Earnings Call - SOLARIS RESOURCES INC

Financial Performance:

• Pre-feasibility study (November 2025) projects a 242,000-ton copper-equivalent annual production with a 22-year reserve life (extendable to 55 years based on 5.8 billion tons total resource).
• Sustaining cash costs estimated at $1.07 (strip-adjusted), yielding a 40%+ post-tax return on capital and a payback period of 2.6 years (under 2 years at current spot prices).
• Project valuation at spot prices: $4.6 billion NPV and 26% IRR (potentially exceeding $10 billion NPV based on $4.50 copper/$2,500 gold spot assumptions used in PFS).
• Capital intensity is low at $15,500 per ton of copper equivalent (vs. industry benchmark of ~$21,000).
• Company balance sheet held $54 million at half-year; $50 million final tranche from a $200 million Royal Gold streaming deal expected immediately, fully funding the project through the feasibility study.
• Estimated total capital expenditure for construction is $3.7 billion.

Guidance and Future Outlook:

• Targeting a fully permitted status by H1 2027, with a Final Investment Decision (FID) scheduled for H2 2027.
• Three-year construction period anticipated, targeting commercial production in 2030.
• Long-term goal to consolidate district-scale potential beyond the primary Warrinza asset, with estimates of ~10 billion tons of opportunity within the Morona-Santiago cluster.
• Exploration programs for peripheral assets in Peru (Paco Orco, Capriccio) set to begin drilling in Q1 2027.
• Management plans to potentially spin out non-core peripheral assets (Peru, Chile, Mexico) to shareholders once value is accreted.
• Strategy involves maximizing financing flexibility via by-product streaming (88% unencumbered gold/silver capacity), senior debt, EPC funding, and strategic partnerships to avoid retail share dilution.

Business Segments and Product Lines:

• Primary focus on the Warrinza project (Southeastern Ecuador), a tier-1 global scale porphyry deposit producing high-quality copper, gold, and molybdenum concentrates.
• District strategy includes 100% owned properties in Ecuador (260 sq km), plus option properties with the government.
• Peripheral portfolio includes: Paco Orco and Capriccio (Polymetallic and Porphyry in Peru), La Verde (JV in Mexico, 60-40 Solaris favored), and Tamarugo (early-stage Chile).
• Operational design features a large open pit, conventional processing plant (165,000 tons/day capacity), and low strip ratio (0.53:1).

Market and Competitive Landscape:

• Positioned to capitalize on a resilient copper market with global supply gaps estimated at 800,000 tons/year of required replenishment.
• Differentiators include no major mining company attachment in the equity stack (ensuring strategic flexibility) and top-quartile strip-adjusted grade compared to global peers.
• Ecuador is highlighted as a favorable jurisdiction with strong infrastructure, deep-sea ports, and bipartisan political support for mining as an economic growth pillar.
• Project benefits from proximity to existing infrastructure (roads, ports) and a favorable social license environment.

Risks and Challenges:

• Primary risks center on securing final government permits and community agreements, specifically the Free Prior Informed Consultation process (targeting completion Q1 2027).
• Construction timeline and cost execution risks over a three-year build period in a remote region.
• Market volatility regarding copper and gold prices affecting NPV calculations, though current spot prices show significant upside over PFS assumptions.
• Management notes political risks in Ecuador but cites strong indigenous partnerships and government support to mitigate these concerns.

Management Commentary and Tone:

• Tone is highly confident and optimistic, describing the project as "multi-generational," "tier-one," and a "value accretive catalyst."
• Management emphasized operational simplicity, low capital intensity, and the "near-term" nature of the proposition to the copper market.
• Strong focus on protecting shareholder value, explicitly stating a dislike for the word "dilution" and a commitment to per-share value metrics.
• CEO highlighted the unique "district scale" potential and the strategic advantage of having a small, experienced team executing the project.

Analyst Questions and Answers:

• Q: Financing strategy for the $3.7B project without diluting retail shares?
  • A: Financing will rely on streaming the 88% unencumbered by-product (gold/silver) capacity, senior project debt, national security/government funding, and EPC contracts with attached funding. Partnerships will be sought for expertise and capital without mandatory equity dilution.
• Q: Political and community risks in Ecuador?
  • A: Management asserts strong community support with two host communities; long-term impacts/benefits agreements are signed. Free prior informed consultation is underway, concluding Q1 2027, with a collective agreement targeted beforehand.
• Q: Capital allocation between Warrinza and peripheral projects?
  • A: Capital will be maturely allocated; peripheral projects (Peru, Chile, Mexico) will remain low-cost with a small dedicated team until high-impact drilling (Paco Orco/Capriccio) in Q1 2027 demonstrates value.

Other Key Points:

• Warrinza reserves represent less than one-third of the total resource endowment, with potential to extend operations by 25-30 years beyond current reserves.
• The project location (1,200m elevation) allows for efficient water drainage and minimal environmental footprint.
• Equity stack remains unattached to major miners, offering Solaris flexibility in future financing structures.
• Management expressed intent to eventually spin out the Latin American exploration portfolio (Peru, Mexico, Chile) to unlock hidden value for shareholders.