SolGold PLC Announces Completion of Franco-Nevada Royalty Financing

Rhea-AI Summary

SolGold has completed a US$100 million royalty financing deal with Franco-Nevada for its Alpala copper-gold project in Ecuador. The funds will be used to progress the Alpala Project towards a final feasibility study and development decision. Additionally, SolGold has repaid a US$15 million bridge loan with Franco-Nevada, eliminating the need to issue over 12 million warrants. Franco-Nevada now holds a 1% royalty interest on net smelter returns from the Cascabel concession, with potential upsizing options available.

Positive

• Completed US$100 million royalty financing with Franco-Nevada, enhancing liquidity.
• Repayment of US$15 million bridge loan eliminates the need for 12.22 million warrants, reducing potential shareholder dilution.
• Funds will advance Alpala project towards feasibility study and development decision.

Negative

• None.

Completion of Franco-Nevada US$100 million Royalty Financing and Repayment of US$15 million Bridge Loan

BISHOPSGATE, LONDON / ACCESSWIRE / Septeber 14, 2020 / The Board of SolGold plc (LSE & TSX: SOLG) is pleased to announce that it completed the previously announced US$100 million royalty financing pursuant to the NSR Financing Agreement ("NSR Financing") with Franco-Nevada Corporation ("Franco-Nevada"), in relation to the Company's flagship Alpala copper-gold project and the remainder of the Cascabel concession in northern Ecuador.

On 11 September 2020, Franco-Nevada advanced to SolGold US$100 million (the "Royalty Purchase Price") under the NSR Financing Agreement, less the amount of outstanding principal and interest under the US$15 million secured bridge loan pursuant to the Bridge Loan Agreement ("BLA") with Franco-Nevada announced on 11 May 2020. The aggregate amount owing under the BLA was therefore repaid out of the proceeds of the NSR Financing. Accordingly, the Company is not required to issue 12,220,000 warrants to Franco-Nevada that would have been required had the Company elected to extend the maturity date under the BLA for a further four month term.

SolGold will apply the funds received to progress the Alpala Project through to a final feasibility study and a development decision. The balance of the proceeds are expected to be used for SolGold's share of the development of Alpala pursuant to agreements with the minority shareholder of Exploraciones Novomining S.A. (ENSA), Cornerstone Capital Resources Inc.

In return for the Royalty Purchase Price, Franco-Nevada has been granted a perpetual 1% royalty interest to be calculated by reference to net smelter returns ("NSR") from the Cascabel concession area in accordance with the terms and conditions set out in the NSR Financing Agreement. Furthermore, the NSR Financing can be upsized by US$50 million at SolGold's election to a 1.5% NSR royalty interest on or before 11 January 2021.

By order of the Board
Karl Schlobohm
Company Secretary

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 until the release of this announcement.

CONTACTS

Nicholas Mather SolGold Plc (Chief Executive Officer) nmather@solgold.com.au	Tel: +61 (0) 7 3303 0665 +61 (0) 417 880 448
Karl Schlobohm SolGold Plc (Company Secretary) kschlobohm@solgold.com.au	Tel: +61 (0) 7 3303 0661
Ingo Hofmaier SolGold Plc (GM - Project & Corporate Finance) ihofmaier@solgold.com.au	Tel: +44 (0) 20 3823 2131
Gordon Poole / Nick Hennis Camarco (Financial PR / IR) solgold@camarco.co.uk	Tel: +44 (0) 20 3757 4997
Andrew Chubb Hannam & Partners (Joint Broker and Financial Advisor) solgold@hannam.partners	Tel: +44 (0) 20 7907 8500
Ross Allister / David McKeown Peel Hunt (Joint Broker and Financial Advisor) solgold@peelhunt.com	Tel: +44 (0)20 7418 8900
James Kofman / Darren Wallace Cormark Securities Inc. (Financial Advisor) dwallace@cormark.com	Tel: +1 416 943 6411

Follow us on twitter @SolGold_plc

ABOUT SOLGOLD

SolGold is a leading resources company focussed on the discovery, definition and development of world-class copper and gold deposits. In 2018, SolGold's management team was recognised by the "Mines and Money" Forum as an example of excellence in the industry and continues to strive to deliver objectives efficiently and in the interests of shareholders. SolGold is the largest and most active concession holder in Ecuador and is aggressively exploring the length and breadth of this highly prospective and gold-rich section of the Andean Copper Belt.

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.

Dedicated stakeholders

SolGold employs a staff of over 600 employees of whom 98% are Ecuadorean. This is expected to grow as the operations expand at Alpala, and in Ecuador generally. SolGold focusses its operations to be safe, reliable and environmentally responsible and maintains close relationships with its local communities. SolGold has engaged an increasingly skilled, refined and experienced team of geoscientists using state of the art geophysical and geochemical modelling applied to an extensive database to enable the delivery of ore grade intersections from nearly every drill hole at Alpala. SolGold has over 80 geologists on the ground in Ecuador exploring for economic copper and gold deposits.

About Cascabel and Alpala

The Alpala deposit is the main target in the Cascabel concession, located on the northern section of the heavily endowed Andean Copper Belt, the entirety of which is renowned as the base for nearly half of the world's copper production. The project area hosts mineralisation of Eocene age, the same age as numerous Tier 1 deposits along the Andean Copper Belt in Chile and Peru to the south. The project base is located at Rocafuerte within the Cascabel concession in northern Ecuador, an approximately three-hour drive on sealed highway north of the capital Quito, close to water, power supply and Pacific ports.

Having fulfilled its earn-in requirements, SolGold is a registered shareholder with an unencumbered legal and beneficial 85% interest in ENSA (Exploraciones Novomining S.A.) which holds 100% of the Cascabel concession covering approximately 50km². The junior equity owner in ENSA is required to repay 15% of costs since SolGold's earn in was completed, from 90% of its share of distribution of earnings or dividends from ENSA or the Cascabel concession. It is also required to contribute to development or be diluted, and if its interest falls below 10%, it shall reduce to a 0.5% NSR royalty which SolGold may acquire for US$3.5m.

Advancing Alpala towards development

The resource at the Alpala deposit contains a high-grade core which will be targeted to facilitate early cashflows and an accelerated payback of initial capital. SolGold is currently assessing financing options available to the Company for the development of the Alpala mine following completion of the Definitive Feasibility Study.

SolGold's Regional Exploration Drive

SolGold is using its successful and cost-efficient blueprint established at Alpala, and Cascabel generally, to explore for additional world class copper and gold projects across Ecuador. SolGold is the largest and most active concessionaire in Ecuador.

The Company wholly owns four other subsidiaries active throughout the country that are now focussed on thirteen high priority gold and copper resource targets, several of which the Company believes have the potential, subject to resource definition and feasibility, to be developed in close succession or even on a more accelerated basis compared to Alpala.

SolGold is listed on the London Stock Exchange and Toronto Stock Exchange (LSE/TSX: SOLG). The Company has on issue a total of 2,072,213,495 fully-paid ordinary shares and 113,175,000 share options.

Quality Assurance / Quality Control on Sample Collection, Security and Assaying

SolGold operates according to its rigorous Quality Assurance and Quality Control (QA/QC) protocol, which is consistent with industry best practices.

Primary sample collection involves secure transport from SolGold's concessions in Ecuador, to the ALS certified sample preparation facility in Quito, Ecuador. Samples are then air freighted from Quito to the ALS certified laboratory in Lima, Peru where the assaying of drill core, channel samples, rock chips and soil samples is undertaken. SolGold utilises ALS certified laboratories in Canada and Australia for the analysis of metallurgical samples.

Samples are prepared and analysed using 100g 4-Acid digest ICP with MS finish for 48 elements on a 0.25g aliquot (ME-MS61). Laboratory performance is routinely monitored using umpire assays, check batches and inter-laboratory comparisons between ALS certified laboratory in Lima and the ACME certified laboratory in Cuenca, Ecuador.

In order to monitor the ongoing quality of its analytical database, SolGold's QA/QC protocol encompasses standard sampling methodologies, including the insertion of certified powder blanks, coarse chip blanks, standards, pulp duplicates and field duplicates. The blanks and standards are Certified Reference Materials supplied by Ore Research and Exploration, Australia.

SolGold's QA/QC protocol also monitors the ongoing quality of its analytical database. The Company's protocol involves Independent data validation of the digital analytical database including search for sample overlaps, duplicate or absent samples as well as anomalous assay and survey results. These are routinely performed ahead of Mineral Resource Estimates and Feasibility Studies. No material QA/QC issues have been identified with respect to sample collection, security and assaying.

Reviews of the sample preparation, chain of custody, data security procedures and assaying methods used by SolGold confirm that they are consistent with industry best practices and all results stated in this announcement have passed SolGold's QA/QC protocol.

See www.solgold.com.au for more information. Follow us on twitter @SolGold plc

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. 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" within the meaning of applicable Canadian securities legislation. 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. 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, and where possible aims to circulate all available material on its website.

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.

SOURCE: SolGold PLC

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FAQ

What are the details of SolGold's US$100 million royalty financing with Franco-Nevada?

SolGold completed a US$100 million royalty financing with Franco-Nevada to fund the Alpala copper-gold project, addressing immediate financial needs and eliminating a US$15 million bridge loan.

How will the financing affect SolGold's Alpala project?

The financing will be used to progress the Alpala project towards a final feasibility study and development decision, aiding its advancement in the mining sector.

What is the royalty agreement with Franco-Nevada?

Franco-Nevada receives a perpetual 1% royalty interest on net smelter returns from the Cascabel concession area, with an option for SolGold to increase it by US$50 million for a 1.5% royalty.

When was the US$15 million bridge loan repaid?

The US$15 million bridge loan was repaid out of the proceeds of the US$100 million royalty financing completed on September 11, 2020.