SolGold Regulatory News (SOLG)

RNS Number : 9744C

SolGold PLC

26 January 2018

 

26 January 2018

SolGold plc

("SolGold" or the "Company")

 

Cascabel Exploration Update

Cascabel Drilling Effort Focussing on

Alpala High Grade Expansion

 

The Board of SolGold (LSE and TSX code: SOLG) is pleased to provide an update from the Company's Cascabel Project in Northern Ecuador, where drilling is currently focussed on targeting high grade extensions to the Alpala resource.

 

HIGHLIGHTS:

 

Ø 12 rigs now onsite and operational at Alpala.

Ø An additional 13,384m of drilling completed since release of Alpala Maiden Mineral Resource Estimate cut off (published on 3 January 2018 Refer Table 1 and Table B in Notes to Editors attached). Over 120,000m of drilling scheduled for the next 12 months.

Ø Alpala drill hole targeting high grade extensions to the current Alpala resource.

Ø Hole 33 high-grade mineralisation extension: 824m @ 0.80% CuEq, incl. 576m @ 0.93% CuEq.

Ø Drilling cost reduced to $530/m from $1,100p/m.

Ø "Rig to Resource" integrated data capture protocol to expedite revised mineral resource calculations.

Ø Aguinaga modelling nearing completion and drilling expected to commence in the March quarter.

Ø Study Manager selection and recruitment underway for Preliminary Economic Assessment.

 

References to figures and tables relate to the version visible in PDF format by clicking the link below:

 

http://www.rns-pdf.londonstockexchange.com/rns/9744C_-2018-1-25.pdf

 

Commenting on the progress, SolGold CEO and Managing Director Nick Mather said:

"The maiden resource is just the tip of the iceberg at Alpala. We are looking to substantially increase it, and focussing on high grade expansion. The bornite rich areas at Alpala South are yet to be comprehensively tested, and I'm confident we will find a deep, rich root at Alpala.

 

We plan to drill at least 120,000m in 2018, so it is pleasing to see that the new track-mounted rigs are already performing beyond expectations, delivering up to 60 metres/day each. Furthermore, the average cost for drilling has declined markedly from $1,100/metre to $530/metre".

 

 

 

FURTHER INFORMATION

 

SolGold currently has 12 rigs that are progressing holes: 29-D4, 32-D3, 33-D1, 34-D1, 36, 37, 38-D1, 39, 40, 41, 42 and 43.

 

Hole 33 assay results from ALS in Lima, Peru, confirm significant mineralisation along the up-dip, western side of the deposit, returning:

 

· 824m @ 0.80% CuEq (0.54% Cu, 0.42 g/t Au), including

· 576m @ 0.93% CuEq (0.61% Cu, 0.51 g/t Au), and

· 206m@ 1.32% CuEq (0.75% Cu, 0.92 g/t Au).

 

Hole 33-D1 has drilled across the orebody from northeast to southwest, intersecting intensely mineralised diorite porphyry from 1042m to 1161m and is continuing onwards to test for extensions to the west of a late-mineralisation "D20" diorite dyke. Assay results are pending.

 

Hole 36 has intersected an intensely mineralised diorite intrusion and is expected to extend the Mineral Resource down dip and to the northeast.

 

Hole 41, drilled from the northeast side of the deposit and collared near the Parambas anomaly, has intersected very shallow epithermal (low temperature) mineralised vein sets between 60m and 100m depth. Additional porphyry style mineralisation is interpreted at depth, on the northeast flank of the Alpala Deposit.

 

Nine other holes (29-D4, 32-D3, 34-D1, 37, 38-D1, 39, 40, 41, 42 and 43) have yet to reach target depth.

 

Significant Mineral Resource extensions at Alpala are being targeted along the open margins of the deposit and at depth (Figure 1).

 

	Resource Category	Tonnage (Mt)	Grade			Contained Metal
			Cu (%)	Au (g/t)	CuEq (%)	Cu (Mt)	Au (Moz)	CuEq (Mt)
>1.1% CuEq	Indicated	70	1.1	1.3	1.8	0.7	2.8	1.2
	Inferred	50	1.1	1.3	1.8	0.5	1.9	0.8
0.9 - 1.1% CuEq	Indicated	50	0.7	0.5	1.0	0.3	0.9	0.5
	Inferred	50	0.7	0.5	1.0	0.4	0.9	0.5
0.3 - 0.9% CuEq	Indicated	310	0.4	0.2	0.5	1.2	2.3	1.6
	Inferred	550	0.4	0.2	0.5	2.0	3.5	2.6
Total >0.3% CuEq	Indicated	430	0.5	0.4	0.8	2.3	6.0	3.4
	Inferred	650	0.4	0.3	0.6	2.9	6.3	4.0

 

 Table 1: Alpala Mineral Resource statement as of 3 January 2018.

 

 

 

Aguinaga

 

The Aguinaga target is anticipated to be drilled using a man portable rig during the March quarter. A series of three holes will test key elements of geochemical and geophysical anomalies:

Ø Northeasterly- and northwesterly-oriented zones of strong molybdenum anomalism

Ø Coincident high Cu/Zn, Mo, Cu, and Au in soil geochemical highs.

Ø A deep root in the magnetic model.

Ø Coincident high chargeability and magnetic features, interpreted to be a magnetic, chalcopyrite-rich potassic core to a porphyry system.

Ø Vertically extensive cylindrical features in the chargeability and resistivity surveys.

 

Cost Control at Cascabel

 

Cost control at Cascabel is proceeding according to plan. The 20,000m drilled since November 2017 has been completed at a cost of $530/m. This is the result of scale efficiencies, use of directional drilling technology (Devico) and increased rig supervision. To date, the use of 'daughter holes' off a single 'parent' hole has saved over 12,000m of drilling.

 

Rig to Resource Data Protocol

 

SolGold is implementing a Rig to Resource data transfer protocol which provides for immediate electronic recording of all drilling, surveying, logging and geochemical data as well as geophysical and geological models and interpretations into files accessible by SolGold explorationists and SolGold's independent consultants. This is being designed to enable regular resource statement upgrades, and the provision of interpretable data in real time.

 

Market Abuse Regulation (MAR) Disclosure

 

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 until the release of this announcement.

 

 

By order of the Board

Karl Schlobohm

Company Secretary

 

CONTACTS

Mr Nicholas Mather Tel: +61 (0) 7 3303 0665

SolGold Plc (Chief Executive Officer) +61 (0) 417 880 448

nmather@solgold.com.au

 

Mr Karl Schlobohm Tel: +61 (0) 7 3303 0661

SolGold Plc (Company Secretary)

kschlobohm@solgold.com.au

 

Mr Ewan Leggat / Mr Richard Morrison Tel: +44 (0) 20 3470 0470

SP Angel Corporate Finance LLP (Broker)

ewan.leggat@spangel.co.uk 

 

Follow us on twitter @SolGold_plc

NOTES TO EDITORS

 

SolGold is a Brisbane, Australia based, dual LSE and TSX‐listed (SOLG on both exchanges) copper gold exploration and future development company with assets in Ecuador, Solomon Islands and Australia. SolGold's primary objective is to discover and define world‐class copper‐gold deposits. The Board and Management Team have substantial vested interests in the success of the Company as shareholders as well as strong track records in the areas of exploration, mine appraisal and development, investment, finance and law. SolGold's experience is augmented by state of the art geophysical and modelling techniques and the guidance of porphyry copper and gold expert Dr Steve Garwin.

 

In October 2017, at the Mines and Money Americas Conference in Toronto, SolGold's Nicholas Mather won the award for the CEO of the Year - Exploration, Latin America. SolGold won the Exploration Award for Latin America, and Ecuador won the Country Award for Latin America. Each party then duly won the 2017 award for each respective category on a global basis at London Mines and Money on 30 November 2017.

 

The Company announced USD54m in capital raisings in September 2016 involving Maxit Capital LP, Newcrest International Ltd and DGR Global Ltd, and a USD41.2m raising in June of 2017 largely from Newcrest International with USD1.2m raised from Ecuadorean investors. All of these raisings were undertaken at substantial premiums to previous raisings. In November 2017 SolGold raised a further £45m at 25p per share, placed with institutions and Newcrest pursuant to their anti-dilution rights. SolGold currently has circa USD110m in available cash to continue the exploration and appraisal of its flagship Cascabel Project, and with which to conduct regional exploration programs on its 77 other 100%-owned projects in its wholly owned subsidiary companies.

 

Mr Craig Jones joined the SolGold Board on 3 March 2017, nominated to the Board of SolGold by Newcrest Mining, now a 14.54% shareholder in SolGold. Mr Jones is a Mechanical Engineer and is currently the Executive General Manager Wafi-Golpu (Newcrest-Harmony Joint Venture). He has held various senior management and executive roles within the Newcrest Group, including General Manager Projects, General Manager Cadia Valley Operations, Executive General Manager Projects and Asset Management, Executive General Manager Australian and Indonesian Operations, Executive General Manager Australian Operations and Projects, and Executive General Manager Cadia and Morobe Mining Joint Venture. Prior to joining Newcrest, Mr Jones worked for Rio Tinto.

 

Cascabel, SolGold's 85% owned "World Class" (Refer www.solgold.com.au/cautionary-notice/) flagship copper‐gold porphyry project, is located in northern Ecuador on the under‐explored northern section of the richly endowed Andean Copper Belt. SolGold owns 85% of Exploraciones Novomining S.A. ("ENSA") and approximately 5% of TSX‐V‐listed Cornerstone Capital Resources ("Cornerstone"), which holds the remaining 15% of ENSA, the Ecuadorian registered company which holds 100% of the Cascabel concession. Subject to the terms of existing agreements, Cornerstone is debt financed by SolGold for its share of costs to completion of a Feasibility Study ("Financing Option").

 

In terms of repayment, SolGold shall receive 90% of Cornerstone's share of earnings or dividends from ENSA or the Tenement to which Cornerstone would otherwise be entitled until such time as the amounts so received equal the aggregate amount of expenditures incurred by SolGold that would have otherwise been payable by Cornerstone, plus interest thereon from the dates such expenditures were incurred at a rate per annum equal to LIBOR plus 2 per cent until such time as SolGold is fully reimbursed.

 

The investments by Newcrest for 14.54% of SolGold endorses Ecuador as an exploration and mining destination, the management team at SolGold, the dimension, size and scale of the growing Alpala deposit, and the prospectivity of Cascabel and its multiple targets. The gold endowment, location, infrastructure, and logistics are important competitive advantages offered by the project. Cascabel is characterised by fifteen (15) identified targets, "World Class" drilling intersections over 1km in length at potentially economic grades, and high copper and gold grades in richer sections, as well as logistic advantages in location, elevation, water supply, proximity to roads, port and power services; and a progressive legislative approach to resource development in Ecuador.

 

To date SolGold has completed geological mapping, soil sampling, rock saw channel sampling, geochemical and spectral alteration mapping over 25km2, along with an additional 9km2 of Induced Polarisation and 14km2 Magnetotelluric "Orion" surveys over the Alpala cluster and other targets at Aguinaga, Parambas, Tandayama-America, Moran and Chinambicito.

 

SolGold has completed over 70,500m of drilling and expended over USD73M in Ecuador, which includes Cascabel exploration, regional exploration, corporate costs and investments into Cornerstone. This has been accomplished with a workforce of up to 260 Ecuadorean workers and geoscientists, and 6 expatriate Australian geoscientists. The results of 60 holes drilled (including re-drilled holes, daughter holes and current holes) and assayed to date have produced some of the greatest drill hole intercepts in porphyry copper-gold exploration history, as indicated by Hole 12 (CSD-16-012) returning 1560m grading 0.59% copper and 0.54 g/t gold including, 1044m grading 0.74% copper and 0.54 g/t gold.

 

The average grade of all metres drilled to date on the project, including non-mineralised intersections, currently stands at 0.30% copper and 0.24 g/t gold. Intensive diamond drilling is planned for the next 12 months with 12 drill rigs operational, targeting over 120,000m of drilling in 2018.

 

SolGold has drill tested 5 of 15 copper-gold targets delineated in the 50km2 tenement with a focus on Alpala.

 

Further drill testing at Alpala will focus on:

· Extending and infilling the Alpala Central area with Rigs, 1, 6 and 5.

· Expanding the system at Alpala Northwest and Trivinio with Rigs 8, 9, 10, 11, and 12.

· Testing extensions of the system at Alpala Southeast with Rigs 2, 3, and 4.

· Testing geochemical and magnetic targets at Alpala West and Carmen with Rig 7.

 

There are currently 12 drilling rigs active at Alpala.

 

The Alpala deposit is open in multiple directions and the mineralised corridor marked for drill testing of the greater Alpala cluster occurs over a 2.2km strike length from Trivinio in the northwest to Cristal in the southeast. The mineralised corridor is known to be prospective over up to 800m width.

 

The remainder of the targets are scheduled for testing during 2018, subject to ongoing technical assessment, and completion of ground magnetic modelling and Spartan Orion deep IP surveys.

 

The Company and its external consultants prepared an initial mineral resource estimate at the Cascabel Project as reported on 3 January 2018. Results are summarised in Table B attached.

The Mineral Resource Estimate was completed from 53,616m of drilling, approximately 84% of 63,500m metres drilled as of mid-December 2017, the cut-off date for the maiden resource calculation. There remains strong potential for further growth from more recent drilling results, and continue rapid growth of the deposit.

The Company is currently planning further metallurgical testing and completion of an independent Preliminary Economic Assessment and Pre-Feasibility Studies at Cascabel. SolGold is investigating both high tonnage open cut and underground block caving operations, as well as a high grade / low tonnage initial underground development towards the economic development of the copper gold deposit/s at Cascabel.

 

Drill hole intercepts have been updated to reflect current commodity prices, using a data aggregation method, defined by copper equivalent cut-off grades and reported with up to 10m internal dilution, excluding bridging to a single sample. Copper equivalent grades are calculated using a gold conversion factor of 0.63, determined using an updated copper price of USD3.00/pound and an updated gold price of USD1300/ounce. True widths of down hole intersections are estimated to be approximately 25-50%.

 

Following a comprehensive review of the geology and prospectivity of Ecuador, SolGold and its subsidiaries have several applications for additional exploration licences in Ecuador over a number of promising porphyry copper gold targets throughout the Country.

 

SolGold, through its 4 subsidiary companies, has 100% ownership of 77 granted concessions throughout Ecuador. Each subsidiary company has technical teams, led by experienced senior geologists, on the ground prospecting granted tenements and collecting baseline data, whilst regional geophysics surveys are being planned. Significant copper occurrences have been identified at numerous projects to date, including La Hueca, Machos, Rio Armarillo, Sharug, Porvenir and Timbara.

 

In Queensland, Australia the Company is evaluating the future exploration plans for the Mt Perry, Rannes and Normanby projects, with drill testing of the Normanby project planned for the coming quarter. Joint venture agreements are being investigated for a joint venture partner to commit funds and carry out exploration to earn an interest in the tenements.

 

SolGold retains interests in its original theatre of operations, Solomon Islands in the South West Pacific, where the 100% owned, but as yet undrilled, Kuma prospect on the island of Guadalcanal exhibits surface lithocap characteristics which are traditionally indicative of a large metal rich copper gold intrusive porphyry system.

SolGold intends in the future to apply intellectual property and experience developed in Ecuador to target additional "World Class" copper gold porphyries at Kuma and other targets in Ecuador and the Solomon Islands.

 

SolGold is based in Brisbane, Queensland, Australia. The Company is listed on the LSE and TSX, with both exchanges using the ticker code: SOLG, and currently has on issue a total of 1,696,245,686 fully-paid ordinary shares, 31,795,884 share options exercisable at 28p; 9,795,884 share options exercisable at 14p and 46,762,000 share options exercisable at 60p.

 

CAUTIONARY NOTICE

 

News releases, presentations and public commentary made by SolGold plc (the "Company") and its Officers may contain certain statements and expressions of belief, expectation or opinion which are forward looking statements, and which relate, inter alia, to interpretations of exploration results to date and the Company's proposed strategy, plans and objectives or to the expectations or intentions of the Company's Directors. Such forward-looking and interpretative statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such interpretations and forward-looking statements.

 

Accordingly, the reader should not rely on any interpretations or forward-looking statements; and save as required by the exchange rules of the TSX and LSE or by applicable laws, the Company does not accept any obligation to disseminate any updates or revisions to such interpretations or forward-looking statements. The Company may reinterpret results to date as the status of its assets and projects changes with time expenditure, metals prices and other affecting circumstances.

 

This release may contain "forward‑looking information" within the meaning of applicable Canadian securities legislation. Forward‑looking information includes, but is not limited to, statements regarding the Company's plans for developing its properties. Generally, forward‑looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward‑looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward‑looking information, including but not limited to: transaction risks; general business, economic, competitive, political and social uncertainties; future prices of mineral prices; accidents, labour disputes and shortages and other risks of the mining industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward‑looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

The Company and its officers do not endorse, or reject or otherwise comment on the conclusions, interpretations or views expressed in press articles or third-party analysis, and where possible aims to circulate all available material on its website.

The Company recognises that the term "World Class" is subjective and for the purpose of the Company's projects the Company considers the drilling results at the growing Alpala Porphyry Copper Gold Deposit at its Cascabel Project to represent intersections of a "World Class" deposit. The Company considers that "World Class" deposits are rare, very large, long life, low cost, and are responsible for approximately half of total global metals production. "World Class" deposits are generally accepted as deposits of a size and quality that create multiple expansion opportunities, and have or are likely to demonstrate robust economics that ensure development irrespective of position within the global commodity cycles, or whether or not the deposit has been fully drilled out, or a feasibility study completed.

Standards drawn from industry experts (1) Singer and Menzie, 2010; (2) Schodde, 2006; (3) Schodde and Hronsky, 2006; (4) Singer, 1995; (5) Laznicka, 2010) have characterised "World Class" deposits at prevailing commodity prices. The relevant criteria for "World Class" deposits, adjusted to current long run commodity prices, are considered to be those holding or likely to hold more than 5 million tonnes of copper and/or more than 6 million ounces of gold with a modelled net present value of greater than USD 1 Billion.

The Company and its external consultants prepared an initial mineral resource estimate at the Cascabel Project in December 2017. Results are summarised in Table B attached.

The Mineral Resource Estimate was completed from 53,616m of drilling, approximately 84% of 63,500m metres drilled as of mid-December 2017, the cut-off date for the maiden resource calculation. There remains strong potential for further growth from more recent drilling results, and continue rapid growth of the deposit.

Any development or mining potential for the project remains speculative.

On the basis of the drilling results to date and the results of the Alpala Maiden Mineral Resource Estimate, the reference to the Cascabel Project as "World Class" (or "Tier 1") is considered to be appropriate. Examples of global copper and gold discoveries since 2006 that are generally considered to be "World Class" are summarised in Table A.

 

References cited in the text:

1. Singer, D.A. and Menzie, W.D., 2010. Quantitative Mineral Resource Assessments: An Integrated Approach. Oxford University Press Inc.

2. Schodde, R., 2006. What do we mean by a world class deposit? And why are they special. Presentation. AMEC Conference, Perth.

3. Schodde, R and Hronsky, J.M.A, 2006. The Role of World-Class Mines in Wealth Creation. Special Publications of the Society of Economic Geologists Volume 12.

4. Singer, D.A., 1995, World-class base and precious metal deposits-a quantitative analysis: Economic Geology, v. 90, no.1, p. 88-104.

5. Laznicka, P., 2010. Giant Metallic Deposits: Future Sources of Industrial Metal, Second Edition. Springer-Verlag Heidelberg.

 

 

Table A: Tier 1 global copper and gold discoveries since 2006. This table does not purport to be exhaustive exclusive or definitive.

 

 

 

	Resource Category	Tonnage (Mt)	Grade			Contained Metal
			Cu (%)	Au (g/t)	CuEq (%)	Cu (Mt)	Au (Moz)	CuEq (Mt)
>1.1% CuEq	Indicated	70	1.1	1.3	1.8	0.7	2.8	1.2
	Inferred	50	1.1	1.3	1.8	0.5	1.9	0.8
0.9 - 1.1% CuEq	Indicated	50	0.7	0.5	1.0	0.3	0.9	0.5
	Inferred	50	0.7	0.5	1.0	0.4	0.9	0.5
0.3 - 0.9% CuEq	Indicated	310	0.4	0.2	0.5	1.2	2.3	1.6
	Inferred	550	0.4	0.2	0.5	2.0	3.5	2.6
Total >0.3% CuEq	Indicated	430	0.5	0.4	0.8	2.3	6.0	3.4
	Inferred	650	0.4	0.3	0.6	2.9	6.3	4.0

 

 Table B: Alpala Mineral Resource statement as of 3 January 2018

 

Notes:

· Mr. Martin Pittuck, MSc, CEng, MIMMM, is responsible for this Mineral Resource estimate and is an "independent qualified person" as such term is defined in NI 43-101

· The Mineral Resource is reported using a cut-off grade of 0.3% copper equivalent calculated using [copper grade (%)] + [gold grade (g/t) x 0.6] based on a copper price of US$2.8/lb and gold price of US$1,160/oz

· The Mineral Resource is considered to have reasonable potential for eventual economic extraction by underground mass mining such as block caving

· Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability

· The statement uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May 2014).

· The MRE is reported on 100 percent basis

· Values given in the table have been rounded, apparent calculation errors resulting from this are not considered to be material

· The effective date for the Mineral Resource statement is 18th December 2017

 

 

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