SolGold (TSX: SOLG; LSE: SOLG) announced Tuesday that it will delay the Cascabel feasibility study and Porvenir preliminary economic assessment (PEA) due to the evolving capital cost environment and its study of value-enhancing opportunities.
"Our top priority is to allocate our human and capital resources efficiently to unlock shareholder value," said interim CEO Scott Caldwell, who took on the job earlier this month following the departure of Darryl Cuzzubbo. "We are curtailing spend that is not aligned with our value maximization objectives, including advancing nonessential studies in this market environment that do not materially increase value."
The company is proceeding with the Cascabel feasibility as the next stage. The report was initially slated for the second half of 2022, but like the prefeasibility study, is now on hold as SolGold reviews opportunities to derisk the project, reduce costs and further improve economics.
In addition, given exploration success has been a key driver of unlocking shareholder value, SolGold said it would take a "disciplined approach" to continue to advance the highest priority exploration targets at Cascabel and across the broader portfolio applying the company's blueprint and proven exploration methodology.
SolGold discovered and defined the resources at Cascabel for less than US1 ? per lb. of copper-equivalent or less than US$3 per oz. of gold-equivalent.
"This new approach is a clear shift in direction and is in alignment with feedback received from a number of shareholders, and we look forward to continued engagement with all stakeholders. I will ensure the SolGold team works tirelessly to ensure all shareholders are rewarded for funding this world-class discovery in Cascabel and I would like to personally thank our shareholders for their patience and support," said Caldwell.
The Cascabel project, located in the Imbabura province of northwest Ecuador, is one of the most ambitious mining projects in a country that is keen to develop mineral resources to spur its sluggish economy.
In April 2022, SolGold published the long-awaited Cascabel prefeasibility study, which outlined a potential world-class deposit with average annual production of 132,000 tonnes of copper, 358,000 ounces of gold and 1 million ounces of silver over a 55-year mine life. Those figures, according to the company mean that the asset would become one of the 20 largest copper-gold mines in South America.
SolGold had been 85% owner of the Cascabel project until its recent acquisition of Ontario's Cornerstone Capital Resources, which is expected to close following customary regulatory approvals and a special shareholders meeting, after which it will officially take over as sole owner.
While it focuses on the Cascabel feasibility study, SolGold will put the Porvenir PEA on hold. Porvenir is a copper-gold deposit located about 100 km north of the Ecuador-Peru border and 100 km south of the Fruta Ddel Norte deposit held by Lundin Gold (TSX: LUG).
Shares of SolGold dropped 1.7% by 1 p.m. in Toronto on Tuesday. The company's market capitalization is $665.8 million.