Solgold [SOLG-TSX, LSE] has struck a binding agreement with Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE) for a US$50 million royalty financing with reference to the company’s Cascabel copper-gold project in northern Ecuador.
Osisko will receive a 0.6% net smelter royalty (NSR) royalty interest from Solgold, calculated with reference to net smelter returns from the Cascabel license area. Under the deal, Solgold retains a buy-back option for one third of the NSR interest. That option, at Solgold’s election, remains open for four years from the date of closing.
“This funding immediately removes the financing overhang that has encumbered Solgold and provides an accretive and attractive financing solution,’’ said Solgold Chairperson Liam Twigger. “Solgold can now devote its complete attention to the Strategic Review Process which is currently underway to maximize shareholder values.’’
Osisko Gold Royalties is an intermediate precious metal royalty company with a focus on the Americas. It holds a portfolio of over 160 royalties, streams and precious metal offtakes. Its portfolio is anchored by a 5% NSR royalty on the Canadian Malartic Mine in Quebec, which ranks as the largest gold mine in Canada.
On November 4, 2022, Osisko Gold shares rose 8.5% or $1.19 to $15.22 on volume of 445,260. The shares are currently trading in a 52-week range of $18.59 and $11.90.
On November 4, 2022, Solgold shares rose 6.1% or $0.015 to 26 cents and currently trade in a 52-week range of 67 cents and 19 cents.
Solgold recently agreed to acquire all the outstanding shares of Cornerstone Capital Resources Inc. it does not already own by way of a court-approved plan of arrangement.
The merger of Cornerstone and Solgold was expected to strengthen the ability of the combined group to create value for shareholders by consolidating ownership of the Cascabel Project along with a robust portfolio of other projects primarily across Equador.
Back in April, 2022, the companies said results of a new pre-feasibility study indicates that the Cascabel joint venture in northern Ecuador is expected to be a top 20 South American copper gold mine.
It is a project that is expected to benefit from a high-grade core, advantageous infrastructure and an increasingly investor-friendly government. “The mine is expected to produce a clean copper-gold-silver concentrate that will be sold to Asian and European smelters,’’ the companies have said. The Cascabel Project is a porphyry copper-gold deposit located in the Imbabura province of northwestern Ecuador, which lies within the under-explored northern section of the richly endowed Andean Copper Belt.
SolGold is funding 100% of the exploration at Cascabel and is the operator of the project. Solgold and Cornerstone have said a definitive feasibility study is expected to be completed by the first half of 2023.