SolGold secures $750m gold stream funding for Cascabel
SolGold secures $750m gold stream funding for Cascabel
15th July 2024
By: Mariaan Webb
Creamer Media Senior Deputy Editor Online
Exploration and development company SolGold has finalised a substantial funding package totalling $750-million for its Cascabel project, in Ecuador. The funding marks a milestone for advancing the copper and gold project to a final investment decision (FID).
The financing includes a syndicated gold stream agreement with Franco-Nevada and Osisko Bermuda. Under this agreement, SolGold will receive $750-million in project advancement funding and a portion of development funding. In return, Franco-Nevada and Osisko will receive a share of the gold produced from Cascabel.
An initial $100-million will be disbursed in three tranches, with the first expected on Monday. These funds will be used for derisking, permitting and completing a development funding package and completing a feasibility study necessary for the FDI.
The remaining $650-million will contribute to funding construction of the project, which will require an estimated $1.55-billion to build.
According to a SolGold timeline, an FDI could be forthcoming between 2026 and 2028.
President and CEO Scott Caldwell said he was “thrilled” to finalise the gold stream with Franco-Nevada and Osisko.
“This agreement not only secures a significant portion of the capital required to fund the construction of Cascabel, but also validates the vast potential of the Cascabel project. The $100-million dedicated to derisking and technical work is crucial for the next steps in our project development,” said Caldwell.
A 2024 feasibility study demonstrates an aftertax net present value of $32.2-billion and an aftertax internal rate of return of 24%, based on a four-year development period for an initial 12-million-tonne-a-year operation ramping up to 24-million tonnes a year.
Franco-Nevada president and CEO Paul Brink said that the gold stream agreement aligned with the group’s strategy to invest in high-quality assets with growth potential. “We believe SolGold's flagship project will be amongst the next generation of large copper development projects and will contribute meaningfully to our longer-term growth. We are pleased to provide pre-construction funding to derisk project development and project financing that provides a balance of funding certainty and financial flexibility,” he said.
Osisko president and CEO Jason Attew described Cascabel as one of the most significant copper and gold discoveries in recent history. “The project has the potential to become a world-class multi-generational mine, demonstrated by the recent PFS estimating at least a 28-year mine life with numerous avenues for additional mine life extensions. This new stream investment, which complements Osisko's existing royalty on the project, will help to support the development of this exceptional asset and enhance Osisko's long-term growth profile."
The syndicate will receive an amount in reference to 20% of the recovered gold in concentrate from Cascabel until 750 000 oz of gold have been provided, after which the percentage will reduce to 12% for the life of the mine.
The syndicate will make ongoing production payments to SolGold equivalent to 20% of the spot gold price at the time for each ounce of gold delivered to the syndicate under the agreement.
The agreement also includes a staged buyback option upon a change of control transaction, which provides the option to reduce the gold stream by 50% within three years of the closing date and 33.33% thereafter until the fifth anniversary of the closing date.
Edited by Creamer Media Reporter
Disclaimer: I own exactly the same amount of shares in both Solgold and WRN (substantial). I believe in the potential of both Cascabel and Casino. I also am a big fan of Jason Attew and Sandeep Singh, who was Jason's predecessor. I like Osisko. I believe things will start moving from here. Cascabel is the 7th largest undeveloped Cu/Au project in the world, and Casino is the 6th largest. Both projects grossly undervalued. Cascabel is way, way undervalued. Exciting times