Solaris Resources (TSX:SLS) (OTCQB:SLSSF) has announced finalized agreements with Orion Mine Finance Management LP for a funding package totaling US$80 million, aimed at supporting the development of the Warintza Project in Ecuador through studies and permitting.
The financing package is diverse, consisting of several components. Firstly, there is a senior secured debt facility amounting to US$60 million, known as the Senior Loan. This loan has a term of four years and notably does not include any hedging conditions. The drawdown of this loan will occur in three stages, each linked to specific milestones. The initial tranche of US$30 million is expected to close soon, followed by a US$15 million drawdown contingent on the submission of an Environmental Impact Assessment (EIA), and another US$15 million upon the publication of a Pre-Feasibility Study (PFS) for the Warintza Project.
Additionally, the agreement includes an offtake arrangement with a buyback provision, under which Orion will purchase 20% of the metals produced from the Warintza Project for 20 years starting from the commencement of production. This offtake is subject to a buyback clause in certain change of control scenarios.
Mr. Richard Warke, Executive Chairman, commented in a press release: “This financing package funds the advancement of Warintza through studies and permitting, leading to a substantially de-risked Project. This is a very special asset that has the potential to create tremendous long-term value for all stakeholders as it unlocks one of the last remaining major greenfield copper districts at low elevation and adjacent to infrastructure in the entire mining industry.”
The funding package also incorporates an equity component. Orion has agreed to subscribe to US$10 million of Solaris’ common shares at a price of C$5.11 each, which is the closing price as of November 6, 2023, prior to the initial announcement. There is also a commitment for an additional US$10 million in equity financing, which Solaris can call upon later under specific conditions.
The net proceeds from this financing will be utilized to advance the Warintza Project. This includes funding for exploration and infill drilling, technical and environmental programs and studies, permitting processes, community social relations programs, and general and working capital needs.
Solaris Resources is an exploration company with a focus on developing its portfolio of copper and gold assets in the Americas. The Warintza Project, located in Ecuador, is its flagship project and is recognized as a large-scale resource with significant potential for expansion and discovery.