Cascabel Exploration Update - Hole 16 Progress

RNS Number : 1413Q

SolGold PLC

25 February 2016

 

25 February, 2015

SolGold plc

("SolGold" or the "Company")

Cascabel Exploration Update

Hole 16 at Alpala Continues to Intersect Visible Copper Mineralisation at 973m Depth.

The Board of SolGold (AIM code: SOLG) is pleased to provide the following exploration update for the Company's Cascabel copper-gold porphyry project in Ecuador.

HIGHLIGHTS:

Ø CSD-16-016 ("Hole 16") was at a depth of 973m at 6pm Central America time Tuesday 24 February.  Drilling has intersected continuous visible copper mineralisation shallower than expected, from 568m, an intersection so far of 405m.

Ø Hole 16 progressing without difficulty, targeting a depth of 1800m.  Intense mineralisation is being encountered.

Ø Mineralisation to date in Hole 16 comprises diagnostic "B" type quartz veins containing magnetite, chalcopyrite (a sulphide mineral containing 34% copper) and bornite (a sulphide mineral containing 63% copper). Disseminated chalcopyrite and bornite occur in the groundmass.  Mineralisation is enriched by overprinting of later "C" type veins consisting of pure chalcopyrite.

Ø Mineral alteration indicators show assemblages in the phyllic and propyllitic zones suggesting that the predicted richer potassic core is yet to be intersected at depth.

Ø Hole 16 extends the Alpala deposit by 100m to the south east in the direction of significant magnetite/hematite alteration at surface at Hematite Hill and significant bornite mineralisation evident at surface at Alpala Southeast and Cristal prospects.

Ø Drill hole CSD-16-015R2 ("Hole 15R2") is underway from the Hole 15 pad, and is at a current depth of 149m.  Hole 15R2 targets extensions of the Alpala deposit to the north east, and at depth. 

Ø Carmen road, being built by the Ecuadorean Government is expected to reach Alpala camp from Santa Cecilia in April, lowering exploration costs and enhancing logistic efficiency and drill rig access.

Ø Negotiations for additional rig and additional contractor are progressing.

References to figures and tables relate to the version of this release on the Company's website (www.solgold.com.au) or visible in PDF format by clicking the link below:

http://www.rns-pdf.londonstockexchange.com/rns/1413Q_-2016-2-25.pdf

DETAILED INFORMATION:

The Directors of SolGold advise that Hole 16 is drilling at the Alpala copper-gold deposit within well mineralised porphyry host rock.

The Cascabel copper gold porphyry is located in northern Ecuador on the Andean copper belt which produces 48% of the world's copper (Figure 1).  Paradigm shifts in the development of sophisticated geophysical and geochemical surveying techniques identified a cluster of targets at Cascabel, of which Alpala Central is the only prospect drilled to date.  The project area has significant advantages over competitor projects in South America, being high grade and rich in gold, as well as being located close to power supply, water, sealed highways and port sites for access and export (Figure 2).

The Alpala deposit has been confirmed to date with 16 drill holes as a world class copper-gold porphyry discovery and is one of 6 major targets on the Cascabel project concession of which SolGold holds an 85% interest (Figure 3).

Hole 16 Confirms Trend to the Southeast

Hole 16 is located along the south eastern margin of the Alpala drilling area to date (Figure 4).  This hole is being drilled off the same pad location as Holes 4 and 14, towards the south-south west at 198 degrees azimuth and a declination of 85 degrees.

The drill hole is currently at a depth of 973m, progressing at the planned rate of 30m/day and is expected to traverse some 250m width of the Alpala structural zone.  The hole is designed to outline a continuation of the Alpala deposit some 100m south east of where it was previously intersected in Hole 12.  The addition of Hole 12 defined the Alpala deposit over a total vertical column of over 1700 metres from near surface and a cross width of some 250m. 

Strong mineralisation and intense veining has been encountered thus far in Hole 16 from 568m depth.  The prospective "D10" diorite intrusion was intersected from 609m, more than 270m shallower than previously predicted from geological modelling.  Drilling is expected to enter the highly prospective "QD10" quartz diorite intrusion from around 1270m (Figure 5).

The progressive shallowing of mineralisation to the south east supports the evolving interpretation that the Alpala deposit plunges towards the north west, and high grade mineralization is expected closer to surface as drill testing progresses further to the south east (Figure 6).

A feature of Hole 12 was the presence of finely disseminated specks of the high copper content mineral species, bornite.  Visible bornite in the Hole 16 core, as both disseminated grains and within veins, and the increasing abundance of bornite in outcrop to the south east provides encouraging evidence of extensions of the central copper-gold rich core zone of the Alpala porphyry system in this area.

Emerging Resource

Drill hole, surface mapping and geophysical data support a three dimensional model of the mineralisation at Alpala.  At a cut-off grade of 0.6% copper, standard interpolant volumes contain mean estimated copper and gold grades of over 1% Cu and 1g/t respectively, and imply an elongate orebody of some 400m length with an average horizontal thickness of 200m, over a vertical extent of 900m.  Mineralisation remains open to the north east and the south east, as well as being open both up-dip and at depth (Figure 7).  

Once the limits of the high grade mineralisation have been defined through further drilling, the increased drill hole density at 100m x 100m spacing should provide sufficient basis for the calculation of a maiden inferred resource. This is expected over the next 6 months and will form the basis for initial scoping studies to address a staged development program (Figure 8). 

Geological similarities with the Golpu copper-gold orebody in Papua New Guinea (50% Newcrest/ 50% Harmony Gold Joint Venture) suggest that the Alpala system could reasonably reveal over 1500 metre vertical extent in the high grade potassic core zone, which despite the extensive high grade intersections returned to date at Alpala, has not yet been encountered.  In addition to the evident outcropping, potentially open cut mineralisation, at Alpala, Aguinaga and Trivinio, SolGold geologists are also pursuing high grade underground targets beneath the existing drill hole intersections.  The presence of the Alpala Deeps target is supported by a deep 3D Magnetic Vector Image (MVI) model, constrained by down hole magnetics readings from drill core and modelled in 3 dimensions using powerful computer software (Figure 9).

Additional Rig and Access Road will Expedite Cascabel Program

In order to test the thick and rich positions in the deposit, SolGold expects to engage a second drilling contractor supplying track mounted rigs capable of over drilling core-holes as deep as 2500m.  These rigs will gain access via the new Santa Cecilia-Carmen road, currently under construction by the Ecuadorean Government.  The additional contractor and rig is expected to be available in late April in time for the planned completion of the new access road (Figure 10).

Drill hole CSD-16-015R2 ("Hole 15R2") is underway from the Hole 15 pad, and is at a current depth of 149m.  Hole 15R2 targets the extensions of the Alpala deposit to the north east, and at depth.  This hole is a re-drill of Hole 15 which was terminated at 1048.4m after drilling contractors were unable to continue the hole due to technical issues.  Drilling of Hole 15 intersected visible copper sulphide mineralization from 870m.

Photos of drill core from Hole 16 to date are provided in Figure 11.

Qualified Person:

Information in this report relating to the exploration results is based on data reviewed by Mr Nicholas Mather (B.Sc. Hons Geol.), the Chief Executive Officer of the Company.  Mr Mather is a Fellow of the Australasian Institute of Mining and Metallurgy who has in excess of 25 years' experience in mineral exploration and is a Qualified Person under the AIM Rules.  Mr Mather consents to the inclusion of the information in the form and context in which it appears.

By order of the Board

Karl Schlobohm

Company Secretary

CONTACTS

Mr Nicholas Mather                                                                                       Tel: [phone]

SolGold Plc (Executive Director)                                                                        [phone]

[e-mail]

Mr Karl Schlobohm                                                                                         Tel: [phone]

SolGold Plc (Company Secretary)

[e-mail]

Mr Ewan Leggat                                                                                                Tel: [phone]

SP Angel Corporate Finance LLP (NOMAD and Broker)

[e-mail]

Follow us on twitter @SolGold_plc

NOTES TO EDITORS

SolGold is a Brisbane, Australia based, AIM‐listed (SOLG) copper gold exploration and development company with assets in Ecuador, the Solomon Islands and Australia.  The Company's objective is to create substantial shareholder value by discovering and defining world‐class copper‐gold deposits.  SolGold's Board and Management Team have high vested interests in the success of the Company, holding approximately 14% of its issued share capital, as well as strong track records in the areas of exploration mine development, investment, finance and law.  SolGold's experience is augmented by state of the art geophysical techniques and the guidance of Newmont trained porphyry expert Dr Steve Garwin.  

Cascabel, the Company's world class flagship copper‐gold porphyry project, is located in North West 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 11% of TSX‐V‐listed Cornerstone Capital Resources, which holds the remaining 15% of ENSA, the Ecuadorian registered company which holds 100% of the Cascabel concession.   

To date the Company has completed geological mapping, soil sampling, 14km² and 9km² Induced Polarisation and Magnetotelluric "Orion" surveys at the Alpala and Aguinaga targets respectively.  By December 2015, the Company had completed approximately 25km² of soil sampling and 14km² of electrical surveys, 18,400m of drilling and expended approximately US$30m.    Diamond drilling continues with two drilling rigs.

Cascabel is characterised by multiple targets, world class intersections rich in high grades of copper and gold, logistic advantages in location, elevation, water supply, proximity to road, port and power services and a progressive legislative approach to resource development.

SolGold is planning a resource statement at Alpala, the most advanced target at Cascabel, during 2016, in addition to drill testing the other key targets in the Cascabel concession at Aguinaga, Trivinio, Alpala Southeast, Cristal, Tandayama America and Chinambicito.  By the end of 2016 the Company is planning further metallurgical testing, and completion of early stage mine and plant design and a scoping study for an economic development at Cascabel.  SolGold is investigating both high tonnage / low grade open cut and high grade / low tonnage underground developments as a block caving operation.

Drill hole intercepts are calculated 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 0.6, determined using copper price of US$3/pound and gold price of US$40/gram.

In Queensland, Australia the Company is evaluating the future exploration plans for the Mt Perry, Rannes and Normanby projects.    Joint venture agreements are still being investigated with the strategy for the joint venture partner to commit funds and carry out exploration to earn an interest in the tenements.  

SolGold is based in Brisbane, Queensland, Australia.  The Company listed on London's AIM Market in 2006, under the AIM code 'SOLG' and currently has a total of 822,716,605 ordinary shares allotted, 4,820,000 options exercisable at 50p, 7,280,000 options exercisable at 28p and 9,280,000 options exercisable at 14p.  On 2 October 2015, SolGold issued two 12 month Convertible Notes for A$1.25m and £500,000 each respectively, convertible at the greater of 1.75 p or 80% of volume weighted average price over the 5 days preceding the date of notification of conversion.

CAUTIONARY NOTICE

The news release may contain certain statements and expressions of belief, expectation or opinion which are forward looking statements, and which relate, inter alia, to the Company's proposed strategy, plans and objectives or to the expectations or intentions of the Company's directors. Such forward-looking 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 forward-looking statements. Accordingly, you should not rely on any forward-looking statements and save as required by the AIM Rules for Companies or by law, the Company does not accept any obligation to disseminate any updates or revisions to such forward-looking statements.

 

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