Member Info for RodneyT

BHP is under increasing pressure due to its weak organic copper pipeline and the company needs a boost overall.

BHP's copper resources?

Escondida (Chile) is mature and politically exposed.

Olympic Dam underdelivers.

Oak Dam is early-stage.

Jansen is a distraction (potash, not copper).

BHP's share price has underperformed (30% down in last 18 months), and it failed in its Anglo bid and for Noront. It secured Oz Minerals because it acted swiftly and paid a price comensurate with the assets secured. London funds are critical of BHP's strategic direction. The LSE needs a win after high-profile departures (Arm, Ferguson). SolGold's TSX delisting leaves it as a pure London-listed copper play, making a successful bid by BHP a City-friendly headline.

Five Eyes governments (UK, US, Canada, Australia, NZ) would quietly support a BHP victory over a Chinese SOE (e.g., Jiangxi Copper), ensuring strategic resources remain within allied control. Ecuador is increasingly seen as aligned with Western investment, and Cascabel is geopolitically sensitive. President Noboa’s alignment with Western values, his recent visits to Donald Trump in the US, and his security-focused economic agenda suggest strong institutional support for a BHP outcome. His current trip to Beijing could be construed as hedging and/or an element of the countries' broader relationship.

Sum Up

A successful BHP offer for the whole business looks attactive to many parties. PRC-backed SOE's would lose out - but they have many other copper reserves in back-up compared with their Western counterparts.

You and I can buy shares at about 7p a share (albeit, not too many). A bidder cannot buy the whole company for 7p a share. Also, ActusRayPartners...

The current share price is largely meaningless to bidders. NAV is a key aspect of what bidders will pay and the 0.8 to 1.1x NAV metric appears time and time again which has already been evidenced.

Revert to the share price position pre-takeover of Noront by Wyloo for hard evidence that answers your question. In relation to M &A activity and the actions of potential bidders, the current share price essentially is meaningless to potential bidders other that as part of a process to decide what the bidding strategy will be and how much their first bid will be. Time and time again, mining M& A deals relate to NAV not share price. The % spread is between 0.8 and 1.1 x NAV time and time again.

Good morning Stas20, Please review my last post covering the UK and an Acquistion rather than a takeover. LSE listing and an acquistion is the sweet spot for PRC-backed SOE companies. The world is changing so fast at the moment that time is of the essence. BRICS v non-BRICS is gathering pace everywhere.

I have looked at the regulatory and geopolitical distinctions between a takeover of SolGold plc by Jiangxi Copper (JCC) versus a direct asset sale of Cascabel or other Ecuadorian projects. My key finding is that UK national security review mechanisms are materially more likely to be triggered in a corporate acquisition than in an asset transaction, creating a clear strategic preference for the latter from JCC's perspective.

1. UK National Security and Investment Act 2021 (NSI Act)

- Applies to acquisitions of control over UK-incorporated companies or UK-located assets in sensitive sectors.

- SolGold plc, as a UK-incorporated and UK-listed company, falls squarely within the scope of the NSI Act in the event of a corporate takeover.

- However, Cascabel is a mining project located in Ecuador, held via non-UK subsidiaries. A direct sale of Cascabel would not involve the acquisition of a UK asset or a UK company.

- Therefore, a direct asset sale by SolGold of Cascabel (or Porvenir) to JCC would not trigger mandatory notification or automatic scrutiny under the NSI Act.

- If there is no ‘Takeover’ then Takeover Panel will not apply.

2. Jurisdictional Reach and Regulatory Comparison

- Canada (via the ICA) has historically applied national security reviews aggressively to foreign acquisitions in critical minerals.

- Australia (via FIRB) also applies reviews, but with more commercial flexibility.

- The UK’s NSI Act has seen fewer interventions in the mining sector, particularly where assets are located outside the UK.

3. Strategic Considerations for JCC

- A takeover of SolGold plc would invite scrutiny from the UK government, particularly due to rising geopolitical concerns over PRC-linked acquisitions.

- A direct asset purchase of Cascabel avoids UK and Canadian regulatory entanglements, especially now that SolGold is delisting from the TSX and winding down SolGold Canada.

- The UK government has no legal jurisdiction over the Ecuadorian mining titles themselves, reducing its capacity to intervene in an asset sale.

Sum Up

Under LSE/UK regulations, Jiangxi Copper is materially advantaged by pursuing an asset acquisition or JV structure over a corporate takeover. Such a structure avoids scrutiny under the UK’s NSI Act, reduces geopolitical resistance, and expedites transaction completion. The TSX delisting further weakens Five Eyes oversight, removing the ICA as a potential blocker. Winding up Solgold Canada Inc would weaken the tenuous ICA link still further.

I shall now look at the position from a BHP viewpoint and comment in due course.

PBOW, I agree with what you say about the other tenements, the seemingly attractive option of ‘walking away’ and your remarks about hoping that the Ecuadorian government intervenes so we can reach a compromise.

I also acknowledge your acreage estimate of the land in question and that mine was too low.

I think we agree on Cascabel and Porvenir in that we both believe they already look fine with reference to these new costs.

Over the coming days, it will be important to key a close eye on developments and news. Sensitivity is a word that keeps coming up of late.

SolGold still owns wholly-owned Canadian subsidiary, SolGold Canada Inc. Although the group’s mining operations are based in Ecuador, SolGold Canada Inc. remains active, potentially constituting a “Canadian business” under the ICA.

The TSX delisting helps reduce Canada’s regulatory visibility into SolGold. It also removes certain filing and reporting obligations under Canadian securities law. While this move does not eliminate ICA exposure entirely, it weakens the jurisdictional argument that SolGold is “carrying on business” in Canada.

A potential acquisition of SolGold by a Chinese state-owned enterprise such as Jiangxi Copper (JCC) could still attract scrutiny under the ICA’s national security review provisions, particularly given geopolitical sensitivities around strategic minerals.

So long as SolGold Canada Inc. remains active, some ICA risk remains. Winding up or deactivating this subsidiary would further insulate SolGold from Canadian regulatory jurisdiction and would be a logical next step if a PRC-backed takeover is contemplated.

I have checked public records and there appears that there are no records of Solgold Canada Inc having been wound up at this stage.

Auranias has almost 4 times the acreage of Solgold and, based on the former's outline, I stick with my Cascabel figure and reduce for the whole of Solgold to $7 million.

A review of the HP and RC reports shows them (to their credit) to be incredibly conservative by anchoring to 0.6x NAV multiples, which are fair for trading but far too low for M&A. Potential buyers such as BHP, Zijin, Jiangxi, Freeport, etc) will absolutely model closer 0.9–1.1x NAV under current spot prices and possibly 1.15x–1.2x NAV if bidding war breaks out. Between 0.8 and 1.1 NAV is the range applicable to so many past deals similar to Solgold. There are many recent transactions which support this view and we covered a good example (Las Bambas /Paul Smith) the other day.

Quady, I understand why you said what you said because resource companies with various projects and no production are dealt with differently to normal, producing businesses and I am sure the formula you referred to is applicable to those businesses but the NAV here is not 7p and the HP/RC papers reflect that.

With updates for spot and Porvenir, NAV ca 164p is the number.

That said, I certainly do not wish to be disrespectful to you or anyone else here so please take these comments in that spirit. The goal is to achieve a fair outcome for all LTSHs and I, for one, am wholly committed to achieving that outcome.

For a project like Cascabel entering exploitation, the annual cost would be ca $2.35m. If Porvenir and regional assets are included, the figure could be $10m+ annualised across the portfolio. Bear in mind it is OPEX, not a direct tax on revenues or NPV

Potential buyers won’t like it — but they won’t walk away because of it. They know these types of "fiscal nibbling" are common in emerging mining jurisdictions. The underlying Tier 1 resource remains the draw.

Chinese SOEs Resource security trumps these types of fees. This is viewed as a cost of doing business, as long as fiscal stability is broadly maintained.

Ecuador remains vastly more stable than many competing copper growth areas (DRC, Zambia, even parts of Peru).

The mining chamber is rightly protesting because it disincentivises exploration (where no cashflow offsets the fee), but SolGold's key assets are well beyond early exploration.

This move may deter juniors but won’t scare away majors who have large capital behind them and care more about resource security and long-term supply.

No, not directly in their NAV models.

Yes, indirectly in their bidding behaviour.

The evidence of this in action was in the Las Bambas deal overseen by Paul Smith as well as many other similar transactions. PRC SOE's tend to focus on supply security more. Western enterprises tend to focus on IRR and other metrics.

Good afternoon, Quady and thank you.

I'll stick with the definition of NAV I have stated. The Red Cloud and H &P NAV figures are both way more than the one you suggest. Why do you think that is? (the former have since been updated/uprated, of course).

Agree, Add, hence the reference to 'primary'.

NAV is an aggregation of all of the company's project-level NPVs, adjusted for corporate costs, balance sheet items, taxes, and streams. NPV is used at the level of each individual project to calculate the value of its expected cash flows over its finite mine life. Mining companies often own multiple projects at different stages. NAV combines them into one total valuation which is why NAV is the primary basis on which mining deals are agreed.

An extract from my post, yesterday, Quady. The HP and RC reports refer to their own NAV figures. Stas20 has uprated these based on current spot.

Well, I agree it has been frustrating here, Ort, but I am keeping the faith. Since 7 April 2025, the SP has tracked the VE Junior Gold Miners ETF up and they are neck and neck at around 25% increase. I am sure there will be meaningful news soon. I just checked on the Bloomberg and, notwithstanding what we hear on the news, Ecuador had a 5.8% of GDP current account surplus in 2024. The UK had a 2.9% deficit by comparison. Ecuador has a clear plan to become a centre for these key resources and, slowly but surely, it is making progress. Cascabel is key to that as we know due the size of the resource and the frequent references to Cascabel by government.

"Either way, it’s a red flag. Genuine holders advocate for fair disclosure, balanced discussion, and valuation transparency - not constant dismissal of shareholder concerns." I am sure your comments are symbiotic with the views of the company too, Stas.

As I have said, I think we will get clarification from the company soon on this topic because I am sure it acts in good faith and wishes to treat all shareholders fairly at all times.

As things stand and bereft of clarification, it could be interpreted that the Board is not fulfilling its fiduciary duty by continuing to refer to old NAVs at $3.85 copper and $1750 gold. If independent NAV using spot is ca 164p a share while stock trades at 7–10p, regulators may well view this as misleading or prejudicial to minority shareholders under MAR Article 17 and I do not believe the company would mislead minority shareholders intentionally.

Selective disclosure may constitute information asymmetry. The current situation tends to deter proper price discovery, suppress offers, and favour concert parties. Concerning the latter, nominee accounts make it extremely difficult to deduce ‘who owns what’ and thus review the current share ownership position.

As an aside, business methodologies adopted in communist countries such as PRC are quite different to those adopted in Western countries such as the UK. (this was touched on in the IRR/Resource Security variances that can be seen between Western and Eastern appraisals of resource targets). Negotiation strategies are quite different too.

A simple clarification from the company is all that is needed and I think this will come soon. As/when it does, this will serve as a key driver towards proper price discovery and a share price more reflective of NAV.

Good morning all

It is absolutely fair to refer to spot prices when looking at NAV of a resource business. In fact, spot-based NAV is probably a more market-reflective number in 2025 than "consensus" long-term prices.

If you're trying to calculate NAV to inform a potential M&A price (rather than a NI 43-101 filing), spot is entirely valid and widely used.

Most recent high-profile deals in the past 5 years have essentially been struck on spot or spot+forward pricing, with scarce Tier 1 assets attracting further premiums.

With the direction of global mining inflation, long-term capex escalation, resource scarcity, and de-dollarisation demand for gold/copper, using conservative spot may in fact understate future NAV. Geopolitical tensions only add to the alure of gold of which the company has plenty. Stas20's references to the Goldman Sachs gold outlook and broader gold price forecast support the comments above well.

SolGold’s negotiated Fiscal Stability Agreement with the Ecuadorian government would apply. Cascabel would benefit from 1. Royalty rate locked at 3%–5% depending on final copper and gold prices. 2.No windfall tax on high copper prices. 3.Standard 25% corporate tax.VAT and import duties refunded on capex and opex. This Stability Agreement massively enhances NAV because it protects buyers from fiscal creep for 20–25 years. Without the stability agreement: NAV would likely drop by 20-35%. With stability, NAV is preserved, and upside copper/gold pricing flows through directly to the operator's EBITDA. The agreement was finalised in 2023 under SC's watch but discussions started when NM was CEO so we have to thank both of them and DC for reaching a strong agreement for the company and its shareholders.

Not a betting man. Really keen on finding new things here so pressing on. Every chance I can be wrong on any topic. Always interested in learning new things from other people.

NAV is an aggregation of all of the company's project-level NPVs, adjusted for corporate costs, balance sheet items, taxes, and streams. NPV is used at the level of each individual project to calculate the value of its expected cash flows over its finite mine life. Mining companies often own multiple projects at different stages. NAV combines them into one total valuation which is why NAV is the primary basis on which mining deals are agreed.

The NAV today (after updating for spot metals) is ca164p a share.

Because the company is still in pre-development phase, the market applies a P/NAV multiple

Silence on updated NAV can allow suppression of the multiple, giving acquirers scope for a cheap entry. This is why I believe the company will update the market soon about the current NAV. I have no reason to doubt that the board of the company does its duty in relation to all shareholders.