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They paid over $40 billion for it. It was a disaster for them.

So now they've hit on the genius idea that it might be worth picking up Tier 1s earlier on in the life cycle, for less outlay...I do hope that the board at BHP give themselves a big raise for coming up with that "novel" concept.

there, technically speaking.

Addicknt, yes the Sonora NPV doesn't reflect the true value. So, let's say the "true" value is an arbitrary $5 billion (NPV x4), which looks a lot healthier.

However, the same applies to Alpala, which, on the same arbitrary multiplication, would then be valued at a staggering $24 billion (an assumed DFS of 6 x 4) - nothing new to the Majors of course and therefore Sonora would still be considered a relatively small project.

Yes, I noted that as well. I'm not sure how much store to put by it though. JW was talking about Jan 19 only a month or so ago, then NM was saying early Q1 19. Now it's late Q1 19. My feeling is they might deliver it "early" (i.e. January). But if they are delaying so that they can include some 40km additional assays from 2018 (nevermind 2019) then I'm all for it, and actually I can't see why they wouldn't want to do it.

JS, agree with the second part, but I disagree that a 40% premium is applicable to junior miners. There are instances of 200% premiums. Not sure what the average is, but from memory of past studies read, I think it is well over 50%. And SOLG is not your average junior.

Yet more interesting discussion this morning.

Perhaps, with respect to size, SXX is the better comparison. Can those who follow it say what it's total CAPEX requirements are? I know it's coming through in several phases, the next one due Q1 19. Think the total is far higher than the $3 billion odd needed for Alpala?

And there's the clincher - Sonora's NPV is only $1.25 billion. Alpala is likely to be 5 or more times larger. Size matters to the majors.

Addicknt, agree that Li is important, but the Major miners aren't into it particularly are they?

Then there's the scale - Wasn't the final BFS NPV for Sonora something like $2 billion? Alpala/Cascabel alone is going to be $6++ billion (based on say a 20% increase in resource to MRE3, optimization and some satellites). Nevermind, the other 5 targets ("what are the chances that Alpala, the first, is the only one or the biggest"...).

Schlem - quite possibly so, but I've come round to the view that it might be in all shareholder's best interests if NM can block a takeover for at least a year - notch up the PEA, PFS (including MRE3) and perhaps most importantly, get some drill results from those 5 other targets - I think at least one, if not several, are going to turn up some REALLY exciting stuff.

Ah yes, and I can't imagine that Mexican politics are helping their case at the moment either.

Should also add wrt BCN there are at least 2 other important differences (likely a good deal more that I haven't thought of):

1) The CEO has shown that he is weak when it comes to arranging financing - lacks the skill set. NM has this in spades (9 previous takeovers).
2) NM has 5% of SOLG. The BCN CEO has very little skin in the game.
2)

Interesting stuff, ref possible financing routes Addicknt. I too think there will be a very healthy component of project level financing.

You bring in the comparisons with SXX and BCN. Although there are some parallels, comparing different commodities is somewhat like comparing apples and oranges. BHP has come out and stated that copper and oil are the/its future. So, if one major has publically stated it, it's quite likely that many others are thinking on the same lines.

On top of that, as you say, the PEA should speak an outstanding investment case.

Addicknt - it sounds like it's going to encompass the whole lot. So, they'll report the NPV and IRR as standard, but I'm sure they will go into quite some detail about the LOM/surplus cash. And they will headline some of the findings, which I think will blow the already reasonably NPV out of the water.

As NM said, after 10 years the NPV discounts the value of the mine to a pittance. It's just not a fair valuation metric. How can you possibly say (assuming same grade and tonnage for a set period) that a small copper porphyry with a LOM of 10 years is equally as valuable as a monster with 40-50 years?

Zeus - yes, those risks. Well, I think NM and the team are doing everything that they can, and doing it well, to mitigate the sovereign one (which I think is the biggest on that last by some margin) - the webinar re0assured me immensely on that score. It sounds like they are doing a great job with community engagement, and taking those community members to talk to other communities is a clever idea.

As for the global market risk, I'm not generally that concerned. The worst case scenario is a 1.5-2 year recession, and that is pretty much as bad as it would get. Now, SOLG are fairly insulated from that, as they are not a copper producer yet (and of course historically gold goes up in these times, as a hedge), but mmore importantly the LOM is so large that it will span many market cycles. The majors know this and plan for it. BHP has finally had the good idea that it might be worth trying to pick up Tier 1 projects early on, on the cheap. As an aside, frankly how it has taken BHP, and other majors, to come to the realization that it might be better to get in early on promising projects (for a very small outlay), rather than spending tens of billions later on, beggars belief really. What do these people get paid their 6 figure salaries for?

RR, well some of the information is already publicly available (e.g. rough CAPEX and NPV), so there is an argument that it is factored in. However, as I have said previously, the market moves in cycles and SOLG has been trending (one way or the other) for several years now, so it goes through periods where the market over-reacts to the upside and underside. What I think we are seeing now is a healthy pullback into the recent rise, in preparation for the next leg up. So, all in all, based solely on rough publicly available info, I think that the share price does not reflect the PEA.

Now, then you have to consider the unknowns, about which NM has hinted but not provided firm details. The exact OPEX will only come out in the PEA and it is vitally important. Again, the exact CAPEX will also only come out then, and even small changes (say down to $2.5bil from $3 bil) can have a big impact on NPV. But, I think what is going to be most tantilising, and we really will have to wait for the PEA to get this, will be the discussion on future copper price scenarios versus annual surplus cash against the life of mine (LOM is another important no. that will come out later).

Should add:

3)a - 10+ year's worth of high grade core.
b - 15 or so additional years of medium grade
c - 20+ additional years of low grade (based on comments by that Ecuadorian guy who was in on the Webinar).

Zeus - yes, that'll be where I picked up the $3 billion CAPEX from - I think the number has been bandied around for quite a while now.

Based on NM's comments I feel it is going to come in lower than that. Now, one of the things that NM thought investors weren't getting on Alpala, was how low the opex will be (vertical, fractured ore body lends itself extremely well to controlled gravity collapsing = cheap. So, to use an over-used phrase, we've got the perfect storm:

1) Copper prices look set to go only one way.
2) CAPEX almost at the bottom of the scale for a large Cu porphyry project.
3) 10+ years' worth of high grade core.
4) Low opex.

To say that the PEA is going to be interesting reading, is an under-statement.

DG, interesting stuff and well said.

BHP are very much in profit? Suggest you get your calculator out again - if their average is in profit it is marginal at best.

People's/company's averages is not really the point however. When one puts £1 in at whatever price, say 40p, then one does so in the expectancy/hope that a profit will be realised on that particular £1. My mistake in bringing the word "averages" into the discussion - I know it's a LTH favourite...

OWT - yes it was choc full of gold nuggets, so I guess I posted only those things that stood in my mind at the end. The webinar didn't seem to have rewind functionality...

I think the PEA is going to come out with some superb numbers. Ah yes and that reminds me - the discussion about NPV and life of mine surplus cash was very telling indeed. It says to me that Nick, and the majors will consider Alpala to be considerably more valuable than the mooted $4 billion NPV. And that's just on MRE2. If they can grow the resource another 20%, with additions to the high-grade core, then it'll blow the roof next year. I'm very much looking forward to some of the copper scenario/surplus cash numbers that will be published. Wonder what the CAPEX will come in at - anything under $3 billion is fantastic. Low CAPEX, big high-grade core, and all that infrastructure already in place = a superb investment proposition.