SolGold released an exploration update from its Rio Amarillo project in Northern Ecuador that is 35km southeast of the company’s Alpala deposit (Figure 1). The company has discovered a cluster of new preserved porphyry lithocap zones and associated surface Cu-Au mineralization that could potentially indicate large porphyry related systems at depth. SolGold owns at least 12 other high-potential projects in Ecuador. The mood surrounding base metals stocks is currently in the doldrums, but now could be a great buying opportunity for SolGold shares as its stock price should recover in H2/20 amid improving sentiment post the global coronavirus scare and the near-guaranteed additional Chinese stimulus package to combat the as yet unquantifiable slowdown in GDP that the virus has already caused in country.
SolGold released initial exploration results from its 100%-owned Timbara project in Southern Ecuador. The company has deployed field teams to assess 75 regional concessions across 14 provinces in the country. To-date, SolGold has identified 13 priority targets that could have excellent potential for discoveries. We note that the company’s flagship Alpala project is the only Cu-Au porphyry project in the hands of a “junior” with the scale to attract super majors such as BHP. SolGold owns 12 other high-potential projects in Ecuador. Given the dampened mood surrounding base metals stocks at present (see SNL Base Metals Index chart in sidebar), this could be an excellent buying opportunity that could see SolGold’s share price recover in H2/20 as sentiment is likely to rebound post the global coronavirus scare and the potential for a stimulus package.
We are publishing our first “Endangered Species List”, which is a list of mining investment assets we consider most likely to go extinct (be acquired) in 2020. In addition, we plan to update this list of names throughout the year. In this note, we outline the criteria used for being selected to our list and a brief rationale of the specific catalyst that we believe could lead to the takeout occurring.
SolGold announced that BHP has agreed to invest US$22M in the company by buying 77M new shares at 22.15 pence per share. This agreement makes BHP SolGold’s largest shareholder by a narrow margin, with a total ownership of 14.7%. We view this investment positively, as it refreshes their endorsement and allows for the Alpala project to be advanced. However, we note that additional financing, potentially in the form of a streaming financing, will be required to eventually develop the project.
SolGold provided an exploration update on its Blanca Project in Northern Ecuador, located 8km north-northwest of its Cascabel concession (Figure 1). On the heels of encouraging rock chip sampling results, initial drill core visual impressions clearly suggest Blanca contains significant gold mineralization and we expect positive assay results to follow. It is worth noting that recent improvement in market sentiment towards base metal stocks (see SNL Base Metals Index) has not yet translated to SolGold’s share price.
Yesterday, SolGold released results from metallurgical test work done at its Alpala project in northern Ecuador showing significantly improved recoveries for Cu, Au, Ag and an improved Cu concentrate grade. SolGold also stated that it plans to move forward with a pilot plant operation in 2020 to investigate a molybdenum-rhenium circuit for its copper concentrate as well as pyrite and magnetite recovery processes that will reduce tailings. We view the improved recovery results as a validation of the recoveries we used in our model (which were higher than the PEA) and believe that the additional recovery circuits could add significant value at Alpala should the metallurgy be proven feasible.
Yesterday, SolGold released a regional exploration update on its activities in Ecuador. The update focused solely on its 100% owned Cisne-Loja project located in southern Ecuador and specifically on its Celen prospect with soil and rock chip sampling and magnetic imaging. The Celen prospect is located only 5km south of the Cuenca Loma epithermal Au-Ag prospect (Figure 1). The last press release regarding this land package was published on May 9th. Since then, the Celen prospect area of Cu-Au-Ag mineralization has increased from 1.5km by 1.0km to 2.0km by 1.0km and 72 rock chip samples were collected and assayed. While it’s still early days at Celen, we expect it to add additional exploration sizzle to SolGold, especially when drilling begins.
If it looks like a bull market (technical breakout in gold), smells like a bull market (significant negative yielding debt) and feels like a bull market (funds flowing into gold), it must be a bull market. Our analysis shows that equities in smaller sized companies outperform during a bull market. However, not all junior miners are created equal, and we believe there are three keys to picking them.
Impact: Mildly Positive
SolGold has announced high-grade sample results from its Blanca tenement, located ~5.1km from Casacbel, where exploration continues to point to a high-grade epithermal system with significant scale potential. With extensive work programs currently underway ahead of MRE#3 for Cascabel, this update offers a reminder of SolGold’s potential for upside beyond its flagship project.
Impact: Mildly Positive
SolGold has announced a positive work program for its Cascabel project where we are expecting Mineral Resource Estimate (MRE#3) later this year. With a recent PEA under its belt, SolGold appears to be undertaking extensive work programs to move the project one step closer to production. We continue to view Alpala as a world class project which the company is actively improving with ongoing development work.