Solgold Share Discussion Threads

[pob69] 30/4/2020 14:50

Broker Red Cloud update from yesterday's news Solgold $SOLG $SOLG.L $CGP #cascabel #ecuador

This update also made an important improvement to the concentrate that could be produced fromthe project, which should make it more attractive to potential buyers. With Cu now at its highest point in nearly six weeks, SolGold’s shares should experience continued positive momentum.

[rougepierre] 30/4/2020 14:00

Hi DD...

On 31 March the SOLG price hit 46p when all we had done was this...

"To date SolGold has expended approximately USD39m, completing geological mapping and soil sampling over 25km, along with an additional 9km of Induced Polarisation and 14km Magnetotelluric "Orion" surveys over the Alpala cluster and Aguinaga targets. SolGold has to date completed approximately 29,000m of drilling and expended over USD 39M on the program, corporate costs and investments into Cornerstone."

At that time only 13 prospects were identified.

Since then, we've had a Maiden MRE on 3 January 2018 with the latest significant update on 7 April 2020.

Among our 70+ prospects, 12 of which are priorities alongside Alpala, including especially Rio Amarillo, Timbara and Blanca, the majority of which have been drilled or have shown impressive samples and yet the share price is still only 28p after 10p on 16 March...

I still believe that the smart thing to do is sell Alpala to the highest bidder and use the funds to develop the other prospects. I believe that will deliver the fastest and greatest long term value.

Whatever the calculations of NPV etc. we are still just talking about Alpala and, as many have said, its value is in truth what a buyer would pay for it.

And the same is true of our share price by definition and the irony is that both the strength and what is holding the price back is the intense concentration of institutional investors. That leave relatively little free float, which means that when nothing much is happening and the vast long term holdings aren't buying, the price is at the mercy of stale PIs and MMs...

But when there is blockbuster information, like a funding deal or a bid, for when BHP took a strategic stake, the price can rocket simply because of the lack of liquidity...

So in conclusion, this is WAAAYYY undervalued and the NPV is virtually irrelevant...

As Nick has said, there is a shortage of world class projects (we may have several) and the major miners are running out of copper and gold to mine...they have to acquire new projects to sustain their long term shareholder value, otherwise, as Shell and BP may have to do, they would have to progressively wind down the resources and the companies themselves...

AIMHO as usual...

[lowtrawler] 30/4/2020 13:59

Why do you say that SOLG has a problem at all? It has an asset that needs to be exploited in a way that gives maximum value to shareholders. We are at an early stage in the process where there are a lot of unknowns. A lot of posters have previously misinterpreted that the returns from Alpala will flow directly to existing shareholders. This has caused some huge valuations for SOLG to be banded around. Over the next few months, a lot of the unknowns will be resolved and it will then be much easier to determine a fair valuation.

[dozyduck] 30/4/2020 13:59

Sorry - wrong. I was going by FDN's gold content. Alpala has copper on top of course.

[greenelf] 30/4/2020 13:51

That is relief. With all this gloom I was getting worried :)So Solg has a good problem then? Phew.

[dozyduck] 30/4/2020 13:46

Mkn - From further reading it seems the $1bn included $430 m previous costs. For info FDN's 8% NPV was $402m in 2016 on about the same gold price as Alpala (having been bought from Kinross in 2014 for $240m) Its about 1/2 Alpala's size. Worth running a comparison when I've got time.

[greenelf] 30/4/2020 13:42

Such a shame, it was all going so well. Now we find out is an almost worthless mine. We will have give it away! Oh dear!

[lowtrawler] 30/4/2020 13:37

The warning sign in the Lundin data is how much of the post production cashflow goes to those providing the funding. Existing shareholders in SOLG haven't yet provided any of the needed 3bn funding. The lions share of the returns goes to those who provide that funding.DD has already created an expectation that we will need to provide some of the funding, say 0.5bn, and even that will only entitle us to a minority share of the return from Alpala. This is the main reason why the underlying value of SOLG is open to so much doubt.

[mknight] 30/4/2020 13:34

DD the problem seems that they went over budget.

[mknight] 30/4/2020 13:29

Yes or tomorrow .

[greenelf] 30/4/2020 13:02

..or tomorrow!

[dozyduck] 30/4/2020 13:01

Fruta del Norte precedent if applied to Alpala. FDN's capex (then) was to be $692m but by mine start was said to have increased to $1bn. ie the streaming and preproduction facility provided 43% of initially planned capex and 30% of actual. To repay, it is giving up 34% of the mine's free cash flow - which is far bigger than if that $300m had been provided by a bank loan. (*depending on the mine's irr) As I've always said, I hope SOLG doesn't have to resort to streaming deals to finance Alpala !

[mknight] 30/4/2020 12:52

DD

They still have 540 million to spend possibly to help fund Solgold is this your feeling . ? We will know next week.

BHP might want the same deal maybe an even larger amount .

[mknight] 30/4/2020 12:37

So they have paid 460 million to get 400000oz of gold over 5 years .so if gold went to 2000oz there investment would pay them 800 million ..breakeven gold price of 1150 or thereabouts .

Is this correct ?

If it is then they feel the gold price will be strong for the next 5 years which most believe the same .

Something simular might suit Solg .

2.5 billion .. to raise ....

So first 5 years gold x 41000oz

Copper sales to Solgold ..mine paid off after 5 years .

[phattrader1] 30/4/2020 12:24

What’s the implied consequences for SOLG?
I would expect something similar but with a longer mine life and much more Gold than Lundin’s mine, this is a goer.

[arcadian] 30/4/2020 12:23

Wonder what they will pay to get total exposure to 23 million OZ of gold and a fair

bit of ( much needed) copper thrown in for free.

[dozyduck] 30/4/2020 12:11

Re Newcrest Lundin streamlining purchase

Here is Key deal terms from Newcrest press release From this we can roughly work outthe terms (involves taking a proportion of output at a low price)

 $460 million cash consideration for the shares of the companies that hold the Facilities  The book value of the Facilities as at 31 December 2019 in the financial statements of Lundin Gold Inc (Lundin Gold) was approximately $552 million1, which implies a book value ratio of ~0.83x  Applying analyst consensus long term gold price of approximately $1,400/oz to the projected life of mine production, the estimated yield on the gold prepay and stream facilities is approximately 6%  Applying a spot gold price of approximately $1,700/oz the estimated yield is approximately 11%  Newcrest, as a lender under the Facilities, will receive cash flows from the Fruta del Norte mine, with approximately 34% of free cash flows from the mine estimated to be directed to service the Facilities over the next 5 years, ahead of Lundin Gold equity holders, assuming a gold price of $1,400/oz  Newcrest acquires a customary lender security covenant package, which includes a requirement for  Lundin Gold to seek approvals from the senior lenders and Newcrest as subordinated lender under the Facilities for any material amendments to the mine plan, financial model and operating budget

Newcrest Managing Director and Chief Executive Officer, Sandeep Biswas, said “The purchase of these gold prepay and stream facilities and the offtake agreement increases our direct exposure to the cash flow generated by the Tier 1 Fruta del Norte mine, in-line with our stated growth strategy. The acquisition is expected to be earnings accretive with the gold prepay and stream facilities expected to provide Newcrest with economic exposure to approximately 400,000 ounces of gold from the mine between 2020 and 20263. With gold prices at the levels we see today, Newcrest expects to receive significant cash flows which will rank ahead of Lundin Gold’s equity holders.”

[lowtrawler] 30/4/2020 11:51

Mk. There's no rush for the share price to go up. It's much healthier for it to pause and allow investors to get used to new levels. The danger in a rapid rise is it leads to an equally rapid fall as people take profit. Be comfortable knowing that we are still on a rising trajectory.

[mknight] 30/4/2020 11:41

Ok DD what you got . What so stink about it .

[mknight] 30/4/2020 11:39

Keep buying .. thts my phrase ..

Ok keep buying .

Nice 200k at 28.88 a few more and mr mm will be running to take out or off those 29p .

[dozyduck] 30/4/2020 11:39

Phat ! Thanks for that Lundin snippet, Looking at the original deal should give a clue how Solg's package might look But I think you've misunderstood. Newcrest has paid $460m to acquire the gold streaming and other revenues which were given up by Lundin in 2017 in exchange for $300m of (part) funding for Fruta del Norte. WE need to look at the deal to see what those revenues are. They are likely to be A PROPORTION ONLY, OF FDN'S OUTPUT, for which Newcrest will pay a given (low) gold price - That will give it a net profit return on its $460m. It certainly won't be anything like a full gold price on FDN's full output as you assume. All Newcrest has said is 'exposure' to FDN's output, of which it will get a small share. Even so - VAIRY INTERESTINK !

[phattrader1] 30/4/2020 11:32

our project value is above USD4bn at current prices, and the value in the ground is more than USD60bn, without counting our other 74 properties in Ecuador. 

let's not forget, we have more than 60moz of gold equivalent in the ground - that is a lot, even for major gold producers.

keep buying.

[arcadian] 30/4/2020 11:31

I have to admit that I found it a very good guide, tempered only by its users and their way of looking at things.

[lowtrawler] 30/4/2020 11:17

Arcadian, I was serious about helping people with the ready reckoner I posted yesterday. It didn't receive any attention but, as a minimum, I think all SOLG investors should have their own views on the elements I suggested in that. It includes metal prices and valuation of other SOLG prospects. It's very simplistic but should cause investors to reflect on why they are investing here and what assumptions they are making on underlying value.