Name of the Project
Alpala 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 with the associated processing and project infrastructure facilities. The operation will sustain 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- 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, of $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
SolGold has delayed the delivery of the prefeasibility study (PFS) for the Alpala project, citing restrictions pertaining to Covid-19 and the changes to the infrastructure, mine design and production schedules.

The PFS was initially planned for delivery at the end of the third quarter, but limited physical access to site and limited staff at laboratories, in Chile, have delayed work on the study.

The company has said that an assessment of new geotechnical information has necessitated a redesign of certain underground infrastructure to a location outside of the cave footprint, changes to the mine design and development, and mining production schedules.

This work is nearing completion, with preliminary financial modelling expected to be undertaken this month.

In parallel, the project team is considering optimisation work.

SolGold has said that the recently formed Alpala project committee, chaired by nonexecutive director Keith Marshall, is reviewing the PFS work input components and the report drafting progress.

The Alpala project committee review will be completed by the end of January, followed by a recommendation to the board. The market will be updated on the PFS shortly thereafter, the LSE- and TSX-listed company 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.