SolGold PLC Announces Proposed Placing and Retail Offer

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN (INCLUDING THE APPENDIX) IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, HONG KONG, NEW ZEALAND, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION, WHERE SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) DOES NOT CONSTITUTE AN OFFER TO BUY, ACQUIRE OR SUBSCRIBE FOR (OR THE SOLICITATION OF AN OFFER TO BUY, ACQUIRE OR SUBSCRIBE FOR) ORDINARY SHARES TO ANY PERSON WITH A REGISTERED ADDRESS IN, LOCATED IN, OR WHO IS A RESIDENT OF, THE UNITED STATES, AUSTRALIA, NEW ZEALAND, HONG KONG, JAPAN, SOUTH AFRICA OR IN ANY OTHER JURISDICTION, WHERE SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL OR CONTRAVENE ANY REGISTRATION OR QUALIFICATION REQUIREMENTS UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014, INCLUDING AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN ‎‎THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH ‎‎INSIDE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THE INSIDE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

LONDON, April 27, 2021 - The Board of Directors of SolGold plc (LSE:SOLG), (TSX:SOLG) is pleased to announce its intention to conduct a placing (the "Placing") of new ordinary shares of 1 pence each in the capital of the Company (the "Ordinary Shares") (the "Placing Shares") to both existing and new institutional investors in the Company to raise approximately US$50 million (£36.0 million), before expenses.

In addition to the Placing, the Company intends to raise up to US$6.0 million (£4.3 million) by way of an offer made via PrimaryBid of new Ordinary Shares (the "Retail Shares") at the Placing Price (the "Retail Offer"), to provide retail investors with an opportunity to participate in the equity fundraise. A separate announcement will be made shortly regarding the Retail Offer and its terms.

Together, the total number of Placing Shares and Retail Shares will be no more than 10% of the Company's existing issued share capital.

The Placing will be conducted in accordance with the terms and conditions set out in the Appendix to this announcement (which forms part of this announcement, such announcement and the Appendix together being this "Announcement") through an accelerated bookbuild process (the "Bookbuild") which will be launched immediately following release of this Announcement. The price at which the Placing Shares and Retail Shares are to be placed (the "Placing Price") will be determined following the close of the Bookbuild. Cantor Fitzgerald Canada Corporation ("Cantor"), H&P Advisory Ltd ("H&P") and Peel Hunt LLP ("Peel Hunt") (together, the "Joint Bookrunners") are acting as joint bookrunners in connection with the Placing.

The net proceeds of the Placing will enable the Company to make a significant investment into Ecuador and its mineral assets in the context of an improved outlook in the country. The goal of the Company is to drive value for stakeholders via the exploration and ultimately development of its exciting prospective targets already identified within its Regional Portfolio and to seek to discover another highly prospective mineral system such as that at the Company's flagship Alpala project. The Company has a proven track record of applying its exploration blueprint of systematically evaluating its exploration assets, which are held in four wholly owned subsidiaries across the country. With 76 concessions covering over 3,000km² in Ecuador, SolGold is the largest and most active concession holder in the country.

SolGold's Alpala (85% owned) world-class copper-gold porphyry project, hosts 9.9Mt Cu, 21.7Moz Au and 92.2Moz Ag, making it one of the most significant copper-gold discoveries of the last decade. The Alpala deposit is the main deposit in the Cascabel concession, located in northern Ecuador. After several investments from BHP and Newcrest Mining, the Company secured a US$100 million royalty financing from Franco-Nevada Corp. ("Franco-Nevada") in the first half of 2020. These proceeds are ring-fenced for the Alpala project and work on the c.50km² Cascabel concession.

The Company believes the Placing will allow the Company to continue to pursue its strategy as an integrated explorer and developer, maximising value for all shareholders by further exploring this highly prospective and gold-rich section of the Andean Copper Belt.

Key Highlights

• The Company intends to raise approximately US$50 million (£36.0 million) by way of an accelerated bookbuild.
• A majority of the directors of the Company also intend to participate in the Placing.
• The Company believes that the newly elected president of Ecuador, Guillermo Lasso, will offer continued support for responsible mining activities which recognise the importance of the environment and the interests of communities.
• SolGold is encouraged to expand its regional activities and commence working on a multi-party project financing solution for Alpala in the second half of this year.
• The focus at Alpala is the delivery of a Preliminary Feasibility Study ("PFS") by year-end and a seamless transition into the delivery of a Definitive Feasibility Study ("DFS") shortly after this.
• In May 2020, the Company secured US$100 million royalty financing from Franco Nevada. This funding is ringfenced and will specifically be deployed for the advancement of the Alpala project and related expenses, as well as further exploration efforts on the Cascabel concession.
• The discovery of the Cacharposa copper/gold porphyry system on the Porvenir concession generated strong shareholder returns in late 2020. Following encouraging drill results, SolGold intends to use a portion of the Placing proceeds to invest further at Porvenir in order to better understand the geology and structure of the deposit and to work towards obtaining a maiden mineral resource estimate for Cacharposa.
• SolGold also intends to use the Placing proceeds to commence drilling at three additional 100% owned projects:
  • Rio Amarillo ~30km south-east of the Cascabel concession in Northern Ecuador
  • Sharug in southwest Ecuador
  • Cisne Loja in southern Ecuador

The net proceeds will also allow SolGold to continue drilling at Blanca Nieves ~8km north-west of the Cascabel concession.

• The Company is committed to proactive and informed engagement with its stakeholders and has been actively supporting local communities. 98% of our employees are Ecuadorian and the Company employs 35 full time staff in our community engagement team in the villages we work with.
• In our conduct SolGold aims to align with international standards such as the UN Global Compact and follows IFC Performance Standards and Equator Principles in the Alpala project design.
• The Company expects that the Placing will help to ensure the expansion of this work, will fund the investment in local initiatives and partnerships and support SolGold's social licence to operate.
• The Company believes it has made material improvements in strengthening its Corporate Governance and building an organisation well suited for the challenges ahead.
• Over the last 12 months the Company appointed Mrs Maria Amparo Alban, Mrs Elodie Grant Goodey, Mr Kevin O'Kane, and Mr Keith Marshall as Independent Non-Executive Directors, with Mr Marshall subsequently assuming the role of Interim CEO. Former CEO Nick Mather retired on 31 March 2021 but remains on the board as a non-executive director.

Details of the Placing

SolGold intends to issue the Placing Shares to certain institutional and other investors by way of a non-pre-emptive cashbox placing. The Company also intends to respect the principles of pre-emption as far as practicable by extending the offer to participate in the Placing to holders of a majority of shares and, as far as practicable, allocating to existing Shareholders at least up to what would have been their pre-emptive entitlement.

The Placing structure has been chosen because of its flexibility, reduced timeframe to completion and to minimise the price risk to participants. As a result of the withdrawal of the standard disapplication of pre-emption resolutions following limited shareholder support for the same at the Company's AGM in 2020, the directors of the Company consider the use of a cashbox structure to be in the best interests of the Company and its shareholders as a whole, particularly when combined with the Retail Offer which allows smaller shareholders to participate in the Placing. The Directors have reached this decision in this particular circumstance and after consulting with and taking into account the views or concerns of certain shareholders and receiving external advice. The Company plans to adhere to the Pre-Emption Group Statement of Principles (the "Principles") in respect of the combined size of the Placing and the Retail Offer, limiting the issuance to a maximum of 10% of the Company's existing issued share capital (5% unrestricted + 5% related to specified capital investments). In addition, the Company has taken into account certain other provisions of the Principles in implementing the Placing, in particular as regards prior consultation with shareholders, that the Placing is being undertaken on a soft pre-emptive basis and that the Company's management will be involved in the allocation process. As noted above, the Company has also given consideration to the effect of the Placing on retail shareholders and will enable them to take part in the issuance of new shares by way of the Retail Offer. The use of this financing structure is intended as a one-off.

The Bookbuild for the Placing will open with immediate effect following release of this Announcement and is expected to close no later than 7am on 28 April 2021. However, the Placing Price, the final number of Placing Shares and Retail Shares, the timing of the closing of the Bookbuild and allocations are at the discretion of the Joint Bookrunners and the Company. Confirmation of the Placing Price and the number of Placing Shares and Retail Shares will be announced as soon as practicable after the closing of the Bookbuild. The Placing is not underwritten.

The Placing Shares and Retail Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with each other and with the existing Ordinary Shares, including, without limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.

The Placing is also subject to the conditions and termination rights set out in the placing agreement between the Company and the Joint Bookrunners (the "Placing Agreement") including, among other things, Admission becoming effective and the Placing Agreement not being terminated in accordance with its terms. Further details of the Placing Agreement can be found in the terms and conditions contained in the Appendix to this Announcement.

The Placing and the Retail Offer do not require shareholder approval. Applications will be made for the Placing Shares and Retail Shares to be admitted to the standard listing segment of the Official List of the Financial Conduct Authority (the "FCA") and to be admitted to trading on the main market for listed securities of the London Stock Exchange plc (together, "Admission"). The new Ordinary Shares will also be admitted to trading on the Toronto Stock Exchange ("TSX"), conditional upon receiving TSX approval. It is expected that settlement for the Placing Shares and Retail Shares and Admission will take place at 8.00 a.m. on or around 30 April 2021.

Your attention is drawn to the detailed terms and conditions of the Placing described in the Appendix to this Announcement. By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions in it, and to be providing the representations, warranties and acknowledgements contained in the Appendix. In particular, investors should read and understand the information provided in the 'Important Information' section of this Announcement.

The Retail Offer is not made subject to the terms and conditions set out in the Appendix to this Announcement and instead will be made on the terms outlined in the separate announcement to be made shortly regarding the Retail Offer. The Placing is not conditional on the Retail Offer.

Subject to the successful completion of the Placing, it is the Company's intention not to exercise the option to upsize the Franco-Nevada facility by a further US$50 million to US$150 million.

The person responsible for arranging this announcement on behalf of SolGold plc is Ingo Hofmaier - Executive General Manager, Corporate Finance.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.

For further information, please contact:

Background to SolGold

SolGold is a leading exploration company focussed on the discovery, definition and development of world-class copper and gold deposits. SolGold, with 76 concessions covering over 3,000km², is the largest and most active concession holder in Ecuador (based on exploration expenditure reported by SNP Global) and is aggressively exploring this highly prospective, underexplored and copper-gold-rich section of the Andean Copper Belt which is currently responsible for c40% of global mined copper production (according to Wood Mackenzie). Ecuador is one of the most important new mining jurisdictions and is endorsed by major mining companies.

ESG and CSR is a key consideration and the Company believes it has made material improvements in strengthening its Corporate Governance and has committed to continue to build on recent advances. Following the new non-executive directors' appointment, gender diversity on the SolGold Board has increased to 22% and the Company is committed to continuously diversify and improve its Board and Management teams. SolGold also announced the formation of the Alpala Project Committee and the Health, Safety, Environment and Community ("HSEC") Committee. Further improvements were made to SolGold Board Committee structure as part of the wider Corporate Governance enhancement programme, with each committee now chaired by an independent non-executive director.

On the ground, the Alpala deposit is the main target in the Cascabel concession, located on the northern section of the heavily endowed Andean Copper Belt. 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 approximate three-hour drive on a sealed highway north of Quito, close to water, power supply and Pacific ports.

The Company's current activities are focussed on progressing a PFS study at its Alpala project and regional exploration as the Company continues to pursue its strategy as an integrated explorer and developer, based on preservation of value for all shareholders. The Company maintains its plan of applying its blueprint of systematic evaluation and exploration across its regional exploration portfolio of 75 concessions, having created the successful blueprint at the company's Tier 1 Alpala project.

The Alpala deposit comprises 2,663 Mt at 0.53% CuEq in the Measured plus Indicated categories and contained metal content of 9.9 Mt copper, 21.7 Moz gold and 92.2 Moz silver. The Company is of the view that the Alpala resource is one of the most significant copper-gold porphyry discoveries of the last decade. The Company further believes that it has the potential to become a key source of future copper supply amid an expected growing medium-term market deficit, reflecting limited new project development, a declining base production and growing demand supported by the shift towards electrification and decarbonisation.

The Company is making good progress studying potential Alpala mine plans while addressing a number of mine development and metallurgical enhancements as well as potential upsides. The Company is optimistic that the revised mine plan currently being studied as part of the PFS process could deliver similar metal production while mining significantly less material with anticipated benefits of the revised approach being studied including lower potential execution risks, lower potential pre-production capital and the potential for significantly reduced time to first production, all of which is expected to enhance project economics. Key considerations of a superior revised approach include:

• Near surface drilling
• Earlier access to the resource and shorter time to first production
• Mining of higher head grades in the earlier years to seek to maximise the NPV
• Optimal size of underground footprint and two extraction levels
• Similar metal production with significantly lower mined material
• Lower execution risks and potential for lower capex and cost savings

A significant part of SolGold's success to date in driving shareholder value growth has been through its successful exploration programmes across Ecuador's highly prospective and under-explored section of the Andean Copper Belt. Whilst this has resulted in the discovery and the proposed development of the world class Alpala project, the board of directors believes that the best way to continue to drive shareholder value at present is through further exploration success at priority projects. The goal of the Company is to drive value for stakeholders through this exploration programme by the assessment and study of exciting prospective targets already identified within the Regional Portfolio and to seek to discover another highly prospective mineral system such as that at the Company's flagship Alpala project.

Following encouraging drill results since late-2020, SolGold intends to invest further at Porvenir in order to better understand the geology and structure of the deposit and work towards obtaining a maiden mineral resource estimate at Porvenir's Cacharposa target. The Company also intends to continue to advance its exploration portfolio through investment in diamond drilling campaigns and regional fieldwork across its asset base. This Placing will allow the Company to continue this work.

SolGold also intends to use the Placing proceeds to commence drilling at three additional 100% owned projects:

• Rio Amarillo ~30km south-east of the Cascabel concession in Northern Ecuador
• Sharug in southwest Ecuador
• Cisne Loja in southern Ecuador

The net proceeds will also allow SolGold to continue drilling at Blanca Nieves ~8km north-west of the Cascabel concession in Northern Ecuador.

Use of Proceeds

The net proceeds of the Placing are intended to fund (i) a minimum of 40,000 meters of diamond core drilling, (ii) related technical services and staff expenses and (iii) CSR initiatives related to the Company's Regional Portfolio.

SolGold intends to invest c.US$50 million into its highly attractive regional exploration portfolio between April 2021 and June 2022 and international exploration and corporate overheads. The Company intends to use the net proceeds of the Placing to:

• Fund a minimum of 40,000 meters of diamond core drilling across key priority Regional exploration targets including:
  • Up to c.20,000 meters at the recently discovered Porvenir project, targeting a maiden resource estimate during 2021
  • up to c.17,000 meters at Rio Amarillo
  • up to c.7,000 meters at Sharug
  • up to c.7,000 meters at El Cisne
  • up to c.5,000 meters at Blanca Nieves
  • The amount of drilling conducted at each of these targets will be adapted as drilling is undertaken to reflect the success of the drilling programme;
• Fund approximately US$8.5 million for community initiatives, partnerships and environmental monitoring at Cascabel and approximately US$5.8 million for social programmes and environment management throughout the Regional Portfolio;
• Fund further expansion of other Regional fieldwork across Ecuador;
• Excess cash will be used for the DFS and related workstreams related to the Alpala Project; and
• Be available for general corporate purposes and working capital.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section of this Announcement.

http://www.rns-pdf.londonstockexchange.com/rns/7643W_1-2021-4-27.pdf

SOURCE: SolGold plc