- Soma is generating positive cash flow from operations
- The Antioquia district of Colombia, in modern times, has produced over 18 million ounces of gold
- Scaling up production and increasing resources
What Soma Gold Corp.does:
Soma Gold Corp. (TSX-V:SOMA, FRA:8PR1)(CVE:SOMA) is a producing gold miner, generating from two mines, La Ye and Los Mangos, at its El Bagre project in the Antioquia district of Colombia, an area, which as generated over 18 million ounces of the yellow metal in modern times.
Average monthly production is between 1,400 ounces and 1,500 ounces of AuEq (gold-equivalent), which the company aims to grow to between 1,800 and 2,000 ounces by the second half of 2021, with a third portal at Cordero-Balvina being built. Processing is carried out at both the firm's wholly-owned owned El Bagre and El Limon mills with a combined capacity of 675 tonnes per day (tpd).
In 2020, the miner produced 17,170 ounces of gold and it is forecasting 22,500 ounces for 2021. The company also owns 100% of the Nechi project in the district, where first production is planned for 2022.
Soma is focused on scaling up production and increasing the size of its resources in Colombia, and currently has 221,000 ounces of gold at the El Bagre and Nechi projects, with a reserve of 60,800 proven and probable ounces. Recent additional drilling indicates a northern extension at the Cordero-Balvina deposit.
In terms of exploration, Soma has identified targets for a potential further 750,000 ounces of gold at its 29,000 hectare ground position and has a fully funded US$2.6 million drilling program for 26,000 metres (m) targeting 240,000 ounces of gold at 8.2 grames per ton (g/t). It has plans for a four-year US$10 million program to be funded out of cash flow using in house rigs, at under US$100 per metre.
How is it doing:
In June, 2021, the company registered another positive quarter (following the first-ever profits in 4Q) revealing that its 1Q revenue for 2021 had reached $9.75 million.
The miner also generated underlying earnings (EBITDA) of $3.16 million and an adjusted EBITDA of $3.22 million over the same period.
Soma said it planned to continue an 8,200 metre drill program at its Cordero deposit ahead of a new NI 43-101 resource estimate planned for the end of 2021.
The resource will be accessed through two new portals currently under construction - the Fenix and Atena portals. Both are expected to be completed during Q3 2021, and production from Cordero is expected to reach 400 tonnes per day (tpd) by the year’s end.
The company said it also planned to file the necessary permits for the mine infrastructure build at the Nechi project in Colombia in July of this year. The target date for production for that mine is 2Q, 2022.
On July 27, the company updated on the progress towards beginning full mining operations at its Cordero mine in Colombia, saying that the Fenix portal had now reached level 2 and encountered the vein.
Some additional development work is needed to access the stopes and begin full mining operations, which will be completed in August this year, it added.
The Fenix portal will then also hit the vein at Level 3, which is 310 meters away and is expected to be completed in September this year.
Ultimately, the Fenix portal will be connected to the Atena portal at the other end of the deposit, and the full daily tonnage of production will be achieved., said the miner.
Previously, the company’s aid the grade at Cordero was expected to be between 6.5 and 8.5 grams per ton (g/t) gold.
Soma said the group's average grade will increase as the grade at Cordero is more than 50% higher than the grade at Mangos, which will have a positive effect on gold equivalent production and profitability.
Inflection points:
- Start of full mining at Cordero
- Achievement of full 400tpd at Cordero
- More exploration results
What the boss says:
"The completion of the Fenix portal is an important milestone for Soma as we transition to mechanized mining," said CEO Javier Cordova in the company's most recent announcement.
"The Cordero mine production rate will increase to 400 tpd by Q4 2021, which will supplement the current 325 tpd production from the La Ye and Mangos mines. The additional ore will allow Soma to fully utilize its installed milling capacity of 650 to 700 tpd.
"The ore from Cordero mine is higher grade than the ore from Mangos and La Ye mines resulting in a higher average grade and a doubling of throughput. We expect a strong finish to 2021 and excellent prospects for 2022 and beyond. Mining activities at the company's 100-per-cent-owned Nechi mine is expected by mid-2022, extending the expected life of mine beyond 2030."
Contact the author at giles@proactiveinvestors.com