SolGold has secured a $750m (A$1.11m) financing package for the advancement of its Cascabel Project in northern Ecuador’s Imbabura province.
In this regard, a syndicated gold stream agreement was signed with Franco-Nevada (Barbados) and Osisko Bermuda (together referred to as the syndicate).
The funds, provided by the syndicate, will be allocated towards project development in exchange for a share of the gold produced.
This financing agreement is structured in two parts, with Franco-Nevada and Osisko contributing 70% and 30%, respectively.
An initial deposit of $100m will be released in three tranches to support various pre-construction activities including de-risking, permitting and completing the feasibility study, leading up to a final investment decision on the project.
SolGold noted that the bulk of the funding, amounting to $650m, will be directed towards the construction of the Cascabel Project.
In return for the financing, the syndicate will receive 20% of the gold recovered from the project until 750,000oz has been delivered, after which its share will decrease to 12% for the remaining life of the mine.
This agreement allows SolGold to retain the revenue from the substantial copper, silver and a large portion of the gold resources at Cascabel.
It also satisfies SolGold's commitments to royalty holders, the Ecuadorian Government, as well as other stakeholders.
The agreement also includes a buyback option for SolGold, exercisable for five years post-closing, offering the company the opportunity to reduce the stream by up to 50% within three years or by 33.33% thereafter until the fifth anniversary of the agreement.
This clause grants SolGold considerable strategic flexibility.
SolGold will also repay a previously disclosed $10m loan from Franco-Nevada, due on 19 July 2024, using the first tranche of the initial deposit.
The company is set to commence the next phase of project advancement, focusing on various critical activities such as geotechnical drilling, metallurgical testing and securing land access rights for infrastructure.
Throughout the project's development, SolGold will maintain a close working relationship with the syndicate to achieve all milestones and ensure the timely release of funds.
SolGold president and CEO Scott Caldwell said: “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 $100m dedicated to de-risking and technical work is crucial for the next steps in our project development.
“We are committed to advancing our operations responsibly and efficiently, and this partnership is a testament to our progress to date and the promising future ahead. Finally, this major investment in Ecuador reflects the strong support from the Ecuadorian Government for the mining industry.”
Last month, SolGold signed an exploitation agreement with the Ecuadorian Government for the Cascabel Project.
