Solaris unveils $35M bought deal after ending Chinese financing plan

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Solaris Resources Inc. [SLS-TSXV, SLSR-OTCQB] h3535as announced details of a new $35 million bought deal after ending a previously announced transaction that would have seen Chinese multinational firm Zijin Mining Group Co Ltd. taking a minority stake in the company.

Solaris said the bought deal financing consists of 7.15 million common shares priced at $4.90 per share. It said the underwriters have been granted an option to purchase up to an additional 1.07 million common shares, representing 15% of the offering, to cover over-allotments, if any, on the same terms. That option remains open for up to 30 days after the closing date. If the over-allotment option is exercised in full, the company will receive additional proceeds of $5.2 million, raising the offering proceeds to $40.3 million.

Net proceeds will be used to fund an expanded exploration and infill drilling program at the company’s flagship Warintza Project in southeastern Ecuador, together with enhanced regional exploration activities, including field work on ten new exploration concessions which were recently awarded to the company, and for working capital and general corporate purposes.

News of the bought deal financing came after the close of trading on May 21, 2024. On Wednesday, the shares eased 4.96% or 26 cents to $4.98. The shares trade in a 52-week range of $6.62 and $3.61.

Earlier on the same day, the company said it has ended a plan to sell a minority stake in the company by way of a previously announced strategic investment by Zijin Mining Group Co Ltd.

The $130 million investment, priced at $4.55 per share, was intended to support the growth of Solaris’s Warintza copper project, including the major purchase of an adjacent asset. Had it gone through, it would have left the Chinese company with a 15% stake in Solaris.

However, after four months of Canadian regulatory review in an evolving environment, approval has not been obtained and the transaction no longer adequately reflects the market value, Solaris said in a press release.

When the transaction was announced in January, 2024, it was priced at a 14% premium, however, Solaris’ share price has increased by greater than 35% and the transaction no longer adequately reflects market value, the company said.

Prior to announcing the new bought deal financing, Solaris said it remains funded for its 2024 and 2025 Warintza baseline program and key deliverables with an additional US$40 million available through the offtake financing package announced in December. It pledged to pursue a focused strategy that maximizes long-term shareholder value with enhanced strategic flexibility.

In addition, the company said it is pursuing the recently awarded option to acquire 40,000 hectares adjacent to Warintza, with fieldwork already under way on a target with a similar geological and “bullseye” geophysical signature as the Warintza cluster.

Warintza is a world class porphyry copper discovery, with untested gold potential, that the company has been able to expand in recent months.

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