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Will SolGold management changes restore investor confidence?


SolGold [LSE:SOLG], the London-listed, Brisbane-headquartered gold and copper exploration company, operating primarily in Ecuador, has announced a raft of management changes.

On the way out is Ayten Saridas, group chief financial officer, who is replaced by Keith Pollocks as Interim CFO; and Keith Marshall, independent non-executive director, who was driving the development of SolGold’s strategic Cascabel copper-gold project located in the Imbabura province of northwest Ecuador.

Marshall stepped into the role of interim-CEO after his predecessor Nick Mather was ‘retired’ in January 2021, following a shareholder revolt in December 2020, where almost half of the shareholders voted against Mather’s reappointment as CEO. Mather had been with the company since its foundation in 2006 and remains on the board as non-executive director with a shareholding of nearly 4%.

At the same 2020 meeting, investors led by Cornerstone Capital Resources [TSX.V: CGP] which owned 8% of SolGold, flagged up their intention to replace the entire SolGold board. At the time, Greg Chamandy, chairman of Cornerstone said: “The current SolGold Board is incapable of managing the affairs of SolGold for the benefit of all shareholders in a prudent and transparent manner.”

This came after a second failed attempt by SolGold to buy Cornerstone in a hostile bid. Cornerstone owns 15% of the Alpala copper-gold project, part of SolGold’s Cascabel asset. Cornerstone were also unimpressed about SolGold bringing Franco-Nevada Corporation royalty financing into the Cascabel project.

SolGold agreed a USD150m financing package, and USD15m bridge loan in May 2020 with Franco-Nevada for the Alpala project, which infuriated Newcrest Mining [ASX: NCM], another one of SolGold’s shareholders, which had urged it to raise funds via equity.

In a June statement, SolGold said: “In addition to the cash position of approximately USD26m as at 30 June 2022, SolGold continues to consider, and has had discussions with its major shareholders regarding possible financing structures and options to obtain funding to further progress the Cascabel development, including a potential equity raise.”

All change at SolGold

It looks like the revolutionaries might get their wish. Priy Jayasuriya, the firm’s chief financial officer had already left the building in November 2020. Marshall welcomed Darryl Cuzzubbo as chief executive in December 2021 into the office he’d just got comfortable in, and now himself seems to be off to pastures new. He will stay on as an advisor to the company’s technical committee to oversee Cascabel and ensure a smooth transition to the new vice president of projects, Bernie Loyer, who joined the company in July.

On leaving Marshall said: I would like to thank the people of SolGold for a fascinating, if somewhat challenging 18 months. There is no doubt in my mind that the Alpala deposit in the Cascabel Project will make a Tier 1 mine […] I wish Darryl and his new executive team every success.”

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Also following them through the exit door is Jason Ward, head of exploration. Ward has been with the company since it was founded. He is stepping down for personal reasons, according to a statement published this morning (11th August) as he lives in Australia, and a continuation of his role would need relocation to Ecuador, which he didn’t fancy.

The management changes come after a bit of a rocky ride for the share price. Given the general market conditions SolGold has offered a -21.6% year-to-date return and -10.8% over one year-. The share price has ranged between 21p and 40.8p over a 52-week period. The shares were trading at 22.95p mid-morning after closing the day previously at 23.25p with a market capitalisation of GBP533.6m

However, brokers are still quite peppy about the stock. Liberium Capital had SolGold as a ‘Buy’ with a target price of 44p in January. Peel Hunt also had a ‘Buy’ rating for SolGold in October 2021 with a target price of 56p.

SolGold still in the driving seat

Despite the perceived management turmoil, when it comes to it SolGold are still in the driving seat at the Cascabel Project – which is a seriously chunky deposit that has the potential to become a Tier 1 mine.

Back in April the company announced plans to start mine construction at Cascabel in the fourth quarter of 2024. SolGold said the project’s prefeasibility study would be completed by the end of this year, with the final feasibility study due next year.

In its prefeasibility study for the Alpala underground deposit, it outlined 9.9 million tonnes of copper, 21.7 million ounces (Moz) of gold and 92.2Moz of silver in measured and indicated resources. The prefeasibility puts investment at USD4.88bn over nine years in pre-production and post-production capital.

Of the amount, USD2.75bn would be pre-production capex to be invested by 2029 and USD2.14bn by 2032, when full production should be achieved. The average annual production in the five years following initial ramp-up is put at 190,000 tonnes per annum (Tpa) copper, 680,000 ounces per year of gold and 1.3Mozpa silver.

Once constructed, Cascabel will become one of the top 20 copper-gold operations in South America. It also has a number of exciting exploration prospects including Porvenir, which is being test-drilled currently, and the Helipuerto project in southern Ecuador.

On paper, SolGold has a strong hand, an exciting future – especially as the energy transition gains momentum and the demand for copper increases – it remains to be seen whether the management changes will be enough to restore confidence in the miner, drive the development of Cascabel into an operational mine, and secure the requisite finance for SolGold to match its ambitions.

As Marshall said on leaving the building: “The challenge, as with all similar projects, is turning an exploration dream into a mining reality.”


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

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