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Thank you guys for the article, I remember it now, the infamous article with the chest thumping and the "fast and smart" statement that has not really helped our cause.
But I agree and it is my understanding from Scott's comments that the priority set on moving the project along with the permits and the exploitation agreement and recalibrating the technical and financial side of Cascabel into the phased approach must have come out of necessity since the fast and smart did not happen until this time. And the necessity must have been the result of the conversations with the potentially interested parties.
If I had to guess, going for a smaller project at the inset points to no big sale but rather a different financing profile linked to Solg going solo with a royalty, debt and equity package, of course unless someone finally shows up to take us out of our misery.
Add, have you got a link to that AFR article by any chance?
Forte, for one thing, neither Scott or SOLG have actually failed, you are over-dramatizing there. It's no doubt that with the benefit of hindsight SOLG's management, past and present, could have taken some decisions in a different way, including possibly selling at a lower price (still higher than today's) than the NAV or the multiples of current price that Nick loved to talk about.
But the company is running, priorities have been set to not waste money and delay the need to further funding, refocus and progress the project from a technical point of view, and re-engage the parties that are likely to be the good candidates for takeovers or JVs.
While I hate this myself, one has to understand that the time that matters is the one that companies need to fulfill their tasks, not the one that investors would like.
Forte, I also try to measure companies and management just based on bottom line and performance, and usually nothing beats the share price as a proxy of that.
However, and that might be just my opinion, SOLG would be priced at 2 to 2.5 times the current level just based on the macro outlook changing positively, and then whatever else on top based on the specific performance of the company.
So I would not blame him 100% for being at 10p.
And by the way, when we were talking about the share price and the shares he bought, upon me asking he seemed quite genuine for his comment that he thought the worst may be over for the price and while he could not guarantee a given share price for obvious reasons, SOLG was so fundamentally undervalued and its fair value would eventually be realized. Now, he pointed out again, which he does at these calls, that the catalysts are the revised phased plan, which should align the technical feasibility aspects of Alpala with the financial aspects and the marketability of the project, and the completion of the necessary permits and government agreements.
It might just be me, but having worked in corporations in C-level capacity with CEOs for many years, Scott just seems like a considerate and pragmatic man trying to bring all the relevant drivers of growth and shareholder value to the level where they need to be. Whether he succeeds or not is a different story, but I don't think he is making significant mistakes outside of the comms strategy (which I also covered with him, he said he was taking notes.....)
Dream, Scott did say something during my call about the close period but I did not take a note about it. I just remember that he talked about the shares he bought via his broker in Canada for his retirement account while he could, then he could not buy more because of the close period, but then he was planning to buy more after the AGM when the window was open again. I had other questions to ask him so I did not go in more detail about it.
Eloro, he was always on the case, what are you on about? Perhaps you should spend less time in your head or in this BB and engage the company directly yourself.
I asked him a few things, very available and personable as usual. I will just post the answers go my questions.
1) With the new government incoming, expects continuity of business when it comes to the permits and the agreements since we deal mostly with non-elected personnel, even though it's impossible to speculate if government priorities and time will result in quicker or slower delivery.
2) We are reading too much into the "special" part of the AGM, it's a regular AGM and all directors are up for re-election.
3) There is no risk that Cascabel is a technically undeliverable project, it can and will be caved. The recalibration of the PFS with the phased approach will mitigate all the risks (technical and financial) from such a big project and that's the envisioned way to achieve shareholder value.
4) Thinks that SOLG management has never really been too greedy when it came to a price tag, there is some hard data backing up the idea that a fair value could be the around the NAV that was advertised, but then of course it still depends on whether any interested party decides to take a bite of not. There have been multiple engagements, site visits and a couple of follow-up visits as well.
5) I shared Barrick's feedback with him, I think he played chilled but it must have annoyed him from the way he came back to that 2-3 times during the call.
6) Thinks that the price has dropped as far as it can, believes we have seen the worst and upcoming news should lift the price. He could buy his shares in the open market easily and plans to buy more after the AGM, has been wandering who has been selling but thinks it's not the big guys.
7) With the cadastre closed, thinks we have a valuable asset and there has been a lot of interest. We have the largest concession area but we are not the only ones. Is very selective, even at this point in time when we think that things are desperate, and expects some JV-type news in the not too distant future, let's see if that comes through.
8) The Comms strategy could definitely be better, expects to be able to come out in a clearer fashion about the strategy soon, putting the "review" to bed.
I think I captured the spirit of the call. Having put some pressure on him, my impression is that he is a believer and is trying to get SOLG to the finish line, the company has a great in-country reputation and progress is being made. There is definitely activities in the background that cannot be disclosed at this time, but he seemed closer than usual to being able to provide some positive news, let's see how the next weeks pan out.
GLA
Https://www.ft.com/content/861d4097-1d8c-4692-a8bb-37d66a80a47b
I know the BB likes to speculate a lot in all directions, which is the point of the BB and also the reason why it gets systematically out of control.
I normally try to stay out of it, however upon reading this article I am reminded of one of the basic concepts about the lifecycle of mining companies (from exploration to major): destinies are determined from the top down.
Meaning that when majors start to move with their M&A, eventually the ripples reach the juniors and then the exploration companies. We are at the receiving end of that wave, no point in kidding ourselves.
So my speculation is that despite all the statements and the chest thumping over the years and the different CEOs, our destiny really depends on the macro and on our own we have not been able to move our own dial if not in the wrong direction. In 2017 we could have sold but NM got greedy and believed his own bs. The macro has been bad for our sector for at least 2 years, the majors have only just restarted the M&A cycle, and as you can read from the article we are just one of the many moving parts in the majors' portfolios. We may be the most desirable upcoming acquisition and equally the last company they want to consider buying, we just don't know and we just cannot do enough to change that in our favour.
What we can do is make our money go farther to minimize dilution until the project is advanced enough with government agreements and permits, but then it's just a highly defensive move and a waiting game as we can only sell when someone shows up to buy, and that wave might take some time to arrive for us.
In any case, I have a call with Scott next week, I will try and get his thoughts on this.
ARTICLE, PART 3
“When you talk about the true value of the business, the true value of the business is what the market is willing to pay.’’
Mr Tomsett said he was convinced the share price would have been trading well below its current levels in the absence of the Newmont offer.
Mr Tomsett said shareholders would also retain their exposure to gold and a lesser extent copper.
Newcrest shareholders will receive 0.4 Newmont securities for each of their shares, plus a $US1.10 per share special dividend.
Australian shareholders will receive chess depository interest (CDIs) in Newmont which will continue to be traded on the ASX.
The votes cast at the scheme meeting on Friday were overwhelmingly in favour, with 92.63 per cent of votes cast supporting the deal going through
Newmont CDIs are expected to start trading on the ASX on October 27.
Newcrest shares were trading at $26.08 on Friday, up 28c.
ARTICLE, PART 2
"The other element is, whenever there’s a merger, naturally, they look at ‘does everything fit within the new, new merged entity?’
Mr Andrawes said most of Newcrest’s Australian assets were probably a good fit for Newmont.
"But there’ll be some of the smaller things like some of the exploration areas which are probably not of interest
“Also Newcrest has some quite significant investment, large stakes in smaller companies like Lundin and SolGold.
“They’re probably one of the most obvious things, probably the first thing to look at are those non strategic investments and some of the exploration areas.’’
The Havieron JV with Greatland might also fit into this category, Mr Andrawes said.
More broadly in the gold sector Mr Andrawes said there had been consolidation in the Leonora area, “and I think we’re going to see more of that’’
There have also been rumours in the market for the past couple of months that Telfer would be put up for sale, which could be packaged together with Havieron.
Evolution Mining has already flagged its interest in any assets put on the sale block by Newmont, with founder Jake Klein telling the Australian at its mid-year investor day it would be in the running.
“The best opportunities do come for us from the majors and obviously (there’s) a lot of activity in the market at the moment,” he said.
“Newmont has made it clear that they are looking to dispose of some of their non-core assets if they proceed with the new post merger. So that is obviously a place that we would be looking in the future – recognising that it will take them probably until 2024 to make any decisions.”
Mr Tomsett would not comment on Friday about possible asset divestments, given that would be the responsibility of Newmont going forward.
At the meeting held to vote on the deal, he did field a number of queries on the question of whether shareholders were getting their due, with one asking, “Why do you think it’s OK to sell the company very cheaply?”
“Well, I don’t think it’s okay to sell a company very cheaply, and I don’t think we are selling it very cheaply,’’ Mr Tomsett said.
On the contrary, the prevailing trend in the sector at the larger end of the scale was for mergers with “just about always ... zero premium. mergers of equal’’, he said.
“We’ve managed to secure for our shareholders a significant premium, and that’s not easy to do in this world.’’
Mr Tomsett said the board had managed to extract a 17 per cent increase against Newmont’s first offer, which was an achievement given the US company was the only bidding party.
“More than they really wanted to pay, which was a 25 per cent premium in the first place, is an outstanding effort on behalf of our board and our advisors,’’ Mr Tomsett said.
ARTICLE, PART 1
The scrip takeover of Newcrest by the world’s biggest goldminer, now known as Newmont Corporation, is also expected to kick off a wave of deal making in the Western Australian gold sector and further afield, as Newmont pares off assets which don’t fit the merged entity’s criteria.
Newcrest was created as Newmont’s Australian subsidiary in 1966, and was then known as Newmont Australia
It merged with BHP Gold in late 1990, creating the nation’s largest pure gold producer, valued at $1.2bn
That deal scuttled a play by Robert Champion de Crespigny’s Poseidon Gold for Newmont’s Australian arm at the time, predating by more than decade the $US1.98bn buyout by the Denver-based Newmont, of Mr Champion de Crespigny’s own Adelaide-based Normandy Mining, signalling its major return to Australian goldfields
Newcrest chairman Peter Tomsett, reflecting on the deal on Friday, said the buyout by a foreign entity was “difficult on a personal level for a lot of people’’, given the hard work which has gone into building company over the past 30 years
We had a mine tour at Cadia and one of the descriptions given was that the whole situation was sad, but not bad,’’ he said
It’s a sad time for everybody but it’s an opportunity for everybody as well.
That opportunity also extends to the mid-tier gold producers and deal-makers who will be keenly waiting as Newmont runs the ruler over Newcrest’s assets - and even some of its own - and likely decides there are some which do not fit their investment criteria
Newcrest’s major mining operations include the Cadia mine in Western Australia, Papua New Guinea-based open pit operation Lihir, Telfer in WA, the 70 per cent owned Red Chris mine in British Columbia, Canada, and the Brucejack mine, also in BC
Altogether, Newcrest’s assets are expected to produce 2-2.3 million ounces of gold and 120,000-140,000 tonnes of copper this financial year.
But, like most major mining companies, it has plenty of non-core assets. These include a 32 per cent stake in the Toronto-listed Lundin Gold, 10.3 per cent of London-listed SolGold with assets in Australia but also Ecuador and Chile, 19.9 per cent of Azucar Minerals, and 8.9 per cent of ASX-listed Antipa Minerals, among other equity investments.
It also has a 70 per cent stake in the Havieron copper-gold exploration joint venture with Greatland Gold, with that project 45km east of Telfer.
BDO head of global natural resources Sherif Andrawes said on Friday the last big merger, between Barrick Gold - now the world’s second largest gold miner - and Randgold in late 2018, triggered a “flurry” of merger and acquisition activity.
Not always just things falling out of the mergers, but also others just following suit. Because if it works for companies of that size, it works for others,’’ Mr Andrawes said.
Of course Sean, and that's why I wrote "Make of it what you want", who knows what Barrick really wants to do and whether they would tell a random stranger anything. I am non the wiser as well.
I just thought I would share it as getting a reply was really a long shot and he was gracious enough to respond within a day.
Remember yesterday one of you was talking about Barrick? I thought I would take my chances and email Mark Bristow directly (mark.bristow@barrick.com) to ask him whether Barrick would know SOLG and have an interest in them.
Unexpectedly, he just replied, his answer below and not what we would hope:
Dear XXX,
We know SOLGOLD well – unfortunately, we do not see it as passing our strategic and financial filters.
Regards
Mark
Make of it what you want, I just find it hilarious that he would actually respond!
Does any of you want to try other relevant CEOs?
Thank you for sharing Almostdone.
I wander whether, given the diverse book and the amount parties who engaged SOLG in the so called "data room", it's possible that the ongoing conversations under the strategic review banner are made more complicated by this partnership angle.
In other words, if the Chinese are interested and maybe BHP or Newmont, and who knows about the Barricks or the Sumitomos of the world, Maxit might be taking longer to figure out an investment structure that lines up two or more of these parties, and that is nor made easier by Ecuadorian country risk and western countries antagonizing China.
I know, I know, just fantasies maybe....
I bought some too, could not resist the boredom. No RNS for that though...
CFO bought 33500 shares, let's hope he has not overexerted himself with that amount!
well red, for one thing i cannot imagine that for barrick ****stan or the middle east in general is less risky than ecuador these days.
if you have mark bristow's number, perhaps you could give him your solg pitch!
My bad, my first ever SOLG trade was in 2011, bought at 26.40 and sold at 20.00, a very bad start!