Cascabel Earn-in Agreement Re-negotiated

RNS Number : 1690Y

SolGold PLC

19 February 2013

 



19 February 2013

SolGold plc

("SolGold" or the "Company")

Cascabel Copper Porphyry Earn-In Agreement Re-negotiated

Highlights:

Ø SolGold acquires initial 20% holding in Exploraciones Novomining S.A ("ENSA"), a wholly-owned Ecuadorian subsidiary of Cornerstone Capital Resources Inc ("Cornerstone") which owns 100% of the Cascabel copper gold porphyry and the La Encrucijada porphyry and epithermal gold projects.

Ø SolGold has the right to acquire up to 85% of ENSA by completing equity placements totalling C$1.2Million in Cornerstone and completing the phase 1, 2,500 metre drill program at Cascabel, planned to commence in or around May 2013.

Ø SolGold's interest is a direct and immediate equity interest in ENSA as a registered shareholder.

Ø Total expenditure commitment for the earn-in phase reduced from C$7.8Million to C$2.5Million.

Ø Preparations well advanced for drilling on Cascabel subject to completion of permitting anticipated in April 2013.

The Directors of SolGold plc are pleased to announce that agreement has been reached with Cornerstone in respect of re-negotiated terms to acquire a majority interest in the promising Cascabel copper gold porphyry project in Northern Ecuador.

The re-negotiation provides for SolGold to be immediately registered as a shareholder in ENSA, the Cornerstone subsidiary that holds the exploration licence at Cascabel, provides upside from La Encrucijada as well, and affords SolGold the right to 85% of the project (up from 65%) for a reduced expenditure of C$2.5Million on the project (down from C$7.8Million).

Under the new agreement:

1.    SolGold will immediately subscribe for Cornerstone shares at the higher of 5 cents a share or the 7 day Volume Weighted Average Price (VWAP) for a subscription amount of C$200,000 and be issued a 20% direct interest in ENSA, an Ecuadorian subsidiary of Cornerstone holding the Cascabel and La Encrucijada projects.  This provides SolGold with an immediate direct interest in ENSA as a registered shareholder.

2.    By 24 March 2013 SolGold may acquire a further 10% interest giving it a direct 30% interest in ENSA by subscribing for a further C$250,000 to Cornerstone shares at the higher of 5 cents a share or the 7 day VWAP.  Part of these funds will be used to renew tenure at ENSA's secondary project, La Encrucijada situated in southern central Ecuador.

3.    SolGold may then elect to undertake a placement in Cornerstone of C$500,000 at the higher of 5cents or the 7 day VWAP upon the issuance of the environmental and any other licences to allow drilling at Cascabel.  Should SolGold elect to undertake this placement, it will receive a further 20% interest in ENSA taking SolGold's shareholding to 50% in ENSA at that point.

4.    SolGold may increase its interest in ENSA to 85% by:

·     Completing a 2,500metre drilling program capped at C$2.5Million including expenditure to date by SolGold;

·     SolGold subscribing C$250,000 at the higher of 5 cents or 7 day VWAP to shares in Cornerstone;

·     SolGold issuing Cornerstone with C$500,000 in SolGold shares priced at the 7 day VWAP.

At this stage, SolGold would have an indirect 85% interest in the Cascabel project.  SolGold shall carry Cornerstone through a 15% interest in the project to completion of a bankable feasibility study on SolGold's schedule and budget.  Cornerstone may elect to contribute down to 10% interest in development or dilute to a 0.5% Net Smelter Return (NSR).

SolGold may acquire this and other royalties for payments totalling C$7.5Million at any stage. SolGold may recover Cornerstone's carried costs to bankable feasibility study from 90% of Cornerstone's share of Cascabel project cash flows.

Commenting on the re-negotiation, SolGold Executive Director Nick Mather said,

"SolGold remains fully committed to the Cascabel project in Ecuador with Cornerstone. Recently announced exploration results provide considerable encouragement that the 25km² intrusive system at Cascabel will yield at least one major porphyry copper gold discovery.  The company is particularly encouraged by open ended high grade copper and gold vein zones at Quebrada Alpala.  The permitting processes are progressing well under Cornerstone's Ecuadorian management, and SolGold is optimistic that drilling will commence in or around May 2013.

The opportunity to renegotiate with Cornerstone provides SolGold with immediate equity of 20% in ENSA, considerably lower expenditure commitments of C$2.5Million as compared to C$7.8Million previously, higher ultimate equity of 85% and increased flexibility for expenditure programs and schedules.

Located on the northern end of the highly prospective Andean Cordillera, Ecuador is well positioned to host world class porphyry copper gold discoveries."

Qualified Person 

Information in this report relating to exploration results is based on data reviewed by Mr Nicholas Mather (B.Sc. Hons Geol.), an Executive Director of the Company.  Mr Mather is a Fellow of the Australasian Institute of Mining and Metallurgy who has in excess of 25 years' experience in mineral exploration and is a Qualified Person under the AIM Rules.  Mr Mather consents to the inclusion of the information in the form and context in which it appears.

By order of the Board

Karl Schlobohm

Company Secretary

Contacts:

Mr Karl Schlobohm                                                                                         Tel: [phone]

SolGold plc (Company Secretary)

[e-mail] 

Mr Ewan Leggat / Katy Birkin                                                                     Tel: [phone]

SP Angel Corporate Finance LLP (Broker)

[e-mail]  

Mr Stephen Weir                                                                                           Tel: [phone]

RFC Ambrian Limited (Nominated Advisor)

[e-mail]  

NOTES TO EDITORS

SolGold's exploration projects are located in northern Ecuador, Australia, and the Solomon Islands. In Ecuador, they comprise of a JV with Cornerstone Capital Resources on the Cascabel gold-copper project. In Australia, SolGold holds 100% of the Rannes, Mt Perry, Cracow West and Normanby Projects, all in southeast Queensland and in the Solomon Islands they comprise the Fauro Project (located on Fauro Island), and the Guadalcanal Joint Venture with Newmont Mining Corporation.

In July 2012, SolGold and Cornerstone Capital Resources Inc. announced that they had signed a Definitive Option Agreement whereby SolGold may acquire up to 85% of Cornerstone's 100% owned 5,000 hectare Cascabel gold-copper-silver property in northern Ecuador.

The Cascabel project is located approximately 120 km north of Ecuador's capital, Quito, 20 km south of the Colombian border, and 75 km inland from the coastal city of San Lorenzo. The gold-copper porphyry project is located within the Andean western cordillera, host to numerous Tier 1 world class copper-gold deposits through Chile, Peru, Ecuador and Colombia.

At the Rannes project SolGold has announced Indicated and Inferred resources of 18.7 million tonnes at 0.9 g/t gold equivalent (gold + silver) for 550,146 ounces of gold equivalent (296,657 ounces of gold and 10,137,736 ounces of silver; see announcement dated 23 May 2012 for details of the resource statement and gold equivalent ratios).

Exploration continues at Mt. Perry, Normanby and Cracow West.

In the Solomon Islands, a JV partner is being sought for the Fauro project to pursue drilling of gold-copper targets defined in the 2011 exploration program. The Guadalcanal Joint Venture (GJV) with NVL Solomon Islands Limited (a subsidiary of NYSE-listed Newmont Mining Corporation) is to be terminated following finalisation of divestment agreements outlined in this announcement.

SolGold's strategy is to be an integrated gold and copper discoverer, developer and miner.

SolGold's Board includes accomplished professionals with strong track records in the areas of exploration, mine development, investment, finance and law.  Board and Management have significantly vested interests in the Company, holding approximately 17.5% of its issued share capital.

SolGold is based in Brisbane, Queensland, Australia.  The Company listed on London's Alternative Investment Market in 2006, under the AIM Code 'SOLG' and currently has a total of 424,242,966 fully-paid ordinary shares, 10,700 Convertible Redeemable Preference Shares, 9,472,000 options exercisable at 50p, 1,250,000 options exercisable at 28p and 1,250,000 options exercisable at 14p on issue. Further details concerning the Company's key projects and personnel can be found at www.solgold.com.au.

 

END

 

 

JVEUKSVROOAUARR