Solaris Resources (TSX:SLS) To Spin Out Non-Core Assets To New Company to Focus on Warintza

Source: Solaris Resources

Canadian-based Solaris Resources (TSX:SLS) has announced its plans to focus on advancing its 100%-owned flagship Warintza copper and gold project in southeastern Ecuador, while transferring its non-core assets into a new private company called Solaris Exploration Inc. 

The company will be transferring its noncore assets in Ecuador, Chile, Mexico, and Peru to the new company following an internal reorganization from the company. It is expected that 100% of the common shares of Solaris Resources will be spun out to shareholders relative to their shareholdings. 

In order for the spin-out to be approved, at least two-thirds of Solaris Resources shareholders have to vote and agree on the future plans. The spin-out and reorganization are also subject to other approvals, including approval by the Supreme Court of British Columbia. 

After the proposed spin-out has been approved, Solaris will continue trading on the Toronto Stock Exchange in Canada under the symbol “SLS”, and on the OTCQB Venture Market in the United States under the symbol “SLSSF”. Solaris Exploration will not be listed on any stock exchange post-spin-out approval, and will remain a private company for the time being.

Warintza Stands on Its Own

As the company bundles its non-core assets, Solaris plans to focus on rapidly growing and advancing its Warintza project. The 268-sq.-km property is adjacent to the San Carlos-Panantza copper and gold mine, along with the Mirador copper and gold mine about 40 km south of the property. The Mirador mine is one of the world’s lowest-cost copper operations and largest mines in Ecuador; it started production in 2019 and is expected to produce 94,000 tonnes of copper concentrate per year.

The low cost of operation at Waritnza and the surrounding mines is due to easy-to-access roads and highways, access to freshwater, and access to low-cost hydroelectric energy. 

The property is also adjacent to a highway nearby that allows access to Pacific ports, transmission lines, and an airport. It is connected to grid power which supplies the company with inexpensive hydroelectric power, as well as access to fresh water, and low-cost skilled labour. This is the ideal situation for the exploration company and its flagship asset. Ultimately, the capital cost savings for the project have been lowered immensely due to the opportune placement of the project.

A 2019 mineral resource estimate for Warintza Central estimated 123.8 million inferred tonnes grading 0.56% copper, 0.03% molybdenum, and 0.06 gram gold per tonne (0.7% copper-equivalent) for 1.5 billion lb. contained copper, 77.5 million lb. molybdenum, and 238,600 oz. gold. The estimate was based on about 7,000 metres of historical drilling to an average depth of approximately 200 metres.

Warintza was first discovered by David Lowell over 20 years ago in 2000. After the discovery, the property was left alone for almost two decades as social acceptance of the property began to break down within the local communities. Through extensive communication and understanding of why operating this project would affect the community so immensely, the two parties came to a resolution in 2019. 

Beyond Business, To Community Development

Now, Solaris has a strategic alliance in place with the Shuar communities of Warintza and Yawi to overlook and engage in direct and transparent dialogue regarding all Warintza project-related activities. This alliance also led to the decision to create a CSR program promoting trust, cooperation, and reciprocal support. Solaris now employs over 450 personnel, which represents full employment from the local communities.

In September 2020, the company ​​signed an Impacts & Benefits Agreement with the Shuar communities of Warintza and Yawi for the Warintza project. This agreement provides certainty to Solaris that the communities will continue to support the company through the development and production stages of the project. 

Warintza has 12 drill rigs on the property, mostly focused on Waritnza Central, currently open to the north, east, and south. Results from ongoing exploration are expected in the near-term as well, and 2022 is set to bring further big developments.

Most Exciting Year Yet?

An updated mineral resource estimate is expected to be published within the first quarter of 2022, as well as a preliminary economic assessment set to be released later in the year. Those updates could establish Warintza as a premier copper project, and reset investor expectations for how big the Warintza project – and Solaris Resources – could be. 

With the new move to make it clear that Warintza is a world-class asset on its own, this could mean the start of the next chapter for the project and Solaris Resources.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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