Solgold Share Discussion Threads

[cielos] 01/6/2020 17:09

Holding well, considering that it has double in price recently

[mknight] 01/6/2020 16:38

UT 24.50

Nothing special . How low do we go ?

Got a bit of cash tucked away but will wait before adding .

[rougepierre] 01/6/2020 15:40

All of these discussions are academic...

SOLG will be taken out...

Just as the share price reflects what SOLG should be at any one point in time (i.e. the balance of buyers and sellers), so...

The takeout price will reflect the value to the ultimate successful bidder, depending on how far they are pushed in an auction...

The final successful bid will be determined by what the buyer is prepared to punt on the value of the other prospects, but what we know for certain is that...

Both copper and gold reserves being mined are depleting; all the majors need to acquire new fields to keep their cashflows rolling and their shareholders happy; otherwise they might as well buy back their shares and shrink the company steadily...so...

Ecuador is the new Chile...

The Fed will continue running the printing presses until the global economy turns the corner...gold/silver will continue to rise...

With no shortage of cash resources at a long term historically low interest cost, any one of 7/9 majors could take out SOLG...

Tick tock...

I stick to my prediction: opening bid no less than 40p; final takeout at 80/125p...

No I'm not ramping, juts reading the tealeaves...

AIMHO as usual...

GLA

[fsawatcher] 01/6/2020 15:14

right issue or open offer gonna be the way to go for the last $700m assumes they ave the $2bln in bag

shareholders gonna ave to stump up at leats 30% as they say need some skin in game as funders aint gonna goive shareholders free ride

that aint way it work

nm alreadies told ya that some of it gonna come from equity

[dozyduck] 01/6/2020 15:10

I've been wondering why Newcrest (pretended ?) to be miffed by the FNV deal. They of course have bought (at a 50% premium) the $300m Orion stream deal at Fruta del Norte (and also have 35% of the latter) so maybe they wanted similar with NM. On the other hand FdN is up and running (and is gold, not copper) so would be more immediately attractive. Anyway, seems worth pondering what Newcrest might be thinking of (FdN doesn't need its block caving know-how) bearing in mind it has just raised another $670m to expand its interest in S America (over and above its FdN deal)

[lowtrawler] 01/6/2020 14:00

DD, yes mezzanine finance is convertibles of some description. It's a tricky one because they will lead to dilution and so will need shareholder approval. BHP & Newcrest probably won't be happy at dilution. It's why we need to wait for the announcement.

[arcadian] 01/6/2020 13:43

Fair point. I had forgotten that we seem to have some already and from the noises off it seems that they will definitely add value.

[lowtrawler] 01/6/2020 12:21

With the exception of Rio Amarillo, I think they have all the permits they can handle at the moment. Their relationship with the government is good and will assist with future permitting. The important thing is to get the permits alongside local support and that takes time. If they don't have funding to develop the other permits, the permits themselves are worthless.

[arcadian] 01/6/2020 12:03

LT


I too agree with you in that the gamechanger is the remaining assets but surely the most important and immediate issue is the permit situation without which funding will be irrelevant but with permits etc sorted finance will not be an issue. Ingo and Nick know this.

[dozyduck] 01/6/2020 11:57

Lt - Mezzanine finance I assume is convertibles or similar ? They are said to be expensive (and involve eventual dilution) ! - But might enable NM to avoid an immediate equity issue. So seems a good way out ! Except that is it not secured on a company's assets ? And if no assets (yet) would add to the expense.

[lowtrawler] 01/6/2020 11:35

DD, I think we are both agreed that the most important piece of missing information for SOLG at the moment is how they intend to fund their other prospects.Ingo has indicated they will be funded through mezzanine facilities. These need to be announced either before or with the release of the FNV money. All we can do is wait for the announcement because it's impossible to anticipate what they will look like.

[dozyduck] 01/6/2020 11:10

Agree LT. Phat's rose spectacles extend to assuming a high gold price at the same time as a recovered copper price. The latter is low for the same reason gold is high. Economic uncertainty. Both together is unlikely.
And to assume someone will pay $1-2bn for Alpala assumes his cost of capital is low enough to make its higher cost to him (build + acquisition) acceptable. Except for Arab sheiks or pop stars I doubt they exist.
We have to assume none of existing shareholders would want to sell Solg outright. They're there for the extra medium term potential and know no-one would offer enough.
And to expect a sale of Alpala alone means assuming enough of the major shareholders would want to sell and that they're like Phat - wanting a quick buck. I believe they, too would want to wait for Alpala to achieve maximum value - which can only be by developing it. Most of them don't need a quick buck.
Which still leaves NM in a bind. He will want to fund other prospects much earlier than Alpala can deliver, calling for at least a $100m-$200m annual drilling spend over at least two years. Hocking Alpala via more streams to pay for anything not Alpala just isn't possible. Any hocking will have to be of the new prospects themselves, and because they're still risky would cost an even bigger fortune than the initial FNV deal.

[lowtrawler] 01/6/2020 10:19

Phat

I admire your relentless attempts to talk up the value of Cascabel to existing Shareholders, particularly in the event of a takeover. However, the discount rate and commodity prices used by SOLG in the PFS are irrelevant to anyone aiming to acquire us.

The reality is, any predator will be looking for about an 18% Return on Capital and so will use that as their discount rate. They will have their own models regarding future commodity prices and so will use those to establish Low - Mid - High forecasts of revenue. They will also have their own views on funding structure with so much being funded by debt, existing cash, NSR agreements, convertibles etc.

Once you model an optimal funding structure, make deductions for risk and apply a required 18% Return on Capital, the remaining NPV is the potential value of Cascabel to an acquirer. I have run these calculations and get a maximum of 80p before deductions for risk. My most optimistic projections don't go above 125p. My current view of risk adjustment is still 50% and so Cascabel currently has a potential acquisition worth of only 40p - 63p.

The real value is in the potential of the other sites. It is becoming increasingly clear that SOLG believe they have at least another 3 Cascabel's in their portfolio. If they were all confirmed and all 4 sites were at the current level of development, the potential take-out price would be 160p - 250p. It is possible that some of the big players close to the SOLG discoveries would be willing to take a punt on the other sites paying off and so pay a premium towards them on top of Cascabel. This is why I believe, in a takeover situation, the price could be between 60p and 120p. However, anyone willing to pay those prices would be doing it in anticipation of the other sites being successful.

[phattrader1] 01/6/2020 10:18

Good point lowtrawler.
All points to a takeover - when? Sooner rather than later Cz Gold and Copper and Silver are all gonna rocket. Time is against the Majors.

[lowtrawler] 01/6/2020 09:44

Ingo also made a comment in the LATAM interview regarding the buy-out clause included in the FNV deal which allows SOLG to buy their way out of the NSR agreement. This aspect has largely been ignored. However, Ingo said it was important to SOLG that this clause was included.

There are only 2 reasons why having a buy-out clause could be important:
1. You think there might be a lot more value in the commodity being mined than current forecasts.
2. You want any potential acquirer to be able to extract themselves from the deal.

[arcadian] 01/6/2020 07:34

MK

In this contest between reason and gut could you be a little more specific about what your gut is telling you? Otherwise the jury will get confused.

[mknight] 31/5/2020 19:01

Lowtrawler

My gut tells me not .. And as you know my gut is not to be dismissed lightly .

[dozyduck] 31/5/2020 17:31

LT - I saw somewhere that NM had mentioned it as 'warranted because will be closer to production" - The last 5% used in Ecuador was, I think, Fruta del Norte in its 2016 PEA which, then, was only three years from 1st production. It had an after tax NPV of $676m at 5% and $402m at 8%, in return for 670m initial capex, giving an after tax irr of 15.7%. Note that the Ecuador Govt is guaranteed 50% of all profits !! - Wonder if that puts off some contenders for mining in Ecuador ?
As for Phat's 'expectations' I can't see any justification for what appears to be wishful thinking !- maybe the same for NM. Potential buyers if any will already have cast their slide-rules over Cascabel and whatever whatever discount rate or copper price NM conjures up won't make the slightest difference. Its obvious he's trying to persuade the less informed - Why ? - Only one answer
PS-LT re FNV site visit. I can't quite see why a site visit is all that necessary. The PEA should have had all the validation needed, unless FNV can't even see the site camp on Google Earth - or unless it just enjoys a jolly.

[phattrader1] 31/5/2020 17:21

I just don’t believe they will be a “major” for the following reasons:
1) 2018 article on SOLG being a takeover target
2)2019 clauses in the BHP November RNS where they’re not allowed to bid u less agreed by the Board and put to shareholders, or if someone bids first
3) Recent FT article on “bolstering defences”
4) Ingo putting together a whole corporate finance team in house since Jan-2020 to work on their financial modelling and marketing the numbers
5) Ingo saying “M&A in the sector will pick up” in the coming months.

Seems to me the whole “we will raise finance of $2.7bn and we are $2bn of the way there” and “we have Franco on board for $150m but only if they complete the site visit” Is all smoke to get the bidders to come forward and get the bidding done before the gold prices rocket more or the election next year.

[lowtrawler] 31/5/2020 16:27

DD. I must have missed where SOLG are now touting around NPV at 5%. Regardless, I think we all know that any potential investor will apply their own cost of capital and expected commodity prices in arriving at their perspective of NPV. I don't have any sense that there is desperation in the funding position with Ingo or SOLG generally.

I think a more important statement made by Ingo during the LATAM interview is the expectation that FNV will only make their site visit in the next 2 months. I was certainly expecting them to visit early June and so for the funds to be released by mid July at the latest. If they don't visit until the end of July, it could be mid to late August before the funds are released. This is significant because it will also impact when they need to announce the mezzanine financing for the other sites. It potentially pushes the next significant announcement out from mid July to late August or even early September.

[lowtrawler] 31/5/2020 16:15

mk, mergers and acquisitions are not the same as the NSR deal done with FNV. Hence, Ingo can only be referring in general to an expectation of increased mergers / acquisitions. Note: he was talking about the industry in general and not about SOLG.

[phattrader1] 31/5/2020 16:15

I believe the following metrics / upgrades are what will be presented in the upcoming PFS report:

6% will be the base discount rate instead of 8%.
Copper will be $3.30 based on a 2025 price.
Gold will be $1,700 instead of $1,300 and 7% higher recoverability.
Mineral resources In the Measured and Indicated categories may be upgraded by 5-10%.
By then Corberstone might have been taken over too so 100% ownership.

They will aim to get a $7bn-$8bn NPV woth funding all secured.

They will want £1.25-1.50 for a takeover before October.

All in my
Opinion. He’s not a producer - he’s an explorer 😂

[mknight] 31/5/2020 15:17

Was Ingo Hofmaier talking in general or talking about Franco or maybe some other expected visit when talking about M&A .