Name of the Project
Cascabel copper/gold/silver project.

Location
Northern Ecuador.

Project Owner/s
SolGold, which holds an 85% registered and beneficial interest in Exploraciones Novomining that, in turn, holds 100% of the Cascabel project.

Project Description
A preliminary economic assessment (PEA) has suggested that the Alpala copper/gold/silver deposit at the Cascabel project has the potential to support a large-scale, low-cost underground block cave mining operation, and associated processing and project infrastructure facilities, capable of sustaining commercial production over a mine life of more than 55 years, depending on the production scenario finally adopted.

Four production scenarios have been assessed. Case 1 involves a 40-million tonne-a-year mining operation with a life-of-mine (LoM) of 66 years, and Case 2a involves a 50-million-tonne-a-year mining operation with a staged ramp-up and an LoM of 57 years.

Case 2b involves a 50-million-tonne-a-year operation with a fast production ramp-up and an LoM of five years, while Case 3 involves a 60-million-tonne-a-year mining operation with an LoM of 49 years.

The production rate scenario proposed for the base case is Case 2b.

The copper concentrator and gold recovery circuit proposed for Alpala is based on two parallel lines, with one line built for Phase 1 (ramp-up to 50% nameplate capacity) and a second line to reach 100% nameplate capacity in the case of the 40-million-tonne-a-year and 50-million-tonne-a-year mine production scenarios. Three parallel modules are considered for the 60-million-tonne-a-year scenario.

Metallurgical recoveries to the chalcopyrite copper concentrate for the first 30 years of operation are estimated at between 93.9% and 87.1% for copper, and between 85.4% (high grade) and 49.4% (low grade) for gold (50-million tonnes a year in staged ramp-up), depending on mill feed grades.

Based on the Case 2b scenario, the yearly metal production average for the first 25 years is estimated at 207 000 t of copper, 438 000 oz of gold and 1.4-million ounces of silver in concentrate.

The project will produce high-quality concentrates – 28.2% copper, 22.1 g/t gold and 65.7 g/t silver, which should deliver a sales premium for the concentrates.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value, at an 8% discount rate, from $4.1-billion to $4.5-billion, and an internal rate of return ranging from 24.8% to 26.5%, depending on the production rate scenario.

Payback on initial startup capital ranges from 3.5 years to 3.8 years after the start of construction, depending on the production-rate scenario.

Capital Expenditure
Capital cost estimates for the four cases assessed range from $2.4-billion to $2.8-billion.

Planned Start/End Date
Not stated.

Latest Developments
The release of the prefeasibility study (PFS) for the Cascabel project will be delayed to assess certain upside options that could deliver a more robust value for the project.

Upside options under review include earlier underground access, mine and mill optimisations, extending Cascabel resources and hydroelectric power. These options offer further optionality and potential for improved economics, the company has said.

SolGold has reported that the PFS is well advanced and that it will announce a new timeframe for the completion of the PFS at the upcoming annual general meeting on December 15.

Meanwhile, SolGold has announced that it has signed a preliminary commitment declaration for an exploration investment protection agreement (IPA) for Cascabel.

The terms of the IPA, submitted by application to the Ministry of Production, Foreign Trade, Investments and Fisheries, include an intention to invest $430-million over ten years between 2013 and 2023 in minerals exploration activities in the Cascabel mining concession. This includes historical investments, totalling about $238-million, estimated until the end of 2021; and planned future investments until the end of 2023, when the exploration phase of activities as defined under the mining law is expected to finish.

Once the IPA has been executed, the Ecuadorian State will grant the SolGold investor companies the applicable protections and guarantees in accordance with the law. Specific protections pertain to the prohibition of all forms of confiscation, nondiscriminatory treatment and an equal playing field, legal security, tax stability for 15 years and international arbitration in London if there are any disputes in relation to the Cascabel project.

"Under the terms of this agreement, SolGold's investors will enjoy increased protection of their key investment in Ecuador,” acting CFO Ingo Hofmaier has said.

Key Contracts, Suppliers and Consultants
Wood (minerals processing, materials handling and project infrastructure components of the study); SRK Consulting (resource estimation), SRK Exploration Services (geology), Mining Plus (geotechnical, hydrogeology and mine planning), Knight Píesold (environmental and community studies) and EY (economic analysis).

Contact Details for Project Information
SolGold, tel +61 7 3303 0660 and email info@solgold.com.au.