Member Info for TigerByTheTail

Hi Goldfingerer!
You're right. Financing $2.7bn Capex against a $650m market cap for a mine in a frontier jurisdiction is nigh on impossible for an explorer.
Solgold have no meaningful security to offer, except the mine itself, the construction of which may well go over schedule and budget (a very everyday situation). And this is without considering the inexperience of the management team, the divided shareholder base, etc. etc.
Some money could likely be raised via offtake agreements, royalty deals, and loans. But it will be far less than 100%, and it will be on very unfavourable terms. IMO, at least 40% of the Capex money will need to come from equity to act as a buffer against losses for the loan money.
Since the new equity will demand favourable terms (if it can be raised at all), this will result in massive dilution and a near wipeout for existing shareholders. Any delays or overages in the construction of the mine will likely result in 100% loss for the equity portion of the investment.
This needs to be said. NM's announced "strategy" is plain suicidal for existing shareholders. It's one of the reasons why the share price is currently so low.
In contrast, it would be easy for a major to raise the required capex money against their existing cashflows. And the interest rate they would be charged by lenders would be much lower as well.
In short, it makes financial sense to either sell Alpala or to farm it out. It's way too big a project for Solgold.
So, if NM is unwilling to put Alpala up for sale / farm it out, I'll be backing Conerstone's "sack the board" motion (given they offer up reasonable replacement directors and a clear plan to do the right thing with Alpala).
I have to add that I'm confident that any financial institutions who own shares in Solgold will be following a similar logic trail, so I'd expect the motion to succeed.

I'm puzzled by the "meh" reaction as well.
If it drops a bit more, I'm adding.

The RNS sounds to me like the prelude to YET another placing.
Vast sold a working gold mine in Zimbabwe for a song to fund this ludicrous adventure in Romania, and to chase after the chimera of diamonds. As bad management decisions go, that was spectacular.
How much would Vast be worth now if it still owned Pickstone Peerless mine? And how many shares would it have in issue?
THIS COMPANY IS JUST A SERIAL ABUSER OF PIS.

Hi Quady!
I assume that there will be very large equity component (40% minimum) because I have a basic understanding of finance - something to do with daily bread for a number of decades and such like.
NM is simply "hanging spaghetti on your ears", as the Russians say.
FN not signing off now is something a guess, but it is the implication of Nick Mather's own metaphor. IMO, it's logical for FN to delay signing off the loan agreement; this mess (sack the board EGMs, public spats, accusations of malgovernance) creates an extra layer of legal uncertainty for them that they will not have figured in to their original calculations. Essentially, FN are bankers - cautious people by nature.
I've never said for sure that BHP are irritated with NM. They have been as silent as the grave so far. But I'd guess (note guess) that they are alarmed by his behaviour as well.

Hi Iceberg!
As regards the conditions of the equity raise, they were an unforgivable breach of corporate etiquette. A basic breach of the principles of fair dealing and good governance. Truly, a needless and stupid and unprofessional way to make enemies.
You don't need to believe me; that's your right. But I do know what I'm talking about. CEO obviously out of his depth + no previous track record of success in mine-building + divided shareholder base + massive Capex requirement + frontier country risk + no meaningful security to offer does not equal an appealing proposition to a corporate financier. Amazingly! Therefore, huge equity buffer required to protect against possible loan losses. Amazingly!

Hi rcg12!
Yes, excluding NCM and DHP from the last equity raise was a fatal error for a CEO. A CEO must deal fairly with all shareholders, and above all with major shareholders. (I do know what I'm talking about it). NM certainly made an enemy out of NCM by his ill-considered action, and he probably made an enemy out of BHP as well. It was needless and stupid and unprofessional - and all for not that much actual effect.
There is a more general point as well. NM comes across as a small-time mining explorer / promoter - i.e. dodgy as hell and none too bright with it. His "plan" to finance the mine is baloney - hardly a good bluff at all. It's obvious that he is not somebody sensible people will lend a lot of money too without rock solid security. And he doesn't have that security to offer. So there will have to be a very large equity component to the mine finance, which (as usual) will wipe out existing shareholders.
All told, IMO, he is way out of his depth.
I can't help thinking the best way forward or Solgold would have been to announce publicly that they were willing to farm out Alpala to a major, in return for keeping a 25% free-carried stake in the project + some extra money for exploration of the other concessions.
But I think we're past that point now. And any potential buyer will be looking at a full takeout to remove such a troublesome component from the game entirely.
(Last post of day. GLA.)

The NM "dog in a manger" quote in the AFR article rather implies that Franco Nevada won't sign off the deal until all this has played out. (Quite reasonably, in my view. It would be reckless to lend money to a company in Solgold's chaotic state).
Remember, according to Aesop, the spiteful dog lies in the corn in the manger, not eating it himself and not letting the horse eat it, either. I assume the corn in this case is the Franco Nevada financing, just as Newcrest are the dog.

Hi Colonel!
An October takeover here will succeed - that is now crystal clear.
If there is one bidder (i.e. BHP or BHP-Newcrest JV) it will be at a "low" price (I think 40p to 50p). Essentially, (given the balance of forces at play), it will be at the price institutional investors like Blackrock agree too. That won't be unreasonably high. They will be able to see as well as I can that Solgold has poor management who will not be able to finance the mine on their own. They need an "out".
If there are two or more bidders, the takeover price will be higher, and so much the better.
I do give a monkeys that today's share price is 23p. That's then price that I can buy at.
There would be some truth in calling my attitude to Solgold that of a carpet-bagger or an asset-stripper. But before you blame me, existing shareholders who bought at much higher prices might want to blame Solgold's management first. They created this situation, not me.

Hi Smickster!
Yes, if BHP want this company they will get it in October for 40p to 50p (unless a second bidder emerges, in which case, so much the better).
Alpala / Cascabel is a world-class asset. But NM is a very poor CEO. It is beyond stupid for a CEO to quarrel in public with not one, but two of his major shareholders. BHP are now in a perfect position to dictate their terms to him.
I'm a newish investor here with an average of about 21p. So this should work out nicely for me. That's why I'm here.
But long term holders won't do so well. If NM had played his cards better, the takeover price would have been much higher. But I think that possibility has now gone (barring major exploration success in the next couple of months, which is always a long shot proposition).
There is risk here - e.g. BHP don't want the asset, or NM manages to insert some kind of disastrous poison pill into Solgold which means the asset will go undeveloped for years. But IMO they are risks worth taking in light of the possible return..

The truth is this company's share price - 23p. Even though it holds a world class copper-gold resource. It's absolutely disgraceful.
And through the CEO's arrogance and incompetence long term shareholders will lose out heavily as Solgold is taken over in October for far less than its true worth. With Cornerstone and Newcrest now firmly and publicly against Nick Mather, BHP essentially are in full command, and (barring a second bidder) they can force a lowball takeover.
(By lowball, I mean 40p to 50p. So (IMO) anybody buying today should double their money).

Yet more utter stupidity from Nick Mather. Only fools talk like this.

I just read this on Marketwatch - liked the metaphor...
"As the story goes, there was once so many cobras in Delhi that there was a bounty placed on each dead one delivered to the government. At first, it worked. But then, entrepreneurs began breeding cobras for the income, and the authorities had to cancel the program. The breeders then released their snakes — whoops! — and the cobra population exploded worse than ever.
That is what’s known as the “cobra effect,” and, as Wall Street veteran Larry McDonald explained, it’s playing out right now in regard to the unintended negative consequences of public policy and government intervention in economics. Basically, the solution is worse than the problem.
“We believe we are at the early stage of the biggest cobra effect in the history of economics,” McDonald wrote in a post on his popular Bear Traps Report blog. “As the massive monetary and massive fiscal stimuli (over $15T globally) conjoin to save the economy from a deflationary depression, they will cause instead a hyperinflationary economic collapse.”"
And, Sotolo, to adapt your own metaphor, if you don't mine... I believe that we have indeed left the plains and climbed the foothills, and we can see ahead in the distance the snow-capped mountains. I just think that there is an unseen canyon between us and those mountains, and that the gold market will drop with the wider stock market when it crashes, which simply can not be far away now.
So, I'm assuming down first before up and away...

Hi All!
So far so good in these crazy times. But IMO the wider economic situation is as unstable as nitroglycerine.
At some point, some tiny unexpected shock is going to set off an explosion of selling in these wildly overvalued markets. And gold has been driven higher largely by ETF buying, some of it leveraged. So money will pour out of gold ETFs in an almost uncontrolled fashion as margins get called and players desperately need cash, and the gold price will plummet.
In short, we are happily riding the escalator up now. But (IMO) going down will be like being hurled down a lift shaft.
For me, it's safety first from here on. I'm running about 70% cash at the moment. I'll be increasing that % again tomorrow. If I miss out on a bit of profit, so be it. There will be no liquidity to sell into if this ends in the way I think it will.
Just my late night rambling...

It will be a new all time high in £. (And some other currencies as well).
In $, the old all time high is about $1920 from 2011.

Hi Jiffy!
I wish you luck with your investments. BUT:
EUA is massively overvalued, and IMO a pump and dump scam. True value? 2p per share, maybe. Red flags galore.
GGP does have a viable resource, but Newcrest own 70% of it, and will charge for the toll processing as well. Also overpriced.
If you're looking at speculative exploration stocks, Solgold may have more to offer at this point.
All IMO and DYOR.

If you look through the published Yanafolila data, there is a lot of gold at c. 1g/t that has been left out of the mine plan. Presumably because it wasn't economic to extract at the assumed price (then) of $1,250 / oz.
Now gold is $1,850 / oz how much of that gold becomes viable to extract? I don't know the answer to that - it's complicated and it depends on pit design and haul distances and all kinds of other variables. But it MUST be some of it.

Hi Prof!
Isn't gold's all-time high $1920 / oz (from 2011)?
I know it was on an intraday spike, so I'm not sure if you're quoting daily or weekly close with your number.

Hi Otho and Jwhitw!
Yes, Resolute had some horrible Australian dollar hedges which played out in the last quarter, lowering their average gold price severely. They are still hedged going forward, but at higher levels. All in all, for a whole number of reasons (Syama running out of oxides, false AISC figures, dodgy management) I make Resolute a strong avoid.
It's great that Hummingbird are fully exposed to the upside of gold's bull run. We should thank management for resisting any pressure to hedge earlier in the year.

Hi Prof!
All I can say is I'm putting my money where my mouth is, so I hope I haven't called this wrong.
I think Centamin is now underpriced against the gold price and all that we know about the company, so I've put my trading pot back in here alongside my usual long term holding.
My current target price is 230p - as per Sotolo earlier.

Hi Stoodio!
The board have already informed us they will pay annual dividends henceforth. In his usual dour way, Terry said they were now on that treadmill and didn't want to ever get off.