Member Info for ToS1963

Meant to add apologies for the dip below 20p. Clearly my fault for purchasing at 20.5p yesterday.

https://www.smh.com.au/business/companies/rio-tinto-cuts-copper-hopes-in-fresh-mongolia-mine-setback-20200703-p558ox.html

Little impact on Solg, but shows two things to me..... on the positive, there will be slightly less copper around if and when we start producing, but on the negative it shows some of the unforeseen risks to timing and cost associated with mine construction.

Morning Jerry... Just a wee correction to your post.... not quite everyone blindly accepts what NM says about the tax implications .... I am very sceptical by nature when it comes to my money! It’s a Scottish thing.
I’d love to see some evidence or hear from a tax expert... would such a transaction be subject to Ecuador, Australia, UK or Canada tax laws?
By the way, I bought more yesterday, having been away all day, I set a limit order at 20.5p which was filled. Not looking for a long term hold now, but believe I’ll get a very decent exit point within 12 months here. Sadly my position is that Solg has languished in my portfolio long enough, and another 5+ years is just too long for my personal circumstances.

I’m also inclined to agree with TbTT analysis. Whether or not there is any legally binding agreement, I think both Newcrest and CGP are looking for the most rewarding way to offload their holdings here. BHP are in a position to provide that to them, come October. A prior to October, all it takes is an informal G&T or two. A gentleman’s agreement if you will.... always happens. Although.... that’s my worst case scenario, and still needs a 45p+ offer.... when your worst case is 125% rise toor SP, you’re usually in good shape.

Hi again Quady, I can see your point of view. I don’t share it, but do understand it. If I thought this was genuinely going all the way to production, without anyone trying to bid though, I think I would sell up on the next decent drill results when the SP reacts, invest somewhere else for about 4 years seeking a return, and buy back in here on a retrace when funding is needed, which it surely will be, prior to production.

Quady, think you’re right about the complications any Chinese or Barrick etc bid would face, just makes it implausible at this point. Neither BHP, Newcrest or NM would entertain anything remotely lowball, so, given the combined holdings of those three, it would have to be spectacular, in fact probably above asset value to succeed. I don’t believe that’s going to happen.
I’m not overly concerned about Newcrest or Barrick either, for much the same reason. I think they both just want out at a fair price now... but that’s the danger. BHP.... I could see them having a stab at it though.... and if both Newcrest and CGP get a reasonable return on their holdings, they might get onboard. That would potentially spell trouble, but it could also lead to a counter bid, which... if you’re in the not going to production or don’t want to wait that long camp.... is the perfect scenario.

All pure speculation of course.

Agreed Quady... I flipping hate it when someone posts “big buys coming in....” and I frantically wait 20 mins for them to show up (no L2) only to see someone’s been down the back of the sofa again!
I guess if you are in the going to production camp, then yes, I see your point about current share price....However, I’d argue whilst it may be a distraction to you, it isn’t to BHP, or Barrick, or recent 20.5p buyers hoping to make a quick profit at the first sign of a bid. We are vulnerable to receiving less than fair value for our investments, and I don’t like that.

Hi Quady, was responding to BNC when you posted.... I’ve covered off your point about Covid in that post. I’d argue it’s not the only reason, whilst other stocks have recovered, the recent placing probably cemented it at this level.
But to say the current SP is a distraction? Cannot think of any stock, ever, where I could say that and it be true. Given that we all appear agreed that post October bids may be on the horizon... and as I outlined in my reply to BNC.... the more 2020 shareholders we have at 20-22p, the more will be delighted to accept 40-45p within a year. I myself am thinking of upping my stake here for that very reason. And in a nutshell, 40-45p is a steal. BHP would be delighted at that.... as they proved when they bought in at 45p. I imagine when they bought in they did not for one second think they could get the remainder for that price, but that’s the risk we run if the share price remains at these levels.
If you mean that drilling results and funding news will lift the share price significantly prior to any bid.... well we both hope that will be the case. But there are no guarantees that will happen. I’ll say it again, an SP that fails to reflect the asset value of a company always makes that company vulnerable to predatory offers.

BNC. To be fair, there’s probably not too much he could have done, but as with most exploration companies, SP rises on decent drilling results, and gradually falls back as funds run low, until method and clarity exists around future funding, and how dilutive it will be to shareholders.

The strategy update in 2017 didn’t land well I don’t think. Yes, it was exciting to have all these new prospects, but the market did not react well. I think the sentiment was that they were spreading themselves too thin, and cash burn would be an issue, which would in turn lead to further large scale dilution. The RNS detailing the creation of 4 new companies also didn’t land well. Again, to balance this, I think both the Newcrest and BHP deals... at 41p and 45p respectively if memory serves, we’re the best possible outcomes at that time for shareholders.
The market also did not react well to the TSX listing.... I have no idea why, maybe others may have a thought on this.
He has, I believe, also been very unfortunate with the timings a couple of thing out with his control.... the referendum on mining coming at the worst possible time after PEA just trashed the SP, a position it never recovered from even when it proved to be a storm in a teacup. Lastly.... flipping Covid has also blown up at the worst time. All stocks got trashed, at the very time when it was critical we held a reasonable market value to deter opportunistic predators. That was really **** bad luck, and given how long it has dragged on for, has reduced his window to do much about it.
I really like the Franco Nevada move, but hate the recent placing ... the low price it was set at was, to my mind, playing a really, really risky game. It served to alienate a lot of LTH, myself included, at the very time when he needed them most. I think that move may have changed the mindset of many from holding out to receive true value, to probably cashing in when we get to around 45p. Which may just play right into the hands of BHP.
But all of that is guesswork. Nobody knows, certainly nobody knows more than NM!

It is, however, quite an exciting share to be in, and will be for a while yet! On that note.... I am fortunate enough to be holding quite a bit of spare cash in my account at present, as I cashed in a lot of my blue chips on the recent post Covid recovery (I believe the stock market is headed south quite soon, so preferred to be in cash for a while to see) seriously considering taking a bigger punt here, as I think, and it is purely a guess, please don’t be advised by this anyone.... doubling the money in a year is a very real possibility. Even if he takes it to production ( I don’t think he will, but let’s not disagree about that people!) he won’t be able to do so without at least one bid coming in which would give me my exit point. As always, gla.

BNC.... I don’t think he’s mismanaged things necessarily. Most if not all your points are valid, but.... and it’s a big but.... your point about the SP is also correct. In order to defend against being taken out for far less than fair value, he could, and should, in my opinion, have done more to protect the SP over the years. This is especially critical now we are nearing the key milestones on the journey. I hadn’t posted here for ages until the recent placing... which, again in my opinion, was a misstep. I have since caveated that by saying that if the rationale behind it was to dilute BHP and Newcrest, then maybe it makes sense. Seems to me now though, that it was in order that he could use the “fully funded” phrase in yesterday’s offer documents. Either way, I trust him, wouldn’t be in the share otherwise.....
But I swear, if I hear the phrase “he’s playing a blinder” one more time on this board whilst the SP remains sub 35p I swear I’ll lose control! Only time will tell whether he’s played a blinder or messed it up. As I say, I trust him, but there remains several potential pitfalls ahead. He’s spinning a lot of plates here.

Yep, my initial reaction to this offer was that it was a waste of time, money and effort when we should be focussed on progressing on other fronts. I posted as much this morning. However, should have followed the standard advice of reading first and posting later... as now I’m not so sure. I know that the documents on the Solg website are all written with only their slant on things, but they have to be accurate by law. If I was a Cornerstone shareholder and read that, I think I’d throw my lot in with Solg. So having been certain the offer was never getting through.... now I’m not so sure.

Been reading the offer details, apologies if this has been posted before, but loved this bit....

Under the current structure, after completion of a Feasibility Study at the Alpala Project, if Cornerstone wishes to maintain its 15% interest in ENSA it will be required to fund its pro rata share of development expenditures at a minimum of 10% of the required capital on an ongoing basis during the highly capital-intensive construction phase of the project. SolGold expects Cornerstone will face significant obstacles in financing such contributions particularly with the current capital expenditure estimate of US$2.6-2.8 billion implying Cornerstone will be required to secure up to US$390-420 million of financing. This represents greater than 5 times Cornerstone’s current market capitalization. In the current market this is considered a challenging task for a micro-cap holding company. Should Cornerstone attempt to maintain its 15% ownership, Cornerstone is unlikely able to arrange debt financing, a royalty, a metal stream or any other similar structure due to a prohibition on granting security over its 15% economic interest in the Alpala Project, which is Cornerstone's only material project. SolGold believes that Cornerstone will also face significant challenges in arranging equity financing, since third parties are likely to be discouraged from participating in any such financing due to the lack of data room access and availability to conduct due diligence, project control and influence as noted above. To the extent Cornerstone is able to arrange such equity financing, SolGold expects it will be highly dilutive to existing Shareholders given Cornerstone’s market capitalisation of just US$76 million ($103 million) against its likely required funding of US$390-420 million. SolGold believes holders of Cornerstone Shares should be greatly concerned about the extent to which the completion of such dilutive equity financings will limit the upside in Cornerstone Shares. Additionally, under its agreement with SolGold, Cornerstone cannot sell its interest in the Alpala Project without SolGold's consent, which may be withheld in SolGold's absolute discretion, and even then, SolGold has a pre-emptive right to purchase such interest itself. In the event of failure to fund its pro rata share of development expenditures and if Cornerstone's interest drops below 10%, SolGold may exercise its right at any time to convert Cornerstone’s remaining interest in the Alpala Project into a 0.5% net smelter return which SolGold may acquire at anytime for total consideration of only US$3.5 million.

By accepting the Offer, Shareholders can remove all of the financing obstacles above and safeguard their investment

Certainly putting the squeeze on!

I can’t make my mind up if this is a positive development. It’s not unexpected, but neither is the fact that it is unlikely to succeed. So whilst yes, it would be great to own 100%, if that outcome is unlikely, then only CGP holders are benefitting here. To the tune of 12% yesterday. Our SP was unmoved.
I am also concerned that all these boardroom tactics and bid preparations are a distraction from the job in hand here. PFS, DFS, drill results and financing.
If NM is intent on building a mine he should focus- almost exclusively - on steps to achieve that.
One last point for swazers.... news, particularly significant RNS can and will come thick and fast here. As nobody knows what this news contains, or how good or bad it may prove, trying to predict an SP movement this way is futile. If it were possible, the MIT boys would have perfected it years ago.

CGP up 12%

Yes Andybear, I know that’s what you meant, I was just clarifying the typo.

Andybear.... it’s 10 into 1, not the other way about, so price should be 25p or thereabouts not 0.25p
Think that’s what you meant, but just clarifying.

Thanks for that fallingknife, always good news when bigger players start taking an interest in one of your stocks. , I am not a short term trader, so will also be holding, but usually set an ambitious 33% profit take within 1 year on any new purchases... caught out not banking profit many times in the past. My figure here is 138p, so I would exit at that if Zeg got there before June 21.

Cheers fallingknife.... makes sense.

Hi red knight, good post. Agree with most of it, and I too am not concerned that Newcrest will offload their stake at anything near current prices. The one bit I slightly disagree with is where you say the current SP is irrelevant... unless or until Solg can get this nearer to reflecting the value of their assets, the more vulnerable they are to being taken out at less than fair value. In my mind, current SP is almost always relevant to any company. This holds true whether they take it to production or not.
I also believe that the market thinks they don’t plan taking it to production, or are pricing massive risk into the share were they to try to do so.

Was about to post, and realised Talatum at 08:44 pretty much nailed what I was about to say. Only truth that matters is the market reaction to the 2 RNSs. FTSE 250 down .85% Solg down 3.81%.