Solomon Gold (LON:SOLG) has revised its resource estimate for the Rannes prospect in Queensland, Australia with 34 per cent now classified as “indicated”.

SolGold said the total resource estimate is now lower overall at 550,000 ounces gold, but the new figure is a more “robust” estimate.

In November, SolGold estimated Rannes’ resource at 812,000 ounces, all in the inferred category.

Malcolm Norris, SolGold’s chief executive said: "While the headline number for Rannes has been revised, development and application of the new geological model has delivered a more robust resource estimate, with 34 per cent of the estimate in the lower risk and higher confidence Indicated category.

This, coupled with the significant work carried out during the wet season to further define robust exploration targets, means that the board remains confident of reaching its previously stated 2 million ounce gold equivalent target," he added.

The Rannes resource is now estimated at 18.7 million tonnes at 0.5g/t gold and 16.9g/t silver (0.9g/t gold equivalent for 550,000 gold equivalent ounces, Indicated and Inferred category).

The November estimate was 25.5 million tonnes at 0.6g/t gold and 15.9g/t silver (1.0g/t gold equivalent for 812,000 gold equivalent ounces, Inferred category).

“Considerable technical studies have been undertaken over the last 5 months, and are ongoing, to further define robust exploration targets in the immediate prospect areas,” SolGold said.

Drilling of new areas outside the resource block model has also resumed at Rannes following the wet season, it added.

Solomon Gold’s (AIM: SOLG) joint venture partner Newmont Mining Corporation (NYSE: NEM) plans to spend US$4.9 million on exploration in 2012 on the Solomon Islands projects, starting with a new drill program at the Mbetilonga Project.

The joint venture is following up on highly copper anomalous results from trenching, including 80 metres at 1.76% copper, and 30 metres at 0.88% copper. 

The results were returned from within a coincident 600 metre diameter copper-molybdenum-bismuth soil geochemical anomalous zone.

Historical holes, drilled by Solomon Gold in 2006, intersected up to 0.76% copper in what is believed to be a cover sequence with local supergene copper development.

The first diamond drill hole for 2012, at the Hambusimaloso Prospect, has reached a depth of about 400 metres and, subject to geological evaluation, is expected to be drilled to 700 metres.

Sutakiki Project

Meanwhile, exploration has also begun at the Sutakiki Project.

Indicating the prospectivity of the area, historical drilling at the Taborora Prospect returned a broad intersection of 354 metres at 0.5 grams per tonne (g/t) gold and 0.13% copper.

In the current exploration phase, Newmont is following up two drill holes completed at the prospect in the 2011 field season which again intersected broad widths of gold and copper.

Results from one hole included 259 metres at 0.28g/t gold and 0.11% copper from 362 metres to the end of hole.

Recently completed re-logging of this hole and petrography has provided definitive evidence of the presence of a gold-copper porphyry mineral system at Taborora.

This work also supports current interpretations that drill targets exist at depth below historical drilling, and potentially in adjacent positions. 

Further geological mapping has been completed at several prospects within the Sutakiki Project and this is currently being interpreted.

Solomon-Newmont Joint Venture

Newmont is funding exploration activities and is earning a 70% interest in the Guadalcanal Joint Venture.

The joint venture is between Solomon Gold and Newmont subsidiary NVL Solomon Islands. 

During 2011 the joint venture partners undertook exploration activities on four of the five Prospecting Licenses. 

The main focus was on the Sutakiki and Mbetilonga projects. Expenditures by Newmont during 2011 were US$7.91 million.

Solomon Gold (LON:SOLG) said the first hole of 2012 at the Hambusimaloso prospect at the Mbetilonga project in the Solomon islands has reached 400 metres and is expected to be sunk to 700m.

MBT008 is targeting previous trenching results, including 80m at 1.76 per cent copper, and 30 metres at 0.88 per cent copper, and if it is successful, a second hole will be drilled.

The news was part of a wider update on activities at the firm's Guadalcanal joint venture (GJV) between the company and Newmont Mining's subsidiary - NVL Solomon Islands Ltd.

Newmont is funding the exploration activities and is earning 70 per cent in the joint venture. Last year, it spent US$7.91 mln, with US$4.92 mln expected in 2012.

Solomon said that last year saw activity across four of the five prospecting licences - the focus being on the Sutakiki and Mbetilonga licences.

At Sutakiki, the firm said exploration was underway. The project has thrown up "outstanding" results previously, at Taborora, where Solomon hit 354 metres at at 0.5g/t gold and 0.13 per cent copper.

In 2011, at Taborora, two holes intersected significant gold and copper, including 259m at 0.28g/t gold and 0.11 per cent copper from 362m to the end of hole at 621 metres in hole SUT001.

Recent work has provided definitive evidence of a gold-copper porphyry mineral system at Taborora and that targets exist below the historical drilling, and potentially in adjacent positions, said the company.

Other exploration within the GJV tenements includes the preparation for a sampling programme within the Central prospecting licence.

The company told investors: "Solomon Gold is encouraged by these results and will provide further updates as data are received. Joint venture meetings are now being held quarterly and the Solomon Gold team is taking active interest in the development and implementation of the exploration programme."

Solomon Gold (LON:SOLG) has added to its project portfolio by acquiring the right to buy up to 85 per cent in a highly prospective gold-copper-silver project in Ecuador.

The company has signed a binding letter of intent with Cornerstone Capital Resources (CVE:CGP) over its 5,000 hectare Cascabel gold-copper-silver property. Field work is expected to kick off in May with Solomon looking to move the project towards the drilling stage "as soon as possible".

The project is located in northern Ecuador within the Andean western cordillera, which Solomon said hosts “numerous Tier 1 world class copper-gold deposits” through Chile, Peru, Ecuador and Colombia.

These projects include the Junin copper-molybdenum deposit with a resource of 982 million tonnes at a grade of 0.89 per cent copper and the La Colosa gold deposit, which hosts 468 million tonnes at 0.86 grammes per tonne (g/t) gold.

Under the terms of the deal, Solomon can buy a 65 per cent stake in the project by making a series of private placements in Cornerstone totalling C$850,000 and spending US$7.8 million on exploration over four years.

Solomon can earn an additional 20 per cent by funding further work towards completion of a bankable feasibility study, which has been capped at US$20 million.

The Cascabel project area contains copper and gold anomalism in soil and rock chip sampling and, according to Solomon, could potentially accommodate a large discovery.

Solomon will initially be targeting a copper and gold mineralisation with grades of up to three per cent copper and 5.9 g/t gold that has been mapped over an area of 3x2 kilometres.

“The Cascabel property demonstrates all the features that we would like to see in an early stage gold-copper porphyry project, and to partner with a highly respected company such as Cornerstone enhances the probability of success,” said chief executive of Solomon Gold Malcolm Norris.

Harry Norman from Proactive Investors talks to Malcolm Norris, CEO and Managing Director of Solomon Gold; listed on the AIM Market Mining Sector; stock ticker SOLG; share price 8 pence; market capitalisation £25 million sterling; www.solomongold.com.

Harry Norman: Please give investors a brief introduction to Solomon Gold and the company’s strategy for developing the business.

Malcolm Norris: Well Solomon Gold listed on the AIM market in 2006 on the back of significant copper gold assets in the Solomon Islands. It then made a deliberate decision to de-risk some of those assets by acquiring gold assets in Eastern Australia. Now we are on to the next stage of development. I joined Solomon Gold on 1st November last year and brought with me a new management team. It is our job to identify and secure assets that have the potential to deliver tier one discoveries of gold copper assets. 

The new team comprises Bruce Rohrlach, Chief Geologist, Damien Lulofs, Exploration Manager and Wendy Collins, Business Support Manager. This is the team that was a key player in the discovery of the Tujuh Bukit gold copper deposit in Indonesia for Intrepids Mines, which built that company from approximately 40 million dollar market capitalisation to just over 1.1 billion market capitalisation in a period of just under two years.

It is that sort of success that we are hoping to deliver to Solomon Gold.

Harry Norman: Malcolm the Rannes Project in Queensland has an inferred resource estimate of 812 ounces of gold equivalent. Please talk us through this resource; how confident you are that you will achieve your target of discovering 2 million ounces of gold equivalent there and what are your plans at Rannes beyond achieving this milestone?

Malcolm Norris: The Rannes deposit is a gold, silver deposit. It is a very important if you like fundamental cornerstone asset of the company. As you have said we have an inferred resource estimate of just over 800,000 ounces of gold equivalents; that is gold plus silver. We have publicly stated that our goal is to deliver a 2 million ounce gold equivalent resource. We think we can do that on the basis of empirical data that shows that there is a number of other mineralised systems nearby and a number of other exploration targets. 

Our aim during 2012 is to test as many of those as we can. We will build a resource during 2012; we will also commence some scoping study work; so we will look at some gold recoveries etc. Then we will take it towards pre-feasibility study. If these studies prove that this is a project that can meet with success, then we might be in a position to make a development decision sometime in late 2013. We are taking it down that path, but while we are going down that path it may be in our shareholders’ best interests to divest the project for one reason or another. We will make that decision when we get there. 

But the most important thing is that this is a key fundamental cornerstone asset that can be valued in a very low risk jurisdiction lease in Australia.

Harry Norman: What can you tell us about progress with Solomon Gold’s other gold prospect in Queensland, Mount Perry, West Krakow and Normanby? 

Malcolm Norris: These three projects are also being progressed. They are not as advanced as Rannes. Rannes is clearly our most important project in Australia. The Mount Perry project is just about ready for drilling, within the next one or two months. I have just finished in fact a two day technical review of all of our projects in Queensland and we have put together our 2012 work programme.

So Mount Perry will be drilling sooner rather than later; West Krakow – it is an early stage project; it is located right next to the significant Krakow high grade epicentre gold deposit. We are getting some very encouraging early exploration signs. We hope that we will be drilling at West Krakow, probably in the third or fourth quarter of 2012.

Normanby is geographically more distant from our other projects and is a gold, possibly copper gold project. We have recently completed some exploration at Normanby. We have assessed the results and we expect to be in a position to be drilling at Normanby in the fourth quarter of 2012.

Harry Norman: What is the situation with Solomon Gold’s joint venture with Newmont Mining at Guadalcanal in the Solomon Islands?

Malcolm Norris: The Guadalcanal joint venture with Newmont is a joint venture where Newmont are funding the exploration. But this was previously a Solomon Gold project Newmont are farming in. They are funding the exploration and earning a 70% position. They have done some drilling in 2011 and intersected some significant copper gold intervals in a number of drill holes. They will be following up that drilling in 2012. 

At this stage we expect the drilling to commence in early April. They have an approved budget of 5 million dollars. They are exploring for very large, world class gold/copper deposits. Newmont is one of the largest gold producers in the world. But they also have significant exposure to copper and gold. Their best example is the ** [0:05:00] copper/gold deposit in Indonesia. So they are exploring for those sorts of targets. 

We are quite comfortable having a 30% exposure to a tier one discovery delivered by Newmont. So it is a very comfortable relationship for us with a 30% exposure. 

Harry Norman: Malcolm what are your thoughts on Solomon Gold Fauro project? 

Malcolm Norris: The Fauro project is located in the north western portion of the Solomon Islands, up near the island of Bouganville in Papua New Guinea. Fauro project in 2010 delivered some very high grade rock chip from surface and since then has had a very high profile. We have drilled nine holes. Those nine holes have defined some narrow high grade intersects of every thermal goal. And some broad lower grade intersects of intrusion, ** [0:05:48] associated gold mineralisation; both of these prospects or mineralisation types require follow up. We did a review where we have identified drill targets. We are now in the process of defining whether we progress those projects in our own right, or whether we seek a joint venture partner; it is most likely that we will seek a joint venture partner to lower our risk and to assist us in funding that project. 

What that will mean is that we are exposed to two joint ventures in the Solomon Islands. The one with Newmont at Gaudalcanal and ultimately one on Fauro Island. 

Harry Norman: Malcolm please tell us about your recent acquisition of Honiara Holdings and also about your other assets in the Solomon Islands.

Malcolm Norris: The recent acquisition of Honiara Holdings was a low key acquisition for us. It was acquiring some tenements in the Solomon Islands that had some good early stage exploration results. We will be following those up and following most up in our own right. It is a low cost exercise to identify how we take those projects through the drilling stage. It fits very well with our skill base. We have a very good team in the Solomon Islands and I will be following up that work; we have a few other minor assets. Some have exposure to ** [0:06:59] nickel in the Solomon Islands. But they are a minor component of our portfolio.

Harry Norman: Having raised 2.3 million pounds sterling which was 3.4 million dollars Australian, with a share placing at the end of February, where does this leave Solomon Gold’s capital structure and financial situation going forward?

Malcolm Norris: Yes we were pleased with the capital raising that we recently completed. The market is a bit difficult at the moment; so it was very good the existing and new shareholders. So confidence in what we are doing. The share placing will provide funds for ongoing drilling at Rannes; and for us to continue and accelerate our global search for a new tier one copper gold asset. The management team participated in this capital structure. So we invested in the future of Solomon Gold. Existing shareholders such as Baker Steele followed their investment and again showed confidence in what we are trying to do at Solomon Gold. So we are very pleased with the success; we are very pleased to have funds that will enable us to advance Rannes and of course we are very pleased to be able to use some of those funds to secure a significant gold/copper asset which really represents the main future of Solomon Gold.

Harry Norman: What can we expect from Solomon Gold over the next 12 to 18 months? 

Malcolm Norris: The next 12 to 18 months will be very exciting for Solomon Gold. We will advancing the Rannes Gold Silver Project. We will be building resources and we see that as a fundamental low risk cornerstone asset for the company; and one that will give us optionality going forward. We will take it down the development path; but we could also diverse it if that was in the best interests of the shareholders. 

So a low risk fundamental asset that can be clearly valued; exposure to a significant joint venture in the Solomon Islands with Newmont Mining. We are very comfortable with the 30% exposure; they are exploring for tier one gold/copper deposits. So for us to have an exposure for that without having to provide funding is significant and we value that. The most exciting development over the next 12 to 18 months will be the new team of Solomon Gold putting its foot on potentially tier one gold/copper asset somewhere in South America or South East Asia; Australasia. These are areas where we have explored before; it is a perfect match for our skill base; the board is very supportive of this development and that is where we see real shareholder value being able to be delivered to Solomon Gold shareholders. 

So a three pronged position; a secure asset with resources; exposure to some great joint ventures and putting our foot on the potential for a tier one gold copper asset elsewhere in the world.

Gold-Copper Opportunities

Solomon Gold is undertaking a comprehensive review of new gold-copper opportunities in the southeast Australasian region and in Central and South America.

The company recently acquired three new early stage exploration properties with low minimum spend requirements in the Solomon Islands.

The licences, which span 389 square kilometres, have returned encouraging gold geochemical and geological results, including anomalous gold from stream sediment sampling, during early stage exploration.

Solomon Gold (LON:SOLG) has acquired three new early stage exploration properties in the Solomon Islands.

It bought Honiara Holdings Pty Ltd, which owns the properties, for A$50,000. According to Solomon, the licences have low minimum spending requirements.

The prospecting licences span a 389 square kilometre area. The company says that early stage exploration has already been completed and it returned encouraging results.

Solomon’s exploration team plans to follow up the initial work during the second quarter of this year.

The company owns a portfolio of exploration assets in the Solomon Islands and in Australia, they are a mix of wholly owned projects and joint ventures.

At Rannes project in Queensland, one of the more advanced project’s in the portfolio, a new resource estimate is expected in the coming weeks.

It will follow the last estimate, in November 2011, which took the resource to 812,000 ounces of gold equivalent.  Solomon has a 2 million ounce target for the project.

The group is also exploring for gold on the Solomon’s Fauro and Guadalcanal islands. 

2012 Exploration Program

Exploration work in the Rannes Project area in 2012 will include:

- Further resource drilling at Kauffmans and Crunchie;
- Drilling at Double Scoop and Porcupine and addition of these to the resource inventory;
- Drill testing of the multitude of surface anomalies in the vicinity of the main prospects; and
- Exploration throughout the 30 kilometre long belt, comprising additional soil sampling and geophysical surveys to define additional targets for drilling.

The breakdown of the resource is 25.5 million tonnes at 1.0g/t gold equivalent for 812,307 ounces of contained gold equivalent (486,935 gold ounces and 13.01 million silver ounces).

Importantly, the resources are all close to or at surface which may potentially lead to a low stripping ratio at Rannes.

Solomon's share price shot up around 50% overnight after it unveiled the upgrade to the market.

Highlighting how quickly Solomon is moving the project forward, the latest upgrade follows hot on the heels of the September upgrade, which boosted ounces by 24%.

Drilling at Rannes continues at Kauffmans, Crunchie , Shilo, Double Scoop and Nicks Prospects, with a total project-to-date discovery cost just A$6.70 per ounce.

Malcolm Norris, chief executive, commented “The board is highly encouraged by today’s further resource estimate upgrade.

"Exploration also continues at the 21 other nearby prospects, which have been identified in the Rannes Project area, with the aim of delivering the company’s objective of defining two million ounces of gold equivalent."

The project is located around 150 kilometres west of the major central Queensland port city of Gladstone.