Fin Review

Takeover targetSolGold looking bigger and better

by Peter Ker

Takeover target SolGold's latest drilling results were "encouraging" according to one of Australia's top mineral exploration consultants, who expects the company's resource estimate to be "bigger and better" when updated next month.

SolGold published on Tuesday aselection of new drilling results from its Cascabel tenement in Ecuador, whichhas attracted the attention of some of the world's biggest miners. Theseinclude BHP, Newcrest Mining, Codelco and Gina Rinehart's HancockProspecting, which has pegged exploration ground on three sides of Cascabel.

Two holes drilled into Cascabel's most promisingtarget, Alpala, revealed more than 1 per cent copper over several hundredmetres, plus significant amounts of gold.

Copper grades above 1 per cent are apositive sign for SolGold, given the maiden resource estimatethe company published in December 2017 underwhelmed investorswith almost 62 per cent of Alpala's contained copper reported on that occasion to be at grades below 0.9 per cent copper.

The December 2017 findings led many in the marketto view Cascabel as being very large but hosting unspectacular grades ofcopper.

Minex Consulting managing director Richard Schoddesaid it was hard to make a firm judgment on the selected results published bySolGold this week, but he said there was cause for optimism.

"The latest drilling results are mostencouraging and should result in larger and higher grade resource than thatreported back in December 2017," he said.

"The upcoming new resource figure is highlylikely to be bigger and better than that reported back in December last year.How much so, I can't tell without detailed assessment of their locations."

'Positive view'

Mr Schodde said SolGold had not yet demonstratedthe sort of results that warranted a ranking as a "tier one" copperprospect, but he said that could change.

"In my opinion, for Cascabel to meet thecriteria of being a 'tier one' deposit it needs to have a resource bigger than750 million tonnes and a grade greater than 0.9 per cent copper equivalent andhave a capex cost less than $3.5 to $5 billion," he said.

"I currently have Cascabel set as a tiertwo discovery. I will revisit this after I see the new reported resourcefor Cascabel."

London-listed SolGold's share register is dominatedby ASX listed companies, with Newcrest the explorer's biggest shareholder with14 per cent.

Low-profile resource house DGR Global and BHP eachown just over 11 per cent of SolGold.

BHP has built that stake over thepast two months, sparking a doubling in the Solgold share price and leadingmany to speculate that SolGold will eventually be the subject of abidding war between Newcrest and BHP.

Speaking several hours after SolGold published thedrilling data, Newcrest chief executive Sandeep Biswas said he had not had anopportunity to assess the latest results.

"We do have a positive view on the Cascabeldeposit from results to date, which is why we are there, and if they are goodresults then we are even happier with our investment," he said onWednesday.

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