SolGold delays Alpala pre-feasibility study again

Alpala is part of the Cascabel copper-gold project, located 180 km north of Ecuador’s capital Quito. (Image courtesy of SolGold.)

Ecuador-focused miner SolGold (LON, TSX:SOLG) said on Tuesday it won’t be able to complete the pre-feasibility study (PFS) for its Alpala copper-gold project this year as planned.

The Australian miner had already flagged delays with the pre-feasibility study as covid 19-related restrictions meant “critical geotechnical data” was not available on time.

SolGold noted that the data, now in its hands, has prompted a redesign of certain underground infrastructure to a location outside of the cave footprint. The company also said it was introducing changes to the mine design, development and production.

SolGold noted that the data, now in its hands, has prompted a redesign of certain underground infrastructure

SolGold said the work was “nearing completion” and that preliminary financial modelling would take place this month.

The project team is simultaneously looking at other ways of optimizing the financial performance of the proposed mine development, the company said.

Sam Catalano, analyst at Canaccord Genuity, believes there is a risk some investors could over-estimate the severity of SolGold’s announcement and equate it to Rio Tinto’s issues at the Oyu Tolgoi mine in Mongolia.

“Our read of the release suggests the company is detailing normal course PFS optimization work, [but] we do flag there is a risk that some investors may read the company comment and immediately believe this is similar to recent delays in the construction of Oyu Tolgoi, where key infrastructure had to be moved out of the cave footprint due to new geotech information,” Catalano wrote in a note.

The two situations are very different, the analysts noted, as SolGold is becoming aware of changes needed during the PFS study, whereas Rio Tinto saw the issues when it was halfway through construction of the mine.

Largest copper-gold potential 

SolGold considers Alpala to be among the world’s best undeveloped deposits, with an estimated mine life of 55 years. The project is located on the northern section of the Andean Copper Belt, known for producing nearly half of the world’s copper.

Ecuador has lately attracted a flurry of interest from big miners looking to increase their exposure to the red metal. The highly conductive material is in high demand for use in renewable energy and electric vehicles, but big, new deposits are rare.

Diversified majors particularly favour large-scale, long-life projects. BHP upped its stake in the company last year to 14.7% from 11.1%, becoming the Ecuador-focused miner’s top shareholder.

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