The emerging top tier character of SolGold’s Cascabel copper-gold project in Ecuador has been demonstrated by the attention from major mining houses keen to take a stake in the company.

Following a US$33 million financing deal with Maxit Capital and Newcrest Mining in October (which easily beat a rival earn-in offer from BHP Billiton), SolGold has amassed a US$44m treasury to conduct a comprehensive, two-year drilling program at Cascabel to follow up on world-class intersections.

The project lies in the northern portion of the Andean copper belt in Ecuador, renowned for hosting almost half the world’s copper production.

Results from initial drilling at the Alpala Central prospect have been so promising – showing high-grade copper-gold mineralisation over 1km long in five intersections – that the potential for a greater deposit has pushed out timing for a maiden resource on Alpala.

“Drill hole CSD-14-009 for example, returned one of the best results in the history of mineral exploration,” SolGold executive director Nick Mather said.

“It had 1088m grading 0.66% copper and 0.89 g/t gold for 1.48% copper equivalent.”

He likens the result to drilling from Newcrest Mining/Harmony Gold’s joint venture at the world-class  porphyry Wafi-Golpu deposit in Papua New Guinea, where one intersection of 1421.5m had 1.14% copper and 0.64/t gold for 1.65% copper equivalent.

Alpala also compares well (see table below) with results from the high grade Oyu Tolgoi copper-gold project in Mongolia, discovered by Ivanhoe Mines and being developed by Rio Tinto and partners, where one of the larger mineralised intersections of 426m had 2.16% copper and 0.67g/t gold for 2.59% copper equivalent.

Of the 18 initial drill holes at Alpala for 23,700m, 16 hit the deposit and five delivered world-class intersections over 1km long, grading over 1% copper equivalent (cu-eq).

Mather, who along with board and management holds a significant stake in the company, said the Cascabel project would emerge as one of “the world’s outstanding copper-gold mines” thanks to its scale, grade, supportive regulatory environment, excellent infrastructure and experienced team behind it.

The company’s market capitalisation has skyrocketed in recent months but to understand how SolGold deliberately set about finding its world-class deposit, Mather takes MiningNews readers back to the company’s beginnings in the Solomon Islands, operating in what he described as a primitive regulatory framework and an aggressive and dynamic physical environment on very steep terrain, “dominated by rainfall measured in metres and the risk of big landslides and flash floods.” The geology didn’t work either - the system wasn’t oxidised enough so the grades were too low. 

“We took that knowledge and experience to the gold rich northern section of the world’s most endowed copper theatre, the Andean Copper Belt and honed in on Ecuador as our target,” Mather explains.

“We wanted a tier 1 discovery - one that transcends metal price cycles, is always profitable and lives for many generations. 

“The Andean Copper belt has a habit of delivering that sort of asset (such as La Escondida, Chuquicamata, El Teniente and others) and it can transform SolGold as other porphyry discoveries have transformed companies of similar fortune in other parts of the world.”

He said SolGold recognised the opportunity presented when in 2012, the government in Ecuador decided to endorse developing a mining industry to replace flagging revenues from declining petroleum resources and prices.

“Ecuador began its collaborative and constructive liaison with industry, and we arrived, armed with experienced explorers and a set of geophysical tools that peeled back the wrapping on Ecuador's treasure, we felt we'd happened on Aladdin's cave,” he said.

In the four years since negotiating access to Cascabel, SolGold has spent about US$35 million on methodical exploration including 50km² of state-of-the art airborne magnetics, 30km² of Orion 3D IP Surveying, detailed soil gridding, rock-chip and rock-saw channel sampling, geological and structural mapping, 3D modelling and interpretation.

SolGold then defined 14 targets, refined 7 of those to drill-ready status, and drilled at just one, Alpala.

That drilling choice gave SolGold the entry to Aladdin’s cave, revealing the high-grade, 1km-long copper-gold intersections (high-grade intersection pictured right).

Mather said establishing a resource was premature because drilling to date had not constrained the rich Alpala deposit.

“Alpala alone is emerging as a tier 1 copper project with higher than average grades in both copper and gold, and the project will enjoy the support of a coterie of pretty sisters in the surrounding targets,” he said.

Mather, who brings more than 30 years’ experience in geology and project management, sees a great deal more potential to unlock at Cascabel thanks to the ascent of large highly oxidised magma bodies in pre-historic (Eocene) times, that facilitated the distillation and enrichment of iron, copper and gold bearing fluids into the porphyry systems at Alpala.  

“Iron occurs as the diagnostic oxide mineral magnetite and the copper occurs as bright yellow chalcopyrite and peacock coloured Bornite,” Mather continued.

“Higher than usual gold grades occur with chalcopyrite and bornite mineralisation (and) as with several other globally significant deposits, the core of the system sees an increase in bornite content, which mineral contains 64% copper.

“That's our holy grail.”

He said the mineralisation could be modelled with 3D magnetics and the strong correlation between copper and magnetics at Alpala suggested that Alpala, Moran and Aguinaga prospects alone gave the Cascabel system the potential to contain 10 billion tonnes of mineralised rock.

“In particular, the Aguinaga target is exciting us, as it has a very similar signature to some of the world's great porphyries,” Mather said.

He said there were stunning similarities between the geophysical modelling on the Alpala-Moran trend and the giant Hugo Dummet orebody at Oyu Tolgoi in Mongloia.

Further, the Alpala deposit itself has near identical geology, mineralisation style and geometry as Newcrest's Golpu deposit in Papua New Guinea, he said.

“The surrounding targets at Aguinaga, for example, are reminiscent of some of the great porphyry clusters in Chile, and the project has been likened to the great Chuquicamata cluster by geologists from a number of the world’s largest mining houses,” he added.

With mineralisation identified to a depth of at least 1.8km so far, Mather said the configuration of the deposit was perfectly suited to block caving.

“That's why Newcrest likes it,” he said.

“They are one of the world's leaders and mine over 2 million ounces per annum largely from Cadia Valley where the grades are lower than bulk grades at Alpala.”

Mather said the capital costs of block caving at Alpala would be partially offset by the advantage of available infrastructure, and that in comparison to high Andean porphyries in Chile, SolGold would not have to invest large capital in roads, water pipelines, desalination plants or a dedicated power station.

“It’s all there courtesy of the huge infrastructure investments by Ecuador, funded by past oil revenues,” he said. 

“Ultimately we believe the project will likely be developed as an underground block cave, at the end of a twin 6km long decline from near San Pedro village.”

Despite subdued conditions on the equities markets this year, SolGold attracted keen interest in two capital raisings and has been significantly rerated, with its market capitalisation rising more than ten-fold in four months from US$40 million to almost US$500m.

“In an environment of intense interest and competition from major companies and the extraordinary support from Maxit Capital, Canada's leading M&A Banker; and DGR Global, the largest shareholder, SolGold raised US$54.5m in two tranches at 6p and 12p, twice the market price on each occasion,” Mather said.

He said the re-rating was driven by the endorsement of the industry's majors, and an understanding of the enormous value of large, rich porphyry systems.

The company has just started a planned two-year 95,000m drilling program with Hubbard Drilling and Major Drilling, to expand Alpala and drill test targets including Alpala South East, Hematite Hill, Trivinio, Moran, Aguinaga and Tandayama-America.

As for whether Mather would describe Cascabel as a gold or a copper project, SolGold’s boss is happy to have both options.

“It doesn't really matter because one can pay for the costs of producing the other and the project can potentially deliver a negative cost of production for either,” he said.

“On top of that, the price outlook for each is robust; driven by political and monetary instability globally in the case of gold; and a relentless growth in demand as the world continues to urbanise 4 billion aspiring individuals, in the case of copper.

“Cascabel’s size, the high grades, the multiplicity of targets, the engaging fiscal and regulatory framework, extraordinary infrastructure, capital and operating cost advantages all driven by a team of experienced and dedicated professionals will no doubt drive the emergence of this project as one of the world’s outstanding copper-gold mines.”

SolGold has been nominated as a candidate for the Outstanding Exploration Achievement Award at the prestigious Mining Journal Awards ceremony at this year’s Mines and Money Forum in London. 

Of the nomination, Mather said that he was “immensely proud of the project and every single staff member, worker, contractor, consultant, service provider, the shareholders and investors that have supported us have made this possible and it’s all of them who deserve to win.”