JC AT MI14 Oct 2020 14:39
John’s Mining Journal: The game’s afoot at Solgold
By Master Investor 14 October 2020
5 mins. to read
Veteran mining analyst John Cornford reviews some of the more interesting plays in the junior mining sector…
It certainly is not over yet for Solgold (LON:SOLG). Only the first shots have been fired in what is increasingly turning into a simmering pot (not exactly a ‘battle’ yet) where Solgold’s future is being stirred up – although it might take a bit longer, with a few more unexpected twists, than some observers expect.
Of the ammunition I expected Solgold to deploy, its first shot – initial drilling at Porvenir – the first three of twelve other promising prospects in the Ecuadorian Andes – looks like being spectacularly successful. Its first drill has intersected ‘visual copper mineralisation’ over 600m of a 750m planned depth, and has led Solgold to speculate that it has a “a large copper porphyry”, possibly bigger than Alpala and at shallower depth.
Porphyrys, although not necessarily high grade, are usually large enough to make them attractive to majors needing long life mines especially if they are at shallow depth. But in this case the initial grades – although not yet assayed – and their extent, look large as well.
So promising does Solgold think Porvenir to be, that it is hastily expanding its initial 8,000m drill programme to 50,000 metres, increasing to six drills as Covid restrictions allow, with at least one more by the end of October. And that will be in addition to restarting drilling at Blanca, only five miles from Alpala, where initial drilling encountered gold-bearing veins.
Also starting is an 8,000-metre initial drilling programme at Rio Amarillo, some 25 miles from Alpala. This has two ‘large-scale’ porphyry targets and has always been one of Solgold’s highest priorities – CEO Nick Mather stating his confidence that its ‘Tier one project at Alpala will be followed by Rio Amarillo’.
However, the fast expansion of these programmes might bring its own problem and perhaps open the way to one of the new twists, because to derive useful indications of their resources they will be expensive. For comparison, Solgold planned to drill 120,000 metres at Alpala in 2018 alone with 12 rigs – after 70,500 metres was drilled in 2017 at a cost of initially $1,100/m which reduced to $500/m as drilling progressed.
So, whereas only recently Solgold was reassuring investors that – following its c. $40 million fund raise (at 21.5p) in June, and the $100m advanced by Franco Nevada to complete the Alpala Feasibility study – it had sufficient funds to last until end-2021, that might come into question. In its latest management report only a month ago but before announcing its expanded programme, Solgold said it was planning to have spent only $27m on regional exploration in the year to end-June next year.
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