Earnings Call - SOLARIS RESOURCES INC

Explicit Guidance:

• Financial Metrics & Valuation (Pre-Feasibility Study Basis): Life-of-mine (LoM) economics project 242,000 tons of copper equivalent (CuEq) production annually over a 22-year reserve life, extending to 55 years with total resources. Under $4.50/lb copper/$2,500/oz gold assumptions, the project shows a 26% IRR and $4.6 billion NPV; at current spot prices, the NPV exceeds $10 billion with a post-tax payback period dropping from 2.6 years to <2 years.
• Capital Expenditure: Project construction CAPEX estimated at approximately $3.7 billion USD. Capital intensity is projected at $15,500 per ton of CuEq, significantly below the industry benchmark of ~$21,000/ton.
• Cash Position: Balance sheet held $54 million at the half-year (2025); expects receipt of the final $50 million tranche from the Royal Gold financing deal immediately.
• Byproduct Revenue: 88% of gold content, plus silver and molybdenum, remains unencumbered and available for future streaming or royalty financing to fund CAPEX without dilution.
• Timeline Milestones:
  • Q1 2027: Completion of free prior informed consultation process with government; expected signing of long-term collective community agreement.
  • H1 2027: Achievement of fully permitted status for the Warinza project.
  • Late 2027: Final Investment Decision (FID).
  • ~3 Years (Construction): Commencing post-FID to reach full production.
  • 2030: Projected start of large-scale production.
• Exploration Timing: Drilling programs to commence at Paco Orco and Capriccio (Peru) in Q1 2027.

Business-Segment Outlook:

• Core Asset (Warinza, Ecuador): Targeting a 55-year mine life with current reserves representing <33% of the resource base; potential for 25–30 years of life extension beyond current reserves. The asset produces high-quality copper, gold, and molybdenum concentrates with no deleterious elements.
• District Expansion: Potential to expand the "Warrinza cluster" (Morona-Santiago province) with untested targets and a joint venture area, aiming to bulk resources to ~10 billion tons. Drill permits sought shortly for Tinky concessions to explore a potential second large porphyry system.
• Peripheral Assets (Latin America):
  • Peru: Paco Orco (polymetallic) and Capriccio (porphyry) have social license and will enter drilling phase in Q1 2027; viewed as "game-changing" potential.
  • Mexico: Tech La Verde joint venture (60% Solaris) is undergoing a refreshed Pre-Feasibility Study (PFS).
  • Chile: Tamarugo (early-stage) and other exploration assets are being maintained with a strategy to potentially spin out non-core assets to shareholders once value is realized.
• Production Mix: High-grade byproducts (gold, silver, molybdenum) expected to provide significant cash flow and financing optionality beyond the primary copper output.

Market and Competitive Outlook:

• Copper Market Dynamics: Anticipates a resilient demand environment requiring ~800,000 tons of annual supply replenishment; current market fails to meet this demand.
• Supply Constraints: Cites global supply challenges including grade degradation, technical hurdles, weather interruptions, and a lack of new large-scale operations coming online.
• Processing Costs: Toll treatment and refining charges (TC/RCs) expected to remain negative for a prolonged period, pressuring smelter margins and potentially benefiting miners with owned concentrate.
• Competitive Positioning: Projected to rank in the top tier of future copper producers globally; 83% of top 30 greenfield projects are attached to majors, whereas Warinza remains independent, offering unique financing flexibility.
• Cost Structure: Maintains "quartile one" cost status via low strip ratio (0.53:1) and near-surface ore body, driving sustaining cash costs to $1.07/lb (implied low cost structure).

Macro / Industry Outlook:

• Ecuadorian Economy & Regulation: Views Ecuador as a favorable mining jurisdiction with cross-party political support (left, center, right governments); mining is a pillar of national growth strategy.
• Currency: Mining contracts and operations denominated in USD, mitigating local currency risk.
• Infrastructure: Strong export infrastructure, deep-sea ports, and highway access reduce logistical risks.
• Social License: Positive community sentiment in Morona-Santiago; formalized via impact agreements and a "community life plan" incorporating mining as a resource pillar.

Strategic Initiatives:

• Financing Strategy: Executed $200 million Royal Gold streaming transaction (May 2025). Future financing to rely on byproduct streaming/royalties (88% unencumbered gold/silver), senior project debt, national security/government funding, and EPC/EPCM contracts with attached financing.
• Capital Allocation: Mature, per-share value-focused approach; minimal capital allocated to peripheral exploration relative to the main project, though increased spending planned for 2027 drilling campaigns.
• Corporate Structure: Potential spin-out of non-core Latin American assets (Peru, Chile, Mexico) to shareholders to unlock value and reduce management complexity.
• M&A/Partnerships: Open to strategic partnerships bringing expertise (not just capital) to support the FID and construction phases.

Risks and Headwinds to Outlook:

• Regulatory/Social: Completion of free prior informed consultation (FPIC) with the government is critical; any delays in Q1 2027 could impact permitting.
• Political: Potential shifts in Ecuadorian political landscape, though currently viewed as stable for mining.
• Execution: Construction timeline relies on a 3-year build-out post-FID; delays could impact the 2030 production start date.
• Market Volatility: Heavy reliance on copper, gold, and molybdenum prices for project economics; deviations in spot prices could alter NPV/IRR profiles.
• Geological/Technical: While "Tier One," the transition from PFS to FID requires confirming reserve extensions and tailings capacity beyond the current 22-year reserve definition.

Management Tone on the Future:

• Confidence Level: High. Describes the project as "very near-term," "very deliverable," and a "step change in re-rating" for shareholders.
• Strategic Clarity: Strong emphasis on "no dilution" for retail shareholders through byproduct financing and structured debt; explicitly rejects the need for equity issuance to fund construction.
• Differentiation: Repeatedly highlights the unique "district scale" potential and independence from major mining equity as a competitive advantage for future partnering.
• Hedges: Acknowledges the need for "optionality" in financing as the project matures, suggesting a flexible cost-of-capital approach rather than a fixed commitment to a single financing model.

Miscellaneous:

• Resource Scale: 5.8 billion tons total resource; 1.3 billion tons reserve; 16 billion tons M&I inclusive of inferred.
• Infrastructure: Located at 1,200m elevation with fresh water availability and existing road/port access.
• Team: Experienced team with specific skills in advancing projects from PFS to FID; small core team dedicated to peripheral assets.