The Board of Directors of SolGold (LSE & TSX code: SOLG) wishes to provide an update regarding progress of the Pre-Feasibility Study ("PFS") with respect to the Alpala copper-gold porphyry project ("Project") on the Cascabel concession in northern Ecuador.
The Alpala Project Team and the Project Committee, chaired by Interim CEO Keith Marshall, are making good progress studying potential Alpala mine plans while addressing a number of mine development and metallurgical enhancements as well as potential upsides, and are continuing to target the release of the PFS in late 2021.
The Alpala deposit comprises 2,663 Mt at 0.53% CuEq in the Measured plus Indicated categories and contained metal content of 9.9 Mt Cu, 21.7 Moz Au and 92.2 Moz Ag [1]. The core of the deposit measures approximately 900m in height and 500m in diameter. Given the size and geometry of the deposit, the Company is quite optimistic that the PFS will demonstrate that it is amenable to underground caving mining methods.
The Company is confident that this revised approach being studied from that which was previously considered is much more beneficial for SolGold and will deliver significant shareholder value. The Company is currently expanding its team of experienced technical staff, with Ms Lisa Park, Head of Metallurgy having officially joined in recent days.
Key considerations that suggest the superiority of the revised approach currently being studied for the development of the Project include:
· much earlier access to the resource with shortest time to potential first production;
· a more selective mining approach, without sterilising the remaining resource, reducing dilution without compromising metal extraction;
· optimal size and orientation of an underground footprint with the potential for two extraction levels to minimise dilution and upfront development Capex; and
· mining of higher head grades in the earlier years of potential production.
The company is optimistic that the revised mine plan currently being studied as part of the PFS process could deliver similar metal production while mining significantly less material. This could result in potentially significant cost savings. The crushing, processing and waste storage requirements are also expected to be reduced accordingly as would, in this potential scenario, the upfront capex associated with these installations.
Anticipated benefits of the revised approach being studied include lower expected execution risks, lower expected pre-production capital and significantly reduced time to first potential production.
SolGold is also investigating options that could provide further upside to the value of the Project including:
· near-surface, open pittable mining options at and near the Alpala deposit;
· hydroelectric power options to reduce power costs;
· further metallurgical testing to increase copper, gold and silver recoveries; and
· electrification of underground production mobile plant, thereby reducing requirements for fuel, emission control and ventilation with additional likely reductions in capital expenditure and operating costs
A number of proof-of-concept level studies on these options have been initiated beginning with geotechnical and mining options. These are being followed with more detailed studies and are expected to be included in the designs for downstream processes and infrastructure. These studies are on track for the delivery of the PFS in late 2021.
The Company is of the view that the Alpala resource is one of the most significant copper-gold porphyry discoveries of the last decade. It has the potential to become a key source of future copper supply amid an expected growing medium-term market deficit, reflecting limited new project development, a declining base production and growing demand supported by the shift towards electrification and decarbonisation.
SolGold plans to provide further progress updates as the revised PFS advances during the remainder of the year.
Commenting on today's PFS update, SolGold Interim CEO, Keith Marshall said:
"The revised mine plan being studied underpins the whole of the Alpala Project. The plan being studied is smaller in scale initially, but a much more selective and simpler approach to mining the deposit. In my view, the big advantages of underground mining over open pit mining are sequencing and selectivity. With underground mining you can target which areas of the orebody you want to mine and when. The previously studied plan was the equivalent of an inverted open pit, with limited selectivity, that would likely have resulted in the mining of larger volumes of waste material.
We are now studying a plan that would introduce an upper extraction level that may offer earlier access to high grade material. We are also considering dual access, through shafts and a decline which might be developed from both ends concurrently. Through the study of the revised approach, we are hopeful of arriving at a plan that will not sterilise any of the resource, furthering SolGold's goal of developing the resource with a view to the interests of all stakeholders, particularly Ecuador.
I am very encouraged with the progress of the study of this revised approach and I am confident that it should offer a robust but flexible solution to the development of a mine at Alpala."
By order of the Board
Karl Schlobohm
Company Secretary |
