Gold Stock Announces Rich Intersect at Columbian Mine
Canadian company Soma Gold Corp. has just announced a significant discovery following a drill program at its La Aurora mine in Machuca, Antioquia, Colombia.
The Canadian company, focused on gold production and exploration, acquires, explores, develops, and operates mining properties in South America. It already controls two adjacent mining properties in Antioquia with a combined milling capacity of 675 tons per day.
Soma Gold Corp.'s (TSXV:SOMA;OTC:SMAGF;WKN:A2P4DU) main project is the El Bagre Gold Mining Complex (El Bagre), consisting of an operating gold processing plant (the El Bagre Mill) and the Cordero underground mine.
Its El Limon Project (El Limon) is adjacent to the El Bagre Project and includes a past-producing underground mine and a gold processing plant with a 225-ton-per-day capacity. The El Bagre Mill is currently operating and producing. Internally generated funds are being used to finance a regional exploration program.
The company's La Aurora Mine is located on the western side of the Ot? Fault within an area characterized by a regionally extensive high-metamorphic grade gneiss. Quartz veins in this region form as laminated fault-fill veins within a sinistral brittle-ductile shear zone, interpreted as a higher-order structure associated with the Ot? Fault. The controlling fault zone is predominantly north-south striking and dips moderately to steeply to the west.
The Ot? fault system has a strike length of over 100 km, from Segovia-Remedios in the south to Nechi in the north (where younger sedimentary overlap sequences conceal it). Soma's property holdings now encompass more than 56 km of this fault's strike length.
High-grade gold mineralization is observed along the entire Ot? Fault strike length, primarily occurring in brittle-ductile to brittle quartz veins formed during later stages of deformation along the fault. Throughout the district, the quartz veins display orientation patterns that suggest the veins form in conjugate faults associated with brittle faulting on the Ot? Fault.
Prominent mines along the Ot? trend, such as Segovia-Remedios, La Aurora, El Limon, Le Ye, Los Mangos, and Cordero, underscore the prevalence of high-grade gold mineralization in the area. The Machuca Property is strategically located along a critical segment of this regional fault structure, boasting numerous indications of high-grade gold mineralization.
Other company assets include the Tucuma Exploration Project (Tucuma) copper/gold exploration project in the Carajas metallogenic province in Para, Brazil. That site is currently under option to Ero Copper Corp.
The Catalyst: Major Gold Vein Intercept
On March 5, Soma Gold announced that it had intersected a gold vein bearing 8.35 grams per tonne (g/t) at La Aurora and issued a report detailing its underground channel sampling. These results were derived from the initial diamond drill program, which consisted of three drill holes totaling 656m of drilling completed in late December 2023.
The March 5 release also delivered the firm's 2022 due diligence underground sampling program results.
According to the report, the Ot? Fault and associated quartz veins form a series of en-echelon segments that consistently step approximately 25m to 50m to the left along the strike. Uniquely oriented quartz veins, created to accommodate extension within step-over zones, strike southeast and dip steeply to the south in these domains. The extensional step-over zones are recognized as hosting high-grade ore shoots and represent highly promising exploration targets.
In 2022, Soma conducted due diligence channel sampling at La Aurora Mine. The channel samples were collected along the strike of the La Constancia vein on level 5 of the mine. In all, 69 channel samples were obtained from 37 lines covering approximately 110m along the strike.
Out of these, 35 samples were quartz vein material from the La Constancia vein, while the remaining 34 samples were wall rock shoulder samples in the footwall and hanging wall of the quartz vein.
The composite grades of each channel sample line ranged from 0.01 g/t gold (Au) to 94.67 g/t, with 21 quartz vein samples exhibiting gold grades exceeding 0.4 g/t and the remaining 15 vein samples indicating the nuggetty nature of the gold distribution. Seven wall rock shoulder samples also exhibited significant gold assays ranging from 0.9 g/t to 9.07 g/t.
Barry Dawes of Martin Place Securities writes that gold looks "ready to break higher against bonds" and that "gold stock sentiment is close to a bottom" and "should be ready to rally soon now."This load is attributed to thin veins containing sulfides and gold in the footwall of the central vein structure. The grade distribution of the due diligence samples aligns with the historical underground channel sample dataset the maximum historical sample along the vein was 146 g/t Au. Due diligence samples adjacent to the high-grade historical sample reported gold assays exceeding 7 g/t.
In late December 2023, a drill program to enhance confidence in the down-dip continuity of the vein structures observed in historical mine workings commenced. The primary objective was to test the interpreted high-grade ore shoots and investigate whether the historic mine's La Constancia quartz vein exposure extends below level 5.
One drill hole unexpectedly intersected mine workings that were not documented in existing mine surveys. It could not be completed to the planned depth, preventing the hole from intersecting the targeted section of the Constancia vein.
A drill hole targeting the down dip of high-grade channel samples from the vein on level 5 intersected the vein 30 m below level 5. The vein spanned from 178.8 m to 181.35 m and had an approximate true width of 2.25 m. This milky white quartz vein was brecciated by younger, brittle fractures during structure reactivation.
The fractures are filled with crushed vein material and pyrite, but assay samples of the vein did not return any significant gold values. A narrow interval of thin quartz veins was found 2.5 m downhole from the primary vein intersection but returned only a weakly anomalous gold value of 0.18 g/t Au over 0.35 m at a depth of 183.9 m.
A third hole was designed to intersect a southeast striking, steeply dipping quartz vein segment that forms in the extensional stepover zone between the Constancia and Aurora veins. The vein, interpreted as forming in a normal fault accommodating extension between the two north-south striking veins, was intersected from 151.6 m to 152.7 m with a true width of 1.0 m, situated 30 m up-dip of its exposure on level 5.
This late milky white quartz-carbonate vein crosscuts an older brecciated dark gray quartz vein. In the footwall, 1 cm to 3 cm thick quartz veins with variable orientations and densities form a 35 m wide stockwork interval. The veins contain 1% to 5% sphalerite and galena, which typically accompanies gold mineralization along the Ot? Fault corridor.
The quartz-carbonate vein was barren of gold mineralization. Still, a set of thin (1.0 cm to 4.0 cm) quartz veins with pyrite, sphalerite, and galena returned a gold assay of 8.35 g/t over 0.5 m within the stockwork interval. The firm has undertaken additional sampling of the entire stockwork interval to determine whether any unsampled quartz veins also contain high-grade gold.
Soma Gold VP Exploration Chris Buchanan says, "We are pleased that the first phase of drilling intersected quartz veins where they were predicted from initial structural models of the vein system."
"We're particularly encouraged that numerous stockwork-style veins with sulfides and high-grade gold intersected in the footwall of the primary vein structure. This zone is interpreted to be an extensional step-over and has the potential to develop into a broad, high-grade ore shoot."
The initial 2023 drill program confirmed the presence of the Constancia and Aurora veins at depth below the current mine workings. While the low gold grades from the Constancia vein in the second hole are disappointing for the firm, they are consistent with the nuggety distribution of gold grade observed in the 2022 due diligence channel samples on level 5.
Soma Gold is dewatering the mine to its deepest levels, enabling access to Levels 1 and 5 while evaluating safety conditions. It is set to conduct geological mapping, systematic sampling, and accurate surveys of the mine workings. The resulting data will be integrated into the current datasets to plan the next phase of drilling in 2024.
"The conclusion is that the charts for Soma Gold present a very favorable outlook for all timeframes, which is for a sustained and substantial bull market, and thus, the current dip is viewed as presenting an opportunity to pick it up at a very good price," Technical Analyst Clive Maund wrote.Channel samples are typical in underground mining in Colombia and are commonly used for grade control. The channel samples are marked by a spray-painted line. Individual samples along the channel are broken out based on changes in lithology (e.g., quartz vein vs. wall rock). A large plastic sheet is laid out below the sample line, and the sample is chipped with a hammer and chisel. The chips are collected by the underlying plastic sheet and transferred to a sample bag.
Before December 2023, the Operadora mine laboratory analyzed all Soma Gold samples, and selected samples were submitted to ALS Laboratory for QA/QC analysis. Fifty-gram aliquots of each sample were analyzed for gold using a standard fire assay with a gravimetric finish.
Since 2023, all exploration samples for Soma Gold have been submitted to ALS Lima for analysis, per the drill core procedures, because renovations for improved employee health and capacity decreased the operating scope of the Operadora mine laboratory. Grade control channel samples for the Cordero Mine continue to be processed at Operadora.
Why This Sector? Ripe for a Rally
As the gold market continues to sit above US$2,000 an ounce, some analysts see a lucrative future for the yellow metal despite the Fed's signals that it is in no hurry to lower interest rates.
Barry Dawes of Martin Place Securities writes that gold looks "ready to break higher against bonds" and that "gold stock sentiment is close to a bottom" and "should be ready to rally soon now."
"Gold stock investors and speculators have been ground into a pulp over the past few years, but there is still hope for a better future," he explains. "Many technical (indicators) are suggesting a breakout is at hand."
Ahead of the Herd newsletter writer, Rick Mills, opines that the biggest beneficiaries of rising gold prices would be gold miners' stocks, "which are dirt-cheap and mostly forgotten today."
Gold remains the critical monetary metal worldwide, as it has for millennia, with no end in sight. However, where we get gold and how we secure it constantly changes. As the international geopolitical climate continues to deteriorate, the value of owned assets in the ground will be directly affected by how easy it is to navigate the jurisdictions where those assets are located.
Gold ore in Columbia is much easier for Western owners to access (and thus profit from) than gold in Russia, China, or other unstable and unpredictable jurisdictions. As Ernst & Young's Top 10 Business Risks and Opportunities for Mining and Metals in 2024 report explains, "The race for minerals and metals required for the energy transition has driven a range of new range of government incentives and restrictions."
"As countries move to incentivize local investment, including through the U.S. Inflation Reduction Act (IRA) and the EU Critical Minerals Act, miners will need to be agile enough to take advantage of new opportunities while managing the risk of government intervention."
"Resource nationalization and more taxes, royalties, and restrictions mean miners should expect tougher operating conditions in some countries."
Why This Company? Already Profitable, Doubling Down
In addition to ongoing exploration activities at La Aurora Mine, Soma's exploration team is assessing various small-scale mines near Machuca. Three extensive soil grids are scheduled for 2024 to determine the continuity of gold mineralization between the informal mines along the Ot? Fault. Soma also continues to work with the local communities on the Machuca property as part of its ongoing ESG program. In addition to taking ESG seriously, Soma Gold follows a comprehensive QA/QC program to ensure the reliability of assay data collected from its exploration programs.
All samples are sawn, or split, in half, with one half returned to the core box for storage. The second half-core is placed in a labeled plastic bag with a tag and document and sealed for shipment. Batches of samples are shipped to ALS Colombian in Medellin with security tags and a documented chain of custody.
Pulps of each sample are prepared in Medellin and shipped to ALS Lima for analysis. All samples are analyzed using the package ME-MS41, an ICP-MS analysis that provides the concentration of 51 elements. Fifty-gram aliquots of each sample are analyzed for gold using a standard fire assay with an atomic absorption finish.
Overlimit samples are subjected to an additional fire assay with a gravimetric finish to determine the gold concentration. The test program includes the regular insertion of certified blanks, duplicates, and certified OREAS standards. Assays of the QA/QC samples are automatically compared to the certified values and standard deviations in the database.
On March 4, Streetwise reported that the company's existing mine production had nearly doubled.
"Soma's mines in Antioquia, Colombia, have a combined milling capacity of 675 tonnes per day. Its El Bagre mining complex produced 23,800 ounces of gold in 2022 and 32,340 ounces of gold in 2023, and its Limon Mill is available to restart production when production from its Cordero Mine (part of the El Bagre mining complex) reaches capacity," we wrote at the time.
"The company said it plans to increase gold production to 38,000 to 40,000 ounces of gold this year and to 85,000 to 100,000 ounces by 2027-2028, according to its investor presentation, generating over CA$100 million of EBITDA and CA$50 million net profit in 2027-2028."
At the time, Soma Gold board chair and interim CEO Geoffrey Hampson said, "We re-looked at the Cordero mine plan and determined that there was a better way to do certain parts of the mine, so we've adjusted the mine plan." The upshot is that the firm plans to increase its production rate from 450 tonnes per day to 640 by Q2 2024.
Soma's properties are in a great neighborhood with AngloGold Ashanti Ltd. and B2Gold Corp.'s 6-million-ounce (Moz) Garmalote project and Aris Gold Corp.'s 5.5 Moz Segovia project nearby. The company claims that Antioquia hosts more than 100 Moz of total discoveries, and informal mining in the Ot? fault has mined an estimated 17 Moz of gold.
In this narrow-vein system, Soma Gold has been "kind of mining by feel," Hampson said, resulting in the firm finding "more gold than we're mining on an annual basis."
"Some investors look at our resource and say, 'Well, you've only got four or five years' worth of mining life there,'" Hampson said. "And I go, 'Yeah, but that doesn't take into account what we find every year.'" He claims the company still finds new veins and extensions to extend the resource. He also opines that the firm could increase its resources and production to as much as 150,000 ounces per year by acquiring other projects.
"I think that the way to really create the value for the shareholders is to be growing, to have a plan to expand the number of ounces and to try and get some momentum in the marketplace," explaining that he would prefer to look at developed properties. "It needs to be shovel-ready," he said.
Why Now? Act on Positive Data
On January 26, Technical Analyst Clive Maund updated his original company assessment from August 2023. "With its gold production set to ramp up substantially this year and in years to come so that increasing revenues rapidly reduce outstanding debt, the outlook for Soma Gold Corp. could scarcely be brighter," he wrote. "With AISC (all-in sustaining costs) currently at about US$1200 - US$1300, the company is already benefiting from substantial margins at current gold prices."
Maund explained that "Whilst the fact that management currently owns about two-thirds of the stock rules out a hostile takeover, their big investment in the company is certainly a vote of confidence and, in addition, the company's large land holdings in a gold-rich district hold out the strong possibility of additional discoveries of high-grade ore."
"Therefore, the sharp dip in the company's stock price over the past week or so, which was occasioned by the CEO of the company stepping down temporarily for personal reasons coupled with a dip in precious metal stocks generally, is viewed as presenting an excellent opportunity to buy the stock at a good price for as we will proceed to see as we examine the charts, the technical outlook for the stock is excellent."
"We can see that the sharp drop over the past week or so," he continued, "which was occasioned largely by the news about the CEO, crashed a support level and brought the price down close to a zone of stronger support, which is expected to limit any further downside and this drop has resulted in the stock becoming quite heavily oversold, as shown by the MACD indicator."
"This," Maund concludes, "is a good place for it to turn higher again, perhaps after some stabilization in this area, as the market starts to appreciate that, given the outlook for the company and for gold itself, the business relating to the CEO is little more than 'a storm in a teacup' that it will soon take in its stride."
"The conclusion is that the charts for Soma Gold present a very favorable outlook for all timeframes, which is for a sustained and substantial bull market, and thus, the current dip is viewed as presenting an opportunity to pick it up at a very good price."
Streetwise Ownership Overview*
Soma Gold Corp. (TSXV:SOMA;OTC:SMAGF;WKN:A2P4DU)
*Share Structureas of 2/28/2024Source: Thomson ReutersOwnership and Share Structure
Headquartered in Vancouver, BC, Soma Gold Corp. has a market cap of US$40.19 million and trades in a 52-week range of CA$0.30 and CA$0.74. As of September 30, 2023, it had CA$3 million in the bank, with a monthly exploration budget of CA$330,000. As a profitable company, it has no burn rate.
According to Reuters, 19.27% of the company is held by management and insiders. CEO and Chairman Geoffery Hampson has 18.27% and 0.56% through his wholly owned company Lake Forest Development Corp., Vice President Jean-Francois Meilleur has 0.52%, Director Glenn Walsh has 0.31% directly and 44.07% through his wholly owned company, Conex Services Inc., and CFO Greg Hayes has 0.12%.
A further 0.70% of control is vested in institutions. Palos Management Inc. has a 0.27% stake, and Marmite Capital AG has one comprising 0.33%. Strategic investor Eric Sprott owns 750,000 shares bought in a private placement (0.82%).
2.26% is with strategic investors.
The rest is with retail investors.
| Want to be the first to know about interestingGold investment ideas?Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
Important Disclosures:
Soma Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. In addition, Soma Gold Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Soma Gold Corp.Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.