From Beacon Securities Target $23.00Zijin Makes $130MM Strategic Investment In Solaris This morning, Solaris announced it has entered into an agreement for Zijin Mining Co. (2899-HK, Not Rated) (Zijin) to make a strategic investment in the company by way of a subscription agreement. Zijin will subscribe to 15% of SLS shares outstanding at a 14% premium. We view Zijin’s strategic investment in SLS as a resounding vote of confidence on the quality and size of the Warintza project. Highlights • SLS will issue an affiliate of Zijin an aggregate of 28.48MM common shares at a price of $4.55/share, ~14% premium to the last closing price. • Upon closing of the Private Placement, Zijin will own approximately 15% of the common shares of SLS on a fully diluted basis. • The company will use the proceeds for the advancement and development of the flagship Warintza project in Ecuador and for working capital and general corporate purposes. We note that in December 2023, SLS reported that Solaris and Orion Mine Finance Management (OMF) entered into definitive agreements for a financing package of US$80MM mainly comprised of a US$60MM senior secured debt facility, an offtake with a buyback provision, a subscription for US$10MM in equity and a commitment for US$10MM in additional equity financing to advance the Warintza project. Solaris’ 100% owned Warintza project, is a surface exposed, higher grade, porphyry Cu-Mo-Au deposit in Ecuador. The project boasts a total mineral resource of 1.5Bt at 0.52% eqCu in the inferred and indicated category. Warintza is located proximal to other mines and copper projects. It is adjacent to the San Carlos-Panantza copper project (1.1Bt Cu). Our take: SLS continues to expand multiple porphyry centers of the Warintza project. Recently, SLS reported new discoveries at porphyry centers, where SLS believes it may have the potential for another high-grade starter pit. SLS continues to demonstrate the potential to add higher grades near surface, at all of its Warintza project targets and deposits. SLS already has a MRE (announced April 2022) of 1.5Bt grading 0.52% eqCu that contains 287MMt grading 0.79% eqCu, that can potentially support a starter pit. The starter pit could have a very low strip, as the higher grades start at or near surface. Even smaller discoveries of the near surface higher grades can add to the starter pit material, which could be highly impactful to the project NAV. Given Warintza’s grades and size, combined with the rate at which SLS is expanding it, and along with the government support, we anticipated SLS to eventually attract several qualified suitors. Suitors that would be interested in a long-lived asset with a sustainable production profile that has access to infrastructure including access to highway, abundant and low-cost hydroelectric power, fresh water, and labour. Today’s news is a confirmation of that. Zijin is not only capable of acquiring the project, but also capable of seeing the project through to construction and production. Zijin’s strategic investment in SLS is a vote of confidence. Valuation: SLS is currently trading at 0.13x P/NAV. Our valuation is based on a conceptual reserve of 1.2Bt grading 0.45% Cu, 0.03% Mo, 0.05g/t Au and 0.25g/t Ag. Utilizing a mill throughput rate of 30MMtpa initially, and moving to 40MMtpa eventually, and at our long-term commodity prices we derive a post-tax NPV7% of $5.89B. Using a 0.75x NAV multiple we derive a $23.00 per share target price, for a fully financed project.