making expertise by hiring personnel from the auto industry, and probably buy production capacity as well. After all, how hard can it really be to bolt on 4 wheels and a nice spacious cabin... You could see this as Solg thinking once they have the asset, mining it can follow, by hiring the expertise and buying the equipment etc.

The reality for Dyson was that it is actually a lot harder as a new entrant to bring a car to production than they thought. They don't have the reach, scale, infrastructure etc that the big automakers have. In fact, Dyson couldn't see a path to manufacturing their car profitably at all, despite their killer battery tech and Sir James's deep pockets. So in the end he threw a lot of money at it only to pull the plug, no pun intended.

I know there are some major differences between car making and gold mining, but you see my point. Switching from your core area of expertise to another is not easily done, regardless of your assets, especially when up against the established major players in that field.

So until 15 October the superposition of Solg is that it is both going to get taken over and it is going to production alone.

Zoros, thanks for the link, I found that very interesting. Pretty much confirms what I said the other day, that Haveiron has a fairly clear and straightforward path to getting the stuff out of the ground and processed, with NCM underground mining experts and their Telfer facilities and infrastructure sitting next door hungry for ore ("closeology" is a great phrase!). Glad to know my thinking wasn't miles off.

He also mentioned the regular updates were doing good things for the market sentiment... Hence why I think SOLG needs some news now to shift the SP up a level.

This is quite an interesting read for anyone interested in such things... I am not saying this is what is happening with Solg, it is just an example of how market participants can try to trade securities in such a way as to anchor the price in a particular place...

https://www.thebushveldperspective.com/blog/public-articles-1/post/auctions-uncrossing-trades-and-evidence-of-manipulation-291#:~:text=At%20the%20closing%20of%20the,Uncrossing%20Trade'%20(UT).

Just looking through CGP's formal rejection of the the SOLG offer again. It's basically just a begging letter / sales pitch. The two things that stand out are:

1) despite all the moaning, they say what they actually want from Solg ("Assuming SolGold had liquid shares acceptable to Cornerstone’s shareholders, SolGold would need to increase the exchange ratio to in excess of 22 SolGold shares per Cornerstone common share to provide Cornerstone shareholders with an interest equivalent to their interest currently held through their Cornerstone shares."). That bit is even underlined. Offer us 22 shares and we're yours.

2) they want someone else to come and buy them for more ("The Board believes it is entirely reasonable for parties other than SolGold to consider a possible acquisition transaction of Cornerstone appealing, as interested third parties have an opportunity to secure a position in Cascabel that is superior to any other SolGold shareholder given the significant value of Cornerstone’s carried interest. In that regard, sophisticated mineral resource companies could leverage Cornerstone’s strategic position to acquire an even larger interest in the Cascabel concession."). That's just a big shout out to NCM or BHP or whoever isn't it? We're in a hole, Solg are coming for us... please, please, please come and buy us out if you want a crack at Solg too. We're yours for the taking Mr Major.

The rest (change of board, mismanagement, breaking exchange rules etc etc) is just noise isn't it. You can totally understand the CGP board wanting to maximise the value they could achieve for their shares. Just they've gone about that in a rather aggresssive, mud-slingy kind of way.

His CD fund is a horror show, why would anyone hold that!

Performance - looking at the full performance chart, the fund was at 90% of starting value on 1 July 2020, that's 10% down over 12 years since inception. So destroyed value in absolute terms, plus opportunity cost if anyone was stupid enough to actually hold that (SPX up 3x in that time). https://en.cdfund.com/track-record.html

Fees - he charges 2 and 20! 2% p/a management fee and 20% performance, so even when the value spiked 2010 - 2011 they'd have been mugging you for a decent chunk of your return. Total return over 12 years with 2% annul fee must be shocking.

All he's done as far as I can see is track the BCOM... for 2% plus some extra.

Thanks for all the background information everyone! Very interesting.

If CGP always expected this to be sold before this stage it still feels like they didn't draft the agreement with Solg to take into account that the prospect might be the next "big one" and not get sold... I'm sure 99 times out of a hundred it wouldn't be, but the big ones eventually have to turn up somewhere. Now it has turned out to be a Tier 1 asset, the terms for CGP aren't particularly favourable with Solg clinging onto it for dear life? Right tail risk?

Can someone who understands these things better than me explain how Cornerstone have got themselves into this position? General feeling seems to be that they can't realistically fund their liability on Cascabel and therefore will lose their interest for FA if nothing changes. Solg keeps making the point that although CGP flaunts their 21% direct and indirect interest in cascabel, there are some pretty huge strings attached in terms of upfront cost and ongoing debt funding obligations, which seems valid.

They used to own all of cascabel didn't they? And they brought in Solg on an earn in to fund and operate it through to this stage. Question for me is why these terms? Why did they put themselves in this position that their retained interest has so many strings attached?

Is that just the way it is with frontier explorers? No hope of funding their prospects any other way unless they do a deal with the devil? If they hadn't taken these terms they would have just lost the whole lot anyway?

Or has something changed since Solg came on board with Ensa that has made a fair deal look worse in hindsight for CGP?

Did they expect to find themselves in a position to easily fund their cascabel obligations by this point, but the rest of their business hasn't panned out?

Any background would be much appreciated, thanks

Tiger, I agree , that's exactly what I thought about GGP. When I looked into the details of Havieron the two things that leapt out are 1) farm in with NCM which utilizes Telfer and all surrounding infrastructure, and 2) it's in Australia. Both of which suggest that despite being a less valuable prospect in total, seems like there's a very decent chance of actually getting the stuff out of the ground and soon.

I'm not disparaging Alpala or Solg, just feels like Havieron is a bit closer to being a bird in the hand rather than two in the bush.

Also on the subject of why no majors have bid yet, someone mentioned a few days ago that they also have to bear in mind their own shareholders. I'm sure these guys all have incredibly sophisticated models telling them exactly what they think SOLG is worth based on information currently available. Let's say they are all valuing it at around £1 a share, isn't it a lot easier for them to justify bidding £1.25 after the PFS has confirmed that represents a 25% premium to fair value rather than say bidding 80p now and effectively paying 3.5x the current market cap? Better optics after the PFS, and risk management.

Feels like to really get the SP moving now a big piece of news really needs to drop... PFS released earlier than expected which significantly boosts the NPV, or FN deal signs or maybe some amazing drilling results from one of the other potential "next Alpalas" that makes it even more certain they really are the next Alpalas.

How long will this current tailwind of parabolic PM prices last? Clearly causing lots of other miners and related shares to pop... I don't see PM prices coming back down from here in a big hurry but you know how fickle sentiment is, especially in this crazy year.

Of course SOLG and SXX are apples and oranges and of course comparing Alpala's gold/silver/copper to West Yorkshire's polyhalite is nonsensical. To go right back to the origin of this whole discussion, I think what was meant was that despite all the promise, there is still in the background the possibility of us all sitting here in 6 months time going W T F just happened? And Barrick/NCM/BHP/China or whoever sitting there going haha can't believe we picked up Alpala and the rest for 25p.

It's a small possibility, I'm sure, and we are all invested here in the belief that it will never happen, but never say never.

Guess for some SXX investors they were convinced they were on to a sneaky winner, they had found an opportunity to get rich, the company was ambitious but credible, it had the asset in the ground, if funding was secured the mine would get built and be a cash machine for 50 odd years to come, and who can't secure funding for anything in this day and age, just look at WeWork and Theranos and every other ridiculous pie in the sky unicorn or heavily indebted business raising money left right and centre...

And then, in the end, they couldn't raise the funding. And Anglo American comes in and takes it for 5.5p.

The range of opinions here seems to be 40p minimum, middle ground 80p, optimists £1 - £1.25 and the true believer(s) £4 in several years' time. I think what was meant was that no one is realistically expecting the SP to be mired around 20p and the takeout to be barely over that, CGP to be successful, massive dilution at this stage or some other as yet unforeseen factor. You can't discount that happening completely though can you? Hence the current SP.

Not deramping BTW, I'm invested and very much in the 50p+ camp.

Thanks Jim and on that front I should definitely say that I am not moaning too much because many people will have bought in at multiples of where I got in and be sitting on or have taken huge losses I guess. I agree, if this makes it through it should eventually be a good return so I'm holding.