A Unique High-Grade Gold Project: From Exploration to Production

On July 22nd, Stockhouse Editorial introduced our investor audience to an exceptional gold junior whose plans to begin producing gold – if successful – give its shareholders huge investment upside. Notably, it is located in one of the world’s most prolific gold-producing regions – Mexico’s mining-friendly State of Sonora. Being surrounded by already producing mines in an area where mining goes back 500 years, should make most if not all aspects of starting production easier and faster for this junior. And this is likely a factor in why it can fast track the development plans for its, at this point, conceptual mine, so that it is in production during the first half of next year.

Now, we take into a deeper dive into this company’s plans to develop its full-scale mining operation. It is a rare opportunity to find a gold junior that is on the cusp of building a major mining operation that, if all goes well, has the potential to fund a major growth story for years to come.

Enter Sonoro Gold Corp. (SGO) (TSX-V.SGO, OTC: SMOFF, FRA: 23SP) – a gold and silver mineral exploration and development company with two potentially high impact gold projects in Sonora. It’s an observation to be taken seriously as the company’s executive has, over the past three decades, collectively discovered or developed 12 copper or gold deposits and mines in the region (more if you include other parts of the world). So if successful, it will be part of a multi-decade track record.

To say that Sonoro consists of highly-experienced management with a successful track record in discovery through mine development is really an understatement. SGO’s flagship Cerro Caliche project is the company’s most advanced and with its plans for a 15,000 tonne per day heap leach operation in the works, it is a big project that should have a transformational impact on the company and its share price.


Ideal Mining Environment

It is often said that just as in residential or commercial real estate, three of the most important factors are location, location, location. This truism goes hand in hand with another often accurate observation that the best place to find a mine is right next to one. At present, there are several highly productive mines already operating in Sonoro’s immediate neighborhood. One mine, the Cerro Prieto, open-pit, heap-leach mine is right next door – only a few kilometers away from where Sonoro’s plans to build its mine.

Sonoro’s gold-rich Cerro Caliche property is yet another of many deposits in the state, and it is the first of what the company hopes will be a series of mine developments. The Sonora region remains one of Mexico’s leading mining states and is an important producer of gold (37% of Mexican gold production in 2019), silver, copper, iron, and other non-metallic minerals. The state boasts a low-cost, available, and skilled workforce, first-class infrastructure, and a pro-mining climate that has positioned Sonora State as a leading mining destination globally.

The State is located in the country’s northwest corner, straddling 588 kilometres (365 miles) along the U.S. border. The region runs through desert and mountains, from the Chihuahuan Desert in the east, through an area of grasslands and oak mountain areas to the Sonoran Desert west of Nogales MX.


(Click image to enlarge)


Cerro Caliche: The “Simple” Gold Project

Sonoro Gold’s flagship Cerro Caliche Gold Project covers 1,400 hectares strategically located between the two world-class mining districts of the Sierra Madre Gold Belt and the Sonora-Mojave Megashear. Drilling totals more than 47,000 meters in 433 holes which has confirmed four major gold zones covering only around 20% of the property’s known gold mineralization. These results have gone to independent contractors including McClelland Laboratories for metallurgical testing, Micon International for assessing a compliant mining pit constrained resources, and D.E.N.M. Engineering for a 43-101 Preliminary Economic Assessment (PEA) for its conceptual mine which is expected to be completed in the coming weeks.

To prepare for a resumption of drilling of the Cerro Caliche’s approximately 3 kilometer by 4 kilometer area of shallow oxide gold mineralization SGO is conducting a systematic surface sampling campaign and in doing so has identified major extensions of the already established shallow zones of oxide gold mineralization. To date, close to 1,300 soil and surface rock samples have been collected.

On July 20th, SGO announced promising assay results that “show linear structural corridors of anomalous gold, silver, and base metal mineralization” which extend over already-established zones at Cerro Caliche. Specifically, a minimum 600 meter southern extension of the El Colorado / La Ventana corridor has been confirmed. Most notable results include 23.7 meters averaging 1.7 grams of gold per tonne (g/t Au), including 5.5 meters averaging 6.0 g/t Au; 8.0 meters averaging 0.6 g/t Au.

The Buena Suerte / San Quintin zones were also extended by over 750 meters. Highlights from this new additional corridor of gold mineralization include 52.6 meters averaging 0.2 g/t Au, including 2.6 meters averaging 2.2 g/t Au; 8.0 meters averaging 0.8 g/t Au; 1.0 meter averaging 9.4 g/t Au. In the northeast region of the Cerro Caliche property, a third corridor which extends the La Magdelena / La Española structure was also defined in this zone. Unlike most of the property where gold credits dominate, high silver content has been identified. At La Magdalena for example, the company reported a 1 meter wide vein sample which averaged 1,230 g/t Ag and 6.6 g/t Au.

These new corridors add to the exploration potential and for the proposed mining operation’s subsequent expansion – which as of a May 2020 project development report had an exploration potential estimated at 75 million to 100 million tons grading from 0.3 to 0.5 g/t Au – well within the grades currently being profitably mined in the region.


(Click image to enlarge)

While these new surface results are exciting from a future potential growth perspective, the most immediate potential share price upside comes from SGO’s highly-anticipated PEA. According to Kenneth MacLeod, President and CEO of Sonoro, he expects the study to be published in the coming weeks. In the news release which announced the promising surface sampling and mapping results which extended the three corridors at Cerro Caliche, Mr. MacLeod went on to comment on the upcoming PEA:

“The sampling data cited in this news release, together with the additional sampling awaiting assaying, will be instrumental in supplementing recommendations for future exploration to be outlined in the upcoming PEA, anticipated to be released in August. Sonoro is scheduling the next phase of drilling to commence this fall.”

The San Marcial Project

Like Cerro Caliche, Sonoro Gold’s 100%-owned San Marcial project contains mineralized gold zones surrounded by former high grade gold mines. The San Marcial project covers over 1,000 hectares and is located 30 kilometers southwest of Cerro Caliche and 20 kilometers east of Magna Gold’s San Francisco mine. The concessions surround the sites of the original mine workings of the San Marcial and Soledad mines that were active in the early 1900’s. Both mine areas have yielded samples showing high-grade gold and silver mineralization, with broader lower grade zones of disseminated to stockwork forms containing oxide gold mineralization.


(Click image to enlarge)


Meet the Team

Sonoro’s highly-experienced executive team hails from legacy mining giants such as Phelps Dodge, Argonaut Gold Inc. (TSX.AR), Glamis Gold, Alamos Gold Inc. (TSX.AGI), along with an another smaller, but still major success story, Pediment Gold.

A notable accomplishment of Sonoro’s head of operations, Jorge Diaz, was back when he directed the development of Alamos Gold’s highly successful Mulatos Gold mine – which has produced over two million ounces of gold and generated more than $400 million in free cashflow since 2005. The Mulatos mine has, in effect, provided the cashflow and growth which led to Alamos Gold becoming a huge winner for investors.

Mr. John Darch headed Asia Pacific Resources, a pennies to $11 per share success which discovered, and developed one of the world’s largest high grade and lowest cost potash deposits located in Thailand. He also headed Crew Development Corp. in the 80s, 90s, and early 2000s until it was taken over (from pennies to $4+/share). The Sonoro strategy is the same as Crew; (a) secure revenue, (b) secure development properties and (c) new exploration. John Darch was also heavily involved with Botswana Diamondfields whose stock exceeded $6/share, and Nevada Goldfields ($8-plus/share).

Mr. Kenneth MacLeod is well known as a financier over the last 35 years in the oil, gas, mining, and energy sectors. The last big project he worked on was Western GeoPower Corp. in California, which was bought-out, by Polaris Infrastructure in 2009. He then set up a company to advance renewable energy projects in the Philippines that included a 600 MW dam and that company was sold to a subsidiary of a major Philippine company in 2014. Ken MacLeod now has his focus on adding shareholder value in Sonoro Metals Corp.

Sonoro’s Operations Manager, Mr. Jorge Diaz, has a long history as both a mining and metallurgical engineer. Jorge is well known for leading the development, construction, and operation of numerous major mines throughout northern Mexico. Similar to his leadership in the more recent successful development of giant mines like Alamos Gold’s Mulatos mine and Argonaut Gold’s La Colorada mine, Jorge is leading the development of Sonoro's Cerro Caliche pilot operation. Jorge’s experience in building mines adds to Sonoro’s confidence that Cerro Caliche has the potential to relatively quickly become a significant cash-flowing asset for Sonoro.


(Click image to enlarge)


From the C-Suite

Stockhouse Editorial reached out to reached out to Sonoro Gold’s President, CEO & Director Kenneth MacLeod, along with Chairman & Director John Darch, to give our investor audience perspective and insight into this uniquely-positioned gold exploration and development company.

SH: Gentlemen, what sets the company apart from other junior mining companies in this space and region?

SGC: We have considerable in-house expertise in exploration, mine development, operations, and finance. With this team we are in the midst of what we view as a low risk development opportunity which should transform Sonoro from an exploration and development company to a cash flowing producer. Very few companies ever make this transition but when they do the rewards for shareholders are usually immense.

SH: Can you talk a bit about your El Colorado Zone assay results in April…very nice numbers here.

SGC: Yes, they are. SCR-234 in the southern extension of El Colorado cut 16.77 meters averaging 1.837 grams of gold per tonne that included 4.57 meters averaging 5.627 g/t Au and 1.52 meters averaging 14.6 g/t Au. Another hole SCR-239 intercepted 7.62 meters averaging 2.425 g/t Au which includes a section of 1.52 meters averaging 10.6 g/t Au. These El Colorado Zone results are not the highest but are very encouraging and certainly should go towards adding to the Cerro Caliche’s gold resource. They also further demonstrate Cerro Caliche’s potential to host a much larger gold deposit. We are very excited by these and other recent results. The more work we do, the more we advance our understanding of the area’s geology. If anything these results add to our optimism regarding the remaining 80% of the known gold mineralized areas, we have yet to drill.

SH: You’ve said that Cerro Caliche is a “simple project.” Can you unpack the benefits of that for our retail investor audience?

SGC: The bulk mining of the shallow oxide gold mineralization at Cerro Caliche is essentially a giant earth moving operation - basically trucks and shovels moving the defined mineralization to be crushed before being piled or ‘heaped’ onto a lined pad. A fluid is then applied, and it percolates through the pile and as it does it leaches out the gold until it reaches the liner and then travels to a collecting pond. From there the gold in the fluid is extracted in our case using carbon and the gold in carbon is then shipped out be extracted and refined into purified gold. Additionally, we reclaim the mined areas as we go and given, they are already disturbed from previous artisanal mining we plan to leave the area in better condition than it is now.

SH: What makes your business model unique and attractive to investors?

SGC: We expect a very low CAPEX to get started, fast payback and very high internal rate of return and cash flow. If we are successful, we expect to show a very high rate of organic growth in the years to come.

SH: I have to mention your stock has had a very nice bump over the last 3 months…up about 60% in value since late April. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good buy right now?

SGC: We are only weeks away from what we view as a major step toward becoming a gold producer where our value should be based on projected cash flow and growth potential. It is our view, and we are not alone, that it should justify a significant upgrade even now from our current share price. Going forward, the cash flow at 15,000 tons per day and future exploration potential gives us cause to believe they will justify continued significant increases in Sonoro’s valuation.


(12 month TSX-V.SGO stock chart Apr 30, 2021 – July 30, 2021. Click image to link to chart)

SH: From the investors perspective, can you tell us about the managerial and operational set-up of the Company and how will Sonoro Gold position itself as an industry leader?

SGC: We have a highly-diversified and complimentary team of experts who, in some cases, have been working together for decades. Like our mine plan, which is designed to allow it to be expanded substantially, we have the management in place which can build a substantially larger company.


Investment Summary: The Bottom Line

Of course it’s easy to say a particular stock – especially in the junior mining space – is undervalued. But all of the basic metrics in determining inherently undervalued share value appear to demonstrate Sonoro Gold Corp. as a perfect case in point:

• Gold explorer and gold producer
• A large land package in a mining-friendly jurisdiction with 500 years of mining history
• 4 confirmed major gold mineralized zones, along with 18 identified gold mineralized zones, at its highly-prospective Cerro Caliche Project
• Over 47,500 metres of drilling to date
• CDN$11.11 million in secured private equity financing over the past year
• Experienced management team with a strong, proven record of providing shareholder value and minimizing equity dilution
• A clear and focussed business plan.

Talk about checking most, or all, of the boxes. Sonoro Gold Corp. is the kind of rare investment gold play that savvy investors should keep on their radar screen moving forward.


(Click image to enlarge)


For more information, visit www.sonorogold.com.



FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.