Mineral exploration company SolGold has finalised an exploitation contract with the Ecuadorian Government for its Cascabel Project.

This agreement is a pivotal step in the development of one of the world’s largest undeveloped copper-gold porphyry deposits, promising substantial economic benefits for the country.

Exploraciones Novomining (ENSA), a subsidiary of SolGold, has been at the forefront of exploring the Cascabel concession since 2012.

The discovery of the Alpala deposit in 2014, followed by the Tandayama-Ameríca deposit, has spurred more than 300,000m of drilling, leading to a significant understanding of the site’s potential.

Work undertaken by SolGold encompasses not only geological exploration but also detailed resource, mining, metallurgical, environmental and social impact studies.

The exploitation contract delineates the framework for the project’s advancement, ensuring compliance with Ecuadorian legislation and regulations.

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Under the exploitation contract, the Ecuadorian Government is guaranteed a minimum of 50% of the cumulative discounted benefits from the Cascabel Project.

SolGold has agreed to an upfront royalty payment of $75m (A$112.87m), with the first instalment of $25m due at the commencement of concentrator construction.

ENSA has been granted the rights to develop the project and extract minerals for an initial term of 33 years, with an option to extend the contract for the entire lifespan of the mine.

A new investment protection agreement, pending approval, will establish a corporate income tax rate of 20% for the project’s duration.

Royalties on net smelter revenues will vary between 3% and 8%, in accordance with the Ecuadorian Mining Law, and will be adjusted based on the type of mineral extracted and prevailing market prices.

SolGold Ecuador president and CEO Scott Caldwell said: “The signing of the Exploitation Contract for the Cascabel Project is a landmark achievement for SolGold and our stakeholders.

“This success would not have been possible without the invaluable collaboration and support from the Government of Ecuador, regional administrations and local communities.

“We are strongly committed to cultivating sustainable development and shared prosperity in Ecuador and its communities.”