Solgold Share Discussion Threads

[greenelf] 30/9/2020 09:06

Indeed, diluting the whole company with all future finds would have been far more disastrous. There was no credible alternative. So pack in the NM bashing.

[dozyduck] 30/9/2020 08:36

SwanV ! The maths can be a bit confusing, because NPV is actually the lifetime profit less the capex. ie for Alpala $4.5b = $7.2bn - $2.7bn.
Capex doesn't change, so a 2% fall in lifetime profit (ie 2%of $7.2bn = $0.144bn) leads to a $0.144 fall in NPV, which is 3.2%.
That is usurious in my view. Looked at another way, Solg can unwind the deal by paying back FNV enough to give it a 12-14% rate of return - again usurious.
As for the deal pointing to a value for Alpala, that would only be so if Solg is willing to accept the same terms all the way to 100%. Which no sensible seller would ever do, and that NM is hinting he would go almost all the way shows how financially illiterate he is. So its not surprising he's upset his major shareholders
The same might be true for Citibank who don't seem to have achieved much for the shares yet. I suspect they're tearing their hair out at NM's obduracy in paintng himself into a corner over developing Alpala.

[greenelf] 30/9/2020 08:21

It could well be part of the tactical game of defending the company. I wonder if BHP are also making any informal "sounding out" approaches. Massive game of poker, lucky NM is skilled at the the classic poker face. Seriously, all credit to NM, he is doing a great job from what I can tell.

[lowtrawler] 30/9/2020 08:16

In the last month, Nick has publicly stated they were racing against the clock to get PFS completed by end September. He expected all the content to be available but publication could be delayed by the need for review and validation.Either he was ill informed or fibbing. Alternatively, they now see timing delivery of the PFS as giving them a tactical advantage and so they will publish at a time to make maximum gain.

[lowtrawler] 30/9/2020 07:42

I don't see the missing technical data they needed to provide on MRE3 by the end of September. Not sure if this has any consequences?I have previously suggested PFS would be delayed into early November. The list of outstanding items makes end November or even December more likely.

[jarega85] 30/9/2020 07:29

Disappointing to not have any revised timescales. When is 'as soon as possible,' surely they have a target date they are aiming for!

[mknight] 29/9/2020 20:41

So NM buying a little time , hold back the PFS and get the drilling results out so we can rerate the share price . No one will bid without knowing the PFS results .

Puts the screws on Cornerstone .

All good .

[bogotatrader] 29/9/2020 20:26

Goldrush - thanks

[goldrush] 29/9/2020 20:21

BT

The overall message was a good one with as mknight said....exciting drilling news expected

They also said that the PFS will be soon....no date specified....

[bogotatrader] 29/9/2020 20:07

mknight...any other interesting takeaways from this evenings presentation?

[swanvesta] 29/9/2020 19:42

As just explained in the webinar, the FNV streaming deal was a no-brainer. If they were to raise the $100m through equity it would have been at the cost of at least 20% dilution. The effective royalty dilution is a fraction of that. There are just one or two big players wanting to sow division to suit their own interests - retail and institutional investors are overwhelmingly in support of it.

[mknight] 29/9/2020 19:40

Ingo..exciting drilling news in the next few days ....

[swanvesta] 29/9/2020 18:32

DozyDuck, can you explain how the streaming deal is so usurious? Even if we equate the 1% royalty to 2.5% equity, it values Alpala at $4bn. And it's been paid over prior to project sign-off, so should be compared with an NPV that is further discounted.

[lowtrawler] 29/9/2020 17:07

We know we will get an RNS tomorrow. As a minimum, it will add the missing technical details to the previous resource announcement. Alternatively, they could surprise us with the PFS containing the missing information ...... wouldn't that be a nice surprise!

[greenelf] 29/9/2020 16:57

We know already the gold recovery rates will be better, hopefully there will be other fundamental technical improvements. But yes, fair point.

[lowtrawler] 29/9/2020 16:54

greenelf. As per previous comments and also the masterinvestor article, unless the NPV improvement comes from having more metal, faster extraction or lower build costs, it will be shrugged off.

Investors have already priced in their own long-term metal prices and discount rates. The hints about NPV improvement in the PFS almost entirely relate to improved gold prices and reduced discount rate. Be careful relying on any headline NPV in the PFS when it is issued.

[lowtrawler] 29/9/2020 16:49

DD, a lot of potentially valid back of envelope calculations there and, of course, you are right from a strictly financial perspective.

What I have come to realise is that the local concerns across Ecuador relate to the environment and community. They don't trust the larger players and want to build a relationship of trust with SOLG. I believe Nick is correct, if we sell Alpala, that trust is lost and it will prove very difficult to develop our other sites. For this reason, I support retaining and developing Alpala.

Whether the financing is unduly onerous remains to be seen. There has been a lot of brinksmanship taking place. I would like to think that common sense will prevail. Ultimately, I think making additional finds at Porvenir and Rio Amarillo will lift our share price sufficiently to make an equity raise sensible.

[greenelf] 29/9/2020 16:43

I am hoping PFS NPV comes in at 5.5bn to 6bn. Maybe more?

[lefrene] 29/9/2020 16:41

LT, with Citibank on board I guess NM is going to do his best to get fair value, and he will have a good idea of what that is. Anyway, the next month ought to see something happen.

[dozyduck] 29/9/2020 16:24

LT. Very roughly - To develop Alpala Solg has to raise circa $2.7bn. If the DFS shows an irr above 25%, 70% of that might be by way of a project loan, leaving $800m needed if Solg is to retain 100% (85% ? depending on the CGP situation)) of the remaining value. Of that, repaying the project loan will take away about $2bn of the 'gross, after funding' PV, which is $4.5bn + $2.7bn. ie the value to Solg will be $5.2bn, but 'earned' over 55 years, although mostly after 15 years). That $5.2b has to be divided by whatever shares will be in issue after raising $800m (Plus whatever is needed to progress exploration of its other prospects).
Suppose raised at 50p, there will be more than 3.7bn ie Solg's NPV/share will be less than 140p.
But, as I say that will take 15-55 years to be earned.
so the market won't value Solg at anything like that. And even if it did start to value 'something' for Alpala, it won't do so until production is in view, which won't be until about 2025.
Will shareholders want to wait that long ? - Or will they prefer Solg to sell off Alpala now for (say) 50p per share (ie $1bn, which means that after funding Alpala itself, its NPV will be $3.5bn and not $4.45 bn) - and see more 'new' value from the new prospects without the dilution that will otherwise occur?

I think NM has painted himself into a corner by 'determining to develop Alpala.
And that is another reason, apart from his mad (and financially illiterate) suggestion to fund Alpala though expanding on an already a usurious streaming finance deal, why he has upset his major shareholders. I'm beginning to think Cornerstone has been right all along !

[lowtrawler] 29/9/2020 15:36

Take a few minutes to decide what you mean by robbed of value. At the moment, SOLG could likely invite bids and sell the Company for between 50p and 150p. By inviting bids, they will be seen as a forced seller and bids could be at the lower end of that range.

Alternatively, they could:

1. Sell Cascabel for between 40p and 140p (less probably 25% tax). Use the proceeds to develop our other sites. Having lost trust, it may prove difficult.
2. Raise $3bn to build the mine and create value of 100p to 150p. Use this a springboard for our other locations having built trust at Cascabel - maybe another 150p or more?

The best way to ensure value for current shareholders is to develop Cascabel. Any other option is likely to pass value over to the buyers and lose our prime position in Ecuador.

The reality is, Nick will see a minimum value around 100p and he controls 20% of the voting rights. I suspect BHP will have a similar view. Even if BHP and Newcrest join forces to make a lowball 50p bid, it is likely other interested parties would outbid them and 100p would become a minimum price for a successful bid.

In terms of value, what do you want? 100p from a bidder today or 150p, 300p, 450p in 10 years time having developed other properties across Ecuador?

[dozyduck] 29/9/2020 14:20

Lefrene. The 'value' to anyone mining Alpala has already been worked out. Its called the NPV. It is based on experienced consultants' detailed plans for building a mine and the extraction timetable and costs thereafter. So what are you talking about ?

[lefrene] 29/9/2020 14:12

LT, I just don't want to be robbed of the value here. NM's value by the Ecudorean government as a trusted operator, gives him an edge in negotiating with a potential partner. But the company still needs exploration capital. Eventually something will emerge as it keeps coming back to the basic, Solg's holding are too large to ignore, and Alpala can pay for itself very quickly.

[lowtrawler] 29/9/2020 13:30

LF, I honestly don't believe Nick will sell Alpala as a standalone site. He wants to be the trusted mining partner in Ecuador and selling our first find would destroy trust. CGP need to succeed at the requisitioned meeting if that is what you want.