Ecuador-focused resources firm SolGold (LSE:SOLG) dipped 3.7pc to 38.7p on Tuesday despite revealing progress at its flagship Cascabel project and developments in its bid for Cornerstone Capital Resources.

SolGold said the preliminary economic analysis for Cascabel’s Alpala deposit is now at a ‘very advanced stage’ and is slated for release following peer review and quality assurance procedures. However, the firm noted that preliminary mine plan assessments and metallurgical data have been more complicated than initially anticipated, resulting in ‘unavoidable but necessary’ delays.

Alpala lies upon the northern section of the prolific Andean Copper Belt, the base for nearly half of the world’s copper production. According to SolGold, the project area hosts mineralisation of Eocene age, which is the same age as numerous Tier 1 deposits along the belt in Chile and Peru.

Elsewhere, the business said it is continuing to engage 11 drilling rigs onsite across the wider Cascabel area in Northern Ecuador. These are carrying out resource extension drilling at a rate of 10,000m a month, focusing on higher-grade mineralisation to the North West and South East of Alpala. Furthermore, the company is conduction sterilisation and geotechnical drilling of the proposed plant site and decline route.

Finally, SolGold provided an update on its bid for TSV-listed Cornerstone Capital Resources, first announced in January this year.

Cornerstone owns the final 15pc of Cascabel that is not owned by SolGold. The latter believes that moving the operation into one entity will have ‘tremendous economic upside, further de-risk the ownership structure and present a simplified and highly attractive value proposition for investors’. The business has offered Cornerstone’s shareholders the opportunity to convert each of their shares into 0.55p of a SolGold share, which it has calculated as an immediate premium of around 20pc.

In Tuesday’s update, SolGold said it is finalising formal documentation for its Cornerstone bid, which it expects to complete shortly. The business said the process had taken longer than expected due to ‘taxation and other considerations to ensure the most advantageous treatment of Cornerstone shareholder’ and the need to translate the bid into French. However, it added that the withdrawal or failure of its bid could have a negative or depressing effect on the illiquid cornerstone market.

‘Should the bid be successful, all Cornerstone shareholders will benefit greatly from consolidation of the project to increase focus and attention on the SolGold capital structure,’ SolGold went on to add. ‘SolGold's award-winning management team are applying the exploration expertise, regional familiarity and blueprint throughout the country, based on the Company's extensive exploration portfolio secured pursuant to its 2014 first mover advantage in Ecuador as a serious copper-gold porphyry explorer.’

Author: Daniel Flynn

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