SolGold (LSE & TSX: SOLG) has reached a significant milestone by signing the Exploitation Contract (EC) for its flagship copper-gold project, Cascabel, in Ecuador. This critical agreement, which establishes the legal and financial framework for the project’s development, follows successful negotiations and the approval of a term sheet by the Government of Ecuador in July 2023. The EC stipulates a substantial advance royalty payment totaling $75 million, highlighting the project’s scale and the commitment to Ecuador’s economic development.

Economic Benefits and Contractual Details

The Government of Ecuador will receive at least 50% of the cumulative discounted benefits from the Cascabel Project, calculated from taxes paid, including corporate income taxes and royalties. The contract grants SolGold’s subsidiary, Exploraciones Novomining S.A. (ENSA), the rights to develop and produce copper, gold, and silver from the area for an initial term of 33 years, with possibilities for renewal.

The EC also establishes a variable royalty rate on net smelter revenues, ranging from 3% to 8%, based on the type of mineral and its market price, once the new Investment Protection Agreement is approved. This innovative fiscal framework is designed to ensure fairness and economic viability for both the state and the investor, solidifying the project’s foundation.

Community and Environmental Commitments

Vice Minister of Mines, Diego Ocampo, emphasized the project’s role in ushering in a new era of economic development for Ecuador, stating, “This Contract represents a new era of economic development for Ecuador, demonstrating our commitment to promoting investment and sustainable development in the mining sector.”

Scott Caldwell, CEO and President of SolGold Ecuador, reinforced the company’s commitment to sustainable practices, acknowledging the support from local communities and regional administrations that have been instrumental in reaching this agreement.

Exploration Success and Future Prospects

The Cascabel Project has been a focus of extensive exploration since 2012, leading to significant discoveries and positioning it as one of the world’s largest undeveloped copper-gold porphyry deposits. The project promises to significantly enhance Ecuador’s economy and set a precedent for future explorations across SolGold’s extensive regional targets throughout the country.

The signing of the Exploitation Contract for the Cascabel Project is a landmark event that not only promises significant economic benefits for Ecuador but also sets a robust example of sustainable and responsible mining practices in the region. This agreement could serve as a blueprint for future mining contracts globally, emphasizing balanced economic benefits, environmental stewardship, and community engagement.

  Cascabel project, Copper Gold Mining, Ecuador Mining, SolGold, sustainable mining practices