Member Info for swsquires

Solgold seem to have focused a huge part of their effort in getting the government and the people of Ecuador onside. They are hiring and training locally, investing in the environment and re-emphasize that this is for the Ecuadorian nation. The more I have read on this, the more impressed I am at how Solgold have really tried to be a partner in this venture.

That brings me to my question. From the perspective of the government, they want mining up and running and sending money to the treasury. This means that it is in many ways in their interests for majors to get involved as it accelerates production and thus revenues flowing through. But, in Solgold they have a partner who has made great efforts to work with them and the people. Taking the example of BHP destroying aboriginal sites recently, how much do we think Ecuador would trust the big boys? In my mind I think they have trust in Solgold and how they operate, but would like things moving faster. To what extent do we think the Ecuadorian government could play in how this ends up?

Schlemiel, I was thinking about this and perhaps I have put 2 plus 2 together to make 5. Solg do a JV deal on Alpala whereby they retain say 20-25% and all costs to production are paid (so little or no money to SOLG but a free carry to production). SOLG then do a big fund raise to all shareholders to effectively push forwards on drilling across the other sites at an accelerated pace. Perhaps DGR is raising money as they will need it to pay for what they know is coming.

Unfortunately today's news has done little to move the dial, as shown by the trading this morning (mainly sells) and no movement in price. Whilst the update was positive, Peter's interview on Proactive offered no real additional insight and Redmoor is going nowhere until the company has more cash. As before the key news to move forwards will be Leigh Creek and whatever deal has been struck to move into production.

I always find it interesting to note when companies appear on Proactive and when they don't following major news. CEO's normally can't wait for an interview to talk up positive news and tell us all what a fantastic job they are doing. You'd have thought that following this 'great' news DB would be straight on to tell retail investors how this was a good move. Maybe he realises that he shafted his retail investors so best to just hide until there is something more palatable to talk about. Hopefully I am wrong and there is just a slight delay in an interview being posted.... we shall see

There are definitely a few things here that appear odd. The stock was going all guns blazing, hitting the 30s, then a sudden reverse only to raise at almost 50% less. With so much interest, why not raise at a better price, why the need to do this now at all?

The most likely conclusion I can come to is that there is a live opportunity that they are working on and needed the cash ready. Otherwise, I don't see that it is logical to raise cash at this price when the share price was in an upward trend, WN progressing well and all signals positive. You'd imagine that future opportunities would have presented themselves to raise additional cash at a might higher premium in the coming months. The only counter I can think of is that a second covid wave could see another market reversal so they decided it was best to get in early.

The next move in SML is all dependent upon financing for Leigh Creek and the timeline to production. What form this takes, the terms and timelines will determine where the share price goes.

I don't foresee much out of Redmoor in the near term as I suspect more drilling is required to increase the estimated resource. We don't have the money for this right now, hence the focus on LC. I'd love to be wrong though.

Agree Trout. At the moment I am seeing nothing to make a compelling case for new investment into SML. My concern is that one day we will eventually get a deal and realise that SML haven't done very well out of it. I really hope this isn't the case, but when the company is so small, the partner with money will squeeze them. Too many smoke and mirrors, a lack of transparency and each RNS adds another small delay...

In the end, this is what the share price is reflecting right now - a lack of progress, a lack of confidence and dates constantly going out. I'm working on the basis that I give this 3 months and if we are no further ahead I will review and likely bail at a loss.

For many of us who have held this for years, there is obvious frustration. Another RNS which seems to be one step forwards and one step back. Every time I see an SML RNS appear in my inbox I hope this is actually going to be something positive, a deal signed, a tangible step closer to new revenue streams. At the moment we just seem to get complications, additional steps and an 'it will be allright eventually' undertone.

I am not planning on selling but hold out for the day we finally see an update that tells us what the JV (or whatever we agree) terms will be for Leigh Creek once signed. That has to be the first step to moving this company back in the right direction. Right now as noted by others we are treading water whilst other companies are making people money. Fingers crossed for something in the next month or three, but not confident given the pace of movement in the last year.

Thought this might be of interest

https://www.valuethemarkets.com/2020/09/01/booming-gold-and-financing-firepower-add-transformational-upside-to-solgolds-strong-and-secure-business-model-solg/

Sell Cascabel

The only other potential I see is that someone buys Cascabel from us. I am not sure how this works with Cornerstone (probably easier if we own 100%). This is probably worth a separate discussion as it brings up a whole new series of questions. If we get paid for Cascabel we are back to 8 years ago but with a ton of cash. Shareholders would expect a special dividend, but enough would need to be retained to move things forwards.
Is this really an option?

Pros
• Huge cash injection that allows us to accelerate other projects rapidly
• Potential to return cash to shareholders
• Cements a relationship with a major for further deals down the line

Cons
• At what price? At what discount?
• We know the cost for bringing Cascabel to production so when we get to the same point with the next project are we just a richer company who will have to do the same again?
• If we let a major in, how will that change the dynamics with the government, before long they will realise their needs are best met without Solgold who don’t have the financial resources to push ahead and generate money and taxes

I wasn’t even going to include this option, but thinking about it, I can still see it happening. I’d say 15-20% chance, less likely than a JV but more likely than us going alone.

Joint Venture

Similar to a farm out deal we see with oilies, this is still a legitimate option in my view. I’d say it hasn’t happened to date because the terms offered have not been acceptable. This would really be all about how it was structured and what SOLG receives, ie. Cash payment, costs of bringing to production, percentage give-up etc

Pros
• Funding sorted and progress with an experienced partner
• Dependent upon terms it could provide additional funds to accelerate drilling programmes on other projects
• I think this would be view positively by the Ecuadorian govt who would (a) rather see revenues sooner than later, but (b) seem to have a very good relationship with SOLG

Cons
• As strong a hand as NM tries to play we are likely to give up far more than we get back when viewed in monetary value over the long term – majors know they hold the upper hand as we need them and their money
• Does this really help us bring other projects to production or just lead to them being JV’d or a full takeover down the line – this could be viewed as a positive dependent upon your view
• We somewhat lose control of Cascabel and become a junior partner

My thoughts are that this is still the way NM would prefer to go as it probably offers the most long term upside. With all the other concessions of which some have to be worth billions (in the ground), the aim has to be to progress, progress, progress then either end up a major or sell for a big number. In my head, it is this option that they want to get CGP for, so that a JV is nice and clean.

Will it happen? 25% chance

SOLG goes to full production alone
Much debated, so I don’t want to say too much. We know this is a huge undertaking, expensive and complex. Can we do it? Anything is possible, but it will take years and likely cost more than expected.
Pros:
• Potentially the best returns for shareholders long term as we own 100% of revenues
• With the number of concessions owned the company has huge potential for a multi-billion market cap long term
• If Mather’s approach is correct the further we go it alone, the higher the cost for someone to buy us out
Cons
• Financing – huge, how long, at what cost, what will we really give up?
• Expertise – we need to bring it in at great cost (people and equipment), likely delays in getting to production
• There is always the risk something negative happens with Cascabel, I am not going to guess what, but things can go wrong - political, economic, resource-wise, etc etc.
I still believe this route is unlikely for Cascabel, but if we play it correctly we could put ourselves in a position to go it alone on one of the other projects. My personal view is that Mather is playing the “we’ll go it alone card” to try and increase value and tease out a good offer. Probability <10%

As a long-term investor in SOLG (over 10 years) I have seen the highs and the lows of this company. It feels now as though we are approaching the end game, or at least the beginning of the end. It actually scares me to think that after all this time we are still years away from anything close to production…
I find this board extremely useful and there are some great contributors providing important analysis, news and information. Sometimes though it does descend into some infighting. Anyway, as I was thinking about SOLG today I decided that perhaps we should all just sit back consider the options, look at pros and cons of each and probability.
I’m keeping it simple, but here goes… Would appreciate thoughts and discussion

Cornerstone Takeover
The simple fact here is that CGP and SOLG relations are terrible and they were never going to accept any offer made. It is hard for NM to constantly say how undervalued SOLG is but then essentially lowball CGP who probably view themselves in the same light.
I don’t think it is worth discussing the pros and cons on this as we all know why we want 100%.
Personally, my guess is at some point SOLG will sweeten the deal allowing everyone to save face. When you are paying in stock for what we know is an undervalued asset I think they need to just agree reasonable terms and move on.

Do I think it will happen? I really don’t know... if they increase their offer 50/50.

At the moment the company seems to be stumbling from one potential disaster to the next. Every bit of newsflow is reactionary (seagreen on advfn saw an article in Africa Mining Intelligence on Fri night which pre-emted today's RNS), defensive and hits confidence further. This is evidenced by each resulting in further share price declines.

We have to admit as shareholders that things are bad, real bad right now. We have the likes of TW exposing more each day and company is doing nothing to help its cause. Today I am seeing questions over the fund raising due to the current price, accounting breaches and need for share consolidation.

In my personal opinion the company needs to stop hiding behind often opaque RNS and come out fighting. Tell us what is happening, what the plan is and how you are going to execute it. If DS wants to remain he has to admit his wrong doings and show us why he is the right man to lead going forwards. Every day they hide away this is only going to get worse until there is no longer a company and our holdings are worthless.

We have Djeno, but in all seriousness I have held stocks before that had great assets only for the BoD to screw up so badly the company went under and they were never realised. I hope AAOG is not going down that path, but right now it is more likely than not.

Whatever the rights and wrongs of the last few months, few can dispute that there have been some very dubious goings-on, appalling communication, too many smoke & mirrors and a break down of faith in the BoD. This has been reflected in the share price and losses that almost all of us are suffering. Another RNS today that has once again confused and provided no clarity.

In my mind I am trying to draw a line under all of this and what I would like to see going forwards is newsflow - clear, transparent and honest. I want to see (in no particular order) at a minimum:

(1) Terms of this new arrangement in a way that all shareholders can understand how it impacts them
(2) A company update - including the financial position of the company, expectation of agreement with SNPC and the corporate strategy for the next 12-36 months
(3) A plan - what, when and how. Build in contingency and deliver early if worried about hitting agreed dates. Both short term covering initial production and long term ramp up
(4) Regular monthly updates on progress - regain some faith and show progress
(5) BoD buying stock in the company - if you really have belief in the company show it, don't just draw a big salary and try to award yourself cheap options

Finally, I think a decision must be made shortly on the role of DS in the company. His position seems to be getting closer to being untenable and his reputation is only getting worse. Is there anybody left that trusts this guy to (a) tell the truth or (b) work in their best interests and not his own.

I have to admit, I look at today's announcement and I find it hard not to take a negative view. I originally came across this company in the high 25-30p range. I read a story of drill, produce and fund from production. Low risk, carefully managed, no classic huge AIM dilution excluding all but a few. As such, I invested and have added since then, what we have in the ground seems good, once we produce rewards should follow.

What I have seen over the past few weeks / months has reminded me of so many AIM stocks, management that cannot be trusted, false promises, dodgy complicated financing structures that add huge dilution and hit LTHs, particularly retail who never get a sniff at the discounted offerings. I will be interested to see what DS has to say today when the presentation is available, but my confidence in him is almost 0 now.

I haven't sold out yet, but am trying to step back and think through where we are. Similar arrangements like this has never in my experience ended well for shareholders, but maybe one has to work right... In the end the share price does not lie and currently it is showing what market and investors think of the company. With the financing in place, everyone should be delighted, certainty provided, a route to production etc - instead everything I read is negative.

We need to see a robust workable plan with timelines, we need to understand how the money is going to be spent and what contingencies they have built in. When will production start and when can we expect to start booking cashflow. I don't want talk of dividends one day then huge dilution the next. I'll continue to hold and re-evaluate but DS needs to try and restore confidence and credibility as both are non existent right now in my view.

Dilution is the enemy of the AIM investor, always at a discount and limited to certain shareholders. Here though I take comfort in the size of the placing, i.e. just the amount needed for Redmoor. Whilst the price opened down, it is all buys today, so everyone seems to agree that it has created an opportunity to pick up some more at a good price. I have to admit to adding a few myself as under 1.6p looks cheap.

Hopefully 1.5p should be the floor now and continued newsflow over the coming months should see this rise to the levels that we all believe are realistic and possible.

Someone posted this on the Cornerstone forum at CEO.CA, so thought I would share. Requires google translate:

https://lahora.com.ec/imbabura/noticia/1102252991/comuneros-de-zonas-mineras-reaccionan-al-fallo-de-la-corte-constitucional

Seems like Solgold are out there trying to engage with the local communities and do what they can to get them onside. Still some negative sentiment from locals though.

New article in mining.com. Doesn't really say anything new but thought I would share:

https://www.mining.com/solgold-shares-soar-after-ecuador-court-dismisses-call-for-referendum-on-mining/

Pbow, given your knowledge of the region, the legal system etc, what is your gut feel right now as to how this will play out?