SolGold in talks over $2.8bn funding for Cascabel

Alpala, part of the Cascabel copper-gold project, 180 km north of the capital Quito. (Image courtesy of SolGold.)

SolGold (TSX: SOLG) is moving forward with completing a prefeasibility study (PFS) and acquiring further information for a proposed definitive feasibility study (DFS) for the Alpala project in Ecuador, the company said its latest business update.

Currently, subject to funding and land acquisition programs, these studies are scheduled for completion by Q3 2020 for the PSF and by the end of Q1 2021 for the DFS.

SolGold considers Alpala to be among the world’s best undeveloped deposits, with an estimated mine life of 55 years

To help with the development of the Alpala deposit, which is the main target at the its 85%-owned Cascabel concession, SolGold has started discussions about a funding package of approximately $2.85 billion. This involves up to $150 million for two years of funding to complete the DFS, as well as about $2.7 billion to fund SolGold’s share of predevelopment costs and longer-term development capital expenditure.

The Cascabel copper-gold project in the country’s north has revealed previously unknown mineralization, further increasing the size of one of the biggest copper discoveries of recent years.

The company adds that funding discussions for finalizing the DFS and the predevelopment costs are progressing “encouragingly”. If an agreement is reached, finalization and settlement could take up to eight weeks.

The longer-term funding of $2.7 billion is being negotiated and targeted to be agreed with a number of financiers and third parties on a conditional basis subject to finalization of the DFS, permitting and fiscal agreements with the Ecuadorean government. The company is targeting debt packages backed by sovereign export and import credit facilities that are supported by conditional concentrate offtake agreements, plus equity raised from a corporate capital issue at development.

SolGold considers Alpala to be among the world’s best undeveloped deposits, with an estimated mine life of 55 years. The project is located on the northern section of the Andean Copper Belt, known for producing nearly half of the world’s copper.

In May 2019, SolGold released its preliminary economic assessment (PEA) on the Cascabel project, and later updated the PEA report to include wider metal price, capital expenditure and operational expenditure ranges. The revised PEA shows a net present value in the range of $2.5 billion to $6.1 billion.

SolGold’s stock surged by over 10% on Wednesday morning following news of the potential funding. The Australian gold and copper producer, whose shareholders include BHP and Newcrest, has a market capitalization of C$465.5 million.

Meanwhile, SolGold board members Nicholas Mather and Jason Ward have both notified the company that they may acquire further shares in SolGold in the next 30 days or in the next available capital raising.

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