Solgold up 27% on US$750 million financing news
Solgold [SOLG-TSX, LSE] on Monday announced details of a US$750 million financing package for its Cascabel porphyry copper-gold project in Ecuador.
Under a syndicated gold stream agreement, subsidiaries of Franco Nevada Mining Corp., [FNV-TSX, NYSE] and Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE) are acquiring a gold stream from SoGold with reference to production from the Cascabel project.
Franco-Nevada has partnered with Osisko to provide a syndicated financing package on a 70%/30% basis. Franco-Nevada will provide US$525 million and Osisko will contribute US$225 million.
At first, Franco Nevada will provide US$70 million and Osisko US$30 million, amounting to US$100 million in pre-construction funding, which will be available in three equal-sized staged payments. The first will be funded at closing with two further tranches, subject to development milestones. Franco-Nevada and Osisko will make US$455 million and US$195 million available respectively for a total of US$650 million towards construction once the project is fully funded and further derisked.
In return, the financing syndicate will receive an amount in reference to 20% of the recovered gold in concentrate from Cascabel until 750,000 ounces has been delivered, after which the percentage will fall to 12% for the life of the mine.
Soldgold shares rallied on the news, rising 26.6% or $0.04 to 19 cents. The shares are currently trading in a 52-week range of 29.5 cents and 10.5 cents.
Details of the financing package have emerged after Solgold recently released a new pre-feasibility study for its Cascabel project.
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.
The study envisages pre-production capital of US$1.55 billion for initial mine development, first process plant module and infrastructure. It also forsees average production of 123,000 tonnes of copper annually, 277,000 ounces of gold and 794,000 ounces of silver, or 182,000 tonnes of copper equivalent (CuEq). The study forecasts peach production of 370,000 tonnes of CuEq annually.
The initial 28-year mine plan is based on an updated mineral reserve estimate of 540 million tonnes, containing 3.2 million tonnes of copper at 0.60%, 9.4 million ounces of gold at 0.54 g/t and 28 million ounces of silver at 1.62 g/y. The company said 85% of mineral reserves are classified as proven.
Soldgold was in the news last year when it moved to consolidate ownership of the Cascabel Project along with a robust portfolio of other projects primarily across Equador, by acquiring all the outstanding shares of Cornerstone Capital Resources Inc. it did not already own by way of a court-approved plan of arrangement.
Solgold owns 100% of Cascabel va Exploraciones Novomining S.A. (ENSA) an Ecuadorian company. It said underground mining will utilize the block cave mining method after a ramp-up period of approximately two years