Member Info for schlemiel

High risk, high return

Mr Beaven said mergers and acquisitions (M&A) were a harder way to create value because a bidder had to achieve a rate of return after paying the market price for assets.

"That is why we don't really major on M&A as a fundamental driver, certainly big ticket existing assets as opposed to the early stage development assets," he said.

But Mr Beaven said BHP needed to continue investing in high risk, high return project options like SolGold and the Trion oil joint venture with Mexico's Pemex, and would progress "judiciously at an early stage" to build confidence before it committed "really big capital" to acquisitions.

"We could lose all our investment on these if, for instance, exploration fails. But we could create the tier one assets of the future," he said.

"Not all of them will come off, some will fail, but we will not have bet the farm on any one individual option."

Mr Beaven said the cyclical nature of the resources industry created "major value opportunities" and it was therefore critical for BHP to get the timing of its spending decisions right.

He said maintaining shareholders' trust and a strong balance sheet when the cycle was depressed would allow BHP to invest counter-cyclically.

cont (2)

Nov 21 2018 at 5:10 PM

Reformed BHP seeks licence to spend

BHP says it has learned from its past errors and can be trusted once more with big spending decisions on projects and acquisitions following changes to internal assessment processes.

In an investor briefing designed to rebuild confidence in BHP's licence to spend, chief financial officer Peter Beaven said the miner had been making better decisions in recent years and was more likely to do small acquisitions in early stage assets than "big ticket" purchases of existing mines.

With its debt under control and shareholders being treated to a year of record dividends and share buybacks, Mr Beaven said BHP needed to continue investing in projects and could not do so effectively without the trust of shareholders who were left unimpressed by bad spending decisions like the 2011 US shale acquisition.

"The discipline around good investment decision making has been, and always will be, a good thing. But the risk is we confuse no investing with good investing," Mr Beaven said on Wednesday.

"On one hand we know that over-investing destroys value but under-investing likewise can also destroy value. We need to find a balance and for us the key to having confidence in our ability to find and manage that balance is the capital allocation process.

"It's fine to have a better framework or better evaluation processes. The acid test is whether we are making better decisions. We think we are, and our track record of recent years shows this."

BHP's capital spending has more than halved since 2013. Mr Beaven's comments come after a two-month period in which BHP has spent $131.9 million buying 11.1 per cent of copper and gold explorer SolGold, which has found prospective acreage in Ecuador.

cont (1)

Can we stop making references to Anna please. I'll be chewing on my pyjama cord all night, again..I love the missus to bits but if Anna popped up from under the covers...well..knowing my luck it would be Nick Mather!!

FOG is the next SOLG when it restarts drilling at Beetaloo (NT) in June-2019.....They've already booked 6.6tcf initial resource and the Canberra govt says there's about 500tcf...the room for price explosion is massive but not yet..

thanks gv...the future is expansive!

Yes, I saw the same price behaviour prior to the takeover of MARL. The price prior to the offer was anaemic. The market appears to come alive at the point when risk equity is turned into actual cash. I believe some call it a liquidity event....the market loves the smell of cash

Lots of positives. great broker notes and updates..pity about the price but then the book's being kept in good order by forces unknown

thanks all and many thanks to Ned for that personal update from NM...he's a canny Aussie and BHP know they won't be able to nick the company for peanuts...geddit? I'll get mi worn coat and head off into the dark, cold, wet night

cheers

must attach a certain degree of importance to the 121m conference as today's news does conveniently 'clash' with his presentation this morning. That's hardly a coincidence, more deliberate and strategic. Is he on the search for risk capital in London?

SolGold doubles Alpala copper equivalent resource
In what has become routine for SolGold (LSE:SOLG), the Ecuador-focused explorer has backed up its stunning recent drill results with a bumper resource update.

Still hitting the good stuff: SolGold's drill teams have hit mineralisation all over the place this year

Alpala now has an indicated and inferred mineral resource estimate of 2.95 billion tonnes at 0.52% copper equivalent, for 15.4 million tonnes contained copper.

This is a 108% increase in the contained metal compared to the previous resource, which came out in January.

Alpala has 8.4Mt copper and 19.4 million ounces of gold in the indicated category.

The high-grade zone - with 0.96% copper cut-off instead of 0.2% - also doubled to 420Mt at 1.47% copper.

SolGold CEO Nick Mather said there was more to come from Northern Ecuadorian project.

"Alpala has got more to grow yet and we are pursuing that aggressively over the coming months," he said.

The new resource estimate comes from another 80,000m of drilling at Alpala this year.

The company said the 0.2% copper equivalent cut-off showed "high production rate mass mining methods such as block caving" could be part of the preliminary economic assessment for the project.

SolGold said growth would come in 2019 through drilling at Alpala SE, Alpala NW, Trivinio and Alpala Western Limb.

In the northwest-Trivinio area of Alpala, SolGold reported intersections of 402m at 0.65% copper equivalent, including the discovery of a new zone, north of the Alpala Breccia unit, containing primary bornite mineralisation of 162m at 0.95% copper equivalent.

Last month, BHP upped its stake in SolGold to 11.2% for almost $60 million.

This makes the major the third-largest shareholder, behind Newcrest Mining and Mather's DGR Globa.

Newcrest managing director Sandeep Biswas said at the time he was fine with another big company getting involved in the project.

"If Cascabel develops to the extent we'd all like it to - we'll have to see whether it's going to get there - it's going to be a big mine with a lot of investing capex, so in relation to developing a mine in the future, there's no question there can be more than one company accommodated in terms of those developments," he told reporters.

https://www.mining-journal.com/resource-definition/news/1351413/solgold-doubles-alpala-copper-equivalent-resource?utm_medium=email&utm_campaign=112018-120204-172%20-%20Nornickel%20COO%20backs%20Ni%20price%20split%20Emmersons%20project%20eminently%20buildable%20Ws%20La%20Parrilla%20ahead%20of%20schedule&utm_content=112018-120204-172%20-%20Nornickel%20COO%20backs%20Ni%20price%20split%20Emmersons%20project%20eminently%20buildable%20Ws%20La%20Parrilla%20ahead%20of%20schedule+CID_1dfe3cc6558a02062769e1b5156d5d83&utm_source=Campaign%20Monitor&utm_term=SolGold%20doubles%20Alpala%20copper%20equivalent%20resource

thanks to p69

https://twitter.com/DrRyanDLong/status/1064859658526048256

https://www.edisoninvestmentresearch.com/sparks-blog/entry/solgold-solg-announces-eye-watering-resource-upgrade

SolGold (SOLG); announces eye watering resource upgrade

SolGold’s Alpala project towers above its peer group

SolGold (SOLG.L) announced this morning an eye watering resource upgrade at its Alpala Porphyry Copper-Gold Deposit, located in Northern Ecuador. The project now has a Total JORC 2012-Complaint Mineral Resource Estimate of 3bt at a copper equivalent grade of c. 0.5% Cu eq. This is a massive increase from the previous estimate of 1bt at a copper equivalent grade of c. 0.7% Cu eq.

As a result, Alpala now towers in size above its London listed copper peer group. Despite its massive size SolGold is currently trading on an enterprise value per attributable tonne of copper equivalent of £50/t compared to an average of £100/t for its London listed peer group. '

'Ahead of schedule, SolGold (SOLG) has more than doubled its mineral resource estimate for its Alpala project in Ecuador, after this year’s drilling brought the overall resource to 15.4 million tonnes of copper equivalent. Analysts at Liberum believe the upgrade puts Alpala into the top ten projects globally, and that it is the only one in a palatable country, with sufficient grades for current risk appetites, and without “serious permitting roadblocks” which would otherwise dissuade majors from buying. The shares are up 7 per cent this morning, but we remain buyers.'

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the 'blue sky potential' reference is a real teaser for a potential acquirer. Plenty left on the table even after today's news and a major(s) will be keeping both eyes on Alpala-Cascabel

cheers addi - no probs

--
pob69
20 Nov '18 - 11:15 - 13848 of 13848
0 0 0
Hannam and Partners update on $SOLG.L Solgold $SOLG #ECUADOR $CGP

SolGold has released an updated Mineral Resource Estimate for its Cascabel Project slightly ahead of schedule. Overall resources more than doubled to combined indicated and inferred 2.95bn tonnes, containing 15.4Mt in copper equivalent metal at an average grade of ~0.52% CuEq, albeit with a lowered cut-off grade of 0.2% CuEq vs the 0.3% used in the Dec’17 maiden MRE.

More importantly, on a like-for-like basis using a higher cut-off of 0.9%, contained copper equivalent metal in the high-grade core at Alpala Central increased by 99% to 6.1Mt, with 97% (by metal) now upgraded to the Indicated category. In our view, today’s updated MRE should be taken as a materially positive catalyst, showing the blue-sky potential for the Jan’19 Preliminary Economic Assessment (PEA) to significantly improve upon our conceptual model, on which we have based our 80p per share target price.

https://www.hannam.partners/umbraco/surface/MediaDownload/Download?file=2016

Yes, I know what IRR stands for but I was intrigued by the 'acquirer' bit. what's the purpose of that if it wasn't to suggest that an outright sale of Alpala-Cascabel (ENSA) is a distinct possibility? I am sure 'IRR' would have sufficed in this instance

From ceo.ca - thanks to @pob Liberum update on $SOLG.L Solgold $SOLG #ECUADOR $CGP

'Doubling of high-grade resource, TP increased to 72p
BUY - Target price 72p (from 65p)
'Solgold has released an updated resource for its Alpala deposit in Ecuador, confirming its place as a top 10 global greenfield copper project by size and top 4 by grade. The updated resource increased contained metal by 67% (at a 0.3% cutoff) to 12.3mt of contained copper equivalent metal (1,834mt @ 0.67%). More importantly, it has doubled the metal inventory within highgrade
ore to 6mt of Cu equiv. metal (430mt @ 1.44%, 0.9% cutoff). The high-grade core is the driver of Alpala’s economics and today's announcement is comfortably ahead of our forecast +50% increase. As a result our Alpala NPV increases from $3.2bn to $3.75bn, applying $3/lb Cu, $1200/oz Au. We upgrade our TP to 72p (from 65p) based on an acquirer IRR threshold (of 12.5-15%) and EV/Resource comps.

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What does 'acquirer IRR threshold' mean?

39.50p could prove tough to crack..those sell orders doing their job well

1 v 3 (15k v 120k) - rounded up...a bit of price resistance

The first of the 100k sell orders now sat on the offer. let's see if someone matches him