Solgold Share Discussion Threads

[dozyduck] 20/4/2020 15:46

mk - actually that might be a good deal for Solg. c £800m would go a long way towards proving up its other prospects. (selling off each one as it becomes financeable is a good - maybe the best for shareholders - strategy). But whether BHP would think its a good deal depends on its own cost of finance. eg the net value to it of Alpala's NPV would be reduced to $3.2bn. (a lot less at present copper prices) More important, the IRR in its hands after paying away approx 20% of the NPV, would be reduced to around 20% (it's much more complicated than that - but takes too long to do the calcs) and that might not be enough to give it the return it (and its shareholders) wants. But who knows ? The NPV is at a 8% discount rate, and if BHP can raise finance at less than that, its net return would be better.
What this shows is that, yes, Alpala could be sold off - but at a much lower price than those on here hope. To get the best return on it for shareholders, as NM has said, its best for Solg to develop it itself. But that will take ten years ! (Elsewhere I've said NM's best strategy is to sell each prospect once it becomes financeable)
Its those sorts of considerations will determine each player's (inc Cornerstone's) present stance. (ie Slightly more complex than imagined on here)

[ntbb] 20/4/2020 15:43

And just alpha alone will create $58 billion dollars and then you have another 14 site and each one would create at least the same or significantly higher amount of money then alpha, this is no ramp but big companies like bhp, Rio barrick etc cant afford to let this go otherwise they wont be big miners

[ntbb] 20/4/2020 15:37

Guys just remember nick and the management said 10 bids received and more to come from smelters,

[lefrene] 20/4/2020 14:35

mnight we have to rely on NM's experience to make the best call. It's always about the money, so which ever way is the shortest most efficient route to going large, will be the one chosen.

[mknight] 20/4/2020 14:33

I still we will have a large jump in shares once the finace news is confirmed . If i thought we were going to stay at the same price i would have sold .

If NM telephoned BHP and said take Alpala off my hands for 40p the way DD is talking they would say no thanks .

[dozyduck] 20/4/2020 14:22

Do explain your definitions of 'absolute' value and 'notional' - that would be so kind.
Meanwhile for those who can read and understand, and as someone said, sentiment plays a big (the major) role in mining shares. Shares in a large find follow a well defined (and logical) timeline - initial euphoria and a sharp rise, followed by a long, drawn out. drift lower as funding uncertainties prevail (off-take funding for Alpala will be a tiny part of the whole issue). That's certainly why (as someone complained) GGP is now racing ahead of SOLG. It will pop at some stage - as bubbles always do, caused as they are by over-excited pi's rushing in where only traders tread and professionals certainly don't.

[lowtrawler] 20/4/2020 14:21

DD appreciate your input as you clearly have more mining experience than most on this board. I still have a meaningful investment here and so hope it pays off but I am no longer exposed to uncomfortable levels of risk.I suspect we will continue to trade in a 17p - 23p range unless we have a new discovery or have a takeover approach. I would previously have said that announcements on long term financing would launch the price upwards. I now believe that this is unlikely although will be happy to be proved wrong. Despite the ownership structure, I still believe we will get an offer to acquire Alpala, if not SOLG.

[greenelf] 20/4/2020 14:02

Lol, he seems to think value is absolute and not notional.Still a lot to learn, evidently.

[dozyduck] 20/4/2020 13:29

You're right Lowtrawler. It took me 15 years (after more than 20 yrs in all other market sectors (except banks and insurers) to work out what drives mining shares. The hard fact is that very few (and certainly not pi's) know how to value them. Brokers are especially bad at it (they make money selling to mugs after all - they're not in the business of selling 'value' to investors even if they pretend they are.) That's partly because no one understands what the real relationship is of an NPV (the only measure publicly available for a long term project but designed for a different purpose than its owner shares' value) and enables brokers to 'puff' a value so they can flog the shares. You're right too, in that Alpala's value is already in the share price. No one would bid for it (or is in a position to oust the existing strong holder) as it is. Plus I've already explained on here why only a fool would buy a project for its NPV. On top, when I was in the business of flogging shares to fund managers, I learned that they never take the slightest notice of 'specialist analysts' at brokers - but only supported their (then vast and ridiculous salaries and their positions at brokers - enabled by the then commission system - because they sometimes needed an industry specialist to answer their specific questions. Evidence ? Numerous surveys showing brokers analysts never get stock picking right - basically because they can't see the woods beyond the trees in their own little yard. Its sad for pi's, whose only 'research' is on these boards. Fund managers know how to look after themselves.

[mknight] 20/4/2020 12:56

Found it 530/m

So 30 millón pound would drill 70,000 m.

With the rest of the cash for wages plus what cash they have in hand .

So 5 sites x 13000 m should give them a good idea of whats interesting .

Lefrene not sure i would go big on one site , id they find something really special they could probably raise more funds and hit that site harder. .

[lefrene] 20/4/2020 12:47

mknight, if you are in a hurry then you put most of your rigs upon the most promising site, to prove it up as fast as possible. Then you have an asset that can raise more cash, and grow the number of drills available for more sites. I guess NM has a plan. It is of course not only richness of ores but also cost of infrastructure and transportation to consider as a whole. But if Blanca Nieve is gold rich, then I guess that's where you go first, and go big.

But if we small fry are discussing these things then the big hitters will not be sitting idly by watching a prize of this calibre slip through their fingers. I would guess that NM is being presented with various deals from one day to the next. It looks like Solg has several offers of finance from different places, the resource is of world class and has decades of capacity. Anybody who bought Solg for $5 billion gets Alpala containing $58 billions at todays metal prices, and they get the rest of the assets for free. It would be the best deal any miner ever made. Perhaps they're sat waiting to see who blinks first?

[arcadian] 20/4/2020 12:28

LOW

One`s view will probably depend upon the assumptions one makes so I can understand your conclusions/actions. Time will tell whether those assumptions were right and all we need to do is wait.

[mknight] 20/4/2020 12:16

Lefrene

How will they start the drilling . One rig on 5 sites ... one on 10 sites .one o 14 sites ? Can you remember the costs per rig per day ?

[mknight] 20/4/2020 11:28

Once funding is sorted /CV then its a case of not having to worry about money for a while and get on with drilling .which imho protects the share price and gives us plenty of news on the drilling that will take place on 5 or 6 or 10 projects .

Will be great to see whats underground .

Also Q3 Will give us a chance to sell or make a royalty agreement on many of the other sites should we choose .

[lefrene] 20/4/2020 11:16

Thanks Lowtrawler, a well thought out and explained stand point.

I take a more bullish view, I feel there is very little downside from the current price on the basis of the sheer size and positive attributes of Alpala, but also that the number of other sites than can be proved up once there is some working capital available. NM is much more than a hired manager he has a lot of skin in the game, and also I suspect a competitive spirit that drives him to become the biggest miner of them all. But it is taking a heck of a long time to extract value from this business. Things seem to be picking up a bit with these healthy expressions of interest from smelters and traders. So lets see where that goes, and whether it prompts a bid from out of the blue.

[mknight] 20/4/2020 11:05

Lowtrawler

Its good you feel comfortable with a reduced shareholding . No good worrying yourself about it .

Lets hope your 100k is worth 30p soon .

[lowtrawler] 20/4/2020 10:57

I have had to take a long hard look at my investment in SOLG to determine whether I have the right exposure. Essentially, I have no experience investing in mining and was initially attracted by the price volatility for some short term trading. After finding that I was completely unable to predict the short term price movements, I looked at the fundamentals and decided to stay.

I'm a finance guy. I have been involved in acquiring and divesting a number of large businesses and often have had to run valuation models. As such, I am at home with fundamental valuations. However, I learnt early on that share prices seldom reflect the underlying value of businesses and depend more on market sentiment than true value. Over time, the underlying business value does act as a marker for where the price should head but it can take many years for this to happen.

Looking at the SOLG fundamentals, I have previously expressed a view that, in an acquisition situation, the offer price would be 60p - 120p. I see no reason to change that view.

If we take Alpala to production, we will need somewhere around GBP 3bn of additional funding. It doesn't really matter whether this comes from equity, smelters, banks or otherwise, it will act as a dilution on the ultimate value to current shareholders of Alpala. The current market cap of SOLG is a little short of GBP 400m, meaning that current shareholders will end up owning somewhere around 10%. Assuming an ultimate NPV of around GBP 5.5bn, that's only around GBP 550m or just short of 30p per share. Add on the other prospective sites and you likely end up somewhere in the mid 30's.

This suggest an acquisition would be far more attractive to us and release value much earlier than going to production. It also suggests that, barring an acquisition, there is limited scope for price growth. We can hope for another Alpala to be discovered but there can be no guarantees.

As DD has previously pointed out, we are substantially owned by a small number of investors, each with their own agendas. This will stand in the way of anyone bidding.

Overall, I believe I have been sucked into SOLG by excitement over size of the underlying assets and so increased my exposure to a level which is uncomfortable. There are still many political and execution risks which warrant a discount to the underlying value and so I have substantially reduced my exposure.

It appears to me that the current valuation is about right for SOLG. Sentiment is bound to swing the price, both up and down, but, if we take this to production, it will be several years before a return starts to be made. Of course, discovery of a 2nd Alpala or an acquisition offer will raise the price substantially and I will look like a fool.

I formed the views expressed above over the weekend and so have now reduced my holding. I have retained a meaningful holding of 100k, in line with my risk appetite, but feel much more comfortable with this level of exposure.

[ntbb] 20/4/2020 10:49

With that uber bull rns on record I think a fantastic deal will be done otherwise think of the consequences of management words

[ntbb] 20/4/2020 10:41

Has to be a win win situation for us shareholders


"SolGold Chief Executive Officer, Nick Mather commented: "The high quality of the concentrates and the gold rich nature is attracting significant interest from not only traditional financiers, but from traders and smelters, pointing to a strong outcome in the generation of a near term development funding package. Running the parallel processes of permitting, feasibility and financing with concentrates like SolGold has at Alpala, will, in SolGold's view, deliver a much quicker than expected development decision."

 

Demand for Apala concentrate expected to drive improved terms

 

[mknight] 20/4/2020 10:22

Level 2

100k at 20.5

Not much until wnts at 21 and the 200k at 21.25 .

The red cloud i interview will be on wednesday at
9.am eastern time . Probably news Wednesday am imho .

[ntbb] 20/4/2020 10:07

That l2 is looking really good, got a feeling 21.50p will be taken out today, although they dont show actual size, today bid is going super strong

[mknight] 20/4/2020 10:05

Market looks strong .

Mm.s want shares

Put a 36k trade on to buy 36k at 20p and
Got jumped .