Near-term gold production to fund regional exploration
Sonoro Gold Corp (TSX-V:SGO, OTCQB:SMOFF). is looking to advance its Cerro Caliche Gold Project, in Sonora State, Mexico, into near-term production, targeting maiden production in 2024.
The Company plans to use the cash flow generated from initial production at Cerro Caliche to fund additional exploration at the project, so it can grow its operation organically.
Sonoro recently completed an updated NI 43-101 compliant total mineral resources estimate for Cerro Caliche of 440,000 ounces of gold equivalent at an average grade of 0.45 g/t gold equivalent.
This updated resource estimate is far from definitive, as Sonoro has the potential to expand the resource base both within the current mineralised zones and throughout most of the remainder of the property.
An exploration target* for Cerro Caliche of between 125,000 ounces and 285,000 ounces of gold equivalent has been defined from the near-resource exploration targets. These targets have been drill tested but require additional drilling to define a compliant resource estimate.
In addition to this local exploration target, Sonoro believes that it has significant potential to further expand the scale of the resource estimate in the future from its regional targets, with only 30% of known mineralised zones delineated by drilling and assaying.
These regional targets are located along strike and parallel to the current vein trends, with additional targets on several other mineralised trends.
Sonoro’s VP Exploration, Mel Herdrick, and VP Operations, Jorge Diaz, estimate the project could contain between 280 thousand and 1.7 million additional ounces of gold equivalent.
An updated preliminary economic assessment (PEA) for the project was completed in June 2022, this defined a post-tax NPV5 of US$53.5 million and a post-tax IRR of 45.6% based on a seven year mine life and a gold price of US$1,800 per ounce. At the current gold price of US$2,000 per ounce, the payback period is just 1.6 years.
Importantly, the PEA defined an initial low capex cost of just US$26 million for an operation that would produce an average of 45,000 ounces of gold equivalent per annum.
Sonoro is currently working on a new updated PEA for Cerro Caliche, which is expected to be completed in Q2 2023.
Permitting for mine development is also underway and is expected to be completed during the summer of 2023. Sonoro will move straight from the new updated PEA into construction, which is targeted for H2 2023, assuming the required funding is secured.
If all goes to plan, Sonoro is targeting commissioning at the Cerro Caliche Project in H1 2024.
Sonoro Gold Corp (TSX-V:SGO, OTCQB:SMOFF). has a highly experienced management team that has collectively discovered over five million ounces of gold and developed 12 gold and copper mines in Mexico. This extensive experience should give investors comfort that the team has the necessary experience to move the Cerro Caliche Gold Project into production.
Introduction
Sonoro Gold Corp (TSX-V:SGO, OTCQB:SMOFF). is a gold development company with two projects located in Sonora State, Mexico (Figure 1). At the flagship Cerro Caliche Gold project, Sonoro owns 100% interest in the project. Sonoro's other project, San Marcial, is also 100% owned by the Company. Both projects are located in an area containing numerous gold deposits and mines, with well-established infrastructure (Figure 1).
Figure 1 - Location of Sonoro's Projects
Source: Sonoro Gold Corp.
Figure 2 - Cerro Caliche Concessions
Source: Sonoro Gold Corp
Cerro Caliche Gold Project
The Cerro Caliche Gold Project is located in Sonora State, northwestern Mexico, approximately 240 kilometers (km) northwest of the city of Hermosillo. The project is made up of 15 contiguous mining concessions covering a total of 1,350.10 hectares (Figure 2).
The Project is situated between the two world-class mining districts, the Sierra Madre Gold Belt and the Sonora-Mojave Megashear. The project is in proximity to several major gold-silver deposits, including Equinox Gold (TSX:EQX)’s Mercedes Mine and Agnico Eagle’s Santa Gertrudis Project.
Cerro Caliche has a NI 43-101 compliant indicated mineral resources estimate of 280,000 ounces of gold at an average grade of 0.44 g/t and 2,235,000 ounces of silver at an average grade of 3.5g/t .
In addition, the project has an inferred mineral resources estimate of 140,000 ounces of gold at an average grade of 0.42 g/t and 1,345,000 ounces of silver at an average grade of 4.0g/t (Figure 3).
Figure 3 - Cerro Caliche Mineral Resource Estimate
Source: Sonoro Gold Corp.
Figure 4 - Cerro Caliche Geology
Source: Sonoro Gold Corp.
Geology
The geology of the Cerro Caliche Project is dominantly comprised of metasedimentary rocks that have been crosscut by series of three igneous intrusions, including a coarse-grained biotite granodiorite, rhyolite dikes and sills, and irregular bodies of microdiorite (Figure 4).
Gold and silver mineralisation at the project occurs as low-sulfidation epithermal veins, within fractured Mesozoic quartzites, shales and the rhyolite dikes and sills.
The nearest operating mines, Cerro Prieto and Mercedes, are also low-sulfidation epithermal gold-silver deposits. Both mines have similar veining characteristics to Cerro Caliche, and also have northwesterly oriented gold-silver-quartz veins (Figure 5).
History
The Cerro Caliche Project contains numerous historical mine workings including small scale prospecting pits, shallow shafts, adits, and tunnels (Figure 4). There is no record of minor “gambusino” production levels.
Previous operators, prior to 2018, completed a total of 119 drillholes (13,007 meters) of drilling at the project. This exploration identified gold-silver mineralisation over several kilometres and down to depths of 200 meters.
Sonoro took ownership of the project in 2018 and has since completed 379 drillholes (42,350 meters) defining gold-silver resources across a series of deposits (Figure 6)
Local Exploration Targets
A number of near-resource targets to further expand the scale of the mineral resource estimate have been identified.
These targets have been drill tested but additional drilling is required to bring the ounces into a compliant resource estimate.
An exploration target* for these areas has been defined suggesting the potential for an additional 120,000 to 275,000 ounces of gold and 1,045,000 to 2,350,000 ounces of silver.
Continued drilling of these near-resource targets could increase the size of the resource estimate by between 28% and 65% and offer a significant mine life extension.
*An Exploration Target (as per CIM or NI 43-101) is conceptual in nature and there has been insufficient exploration to estimate a Mineral Resource, and it is uncertain if further exploration will result in the estimation of a Mineral Resource.
Figure 5 - Vein Orientation at Proximal Mines
Source: Sonoro Gold Corp.
Figure 6 - Cerro Caliche Drilling Completed to Date
Source: Sonoro Gold Corp.
Regional exploration targets
Sonoro has identified numerous regional targets at Cerro Caliche. The structures that are associated with the gold-silver veins at the Project and are developed within a broad listric faulting regime that produced enechelon vein structure repetitions in a corridor that covers a 25 km2 area.
The majority of Sonoro's exploration at the Project has focused on targeting the main mineralised vein zones and extensions of these zones around the resource estimate.
Other targets are located on the same northwest trending lineament, approximately one kilometre away, including the La Española and El Bellotoso targets.
Only minor exploration at these two mineralised zones has been completed to date, but initial drill results indicate favourable exploration potential.
A project development report that was prepared by Sonoro’s VP Exploration, Mel Herdrick, P.Geo. and VP Operations, Jorge Diaz, MSc., estimated the Cerro Caliche Project’s mineralised trends could potentially contain an additional 29,000,000 to 97,000,000 tonnes with grades potentially between 0.3 g/t to 0.55 g/t gold equivalent.
That would be additional gold equivalent ounces of between 280,000 ounces to 1.7 million ounces.
Including the defined resource base and exploration target* with these other conceptual targets the project could contain between 844,000 ounces and 2.4 million ounces of gold equivalent.
Metallurgy
Metallurgical studies completed by Sonoro have confirmed the amenability of the ore from Cerro Caliche to be processed by heap leaching with an average recovery rate of 74% for gold and 27% for silver. Additional metallurgical testing will be conducted on recently discovered zone as part of the new updated PEA.
June 2022 preliminary economic assessment (PEA)
An updated preliminary economic assessment (PEA) completed in June 2022 defined a heap leach operation based on several open pit mines (Figure 7) with a combined seven year mine life.
Based on a gold price of US$1,800 per ounce the PEA defined a post-tax NPV5 of US$53.5 million and a post-tax IRR of 45.6%.
Using a gold price of US$2,000 per ounce, closer to today's price, the post-tax NPV5 of the project increases to US$96.9 million and the post-tax IRR increases to 72.7%, demonstrating the attractiveness of the initial operation.
Figure 7 - Cerro Caliche Pit Shells
Source: Sonoro Gold Corp.
The operation would produce an average of 45,000 ounces of gold equivalent totalling 344,500 ounces over the mine life.
The project would have a low initial capex of US$26 million and a AISC of US$1,333 per ounce of gold equivalent.
At a gold price of US$2,000 per ounce the payback period is just 1.6 years.
A new updated PEA is expected to be published in Q2 2023, which will further refine these metrics.