Mr. Scott Caldwell reports

SOLGOLD PLC ANNOUNCES EXPLOITATION AGREEMENT WITH GOVERNMENT OF ECUADOR

The board of directors of Solgold PLC has completed the contractual negotiations and agreed upon a term sheet in preparation for the execution of the exploitation agreement for the Cascabel project, its flagship copper-gold project in Ecuador.

Solgold began exploration work at Cascabel in July, 2011, leading to the discovery of the Alpala and Tandayama America deposits on the Cascabel concession. Since January, 2023, Solgold has been in discussions with the government of Ecuador to negotiate the terms and conditions of the exploitation agreement for the Cascabel project. The Exploitation agreement, coupled with existing legislations and regulations, establishes the legal and financial terms and conditions required for the Cascabel project's development. The agreed term sheet, which has been approved by the Ecuadorian government, marks a pivotal step forward for the project.

Solgold's chief executive officer and president of Solgold Ecuador, Scott Caldwell, stated: "The completion of the negotiations and execution of the term sheet of the exploitation agreement for the Cascabel project stands as a significant milestone, reflecting our shared commitment to all stakeholders. Solgold extends our sincere gratitude to the government of Ecuador, regional administrations and local communities for their invaluable collaboration and support, each of whom has been instrumental in this momentous achievement. This agreement is a positive outcome and exemplifies our unwavering dedication to working collaboratively with all our stakeholders."

Key contract terms

All monetary amounts stated below are references to United States dollars.

• Solgold PLC, through its wholly owned subsidiary in Ecuador, Exploraciones Novomining S.A., has negotiated the right to develop the Cascabel project and produce copper, gold and silver from the contract area for 33 years, which may be renewed.
• The company and the government of Ecuador have agreed to an advance royalty payment totalling $75-million, with $25-million due upon the concentrator construction start date. The remaining two payments, each of $25-million, will be made on the first and second anniversary, respectively, from the date of the first payment. The advance royalty will be deductible against the government royalty (defined herein).
• One of the key economic assumptions is that the company expects a reduced corporate income tax rate of 20 per cent (previously 25 per cent) during the project's life once the government of Ecuador approves the amendment of the investment protection agreement. Based on this reduced corporate income tax rate, the mining concessionaire, the state and Solgold have agreed to a variable royalty on net smelter revenues in accordance with Ecuadorian Mining Law. The applicable royalty rate follows the progressivity criteria stated in the mining law, stipulating a variable percentage rate from 3 per cent to 8 per cent. This rate is dependent on the type of mineral and its price, as shown in the attached table. The royalty will be based on net smelter returns received from the sales of copper, gold, silver or other marketable mineral products from the project (for each mineral product, respectively, "NSR revenue").

According to the mining law in Ecuador, 60 per cent of the revenue from the royalties collected by the government will be allocated to productive and sustainable projects through the municipal governments and parish councils of the communities of the Cascabel project. The company expects these funds to make an important contribution to local development in the area of influence.

• The advance royalty will be deductible against the lesser of 50 per cent of the royalties payable or 10 per cent of the total advance royalty payment made until the advance royalty is settled in full (calculated every six months once the government royalty becomes payable).
• According to current legislation, the exploitation agreement also provides that the government of Ecuador's share of cumulative discounted benefits derived from Solgold's Cascabel project will not be less than 50 per cent. Each year, to the extent that the government of Ecuador's cumulative benefit falls below 50 per cent, the company will be required to pay an annual sovereign adjustment. The government of Ecuador's benefit will be calculated as the present value of the cumulative sum of taxes paid, including corporate income taxes, royalties, labour profit sharing paid to the state, non-recoverable VAT (value-added tax) and any previous sovereign adjustment payments. To the knowledge of the company, no mining company operating in Ecuador with a similar sovereign adjustment clause in its exploitation agreement has made a payment to the government pursuant to such clause. Based on the economic assumptions included in the project's financial model, it is not expected that the company will be required to make any such payments after the commencement of commercial production at the Cascabel project.
• The term sheet also includes a mechanism for correcting any economic imbalance for the mining concessionaire as a result of changes in taxes, laws and regulations in place at the date of the signing of this agreement. The provision removes a significant amount of uncertainty for the economic regime governing the project in the future.
• The term sheet also develops various investor protection rights, ensuring the protection of the investment including, among other things, a dispute resolution mechanism through international arbitration.
• The mining concessionaire will be solely responsible for making pertinent technical and economic decisions in the design, construction and operation of the Cascabel project as specified in the term sheet.

In the following months, the company must apply to change the Solgold project's official status from exploration phase to exploitation phase. The company has up to six months after the approval of the phase change application to execute the exploitation agreement with the government of Ecuador. Once executed, the exploitation agreement is required to be registered with the Mines Registry and will be made publicly available on the company's profile on the SEDAR website maintained by the Canadian Securities Administrators at SEDAR.

A conference call with a live webcast presentation to provide a market update will be held on July 20, 2023, at 8 a.m. ET, 1 p.m. (BST) and 10 p.m. (AEST).

The presentation is open to all existing and potential shareholders. The presentation material will also be available on the day of the presentation at the company website.

About Solgold PLC

Solgold is a leading resources company focused on the discovery, definition and development of world-class copper and gold deposits and continues to strive to deliver objectives efficiently and in the interests of shareholders.

The company operates with transparency and in accordance with international best practices. Solgold is committed to delivering value to its shareholders while simultaneously providing economic and social benefits to impacted communities, fostering a healthy and safe workplace, and minimizing the environmental impact.

Solgold is listed on the London Stock Exchange and Toronto Stock Exchange (LSE/TSX: SOLG).

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