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Friday, August 5, 2016

SolGold - Cascabel Project - A snake in the Grass?

SolGold (AIM: SOLG.L - have been announcing some very impressive drilling results from their Cascabel project in Ecuador. They have been reporting some of the best porphyry copper-gold intersections in the world, Ever!

  • Very good Au-Cu intercepts, but mineralisation is deep (>500m).
  • Bad location
    • Ecuador, need I say more....
    • Local access issues?
Here are some questions that I was thinking when playing around with the data:
  • Why no backing from a major company? With the reported grades you could expect a more adventurous major taking an interest to playing the long game?
  • Why is no future drilling planned for any of the other targets?
  • Are the great intercepts skewed by the fact that the holes are nearly vertical and been drilled into a vertical deposit?
  • If the Aguinaga targets is key (heck they even have an open pit outline on their geofizz anomaly), why no drilling planned on it this year?

I was intrigued, a small ASX and AIM listed company with a $0.1 share price (or 6p in old world money) and a $80-90M market cap (ahh a normal ASX listed company where a tight float is if you have less than a billion shares issued).

So I went through the project data all the way back to 2013 and  brought as much data as I could find so I could review it and to separate the reality from IR spin. This was hard to do. There was a lot of fluff in the press releases, but some nice photos which were very informative.

This is understandable as they have been drilling some very deep drill-holes (up to 2000m) and these holes take a lot of time to drill (2-3 months per hole), and the company, understandably, wants a continued stream of news from their , but it made it a challenge to find out true hole depths, azimuths and so on....

But I have my ways (and a bit of basic trigonometry helped), and here is what I could extract and share with you, and I've also included their proposed drill-holes (azimuths and depths are educated guesses).

At first glance hey aren't too bad, I thought I had found a decent project with good upside.

left = PR results; right = split assays
left = PR results; right = split assays

All of the drilling to data (18 holes for 23,700m drilled) into the Alpala target and they have defined a 500m x 500m x 1500m (vertical extent) zone of porphyry Cu-Au mineralisation. But, darn, the high grade stuff is really deep, starting at around 500+m depth.

When I looked at the data I noticed that most of the drill-holes were almost vertical and you combine this with what looks like a vertical deposit you get to understand why the grades they have been reporting are so good.

They have hit some low-moderate grade (0.25 g/t Au and 0.25% Cu) mineralization near surface, but it is thin (250m x 125m), and what do they photos show us?

No oxides

As you can see those rocks aren't beautiful shades of green, and Sol Gold nicely tell you multiple times that they have bornite and chalcopyrite at surface. So no nice and cheap to mine and leach oxide ore. We can ignore this, it is too small, too low grade.

The value in this deposit is the high(ish)-grade mineralisation at depth, and Sol Gold nicely show us their conceptual 6km ramp that will run below their Aguinaga target to below Alpala, which is nice.

Often you can tell a lot about a project by what isn't being told. All of the drilling is focused into a small 650m x 550m area.

Red blobs = good! Yellow blobs = drilled holes.

When we look at their proposed phase 2 drilling, again, all of them are focusing to drill into the area of known mineralisation, no holes appear to be planned for any of the other targets. Why is this?

Nice and adventurous!

You would think that they would plan a couple of drill-holes for some of their other targets that have similar (or better) exploration results? All we see in the PRs are a few surface samples and a single trench.

When you look at the planned holes, they aren't being drilled from the optimal locations, and we have multiple holes being drilled from the same platform, often where holes historic holes have been drilled (some platform recycling - cuts down on prep time and reduced the footprint of the drilling).

So for the phase 2 program only a single new platform is being built? No holes are planned for other targets? There could be a number of reasons:
  • Sol Gold only has access to a small part of the property. This could be very bad news as it could mean that there is local resistance to the project. 
    • This could be minor - the company hasn't started dialogue with communities adjacent to Alpala.
    • Major - the local communities are anti-mining. if that is the case. the project is dead.
  • They don't have permits to drill/explore other areas - basically they are continuing to work within the limits of the current environmental permit that may have a limit on the number of pads (but not drill-holes) that can be built.
    • Minor - this basically takes time (and money).
So there you go, an interesting project, with some good rocks, but in the wrong location. Maybe once Mirador is built (or Sol Gold decide to issue $17B of loans to Ecuador to get special treatment), this could be a good project.

Leapfrog viewer link here

One to keep on your radar.


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  2. Thank you for your dose of scepticism regarding this project. I haven't been able to find anything but incredible positivity regarding this project, so your thoughts are much appreciated.

    1. Hello Teck,

      Geologically, Cascabel is a very good project. The mineralisation is deep and there is great potential to drill more great intercepts.

      What I found most frustrating was the lack of adventure for the phase 2 program. Sol Gold have plenty of money, why not spend some on a few drill-holes in the other targets?
      Image what would happen is they got a 1000m intercept of >1% CuEq from surface? It could be a game changer.

      The sad fact is that Ecuador doesn't have a history or large scale mining, and unfortunately mining companies have had a history of poor social management, which has left the industry with an uphill struggle, especially for those companies that aren't funded by the Chinese or National Mining Companies (Codelco).

      If you want to continue the conversation, e-mail me at

      Kind Regards


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  5. I can probably fill you in on some of the rumours. However, much more interesting are the grades of CSD15-012 and CSD13-004 as they pass within metres(?) of each other 0.05 to 0.1 %Cu versus 0.5 to 1%Cu! drilling down veinlet systems? - Cheers

    1. Hello Darryl,

      I notice that and I put is as a bullet point at the start of the post, but obviously i forgot to expand on it in detail in the main body of the text.

      The other issue you have with vertical drilling, nit just potentially skewing the data towards the high grade mineralisation hosted in the B-veins, you also run the risk that you are missing any post-mineral (i.e. barren) dykes that are generally vertical as well. In some deposits (e.g. Panoro - Cotabambas, Polo Sur), there can be sufficient post-mineral dykes that essentially they have stoped away/replaced a large portion of the ore and essentially make the deposit uneconomic.

    2. Flick me an e-mail at and we can continue the conversation

  6. Could you explain what it means to someone who doesn't understand its significance?

    1. Yes I can, in Porphyry systems the copper-gold mineralisation generally isn't disseminated (i.e. evenly spread throughout the deposit), but is found in veins (that Sol show you some nice photos of in their PRs) or along fractures (small breaks in the rock).
      Generally the veins have a vertical orientation and if you have drilled a vertical (or near vertical which is the case here) hole into a porphyry system with vertical veins you have a high probability of having a 1cm wide vein running up the middle of the core.

      This is an issue as the veins contain much more copper (as chalcopyrite) than the surrounding rock the drilling is skewing the average grade of the deposit. I'll find some photos to show you what that means and put it in a follow up post.

  7. Let me take a stab: So holes CSD15-012 and CSD13-004 pass each other by at very close range, yet CSD13-004 has a terrible assay result (0.14% CuEq) while CSD15-012 has excellent results (above 1% CuEq). Which may suggest that CSD15-012 happened to hit a very narrow vein, and that its result may not be indicative of the deposit's grade as a whole?

    1. I've put out a new post with pictures trying to explain it a bit more.

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