SolGold makes progress with Alpala offtake plans

SolGold updated the market on expressions of interest it had received from leading commodity traders for the offtake of copper-gold-silver concentrate from its flagship Alpala project in Ecuador on Thursday.

The AIM-traded firm said that, following the release of “encouraging” metallurgical test work results in October, it began engaging with “major” global copper smelters and international commodity traders, in a bid to assess the interest and commercial value of Alpala's high copper, high precious metal and low deleterious content copper concentrate.

It said on Thursday that, subject to favourable outcomes in development funding and necessary permits, production of gold rich copper concentrate is expected to start in late 2025, as it outlined in the preliminary economic assessment in November.

In the first 15 years of production, based on the 50Mtpa fast ramp-up scenario, the mine was expected to produce an average of 810ktpa of concentrate, with grades of 28.2% copper, 22.1g/t gold and 65.7g/t silver.

Those grades would result in production of contained metals of around 230kt of copper in concentrate, 580koz of gold and 1.7Moz of silver per annum on average.

At spot metal prices, life-of-mine net smelter return sales proceeds were expected to be $58.4bn, under the preliminary economic assessment assumption.

Given the “high level” of interest in reported in the concentrate, the board said it had decided to select a short-list of traders based on an initial expression of interest from each, covering the intended market strategy for Alpala concentrate, proposed offtake volumes and tenures, comprehensive commercial terms, and the ability for short and long term financial support.

In February, SolGold engaged with established international commodity traders to submit terms for the offtake of Alpala concentrate.

It said that to date, 10 qualifying bids had been received, with more expected once worldwide restrictions due to the Covid-19 coronavirus pandemic are lifted.

The offtake terms, though non-binding, were said to be “sufficiently detailed” to give SolGold confidence that binding agreements could be reached during upcoming negotiations.

“The high quality of the concentrates and the gold rich nature is attracting significant interest from not only traditional financiers, but from traders and smelters, pointing to a strong outcome in the generation of a near term development funding package,” said chief executive officer Nick Mather.

“Running the parallel processes of permitting, feasibility and financing with concentrates like SolGold has at Alpala, will, in SolGold's view, deliver a much quicker than expected development decision.”

At 1610 BST, shares in SolGold were up 12.7% at 20.62p.