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Franco-Nevada (NYSE:FNV) and Osisko Gold Royalties (OR) announced their partnership to secure gold produced at SolGold’s (OTCPK:SLGGF) Cascabel copper-gold project in Ecuador.
Financial Support for the Project
Osisko (OR), which had previously acquired a 0.6% net smelter return royalty on the Cascabel project, revealed that they, along with Franco-Nevada (FNV), will provide initial deposits totaling US$100M to SolGold (OTCPK:SLGGF) to cover the project’s pre-construction costs. Additionally, they plan to make further deposits amounting to US$650M for the construction costs once the project is fully financed and de-risked.
Osisko (OR) mentioned that its Bermuda subsidiary will contribute 30% of the deposit in exchange for a 30% interest in the gold stream from Cascabel, while Franco-Nevada’s (FNV) Barbados unit will provide the remaining 70% of the deposit for a 70% stake in the gold stream.
Project Potential
The companies involved view Cascabel as a world-class copper-gold project with the potential to be a multi-generational mine. A pre-feasibility study conducted earlier this year estimated total production over an initial 28-year mine life, including 2.9M metric tons of copper, 6.9M oz of gold, and 18.4M oz of silver. This estimation is based on exploiting just 18% of the measured and indicated mineral resources of one deposit.
SolGold (OTCPK:SLGGF) expressed that the agreement secures a significant portion of the capital needed to fund the construction of Cascabel and validates the vast potential of the project.
Insight:
The collaboration between Franco-Nevada and Osisko Gold Royalties showcases the importance of strategic partnerships in the mining industry. By combining resources and expertise, companies can mitigate risks and unlock the full potential of promising projects like Cascabel. This joint effort not only ensures financial support but also signifies confidence in the long-term viability of the venture. Such collaborations are common in the mining sector as they allow companies to pool their strengths and maximize returns while sharing the associated risks.
