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(SOLG) SolGold

Discussion in 'General Share Chat (SOLG)' started by Inspiration, Feb 25, 2016.

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    16 April 2020

    SolGold plc

    ("SolGold" or the "Company")


    Off-take Expressions of Interest received for Copper-Gold Concentrate from Alpala


    The Board of Directors of SolGold (LSE & TSX: SOLG) is pleased to provide an update on Expressions of Interest ("EoI") received from leading commodity traders for the offtake of copper-gold-silver concentrate from the Company's flagship Alpala project in Ecuador.


    Following the release of encouraging metallurgical test work results in October 2019, the Company began engaging with major global copper smelters and international commodity traders, to assess the interest and commercial value of Alpala's high copper, high precious metal and low deleterious content copper concentrate.


    Subject to favourable outcomes in development funding and necessary permits, production of gold rich copper concentrate is anticipated to commence in late 2025, as outlined in the Preliminary Economic Assessment ("PEA"), filed on 19 November 2019. In the first 15 years of production, based on the 50Mtpa fast ramp up scenario, the mine is expected to produce an average of 810ktpa of concentrate with grades of 28.2% copper, 22.1g/t gold and 65.7g/t silver. These grades would result in production of contained metals of approximately 230kt of copper in concentrate, 580koz of gold and 1.7Moz of silver per annum on average. At spot metal prices, life-of-mine NSR sales proceeds are estimated to be USD58.4bn under PEA assumption.


    Given the high level of interest in this exceptional concentrate, the Board decided to select a short-list of traders based on an initial Expression of Interest from each, covering:

    1. The intended market strategy for Alpala concentrate;

    2. Proposed offtake volumes and tenures;

    3. Comprehensive commercial terms; and

    4. Ability for short and long term financial support.


    In February this year, SolGold engaged with established international commodity traders to submit terms for the offtake of Alpala concentrate. To date, 10 qualifying bids have been received with more expected once worldwide restrictions due to COVID-19 are lifted. The offtake terms, though non-binding, are sufficiently detailed to give SolGold confidence that binding agreements can be reached during forthcoming negotiations.


    SolGold Chief Executive Officer, Nick Mather commented: "The high quality of the concentrates and the gold rich nature is attracting significant interest from not only traditional financiers, but from traders and smelters, pointing to a strong outcome in the generation of a near term development funding package. Running the parallel processes of permitting, feasibility and financing with concentrates like SolGold has at Alpala, will, in SolGold's view, deliver a much quicker than expected development decision."


    Demand for Apala concentrate expected to drive improved terms


    Demand from the traders for the Alpala concentrate was significantly in excess of planned production volumes, testament to the inherent quality and value of the material.

    Demand from all major Asian, European, North and South American smelters is expected to be strong, as a replacement for Freeport's gold rich Grasberg concentrate when smelting begins in 2023 at its planned Gresik smelter in Indonesia. SolGold considers that the low deleterious element content of the Alpala concentrate, and the well-balanced combination of sulphur, iron and copper in the concentrate will ensure that Alpala concentrate will be a preferred baseload for prime copper smelters with high gold recovery circuits. SolGold will be in the enviable position of choosing from a wide array of suitors for its concentrate, allowing for a competitive bidding process and geographical spread of sales.


    All of the EoI submissions indicated an improvement on the assumptions made in the PEA. The most credible EoI in size, counterparty and volume represented a substantial economic improvement over PEA assumptions. The Company expects final agreed off-take terms to continue to improve. In particular, all metal payables, precious metal refining charges and payment terms are expected to be finalised on better terms than earlier conceptual assumptions.


    Funding in exchange for offtake


    SolGold is also pleased to have received material offers for funding in exchange for offtake from a number of traders in their recent EoI submissions. Offers included the provision of both short-term and longer-term capital with proceeds available for studies, mine construction and cost overruns as well as working capital during ramp-up.


    Engagement with global copper smelters


    In parallel with the EoI process, the Company has engaged directly with state-of-the-art copper smelters in Canada, China, Europe, India, Japan and Korea known to be able to process high quality concentrate. The reactions have been overwhelmingly positive and SolGold's concentrate assays which have been further confirmed by test results undertaken by smelters, evidence that Alpala's concentrate is likely to establish itself as a premier global concentrate coveted by smelters. Discussions with traders and smelters will continue, as a complementary, integral process of SolGold's overall project finance strategy. SolGold considers that the high tonnages of concentrate production and long mine life at Alpala is likely to prove attractive for smelters and traders alike wishing to secure supply.


    Executive General Manager of Corporate Finance, Mr Ingo Hofmaier commented: "We are delighted with the outstanding responses received on our recent invitation to submit expression of interests from so many of the world's leading traders. Their indicative offtake terms were highly competitive and testament to the outstanding quality of the concentrate this long-life mine is expected to produce."


    "We expect demand for concentrates to remain strong, with smelter expansions and new-builds in China, Indonesia and Africalikely to outpace supply. Chinese State-Owned Enterprise copper smelters are intent on decreasing the need for cathode imports and can be expected to continue the trend of building state-of-the-art, environmentally friendly, low cost smelters as demand for copper increases over time. In a post-pandemic world, copper will continue to be the metal of the future supporting growth and innovation, smart transportation and living, antibacterial materials, data-enabled healthcare initiatives and medical advances and working in a world of increasing digital collaboration and entertainment."


    SolGold is now ranking and selecting a short-listed group of traders with a view to finalising offtake agreements as well as funding support. A further update will be released to the market in due course.


    By order of the Board

    Karl Schlobohm

    Company Secretary
     
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    20 April 2020

    SolGold plc

    ("SolGold" or the "Company")


    Online Webinar and Q&A


    Please join Chief Executive Officer Nick Mather and SolGold's management team on a live webinar, hosted by Red Cloud on Wednesday 22nd April 2020, at 2.00pm UK time (GMT+1).

    The webinar will provide an update on the Company's recent developments and future plans for the Alpala copper-gold Project in northern Ecuador. To register any questions for the management team, please email emichael@solgold.com.au

    To register your spot for the webinar, please click here.


    SolGold's on site operations in Ecuador remain halted in an effort to reduce the potential transmissions of COVID-19 and continues to actively monitor all its employees. Health and safety are top priorities for the Company and SolGold will continue supporting its employees and local communities where possible in their efforts to curtail the spread of the virus.


    By order of the Board

    Karl Schlobohm

    Company Secretary
     
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    LSE SheffieldSteeler

    FT Article - For those who cannot access it:


    Copper group SolGold has strengthened its defences against a takeover, appointing Citi for advice and fundraising as big rivals eye acquisitions amid the global economic downturn caused by coronavirus. The London-listed explorer is a prime target due to the potential of its undeveloped copper and gold project in northern Ecuador, people familiar with the company said. Last month SolGold said it was in talks to secure the $2.85bn it needs to develop the Alpala project in Ecuador, including an immediate $150m for a definitive feasibility study of the project. The company says the mine will start production in 2025. Citi has been hired to help with the fundraising and also act as a defence adviser, a person familiar with the company said.

    “We’re building a company that’s as important to the development of Ecuador as BHP was to Australia. I think that's just beginning to sink in to the world’s majors and financiers,” said Nick Mather, SolGold chief executive.

    The world’s biggest mining companies are all looking for opportunities to expand in copper because of its use in clean energy technologies such as wind turbines and electric cars. BHP, the world’s largest miner, is SolGold’s top shareholder but under a standstill agreement is restricted from buying new shares and going beyond its 15 per cent stake until October unless there is another bidder. In February BHP’s new chief executive Mike Henry said the miner needed more “future-facing” metals such as copper. A month later BHP’s chairman Ken Mackenzie said the company was in a strong position to make acquisitions if there were opportunities because of coronavirus.“I’m not sure if there will be any opportunities that will come from this, but if there are, we are actually in a position to act,” Mr Mackenzie said, according to Reuters. Coronavirus business update in SolGold have fallen 48 per cent over the past year, giving it a market capitalisation of £381m. That compares with a 30 per cent fall for the FTSE 350 Mining index. Copper prices have declined 16 per cent this year — to trade at $5,211 a tonne — due to a collapse in demand because of the spread of coronavirus. BHP and Citi declined to comment. Australian rival Newcrest Mining, SolGold’s second-largest shareholder, did not respond to a request for comment.


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    https://www.youinvest.co.uk/market-research/LSE:SOLG[/URL]
     
    Last edited: Apr 21, 2020
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