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Wednesday, January 17, 2018

SolGold - A resource Review

DISCLOSURE: I own shares in SolGold.

A few days late, but we got the initial resource calculations for Alpala (link), in summary:



So we should see the report released around mid-February. I'm sorry I haven't posted an article sooner, I've been rebuilding the drill-hole database and being a bit I'm lazy.

You can get the model from here (link).

Back in November I put on this blog a 'guesstimate' resource outline, which is below:



Compared to the office resources, I can say is:



Yup, I was terrible! This level of incompetence is normally only seen in British politics, and as I can't accept that I'm truly incompetent (just partially, when among friends), I wanted to see why I was so shite (excluding the obvious disabilities).

Resource review

Go to the end of this section to see numbers and the like.

For the basis of my incorrect November guesstimate I didn't use a bias when making the grade shells in Leapfrog.  I simply told it to look equally all directions (by 200m) equally when joining the data from adjacent drill-hole together. for a range of 200m. I though that this was reasonable, but totally wrong!

Fortunately, I can use my stoat-like intelligence and use the plan maps and sections provided and show that there is a strong trend both the geology and mineralization.

Alpala Trends - Plan view



Alpala Trends - Sections



You can see that the highest grades are related to the certain rock types (D10, QD10 and QD15), these units are generally quite thin, but appear to be quite continuous along strike.

So, I've used this info to update the model, and for the geologists among you, I got:



For the range (highlighted), I measured the distance (radius) from the drill-holes to the inferred resource limit outlines, and doubled it to get the base range.


You plug those numbers into leapfrog and you get:



That's more like it! Now, I'm not a resource geologist, but is a 300m base range reasonable for a porphyry deposit?

For reference:

  • Vizcachitas (Los Andes): base range = 400m
  • Constancia = 100-300m (depending on the direction)
  • Rio Grade (Regulus) = 120m

So, it looks to be quite generous, you get the impression that SolGold wanted a billions tonnes of resource come hell or high water.

Comments and observations

Why don't we look at the data in a bit more detail.

The mineralization is deep, the high-grade core starts at ~800m depth and it is surrounded by a large low-grade halo with several small, isolated high-grade zones, which are often defined by a single hole.

left = TAG CuEq grade shells; right = SolGold grade shells; white polygons = >1% CuEq grade shells


















So, off the bat, if it is ever mined, it will be from underground, but is it good enough? Let's plot Alpala's resources on Macquarie's ore value chart.


Yellow star = global resources; Magenta = high-grade core
Only the high-grade mineralization is good enough for an underground mine, the rest is crap.

I want to see if there is any upside, but virtually all of the holes passed through mineralization and stopped in barren rock on the other side.

At the edges of the deposit, drilling only cut a couple of narrow, inconsistent high-grade zones. So the upside appears to be limited.

These resources are a start, a good foundation, but I was disappointed that SolGold insisted in calculating as large a resource as possible when it was obvious that the vast majority would be uneconomic.

I'm also disappointed that they are going to drill a metric-fuck-tonne of holes at Alpala this year. I think the story at Alpala is done, the upside seems to be small, with no obvious areas to  expand the high-grade zones.

We've seen press releases on some fecking rock samples from other prospects, but where are any announcements on planned drill programs for some of the other targets, if they could find a second deposit, close to surface at the same grades as the Alpala global resource (>0.5% Cu), then someone will look very closely at acquiring SolGold.










5 comments:

  1. 800 meters to get to the high grade? Yikers. That there is half a mile. (And/Or 874 yards) One wonders how many billion the cap costs are envisioned hereto.

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    Replies
    1. Understand the topography and you will see they will access it from below from a drift from a neighbouring town. Gravity will be their friend.

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    2. I know that, it has featured on several of the earlier press releases from SolGold. It also depends on teh angle they want for the ramp.
      If they go from the Valley floor under Aguinaga, that'll be 5.5km at a 6-7 degree inclination.

      However, if there was a decent sized porphyry at Aguiaga, you could potentially ramp in from the bottom of the pit, and have a slightly steeper ramp (say 10 degrees), but a lot shorter (around 2-2.5km in length).

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  2. Technical Report NI 43-101 has just been released on Sedar dated 16 Feb 2018, you will find it by searching against Cornerstone Capital Resources. However, the report notes at the outset that it is based on data up to December 2017. There is a considerable amount of core/assays due. Aguinaga drilling is expected to commence March 2018. Why has Solgold not yet released details of the results of their Orio/Spartan surveys? They said previously these would inform the location of drill holes at Aguinaga.

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  3. Drilling update RNS out. There was a lot of hype around Solgold when they started producing some world class drill cores. When majors start wanting to buy in (Newcrest/BHP) you just know there on to something. Then there was a bit of scepticism about whether things were really as rosey as they seemed. Well, it looks like Alpala is turning into a monster. If they find something shallow at Aguinaga and more high grade there is going to be a real fight between the majors over who gets to buy this.

    ReplyDelete