Solomon Gold (SOLG) is based in Brisbane, Australia but listed on AIM in the U.K.. Its shares first began trading in 2006. The Company acquired Acapulco Mining and Central Minerals in late 2009 and early 2010.
The company has a portfolio of projects in the Solomon Islands (Guadalcanal and Fauro), Queensland , Australia (Rannes and Mt Perry).
Projects
Mt Perry
At Mt Perry, located in South East Queensland, the company is investigating an area of approximately 1,500square kilometres hosting over 50 historic mines and workings near Newcrest's Mt Rawdon Gold Mine. Mt Perry has yielded potentially economic drill intersections on nine of the ten prospects tested to date.
The area lies adjacent to Lihir Gold’s 100kozpa Mt Rawdon Gold Mine on the intersection of two major geological fault structures; the Mt Perry and Darling Lineaments. Several high grade vein style and lower grade high tonnage porphyry style gold targets have already been identified by mapping sampling, geophysics and exploration drilling.The mineralised target zones at Mt Perry extend over a 20km north-easterly corridor from Augustine West in the south west to the New Moonta mines in the north-east. Sulphide mineralised breccias with variable gold, silver and base metals, with occurrences of uranium characterise the Augustine to New Moonta trend. Copper-molybdenum porphyries with gold and zinc anomalous halos lie in the south of the project area and merge with the 7km long strongly mineralised Chinamans Creek – Reids Creek – Spring Creek – Regans target immediately to the north. In the northern part of the project area, gold mineralisation is characteristically low in sulphide minerals and similar in style to gold rich intrusives of north-west America.
Rannes Project
The Rannes project is 140km west of Gladstone, Queensland, Australia with a 22km long prospective zone in a 200km long trend on the eastern edge of Queensland's Bowen Basin in the same geological setting as Newcrest's 100,000 ounce per year Cracow Gold Mine. This extensive exploration licence position hosts three mineralised projects at Cooper, Rannes Central and Police Camp. The exploration area is believed to host mineral systems which are geologically similar to the Carlin trend in Nevada USA. At Rannes Central, the Company has encountered potentially economic mineralisation in five different prospects targeted to yield at least 1 Moz. A maiden 200,000 ounces has been defined to date at the Crunchie Prospect.
Guadancanal
The Guadancanal project is 30km south of the Capital Honiara, Solomon Islands
Over the period from 2005 to 2008 the Company set about an intensive program of fieldwork involving detailed mapping and sampling of known prospects. At Valehailali, Sutakiki, 32m at 9.45g/t gold was encountered in a peripheral skarn system. In 2009, the Company entered into the Venture Agreement with Newmont, the Guadalcanal Joint Venture (“GJV”). The aim of this initiative was to refocus the exploration program from the diversionary high grade vein search to porphyry exploration. Newmont can earn 51% of the Guadalcanal project area by expending US$6million by 4 March 2012, and may elect to spend a further US$6million within a further two year period to earn an additional 19% interest (a maximum potential interest of 70%).
Newmont has proposed an extensive 2011 work program budgeted at US$6million on Mbetilonga, Sutakiki, Kuma and Central during 2011, including a planned 5,600m (3,500m at Mbetilonga and 2,100m at Sutakiki) drilling program.
Fauro Island Project
The Fauro Island project is 380km northwest of the Capital Honiara, Solomon Islands. SOLG own a 100% owned Prospecting Licence on Fauro Island Project which was granted on 20 November 2009 for a period of three years and covers 70km2 (granted) of mineralised volcanic rim on the western side and a further 67km2 (licence extension application) on the eastern side, over Piru and Masamasa Islands. The Fauro Project area covers the remnant rims of a volcano which gave off silica and gold rich mineral fluids as the volcano waned. These fluids soaked into porous and absorbent volcanic rubble known as breccias and agglomerates and precipitated gold and sulphide minerals. Copper and molybdenum sulphide mineralisation are evident in porphyry bodies in the core of the volcanic complex. Alluvial gold is known to be common in the streams draining the Fauro prospects on the western side of the volcanic rim.
Management
The management team hold 17% of SOLG shares.
Nicholas Mather (Chief Executive Officer)Cameron Wenck (Non-Executive Chairman)Brian Moller (Non-Executive Director)John Bovard (Non-Executive Director) Dr Robert Weinberg (Non-Executive Director)
Nicholas Mather graduated in 1979 from the University of Queensland with a B.Sc. (Hons, Geology). He has 25 years' experience in exploration and resource company management in a variety of countries. He was managing director of BeMaX Resources NL (an ASX-listed company) from 1997 until 2000 and instrumental in the discovery of the world class Ginkgo mineral sand deposit in the Murray Basin in 1998. As an executive director of Arrow Energy NL (also ASX-listed) until his resignation in 2004, he drove the acquisition and business development of Arrow's large Surat Basin Coal Bed Methane project in south-east Queensland. He was managing director of Auralia Resources NL, a junior gold explorer, before its USD23 million merger with Ross Mining NL in 1995. He was a non-executive director of Ballarat Goldfields NL until 2004, having assisted that company in its recapitalisation and requotation on the ASX in 2003. He was also founder and Chairman of TSX-V listed Waratah Coal Inc until its $130m takeover by Minerology Pty Ltd in December 2008. He is also Chief Executive of ASX-listed D'Aguilar Gold Limited and is a non-executive director of ASX-listed Bow Energy Limited.
Cameron Wenck is a financial adviser and company director with over 18 years' experience in the financial services industry. Earlier in his career Cameron worked for the London stockbrokers Scrimgeour Vickers and chartered accountants PricewaterhouseCoopers.
Future news flow
February 2011 – Drilling and assay results from Perry, Rannes and Fauro. Resource upgrade at Rannes and maiden resource at Mt Perry
March 2011 – Fauro dilling results. Perry and Rannes drilling
Project updates
Kauffmans-Homestead Prospect - Rannes
On the 28 February 2011, SOLG announced a Maiden Resource Estimate at its Kauffmans-Homestead Prospect at Rannes of 203koz of gold and silver, bringing a total Inferred Resource for Rannes to 404koz. The Kauffmans-Homestead Prospect lies within the Rannes Project, in Central Queensland, Australia and a major asset of its 100% owned subsidiary, Central Minerals Pty Ltd. The estimates were compiled by Hellman & Schofield Pty Ltd, an independent geological consultancy, and have been classified as Inferred for reporting under the JORC Code for Reporting of Mineral Resources and Ore Reserves widely accepted as a standard for professional reporting purposes.
Solomon is targeting a resource in excess of 2Moz of gold at the Rannes Project. The Company expects additional regular updates in regard to the drilling programs and further resource upgrades due to improving weather conditions going into winter and the availability of additional drill rigs. The Kauffmans prospect should be mineable by open cast making the mining simpler and it is possible that a strike length of some 1.5km may emerge if mineralisation joins with Homestead and Shilo gold prospects near by
Fauro
On 18 February 2011, announced the completion of the first diamond drill hole on the Meriguna Prospect, with encouraging mineralisation and initial assay results from the first 83m of the hole. The IP survey on the Fauro Island Project has commenced over the identified Prospects. The survey will cover a total area of 11km2 over the identified Prospects: Ballyorlo, Kiovakase, Meriguna, Bataha, Ballteara and Northern Fauro The Meriguna Prospect is part of the Fauro Island Project which is in the Northern Solomon Islands, just south east of Bougainville and is 100% owned by Solomon Gold.
Guadancanal
On 14 February 2011, the company announced that rock chip samples taken from the Mbetilonga Project have returned high grade copper and gold results. NVL Solomon Islands Limited, a subsidiary of Newmont Mining Corporation, Solomon Gold's partner in Guadalcanal, has advised of the 2011 work program for the Guadalcanal Joint Venture, spending US$6.03million on a program including 5,600m of drilling on Mbetilonga, Sutakiki, Kuma and Central during 2011, including a planned 5,600m (3,500m at Mbetilonga and 2,100m at Sutakiki) drilling program.
Financial
In July 2010, Solomon Gold undertook a placement of 33.1 Million Shares at £0.05 to Raise £1,654,455. In October 2010, it placed 54.02 million shares at £0.28 to raise £15.1 million. The funds raised were be used to continue the progression of the Company's exploration program at Fauro in the Solomon Islands in 2011, including extensive mapping, sampling, trenching, geophysics and a 9,900 metre drilling program. In addition funding would be available for drilling Rannes and Mt Perry Projects in Queensland. Nick Mather, Chief Executive of Solomon Gold, subscribed for 1,116,071 Placing Shares in the Placing. Following completion of the Placing and Admission, Nick Mather holds 37,706,233 ordinary shares in the company representing 13.45% of the enlarged issued share capital of the Company following the Placing.
The Company now has 281,772,521 fully paid ordinary shares and 2,600,000 options on issue. Current market capitalization is £80 million at 28p per share (52 week range 5p-53p).
SOLG intend to spend $A 21 million in 2011 on exploration activities (Newmont will spend approximately $6 million).
SWOT
Strengths
Solomon Gold’s shares are currently trading at 27p, giving a market capitalization of £76 million (52 week range 5p-53p). At the current price they are trading below October 2010’s placing of 28p which raised £15 million for the company’s current exploration and appraisal programme. Though the shares once hit over 80p intra-day after the initial Fauro Islands discovery they have drifted down in recent months and have traded in a 25-35p range.
The Fauro project remains the most risky, but Guadancanal and Rannes (Australia) offer the most certain upside to the current share price. The fact that Newmont mining are working in a joint venture with Solomon on Guadancanal gives reassurance and less funding risk. Solomon are targeting 2 million ounces at Rannes alone, which could mean a 3 times upside to the share price. Initial exploration results have been encouraging on both these projects.
Solomon Gold feels a little like Range Resources (RRL). In other words, plenty of upside from a diversifIed range of exploration assets but with a good dose of risk on some of them. Arguably the fact that Solomon Gold has assets in stable parts of the world versus Range’s key asset in Somalia, makes SOLG feel slightly more comfortable and therefore investable (RRL's recent share price rise has been incredible by the way! When I wrote my review on Range in early February the share price was 16p, yesterday it hit 24p. SEE http://contrarianinvestoruk.blogspot.com/2011/02/range-resources-look-to-have-good.html
Private Investors in SOLG seemed to have lost interest despite the news flow due over the next 2 months. This is not surprising with all the excitement over in the oil sector e.g. Caza, Range, Chariot etc. But lets not forget, gold is still hot and hitting all time highs at the moment ($1,418). If SOLG can deliver on their promises, this company looks very interesting. I bought some for my Contrarian Investor UK portfolio on Tuesday and topped up at the close yesterday on continued weakness in the share price.
The company has a portfolio of projects in the Solomon Islands (Guadalcanal and Fauro), Queensland , Australia (Rannes and Mt Perry).
Projects
Mt Perry
At Mt Perry, located in South East Queensland, the company is investigating an area of approximately 1,500square kilometres hosting over 50 historic mines and workings near Newcrest's Mt Rawdon Gold Mine. Mt Perry has yielded potentially economic drill intersections on nine of the ten prospects tested to date.
The area lies adjacent to Lihir Gold’s 100kozpa Mt Rawdon Gold Mine on the intersection of two major geological fault structures; the Mt Perry and Darling Lineaments. Several high grade vein style and lower grade high tonnage porphyry style gold targets have already been identified by mapping sampling, geophysics and exploration drilling.The mineralised target zones at Mt Perry extend over a 20km north-easterly corridor from Augustine West in the south west to the New Moonta mines in the north-east. Sulphide mineralised breccias with variable gold, silver and base metals, with occurrences of uranium characterise the Augustine to New Moonta trend. Copper-molybdenum porphyries with gold and zinc anomalous halos lie in the south of the project area and merge with the 7km long strongly mineralised Chinamans Creek – Reids Creek – Spring Creek – Regans target immediately to the north. In the northern part of the project area, gold mineralisation is characteristically low in sulphide minerals and similar in style to gold rich intrusives of north-west America.
Rannes Project
The Rannes project is 140km west of Gladstone, Queensland, Australia with a 22km long prospective zone in a 200km long trend on the eastern edge of Queensland's Bowen Basin in the same geological setting as Newcrest's 100,000 ounce per year Cracow Gold Mine. This extensive exploration licence position hosts three mineralised projects at Cooper, Rannes Central and Police Camp. The exploration area is believed to host mineral systems which are geologically similar to the Carlin trend in Nevada USA. At Rannes Central, the Company has encountered potentially economic mineralisation in five different prospects targeted to yield at least 1 Moz. A maiden 200,000 ounces has been defined to date at the Crunchie Prospect.
Guadancanal
The Guadancanal project is 30km south of the Capital Honiara, Solomon Islands
Over the period from 2005 to 2008 the Company set about an intensive program of fieldwork involving detailed mapping and sampling of known prospects. At Valehailali, Sutakiki, 32m at 9.45g/t gold was encountered in a peripheral skarn system. In 2009, the Company entered into the Venture Agreement with Newmont, the Guadalcanal Joint Venture (“GJV”). The aim of this initiative was to refocus the exploration program from the diversionary high grade vein search to porphyry exploration. Newmont can earn 51% of the Guadalcanal project area by expending US$6million by 4 March 2012, and may elect to spend a further US$6million within a further two year period to earn an additional 19% interest (a maximum potential interest of 70%).
Newmont has proposed an extensive 2011 work program budgeted at US$6million on Mbetilonga, Sutakiki, Kuma and Central during 2011, including a planned 5,600m (3,500m at Mbetilonga and 2,100m at Sutakiki) drilling program.
Fauro Island Project
The Fauro Island project is 380km northwest of the Capital Honiara, Solomon Islands. SOLG own a 100% owned Prospecting Licence on Fauro Island Project which was granted on 20 November 2009 for a period of three years and covers 70km2 (granted) of mineralised volcanic rim on the western side and a further 67km2 (licence extension application) on the eastern side, over Piru and Masamasa Islands. The Fauro Project area covers the remnant rims of a volcano which gave off silica and gold rich mineral fluids as the volcano waned. These fluids soaked into porous and absorbent volcanic rubble known as breccias and agglomerates and precipitated gold and sulphide minerals. Copper and molybdenum sulphide mineralisation are evident in porphyry bodies in the core of the volcanic complex. Alluvial gold is known to be common in the streams draining the Fauro prospects on the western side of the volcanic rim.
Management
The management team hold 17% of SOLG shares.
Nicholas Mather (Chief Executive Officer)Cameron Wenck (Non-Executive Chairman)Brian Moller (Non-Executive Director)John Bovard (Non-Executive Director) Dr Robert Weinberg (Non-Executive Director)
Nicholas Mather graduated in 1979 from the University of Queensland with a B.Sc. (Hons, Geology). He has 25 years' experience in exploration and resource company management in a variety of countries. He was managing director of BeMaX Resources NL (an ASX-listed company) from 1997 until 2000 and instrumental in the discovery of the world class Ginkgo mineral sand deposit in the Murray Basin in 1998. As an executive director of Arrow Energy NL (also ASX-listed) until his resignation in 2004, he drove the acquisition and business development of Arrow's large Surat Basin Coal Bed Methane project in south-east Queensland. He was managing director of Auralia Resources NL, a junior gold explorer, before its USD23 million merger with Ross Mining NL in 1995. He was a non-executive director of Ballarat Goldfields NL until 2004, having assisted that company in its recapitalisation and requotation on the ASX in 2003. He was also founder and Chairman of TSX-V listed Waratah Coal Inc until its $130m takeover by Minerology Pty Ltd in December 2008. He is also Chief Executive of ASX-listed D'Aguilar Gold Limited and is a non-executive director of ASX-listed Bow Energy Limited.
Cameron Wenck is a financial adviser and company director with over 18 years' experience in the financial services industry. Earlier in his career Cameron worked for the London stockbrokers Scrimgeour Vickers and chartered accountants PricewaterhouseCoopers.
Future news flow
February 2011 – Drilling and assay results from Perry, Rannes and Fauro. Resource upgrade at Rannes and maiden resource at Mt Perry
March 2011 – Fauro dilling results. Perry and Rannes drilling
Project updates
Kauffmans-Homestead Prospect - Rannes
On the 28 February 2011, SOLG announced a Maiden Resource Estimate at its Kauffmans-Homestead Prospect at Rannes of 203koz of gold and silver, bringing a total Inferred Resource for Rannes to 404koz. The Kauffmans-Homestead Prospect lies within the Rannes Project, in Central Queensland, Australia and a major asset of its 100% owned subsidiary, Central Minerals Pty Ltd. The estimates were compiled by Hellman & Schofield Pty Ltd, an independent geological consultancy, and have been classified as Inferred for reporting under the JORC Code for Reporting of Mineral Resources and Ore Reserves widely accepted as a standard for professional reporting purposes.
Solomon is targeting a resource in excess of 2Moz of gold at the Rannes Project. The Company expects additional regular updates in regard to the drilling programs and further resource upgrades due to improving weather conditions going into winter and the availability of additional drill rigs. The Kauffmans prospect should be mineable by open cast making the mining simpler and it is possible that a strike length of some 1.5km may emerge if mineralisation joins with Homestead and Shilo gold prospects near by
Fauro
On 18 February 2011, announced the completion of the first diamond drill hole on the Meriguna Prospect, with encouraging mineralisation and initial assay results from the first 83m of the hole. The IP survey on the Fauro Island Project has commenced over the identified Prospects. The survey will cover a total area of 11km2 over the identified Prospects: Ballyorlo, Kiovakase, Meriguna, Bataha, Ballteara and Northern Fauro The Meriguna Prospect is part of the Fauro Island Project which is in the Northern Solomon Islands, just south east of Bougainville and is 100% owned by Solomon Gold.
Guadancanal
On 14 February 2011, the company announced that rock chip samples taken from the Mbetilonga Project have returned high grade copper and gold results. NVL Solomon Islands Limited, a subsidiary of Newmont Mining Corporation, Solomon Gold's partner in Guadalcanal, has advised of the 2011 work program for the Guadalcanal Joint Venture, spending US$6.03million on a program including 5,600m of drilling on Mbetilonga, Sutakiki, Kuma and Central during 2011, including a planned 5,600m (3,500m at Mbetilonga and 2,100m at Sutakiki) drilling program.
Financial
In July 2010, Solomon Gold undertook a placement of 33.1 Million Shares at £0.05 to Raise £1,654,455. In October 2010, it placed 54.02 million shares at £0.28 to raise £15.1 million. The funds raised were be used to continue the progression of the Company's exploration program at Fauro in the Solomon Islands in 2011, including extensive mapping, sampling, trenching, geophysics and a 9,900 metre drilling program. In addition funding would be available for drilling Rannes and Mt Perry Projects in Queensland. Nick Mather, Chief Executive of Solomon Gold, subscribed for 1,116,071 Placing Shares in the Placing. Following completion of the Placing and Admission, Nick Mather holds 37,706,233 ordinary shares in the company representing 13.45% of the enlarged issued share capital of the Company following the Placing.
The Company now has 281,772,521 fully paid ordinary shares and 2,600,000 options on issue. Current market capitalization is £80 million at 28p per share (52 week range 5p-53p).
SOLG intend to spend $A 21 million in 2011 on exploration activities (Newmont will spend approximately $6 million).
SWOT
Strengths
- Diverse portfolio of assets in Solomon Islands and Australia
- Well funded following £15 million placing in October 2010
- Active drilling programmes in Guadancanal, Fauro, Rannes and Mt. Perry
- Management team has 17% of shares so vested interest in company success
- Institutional support – Baker Steel and Regent Pacific
- Joint venture with Newmont mining in Guadancanal
- Management are targeting a 2moz resource within the Rannes prospect area which if economically mineable could be transformational
- AIM share volatility
- Exploration risk
- Preparing for ASX Australia listing in second half 2011 (documentation being drafted)
- Strong gold price ($1,418 an ounce)
- Potential for Newmont Mining to increase cooperation on other projects
- Potential does not translate into economically recoverable reserves
Solomon Gold’s shares are currently trading at 27p, giving a market capitalization of £76 million (52 week range 5p-53p). At the current price they are trading below October 2010’s placing of 28p which raised £15 million for the company’s current exploration and appraisal programme. Though the shares once hit over 80p intra-day after the initial Fauro Islands discovery they have drifted down in recent months and have traded in a 25-35p range.
The Fauro project remains the most risky, but Guadancanal and Rannes (Australia) offer the most certain upside to the current share price. The fact that Newmont mining are working in a joint venture with Solomon on Guadancanal gives reassurance and less funding risk. Solomon are targeting 2 million ounces at Rannes alone, which could mean a 3 times upside to the share price. Initial exploration results have been encouraging on both these projects.
Solomon Gold feels a little like Range Resources (RRL). In other words, plenty of upside from a diversifIed range of exploration assets but with a good dose of risk on some of them. Arguably the fact that Solomon Gold has assets in stable parts of the world versus Range’s key asset in Somalia, makes SOLG feel slightly more comfortable and therefore investable (RRL's recent share price rise has been incredible by the way! When I wrote my review on Range in early February the share price was 16p, yesterday it hit 24p. SEE http://contrarianinvestoruk.blogspot.com/2011/02/range-resources-look-to-have-good.html
Private Investors in SOLG seemed to have lost interest despite the news flow due over the next 2 months. This is not surprising with all the excitement over in the oil sector e.g. Caza, Range, Chariot etc. But lets not forget, gold is still hot and hitting all time highs at the moment ($1,418). If SOLG can deliver on their promises, this company looks very interesting. I bought some for my Contrarian Investor UK portfolio on Tuesday and topped up at the close yesterday on continued weakness in the share price.
Excellent article,
ReplyDeleteI'm a long term holder and disappointed at the drift past the 28p placing but I'm in it for the long haul.
It may take a couple of years to get JORC's out of the Solomon Islands but just 10moz equiv measured across the prospects would see my holding past £1.6m, let alone the 40moz that could be sitting down there, just hope there won't be too much dilution in the mean time.