Equity Analysis /
United Kingdom

GB : SolGold - Election result clears major risk hurdle

    Tom Price
    Tom Price

    Analyst - Strategy, Accounting and Sustainability

    Contributors
    Max Kaye
    Ben Davis
    CGS-CIMB
    13 April 2021
    Published by

    The victory of Guillermo Lasso in the Ecuador elections derisks the SolGold investment case and materially increases the likelihood of a takeover bid in our view. Not only was Lasso the pro foreign direct investment candidate, which should get potential investors off the fence, but the clear win allows for a smooth transition. Combined with encouraging progress on the PFS re-scoping and exploration at Porvenir, we are lowering the discount to 20% from 30% on our valuation. This raises the price target to 44p or just 2.6 weeks of BHP’s spot FCF generation.