Solgold Share Discussion Threads

[mam fach] 21/11/2018 10:52

Probably reason BHP were allowed to buy in is that THEY don't want to buy SOLG out.
This sends a mixed message.
SOLG will be a success but IF we go it alone it will take longer.
Think this uncertainty is holding share price back.
We all agree NM is holding his cards close to his chest.
One thing is certain I am holding on to my shares.

[alwaysevolving] 21/11/2018 10:01

Yes, cheers Mirabeau, very interesting read indeed. It does however seem to send some mixed messages re their possible intentions on SOLG?

Interested to hear how others on here have interpreted that piece?

[mirabeau] 21/11/2018 09:41

No need for thanks but thanks anyway

The pleasure's in the knowledge that we all benefit from BHP's involvement here

M

[goldrush] 21/11/2018 09:33

Mira

Thanks also from me.

That is a very pleasant read IMHO

[arcadian] 21/11/2018 09:17

MIRA

Well done.

[mirabeau] 21/11/2018 08:43

SolGold Plc.

Alpala Exceeds Expectations

Impact: Positive

SolGold has exceeded expectations with its recent resource update for its Alpala deposit in Ecuador. The expansion of the high-grade core has exceeded our previous estimates, resulting in an increase to our NAVPS estimate. This resource update paves the way for company to publish initial economics on this world class project in early 2019E. We continue to view Alpala and the wider Cascabel project as a world-class deposit with scale potential that separates it from the pack.

Highlights:

- Expansion of the high-grade core exceeds expectation, benefits our estimates. Besides our expectation of a doubling of the Alpala resource, we expected a 50% increase in the high-grade core at Alpala Central (Figure 2). High-grade core results beat our estimates by 17% on tonnes, 17% on grade and 33% on contained metal. In our view, project economics are driven by the high-grade core, and this growth has boosted our estimates.

- A significant increase in contained CuEq. Using the 0.3% CuEq cut-off, contained copper increases by 77%, while grades remained relatively consistent. Importantly, there was a significant increase in Indicated tonnes both overall and for the high-grade core, improving our confidence in the potential of this deposit (Figure 1). It is likely that the most recent strategic investment in to Solgold by BHP anticipated this higher-grade core improvement.

- Better grades, better payback. To remain conservative, we have modelled the continuous portion of the high-grade core (mined years 1-7) to be 180Mt grading 1.85% CuEq (was 180Mt grading 1.67% CuEq), which has allowed for a better payback, reflected in an increase in the project IRR to 24% (was 20%). The increase in grade has allowed for a 19% increase in the projects after-tax NPV to US$2.82B (was US$2.38B).

Valuation:

- Resource update drives increase in our estimates. By accounting for the recent resource update at Alpala, we have increased our NAVPS for SolGold to C$1.47/sh (was C$1.30/sh). SolGold trades at a slight premium to peers (0.44x NAV vs peers 0.36x) and we believe a further premium is warranted given the scarcity and scale of Cascabel and that willing suitors are ready to pounce. Upcoming catalysts: 1) Ongoing exploration and 2) Maiden PEA (Q1/19).

[5070481] 21/11/2018 08:40

INtersting read. Both sides of the options covered it seems. DOnt want to go all in on one investment but then also want to have control of the assets. THey cant have it both ways I would have thought.

[mirabeau] 21/11/2018 06:36

Nov 21 2018 at 5:10 PM
Updated 23 mins ago

Reformed BHP seeks licence to spend

BHP chief financial officer Peter Beaven briefed investors on the miner's spending plans on Wednesday.

by Peter Ker

BHP says it has learned from its past errors and can be trusted once more with big spending decisions on projects and acquisitions following changes to internal assessment processes.

In an investor briefing designed to rebuild confidence in BHP's licence to spend, chief financial officer Peter Beaven said the miner had been making better decisions in recent years and was more likely to do small acquisitions in early stage assets than "big ticket" purchases of existing mines.

With its debt under control and shareholders being treated to a year of record dividends and share buybacks, Mr Beaven said BHP needed to continue investing in projects and could not do so effectively without the trust of shareholders who were left unimpressed by bad spending decisions like the 2011 US shale acquisition.

"The discipline around good investment decision making has been, and always will be, a good thing. But the risk is we confuse no investing with good investing," Mr Beaven said on Wednesday.

"On one hand we know that over-investing destroys value but under-investing likewise can also destroy value. We need to find a balance and for us the key to having confidence in our ability to find and manage that balance is the capital allocation process.

"It's fine to have a better framework or better evaluation processes. The acid test is whether we are making better decisions. We think we are, and our track record of recent years shows this."

BHP's capital spending has more than halved since 2013. Mr Beaven's comments come after a two-month period in which BHP has spent $131.9 million buying 11.1 per cent of copper and gold explorer SolGold, which has found prospective acreage in Ecuador.
High risk, high return

Mr Beaven said mergers and acquisitions (M&A) were a harder way to create value because a bidder had to achieve a rate of return after paying the market price for assets.

"That is why we don't really major on M&A as a fundamental driver, certainly big ticket existing assets as opposed to the early stage development assets," he said.

But Mr Beaven said BHP needed to continue investing in high risk, high return project options like SolGold and the Trion oil joint venture with Mexico's Pemex, and would progress "judiciously at an early stage" to build confidence before it committed "really big capital" to acquisitions.

"We could lose all our investment on these if, for instance, exploration fails. But we could create the tier one assets of the future," he said.

"Not all of them will come off, some will fail, but we will not have bet the farm on any one individual option."

Mr Beaven said the cyclical nature of the resources industry created "major value opportunities" and it was therefore critical for BHP to get the timing of its spending decisions right.

He said maintaining shareholders' trust and a strong balance sheet when the cycle was depressed would allow BHP to invest counter-cyclically.

Embedded options

In comments that may also prove to be pertinent to BHP's newly acquired stake in SolGold, Mr Beaven said BHP needed to "own or have control of access to embedded options" so it could "execute at the timing we choose".

He said BHP was keen to add to its copper and oil project options, but indicated the company was unlikely to acquire new assets in bulk commodities like iron ore and coal.

Mr Beaven said BHP had created a more "objective" assessment process where the company's commodity divisions were responsible for suggesting project options, typically brownfield expansions that built upon existing assets, but not acquisitions, which were the responsibility of a central strategy team.

The changed structure is designed to separate those doing project analysis from those doing project promotion.

The capital allocation framework introduced by BHP in early 2016 requires investment in projects and acquisitions to be measured against returning cash to shareholders, and Mr Beaven said the company's focus on shareholder returns would "not waver".

Since ditching its progressive dividend policy in February 2016, BHP now devotes 50 per cent of underlying attributable profit to dividends every six months, and may add to those dividends if there is surplus cash available after paying debt and maintaining its existing assets.

end

[mam fach] 20/11/2018 23:48

Glad someone agrees with me.
Is it possible Alpala could be sold off ?
Keeping remainder of Cascabel for further exploration.
Just thinking out aloud.
Mining companies seem to be interconnected through joint ventures
and subsidiaries.
Also Directors or non- Executive directors who
have been on various boards.
Interesting to see which way price moves tomorrow.
GLA

[alwaysevolving] 20/11/2018 21:53

Mamfach, I agree,

also the recent substantial amount of 60p staff options and the updated MRE put out early? Like you say, all the recent RNS/presentations etc. I believe an offer will come sooner rather than later if not already in the pipeline? And think it will come from BHP. Why else would they have agreed not to increase their stake for the next two years but with the option to make a full offer? Just My opinion.

[mam fach] 20/11/2018 21:39

Just get the feeling Solg or part of it is up for sale.
Only got to cross the T's & dot the I's.
Far too many Rns's & presentations for it not to be a come & buy me signal.
WDIK.

[mirabeau] 20/11/2018 19:06

A fella called Ned from L-SE met Nick today at the 121 Meeting and had a quick chat with him. Ned's comments are below -

--

121 Meeting - Today 15.32pm

'Met NM by chance as I did not have an appointment. Asked if he was thinking of selling piece by piece and he said that what they have in the pipeline would last generations and in effect make them bigger than BHP Or RIO which he said they would not allow therefore he thought solg would get bought out Nd if we were they were going to pay big time. Seems he may be expecting offers and I would say he has a price in his head.
He also said that the Blanco nieces deposit had a couple of billions worth in gold. Interesting then he got a coffee and moved on. Food for thought. Cheers Ned
Ps exceedingly strong buy!!'

Today - 16.28pm

'I cannot put down all the expletives that he said about the stock market and the price we are currently values at, which must be in his opinion much much higher. Cheers Ned
Ps ( like Mr Kipling) exceedingly strong buy!!'

--

[lefrene] 20/11/2018 18:01

Arcadian, AAZ have an all in production cost of $535 per oz of gold, I believe they average 1.45oz per tonne of ore, they also produce some copper from that ore. They took over old workings and invested £100mn in new equipment, recently all come good after about 10 years of grafting, now debt free and paying a divi. So it can be done, but SOLG is on a completely different scale, and hopefully will enjoy low water costs and low energy costs at Alpala. Solg is just plain cheap, every dirty trick will be tried to own it as cheap as possible.

[pob69] 20/11/2018 17:03

Here's the ppt for Nick Mather's 121 Mining presentation $SOLG.L SolGold $SOLG #ECUADOR $CGP

Mystery solved about the 11 (from 10) priority projects. Cisne Loja target is now both epithermal and a porphyry priority.

The slide showing tenement holders around Cascabel has been removed.

[pob69] 20/11/2018 16:40

National Bank of Canada Outperform target price raised from C$0.95 to C$1.10 $SOLG.L SolGold $SOLG #ECUADOR $CGP

[pob69] 20/11/2018 16:33

New 121 Mining interview with Nick Mather sounding very confident $SOLG.L SolGold $SOLG #ECUADOR $CGP

"The party is not yet over at Alpala..."

"PEA analysis is well underway, expect report Q1 2019 - sooner rather than later and PEA studies by end of 2019."

"Regionally, 4 epithermal and 7 porphry priority projects"

"BHP investment sends powerful message to Ecuadorian govt and we intend to make Solgold a household name in Ecuador.... for the benefit of all Ecuadorians..."

[arcadian] 20/11/2018 16:20

I seem to remember that gold miners mad something like $300 profit per oz after expenses. We have indicated and inferred c. 22million oz of gold with more to come on this site and several other prospects.

If true the profit on the gold alone would be c. £50 billion 8 times our current Mk Cap. No wonder NM said that we were cheap. I do hope that he can extract the true worth here. He has a good sales track record so my money stays with him even on a bad day.

[dmitribollokov] 20/11/2018 16:00

Shame this RNS came on a weak day, risk assets getting smashed today...

[lefrene] 20/11/2018 15:47

It's a guess but from the figures of a small very efficient miner I hold I believe it will cost around $600 to process a ton of rock to extract whatever is in it. A new mine would have all the latest and best kit, and Alpala does have access to copious water and there is grid energy near by, both of which will help. I'm sure there are others here that have more hands on knowledge. But if my $600 guess is anywhere near, then yes the potential profits are very substantial and will be so for decades.

[5070481] 20/11/2018 15:38

NOt just cost of setting it up. Cost for capital and internal rate of returns to be considered as well as the risk still associated with the operating country and mining taxes.

Valuation models attribute different mutilples to indicated and inferred resources levels as well.

They should be releasing their PEA early in teh new year though so we shall see what numbers they have come up with. I have no doubt that BHP were granted visibility on these before deciding to fund the placing.

[arcadian] 20/11/2018 15:24

Does anyone know how much it costs to mine per ton- capex and operating costs?

Our in the ground is valued by the market at £50 per ton and yet the copper sells at c. £5000 per ton. We have 14mill tons worth c. £70 billion before mining costs. Surely here is a massive profit to be made after making us a generous offer , paying the capex and mining the stuff?

The gap between our market cap and the potential profit is enormous. No wonder the majors are looking at SOLG which with other prospects is still growing widening the gap even further.

I am new to this area so please correct my thinking gently. My facts and assumptions may be wide of the mark and I am happy to sit at the feet of any Gamaliel. Otherwise I shall wait for the PEA next year.

[mikalan] 20/11/2018 15:02

I'm not entirely surprised by the lack of share price movement. Everyone expected the MRE to double - it did. Some will have bought in on that certainty, many will already have been here. Question I'm sure many short termers are asking, is what will drive the price now?

I'm sure all LTH are more than aware of where this will end up, but patience is often in short supply in this game. Best case a suitor makes a move based on the certainty of the resource.

[lefrene] 20/11/2018 14:41

I suppose hot money is always looking for a fast buck mam fach, whereas this is about global players seeking out continuity of supply four or five years ahead. It's a waiting game for the buried value to find an owner and end user. At least you are not going to wake up one morning to find a £300 million blackhole in the accounts, because they have been forward accounting for unpaid sales, whilst not handing over the VAT and employment taxes!

[mam fach] 20/11/2018 14:32

Any possibility holders are bailing out as not even amazing news,
which we have had time after time ,lifts share price.
If so is it short term holders in for quick profit
or despondent long term holders ?

[5070481] 20/11/2018 14:12

LOoking at the size of some of the sells, either someone is less than impressed by the results or we have a forced seller. SLightly surprised it hasnt managed to hold onto a bit more of its gains since it traded up this morning rather than gapping