SolGold PLC Expiry of Cornerstone Capital Resources Bid (3771C)

TIDMSOLG

RNS Number : 3771C

SolGold PLC

16 October 2020

SolGold plc

("SolGold" or the "Company")

Expiry of Cornerstone Capital Resources Bid

The Board of Directors of SolGold (LSE & TSX: SOLG) wishes to advise that the takeover bid (the "Offer") for all outstanding common shares of Cornerstone Capital Resources Inc ("Cornerstone") dated June 30, 2020 expired at 5:00 p.m. (Toronto time) on October 14, 2020. The Offer is now terminated and no longer open for acceptance by any Cornerstone shareholders. As the Offer conditions have not been met, SolGold will not take-up any securities deposited under the Offer and will return such securities to the holders thereof.

SolGold firmly believes in a clean ownership structure of the Alpala Project, however the Offer was strongly opposed by the major shareholders and Board of Directors of Cornerstone. Attempts by SolGold to reasonably engage with the Cornerstone Board in respect of the Offer were fruitless.

Cornerstone holds a minority 15% interest in ENSA and the relationship between Cornerstone and SolGold in respect of their shareholdings in ENSA is governed by two agreements dated 23 July 2012 and 24 February 2014 pursuant to which:

1. SolGold funded Cornerstone's 15% share of feasibility on the Cascabel tenements in Northern Ecuador. Having fulfilled its earn-in requirements, SolGold is a registered shareholder with an unencumbered legal and beneficial 85% interest in ENSA which holds 100% of the Cascabel tenements.

2. Following completion of the earn-in, Cornerstone must contribute to development of the Cascabel tenements or be diluted, and if its interest falls below 10%, it shall reduce to a 0.5% NSR royalty which SolGold may acquire for US$3.5million.

3. Cornerstone may not use its interest in ENSA directly or indirectly to secure debt funding without SolGold's consent and SolGold holds a pre-emptive right and a right to approve or disapprove of any dealings of Cornerstone in its direct or indirect interest in ENSA.

4. Cornerstone must repay to SolGold 15% of SolGold's expenditure on the Cascabel tenements since SolGold's earn in was completed, out of 90% of Cornerstone's share of earnings or dividends from ENSA or the Cascabel tenements.

SolGold's strategy to become a copper gold mining major on the Ecuadorean sector of the globally important Andean Copper Belt is already yielding success with the discovery of the Carchaposa copper-gold porphyry at Porvenir in southern Ecuador. The first drill hole intersected more than 800m of visible copper mineralisation and was terminated in mineralisation to commence drill hole 2, closer to the prognosed core of the system. Updates will be released on a regular basis.

SolGold is exploring a pipeline of 14 wholly owned and unencumbered projects covered by 75 granted licences covering 3,200km (2) throughout the length of Ecuador. These projects have the same or better gross geological characteristics as Cascabel and provide SolGold with a first mover advantage fir copper gold porphyry growth in Ecuador.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 until the release of this announcement.

Qualified Person:

Information in this report relating to the exploration results is based on data reviewed by Mr Jason Ward ((CP) B.Sc. Geol.), the Chief Geologist of the Company. Mr Ward is a Fellow of the Australasian Institute of Mining and Metallurgy, holds the designation FAusIMM (CP), and has in excess of 20 years' experience in mineral exploration and is a Qualified Person for the purposes of the relevant LSE and TSX Rules. Mr Ward consents to the inclusion of the information in the form and context in which it appears.

By order of the Board

Karl Schlobohm

Company Secretary

CONTACTS

 
    Nicholas Mather                                        Tel: +61 (0) 7 3303 0665 
     SolGold Plc (Chief Executive Officer) 
     nmather@solgold.com.au 
    Karl Schlobohm 
     SolGold Plc (Company Secretary)                       Tel: +61 (0) 7 3303 0661 
     kschlobohm@solgold.com.au 
    Ingo Hofmaier 
     SolGold Plc (GM - Project & Corporate                Tel: +44 (0) 20 3823 2131 
     Finance) ihofmaier@solgold.com.au 
    Gordon Poole / Nick Hennis 
     Camarco (Financial PR / IR)                          Tel: +44 (0) 20 3757 4997 
     solgold@camarco.co.uk 
    Andrew Chubb                                          Tel: +44 (0) 20 7907 8500 
     Hannam & Partners (Joint Broker and Financial 
     Advisor) 
     solgold@hannam.partners 
    Ross Allister / David McKeown                          Tel: +44 (0)20 7418 8900 
     Peel Hunt (Joint Broker and Financial 
     Advisor) 
     solgold@peelhunt.com 
    James Kofman / Darren Wallace                              Tel: +1 416 943 6411 
     Cormark Securities Inc. (Financial Advisor) 
     dwallace@cormark.com 
    Clayton Bush / Scott Mathieson                        Tel: +44 (0) 20 3100 2184 
     Liberum (Joint Broker and Financial Advisor) 
     Clayton.Bush@liberum.com

ABOUT SOLGOLD

SolGold is a leading resources company focussed on the discovery, definition and development of world-class copper and gold deposits. In 2018, SolGold's management team was recognised by the "Mines and Money" Forum as an example of excellence in the industry and continues to strive to deliver objectives efficiently and in the interests of shareholders. SolGold is the largest and most active concession holder in Ecuador and is aggressively exploring the length and breadth of this highly prospective and gold-rich section of the Andean Copper Belt.

The Company operates with transparency and in accordance with international best practices. SolGold is committed to delivering value to its shareholders, while simultaneously providing economic and social benefits to impacted communities, fostering a healthy and safe workplace and minimizing the environmental impact.

Dedicated stakeholders

SolGold employs a staff of over 700 employees of whom 98% are Ecuadorean. This is expected to grow as the operations expand at Alpala, and in Ecuador generally. SolGold focusses its operations to be safe, reliable and environmentally responsible and maintains close relationships with its local communities. SolGold has engaged an increasingly skilled, refined and experienced team of geoscientists using state of the art geophysical and geochemical modelling applied to an extensive database to enable the delivery of ore grade intersections from nearly every drill hole at Alpala. SolGold has over 80 geologists on the ground in Ecuador exploring for economic copper and gold deposits.

About Cascabel and Alpala

The Alpala deposit is the main target in the Cascabel concession, located on the northern section of the heavily endowed Andean Copper Belt, the entirety of which is renowned as the base for nearly half of the world's copper production. The project area hosts mineralisation of Eocene age, the same age as numerous Tier 1 deposits along the Andean Copper Belt in Chile and Peru to the south. The project base is located at Rocafuerte within the Cascabel concession in northern Ecuador, an approximately three-hour drive on sealed highway north of the capital Quito, close to water, power supply and Pacific ports.

Having fulfilled its earn-in requirements, SolGold is a registered shareholder with an unencumbered legal and beneficial 85% interest in ENSA (Exploraciones Novomining S.A.) which holds 100% of the Cascabel concession covering approximately 50km(2) . The junior equity owner in ENSA is required to repay 15% of costs since SolGold's earn in was completed, from 90% of its share of distribution of earnings or dividends from ENSA or the Cascabel concession. It is also required to contribute to development or be diluted, and if its interest falls below 10%, it shall reduce to a 0.5% NSR royalty which SolGold may acquire for US$3.5million.

Advancing Alpala towards development

The resource at the Alpala deposit contains a high-grade core which will be targeted to facilitate early cashflows and an accelerated payback of initial capital. SolGold is currently progressing its Pre-Feasibility Study and is fully funded through to development decision following the Net Smelter Royalty Financing with Franco-Nevada Corporation for US$100million. Franco-Nevada will receive a perpetual 1% NSR interest from the Cascabel licence area.

SolGold is currently assessing financing options available to the Company for the development of the Alpala mine following completion of the Definitive Feasibility Study.

SolGold's Regional Exploration Drive

SolGold is using its successful and cost-efficient blueprint established at Alpala, and Cascabel generally, to explore for additional world class copper and gold projects across Ecuador. SolGold is the largest and most active concessionaire in Ecuador.

The Company wholly owns four other subsidiaries active throughout the country that are now focussed on thirteen high priority gold and copper resource targets, several of which the Company believes have the potential, subject to resource definition and feasibility, to be developed in close succession or even on a more accelerated basis compared to Alpala.

SolGold is listed on the London Stock Exchange and Toronto Stock Exchange (LSE/TSX: SOLG). The Company has on issue a total of 2,072,213,495 fully-paid ordinary shares and 113,175,000 share options.

Quality Assurance / Quality Control on Sample Collection, Security and Assaying

SolGold operates according to its rigorous Quality Assurance and Quality Control (QA/QC) protocol, which is consistent with industry best practices.

Primary sample collection involves secure transport from SolGold's concessions in Ecuador, to the ALS certified sample preparation facility in Quito, Ecuador. Samples are then air freighted from Quito to the ALS certified laboratory in Lima, Peru where the assaying of drill core, channel samples, rock chips and soil samples is undertaken. SolGold utilises ALS certified laboratories in Canada and Australia for the analysis of metallurgical samples.

Samples are prepared and analysed using 100g 4-Acid digest ICP with MS finish for 48 elements on a 0.25g aliquot (ME-MS61). Laboratory performance is routinely monitored using umpire assays, check batches and inter-laboratory comparisons between ALS certified laboratory in Lima and the ACME certified laboratory in Cuenca, Ecuador.

In order to monitor the ongoing quality of its analytical database, SolGold's QA/QC protocol encompasses standard sampling methodologies, including the insertion of certified powder blanks, coarse chip blanks, standards, pulp duplicates and field duplicates. The blanks and standards are Certified Reference Materials supplied by Ore Research and Exploration, Australia.

SolGold's QA/QC protocol also monitors the ongoing quality of its analytical database. The Company's protocol involves Independent data validation of the digital analytical database including search for sample overlaps, duplicate or absent samples as well as anomalous assay and survey results. These are routinely performed ahead of Mineral Resource Estimates and Feasibility Studies. No material QA/QC issues have been identified with respect to sample collection, security and assaying.

Reviews of the sample preparation, chain of custody, data security procedures and assaying methods used by SolGold confirm that they are consistent with industry best practices and all results stated in this announcement have passed SolGold's QA/QC protocol.

The data aggregation method for calculating Copper Equivalent (CuEq) for rock-saw channel sampling intervals are reported using copper equivalent (CuEq) cut-off grades with up to 10m internal dilution, excluding bridging to a single sample and with minimum intersection length of 50m.

Copper Equivalent is currently calculated (assuming 100% recovery of copper and gold) using a Gold Conversion Factor of 0.751 (CuEq = Cu + Au x 0.751), calculated from a current nominal copper price of US$3.30/lb and a gold price of US$1700/oz.

See www.solgold.com.au for more information. Follow us on twitter @SolGold plc

CAUTIONARY NOTICE

News releases, presentations and public commentary made by SolGold plc (the "Company") and its Officers may contain certain statements and expressions of belief, expectation or opinion which are forward looking statements, and which relate, inter alia, to interpretations of exploration results to date and the Company's proposed strategy, plans and objectives or to the expectations or intentions of the Company's Directors. Such forward-looking and interpretative statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such interpretations and forward-looking statements.

Accordingly, the reader should not rely on any interpretations or forward-looking statements; and save as required by the exchange rules of the TSX and LSE or by applicable laws, the Company does not accept any obligation to disseminate any updates or revisions to such interpretations or forward-looking statements. The Company may reinterpret results to date as the status of its assets and projects changes with time expenditure, metals prices and other affecting circumstances.

This release may contain "forward--looking information" within the meaning of applicable Canadian securities legislation. Forward--looking information includes, but is not limited to, statements regarding the Company's plans for developing its properties. Generally, forward--looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".

Forward--looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward--looking information, including but not limited to: transaction risks; general business, economic, competitive, political and social uncertainties; future prices of mineral prices; accidents, labour disputes and shortages and other risks of the mining industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to, risks relating to the ability of exploration activities (including assay results) to accurately predict mineralization; errors in management's geological modelling; capital and operating costs varying significantly from estimates; the preliminary nature of visual assessments; delays in obtaining or failures to obtain required governmental, environmental or other required approvals; uncertainties relating to the availability and costs of financing needed in the future; changes in equity markets; inflation; the global economic climate; fluctuations in commodity prices; the ability of the Company to complete further exploration activities, including drilling; delays in the development of projects; environmental risks; community and non-governmental actions; other risks involved in the mineral exploration and development industry; the ability of the Company to retain its key management employees and skilled and experienced personnel; and those risks set out in the Company's public documents filed on SEDAR at www.sedar.com . Accordingly, readers should not place undue reliance on forward--looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

The Company and its officers do not endorse, or reject or otherwise comment on the conclusions, interpretations or views expressed in press articles or third-party analysis, and where possible aims to circulate all available material on its website.

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