Osisko will make an upfront cash payment to SolGold of US$50 million in exchange for the NSR, which will be a life-of-mine instrument covering the entirety of the Cascabel property including the Alpala project
Osisko to Acquire Royalty on SolGold’s Cascabel Project. (Credit: Alex Banner from Pixabay)
Osisko Gold Royalties Ltd (“Osisko”) (OR: TSX & NYSE) is pleased to announce that it has entered into a binding agreement with SolGold plc (“SolGold”) (SOLG: TSX & LSE) with respect to a US$50 million royalty financing (the “Transaction”) to support the advancement of SolGold’s Cascabel copper-gold property in northeastern Ecuador.
As part of the Transaction, Osisko will acquire a 0.6% net smelter return royalty (the “NSR”) covering the entire 4,979 hectare Cascabel property, including SolGold’s world-class Alpala project for which SolGold released the results of a pre-feasibility study in April of 2022 (the “PFS”).
Sandeep Singh, President and CEO of Osisko, commented: “We are excited to partner with SolGold on one of the best copper-gold discoveries made over the last decade. We believe that Alpala has the potential to become a Tier-1 asset with a much longer mine life than currently envisaged. SolGold was a first mover in Ecuador and we view the broader Cascabel property as having the geological potential to support significant further discoveries. Osisko’s investment in SolGold adds yet another high-quality royalty to our portfolio of peer-leading growth.”
INVESTMENT HIGHLIGHTS
Exceptional Royalty on one of the Most Significant Cu-Au DiscoveriesNSR covers the Cascabel property comprising 4,979 hectares of Andean Copper Belt;
Total resources at Cascabel currently represent approximately 20% and 16% of the total copper and gold in new major deposit discoveries since 2012 (as compiled by SolGold);
Based on the PFS, the NSR would average approximately 4,700 annual gold-equivalent ounces (“GEOs”) to Osisko over an initial 26-year mine life and 7,600 GEOs over the first 10-years of nameplate production.
Exposure to the Large-Scale Alpala ProjectThe Alpala deposit is SolGold’s principal focus on the broader Cascabel property. The PFS study on Alpala outlined a large underground block cave mine with an initial 26-year mine life based on Probable Reserves (only 21% of total M&I tonnage inventory);
Alpala Probable Reserves contain 3.3 Mt of Cu, 9.4 Moz of Au and 30 Moz of Ag (558 Mt of 0.58% Cu, 0.52g/t Au and 1.65g/t Ag);
Alpala is estimated to produce an average of 132 kt Cu and 358 koz Au annually over the life of mine with peak annual production of 210 kt Cu and 829 koz Au;
Based on the PFS, Alpala is expected to rank in the first decile in terms of production costs.
Further Exploration Potential Within the Broader PropertyPresence of regional targets on the Cascabel property that have similar geophysical and geochemical characteristics to known mineralized porphyry clusters on the property;
The PFS mine plan did not include a further 2 billion tonnes of resources which may supplement production;
A number of prospective targets across the Cascabel concession in addition to the discovered Alpala and Tandayama-America deposits.
TRANSACTION DETAILS
Osisko will make an upfront cash payment to SolGold of US$50 million in exchange for the NSR;
The NSR will be a life-of-mine instrument covering the entirety of the Cascabel property including the Alpala project;
Beginning in 2030 and until the end of 2039, Osisko will receive minimum annual payments under the NSR of US$4 million;
SolGold shall have a right to buydown one-third (1/3) of the NSR percentage for 4 years;
Osisko has made a three-year commitment to fund certain ESG initiatives at the project;
Closing of the Transaction is subject to customary conditions precedent.
ALPALA PROJECT OVERVIEW
The Alpala deposit is the main target in the Cascabel concession, located on the northern section of the heavily endowed Andean Copper Belt. The project base is located at 800 meters above sea level in northern Ecuador, an approximately three-hour drive on sealed highway north of Quito, close to water, hydroelectric power supply and Pacific ports.
The Cascabel property lies on the margin of the Eocene and Miocene metallogenic belts which are renowned for hosting some of the world’s largest porphyry copper and gold deposits.
The PFS outlines a mill throughput of 25 Mt per year fed by a block cave operation. Due to the very efficient mining method and transportation of ore to surface via conveyor belts and access to hydroelectric power, the Alpala mine has the potential to have very low carbon footprint.
Source: Company Press Release