SolGold, an exploration and development company, has finalized a significant funding arrangement totaling $750 million for its Cascabel project in Ecuador. This funding represents a crucial step towards advancing the project towards a final investment decision (FID), focusing on both copper and gold extraction.
The financing package includes a syndicated gold stream agreement with Franco-Nevada and Osisko Bermuda. Under the terms of the agreement, SolGold will receive $750 million in funding for project advancement and development. In return, Franco-Nevada and Osisko will share in the future gold production from Cascabel.
The initial disbursement of $100 million will be provided in three tranches, with the first installment expected imminently. These funds are earmarked for derisking activities, permitting processes, and completing a feasibility study crucial for the FID.
The remaining $650 million will be allocated towards the construction phase of the project, which is estimated to require a total investment of approximately $1.55 billion.
According to SolGold’s timeline, the FID is anticipated between 2026 and 2028.
Scott Caldwell, President and CEO of SolGold, expressed his enthusiasm regarding the agreement with Franco-Nevada and Osisko, emphasizing that it secures a substantial portion of the capital needed for Cascabel’s construction. He highlighted the importance of the initial $100 million for derisking and technical advancements, pivotal for advancing the project.
A feasibility study conducted in 2024 indicates an after-tax net present value of $32.2 billion and an after-tax internal rate of return of 24%. This is based on a four-year development period aiming for an initial annual operation of 12 million tonnes, scaling up to 24 million tonnes per year.
Paul Brink, President and CEO of Franco-Nevada, stated that the gold stream agreement aligns with their strategy to invest in high-quality assets with growth potential. He emphasized confidence in SolGold’s flagship project, anticipating it to be among the next generation of large copper developments contributing significantly to their long-term growth.
Jason Attew, President and CEO of Osisko, described Cascabel as a landmark discovery in copper and gold, foreseeing its potential to become a world-class, multi-generational mine. He highlighted the project’s robust economic prospects, including extensions to its mine life. The new stream investment complements Osisko’s existing royalty on the project, reinforcing their commitment to its development and long-term growth.
Under the terms of the agreement, the syndicate will receive 20% of the recovered gold in concentrate from Cascabel until 750,000 ounces of gold have been delivered, reducing thereafter to 12% for the mine’s life. Additionally, ongoing production payments to SolGold will be based on 20% of the prevailing spot gold price for each ounce delivered under the agreement.
The agreement also includes a staged buyback option in the event of a change of control transaction, allowing for a reduction of the gold stream by 50% within three years of the closing date and by 33.33% thereafter until the fifth anniversary.
SolGold’s achievement of securing this substantial funding package signifies a significant milestone in the advancement of the Cascabel project, setting the stage for its future development and operational success.
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