Solstice Gold Corp V.SGC.W

The deal is around the corner (Not Likely)

[StockExpertPro]

With a NPV of $345 million at a 10% discount (post-tax)
If you deduct the 40% stake of Enamco on the Sunridge Gold Project then that only leaves around $200 million dollars. I highly doubt the Chinese would pay $200 million for the Sunridge Gold project. They might offer $50 million but I think that is a long shot. I think SGC will need a full feasibility study done on their 5th and 6th deposits to obtain financing or any serious buyout offers.
In the long run SGC's best bet is to take this project into full-scale production. Until then company needs to reduce or slow down their cash burn rate until then.
Management should steer clear of the Chinese. If I remember correctly they were already burned once by them. They don't want to make that mistake again. In the long run I think the company will be successful with their mining project but there could be some rough times along the way. Be prepared for the ups and downs.

Note: If gold and silver prices continue to go lower. This could further impact the progress of financing or the possibility of a buyout taking place.

Base Case metal prices used - $3.25/lb copper, $1.00/lb zinc, $1,400/oz gold, $25.00/oz silver

When the mining license is granted the Government of Eritrea will have a 10% carried interest in the project and ENAMCO (Eritrean National Mining Corporation) will be purchasing an additional 30%. ENAMCO will therefore be responsible for 33.33% of all capital and operating costs of the mine.

Plus SGC management claims that they were able to reduce the initial capital requirements to be financed by over $130 million. I would be skeptical about this because SGC will be operating in a 3rd world country in Eritrea. There is too many unforeseen factors that could drastically increase the overall amount of financing needed to go take the project into production. Having properly paved roads, steady water supply and energy (fuel) costs. Although management claims project location and access is good. I'm skeptical about this too.

Project Location and Access

All four deposits included in the Study are located within a 30 minute drive on paved roads from the capital city of Asmara with close proximity to power, water and an international airport. In addition, the Red Sea port city of Massawa is approximately 120 kms east of Asmara via paved road.

Financing the project could easily cost over $500+ million dollars like management originally estimated if there are any major unforeseen factors/problems.
According to SGC management they will now only require over $400+ million dollars to go into full-scale production. On a positive note the cheap Eritrean labor could reduce some of the costs but they will probably be unskilled workers that lack experience.

• Initial capital cost Phase IA & IB Direct Shipping Copper Ore & Heap-Leach Gold - $46 million
• Initial Phase II & III flotation plant capital cost estimate - $357 million

https://www.sunridgegold.com/s/PressReleases.asp?ReportID=585985