Could Early Open Pit Plans at Cascabel Challenge Project Financing?

DGR’s Strategic Stake in SolGold

DGR Global Limited has drawn investor attention to a recent re-rating of SolGold plc, a company in which it holds a substantial 6.8% stake. This re-rating follows SolGold’s announcement of a staged development strategy for the Cascabel copper-gold project in Ecuador, a globally significant asset wholly owned by SolGold. Notably, DGR’s CEO, Nick Mather, also serves as a Non-Executive Director and founder of SolGold, holding an additional 2.9% interest, underscoring the close ties between the two companies.

Staged Development and Early Open Pit Focus

SolGold’s new approach involves initiating development with a relatively low capital expenditure open pit operation at the Tandayama deposit, located just three kilometres north of the flagship Alpala deposit. This strategy aims to unlock value early and improve the overall financing profile of the Cascabel project. The revised resource estimate at Tandayama reveals a near-surface resource of 60.2 million tonnes grading 0.44% copper equivalent, with a favourable strip ratio of 0.61, 1, making it an attractive target for early mining.

Exploration Upside and Increased Drilling Activity

SolGold plans to ramp up exploration efforts by adding two more drilling rigs to the existing four, intensifying the search for further near-surface and underground mineralisation at Tandayama and its western extensions. DGR has expressed strong support for this exploration push and the broader staged development plan, seeing it as a catalyst for enhancing the project’s value and financing potential.

DGR’s Broader Business Model and Outlook

Beyond its SolGold investment, DGR Global operates as a resource incubator, identifying and nurturing projects with long-term commodity potential. The company has a track record of crystallising value, exemplified by a $26 million return from the sale of its stake in Orbis Gold in 2015. With several projects advancing through various development stages, including holdings in Clara Resources, NewPeak Metals, and Auburn Resources, DGR is positioning itself for further growth in the coming quarters.

Market Implications

The re-rating of SolGold shares, driven by tangible development progress and resource updates, directly enhances the valuation of DGR’s investment portfolio. This development also signals growing investor confidence in the Cascabel project’s staged development approach, which could set a precedent for financing large-scale copper-gold projects in emerging jurisdictions like Ecuador.