My taking a profit on a small proportion of my stake in SolGold after its spurt to 12p following Newcrest International’s offer to buy 10% at 6p per share is looking silly now that the shares are touching 18p – after what looks like a mini-buying stampede today. And after dithering when to get back in, at what price, I still haven’t put it all back in.
Since my last comment on 9th September, I’ve also been dithering over a necessary update for Master Investor – to catch a fast-moving situation.
The week up to 22nd September was providing a clue that, following Newcrest’s recent offer to match mining financier Maxit Capital’s proposed investment (on behalf of its clients – the key one of whom has been revealed as TSX listed Guyana Goldfields Inc., whose CEO is to join SolGold’s board) by offering to invest $10.8m at 6.1p per share, something more was brewing. A steady but uninterrupted rise in the shares from 11.4p to 13.2p indicated that someone else was building a stake and was paying up to 13p.
But no one could tell whether it was Newcrest protecting its position, or a ‘superior investment proposal’ – perhaps from another mining industry player – which SolGold had indicated would supplant Newcrest’s offer if it came along.
Now, with SolGold’s announcement on 22nd September that it is Newcrest upping its offer to 12p per share, as well as Maxit, we can surmise that one of the Maxit clients who were being approached to support a further funding at the doubled share price was buying beforehand – in other words on inside knowledge.
So now, holders at the 13th October shareholder meeting have an even more glittering set of proposals to rubber stamp (unless yet another ‘superior investment proposal’ comes along!).
The new proposals will see SolGold receiving $10.14m from Maxit for a 4.4% stake, and Newcrest stumping up $22.9m for 10%. With its existing cash, SolGold will have $48m – enough for more than a year’s further exploration of Cascabel using seven drilling rigs (instead of only one up until a few months ago) on the further seven promising targets so far unexplored at what SolGold is now, for the first time, describing as one of only five ‘Tier One’ copper-gold discoveries in the last ten years.
And that is unless another superior proposal comes along from the many industry participants who SolGold says have been showing ‘intense interest’.
So, even though I’ve dithered, and provided I act quickly, I may yet be able to profitably reinvest the remainder of what I shortsightedly skimmed off my SolGold stake a few weeks ago. I think readers, as well as I, ought to act quickly because SolGold also says that it is now more urgently pursuing its aim of an additional listing on the Toronto Stock Exchange, to tap the ‘intense interest from North American investors’.
SolGold is now rapidly drawing in more and more interest. It is ‘in play’ in an industry which, although copper is at a ten year low, is looking to fill the gap in copper supply looming in 5-10 years time – just when Cascabel could be coming into production. For them, a rising content of gold at Cascabel (about half the resource by value) will be the icing on the cake – getting thicker with a gold price that more and more investors believe has nowhere to go but up.