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Did I see somewhere yesterday that Peter Holmes and Benn Whistler had also resigned? Is that old news or new news?
So basically Solg have lost virtually all of their former management including the key execs on exploration (their strong suit) as well as finance?
Is that Darryl just forcing everyone out so he can bring in his team? Is he a harsher taskmaster and people don't like him? Or something else causing everyone to leave in droves?
I've not been able to keep up with this board much recently and tbh the incessant name calling and nonsense doesn't help... But I think I saw a post from you the other day Redknight that I very much agreed with.
It has been obvious for some considerable time now that the everything bubble was going to unwind hard; inflation was of control and was going to result in some large "after the horse has bolted" rate rises from central banks; that these would cause equity markets to tank; that the dollar would continue to rise and trash everything in its path; that PMs would struggle as a result of the strong dollar; and that all in all mid 2022 onwards would be an absolutely dreadful time to come to market looking to raise funds just to keep the whole show on the road.
Forget securing the funds to construct Cascabel, the company has to get to that stage first and I think it's an absolute howling own goal that they didn't raise funds earlier this year when the SP was up in the mid 20s. If they had Solg could just keep its head down and carry on executing its various exploration and study milestones and ride out this macro storm.
As it is they are running out of funds, exploration has ground to a complete halt, execs have left and they are going to have to raise $50m odd at some atrocious price in the low teens. Which basically means a much bigger dilution for us than was necessary and for many of us our investments firmly anchored under water now.
They should have just proposed an equity raise that was acceptable to the major holders even if it did risk BHP and NCM gaining a few extra per cent of ownership. By trying to be too clever with a cash box raise to manage major holding levels, they have potentially holed themselves below the waterline. It wasn't worth it.
If you take the penultimate sentence at face value, it implies what SM just said that BHP/NCM declined to participate in a pre-emptive placing and then vetoed a non pre-emptive cashbox raise. However, if that were the case it raises some another question, namely are there enough other investors willing to invest the amounts that Solg needed, or are Solg actually dependent on BHP/NCM to contribute their 26% of any funding round in order to secure enough funds?
If they did try a pre-emptive placing, provided they offered the opportunity to BHP/NCM to invest, there's no reason other investors can't step in and take up those allocations if BHP/NCM don't want them. And if BHP/NCM had just outright declined to invest and Solg then tried to get a cash-box placing done, it suggests that there were enough commitments from other investors to raise the amount that Solg wanted... but it was vetoed by existing holders.
Which is to say, BHP/NCM can't have it both ways. They can't insist on an equity raise that includes them and refuse to participate, and then block an equity raise that doesn't include them.
So I wonder if the writer of the article has slightly misreported the events, and the penultimate sentence should read something like "BHP and Newcrest were apparently unwilling to invest again, BECAUSE a second raising that would circumvent pre-emption rights was ultimately seen by shareholders as not appropriate".
Also, in my view Solg didn't "test the market" as some sort of fact finding exercise. They "tested the market" with a view to raising funds via whatever method they "tested". Therefore there is no material distinction between 1) Solg asked investors if they would support a cashbox placing that they intended to launch, were told no and therefore didn't proceed with the placing and 2) Sold launched a cashbox placing (irrespective of whether shareholders supported it or not) and then failed to secure sufficient commitments in order to close the placing. The outcome is the same in both scenarios - Solg need funds, wanted to raise funds, and have not raised any funds.
And anyway, even if this was not a failed fund raise but a mere "discussion" with Shareholders, a "discussion" that results in the resignation of your funding executive and your new CFO at the same time is not a success, it's probably worse than just launching a placing that is undersubscribed due to poor market sentiment.
However, Franco's royalties only pay off fully if the mine actually gets built and starts producing at a decent capacity. Given that the consensus view seems to be that Solg doesn't have the skills or experience to deliver the fully functional, max output Cascabel mine any time soon, is it in FNV's interest to offer enough funding to Solg that they force the majors out and end up building it themselves?
The CEO of FNV was interviewed about the Alpala royalty at the time and the interviewer asked him about it being a complex and risky block cave mine. He said something along the lines of "we're not worried about that, Newcrest are on the register."
All parties are trying to balance their own needs against the needs of the others. What suits FNV the most is probably to get Alpala into the hands of BHP and NCM as quickly as possible so they can get their royalty as quickly as possible. They don't want to push too far and leave Solg holding the baby alone.
It's a shade under my average right now. I'm not buying any more because Solg is already an outsize position for me and its ups and downs are causing quite a lot of volatility to my total portfolio. So not gonna YOLO another £20k into this here. That doesn't mean I'm not still expecting a decent return on my investment. I'm not selling any.
CD, agree with the last paragraph of your 18.44. Very annoying that we as shareholders get little clear information from the company and have to piece everything together from message boards, contacts and press articles.
Re Cascabel funding, I haven't looked back but I had it in my mind that the FNV money was to take them through both PFS and DFS. Could the fact that the PFS was delayed again and revised have pushed costs up materially? Alongside covid and inflation and the fact they keep having to do more drilling at Cascabel outside Alpala.
I mean, I could be wrong of course, but that was my reading. The actual quotes from Biswas don't seem to tally with what the journo thinks he's referring to.
But again as you say, raises the question of why BHP and NCM would be concerned about looking out for the rights of us little PIs (they aren't) and pushing for a rights issue. If they had been allowed to participate in the cash box as per last year, what's the issue? Does this suggest that they wouldn't have been able to fully participate and someone else was being brought in so as to dilute them?
And why doesn't Solg want to do a rights issue? Is it because they fear that it would allow BHP and NCM would increase their stakes by hoovering up rights shares not taken up by other investors?
Also whatever went on, it cost Ingo and Ayten's jobs. Still pieces that don't fully add up to me.
Calm down guys. The journalist who wrote this has got confused about what Biswas was referring to and mistaken the cash box for the FNV streaming deals. Biswas is clearly saying Solg tried to do a cash box deal and shareholders were not happy with it. There is no suggestion there was an steaming deal. Just read the actual Biswas quotes and not what the journalist has interjected.
“At that time there was also a public announcement by the company that that was a one-off and that future raisings would be more along the lines of allowing existing shareholders to be part of the fundraising activity in relation to an equity raise,” he said. THIS IS REFERRING TO THE CASH BOX PLACING.
But Mr Biswas said SolGold had again sought to raise funds through methods other than share issuance over the past month. MISUNDERSTANDING BY THE JOURNO
’They chose not to do that, they went back to what happened last year and we...did not support that proposal,” he said. AGAIN REFERRING TO THE CASH BOX STRUCTURE. THE CASH BOX WAS LAST YEAR. THE FNV DEAL WAS 2020.
Hi Red. The GPFG is the formal name for the oil fund, effectively is their sovereign wealth fund. It invests in non domestic assets. They also have a smaller domestic fund also under the management of NBIM. Their Solg investment is in the GPFG aka the oil fund.
Also I realise Oz was trading at $10 or under pre covid, but that was a different era and frankly BHP should have snapped it up back then for $13 or $15 or something. It's not like they suddenly woke up last week and just realized copper is going to be in short supply. That horse has bolted and agree with CD, copper miners are not going cheap any more.
Plus Solg has been in or above its current price for years on and off, so again, such an optimistic low ball just wouldn't cut it here I feel.
Also I realise Oz was trading at $10 or under pre covid, but that was a different era and frankly BHP should have snapped it up back then for $13 or $15 or something. It's not like they suddenly woke up last week and just realized copper is going to be in short supply. That horse has bolted and agree with CD, copper miners are not going cheap any more.
Plus Solg has been in or above its current price for years on and off, so again, such an optimistic low ball just wouldn't cut it here I feel.
Looking at the Oz share price, it's been over $25 for large chunks of the last year. At the start of the year it was over $28. To claim that $25 is full and fair seems ridiculous to me, it's just pure opportunism when the SP has dipped due to short term copper weakness.
It's not like some company that has got itself into trouble, loaded up with debt with a declining business and seen its share price decline by 75% over several years, in which case a 30% premium to current price probably seems like a blessing to put shareholders out of their misery. BHP's offer is less than what you would have paid for OZ shares just a few months ago, while at the same time their own in house economists are trumpeting great future demand for copper over the medium to long term.
If they offered the same for Solg right now, offer at 29p or similar, I'm sure virtually every Solg shareholder would say F off.
Where does it say that having a 10% shareholding entitles a party to a board seat? Is that in Solg's mem and arts? Or just an assumption? I thought NCM's and BHP's rights to nominate a board member were contractual, arising out of their subscription agreements when they made investments in the company.
My reading of it is that the company can *technically* issue any amount via this structure, but the 20% limit is the threshold at which a main market listed company needs to produce a prospectus, which is time consuming and costly. Therefore such offers tend to be restricted to less than 20% to avoid the prospectus requirement.
I think the 10% (5+5) is the recommended limit for displaying pre-emption rights under the PEG principles. Solg has committed to adhering to these principles, so in the previous cashbox they limited themselves to 10%.
" The Placing structure has been chosen because of its flexibility, reduced timeframe to completion and to minimise the price risk to participants. As a result of the withdrawal of the standard disapplication of pre-emption resolutions following limited shareholder support for the same at the Company's AGM in 2020, the directors of the Company consider the use of a cashbox structure to be in the best interests of the Company and its shareholders as a whole, particularly when combined with the Retail Offer which allows smaller shareholders to participate in the Placing. The Directors have reached this decision in this particular circumstance and after consulting with and taking into account the views or concerns of certain shareholders and receiving external advice. The Company plans to adhere to the Pre-Emption Group Statement of Principles (the "Principles") in respect of the combined size of the Placing and the Retail Offer, limiting the issuance to a maximum of 10% of the Company's existing issued share capital (5% unrestricted + 5% related to specified capital investments). In addition, the Company has taken into account certain other provisions of the Principles in implementing the Placing, in particular as regards prior consultation with shareholders, that the Placing is being undertaken on a soft pre-emptive basis and that the Company's management will be involved in the allocation process. As noted above, the Company has also given consideration to the effect of the Placing on retail shareholders and will enable them to take part in the issuance of new shares by way of the Retail Offer. The use of this financing structure is intended as a one-off."
Note the last sentence! As I have always said, the use of the cash box last time was done with the major holders onside and participating, in a soft pre-emptive manner. I don't think the company can just keep on using it to bypass pre-emption rights if major holders aren't onside, as they would all kick off. Which is exactly what that latest article says, it wasn't seen as appropriate by shareholders, so didn't go ahead.
Colonel - do you not think it could be the other way round? BHP and NCM were willing to participate in the equity raise at whatever price it was pitched at, but it was the other institutional shareholders who weren't happy? DC said, BHP and NCM have a view on how Solg should raise capital (equity, as they said at the time of the Franco deal), other shareholders have a different view (not equity, so streaming or debt I assume).
Reading between the lines of the Berry St letter, the company and management don't understand their shareholder base (i.e. everyone else aside from BHP and NCM don't want to be diluted to oblivion) and the basic mechanics of capital markets (you can't keep trying to raise equity at lower prices than what the stock was trading at a few months ago). I assume Berry St and a few of the other funds that hold Solg are in the same position as Nick Mather and DGR, they don't want to see $150m+ of dilutive equity raises just to get to DFS, whether they are at 25p or 30p they will still be dilutive.
We never discuss the scenario where Solg pushes BHP and NCM too far and one or both of them decides to just walk away completely. How would that play out? It's tempting to hope that one would sell to the other, or if both decided to sell out that a third party major would be waiting in the wings to scoop up 27% of the company and look to take over... But I wonder if that's wishful thinking.
If one or both of them just decided to dump their holdings as soon as possible and put out a statement saying the jurisdiction was too tricky, Cascabel was too complex and capital intensive with too low an IRR... I imagine the SP would tank like we wouldn't believe.
People will say oh but they've both invested so many millions in Solg already, they must either want to take control and mine everything themselves, or they will want a decent return on their investment. I don't think that is true in all circumstances. CEOs like to talk about "optionality", which they get by making strategic early stage investments in companies like Solg so as to keep their options open for the future, but it doesn't necessarily mean they have to take up all those options. They must expect to walk away from at least some of their early stage investments having given up the option premium but ultimately decided it wasn't worth going further. Bearing in mind the size and scale of BHP they could just write down their investment in Solg by 50%, walk away and not really lose any sleep over it. Especially if they feel they have better options elsewhere to bring on their future facing metals.
Which is not me being totally negative on Solg by the way. Just feels that Solg is now walking quite a narrow path trying to balance the needs of the major holders vs the rest, which DC said in his recent comments. It's easy for us to say sod them, let's just go out and find alternative funding and trigger the majors into action, but I wonder if we need to be careful what we wish for. Having these two on the register adds a lot of credibility to Solg's projects. Having them walk away now would surely be a terrible outcome.