‘You need to assume a long-term copper price that's above the current consensus’ - Solaris Resources’ Daniel Earle on miners' capital constraints

(Kitco News) - Solaris Resources has been transformed thanks to a $130 million investment by one of the world's largest miners, Zijin Mining Group.

Solaris’ president and CEO Daniel Earle spoke to Kitco Mining in February at the 33rd BMO Global Metals, Mining & Critical Minerals Conference in Hollywood, Florida.

Solaris Resources (TSX: SLS) is advancing its flagship Warintza project in Ecuador. The company calls Warintza a global scale resource with 579 Mt at 0.59% CuEq (Ind) and 887 Mt at 0.47% CuEq (Inf) with growth potential. An updated mineral resource is expected in late Q2 of 2024.

Solaris is managed by the Augusta Group. In January, Solaris announced a $130 million investment by Zijin Mining Group at $4.55 per common share, giving Zijin a 15% stake in Solaris.  

Earle said the investment enables the company to advance more quickly.

"This investment holds the potential to be nothing short of transformational for the business," he said. "It allows us to get much more aggressive in terms of our pursuit of our vision."

Earle said the funds will help advance the project, as well as unlocking its full potential through new discoveries.

"If we're able to bring it all together...do the exploration to make the discoveries, drill the resources that are available to us… at a capital cost where you could bring on production… anywhere from a half to a third of the cost of the competing jurisdictions, I think that combination represents the opportunity for one of the best greenfield projects in the entire industry,” he said.

To de-risk the project, Earle said the company is working through its social license and regulatory requirements.

Looking broadly at the copper sector, Earle said the cost of capital is constraining new supply.

"I think the most acute and constraining factor in terms of bringing on new copper supplies is on capital costs," said Earle.

"You need to assume a long-term copper price that's above the current consensus, which is currently $3.75 pound copper," said Earle. "There are a lot of management teams that are going to go out to their shareholders and tell them that they're assuming and deploying capital based on an assumption that the copper price is going to be materially higher than the current consensus. That's really the challenge."

Coverage of the BMO Global Metals, Mining & Critical Minerals Conference sponsored by First Majestic Silver (NYSE:AG).

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