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Hi Quady, in answer to your 8.53 post, the FNV and Osisko NSR agreements both contain essentially the same change of control and transfer provisions. If ownership of ENSA or the Solg holdco is transferred, or there is a change of control of Solgold, the transferee has to sign up to the same terms and conditions as per the NSR agreement. In other words the NSR attaches to Cascabel regardless of who owns it, and would be transferred to any buyer.
So there is the option to buy back 1/2 of the FNV NSR and 1/3 of the Osisko one... but the rest is perpetual. So yes both FNV and Osisko expect Cascabel to be taken to production, but it doesn't matter to them by whom. In fact it's probably better for them if a major buys Cascabel or Solg and gets everything ramped up as soon as possible. That's also presumably why BHP and NCM are so vocally against these NSR deals, because it gives away part of every and any shareholder's eventual returns regardless of who they are.
I guess an acquiror could just negotiate with the FNV and Osisko to terminate the NSRs by mutual consent, for a suitably large sum of cash... so the streamers still get paid one way or the other and hence why they are keen to advance funds now. Solg had already failed to get an equity raise done, doesn't want too much dilution and probably wants to poke BHP and NCM in the eye to trigger a bidding war, hence why they went for this form of financing imho.
Add, Q, regarding the Cascabel funds, presumably because even if they intend to sell it they still need to keep derisking the project while they wait for an offer to buy it. They can't just sit there and do nothing hoping someone comes along to take it off their hands. Isn't it just that the further all these optimisations are progressed in the meantime, the more attractive the economics look to an acquiror?
Hi RK, after the merger completes Solg shares will continue to be listed on both London and Toronto, and one of the conditions precedent for completion is the approval of both TSX and LSE for the listing and admission to trading of the new Solg shares to be issued as part of the transaction.
Technically the hydroelectric plant is not part of the Strategic Review. It's part of the "Project Advancement and Exploration" for Cascabel, alongside a whole load of other optimisation options. The strategic review is looking at a non-exhaustive list of 4 items.
The optimisation process for Cascabel is presumably to make the economics more attractive. I don't think that precludes the scenario where an full or partial disposal occurs for a higher price, which feeds into the strategic review. I just don't think you can selectively cling to the hyrdoelectric power item as a signal that this is or is not getting sold.
Strategic Review
The Board is focused on maximising value for all shareholders. A Strategy Sub-Committee led by Non-Executive Director, Dan Vujcic, will continue to advance the previously announced Strategic Review as a top priority.
As previously disclosed, the Strategic Review includes, among other things, evaluating and pursuing value enhancing opportunities for the Company such as:
· evaluating financing alternatives for the Company that endorse project value;
· a spin-out of assets, other than the Cascabel project, to all shareholders;
· the direct or indirect sale of an interest in the Cascabel project at prices that endorse project value howsoever effected; or
· any other transaction or series of related transactions.
Project Advancement and Exploration
SolGold is focused on advancing Cascabel in a cost effective and value maximising manner.
The Cascabel Project Team is rigorously reviewing all opportunities to de-risk the project, reduce costs and further improve project economics. The Project Team is investigating an expanded list of optimisation opportunities and upside options including:
· Alpala underground mine design optimisation;
· improvements to mine and mill production rate;
· inclusion of open pit resources including at Tandayama-America;
· process plant design optimisation;
· opportunities for improved metallurgical recovery;
· improving gold recoveries;
· capital and operating cost reduction opportunities;
· hydropower project development; and
· project execution strategy.
To be fair we don't know what the Chinese would or wouldn't have taken and at what price, other than what they have just bought.
From their perspective they may have said well, the SP is currently in the high teens and way down from where it has been in the past, you just failed to get a funding round away over the summer and are rapidly running out of cash and you can't just keep giving more and more of the upside away in streaming deals, and you're about to dilute us by up to 20% if we invest now so you can complete the CGP buyout. So if you want us to fund your company to the tune of 30-odd million dollars, we want to see you guys (management and shareholders who are driving this thing) put up some cash of your own so you've got decent skin in the game and all of our interests are aligned. And we'll have our shares at 20c please because beggars can't be choosers and right now Solg needs our cash more than we need to invest it in Solg...
Hi Quady. "No one is going to buy us unless they can get us cheap."
You don't know that though, aren't you just basing that on comments from Mike Henry? There are more potential buyers than just BHP. History is littered with examples of M&A where the buyer paid way too much for the target, it happens all the time. Additionally I would say that what even is cheap when it comes to a mine with a 55+ year life of an in demand metal? Considering the cashflows at peak capacity you could say that $2bn or $3bn right now is good value to secure all that copper and gold, especially if prices go up as anticipated.
"No one is going to sell because they want full value or close to it."
Yes but there reaches a point where selling is the only way to realize any value for it, because if they continue to hold and Solg reaches a point where it cannot fund construction, value will be destroyed. Likewise if you hold too long and Solg is forced into a poor value JV or similar to try to cling onto some ownership of Cascabel and move it forward, you might be staring down the barrel of a SP in the single digits for years to come and 40p today will in hindsight look like a massively missed opportunity.
Add, re Norges holdings, on 1 March they owned 73,948, 696 shares (3.22%), of which 70,334,591 were held by them and 3,614,105 had been loaned out by them to other parties, with a right for Norges to recall them.
As of yesterday, they own 82,875,000 shares (3.609%), of which 68,375,000 are held by them and 14,500,000 have been loaned out by them with a right to recall them.
So they own a larger percentage of the company, but they have loaned more shares out than previously. I guess both direct holdings and loaned shares are reported cumulatively in the TR1 because Norges has the right to recall the loaned shares, so when it comes to any voting at meetings etc they have the ability to control the entire amount if they choose to recall their loaned shares. This is the same as Blackrock reporting their direct holdings and the stock lending instruments (i.e. the shares they have transferred to someone else under a stock lending arrangement but ultimately have the right to receive back upon termination of the loan).
Apologies if this is teaching you to suck eggs.
Red HKSCC nominees is the nominee company of the HK stock exchange's clearing company. It's basically the exchange.
BlackRock own shares in virtually every large company in the world. They aren't going to manipulate markets just so one company they happen to own 1% of can acquire a stake in another for pennies cheaper. Particularly when they hold shares in the target in their funds and therefore want the highest possible return for their investors.
Bubble what exactly do you think the 1 share trade means and why? I know it's "your theory" but since you keep posting it on here day in, day out I think it's fair to ask.
Who is meant to be flagging news, to whom and for what purpose?
Fort, agree. I think they want to sell cascabel and retain (one way or another) our current exposure to any upside in the rest of the portfolio. Hence the debate the other day about the spin out or regionals. It would be a crying shame to sell the whole company only based on Cascabel and the acquiror gets all the rest for virtually nothing.
Ecuador is seen as a new mining frontier. Solg with it's large package of licences across the country is seen by some as a good entry point into the Ecuador mining play... Not just as Cascabel.
Hi Mog, that's the one! Thank you!
Reading this again I feel like it describes a lot of what Mather has tried to do with Solg. In my opinion it explains a lot about what they have done over the last few years, the whole production Plan A (as a means to trigger M&A) and some of the internal tensions on the board as they tried to cover both bases in terms of experienced M&A types and experienced mine builders.
Has anyone got the link to that article that's a guide for junior miners trying to sell their resources to majors? It was written by a guy who had been a CEO. It was a list of 10 or so points and was quite pertinent to Solg's position.
Iirc one of the things he said was always get a major onboard if you can, although they could cause you some issues it will benefit your project to have a major name on board. I think he also said expect shenanigans and dirty dealing, you have to rise above it and stay strong and you will get a deal in the end, or words to that effect.
It's Mather, Twigger and Clare who have agreed to/engineered this complete turnaround in strategy imho. They are the only ones from the "old" board who are still left and there's no way the CGP merger and then the two CGP directors becoming CEO and head of Strat Review would have happened unless those guys wanted/allowed it. All of the more recent appointments (Keith, Kevin, DC etc) have gone and with them the comsiliatory and softly softly approach to relations with BHP/NCM and the slow and steady progress at Cascabel. It's now balls out of the bath time, and Mather, Twigger and Clare are fully aligned with CGP, Sangha and co, they are pushing for a sale of Cascabel and/or Solg, so I have voted for them.
In my view it must be possible to structure such a spin off in a way that is palatable to all holders and doesn't have huge adverse tax consequences. It's not the most difficult transaction by some distance. As you have noted yourself RK, the licence packages are already held through discrete subsidiaries, which will have been done for a reason.
Also, if a spin off is such an undesirable possibility, why even mention it as one of the SR options? They could have just stated the otter items, which are pretty broad.
And lastly, given that the company is now valued almost entirely on Cascabel and the very large package of licences across Ecuador are valued at virtually nothing, why is everyone is such a rush to throw them away for nothing just to effect a quick payday for Cascabel? Surely it's a better out come for shareholders to sell Cascabel and retain our interest in everything else... Especially as Porvenir and the blocks adjacent to Warintza are included in that everything else. I can't imagine recent institutional investors like Norges would prefer seeing all the rest go for a peppercorn just to get a quick sale in the next few months.
Red, I don't think that's what they're saying. The suggestion is that Solgold spins off all of the regionals apart from Cascabel to all existing shareholders. So we and CGP (post merger) receive X number of shares in NewCo for each Solg share held. We continue to hold our Solg shares, and Solg now only has Cascabel and nothing else. Third party bidders then bid 50p/70p/100p or whatever to buy Solgold, which is just a wrapper for Cascabel. No transfer of ENSA out of Solgold. We, CGP and all other Solg shareholders get our payday for selling Solg, which ceases to be publicly traded. We are left holding the cash and our shares in NewCo, which continues to explore and develop all the regionals giving us exposure to upside in the rest of the portfolio should we chose to keep those shares.
The company has already telegraphed this possible outcome twice in it's description of the strategic review:
"As previously disclosed, the Strategic Review includes, among other things, evaluating and pursuing value enhancing opportunities for the Company such as:
· evaluating financing alternatives for the Company that endorse project value;
· a spin-out of assets, other than the Cascabel project, to all shareholders;
· the direct or indirect sale of an interest in the Cascabel project at prices that endorse project value howsoever effected; or
· any other transaction or series of related transactions."
Bullet number 2, spin out everything except Cascabel to all of us, the newco operating as an explorer and early stage developer, basically Solgold Part 2. Keep Cascabel within the Solgold wrapper and someone buys out Solgold, avoiding any poor tax consequences of selling ENSA itself out of Solg?
This seems like a better outcome than the current status of Solg being valued almost solely on Cascabel with no value attributed to anything else, and if someone bids for the entirety of Solg now they get all the regionals chucked in for peanuts/nothing and we never benefit from any future value contained within them.
BNc, this one?
https://twitter.com/bigdude6669/status/1578376734856347648?t=ySV9ZdyReRWDjNPprhFA1g&s=19
"BHP in control? Check your numbers. Give me an example of a cheap takeover of a world class mineral deposit. Doesn’t happen."