SolGold PLC on Monday secured a $750 million financing package from Franco-Nevada (Barbados) Corp and Osisko Bermuda Ltd to fund the Cascabel project.
The Ecuador-focused exploration company said Franco-Nevada and Osisko will contribute 70% and 30% respectively for the Cascabel copper-gold project in Northern Ecuador.
An initial deposit worth $100 million will be paid over three tranches to contribute to the project’s development and feasibility study to advance it to a final development investment decision.
This is to be followed by a $650 million construction deposit to finance the project’s construction.
‘In exchange for the deposit and ongoing payments to SolGold equivalent to 20% of the spot gold price at the time, the syndicate will receive an amount in reference to 20% of the recovered gold in concentrate from Cascabel until 750,000 ounces of gold have been provided after which the percentage will reduce to 12% for the life of the mine,’ SolGold said.
Included in the agreement is a buyback option for five years following the closing of the transaction to reduce the stream by 50% within three years or 33% thereafter until five years from the closing date.
Chief Executive Officer 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.’
In addition, SolGold said it continues to review additional funding options to fully cover the $1.55 billion anticipated costs for the project. These include support from international development banks as well as off-take agreements with smelting companies.
SolGold shares were up 17% to 10.32 pence each in London on Monday afternoon.
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