Where Are Copper Prices Heading In 2023? - Daniel Earle of Solaris Resources

• Daniel Earle, the CEO of Solaris, discussed the potential for a mild recession next year, with the effects of inflation and the challenges it presents to the mining sector. There's a possibility of a 35% chance of a recession in the next 12 months, according to Goldman Sachs.
• The copper market has seen a 30% reduction in prices without significant changes in fundamentals. Daniel projects a flat copper price environment around the $350 price level for next year. He believes the copper industry is fundamentally tight but that prices have already adjusted for potential economic slowdowns.
• India's shift from a net exporter to a net importer of copper over the last five years is significant. Although India's current demand isn't massive, there's potential for rapid growth due to urbanization, infrastructure development, and the move from fossil fuels to electrification, which is copper-intensive.
• Gold is harder to predict compared to copper. While Daniel sees a potential for more upside in gold prices compared to copper, he prefers copper equities over gold equities for 2023.
• Solaris is focused on doubling the size of its high-grade starter pit. There's potential for significant resource growth, with exciting targets for discovery drilling. On the business side, they aim to secure an investment protection agreement to freeze the tax regime and mining legislation in Ecuador, providing stability and de-risking their operations.

About Solaris Resources

Solaris Resources is a multi-asset exploration company advancing a portfolio of copper and gold assets in the Americas. The company's primary focus is the Warintza Project in Ecuador, which hosts a world-class large-scale copper and gold resource with significant expansion and discovery potential. Solaris also has discovery potential at early-stage projects in Chile (Ricardo, Tamarugo), Peru (Capricho, Paco Orco), and holds a 60% interest in the La Verde copper project joint venture with Teck Resources in Mexico. With a diversified portfolio including a flagship asset at Warintza and additional projects across the Americas, Solaris Resources is leveraged to make further discoveries and benefit from rising copper prices.

CEO Daniel Earle provided an update on the company's Warintza copper project in Ecuador, as well as his views on the macroeconomic environment and outlook for copper and gold prices. With assay results from recent drilling, Solaris is on track to achieve its goal of doubling the size of the high-grade starter pit at Warintza Central. Additional discoveries at Warintza West and Warintza South also demonstrate the potential for significant resource growth.

Macroeconomic Outlook: Recession Risk Overblown, China Recovery Ahead

Earle believes recession risk in the U.S. is overstated, as long as the Fed doesn't hike rates to the point of threatening financial stability. He expects inflation to decelerate sharply in 2023. For mining, a recession could bring a 15% revenue decline and 40% EBITDA decline, but much is already priced in after this year's sell-off. The situation in Europe is worse due to the energy crisis, but China will likely relax zero-COVID policies to support growth.

Earle said: "I think the market has already done a lot of work in taking down and insulating the copper price against a further economic slowdown."

Copper Price Outlook Remains Strong on Fundamentals

Despite a 30% correction this year, Earle believes copper fundamentals remain very tight. Inventories are extremely low, pointing to a flat $3.50/lb price environment in 2023. Longer-term, demand growth from electrification and urbanization should drive large deficits.

Earle commented: "We're still in a very tight position, both in Shanghai we've got about two days of copper supply and then in the LME not much more than that."

Gold More Difficult to Forecast; Upside if Real Rates Decline

Earle sees precious metals as harder to forecast than industrial metals like copper. However, with real interest rates at unusually high levels, he believes there could be opportunity for gold prices to move higher if rates decline. This would likely coincide with dollar weakness.

Solaris Exploration Results Confirm Resource Growth Potential

Recent assay results from Warintza Central have extended high-grade mineralization, supporting the goal of doubling the starter pit resource. Additional drilling has defined large-scale potential at the new Warintza West discovery. At Warintza East, Solaris is working to upgrade the large porphyry footprint into a compliant resource.

At the Warintza South target, extensive surface sampling has revealed new zones of high-grade mineralization that could represent a second starter pit. Follow-up drilling is planned for early 2023.

Earle noted: "This mineralization would be similar to what we see at the Central deposit, so high grade supergene mineralization and also high grade hypogene or primary mineralization like we haven't seen before on this Warintza project."

De-Risking Advancing in Ecuador

Beyond exploration results, Solaris continues to advance de-risking efforts in Ecuador. Earle said the company is close to finalizing an investment protection agreement to lock in the stable tax regime and mining law for Warintza. This would eliminate a key risk for investors.

Upside Catalysts Ahead

With significant warrants expiring in late 2022, Earle believes Solaris will see relief from recent pressure on its share price. Assay results will continue providing catalysts in the months ahead, while early 2023 drilling at Warintza South offers blue sky potential.

In summary, Solaris has made strong progress in resource definition and discovery work at Warintza. The company appears to have solid upside potential as it advances the project in a stable mining jurisdiction like Ecuador. With copper fundamentals still strong and gold potentially turning up, Solaris presents an opportunity for investors seeking leverage to key metals.

Key Takeaways for Investors

• Recent drilling has extended high-grade mineralization at Warintza Central, supporting Solaris' goal of doubling the size of the starter pit resource. This would improve economics.
• Additional discoveries at Warintza West and South show potential for further significant resource growth through follow-up drilling.
• Copper fundamentals remain tight even after this year's price correction, pointing to a stable outlook. Solaris offers leverage to an upward copper price cycle.
• Macroeconomic risks appear overblown, with China recovery ahead. Solaris could see re-rating as growth stabilizes.
• Advancing de-risking efforts in Ecuador through a pending investment protection agreement eliminates a key country risk.
• With warrants expiring, Solaris share price pressure should ease, allowing value to emerge. Assay catalysts ahead.
• Solaris has clear resource expansion potential at Warintza with further exploration upside. Attractive leverage to copper in a top mining jurisdiction.