SolGold completes $100 million royalty in exchange for perpetual 1% royalty interest on Cascabel
SolGold (TSX: SOLG) said Monday it completed its US$100 million royalty financing with Franco-Nevada for the company's flagship Alpala copper-gold project and the remainder of the Cascabel concession in northern Ecuador.
SolGold said the funds will be used for its Alpala project to guide the 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," said the company.
Cornerstone Capital is critical of the financing deal. Cornerstone also has interest in Cascabel and has been the subject of hostile takeovers by SolGold.
"[It] is our view that the proposed Franco-Nevada Royalty Financing will significantly destroy shareholder value for all SolGold shareholders,” wrote the company in a July news release.
Cornerstone said Cascabel is the only available tier-one copper-gold asset in the world not owned by a global, multi-national mining company.