Australia’s SolGold (LON, TSX:SOLG) announced Thursday it had made a new key discovery in the northern part of Ecuador’s Andean copper belt Ecuador, this time on its Sharug project, one of the company’s 12 priority prospects.
The miner, which holds 72 mineral concessions in Ecuador
through four subsidiaries, said it had found a new porphyry
copper-gold-molybdenum system — Santa Martha — in the northern part of the
Sharug 2 concession.
SolGold had previously intercepted a mineralized field in
the same area, the Quillosis prospect, registering grades of up to 39.6 grams
of gold per tonne of ore.
The best returns include one hole with 2.5% copper, 0.2
grams of gold per tonne, and 491 parts of molybdenum per million. In another,
SolGold found 0.8% copper, 0.5% grams of gold, and six parts per million of
molybdenum.
“The Santa Martha copper-gold porphyry target has the
areal extent and copper endowment at surface to yield a significant copper gold
porphyry orebody and the Quillilosa epithermal gold target is probably related
and just as big,” chief executive Nick Mather said.
Among 10 largest copper, silver and gold mines
The news comes on the heels of a preliminary study published by Ecuador’s Energy Ministry indicating that SolGold’s Cascabel copper-gold project, 180 km north of the capital Quito, has the potential to be among the world’s ten largest copper, silver and gold mines.
The Alpala mineral deposit in particular, which is located in the Cascabel region, “could become the largest underground silver mine, third-largest gold and sixth-largest copper in the world,” minister Carlos Pérez said in a statement.
Independent analysis of the deposit show that underground
mining operations at Alpala could extend from 49 to 66 years, with Cascabel
boasting mineral reserves of 10.9 million tonnes of copper and more than 23
million ounces of gold.
In the first 25 years, forecast production is expected to reach around 207,000 tonnes of copper, 438,000 ounces of gold and 1.4 million ounces of silver, according to official data.
Local communities, however, recently asked the Constitutional Court for permission to hold a popular referendum on mining in the provinces where the SolGold’s 85% owned Cascabel project and other wholly owned exploration projects are located.
The court is expected to deliver its verdict before the
end of the month.
Attracting top miners
Over the past two years, SolGold has grabbed headlines as it
made progress on Cascabel, one of the few new major copper-bearing projects
expected to come online in the near future.
Australia’s largest gold producer, Newcrest Mining (ASX:
NCM), upped its stake in SolGold in December to 15.33% from
13.83%, to secure a portion of the Cascabel.
The move further boosted Newcrest’s position in SolGold against
No.2 shareholder, BHP, which in September had bought a 6.1% stake in the explorer.
Miners are scrambling for copper projects amid
forecasts that demand for the metal will significantly outstrip supply from
2020, due to increasing demand for power generation and electric vehicles
(there are 300kg of copper in an electric bus and nine tonnes per windfarm
megawatt).
According to Colin Hamilton, director of commodities
research at BMO Capital Markets, the current copper pipeline is the lowest seen this century, both in terms of numbers and
capacity.
“After delivery of Cobre Panama we are left with a gap until
we see the next batch of 200ktpa-plus projects in 2022-23. This is when the
likes of Kamoa, Oyu Tolgoi Phase 2, and Quebrada Blanca 2 are likely to offer
meaningful supply growth,” Hamilton said.
Ecuador has gained ground as a mining investment destination
in the past two years, thanks to a revised regulatory framework and a major investor engagement campaign.