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Tesla,
I am not making up numbers. The resource is what SOLG publicly advertised and the paid prices are from publicly available sources like RFC Ambrian.
I did point out in a previous post that the resource may not be technically viable as SOLG says it is, which would be the only other reasons outside of price to inhibit bidders.
My point was that in this possible negotiation, even if there is a theoretical fair value but the bid and the ask are too distant, the negotiation does not even start. If SOLG had signaled that they might eventually look at bids in the 30-40p area (just to throw some "reasonable" numbers), I think that buyers would have shown their hand, and equally if one of those 20 engaged parties had signaled that they might be interested in a "reasonable" price, we would have a real inside bid-ask market.
What I suspect is that SOLG, from the NM days have told everyone to p**s **f until they show a bid a fair value, which would have worked in a seller market (i.e. tell me what you pay and I decide whether I sell), but since we are in a buyers market at present (i.e. tell me where you are selling and I decide whether I buy), it just does not trigger any buyer reaction.
Fair?
Just to add to that, the industry average for takeovers at the feasibility stage is around 0.085 USD per pound of Cu equivalent, which given the resource we have advertised last, returns a GBP share value of 72p.
As Scott also confirmed (during my call), the company is still of the view that from the NM days management thinks that this is the fundamental value.
That is why no bidders have declared themselves (yet), the asking price from the company is known to them and they are not willing to pay until we have the "turnkey" project that justify that 0.085 value or thereabouts.
Until then we would only be worth the exploration stage valuation, which is in the 30-40p range. I would bet my SOLG shares that if we went out stating that we are happy to sell at 30-40p the buyers would come out in troves.
This also means that the current share price has limited effect on bidding decisions, at best it would be used as a reference for a first approach.
Cintsa, I rarely mock other bb members here, but there are exceptions and I need o ask, is 71 your IQ?
Forte, you might be overdoing the critique about the deal making.
If no prospective buyers have shown a bid, especially at this price levels, it's either because the project is not worth it on a fundamental technical level, or because management is keen on extracting a fair value for it based on the fundamentals and no buyer is ready to acknowledge that. Eventually the price will be paid or the price will be reduced. Current share price has limited bearing on the value of that transaction if and when it happens.
Now you and everyone else can make up your minds about which one it is, however since the NM days management has been very keen to let us know which one they think it's the case, and in all the different permutations management has worked to put in place some of the building blocks necessary to eventually monetize (getting the tenements, getting the permits, getting the exploitation agreement, building community relationships, showing credible ESG credentials, engaging institutional investors, etc.).
Keeping in mind how the sector is out of fashion and all the risks associated to Ecuador, on many metrics we cannot give SOLG management a fail and certainly we cannot imagine that replacing this leadership will change the future direction a bit.
It does not mean that under the different CEOs errors were not made of course, but we need to take a more balanced view. IMHO that is of course.
GLA
I am glad management listens when we engage. I am sure others have pointed out to Scott that the comms strategy had been poor lately, leaving too much to interpretation. On my side, this RNS reads like during our call Scott and Chris were taking notes about what to cover in a much needed update, even if most of the content is not new.
What matters is the evolving narrative that had to be spelled out clearly and how much work SOLG is doing is aligned with the objectives we all share.
I am pleased.
Ship, thank you as usual for taking the queations to management instead of the BB. Great that Scott always stays emgaged with us and shows composure.
Roxi, what have you smoked?
The resource here is real and it's big.
Management is working to advance the main project and negotiate one or more JV for some of the other tenements.
However, since we are in a waiting mode before the new PFS and any other JV-type announcement, we are exposed to price speculation, at a time where the entire sector is crucified by investors and speculators.
Keep up!
Forte, no they don't. Scott bought from his Canadian pension funds via a broker in the open market, had no idea. He just did not think it was one of the big guys, his words.
Not that I am pleased about it, but I don't see much support until we reach 4-5p, personal opinion. After that I suppose we would see a lot of speculative buying in support.
Even though I did ask Scott about what he thought he could do to support the price, apart from his opinion that we had reached the bottom his point of reference was the new PFS with the phased approach, so I suppose there is nothing at the moment offering respite to holders.
Personally, I am not topping up unless we reach truly stupid levels, like 1-2p, where realistically it's the only levels where there isn't much downside.
This is crazy given the fundamentals, but that's where we are.
Forte, I think you are reading too much into the Blackrock side of things. A dear friend of mine is a MD at BR and he told me that most fund allocations are managed by the algos, based on a combination of macro and micro risk drivers, usually it's just a dry and impersonal risk weighting driven decision.
Https://news.mongabay.com/2023/10/investing-in-the-pan-amazon-how-chinas-investment-operates/
Https://latam-investor.com/2023/10/the-challenges-facing-ecuadors-new-president-daniel-noboa/
I have been researching for some link between Xib and Solg or Maxit, other than the address I have not yet found anything, anyone else can see some personal connections?
Apologies for the dumb question, but can someone more informed clarify what does the "% short" value represent? The 0.50% from XIB is 0.50% of what exactly, total issuance or something else?
About the price per lb in case of M&A, if only we obtained an average 0.08 / 0.09, we would be in the 70p thereabouts.
At at the 0.03 we paid for Cornerstone we would be worth 25p, general sentiment and some corporate progress allowing.
Why do I bother....
Sometimes I digress about general sentiment and macro picture, to highlight how much the current SOLG share price, like many other juniors and exploration companies, is depressed for reasons outside of the specific SOLG circumstances.
You can listen to Michael Oliver's analysis on this as well, but to give you an idea of how much sentiment and other externalities like the gold price can influence the price of this share, and others for that matter, let's try and price it.
Let's first take the gold price and the GDXJ price. At times of bullish sentiment (for gold) the ratio between the two reaches 0.035, while at times of bearish sentiment it can reach down to 0.014. The historic average is 0.023. We are currently at 0.0174.
Now if gold was to reach say 2550 (Mr Oliver docet, not me!) and the ratio reached 0.03, not even the maximum, it would imply a 120.4% surge in GDXJ. SOLG is correlated with that even if it does not produce yet. On that basis SOLG should reprice to 19.99p, that is with nothing new happening in the company, just because the sentiment changes, gold goes up, equity investors reallocate into mining from other asset classes and since it's a small asset class the inflow has a material multiplying effect.
Make of that what you want, I am not trying to open up a debate, but I thought I would share some positive thoughts on the back of the Michael Oliver interview that Eish kindly shared with us.
Some of you may already know this, but the USA value their gold holdings at a value of $42.22 per troy ounce, which is obviously well below market value. One speculation from various parties is that the USA are getting ready for a plan-B scenario where the dollar loses the de facto world reserve currency status, the dollar is replaced by SDRs and at that point the gold holdings are revalued, killing the value of the dollar and the federal debt.
If we consider that dollar domination is already waning and all big economies are accumulating gold, it is possible that eventually we will transition to a new monetary world order supported by gold.
It's not a conspiracy, these topics are debated by central bankers worldwide and there are studies about the mechanics of it. But obviously if it ever happens, it will happen by international agreement, not because there is some crazy event, and under the right circumstances the USA can support it as it would in fact resolve their public debt problem.
Thank you Eish.
The debate about gold and its potential rerating has indeed gone on and on for a long time, Willem Middelkoop is another advocate for the topic and to be honest it gets also officially debated at central banks' meetings.
With global debt ballooning, it's possible that even the Fed might eventually orchestrate a gold/dollar rerate to devalue the federal debt.
Now, the interesting part of the interview and a good reason to listen to it is the logic around where capital flows might go and how that could benefit the exploration companies. Even if he is half right we should see an uplift here.
Just to reiterate, Scott said I was reading too much into the "special" part of the AGM, as this was going to be a normal AGM and all the directors were going to be up for confirmation.