Shares in SolGold (LSE:SOLG) inched up 0.3pc to 37.9p on Wednesday after the business announced a significant discovery at its 100pc-owned Chical project in northern Ecuador. The firm said follow up of anomalous stream sediment geochemistry has identified a 5.8km2 area of mineralised epithermal gold and porphyryr-style mineralisation. This comprises three prospect areas called Pascal, La Esperanza, and Espinoza.

SolGold added that the discovered mineralisation is associated with an extensive contact zone between intrusive granodiorite and gabbro with volcano-sedimentary units. Meanwhile, it said that the gold mineralisation consists of epithermal stockwork quartz veining with an abundance of 10-15 veins per metre. This is significantly more intense than that required for a significant mineral system associated with substantial chlorite-sericite-epidote hydrothermal alteration.

SolGold's exploration and country manager Jason Ward said: ‘The large areas of geochemical anomalism, the widespread extent of the altered and mineralised outcrops and the mineralisation style comprising multi-directional veining accompanied by molybdenum are strong indicators of a large copper rich porphyry system at La Esperanza. Peripheral high-grade gold rich epithermal veins have also been identified at Pascal and Espinoza. The high-grade gold vein occurrences also indicate potential for early high-grade gold resources beside the porphyries.

‘The proximity of Chical to Cascabel is geologically and logistically encouraging and vindicates our long-held opinion that we have discovered a new copper porphyry province. The generative foundations laid in 2014 are certainly paying off.’

Wednesday’s development comes just one day after SolGold said it had identified a large porphyry copper-gold target at its Porvenir project in Ecuador. On Tuesday, the firm said first-pass mapping and sampling at an area called ‘Target 15’ on the asset has extended existing porphyry copper and gold mineralisation at a target called Cacharposa Creek on its Porvenir 2 concession.

The open-ended mineralised intercept has now been extended to 147.83m at 0.64pc copper equivalent, including 82.63m at 0.96pc copper equivalent. Using this data, 3D geochemical modelling carried out by Fathom Geophysics has confirmed the potential for shallow porphyry-style mineralisation extending at depth.

SolGold added that mapping and sampling of the Mula Muerta Creek on the northwest side of Cacharposa Creek has discovered similar mineralised. Both areas are thought to form part of an 800m-wide, northeast-trending mineralised corridor more than 1,200m long. Meanwhile, modelling has also confirmed the potential for mineralisation at another Porvenir prospect called Bartolo alongside two new target areas.

‘Porvenir contains mineralisation styles, size and geometry consistent with exposure of a vertically extensive, well-preserved porphyry copper-gold system,’ added SolGold.

SolGold now plans to follow up on its work at Target 15 with a programme of drill testing and ground magnetics in the current quarter. Specifically, a targeted ground magnetic survey will begin this month while an airborne-magnetic study is planned for the entire Porvenir concession package imminently.

The company’s chief executive Nick Mather highlighted Porvenir’s prospectivity, adding that its channel sample is significantly longer and richer than the 50m long discovery outcrop at Alpala in the firm’s Cascabel tenement. This has so far yielded a contained resource of 23MMozs of gold and nearly 11MMts of copper.

‘The latest progress at Porvenir is indicative of the effort SolGold puts into its first mover advantage secured in 2014 across Ecuador. SolGold's team of geoscientists led by Dr. Steve Garwin, porphyry expert, recognised several targets with the right geochemical, geological and geophysical signature and we have so far secured eleven of them,’ he added. ‘The Porvenir system has the hallmarks of a significant discovery so far.’

SolGold is working to develop a sustainable copper-gold mining industry in Ecuador, which is located on the rich and under-explored northern section of the Andean Copper Belt. The southern portion of the belt is renowned as the production base for nearly half of the world’s copper.

‘SolGold is committed to leading the development of a sustainable copper-gold mining industry in Ecuador. The high grades and strong gold endowment at Alpala and Porvenir provide us with a unique opportunity to develop this Company without joint ventures,’ added Mather.‘SolGold has identified and secured the best of an entire copper-gold province, the size and metallurgy of northern Chile. That's a unique approach that can't be replicated. We are confident that Alpala and now Porvenir are the first projects in a long, large and rich string of them.

‘The next generation of growth in SolGold is going to come from more spectacular discoveries on a 100% basis like Porvenir. All SolGold shareholders will enjoy that growth, including hopefully the Cornerstone Capital Corporation shareholders who are soon to be availed of our bid for Cornerstone.’

In February, SolGold said it was ‘surprised and disappointed’ by Cornerstone’s swift dismissal of its takeover bid. The firm said Cornerstone – which owns the remaining 15pc of Cascabel, lodged its response fewer than three hours after SolGold’s approach, raising questions around how well it had considered the potential offer.

SolGold had proposed the conversion of each Cornerstone share into 0.55 of a SolGold share, equating to an immediate 20pc premium for Cornerstone holders at the time. It added that the consolidatory move would benefit Cornerstone shareholders significantly by removing the company’s ‘funding challenges’ concerning Cascabel’s development.

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

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