RE: Ex post facto rationalisation...4 Aug 2022 23:17
Colonel, I disagree with you when you say that BHP/NCM would not be happy with a capital raise at a low price. In fact, I think this is their preferred way forward. It allows them to maintain or increase their ownership of SOLG (we have to offer them the chance to participate in any raise), and, in the event that he does not have funds to keep up, dilutes the % of the company controlled by Nick Mather through his various holdings.
Cuzzubbo is in a difficult position at the moment as he attempts to follow a strategy and raise funds that placate his biggest investors: BHP, NCM and Nick Mather, who by virtue of his combined various holdings is actually our biggest shareholder (DGR, Mather, Tenstar = 17.6%). The problem is they clearly don't agree.
Mather would much rather we did another Franco-type deal as he wants to bring in funds with minimal dilution, to progress the work at Cascabel and prove up the regional portfolio. This allows him to extract a higher offer from whoever ends up buying SOLG. He spelt it out quite clearly 2 weeks ago - he wants this sold. The issue Cuzzubbo has, as he half alluded to in the MiningNews piece, is that to do that type of deal, with Boliden or whoever, risks the ire of the two majors we have on board - BHP and NCM.
I don't think we as investors should underestimate the possibility of both of these players 'going nuclear' if they see the profitability of the mine be sold off bit by bit in royalty or streaming agreements. Ultimately they (or at least BHP) want to own the project and reap all of the rewards, if we continue to eat into the profitability of Cascabel, would they bother hanging around owning just 13% of it (less given it's 13% of 85%)? Cuzzubbo will be all too aware of what happened to the other Directors who fell foul of the majors - they lost their jobs.
I have no idea how Darryl plans to balance the interests of BHP, NCM and Mather over the mid-long term.
This year, unfortunately, I think we'll see a fundraise at 20p, followed by the delivery of the Porvenir PEA and Cascabel PFS addendum before the AGM. I also expect to see, as Ortherncopper mentioned on here the other day, Mather to make a play of sorts with his holdings.
I think the reason PIs have been in the dark about what SOLG's actual strategy is, pretty much ever since Nick stepped down, is because the two CEOs since have been somewhat hamstrung by their biggest shareholders.
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