Solaris Resources Could Help Fuel The Green Energy Transition

The mining industry experienced record investment in 2021 and is on track to continue attracting investors in 2022 as the green energy transition continues to grow, requiring metals such as copper and lithium. Over the last decade or so, green energy has gained more popularity and the drive to use and provide cleaner, environmentally-friendly energy has really taken off over the past few years within the mining industry.

In order for the world to proceed with transitioning to greener energy, the mining industry has to be able to meet demand, however, miners will have to invest ever-increasing sums of money in supply in order to satisfy this. The industry has to continually replenish supply just to maintain output. Add to that the impact of increased demand via green energy initiatives and the need for investment quickly accumulates. Metals that are most helpful in delivering cleaner energy include copper, cobalt, lithium, rare earths and even others, such as silver, which can help build things like solar panels.

Copper is a highly conductive metal, so it is useful in renewable energy sources to create solar, wind, and other types of renewable power. Lithium is known for being used in batteries, and most commonly for electric vehicles (EVs) which has been a huge market for the green energy transition in 2021 and will only continue to grow this year.

According to CRU, a commodities consultancy, copper demand from renewables will be about 801,000 tonnes in 2022 out of total global consumption of about 25m tonnes. Over the next four years, the company says, EVs and renewables will account for 72 percent of the total growth in refined copper demand.

The implication is very clear for the sector: large-scale M&A is required to restock global pipelines and you have all the majors acknowledging that.

Solaris Resources (TSX:SLS; OTCQB: SLSSF), a junior mining company advancing a portfolio of copper and gold assets in the Americas may just be what the copper market needs as it is close to showing the world-class credentials of its Warintza copper project in southeastern Ecuador thanks to the completion of an updated mineral resource estimate at the end of this quarter.

Solaris has grown quite the name for itself since going public in July 2020, with assays returning up to 1% CuEq at or near-surface and extending to depths greater than 1km. Mineralization occurs over a 7km x 5km cluster of copper porphyries that include Warintza Central (original discovery); Warintza West, discovered in February 2021, 1 km to the west; Warintza East, discovered in July 2021, about located 1.3 km to the east; and its latest discovery made last month at Warintza South, 3 km to the south, a target with two to three times the volume of Warintza Central.

The company has completed ~50,000m of drilling to expand the size of and increase its confidence in the resource at Warintza Central, due to be issued in the coming weeks, where the company expects to issue a 1Bt resource showcasing a high-grade starter pit to really drive robust cash flows in the early years, capital payback, and a high internal rate of return. When taking into account the other nearby discoveries made at West, East and South, all within close proximity to Central, you can see the clear potential of this cluster of porphyries as a multi-Bt development opportunity.

Beyond this, the company has a number of other targets still to be tested including the sizeable Yawi target, located about 2km to the east of Warintza Central. A geophysical survey of the area shows an anomaly almost twice as large as the one identified at Warintza South.

The Warintza project is located 40km north of the Mirador copper and gold mine, one of the world’s lowest-cost copper operations and largest mines in Ecuador. The project lies adjacent to nearby primary infrastructure and is situated in one of the only mining jurisdictions globally that has been cutting taxes and royalties, streamlining permitting, and generally making the environment more attractive to global mining investment. This comes in stark contrast to various other jurisdictions increasing their government take – most importantly in Chile and Peru - the world's number one and two producers.

In December 2021, Solaris also made a big decision and announced plans to transfer its non-core assets into a newly created, wholly-owned subsidiary called Solaris Exploration Inc. Creating Solaris Exploration is a prudent step in the face of the possibility of the updated resource estimate generating interest on the corporate front, such as a strategic partner or joint venture interest - as well as an outright takeover. Management sees tremendous value in these other assets and is looking to preserve that value for its shareholders down the line beyond the immediate development opportunity at Warintza.

The green energy transition is on track to only get bigger over the course of 2022, especially the EV market. All the majors are dreaming of the same thing, which is a large-scale copper project in a viable jurisdiction, that offers an opportunity for rapid capital payback, and the list of projects, of course, that fits that description is vanishingly small. If Solaris is able to successfully deliver a 1Bt resource set within a multi-Bt development opportunity, adjacent to primary infrastructure and within a jurisdiction that is bucking the trend on mining reforms – it will arguably stand out as the best project available to a larger corporate, globally.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes