TIDMSOLG
RNS Number : 5739G
SolGold PLC
20 July 2023
SolGold plc
("SolGold" or the "Company")
Announces Agreement with Government of Ecuador
on Exploitation Agreement Terms and Conditions
The Board of Directors of SolGold (LSE & TSX: SOLG) is
pleased to announce that it has completed the contractual
negotiations and agreed upon a term sheet ("Term Sheet") in
preparation for the execution of the Exploitation Agreement
("Agreement") for the Cascabel Project ("Project"), its flagship
copper-gold project in Ecuador.
SolGold began exploration work at Cascabel in July 2011, leading
to the discovery of the Alpala and Tandayama America deposits on
the Cascabel Concession. Since January 2023, SolGold has been in
discussions with the Government of Ecuador to negotiate the terms
and conditions of the Exploitation Agreement for the Cascabel
Project. The Exploitation Agreement, coupled with existing
legislations and regulations, establishes the legal and financial
terms and conditions required for the Cascabel Project's
development. The agreed Term Sheet, which has been approved by the
Ecuadorian Government, marks a pivotal step forward for the
Project.
SolGold's CEO and President of SolGold Ecuador, Scott Caldwell,
stated, "The completion of the negotiations and execution of the
Term Sheet of the Exploitation Agreement for the Cascabel Project
stands as a significant milestone, reflecting our shared commitment
to all stakeholders. SolGold extends our sincere gratitude to the
Government of Ecuador, regional administrations and local
communities for their invaluable collaboration and support, each of
whom has been instrumental in this momentous achievement. This
Agreement is a positive outcome and exemplifies our unwavering
dedication to working collaboratively with all our
stakeholders."
Key Contract Terms
All monetary amounts stated below are references to United
States Dollars.
-- SolGold plc, through its wholly owned subsidiary in Ecuador,
Exploraciones Novomining S.A. ("Mining Concessionaire"), has
negotiated the right to develop the Cascabel Project and produce
copper, gold, and silver from the contract area for 33 years, which
may be renewed.
-- The Company and the Government of Ecuador have agreed to an
advance royalty payment totalling $75 million, with $25 million due
upon the concentrator construction start date. The remaining two
payments, each of $25 million, will be made on the first and second
anniversary, respectively, from the date of the first payment. The
advance royalty will be deductible against the Government Royalty
(defined below).
-- One of the key economic assumptions is that the Company
expects a reduced corporate income tax rate of 20% (previously 25%)
during the Project's life once the Government of Ecuador approves
the amendment of the Investment Protection Agreement. Based on this
reduced corporate income tax rate, the Mining Concessionaire, the
State, and SolGold have agreed to a variable royalty on net smelter
revenues in accordance with Ecuadorian Mining Law ("Government
Royalty"). The applicable royalty rate follows the progressivity
criteria stated in the Mining Law, stipulating a variable
percentage rate from 3% to 8%. This rate is dependent on the type
of mineral and its price, as shown in Table 1: Royalty Rates. The
royalty will be based on net smelter returns received from the
sales of copper, gold, silver, or other marketable mineral products
from the Project (for each mineral product, respectively, "NSR
Revenue").
According to the Mining Law in Ecuador, 60% of the revenue from
the royalties collected by the government will be allocated to
productive and sustainable projects through the municipal
governments and parish councils of the communities of the Cascabel
Project. The Company expects these funds to make an important
contribution to local development in the area of influence.
Table 1: Royalty Rates
Realized Copper Price (US$/lb) Percentages applicable
to
Copper NSR Revenue
================================ =======================
Equal to or less than $3.00 3.0%
From $3.01 to $3.50 4.0%
From $3.51 to $4.00 5.0%
From $4.01 to $4.50 6.0%
From $4.51 to $5.00 7.0%
Equal to or more than USD
5.01 8.0%
Realized Gold Price (US$/oz) Percentages applicable
to
Gold NSR Revenue
============================== =======================
Equal to or less than $
1,400 .00 3.0%
From $1,400.01 to $ 1,600
.00 4.0%
From $1,600.01 to $ 1,800
.00 5.0%
From $1,800.01 to $ 2,000
.00 6.0%
From $2,000.01 to $ 2,200
.00 7.0%
Equal to or more than $
2,200 .01 8.0%
Realized Silver Price (US$/oz Percentages applicable
to
Silver NSR Revenue
=============================== =======================
Equal to or less than $
20.00 3.0%
From $20.01 to $ 22.50 4.0%
From $22.51 to $ 25.00 5.0%
From $25.01 to $ 27.50 6.0%
From $27.51 to $ 30.00 7.0%
Equal to or more than $30.01 8.0%
-- The advance royalty will be deductible against the lesser of
50% of the royalties payable or 10% of the total advance royalty
payment made until the advance royalty is settled in full
(calculated every six months once the Government Royalty becomes
payable).
-- According to current legislation, the Exploitation Agreement
also provides that the Government of Ecuador's share of cumulative
discounted benefits derived from SolGold's Cascabel Project will
not be less than 50%. Each year, to the extent that the Government
of Ecuador's cumulative benefit falls below 50%, the Company will
be required to pay an annual sovereign adjustment. 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. To the
knowledge of the Company, no mining company operating in Ecuador
with a similar sovereign adjustment clause in its exploitation
agreement has made a payment to the government pursuant to such
clause. Based on the economic assumptions included in the Project's
financial model, it is not expected that the Company will be
required to make any such payments after the commencement of
commercial production at the Cascabel Project.
-- The Term Sheet also includes a mechanism for correcting any
economic imbalance for the Mining Concessionaire as a result of
changes in taxes, laws and regulations in place at the date of the
signing of this Agreement. The provision removes a significant
amount of uncertainty for the economic regime governing the Project
in the future.
-- The Term Sheet also develops various investor protection
rights, ensuring the protection of the investment including, among
other things, a dispute resolution mechanism through international
arbitration.
-- The Mining Concessionaire will be solely responsible for
making pertinent technical and economic decisions in the design,
construction and operation of the Cascabel Project as specified in
the Term Sheet.
In the following months, the Company must apply to change the
SolGold Project's official status from exploration phase to
exploitation phase (the "Phase Change Application"). The Company
has up to six months after the approval of the Phase Change
Application to execute the Exploitation Agreement with the
Government of Ecuador. Once executed, the Exploitation Agreement is
required to be registered with the Mines Registry and will be made
publicly available on the Company's profile on the SEDAR website
maintained by the Canadian Securities Administrators at
www.sedar.com .
A conference call with a live webcast presentation to provide a
market update will be held on July 20, 2023, at 8:00 a.m. (EST),
1:00 p.m. (BST), and 10:00 p.m. (AEST).
Investors can register for SolGold's webcast on 6ix.com for free
via the following link:
https://my.6ix.com/2kg-oijy
The presentation is open to all existing and potential
shareholders. The presentation material will also be available on
the day of the presentation at:
https://www.solgold.com.au/investors-center .
This announcement was approved for release by Ryan Wilson -
Company Secretary.
CONTACTS
Scott Caldwell Tel: +44 (0) 20 3807 6996
Chief Executive Officer
Tavistock (Media) Tel: +44 (0) 20 7920
Jos Simson/Gareth Tredway 3150
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 the environmental impact.
SolGold is listed on the London Stock Exchange and Toronto Stock
Exchange (LSE/TSX: SOLG).
See 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.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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCRLMFTMTABBTJ
(END) Dow Jones Newswires
July 20, 2023 02:00 ET (06:00 GMT)
Solgold (LSE:SOLG)
Historical Stock Chart
From Apr 2024 to May 2024
Solgold (LSE:SOLG)
Historical Stock Chart
From May 2023 to May 2024