Member Info for schlemiel

Will CGP turn out to the king-maker? Will their votes decide who triumphs?

Understand that BHP, NCM, CGP and Blackrock have differing and competing interests and objectives. If they try and work together to oust Mather and the board all 4 shareholders will have to offer up compromises and rewards in return for acting to oust Mather. Cornerstone wants Alpala sold and the proceeds distributed in a competitive bid process. If BHP want CGP's votes, BHP will try and offer CGP something in return etc etc etc..the permutations of this possible 'concert party' arrangement are numerous

NM

I wished someone would give the price a nudge 'cos' I for one can't understand why funds are flowing into many copper-gold stocks while SOLG languishes. Maybe it's the fear of a low-ball bid or further dilution.....

My yearning to see this come good is circumstantial and that brings its own urgency adding to the irritation at seeing a flaccid price of a company that has considerable embedded value...some of that value needs releasing or else this price languish for months and years to come. I for one cannot wait that long

gla

Post something useful then instead of moaning about the contents of the board

BHP and Solgold are referenced

https://www.mining.com/web/copper-the-most-critical-metal/

Copper, the most critical metal (Rick Mills - December 6, 2020 )

When will people understand that this tiny company will not be able to develop Alpala without massive dilution, that is dilution to your holding and no doubt at lower prices to reflect the development cost and location of the asset. And no doubt further dilution to accommodate the capital budget overruns that ALWAYS occur in development projects of this complexity, cost and size?

Develop the assets and sell the feckin' things to the highest bidder or at least JV some of them al a Greatland

I'm undecided as to what Mather's true intentions are. Is he talking crap when he says he wants to go to mining with Alpala or is he deadly serious? Personally, I think he's talking horse-sh-t and diluting only insofar as it provides exploration capital to drill and prove up until offers do arrive

Sol what

This funding discussion becomes moot if a buyer turns up. The most obvious candidate is Australian giant BHP (BHP), which both owns 13.6 per cent of SolGold and recently underlined its interest in copper. A restriction on BHP buying more shares in SolGold ended in mid-October, meaning speculation could soon hot up again. Newcrest – which also holds a 13.6 per cent stake – could also move on SolGold, despite its objection to the royalty sale.

Last year’s preliminary economic assessment put Alpala’s net present value at $3.6bn-$3.9bn (post-tax, with a 9 per cent discount). This was done with a copper price forecast of over $7,000 a tonne and a $1,300-an-ounce (oz) gold price, compared with their current prices of around $6,700 a tonne and $1,900 an oz, respectively. SolGold itself has a market capitalisation of £686m – a run at the end of September helping it rise to 40p a share – and recent mining deals have seen 20-30 per cent premiums for cash offers. Of course, any buyer would be committing itself to spending billions on building the mine, which is one of only a few major copper discoveries of recent years.

Even with the existing major miners involved, Cornerstone thinks third-parties are still paying attention. “It's possible that a third-party coming in with an aggressive bid could create enough tension to force people to get into a bidding war,” Mr Macdonald told us. “There are just so few deposits of this size available.”

Mr Mather’s argument against selling off Alpala is SolGold’s potential to turn into a major player itself. “The blueprint that we created at Alpala is replicable, and applicable to all 14 of our other projects throughout Ecuador,” he said. “BHP doesn't have [these exploration prospects], Newcrest doesn't have them, we have them.”

Given the apparent potential of these other wholly-owned targets, would Mr Mather rather not sell Alpala and focus on those without the Cornerstone angle? The SolGold boss said it wasn’t something he was considering. Even if SolGold pushes this project through to production successfully, it will still be partly reliant on exploration prospects for share price improvement, given the years of construction needed. In any case, it’s hard to see a constructive relationship suddenly blooming between SolGold and Cornerstone.

An ideal world for SolGold would see Cornerstone giving up and selling its Alpala stake, which SolGold has first dibs on. But Mr Macdonald and co seem just as determined as Mr Mather to get their way and find a buyer.

Given mining’s cyclical nature, the difficulty of building major new operations and SolGold’s ability to annoy its partners, that might be the best option for everyone.

end

A few weeks ago -

'A football match quickly gets confusing if one team’s players can’t decide which side they are on. This is not dissimilar to the recent experience of SolGold (SOLG) investors, watching on as purported collaborators work against each other.

The company is at odds with Cornerstone Capital Resources (Can:CGP), a 15 per cent owner of the Alpala deposit and an 8 per cent shareholder of SolGold itself, over how the high-value Ecuadorian copper and gold project should be developed.

Further protest has come from another sizeable shareholder, Newcrest Mining (Au:NCM), over the company’s decision to sell off 1 per cent of future production for $100m. Institutional holders’ unhappiness over governance has pushed the company to expand the independence and breadth of its board.

The Cornerstone relationship is the rockiest, however, given the Canadian company’s push for a sale of Alpala and SolGold’s insistence it can build the multi-billion-dollar mine itself. Last month, a SolGold takeover bid for Cornerstone expired.

“If they wanted our co-operation, the all-share, failed hostile bid was not the way to do it,” Cornerstone chief executive Brooke Macdonald told Investors Chronicle. The group’s push for a sale comes from the practicalities of being a cash-light equity partner in Alpala – the latter of which means finding hundreds of millions of dollars to fund its share of development costs.

In fact, feasibility work on the project has left it progressively more indebted to SolGold, which is lending Cornerstone its share of funding ahead of giving the final green light for the mine. At present, this is expected to be paid off from eventual project revenues, although Mr Macdonald also remains sceptical that SolGold will be able to fund construction of Alpala.

“[SolGold talks] about creating the next BHP in Ecuador with a pipeline of other projects. All of that is very interesting, but there are cases where junior companies got into trouble trying to build a project of this size,” he said. “We suspect that at the end of the day the capital cost will be quite a bit larger than what is estimated in the preliminary economic assessment, and that it is just too much heavy a lift for a junior mining company.”

An updated cost estimate for Alpala – from the $2.4bn-$2.8bn (£1.9bn-£2.2bn) released last year – was expected at the end of September, but Covid-19 restrictions have delayed the pre-feasibility study. Managing director Nicholas Mather told us the project had a “perfect storm” of factors that attracted financiers, including the “high-grade core” of the deposit and current gold and copper price strength, and said the company was already being approached with funding offers.

cont...........

To get the undecided on board Mather will have to offer them something or hold out the prospect of 'something to come'.

It is interesting the threatened requisition of a GM to replace SOLG's board has still not happened. Does that suggest that CGP couldn't muster the necessary backing?

This uncertainty just ain't good for stock sentiment nor our state of mind

Timing is important because, at the end of October (2020), the first 12-year concession period will have only two years remaining and so a feasibility study needs to be completed, Macdonald noted. A major miner will want to conduct this study itself, in-house, rather than rely on SolGold to do so, he added.''

https://www.mergermarket.com/info/solgold-go-it-alone-strategy-debated-ahead-october-showdown-%E2%80%93-shareholders-bankers

'Separately, Newcrest Mining, one of Solgold’s major shareholders, has been quoted in the Australian Financial Review expressing its continuing support and urging further exploration and long term financing solutions at Cascabel while its other major shareholder, BHP increased its interest to 14.7% in November 2019.

The report reiterates Newcrest’s view on the long-term value of the project and its commitment to the Alpala (Cascabel) project.

Solgold are clearly keen to maximise the value and opportunity of their extensive exploration portfolio. It is possible that this could lead to further corporate action in relation to Solgold, Newcrest and BHP.'

*SP Angel act as Financial Advisor and broker to Solgold

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https://www.**********.co.uk/articles/sp-angel-morning-view-eurozone-economic-growth-at-the-weakest-level-7-years-b6b33d8/

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If anyone knows what's gonna happen it's the broker to Solgold. What 'corporate action' means is anyone's guess

Ah, I see

cheers, appreciate the reply

''For clarity, neither Exploraciones Novomining S.A. ("ENSA") nor the minority shareholder (CGP) in ENSA will be liable for the royalty. ''

That assumes that Solgold will not sell Alpala which will provide the income to satisfy the royalty obligations entered into by Solgold. If Alpala is sold then Solgold will certainly still be liable for the royalty payments and not ENSA which owns the Cascabel licence. On that basis it doesn't make sense for Solgold to sell Alpala. I believe Mather wants to invite an offer for Solgold and not for each individual licence as they deliver up their riches

I don't possess the necessary critical faculties to appreciate the entire implications of the FN deal with SOLG and the fact that ENSA shareholders (SOLG and CGP) are liable.

They bought a royalty from future production from Alpala. They must be confident the project will achieve production otherwise they would not have bought the royalty. For production to be achieved Alpala needs financing. Is Franco confident that SOLG will secure or have already secured Alpala financing? They must be otherwise they would not have bought the royalty relating to future production from Alpala.

Or did Franco buy the royalty because they believe a major (Aus, China etc etc) will at some point own and develop Alpala to production and it is this that persuaded them to purchase the royalty?

I believe both. The presence of both BHP and their confidence that Alpala financing will be forthcoming.

I have an inkling that BHP is communicating with Mather on operational issues and other matters. I think they're onside

In a note to clients this week, Goldman Sachs analysts said they believe the current price strength “is not an irrational aberration” but rather “the first leg of a structural bull market in copper.” By the first half of 2022, the Wall Street bank says that it’s “highly probable” copper could test its previous record high of nearly $10,150 per ton, set in February 2011.

Copper miners on fire

As a result, shares of copper producers and explorers have soared. For the six months through December 3, the Solactive Global Copper Miners Index was up more than 66%, outpacing the returns for other metal miner groups. Performance for the period was driven by companies such as Capstone Mining (up 174.04%), which operates in the U.S. and Mexico; Arizona-based Freeport-McMoRan (140.68%); and Ivanhoe Mines (93.93%), which is currently developing three properties in Southern Africa.

Our favorite copper name continues to be Ivanhoe. As I reported in September, the Vancouver-based company is set to begin production at its tier-one Kamoa-Kakula Copper Project in the Democratic Republic of the Congo (DRC), believed to be the world’s second-largest copper deposit.

“Kakula is on track to begin production in under one year from now, which, considering we’ve been working in Africa for 27 years now, feels like tomorrow morning,” commented Robert Friedland, Ivanhoe’s billionaire founder and co-chairman.

https://www.mining.com/web/copper-bull-run-may-only-be-getting-started/

Dec 4
Funds are turning bullish on copper.

The price of copper is on a tear right now thanks to news that a number of pharmaceutical companies have developed effective vaccines against covid-19, raising hopes that the world economy will open to full capacity sooner than expected. The industrial metal rose 12.24% in November, its best month in four years. Today it was trading as high as $3.50 per pound ($7,616 per ton), its highest level since 2013.
Sign Up for the Copper Digest

The copper rally is due in large part to improved manufacturing activity in the U.S., China and eurozone. For the month of November, the IHS U.S. Manufacturing PMI hit 56.7, up significantly from 53.4 in October. The month-to-month increase was the sharpest since September 2014, according to IHS Markit.

Meanwhile, Chinese factories signaled their strongest improvement in over a decade. The Caixin China General Manufacturing PMI posted 54.9 in November as output and new orders surged to 10-year highs.

Looking at manufacturers on a global scale, you would be forgiven for not knowing we were in the middle of a pandemic and economic pullback. The JPMorgan Global Manufacturing PMI climbed from 53.0 in October to 53.7, a 33-month high. According to JPMorgan economists, this marks the fastest pace since January 2018.

The start of another China-driven supercycle?

In light of the positive manufacturing uptrend, some economists and market experts see the start of a new copper-price supercycle driven largely by China. The Asian country currently consumes about half of all copper produced worldwide, and this share could increase as the nation undergoes a vast energy shift to renewables such as wind and solar.

This week, a senior executive at BHP, one of the world’s top copper producers, said that copper output would need to double over the next 30 years to meet surging demand for green renewable energy.

“To keep pace with these mega trends, copper production will have to double over the next 30 years,” commented Tariq Salaria, VP for sales and marketing at BHP.

Reflecting on the copper bull run, which has lifted the metal’s price some 72% since the March low, one money manager believes this rally could be one for the history books. Says Luke Sadrian, chief investment officer at Commodities World Capital, copper is “looking like it did in ’04 and ’05, and the world didn’t get the memo.”

Due to massive imports from China, copper prices increased more than 280% between the beginning of 2004 until they peaked in May 2006.

Today’s China imports of the red metal are much greater than they were then. In July of this year, the country bought a record 762,211 tonnes of unwrought copper, which is close to four times greater than the average monthly import amounts between 2004 and 2007.

c..............

SolGold Plc. (TSX:SOLG, BUY, C$1.90 target, Jacob Willoughby) provided another positive exploration update at its 100%-owned Porvenir copper-gold porphyry project in Zamora Chinchipe, southern Ecuador. Additional assay results for the first hole to test the Cacharposa target (PDH-20-001) were released, following up on the initial results announced last month for the first 580m (see prior note https://buff.ly/2TYAMEM). Assays have now been provided for the first 758m of the 909m hole, and the results continue to be excellent, having returned 0.59% Cu Eq over a whopping 748m, including 0.65% Cu Eq over 644m. Mineralization beyond the hole is open at depth, having been terminated in visible chalcopyrite mineralization. Initial assay results were also provided for the first 500m of the second hole, PDH-20-002, which was drilled from the same collar location as the previous, at a steeper angle to a 1,200m depth. The hole returned 0.51% Cu Eq over 500m starting from surface, including 0.71% Cu Eq over 260m. Assays are pending for the remaining portions of both holes. SolGold is currently drilling hole PDH-20-003 west of the previous holes, at a shallower dip to test for near-surface mineralization and is currently at a depth...

https://ca.linkedin.com/company/red-cloud-securities

CGP's depreciating share price does suggest the voting sentiment is with Mather who does need to deliver value (monetisation is essential).

Voted for all the resolutions after much thought. 150k