Sector: Mining, Precious Metals, Industrial :
News Release - June 24, 2019 4:49 PM ET
Sonoro advancing Cerro Caliche Gold Project, on pathway to 1 million Oz Gold and heap-leachable oxide open pit operation
NEW YORK, NY, June 24, 2019 /Sector Newswire/ -- Sonoro Metals Corp. (TSX-V: SMO) (US Listing: SMOFF) (Frankfurt: 23SP) has announced a $750,000 private placement financing which is expected to carry the Company though to first-pass/maiden resource. Sonoro is also the subject of a Mining MarketWatch Journal review.
Full copy of the Mining Journal review may be viewed at https://miningmarketwatch.net/smo.htm online.
Excerpt of review:
Sonoro Metals Corp. (TSX-V: SMO) (US Listing: SMOFF) (Frankfurt: 23SP) is aiming to release a first-pass/maiden resource this Summer-2019 on its flagship Cerro Caliche Gold Project in Sonora State Mexico, located 3 hrs north of Hermosillo, 3 hrs south of Tucson, AZ USA, along the prolific Sonora-Mojave Megashear, between Agnico Eagle and GoldGroup's open pit mines. The coming maiden resource (only weeks away) is expected to have both Inferred and Indicated categories, and be meaningful enough to attract market attention. The Company is already planning an aggressive ~7,000 m 'Phase 3' drill program with the goal of establishing a resource exceeding 1,000,000 oz of gold before mid-2020. The management team is considering a number of different scenarios and interesting offers, including a non-recourse gold-backed debt financing arrangement for an open-pit heap leach pilot plant operation to generate income, cash flow the bigger picture, and minimize dilution. Investors can look forward to multiple news catalysts playing out over the next few months as the Cerro Caliche Gold Project advances.
Fig 1. (above) -- Location map of all three of Sonora Metals' assets, all located in Sonora State. The entire area around Cerro Caliche (and San Marcial) share the same Sonora-Mojave Megashear, with southeast-northwest vein structures throughout, and disseminated Au-Ag between.
Sonoro Metals Corp.'s management team is highly-accomplished, and its geological team is dialed-in on the gold at Cerro Caliche. Melvin Hendrick, P.Geo is Sonoro's V.P. of Exploration, he has nearly half a century of experience under his belt, including Chief Geologist for Phelps Dodge, and VP Exploration for Pediment Gold Corp., bought by Argonaut in 2011 (click here to see historic chart of Pediment Gold and how well early investors made out under Mel's exploration prowess), he and his team have an impressive track record in mineral discovery (see CV's at bottom of this article).
Anyone that has been around the resource sector for a while will know the reputation of John Darch (Sonoro's Chairman & Director), and Kenneth MacLeod (President, CEO, & Director);
John Darch headed Asia Pacific which identified, explored and developed one of the worlds largest potash deposits located in Thailand (and lowest cost too, click here for related historic chart of Asia Pacific Resources, bought out by Italia Thai), he also headed Crew Development Corp. in the 80s, 90s, and early 2000s until it was taken over (from pennies to $4+/share). The Sonoro strategy is the same as Crew; (a) secure revenue, (b) secure development properties, and (c) new exploration. John Darch was also heavily involved with Botswana Diamondfields whose stock exceeded $6/share, and Nevada Goldfields ($8+/share).
Ken MacLeod is well know as a financier over the last 35 years in the oil, gas, mining, and energy sectors. The last big project he worked on was Western GeoPower Corp. in California, that company was bought-out, he then set up a company to advance renewable energy projects in the Philippines that included a 600 MW dam, and that company was sold to a subsidiary of San Miguel Corporation in 2014. Ken MacLeod now has his focus on adding shareholder value in Sonoro Metals Corp.
Sonoros Operations Manager, Jorge Diaz, has a long history as both a mining and metallurgical engineer. Jorge is well known for leading the development, construction and operation of numerous major mines throughout northern Mexico. Similar to his leadership in the successful development of giant mines like Alamos Golds Mulatos mine and Argonaut Golds La Colorada mine, Jorge is leading the development of Sonoro's Cerro Caliche pilot operation. Jorges experience in building mines adds to Sonoros confidence that Cerro Caliche has the potential to relatively quickly become a significant cash-flowing asset for Sonoro.
Rapidly building bulk tonnage gold ounces in a proven jurisdiction:
Sonora State is a low-risk mining-friendly jurisdiction with exceptional infrastructure, responsible for 24% of Mexico's gold output. The neighboring landscape surrounding SMO.V's Cerro Caliche Gold Project is dotted with numerous low-grade bulk tonnage open pit mines (highly-profitable low opex operations with many currently operating in the mid-USD$700/oz to mid-USD$800/oz gold range). These are essentially giant earth-moving projects.
Near-term heap-leachable oxide deposit open pit gold mining scenario developing at SMO.V's Cerro Caliche Gold Project:
SMO.V's Cerro Caliche Gold Project is advanced-stage drilling-wise, in total (current and historical to date) that is more than 20,000 m drilling. Sonoro Metals has two drill programs (~10,000 m; ~100 holes and ~6,000 samples) under its belt now, plus there were 3 past operators on the property (the last two operators ran out of money) and SMO.V is fortunate to have inherited 43-101 compliant data on 116 holes and ~3,600 samples (~$3 million worth in exploration) from them.
Figure 2. (above) -- Central Zones of the Cerro Caliche Gold Project.
Southeast-Northwest trending vein structures litter the area, with disseminated gold between the gold structures. To date SMO.V has identified 17 mineralized clusters/zones on the Cerro Caliche property. The majority of drilling to date is concentrated on the central zones of Japoneses, Cuervos, and Abejas, and western central zones of Cabeza Blanca, Guadalupe, and El Colorado. The yellow shaded areas in the image above are the more advanced work areas, the Japoneses zone is most advanced with close spacing drill holes and is where the indicated resource is expected in the upcoming first-pass/maiden resource. The average grade of the resource is expected to be in the 0.5 to 0.6 g/t gold range.
Much of the mineralization begins at or near the surface. This reality makes it all the more reasonable to anticipate the development of a large tonnage, open pit, oxide deposit, amenable to a heap leaching operation, much like several neighboring mines with similar grades that are in operation in the region. Every single one of the holes that Sonoro has drilled on the property is mineralized, and all are oxide (apart from 2 holes in the far eastern section of Abejas), which will help make for an uncomplicated heap leach pad operation. Sonoro appears close to matters materializing quickly that may see a small heap leach pad plant operation in the ~20,000 gold oz/annum range.
A second pit zone appears developing well in the Cabeza/El Colorado zone area (the grades in this area are higher, in the 0.6 to 0.7 g/t range). Low-grade is of no concern to sophisticated investors familiar with bulk tonnage operations in this area, they are proven low opex earth-moving beasts. At Cerro Caliche, on a small (pilot plant) basis, mining material extraction costs will probably run ~$8/t, and on a longer-term basis that should come down to ~$6/t.
Pilot Plant Operation Initiative: There's now groups courting SMO.V to forward sell gold and Sonoro is fielding discussion regarding non-dilutive options to advance the project to production, expand the resource >1M oz gold, plus advance blue sky sections. The Company has plans for a Heap Leach Pilot Operation (HLPO), and has engaged the geological engineering firm Geo Digital Imaging de Mexicoan (GDI) to develop preliminary studies. Using data to date and GDI's block model, SMO.V's team has conducted sensitivity analysis for a range of costs and metallurgical Au recoveries, generating several possible pit geometries with their associated stripping ratios, ore, waste haul roads, waste and process sites, pad size requirements and associated infrastructure location.
One part of the Pilot Operation initiative is a gold-backed debt financing projected to close following the completion of a NI 43-101 pre-feasibility study - likely by October 2019. To advance this key part of the initiative, Sonoro has agreed to meet in China with numerous gold-centric investors the week of July 22nd. These investors consist of individuals and corporations and their principal interest is to invest in a non-recourse gold-backed loan to be repaid from the pilot operation in bullion.
Synopsis of Sonoro's Strategy for success:
Sonoros executives have taken their decades of
experience to identify, acquire and develop what they expect will
become two major gold assets: the Cerro Caliche and San Marcial
projects (see overview of that project further below). The Company's
clearly defined strategy for success consists of three parts:
SMO.V currently has a market cap of ~C$7 million (only ~35 million shares outstanding trading at ~$0.19/share, ~44.6M fully diluted), miniscule compared to the gold ounces it is building. A recently announced private placement of $750,000 is expected to add ~4.167M shares outstanding, this will carry the Company through to the release of its resource calculation, at which time the share price is apt to trade higher. The share price of SMO.V appears poised for upside revaluation as the market better understands and appreciates the Company's plan to continue to rapidly grow intrinsic value in the ground and add shareholder value, while keeping the shares outstanding to a minimum. After the coming first-pass resource, the Company will probably only need ~$1.4M to get itself to mid-2020 and issue a second resource calculation which has very real possibility to touch 1M oz Gold at Cerro Caliche -- at that point SMO.V will likely attract major attention that should put a smile on investors.
SMO.V retains 1% Net Smelter Royalty (NSR) on a project it recently sold; consider it 'money in the bank': Sonora Metals' initial qualifying transaction as a mining entity was on its nearby Chipriona Gold Project which it has since sold to neighbor Agnico Eagle, flipping for a quick $4 million back in 2017. SMO.V still retains a 1% NSR which is expected to eventually be bought-out for $1.5M (a production decision could flow from AEM when they finish metallurgy testing at the new ore they are getting into at their La India open pit, the new ore appears more similar to Chipriona). In 2017 Sonoro turned its attention to advance the Cerro Caliche Gold Project.
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A closer look at SMO.V's Projects in Sonora State, Mexico:
Figure 3. (above) map of Senora State, Mexico with location of SMO.V's assets, and location of neighboring mines of significance noted. The neighbourhood fairly prolific;
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Table 1. (above) - Comparative area deposits -- What will Cerro Caliche be worth when it demonstrates size? It is difficult to compare deposits, and compare what they were sold for per ounce, since there are so many variables and extraneous factors. These are giant earth moving operations, many mine profitably down to near 0.1 g/t. (SMO.V will probably use a 0.15 cut-off in its resources). The Santa Getrudis property immediately to the north of Cerro Caliche was acquired by Agnico Eagle from GoGold in November 2017 for USD$80M plus USD$12M to buy the royalty (~CDN$125M total was the sale price for Santa Gertrudis) -- at the time GoGold has demonstrated ~1M oz gold grading ~1 g/t -- now compare that to the central gold zones of Cerro Caliche and the fact it appears SMO.V will likely eventually demonstrate ~1M oz at ~0.5 g/t in the main central west area of zones and ~500K oz in the main central east (Cabeza/El Colorado zone area) at 0.6 to 0.7 g/t... now discount for the grade differential (compared to what GoGold had and was offered) -- certainly it can be said that if you look at SMO.V's current market cap, it appears SMO.V should see appreciation when it demonstrates the value at the property.
Click here for a Q2-2019 compiled PDF list that summarizes acquisitions and mergers of similar type deposits that have occurred over the last several years. The document also summarizes the precious metals explorers and producers operating in Senora State that are listed on the TSX and TSX Venture.
Cerro Caliche claim map
Figure 4. (above) -- Cerro Caliche Gold Project claim map showing mineralized zones.
Figure 5. (above) Cerro Caliche Gold Project topographical claims map showing mineralized zones.
Historic workings on Cerro Caliche Gold Project
Figure 6. (above) -- Evidence of historic mining, historic high-grading of veins, on Cerro Caliche Gold Project
COST OF DRILLING - SQUEEZING EVERY DOLLAR: Sonoro's drilling is done on a tight efficient budget; the costs all-in, including the drilling, assays, site prep, road prep, support staff, and sampling is ~CDN$100 per metre. It also helps that the mineralization is fairly close to surface; the average depth of the Japoneses zone drilling is 110 m. Internally, the Company has been able to keep costs down; SMO.V set up a lab in Magdalena, which is ~45 minute drive from the property, and is able to do tests for a fraction of the cost. The lab is set up for column leach testing, bottle roll testing, and the Company can do assays. Obviously any compliant official results the Company wants to rely upon or announce will also be taken to Chemex (outside 3rd party service) for verification.
Recent drilling on Cerro Caliche Gold Project
2018-19 Sonoro Exploration
NOTE: The 2019 Phase two drilling
program of 10,000 m RC drilling is nearing completion.
Upcoming Technical Studies
Sonoro Metals Corp. has encountered quality swaths of mineralization, ideal for bulk tonnage open pit operations.
Figure 7. & Table 2. (above) -- map showing mineralized 8 gold mineralized zones (Las Japoneses, Cabeza Blanca, Cuervos, Abejas, El Colorado, Guadalupe, El Quince, Chinos), and Table 2 shows selected results from 2018 drill program. Click here for a complete listing of intercepts from the first 80 holes that Sonoro Metals drilled on Cerro Caliche. Every hole is documented on Sonoro's corporate website, GPS, azimuth, dip, etc.... anyone with an understanding of geological intercepts will appreciate how voluminously well mineralized this deposit is throughout.
Assay Results from the 2018 Phase One Drilling
Highlights from some central zones:
Selected Assay Results from the 2019 Phase Two Drilling Highlights from some central zones:
Table 3. (below) of selected 2019 Phase 2 drill results:
Figure 8. (above) -- Intersects and mineralization of Cerro Caliche Gold Project central zones. The upcoming 43-101 resource is well underway and SMO.V is updating data as the last of the Phase 2 drill campaign wraps up. The geological team has been drilling extensively in what will likely be the pit cone, in the Japoneses zone.
In the Phase 2 drill campaign, the geological team has been:
Infill drilling at
Japoneses, Chinos NW, Abejas & Cuervos.
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Demonstrating Blue-sky Potential at Cerro Caliche
Figure 9. (above) -- Zones at Cerro Caliche Gold Project, seen in blue are the areas that have received only 1 to a few drill holes and show immense potential.
In the recent round of drilling the geological team conducted some scout drilling (very big step-out drilling), going 1.25 km NW of the current known mineralization and hit quality intercepts (see April 29, 2019 "Sonoro Confirms New and Expanded Mineralized Zones at Cerro Caliche"), further affirming blue sky potential of the project.
Besides all the yellow shaded zones expanding, the geological team sees blue sky potential in a number of extremely intriguing zones (here is just a sampling):
A) All the blue shaded areas are ripe for exploration expansion.
B) Chinos Altos is theorized to be an extension of Chinos NW.
C) Japoneses and Abejas, it is theorized they will be connected.
D) La Espanola (historic mine area) is ripe for exploration discovery of significance. The historic gold mine in this area has very telling signs; there is a waste rock dump with visible gold in it. Back ~100 years ago it was high-graded (likely not taking anything under 10 g/t), they were just mining the vein zone and leaving all the stockwork and veinlets, they were taking the ore and sending it down the valley to a refinery by burrow. Sonoro Metals just finished (this 2019) building a road leading from La Espanola and had opportunity to conduct a lot of sampling in the process.
Four New Mineralized Zones
10.67 metres @0.744 g/t AuEq.
10.67 metres @2.728 g/t AuEq.
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How a 'forward gold sale'/'gold loan' arrangement would work for Sonoro Metals corp.
In February-2019 SMO.V announced it was entertaining a deal with a group from Singapore that the Company may forward sell gold from a predefined section of the upcoming resource, legally define the space encompassing say a 50,000 or 70,000 Oz Gold Indicated section. Put that section into a separate Company and do a gold loan, whereby debt is provided, secured by a bond, the bond is secured by the gold in the ground, the lender gets paid in gold, and the arrangement DOES NOT interfere with the equity of Sonoro Metals Corp. at all -- thus no dilution. The arrangement would be strictly non-recourse (meaning SMO.V is not responsible for the debt), and is only applicable to that legally defined zone. Unlike some gold streaming deals that tie up an entire project for ever, even as it grows, this is not the case here. Both the President and Chairman of Sonoro Metals Corp. have strong histories of negotiating successful financings that create a win-win scenario, this is the case here.
The situation on the ground is developing quickly and SMO.V could be looking at a much larger pit now than it initially was, when first discussing the possibility with the Singapore group. SMO.V might be looking now at ~1.5 km diameter pit and seeking larger Heap Leach Pilot Operation. Plus a second pit zone appears to be developing.
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H2-2019 Priorities for SMO.V at Cerro Caliche
Finalize NI 43-101
technical report for Phases 1 & 2 drilling.
Essentially, the next (Phase 3) drill plan is to keep extending the pit at Japaneses, keep extending the pit zone at El Coloado and Cabeza Blanca, define the potential for mineralization at El Rincon, La Espanola, keep looking throughout the property.
Full copy of the Mining Journal Review may be viewed at https://miningmarketwatch.net/smo.htm online.
SOURCE: Sector Newswire editorial