Solgold Share Discussion Threads

[lowtrawler] 28/11/2020 09:11

Mirabeau, it was part of the standstill agreement. BHP couldn't vote against the Board.

[mirabeau] 28/11/2020 08:26

I have no mind for legal or contract matters but what is and how relevant is this ? - 'non blocking' (below).

Is the non-blocking clause part of the Standstill Agreement and what exactly does a 'non-blocking' clause prevent BHP from doing?

* September 2018: BHP purchased Guyana Goldfields’s 103.1m shares @ 26.59p /
share (20% premium)
• October 2018: 100m shares @ 45.00p /
share (28% premium)
• November 2019: 77m shares @ 22.15p /
share (13% premium)
• Non blocking
• Anti dilution @ 10%
• 2 year standstill (October 2020)
• SolGold right of first refusal disposal

[lowtrawler] 28/11/2020 08:02

MF, I fully support Nick. It comes down to whether you believe his rhetoric about building a major and not selling of parts or whether you think that's a ploy to encourage higher bids.If he's building a major, the dilution will make your eyes weep. In reality, BHP won't let that happen. There will be a bid in the next 12 months.

[michaelfenton] 28/11/2020 05:39

Lowtrawler - you are right failure to support NM and things may very well fall apart. he has a huge amount of skin in the game and it seems logical that smaller shareholders should support him. He has a history of taking companies to takeover and I imagine and hope he will do so again. I nice secure pay day in the next year is to me much preferable to waiting 5 to 10 years for possible larger reward? Who knows what the cost to SOLG will be. But first he has to prove the value of our holdings to get a decent offer. Even though he can be a bit annoying I am fully behind him. Others seem to imagine they could do a better job? I doubt that. And yes it is all a game.

[zoros1] 27/11/2020 23:21

Dozy...in addition to LT's post, need I remind you that NM owns 93,000,000 shares too!
Z

[lowtrawler] 27/11/2020 22:46

DD is not wrong with anything said. The question is, will Nick use the capability to dilute in a destructive way?He needs to convince others that SOLG can plough their own furrow. Having the ability to issue equity is part of that. Only by convincing others will he maximise shareholder value. Fail to support him and the plan falls apart.

[arcadian] 27/11/2020 20:34

I doubt that BHP NCM and CGP and other large holders will vote for that either but is dilution proposed in section 11b ?

pursuant to an offer by way of a rights issue in favour of holders of ordinary shares in proportion
(as nearly as practicable) to the respective number of ordinary shares held by them on the record
date for such allotment (and holders of any other class of equity securities entitled to participate
therein

Not my field so would welcome an informed reply to support or refute DD`s point.

[dozyduck] 27/11/2020 17:37

I'm opposed to the increase in authorised capital- as all shareholders should be. Maybe some don't realise that NM's disapplication clarification is referring the the 'authorised'capital - which in sterling terms (the accounts give it in dollars) - means authority to issue about 770m shares of 1p. (haven't got latest share cap in ££'s so as to be precise) which is an increase of over 40% in current shares. That's heavy dilution in my book. And I'm increasingly coming to view a change in leadership as in shareholders best interests. NM may be an ace explorer/discoverer. But his attempts to move to be a developer don't look reassuring. - illustrated by the complaints about his inability to forecast feasibilty study timelines (which is not the only indicator he might be out of his depth). Even less reassuring is his apparent willingness to subject existing shareholders to significant dilution of their current share in Alpala to his own long-term empire building agenda - just so as to be seen as an ace developer as well as an explorer. Everyone in this world, NM included, reaches his level of incompetence eventually, at which stage, unfortunately, he has been allowed, by those around him who don't realise what that level is, to get to be in charge.

[zoros1] 27/11/2020 16:34

Dozy - disappointed that you are against the resolutions. You need to ask yourself this: If the motion to depose NM is carried, who will takeover and will the new incumbent trash an otherwise slow but steady gravy train?
NM is a known quantity. He is not everyone's cup of tea (I am not struck on him, for one) but he is a KNOWN KNOWN!
Don't rock the damn boat, you and those like you could capsize the whole bloody boat!
Z

[rougepierre] 27/11/2020 15:39

Nick and insiders have 20.94%, which is why without BHP he needs us to get to 25%...

[lowtrawler] 27/11/2020 15:25

MF, the question has arisen a few times and the answer always seems to be debatable. That's because nominee accounts hide a multitude of sins. As far as I can tell, around 70% to 80% of shares are held by institutions. Generally, under 70% of shares are voted at the AGM and so about 35% is needed to win a vote. Nick has 20%, BHP 13% and so together, they win. We can guess that NCM and CGP will be opposing, together they have 20%. Hence,. BHP are kingmakers.

[michaelfenton] 27/11/2020 15:02

Can anyone tell me please how many shares are in the hands of Private Investors? Seems quite important given recent speculation. Personally I am in favour of a complete takeover but not a lowball offer of 50P - lets start the bidding at 100+p. I am convinced that is what NM is aiming for and he will be a very rich man.

[arcadian] 27/11/2020 14:48

Low-- thanks
You`re right I got carried with the possibility of an alliance with a view to selling Alpala.

[lowtrawler] 27/11/2020 14:33

Arcadian, they only have a 6% - 7% stake in SOLG, not 15%. So long as BHP is onside, SOLG have nothing to fear from NCM or CGP. Remember, Nick controls 20% and so with the 13% from BHP, he is in a strong position. If BHP were to break ranks, it is difficult to see how Nick could win.

[arcadian] 27/11/2020 14:18

CGP might be weak financially and in many ways financially irrelevant but their 15% vote if allied to NM and BHP while worrying to some might attract others. This might explain the AGM exhortations and the keeping our powder dry lack of news.

[lowtrawler] 27/11/2020 14:15

RP, the reason the financing plan is contingent is the need to get the DFS to validate elements of the PFS. I can see your argument but I doubt that either SOLG or CGP would interpret it as you have.

SOLG have not created any liability for the potential build costs and nor should CGP. They only become relevant when a build decision is taken. However, both SOLG and CGP do make reference as part of their going concern statements on the need to potentially fund this.

Ultimately, the CFP will show that SOLG can fund their 85% share of the build costs and so the ball is in CGP's court. CGP have spoken about arranging a streaming deal, similar to what SOLG have with FNV. In turn, SOLG have said that CGP are unable to enter streaming deals without their approval. CGP have responded that SOLG are unable to withhold approval unreasonably.

[rougepierre] 27/11/2020 13:28

Hi LT...here's the answer I posted on LSE:

The original agreement says:

"At this stage, SolGold would have an indirect 85% interest in the Cascabel project. SolGold shall carry Cornerstone through a 15% interest in the project to completion of a bankable feasibility study on SolGold's schedule and budget."

The definition of a 'bankable' feasibility study is:

"A feasibility study is "bankable" if it has been prepared in enough detail and with enough objectivity that the company could submit it to investors or lenders when seeking financing for the project."

Given that NM is working towards the PFS being coterminous with the Contingent Financing Plan, I would read the PFS as the BFS...

So that begs two fundamental questions:

How will CGP finance the costs from completion of the BFS through to net positive cashflows, as the only costs they can defer are those up to the completion of a BFS

How on earth can they not have a contingent liability, not only for these costs, but also for the prospective $420 million they will have to stump up as part of the financing...we're not talking about costs here, we're talking about the finance to PAY the costs...

[lowtrawler] 27/11/2020 13:22

RP, Cornerstone are no longer in control of their own destiny. They are entirely reliant on SOLG undertaking a financing deal for Alpala which accommodates them or a bid being made for SOLG where the bidder also wants CGP. They gave up control when they rejected the SOLG bid.

You have raised an interesting conflict in their accounts regarding the $72m asset but no liability. However, they are likely to argue they intend to dispose of the asset before the liability falls due and the $72m value reflects a reduction for the liability.

I don't believe they will need to contribute towards the capital cost just because we have put together a contingent financing package. I will need to check back through the contract but from memory, the DFS needs to be published and a build decision made. At that point, some of the build costs becomes due from CGP, payable within a few weeks. Those are not refundable if subsequently they can't meet their whole commitment (or at least 10% of the total build cost) and so I suspect they will default within weeks of the DFS.

The reality is, it looks as though they have messed up some of the dates for the PFS / DFS that you mention and so we should fallback to the SOLG published dates.

Goldrush, because they have used a valuation firm to calculate the implied mine value of the Cascabel project, they would not need to demonstrate any ongoing discussions, only that the value was suitably reduced for the liability.

[goldrush] 27/11/2020 13:07

rougepierre

From one FD to another and former Auditor, your thinking is thought provoking. Could it be they have documentation to show that they have ongoing discussions with BHP,NCM etc.....which they were required to show to the Auditors to back up their case.....In fact it would seem like a necessary requirement....IMHO

[pob69] 27/11/2020 12:39

This German outfit seems to have actively promoted Solgold over the past 6 months.

"...You can feel that the copper clock is ticking at SolGold. Market participants are entirely ignoring the unfavourable environment for gold, and this could accelerate significantly after the "Taxloss Season" in Canada, especially if gold stabilizes. One should therefore definitely take hold on weaker days in the coming weeks."

[rougepierre] 27/11/2020 12:13

And finally, there is the matter of 'going concern', which is fundamental to the viability of any company and here is what they say:

"The assessment of the Company’s ability to continue as a going concern and to raise sufficient funds to pay for its ongoing operating expenditures, meet its liabilities for the ensuing year, and to fund planned and contractual exploration programs, involves significant judgments based on historical experience and other factors including expectation of future events that are believed to be reasonable under the circumstances.
The Company’s business of exploring for minerals involves a high degree of risk and there can be no assurance that current exploration programs will ultimately result in profitable mining operations. The Company's continued existence is dependent upon the preservation of its interests in the underlying properties it acquires, the discovery of economically recoverable reserves, the achievement of profitable operations, the ability of the Company to raise additional financing, if necessary, or alternatively, upon the Company's ability to dispose of its interests on an advantageous basis. Changes in future conditions could require material write-downs to the carrying values of the Company’s assets. "

And finally, how can they possibly take these apparently directly contradictory positions:

"Consequently, because there is uncertainty about the completion of a positive feasibility study no provision for a contingent liability for the repayment of the Carried Interest has been recorded in the Consolidated Statement of Financial Position."

While valuing their interest in ENSA at $72 million as follows:

"Based on the enterprise value of SolGold, the valuation firm has calculated the implied mine value of the Cascabel project using the following key inputs:
• Risk adjusted CuEq lbs of 18,537 MMlbs
• Value attributable to Cascabel $/lbs ranging from 66% to 73%
• Adjusted $/lbs ranging from $0.026 to $0.028
• Marketability discount ranging from 0% to 10%"

[rougepierre] 27/11/2020 12:13

Further astonishment on their Accounting policies, especially re Contingency:

They are using definitive forecasts of the completion of PFS and DFS in their public statements and presentations in order to validate the underlying value of their investment in Cascabel, but they make this statement in their Financial Statement:

"By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence and potential quantum of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events."

Even if they made a mistake on the date of the DFS, it is still scheduled for completion no later than just over a year from now and yet they carry this outrageous statement in the FS as well:

"Consequently, because there is uncertainty about the completion of a positive feasibility study no provision for a contingent liability for the repayment of the Carried Interest has been recorded in the Consolidated Statement of Financial Position."

A quite astonishing conflicting statement...furthermore, while they don't say so anywhere, the only possible reason for saying there is uncertainty about a positive feasibility study is if they believe there will be a bid for Cascabel or Solgold...

Furthermore, they predicate their $18 a share valuation on the value of Solgold/Cascabel which could only be remotely true if the project goes to production.

[rougepierre] 27/11/2020 12:12

I know their share of cots is significant and although they can be funded out of future Alpala revenues, they actually have to start paying their share of Alpala costs as soon as the DFS is completed (see below).

My reading of this is that, while the costs incurred up to DFS can be deferred as above, any costs incurred between DFS and net cashflows from production have to be paid immediately...

The prospective need to fund raise $420 million immediately after DFS is far more damaging and indeed I believe this will crystallise as soon as SOLG announce the CFP, which could still be by end December...which may partly explain why CGP's SP, far from being $18 is now virtually where it was on 14 September...and could well sink lower after the equity raise...

Meanwhile, further to the point about Contingency, the statement in the MDA says:

The Company has no significant contingencies other than which are disclosed under note 15 of the Company’s annual audited consolidated financial statements."

Note 15 says:

"Environmental contingencies: The Company’s exploration activities are subject to various laws and regulations governing the protection of the environment. The Company conducts its operations to protect public health and the environment and believes that its operations are materially in compliance with all applicable laws and regulations."

The only vague acknowledgement is this:

"The Company has no significant source of operating cash flow to fund its exploration and development projects. Funding for projects requires equity or debt financing. The Company has limited financial resources and there is no assurance that funding will always be available to allow the Company to fulfill its obligations on existing or future exploration projects."

What planet are they living on...As a FCA qualified Auditor I would be qualifying their MDA and Financial Reports...

[rougepierre] 27/11/2020 12:11

Surely this is wrong...

CGP's latest filed MDA states:

"SolGold has announced that the PFS is expected to be completed prior to the end of Q3 2020, with a
definitive Feasibility Study scheduled for completion at the end of Q1 2021."

Apart from the fact that it directly contradicts this statement from the latest presentation:

"Pre-Feasibility Study (“PFS”) underway, expected to be completed Q1 2021, with definitive Feasibility Study end of 2021"

Which means they are either incompetent or wrong, but...

If the first statement is true and the DFS is "scheduled for completion at the end of Q1 2021."

This would be incredibly bullish for SOLG, who currently have this as by End Q4 21 and, from Cornerstone's own MDA the following statement means that they will have to start paying their proportion of any costs for Cascabel from the date of completion of the DFS...if their MDA is correct, that would be from 1 April 2021 and yet they have provided no contingent liability...

"Subject to the satisfaction of certain conditions, including SolGold’s fully funding the project through to completion of a feasibility study"

And I know we've had the debate about Cornerstone's liabilities, but the following is significant, because it mean that although they can repay

"the Company’s financed costs to completion of the feasibility study at Libor plus 2% from 90% of the Company’s share of the cash flows from the Cascabel project"

they have to find 15% of the CFP amount immediately after the DFS is completed...how on earth are they going to do that...? We're talking about, prospectively, $420 million, when they're struggling to raise $7.7 million just to keep the lights on. They say they will have no difficulty raising the money, but which banker is going to lend $420 million while Solgold has total control over the scale and pace of development of Alpala...?

"Pursuant to the agreement, SolGold will finance the Company’s 15% interest in the project to completion of a feasibility study on SolGold’s schedule and budget. Cornerstone’s intention is to monetize its interest in Cascabel, but if it is unable to do so on acceptable terms prior to completion of the feasibility study, then it intends to finance its 15% of Cascabel expenditures following completion of such feasibility study, which would be US$150 million for each US$1 billion of capital cost in the event of a positive feasibility study leading to a production decision."

[lowtrawler] 27/11/2020 11:24

DD, thanks for your recent contributions. Well explained and reasoned arguments.