Another view11 Aug 2021 00:51
Courtesy LowTrawler@Advfn.
"...In my view, Alpala is not economic on its own and they need Tandayama. I believe this will delay publication of any PFS until late 2022 at the earliest as they will need to accommodate the 2 resources within the plan. The costs to finalise the joint plan will necessitate further equity raising. I believe they will actively seek to monetise Cascabel rather than take the whole process through. However, monetising before the PFS is likely to yield a disappointing return for shareholders.
Porvenir appears to have lost momentum. However, it looks amenable to being open-pit (subject to this being acceptable given the location is on the edge of a National Forest). It would seem sensible for SOLG to explore the potential satellite mines around Porvenir before preparing a PFS. In my view, that will also push any PFS to late 2022 or even 2023.
SOLG badly need to explore Rio Amarillo as this is likely to be a third huge find. However, it will then give them the same challenge as at Cascabel / Porvenir with several years of development and associated cost before PFS.
In essence, the mine opportunities identified by SOLG are massive and so the timelines / costs for their development are also massive. It was difficult enough for SOLG to handle Alpala, to handle Alpala, Tandayama, Porvenir and Rio will stretch them to breaking. Hence, my expectation of Cascabel being monetised at the earliest opportunity. It is slightly disappointing they have not announced any partnerships for exploration of the other sites. Having announced they were seeking partners, at least 1 or 2 should be ready to go. This will be key to them meeting their exploration obligations for each license.
From a shareholders perspective, I don’t expect any proceeds from Cascabel to be returned. I believe they will be required for Porvenir / Rio and regional exploration. Hopefully, the proceeds will be sufficient to deliver Porvenir and Rio to DFS. If so, I hope that SOLG then monetise delivery of the projects so as to provide shareholders with a return.
I know that most investors are focused on the massive resources found by SOLG. Logic would dictate that large players will want to exploit those resources and so SOLG will be a takeover target. However, Ecuador is still at an early phase of opening itself up to mining and there is a lot of regional opposition which will not be easy to overcome. Alpala is a complex development and, in my view, is not economic by itself. This explains why the big players have not attempted to acquire SOLG. The proximity of Porvenir to the National Forest is another potential worry. I expect the big players will only show interest when the PFS / DFS is published, and only in the specific project covered by the study. If correct, there will be no early return for shareholders and only patchy returns as each project is monetised...."
Sign In
Follow the stocks
