Benzinga - by Stjepan Kalinic, Benzinga Staff Writer.
Ecuador-focused mining company SolGold (OTCPK: SLGGF) surged 23% following the announcement of a $3.2 billion investment from the Ecuadorian government in its flagship Cascabel copper-gold project. This investment, marking a historic milestone for Ecuador’s mining sector, reflects the country’s strategic move to capitalize on the burgeoning copper market amid looming supply constraints and forecasted shortages of this critical metal.
SolGold's CEO Scot Caldwell expressed enthusiasm about the groundbreaking deal, stating that this deal “not only reinforces the protections for our key investment in Ecuador but also symbolizes a deepening of our relationship with the Ecuadorian State.”
The investment is separate from the government’s prior commitment of $311 million for the Cascabel project. The project boasts indicated resources of 2.050 billion tons, including 8.4 million tons of copper and 19.4 million ounces of gold. Inferred resources include 900 million tons, 2.5 million tons of copper, and 3.8 million ounces of gold.
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SolGold’s recent pre-feasibility study for Cascabel revealed a significant reduction in upfront costs. Initial mine development, the first process plant module, and infrastructure are estimated to cost $1.55 billion, down from $2.75 billion in the previous study. The indicated resources at Cascabel make it a potential multi-generational asset and one of the 20 largest copper-gold mines in South America. Construction is scheduled to commence in 2025.
SolGold also signed a memorandum of understanding (MoU) for the project’s potential 200 MW hydroelectric and solar power supply. Per Caldwell's words, this initiative could position Cascabel as one of the world’s largest copper-gold mines with a carbon-neutral footprint. The MoU involves partnerships with Grupo Empresarial Semaica, Constructora Nacional S, and Enerhydra, outlining plans for a power purchase agreement, financing, construction, and operation.
While SolGold’s share price has faced challenges over the past year, the recent developments, including the significant government investment and commitment to renewable energy, have injected optimism into the company’s outlook. Yet despite the recent surge, the stock is still down 25% year-to-date.
Major industry players, including BHP (NYSE:BHP), Newmont (NYSE:NEM), and Jiangxi Copper (OTCPK: JIAXF), hold significant stakes in SolGold. BHP and Newmont collectively own around 20%, while Jianxi holds around 6%. Prospective copper investors might want to check the newly launched Sprott Copper Miners ETF (NASDAQ:COPP).
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