REG - SolGold PLC - Exploitation Contract for Cascabel Project

SolGoldAnnouncement

06/06/2024 07:00

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RNS Number : 3855R  SolGold PLC  06 June 2024

06 June 2024

SolGold plc

("SolGold" or the "Company")

Exploitation Contract for Cascabel Project

 

SolGold (LSE & TSX: SOLG) is pleased to announce the signing of the
Exploitation Contract ("Exploitation Contract" or "EC") for the Cascabel
Project ("Project"), its flagship copper-gold project in Ecuador. This
milestone follows the successful contractual negotiations and approval of the
term sheet ("Term Sheet") by the Government of Ecuador in July 2023 (see
SolGold release dated 20 July 2023
(https://polaris.brighterir.com/public/solgold/news/rns/story/w1ke43x) ). The
EC and existing legislation and regulations establish the legal and financial
terms and conditions required for the Cascabel Project's development.

 

Mr. Diego Ocampo, Vice Minister of Mines, stated: "This Contract represents a
new era of economic development for Ecuador, demonstrating our commitment to
promoting investment and sustainable development in the mining sector. The
Government of Ecuador supports the Cascabel Project, which will bring
substantial long-term benefits to our country's economy and local communities
through significant investment, job creation, and sustainable growth."

 

Mr. Scott Caldwell, CEO and President of SolGold Ecuador, commented: "The
signing of the Exploitation Contract for the Cascabel Project is a landmark
achievement for SolGold and our stakeholders. This success would not have been
possible without the invaluable collaboration and support from the Government
of Ecuador, regional administrations, and local communities. We are strongly
committed to cultivating sustainable development and shared prosperity in
Ecuador and its communities."

 

Exploraciones Novomining S.A. ("ENSA"), SolGold's wholly-owned subsidiary in
Ecuador, embarked on a rigorous exploration journey at Cascabel in 2012,
leading to the major discovery hole at Alpala in early 2014, and the
subsequent discovery of Tandayama-Ameríca deposit in later drill programs.
SolGold has since drilled over 300,000 metres of cored exploration, resource
definition, and geotechnical drill holes and has conducted numerous resource,
mining, metallurgical, environmental, and social studies on the Project. This
extensive work has transformed the Project into one of the world's largest
undeveloped copper-gold porphyry deposits, with the potential to significantly
boost the Ecuadorian economy and serve as a blueprint for the exploration and
discovery of other resources on SolGold's extensive regional targets
throughout Ecuador.

 

Key Exploitation Contract Terms (All monetary amounts are stated in United
States Dollars)

 

·    Share of Cumulative Benefits: The EC provides that the Government of
Ecuador's share of cumulative discounted benefits derived from SolGold's
Cascabel Project will be at least 50%. The Government of Ecuador's benefit
will be calculated as the present value of the cumulative sum of taxes paid,
including corporate income taxes, royalties, labour profit sharing paid to the
State, non-recoverable VAT, and any previous sovereign adjustment payments.

·    Development and Production Rights: ENSA ("Mining Concessionaire") has
secured the right to develop the Cascabel Project and produce copper, gold,
and silver from the contract area for 33 years, which may be renewed for the
life of the mine.

·    Advance Royalty Payment: SolGold will make an advance royalty payment
totalling $75 million, with the first payment of $25 million due upon the
concentrator construction start date. The remaining two payments, each of $25
million, will be made on the first and second anniversary, respectively, from
the date of the first payment. The advance royalty will be deductible against
the Government Royalty (defined below).

·    Government Royalty & Taxes: Once the Government of Ecuador
approves the new Investment Protection Agreement, the Company expects a
corporate income tax rate of 20% during the Project's life. Based on this
corporate income tax rate, the Mining Concessionaire, the State, and SolGold
have agreed to a variable royalty on net smelter revenues by Ecuadorian Mining
Law ("Government Royalty"). The Government Royalty on net smelter revenues
will follow a variable percentage rate from 3% to 8%, depending on the type of
mineral and its price.

·    Economic Imbalance Mechanism: The EC includes a mechanism for
correcting any economic imbalance for the Mining Concessionaire due to changes
in fiscal policy, taxes, laws, and regulations. This provision removes
significant uncertainty for the future economic environment governing the
Project.

·    Investor Autonomy: One of the most crucial principles that the EC
develops is the autonomy and freedom of the Company to make its commercial
decisions. The technical design of the mine, investment amount, production
capacity, etc., are decisions of the Company and respond to its business
strategy. This freedom and autonomy ensure development that aligns with
SolGold's philosophy and principles.

·    Investor Protection Rights: The EC addresses various investor
protection rights, ensuring the protection of the investment, including a
dispute resolution mechanism through international arbitration.

 

 

CONTACTS

 Scott Caldwell              Tel: +44 (0) 20 3807 6996

 Chief Executive Officer

 Tavistock (Media)           Tel: +44 (0) 20 7920 3150

 Jos Simson/Gareth Tredway

 

ABOUT SOLGOLD

SolGold is a leading resources company focused on the discovery, definition
and development of world-class copper and gold deposits and continues to
strive to deliver objectives efficiently and in the interests of shareholders.

The Company operates with transparency and in accordance with international
best practices. SolGold is committed to delivering value to its shareholders
while simultaneously providing economic and social benefits to impacted
communities, fostering a healthy and safe workplace, and minimizing
environmental impact.

SolGold is listed on the London Stock Exchange and Toronto Stock Exchange
(LSE/TSX: SOLG).

See www.solgold.com.au (http://www.solgold.com.au) for more information.

 

CAUTIONARY NOTICE

News releases, presentations and public commentary made by SolGold plc (the
"Company") and its Officers may contain certain statements and expressions of
belief, expectation or opinion which are forward looking statements, and which
relate, inter alia, to interpretations of exploration results to date and the
Company's proposed strategy, plans and objectives or to the expectations or
intentions of the Company's Directors, including the plan for developing the
Project currently being studied as well as the expectations of the Company as
to the forward price of copper. Such forward-looking and interpretative
statements involve known and unknown risks, uncertainties and other important
factors beyond the control of the Company that could cause the actual
performance or achievements of the Company to be materially different from
such interpretations and forward-looking statements.

Accordingly, the reader should not rely on any interpretations or
forward-looking statements; and save as required by the exchange rules of the
TSX and LSE or by applicable laws, the Company does not accept any obligation
to disseminate any updates or revisions to such interpretations or
forward-looking statements. The Company may reinterpret results to date as the
status of its assets and projects changes with time expenditure, metals prices
and other affecting circumstances.

This release may contain "forward‑looking information". Forward‑looking
information includes, but is not limited to, statements regarding the
Company's plans for developing its properties. Generally, forward‑looking
information can be identified by the use of forward-looking terminology such
as "plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases or state
that certain actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved".

Forward‑looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of
activity, performance or achievements of the Company to be materially
different from those expressed or implied by such forward‑looking
information, including but not limited to: transaction risks; general
business, economic, competitive, political and social uncertainties; future
prices of mineral prices; accidents, labour disputes and shortages and other
risks of the mining industry. Although the Company has attempted to identify
important factors that could cause actual results to differ materially from
those contained in forward-looking information, there may be other factors
that cause results not to be as anticipated, estimated or intended.  There
can be no assurance that such information will prove to be accurate, as actual
results and future events could differ materially from those anticipated in
such statements. Factors that could cause actual results to differ materially
from such forward-looking information include, but are not limited to, risks
relating to the ability of exploration activities (including assay results) to
accurately predict mineralization; errors in management's geological modelling
and/or mine development plan; capital and operating costs varying
significantly from estimates; the preliminary nature of visual assessments;
delays in obtaining or failures to obtain required governmental, environmental
or other required approvals; uncertainties relating to the availability and
costs of financing needed in the future; changes in equity markets; inflation;
the global economic climate; fluctuations in commodity prices; the ability of
the Company to complete further exploration activities, including drilling;
delays in the development of projects; environmental risks; community and
non-governmental actions; other risks involved in the mineral exploration and
development industry; the ability of the Company to retain its key management
employees and skilled and experienced personnel; and those risks set out in
the Company's public documents filed on SEDAR+ at www.sedarplus.ca
(http://www.sedar.com) . Accordingly, readers should not place undue reliance
on forward‑looking information. The Company does not undertake to update any
forward-looking information, except in accordance with applicable securities
laws.

The Company and its officers do not endorse, or reject or otherwise comment on
the conclusions, interpretations or views expressed in press articles or
third-party analysis.

 

See www.solgold.com.au (http://www.solgold.com.au) for more information.
Follow us on 'X' @SolGold_plc

 

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