Osisko Gold Royalties Ltd (TSX:OR) (NYSE:OR) is pleased to announce that its wholly-owned subsidiary, Osisko Bermuda Limited in partnership with Franco-Nevada (Barbados) Corporation a wholly-owned subsidiary of Franco-Nevada Corporation (TSX:FNV) (NYSE:FNV), has entered into a definitive Purchase and Sale Agreement (Gold) with SolGold plc and certain of its wholly-owned subsidiaries (LSE:SOLG) (TSX:SOLG), with reference to gold production from SolGold’s 100%-owned Cascabel copper-gold project located in Ecuador. Osisko also holds a 0.6% NSR royalty on Cascabel which it purchased from SolGold in 2022.

Pursuant to the terms of the Gold Stream, OBL and FNB will make initial deposits totaling US$100 million to SolGold in three equal tranches to fund the Project’s pre-construction costs. The first tranche of the Pre-Construction Deposit will be funded at closing, with the two subsequent tranches subject to the achievement of key development milestones.

Thereafter, the Stream Purchasers will make additional deposits totaling US$650 million to SolGold to fund construction costs once the Project is fully financed and further derisked. OBL will provide 30% of the Deposit in exchange for a 30% interest in the Gold Stream and FNB will provide 70% of the Deposit in exchange for a 70% interest in the Gold Stream.

Jason Attew, President & CEO of Osisko commented: “Cascabel is a world-class copper-gold project that has the potential to become a multi-generational mine. SolGold’s focus on sustainable development has generated very strong support from the Government of Ecuador and the local communities near the Project. This new stream investment, which complements Osisko’s existing royalty on Cascabel, further enhances Osisko’s peer leading growth profile at an attractive rate of return. We are excited to be partnering with Franco-Nevada to continue to support SolGold and the development of this exceptional asset.”

INVESTMENT HIGHLIGHTS

• Increasing Exposure to a Long Life, Tier-1ⁱ Copper-Gold Asset
  • Cascabel represents one of the most significant copper-gold discoveries in recent history and one of the few long life, high production projects that is not currently owned by a major mining company.
  • The 2024 pre-feasibility study for the Project’s Alpala deposit (the “2024 PFS”) estimates total production over an initial 28-year mine life of 2.9 million tonnes of copper, 6.9 million ounces of gold and 18.4 million ounces of silver at an all-in sustaining cost of US$0.69 per pound of copper, placing it in the 1^st quartile on the global copper mine cost curve.
  • The Exploitation Contract signed with the Government of Ecuador on June 5, 2024 outlines the fiscal and legal frameworks for the development of Cascabel.
  • SolGold has demonstrated a strong commitment to responsible and sustainable operating practices, with the aim of establishing one of the lowest carbon footprint copper mines globally.
• Potential to Materially Extend Mine Life through Near-Mine Exploration
  • The initial 28-year mine life outlined in the 2024 PFS only considers the exploitation of 18% of the Measured and Indicated Mineral Resources from the Alpala deposit.
  • There are numerous regional exploration targets that have similar geophysical and geochemical characteristics to Cascabel’s known mineralized porphyry clusters.
  • The Tandayama-America deposit, located just 3km north of the Alpala deposit, has the potential to be exploited by open-pit mining methods and could provide additional mill feed and project development flexibility.
• Robust Gold Stream with Phased Investment as Project Advances
  • Based on the 2024 PFS, annual deliveries to OBL over the initial 28-year mine life are expected to average approximately 12,000 gold equivalent ounces (“GEOs”), including an average of approximately 23,000 GEOs per annum for the first 10 years.
  • OBL’s investment is staged and based on the achievement of key development milestones, with US$30 million available pre-construction and the balance available for construction once the Project is further derisked and fully financed.
  • The Gold Stream includes adjustment mechanisms to preserve the economics to the Stream Purchasers in the event of changes to the scale of the Project or timeline of development.

STREAM DETAILS (ATTRIBUTABLE TO OBL)

• Pre-Construction Deposit: OBL will make initial cash deposits totaling US$30 million to SolGold to fund pre-construction costs of the Project, including:
  • US$10 million on closing; and
  • two additional staged deposits of US$10 million each, subject to satisfaction of key development milestones and other conditions precedent.
• Construction Deposit: OBL will provide additional deposits to SolGold totaling US$195 million to fund construction costs of the Project, subject to customary conditions including execution by SolGold of an Investment Protection Agreement with the Government of Ecuador related to the construction and development of the Project, receipt of all material permits, a board-approved construction decision and the balance of the construction financing being available.
• Streamed Metal: OBL will purchase refined gold equal to 6% of the contained gold produced from the Project until 225,000 ounces of gold have been delivered to it, and 3.6% thereafter for the remaining life of the mine. Over the initial 28-year mine life, SolGold estimates contained gold production from the Project to average approximately 253,000 ounces per annum, including an average of approximately 392,000 ounces per annum for the first 10 years.
• Production Payments: OBL will make ongoing cash payments for refined gold delivered equal to 20% of the spot price of gold at the time of delivery.
• SolGold Change of Control: In the event of a change of control of SolGold:
  • the Stream Purchasers have the option to terminate the Gold Stream and receive repayment of the Deposit that has been advanced by such date plus a return; or
  • if the Purchaser Termination Option is not exercised, then:
    • prior to the third anniversary of closing, an acquiror of SolGold shall have the one-time right to repurchase 50% of the Gold Stream; or
    • subsequent to the third anniversary of closing but prior to the fifth anniversary of closing, an acquiror of SolGold shall have the one-time right to repurchase 33% of the Gold Stream, in each case, for a one-time payment of gold equal to 50% or 33% (as applicable) of the then advanced amount of the Deposit plus an amount equating to a 15% internal rate of return on the portion of the Deposit being bought back, plus a change of control fee.

• Other Considerations:
  • OBL has agreed to commit funds to support environmental and social initiatives being advanced by SolGold in relation to the Project.
  • The Gold Stream is referenced to production from the entire Cascabel concession as well as any production from other properties owned by SolGold that is processed through the Cascabel plant and associated facilities.
  • SolGold has granted the Stream Purchasers a right of first refusal in respect of the sale or transfer of any royalty, stream or similar interest in the Project.
  • SolGold and certain of its subsidiaries have provided the Stream Purchasers with corporate guarantees and security over their assets related to the Project.

CASCABEL PROJECT OVERVIEW

Cascabel hosts one of the largest undeveloped copper-gold mineral resources in the world. The Project is located in the Imbabura province of northern Ecuador, approximately 100 kilometers north of the capital city of Quito and 50 km north-northwest of the provincial capital of Ibarra, and is in proximity to power, water and deep-water port infrastructure.

Three significant deposits have been identified thus far at Cascabel, namely the Alpala porphyry copper-gold-silver deposit, the Tandayama-America porphyry copper-gold deposit, and the Aguinaga porphyry copper-gold deposit. These mineralised systems are hosted within the Andean Porphyry Belt that extends from southern Chile right through to Ecuador and Colombia to Panama. The Andean Porphyry Belt hosts the largest concentrations of copper in the world, including numerous deposits with active mining operations.

In March 2024, SolGold released the results of the 2024 PFS for the Alpala deposit at Cascabel. The 2024 PFS outlined an initial 28-year mine life based on the exploitation of only 18% of the Alpala Measured and Indicated Mineral Resource. The 2024 PFS envisages the phased development of an underground mine exploited using the block caving mining method. The target extraction rate in phase one is estimated to be approximately 12 million tonnes per annum, with production expanding to 24 million tonnes per annum in year six of the mine life. The proposed process flowsheet includes a conventional copper-gold flotation process consisting of a single rougher stage and a multi-stage cleaning circuit to produce a clean copper-gold-silver concentrate. Over the current life of mine, the plant is expected to produce 2.9 million tonnes of copper, 6.9 million ounces of gold and 18.4 million ounces of silver.

In June 2024, SolGold announced the signing of the Exploitation Contract for Cascabel with the Government of Ecuador. The Exploitation Contract and existing legislation and regulations establish the legal and financial terms and conditions required for the Project’s development.

SolGold has made considerable efforts to undertake environmental studies and community engagement to facilitate the advancement of the Project. Several environmental baseline studies have been initiated in support of future permitting associated with mine development and submission of an Environmental and Social Impact Assessment. Cascabel is expected to bring substantial long-term benefits to the Ecuadorian economy and local communities through significant investment, job creation, and sustainable growth.

About SolGold plc

SolGold is a leading resources company focused on the discovery, definition and development of world-class copper and gold deposits. SolGold 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 environmental impact.

Qualified Person

The scientific and technical content of this news release has been reviewed and approved by Guy Desharnais, Ph.D., P.Geo., Vice President, Project Evaluation at Osisko Gold Royalties Ltd, who is a “qualified person” as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

About Osisko Gold Royalties Ltd

Osisko is an intermediate precious metal royalty company focused on the Americas that commenced activities in June 2014. Osisko holds a North American focused portfolio of over 185 royalties, streams and precious metal offtakes. Osisko’s portfolio is anchored by its cornerstone asset, a 3-5% net smelter return royalty on the Canadian Malartic Complex, which is home to one of Canada’s largest gold mines.