Monsters of Rock: The junior explorer being stalked by BHP and Newcrest is adding to its Ecuadorian copper-gold bounty
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SolGold has had a tumultuous few years.
The London-listed company is sitting on one of the world’s largest undeveloped copper and gold resources at Cascabel in Ecuador.
But it’s recent history has been marred by big votes against resolutions at recent AGMs and concerns about corporate governance from major shareholders BHP (ASX:BHP) and Newcrest (ASX:NCM), who both muscled in on the register a few years ago in the hope of getting in early on the discovery.
The latest was the revelation in its March quarterly statements that a forensic accounting exercise commissioned by SolGold had uncovered the misappropriation of US$4.6 million of funds in its Ecuadorian business.
BHP and Newcrest, keen on new copper assets as the metal heads into an expected years long cycle of deficits driven by decarbonisation, both hold around 13.5% of the company at the top of its share register.
Today, more positive news from the company, announcing drilling at its Cascabel project has extended the Tandayama-America measured an indicated mineral resource by 740,000t of copper and 1.9Moz of gold to 528.5Mt at 0.24% copper and 0.19g/t gold for 1.27Mt Cu and 3.16Moz Au.
The TAM is held on an 85% basis by SolGold and represents the second major porphyry at Cascabel, some 3km north of Alpala, where SolGold boasts 2.66Mt at 0.53% copper equivalent in measured and indicated resources for 9.9Mt Cu, 21.7Moz Au and 92.2Moz silver.
Alpala is likely to be mined by bulk underground mining methods, but TAM contains potentially open pittable resources of 356.5Mt at 0.36% CuEq, with a high grade zone of 223.3Mt at 0.41% CuEq and outcropping resources at higher grades including 28Mt at 0.43% CuEq and 10.5Mt at 0.55% CuEq.
The 94% increase in open pit resources could present a less capital intensive option to begin mining while the larger underground development is in ramp-up mode.
“The Cascabel project continues to grow with more drilling with the additional resources being identified at TAM providing an open pit resource potentially enabling Cascabel production to be brought forward and a significant risk mitigation to any ramp up delays in the underground production,” said SolGold CEO Darryl Cuzzubbo, a former BHP executive who began at the explorer in November.
SolGold, which has around US$38 million in the bank, thinks Cascabel can be a top-20 South American copper and gold mine with average production of 132,000t copper, 358,000oz gold and 1Moz of silver a year with a mine life potentially in excess of 50 years and peak copper production of 210,000t.
The mine would have an estimated US$2.9b after-tax NPV and 19.3% IRR with an after tax NPV of US$4.1n and IRR of 23.4% at current elevated spot gold, copper and silver prices.
Materials ended Friday trade up 1.49% with energy stocks closing 2.26% higher as oil prices rose.