The Board of Directors of SolGold (LSE & TSX: SOLG) wishes to provide an update regarding progress of the Pre-Feasibility Study ("PFS") with respect to the Alpala Project ("Project") on the Cascabel concession in northern Ecuador.
The Project Committee ("Committee"), chaired by Non-Executive Director Keith Marshall, has reviewed the work undertaken to date on the Alpala PFS and provided its recommendation to the Board on the next steps to progress to completion of a revised Alpala PFS covering the entire Cascabel concession.
The Committee has determined that additional work is required to sufficiently address a number of mine development and metallurgical alternatives and potential upsides, including the resource potential on other targets within the Cascabel concession.
Commenting on today's PFS update, SolGold CEO, Mr Nick Mather said:
"The objective of a revised study encompassing all of the Cascabel targets is to reduce the risk of a very large initial capex on a large underground development and deliver a study which demonstrates a lower technical risk through better defined upsides in resources, operating costs and recoveries and augments production with early stage open cuttable resources. Continued strength in global copper and gold markets will further endorse the strategy of making the Cascabel project lower risk, quicker to build and bring to production if a development decision is made and with reduced upfront capital exposure. We believe the extra time to be spent on the revised study is well founded and will lay the basis for the next phase of the evolution of SolGold. This endorses SolGold's strategy for the future."
The Committee has identified the key work required and noted that it would be advisable to consider adjusting the current draft mine development plan and the draft mine production plan to de-risk the project with a view to facilitating the expeditious development and optimised capital requirements.
On the basis of the report of the Project Committee, the Board of Directors has requested SolGold management to review both the current draft mine development plan and draft mine production plan, specifically:
· to examine an alternative mine access to accelerate the development of the cave,
· to examine the draft mine production plan with a view to ascertaining the optimum production rate, with the most likely scenario being a reduction of the previously contemplated mining rate but at higher grades from a reduced footprint in the early stages of operations,
· to study an optimised block cave footprint targeting higher grade material in the early stages, whilst maintaining expansion capabilities through plant and infrastructure addition strategies,
· to correspondingly optimise the capital cost and construction schedules of all related downstream milling, processing and tailings operations,
· to undertake a thorough re-assessment of all potential near-surface mining options at the Alpala Deposit, and
· to investigate the resource potential at satellite targets on the Cascabel concession, including Tandayama-America, Aguinaga and Moran.
Management is also investigating other options and scenarios to deliver further value, including adoption of dedicated hydro-power plants, and the improvement of metallurgical recoveries.
Further drilling, including the collection of more extensive geotechnical, hydrogeological and metallurgical data sets, has been underway over the last six months. The provision of more extensive data sets will address uncertainties, which are typical for a project of this scale and stage.
Exploration drilling completed at the Tandayama-America target, situated 3km north of the Alpala deposit, in the last three months, and at the Aguinaga target in Q2 & Q3 of 2018, has intersected mineralised porphyry copper-gold systems with potential to ultimately yield further resources which may be included in the development plan.
The Company has taken this opportunity to commit a portion of its drilling fleet to a planned 28,795m resource extension program at the Alpala Deposit, with the remaining portion of the drilling fleet committed to a planned 19,250m resource delineation program, at the three satellite prospects for 2021.
With the extra work required, the publication of a PFS is not expected until late 2021. SolGold will update the market in due course on progress of the PFS.
SolGold is confident that the additional time and work to complete a PFS on the scope of the entire Cascabel concession is in the Company's best interest and will result in the delivery of a PFS that has the benefit of the consideration of various upside potential and a broader range of production and development scenarios than is currently available.
By order of the Board
Karl Schlobohm
Company Secretary
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