Lithium's Big Run is a Precursor for Copper - Solaris Resources CEO Daniel Earle

• There's a renewed interest in the copper exploration sector, with multiple financing deals and new exploration projects in places like Chile, British Columbia, and Quebec.
• The energy transition and global mandate for greener solutions are driving the need for more copper sources.
• The recent surge in lithium prices, due to a security supply panic, might precede a similar trend in the copper market as inventories deplete.
• Current copper projects, including Solaris Resources' operations, take over a decade to go from discovery to production, with potential challenges along the way.
• Despite the historically high price of copper at around four dollars per pound, there's an anticipated structural deficit in supply, which could further drive up prices in the future.

About Solaris Resources

Solaris Resources is a multi-asset exploration company focused primarily on advancing its flagship Warintza Project in Ecuador, which hosts a world-class copper and gold resource with significant expansion and discovery potential. The company's portfolio also includes early-stage projects with discovery potential for copper and gold in Chile (Ricardo, Tamarugo), Peru (Capricho, Paco Orco), and a 60% interest in the La Verde copper joint venture project with Teck Resources in Mexico. With a diversified asset base led by the large-scale Warintza Project as well as additional discovery opportunities across the Americas, Solaris Resources is well-positioned to benefit from increasing copper prices and unlock further value through exploration success.

Copper Deficit Coming Soon

With copper prices hovering around $4 per pound, Daniel Earle, President and CEO of Solaris Resources, sees a structural copper deficit emerging in the next few years that will lead to much higher prices. In an interview at the BMO Global Metals & Mining Conference, Earle provided an overview of the copper market dynamics and an update on Solaris' Warintza copper project in Ecuador, which he believes is well positioned to help fill the looming supply gap.

The Copper Price Outlook

"I think this year and beyond you're basically looking at the same structural framework around the copper market," said Earle. He pointed to declining production from existing mines, steadily rising demand from traditional end uses and electric vehicles, and a lack of new mines coming online.

"The key elements are the rollover in legacy supply. You see this most acutely in Chile," Earle explained. Chilean copper production fell around 6% last year despite high prices. While some new projects will contribute to supply growth over the next few years, it likely won't be enough to offset declining production at older mines.

Meanwhile, demand continues to expand steadily, driven by population and economic growth in China and India. "You've got two-thirds of the population in India that exists below the middle class, so hundreds of millions of people are going to join the middle class over the next decade," said Earle. The increase in housing, appliances and vehicles will drive copper demand higher. Add in rising demand from EVs, renewable energy and grid upgrades, and Earle sees a structural deficit emerging soon.

"If you take the IMF's global growth expectations, the copper market should be in a small surplus this year, balanced next year, and then in deficit the year after that and every year thereafter," he said. Once inventories are depleted in a few years, Earle believes copper prices could disconnect from incentive pricing for new mines and go much higher.

Solaris Resources Well Positioned with Warintza Project

With few new copper projects in the pipeline, Solaris Resources is looking to advance its Warintza project in Ecuador to help supply the coming deficit. According to Earle, Warintza benefits from Ecuador's low-cost, infrastructure-rich environment.

"By virtue of the low-cost intensity in Ecuador with the infrastructure-rich environment, low elevation, grid power, low-cost labor, free availability of fresh water, you're just at a much lower price point in terms of delivering one of these large-scale projects," he said.

Earle explained that Solaris has significantly expanded the initial Warintza resource since its discovery. "We've now done over a year of additional drilling since then. We set out with the goal of basically doubling the starter pit and then delivering significant overall growth." The company plans to release an updated resource estimate and economic study for the project in the second half of 2023.

Solaris aims to reach production at Warintza to capitalize on much higher copper prices driven by the widening supply deficit over the next few years. With its low-cost profile, Solaris believes it can generate strong returns for investors even at incentive pricing. The stock appears undervalued at current levels following a large correction last year, presenting a buying opportunity.

Key Takeaways for Investors

• Legacy copper mines are facing declining production, especially in Chile.
• Demand continues to grow steadily from population growth, urbanization, and the energy transition.
• A structural deficit is emerging, with mine supply unable to keep up with rising demand.
• Once inventories are depleted in a few years, copper prices could disconnect from incentive pricing and go much higher.
• Very few new large-scale copper projects are in the pipeline to meet future demand.
• Solaris believes its Warintza project in Ecuador is well-positioned as a low-cost, large-scale new copper mine.
• The supply-demand backdrop points to much higher copper prices on the horizon.

Why You Should Pay Attention to Solaris Resources

With copper in a structural deficit, inventories declining and few new mines coming online, Solaris CEO Daniel Earle believes much higher prices are on the horizon. Solaris is advancing its large, low-cost Warintza copper project in Ecuador to capitalize on the attractive supply-demand backdrop. The company aims to release an updated resource and economic study later this year to highlight Warintza's potential. After a substantial correction last year, Solaris may be presenting investors an opportunity to get positioned as a top copper developer ahead of the next bull run in copper prices.