Solgold study pegs cost of Ecuador copper mine at US$1.55 billion

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Solgold [SOLG-TSX, LSE] has released a new pre-feasibility study for its Cascabel project in Ecuador that features a significantly reduced capital cost, a 24% internal rate of return and an updated mineral reserve estimate.

The Cascabel Project is a porphyry copper-gold deposit located in the Imbabura province of northwestern Ecuador, which lies within the under-explored northern section of the richly endowed Andean Copper Belt.

The study envisages pre-production capital of US$1.55 billion for initial mine development, first process plant module and infrastructure. It also forsees average production of 123,000 tonnes of copper annually, 277,000 ounces of gold and 794,000 ounces of silver, or 182,000 tonnes of copper equivalent (CuEq). The study forecasts peach production of 370,000 tonnes of CuEq annually.

The initial 28-year mine plan is based on an updated mineral reserve estimate of 540 million tonnes, containing 3.2 million tonnes of copper at 0.60%, 9.4 million ounces of gold at 0.54 g/t and 28 million ounces of silver at 1.62 g/y. The company said 85% of mineral reserves are classified as proven.

Soldgold was in the news last year when it moved to consolidate ownership of the Cascabel Project along with a robust portfolio of other projects primarily across Equador, by acquiring all the outstanding shares of Cornerstone Capital Resources Inc. it did not already own by way of a court-approved plan of arrangement.

The company has previously said Cascabel is expected to be a top 20 South American copper gold mine.

It is a project that is expected to benefit from a high-grade core, advantageous infrastructure and an increasingly investor-friendly government.  “The mine is expected to produce a clean copper-gold-silver concentrate that will be sold to Asian and European smelters,’’ Solgold has said.

Solgold owns 100% of Cascabel va Exploraciones Novomining S.A. (ENSA) an Ecuadorian company. It said underground mining will utilize the block cave mining method after a ramp-up period of approximately two years

The company has said additional mining optimization studies indicate that the optimum production profile for Cascabel is to begin with a processing rate of 12 million tonnes annually, extracting high grade ore for six years, before expanding the processing rate to 24 million tonnes annually.  The 12 million tonnes per annum throughput rate is expected to be achieved six years after the start of project development.

Over the current mine life, the plant is expected to produce 2.9 million pounds of copper, 6.9 million ounces of gold and 18.4 million ounces of silver.

Looking head to next steps, Solgold says it expects to begin technical work to further advance and de-risk the Cascabel project.

Solgold shares were unchanged at 11.5 cents on Friday. The shares trade in a 52-week range of 38.5 cents and 12.5 cents.

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