Cascabel Exploration Update-MRE Revision Dec 2018

RNS Number : 9584C

SolGold PLC

05 October 2018

 

5 October 2018

SolGold plc

("SolGold" or the "Company")

Cascabel Exploration Update

Alpala Mineral Resource Update for December 2018

The Board of SolGold (LSE and TSX code: SOLG) is pleased to provide an update on recent drilling at the Company's Cascabel project in Northern Ecuador.

HIGHLIGHTS:

Ø With over 124,000m of drill hole assays now received, a further 70,400m of drilling has been added to the existing Alpala Maiden Resource during 2018 of 5.2Mt of copper (2.3Mt Indicated, 2.9Mt Inferred) and 12.3MOz of gold (6Moz Indicated, 6.3MOz Inferred) (published January 2018 - refer Table B in the Notes to Editors for full details).

Ø Approximately 32,000m of further drilling set to be completed at Alpala in 2018, significantly adding to the Mineral Resource Estimate ("MRE") update.

Ø Updated Mineral Resource Estimate projected for completion and release December 2018.

Ø Recent drilling highlights include Hole 55R-D1 (869m @ 0.72% CuEq, including 378m @ 1.17% CuEq), Hole 58-D1 (983m @ 1.08% CuEq, including 456m @ 1.71% CuEq), and Hole 66 (634m @ 1.25% CuEq, including 301m @ 1.88% CuEq and 174m @ 2.46% CuEq open at depth).

Ø Hole 66 intersects rich porphyry style mineralised zone containing visible gold.

Ø Hole 64 intersects new zone containing primary bornite mineralisation at Alpala NW.

Ø Assay turnaround reduced to 3 weeks.

Ø Internal geology, grade and resource modelling indicates potential for significant growth in total metal inventory at Alpala at all cut-off grades.

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/9584C_1-2018-10-4.pdf

Commenting on today's release, SolGold CEO, Mr Nick Mather said: "The results from these latest drill holes are very encouraging, with several notable drill hole results outside the previous resource area, such as Hole 64, which last week intersected primary bornite mineralisation deep at Alpala NW.

The 2018 drilling campaign at Alpala will add approximately 105,000m of drilling to what we believe is already one of the top five undeveloped Cu-Au resources in the world.  Initial results of internal modelling updates at the Alpala Deposit suggest that an MRE update planned for release in December could deliver significant resource growth, and the conversion of a large amount of tonnage into the Indicated category.  We expect the MRE update to validate a far more robust high-grade core, and an additional, (much shallower) second high-grade "western lobe" extension to the high-grade core.

The Company continues to press its first-mover advantage in Ecuador.  Its wider exploration efforts beyond Cascabel, that have only just scratched the surface, have yielded several very encouraging porphyry and epithermal targets, which we believe places Ecuador at the forefront of prospectivity."

FURTHER INFORMATION

The Cascabel Project is located on the northern section of the prolific Andean Copper belt, renowned as the base for nearly half of the world's copper production.  The project area hosts mineralisation of Eocene age, the same age as numerous Tier 1 deposits along the Andean Copper Belt in Chile and Peru to the south.  The project base is located at Rocafuerte in northern Ecuador, approximately three-hour's drive north of Quito, close to water, power supply and Pacific ports (Figure 1).  SolGold holds an 85% registered and beneficial interest in ENSA (Exploraciones Novomining S.A.) which holds 100% of the Cascabel tenement.

SolGold is encouraged by the outstanding infill drilling results, which are expected to expand and enrich the existing high-grade resource.  The Company is also excited about notable drill hole results outside the previous resource area, such as Hole 64, which last week intersected primary bornite mineralisation deep at Alpala NW.  The discovery of primary bornite-chalcopyrite assemblages with magnetite and in the absence of pyrite, is indicative of the high temperature core many porphyry systems, and warrants follow up drill testing and may lead to unearthing further evidence of a second system adjacent to the Alpala Deposit (Figure 3).

Hole 66 extended the high grade core of the deposit towards the southeast at depth and intersected a zone of visible gold associated with porphyry style chalcopyrite and bornite mineralisation. Very high gold grades in the core and periphery of the deposit at Alpala can be associated with related to intermediate- to high- sulfidation state sulfide-mineral assemblage associated with a phyllic alteration over-print, and is a feature common in many of the world's richest porphyry deposits, like Oyu Tolgoi, Grasberg and Wafi-Golpu (Figure 4).

Highlights of assay results expected to add to the existing MRE at Alpala are detailed in Figure 5.

Drill hole location plans showing resource shells from the existing December 2017 Mineral Resources Estimate against current in-house models highlight resource growth predicted at cut-off grades of 0.15%CuEq and >1.5%CuEq (Figures 6 and 7).

Section (A-A'), looking northeast, through the high-grade core of the deposit (Figure 8), shows an example of infill drilling resulting in a potentially more robust, richer high-grade core of the Alpala Deposit, as exemplified by:

Ø Hole 57 high grade intercept:  304m @ 2.52% CuEq (1.15% Cu, 2.18g/t Au);

Ø Hole 41-D1-D2 high grade intercept:  340m @ 1.54% CuEq (0.78% Cu, 1.21g/t Au);

Ø Hole 41-D1 high grade intercept:  252m @ 1.53% CuEq (0.86% Cu, 1.07g/t Au).

A total of 12 drill rigs are currently in operation on the project, with the entire fleet moved back to Alpala in order to expedite drilling ahead of planned December Mineral Resource Estimate.  Secondary targets at Cascabel, including Aguinaga, Trivinio, and Moran are planned for drill testing as the Alpala resource development program allows.

The Company is currently changing out 2 track mounted drill rigs for man-portable drill rigs, with the first replacement man-portable now mobilised to site.  The Company is increasing its man-portable portion of the Cascabel drill fleet to increase flexibility in rig movements and siting, as well achieving a higher metre rate at lower cost.

A maiden Mineral Resource Estimate (MRE) for the Alpala deposit, estimated from the initial 53,616m of drilling and released in December 2017, comprised a contained metal content of 2.3 Mt Cu in the Indicated category and 2.9 Mt Cu in the Inferred category and 6.0Moz Au in the Indicated category, and 6.3Moz Au in the Inferred category (all at 0.3% CuEq cut off).  Refer to Table B in the Notes to Editors for full details.

An updated Mineral Resource Estimate is expected to provide a significantly greater resource base for the project upon completion of approximately 14,000m of further planned drilling in December 2018.  The Company will assay 100% of metres drilled (148,000m) at the project, with 24,000m of drilling currently awaiting assay results.  The assay backlog is set to clear before December 2018, with ALS Global having completed the commissioning of larger preparation facilities in Ecuador (Figure 2).  Assay results for drilling on the Cascabel Project are currently performed by ALS Global in Lima, Peru.

During September 2018, BHP Billiton purchased a 6% stake in the Company.  Commenting at the time of the acquisition, BHP Billiton's CEO noted that this investment would give BHP exposure to a high quality copper exploration project in Ecuador, which is a highly prospective location for BHP, and that, consistent with their positive long-term outlook, copper is a key exploration focus for BHP as they seek to replenish their resource base.

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.

Qualified Person:

Information in this report relating to the exploration results is based on data reviewed by Mr Jason Ward ((CP) B.Sc. Geol.), Exploration Manager Global of the Company.  Mr Ward is a Fellow of the Australasian Institute of Mining and Metallurgy, holds the designation MAusIMM (CP), and has in excess of 20 years' experience in mineral exploration and is a Qualified Person for the purposes of the relevant LSE and TSX Rules.  Mr Ward 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 (Chief Executive Officer)                                                                                    [phone]

[e-mail]

Mr Karl Schlobohm                                                                                                               Tel: [phone]

SolGold Plc (Company Secretary)

[e-mail]

Ms Anna Legge                                                                                                                       Tel: [phone]

SolGold Plc (Corporate Communications)

[e-mail] 

Mr Ewan Leggat / Mr Richard Morrison                                                                       Tel: [phone]

SP Angel Corporate Finance LLP (Broker)

[e-mail] 

Gordon Poole / Nick Hennis                                                                                             Tel: [phone]

Camarco (Financial PR / IR)

[e-mail]

Andrew Chubb / Ingo Hofmaier                                                                                      Tel: [phone]

Hannam & Partners (Joint Broker)

[e-mail]

Follow us on twitter @SolGold_plc

ABOUT SOLGOLD

SolGold is a leading exploration company focussed on the discovery and definition of world-class copper and gold deposits.  In 2017 SolGold's management team was recognised by the "Mines and Money" Forum as an example of excellence in the industry, and continue to strive to deliver objectives efficiently and in the interests of shareholders. SolGold is the largest and most active concession holder in Ecuador and is aggressively exploring the length and breadth of this highly prospective and gold-rich section of the Andean Copper Belt.

Ecuador dedicated to become a serious mining nation

Ecuador has, over the last 5 years, been recognised globally as a frontrunner in emerging mining nations as it develops regulatory and fiscal frameworks to facilitate the development of a fiscally, socially and environmentally strong and responsible mining industry.

Dedicated stakeholders

SolGold employs a staff of over 400 and at least 90% are Ecuadorean.  This is expected to grow as the operations at Alpala, and in Ecuador generally, expand. SolGold focusses its operations to be safe, reliable and environmentally responsible and maintains close relationships with its local communities. SolGold has engaged an increasingly skilled refined and experienced team of geoscientists using state of the art geophysical and geochemical modelling applied to an extensive data base to enable the delivery of ore grade intersections from nearly every drill hole at Alpala.  SolGold has 86 geologists, of which 25% are female, on the ground in Ecuador looking for copper and gold.

About Cascabel and Alpala

The Alpala deposit is the main target in the Cascabel concession, located on the northern section of the heavily endowed Andean Copper Belt, the entirety of which is renowned as the base for nearly half of the world's copper production.  The project area hosts mineralisation of Eocene age, the same age as numerous Tier 1 deposits along the Andean Copper Belt in Chile and Peru to the south.  The project base is located at Rocafuerte within the Cascabel concession in northern Ecuador, an approximately three hour drive on sealed highway north of Quito, close to water, power supply and Pacific ports (Figure 1).

Alpala has produced some of the greatest drill hole intercepts in porphyry copper-gold exploration history, as exemplified 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.

Having fulfilled its earn-in requirements, SolGold is a registered shareholder with an unencumbered legal and beneficial 85% interest in ENSA (Exploraciones Novomining S.A.) which holds 100% of the Cascabel concession covering approximately 50km².  The junior equity owner in ENSA is required to repay 15% of costs since SolGold's earn in was completed, from 90% of its share of distribution of earnings or dividends from ENSA or the Cascabel concession. It is also required to contribute to development or be diluted, and if its interest falls below 10%, it shall reduce to a 0.5% NSR royalty which SolGold may acquire for US$3.5m.

Over 145,000m of diamond drilling has been completed on the project.  With numerous rigs currently active on the project, SolGold produces up to approximately 10,000m of core every month.  The Cascabel drill program is currently focussed on extending and upgrading the status of the Alpala Resource, as well as further drill testing of the rapidly evolving Aguinaga prospect.  Drill testing of the Trivinio target has commenced, whilst the numerous other untested targets, namely at Moran, Cristal, Tandayama-America and Chinambicito, are flagged for drill testing as overall program demands allow.

Since the publication of the Alpala Maiden Mineral Resource Estimate in January 2018, which outlined a contained metal inventory of 5.2 million tonnes of copper and 12.6 million ounces of gold, the Company has nearly doubled both drilled and reported meterage and will produce a revised resource statement addressing the evident growth in the size of the deposit at the conclusion of the current Alpala drill programme.  Investors should consult the technical report dated 18 December 2017 for a detailed account of the assumptions on which the estimates were based as well as any known legal, political, environmental and other risks that could materially affect the development of the resources.

Getting Alpala advanced towards development

SolGold has appointed feasibility management to initially address the production of a preliminary economic assessment (PEA), prior to the prefeasibility and feasibility studies.

The resource at the Alpala deposit boasts a high grade core which, in the event of the construction of a mine, is targeted to facilitate early cashflows and an accelerated payback of initial capital. SolGold is currently investigating development and financing options available to the company for the development of Cascabel on reaching feasibility.

SolGold's regional push

SolGold is using its successful and cost efficient blueprint established at Alpala, and Cascabel generally, to explore for additional world class copper and gold projects across Ecuador.  SolGold is the largest and most active concessionaire in Ecuador having recognised as early as 2014 that the country hosted the same untested prospectivity as the Northern Chilean section of the Andean Copper Belt, which accounts for some 25% of the world's copper resources.  

The Company believes Alpala is just the beginning for SolGold in Ecuador.  The Company wholly owns four other subsidiaries active throughout the country that are now focussed on ten high priority gold and copper resource targets, several of which the Company believes have the potential, subject to resource definition and feasibility, to be developed in close succession or even on a more accelerated basis from Alpala. 

SolGold is listed on the London Stock Exchange and Toronto Stock Exchange (LSE/TSX: SOLG).  The Company has on issue a total of 1,696,245,686 fully-paid ordinary shares, 9,795,884 share options exercisable at 14p, 31,795,884 share options exercisable at 28p; 21,500,000 share options exercisable at 40p and 46,762,000 share options exercisable at 60p.

See www.solgold.com.au for more information.  Follow us on twitter @SolGold_plc

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.

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 25-70%.

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 18 December 2017

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.

 

END

 

 

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