TD Flash NoteSolaris Resources Inc. (SLS-T) C$9.21 Augusta Continues to Add; Opportunity Becoming Clear Arun Lamba, CFA Jamie Carmichael, (Associate) Event This morning, Equinox Gold Corp. (EQX-T) announced that, in response to a request from Solaris, the company has agreed to sell a portion of its shareholdings in Solaris totaling 10mm shares to Augusta Investments Inc. and a strategic shareholder for gross proceeds of ~C$82.5mm.
Impact: POSITIVE We are encouraged to see continued share purchases by insiders (and strategics) as it provides us further comfort in our belief that SLS shares are attractive at current levels.
Recall, insiders have continued to be buying shares in the market (in Q4/20, filings show that Executive Chairman, Richard Warke, purchased ~2.2mm shares in the market for ~C$10mm). This was in addition to the 6.6mm shares he purchased (~C$34mm) in December's placement (which at the time was a premium to market financing).
As a reminder, Solaris has what we view as very strong corporate and insider ownership, accounting for nearly 70% of its share structure. Prior to today's sale, Equinox Gold and Richard Warke owned 27% and 26%, respectively. The Lundin Family and Ross Beaty own 5% and 4%, respectively. Management owns a further 5%.
EQX reported that it remains committed to supporting Solaris as a long-term strategic shareholder and does not currently anticipate making any additional changes to its share position. In addition, Equinox Gold will grant the buyers warrants to purchase an additional five million Solaris shares from the company for a period of 12 months at C$10.00/ share. In the event all warrants are exercised, the total gross proceeds to Equinox Gold would be C$132.5mm.
Following the sale of the Solaris shares (10mm) and assuming the granted warrants are fully exercised (5mm), and if all the Solaris warrants held previously by Equinox Gold were exercised (~10mm), EQX would hold approximately 19.97% of the issued and outstanding Solaris shares on a partially diluted basis.
Solaris reported a cash balance of ~C$93mm (December 31).
We continue to believe that Solaris is in the early stages of making multiple worldclass discoveries among its cluster of porphyries on the Warintza property. We expect the stock to continue to re-rate higher as the company demonstrates the growth potential of the project