Exploration and development company SolGold (OTC:SLGGF) has successfully secured $750 million in funding for its Cascabel project in Ecuador. This funding came from a syndicated agreement with Franco-Nevada Corporation (NYSE:FNV) and Osisko Bermuda, who will receive a portion of the gold produced.
"We are thrilled to finalize this transformative $750 million gold stream with Franco-Nevada and Osisko," stated Scott Caldwell, President and CEO of SolGold.
"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," he said.
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Initially, $100 million will be released in three tranches, the first of which is expected shortly. These initial funds are designated for de-risking, permitting, completing a development funding package, and finalizing the feasibility study necessary for the final investment decision. The remaining $650 million will be allocated to the project’s construction, which will require a total of $1.55 billion.
The Cascabel project, particularly the Alpala deposit, is anticipated to become a world-class copper and gold mine. According to a 2024 pre-feasibility study, the project has an after-tax net present value of $32.2 billion and an after-tax internal rate of return of 24%. The project should have an initial production capacity of 12 million tons annually, eventually ramping up to 24 million tons annually. SolGold's management expects to start production between 2026 and 2028.
In exchange for the funding, the syndicate will receive a predetermined share of the gold produced at Cascabel:
- 20% of recovered gold in concentrate until 750,000 ounces are delivered.
- 12% of recovered gold in concentrate for the remaining life of the mine.
- Ongoing production payments equivalent to 20% of the spot gold price for each ounce delivered.
"Cascabel represents one of the most significant copper and gold discoveries in recent history. The project has the potential to become a world-class multi-generational mine, demonstrated by the recent pre-feasibility study estimating at least a 28-year mine life with numerous avenues for additional mine life extensions," said Osisko Bermuda's president and CEO Jason Attew, clarifying that this investment enhances Osisko's long-term growth profile.
Ecuadorian mining remains relatively underdeveloped, with only two currently operating mines: Ecuacorriente‘s Mirador copper mine and Lundin Mining‘s Fruta del Norte gold mine. Alongside Silvercorp's pending acquisition and development of the El Domo copper-gold project, Cascabel presents the potential to boost the country's mining output significantly.
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