- Noteworthy individuals recently issuing bullish commentary on Sonoro Metals Corp. include Greg McCoach and Kaiser Research, additionally SMO.V is the subject of a Mining MarketWatch Journal review, see https://miningmarketwatch.net/smo.htm online.
- Sonoro Metals Corp. (SMO.V) offers an ideal vehicle for investors seeking exposure to precious metals as the Company rapidly builds intrinsic value with near-term production potential.
- SMO.V currently has a market cap of ~C$7 million (only ~35 million shares outstanding trading at ~$0.19/share, ~44.6M fully diluted), miniscule compared to the gold ounces it is building. A recently announced private placement of $750,000 is expected to add ~4.167M shares outstanding, this will carry the Company through to the release of its first-pass resource calculation, at which time the share price is apt to trade higher. The share price of SMO.V appears poised for upside revaluation as the market better understands and appreciates the Company's plan to continue to rapidly grow intrinsic value in the ground and add shareholder value, while keeping the shares outstanding to a minimum. After the coming first-pass resource, the Company will probably only need ~$1.4M to get itself to mid-2020 and issue a second resource calculation which has very real possibility to touch 1M oz Gold at Cerro Caliche -- at that point SMO.V will likely attract major attention that should put a smile on investors.
Sonoro Metals Corp. (TSX-V: SMO) (US Listing: SMOFF) (Frankfurt: 23SP) is aiming to release a first-pass/maiden resource this Summer-2019 on its flagship Cerro Caliche Gold Project in Sonora State Mexico, located 3 hrs north of Hermosillo, 3 hrs south of Tucson, AZ USA, along the prolific Sonora-Mojave Megashear, between Agnico Eagle and GoldGroup's open pit mines. The coming maiden resource (only weeks away) is expected to have both Inferred and Indicated categories, and be meaningful enough to attract market attention. The Company is already planning an aggressive ~7,000 m 'Phase 3' drill program with the goal of establishing a resource exceeding 1,000,000 oz of gold before mid-2020. The management team is considering a number of different scenarios and interesting offers, including a non-recourse gold-backed debt financing arrangement for an open-pit heap leach pilot plant operation to generate income, cash flow the bigger picture, and minimize dilution. Investors can look forward to multiple news catalysts playing out over the next few months as the Cerro Caliche Gold Project advances.
Fig 1. (above) -- Location map of all three of Sonora Metals' assets, all located in Sonora State. The entire area around Cerro Caliche (and San Marcial) share the same Sonora-Mojave Megashear, with southeast-northwest vein structures throughout, and disseminated Au-Ag between.
Sonoro Metals Corp.'s management team is highly-accomplished, and its geological team is dialed-in on the gold at Cerro Caliche.
Melvin Hendrick, P.Geo is Sonoro's V.P. of Exploration, he has nearly half a century of experience under his belt, including Chief Geologist for Phelps Dodge, and VP Exploration for Pediment Gold Corp., bought by Argonaut in 2011 (
click here to see historic chart of Pediment Gold and how well early investors made out under Mel's exploration prowess), he and his team have an impressive track record in mineral discovery (see CV's at bottom of this article).
Anyone that has been around the resource sector for a while will know the reputation of John Darch (Sonoro's Chairman & Director), and Kenneth MacLeod (President, CEO, & Director);
John Darch headed Asia Pacific which identified, explored and developed one of the world’s largest potash deposits located in Thailand (and lowest cost too,
click here for related historic chart of Asia Pacific Resources, bought out by Italia Thai), 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+/share).
Ken MacLeod is well know 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, that company was bought-out, 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 San Miguel Corporation in 2014. Ken MacLeod now has his focus on adding shareholder value in Sonoro Metals Corp.
Sonoro’s Operations Manager,
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 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.
Rapidly building bulk tonnage gold ounces in a proven jurisdiction:
Sonora State is a low-risk mining-friendly jurisdiction with exceptional infrastructure, responsible for 24% of Mexico's gold output.
The neighboring landscape surrounding SMO.V's Cerro Caliche Gold Project is dotted with numerous low-grade bulk tonnage open pit mines (highly-profitable low opex operations with many currently operating in the mid-USD$700/oz to mid-USD$800/oz gold range). These are essentially giant earth-moving projects.
Near-term heap-leachable oxide deposit open pit gold mining scenario developing at SMO.V's Cerro Caliche Gold Project:
SMO.V's Cerro Caliche Gold Project is advanced-stage drilling-wise, in total (current and historical to date) that is more than 20,000 m drilling. Sonoro Metals has two drill programs (~10,000 m; ~100 holes and ~6,000 samples) under its belt now, plus there were 3 past operators on the property (the last two operators ran out of money) and SMO.V is fortunate to have inherited 43-101 compliant data on 116 holes and ~3,600 samples (~$3 million worth in exploration) from them.
Figure 2. (above) -- Central Zones of the Cerro Caliche Gold Project.
Southeast-Northwest trending vein structures litter the area, with disseminated gold between the gold structures. To date SMO.V has identified 17 mineralized clusters/zones on the Cerro Caliche property. The majority of drilling to date is concentrated on the central zones of Japoneses, Cuervos, and Abejas, and western central zones of Cabeza Blanca, Guadalupe, and El Colorado. The yellow shaded areas in the image above are the more advanced work areas, the Japoneses zone is most advanced with close spacing drill holes and is where the indicated resource is expected in the upcoming first-pass/maiden resource. The average grade of the resource is expected to be in the 0.5 to 0.6 g/t gold range.
Much of the mineralization begins at or near the surface. This reality makes it all the more reasonable to anticipate the development of a large tonnage, open pit, oxide deposit, amenable to a heap leaching operation, much like several neighboring mines with similar grades that are in operation in the region. Every single one of the holes that Sonoro has drilled on the property is mineralized, and all are oxide (apart from 2 holes in the far eastern section of Abejas), which will help make for an uncomplicated heap leach pad operation. Sonoro appears close to matters materializing quickly that may see a small heap leach pad plant operation in the ~20,000 gold oz/annum range.
A second pit zone appears developing well in the Cabeza/El Colorado zone area (the grades in this area are higher, in the 0.6 to 0.7 g/t range). Low-grade is of no concern to sophisticated investors familiar with bulk tonnage operations in this area, they are proven low opex earth-moving beasts. At Cerro Caliche, on a small (pilot plant) basis, mining material extraction costs will probably run ~$8/t, and on a longer-term basis that should come down to ~$6/t.
Pilot Plant Operation Initiative: There's now groups courting SMO.V to forward sell gold and Sonoro is fielding discussion regarding non-dilutive options to advance the project to production, expand the resource >1M oz gold, plus advance blue sky sections. The Company has
plans for a Heap Leach Pilot Operation (HLPO), and has engaged the geological engineering firm Geo Digital Imaging de Mexicoan (GDI) to develop preliminary studies. Using data to date and GDI's block model, SMO.V's team has conducted sensitivity analysis for a range of costs and metallurgical Au recoveries, generating several possible pit geometries with their associated stripping ratios, ore, waste haul roads, waste and process sites, pad size requirements and associated infrastructure location.
One part of the Pilot Operation initiative is a gold-backed debt financing projected to close following the completion of a NI 43-101 pre-feasibility study - likely by October 2019. To advance this key part of the initiative, Sonoro has agreed to meet in China with numerous gold-centric investors the week of July 22nd. These investors consist of individuals and corporations and their principal interest is to invest in a non-recourse gold-backed loan to be repaid from the pilot operation in bullion.
Synopsis of Sonoro's Strategy for success:
Sonoro’s executives have taken their decades of experience to identify, acquire and develop what they expect will become two major gold assets: the Cerro Caliche and San Marcial projects (see overview of that project further below). The Company's clearly defined strategy for success consists of three parts:
i. Design, develop and as quickly as practical, commence income-generating pilot production at Cerro Caliche so that the need for future equity financings is reduced or eliminated entirely;
ii. Simultaneous to the pilot operation, our focus remains outlining the potential for plus-million ounce gold resources at both the Cerro Caliche and later at San Marcial to a level where they can either be:
(a) sold (likely to one of the area's gold producers with near-exhausted gold deposits), or
(b) put into commercial production with a Joint Venture partner;
iii. Add to the company’s portfolio of high impact prospects for future exploration and development, thus ensuring Sonoro is positioned for significant growth in the longer term.
Unlike many junior mining companies, Sonoro Metals has a clear vision and roadmap forward. It is one which should excel spectacularly should it be successful in commencing pilot operations and consequently able to use the resulting cash flow to leverage its ability to acquire quality assets, while it fully develops the Cerro Caliche and San Marcial projects.
SMO.V retains 1% Net Smelter Royalty (NSR) on a project it recently sold; consider it 'money in the bank': Sonora Metals' initial qualifying transaction as a mining entity was on its nearby Chipriona Gold Project which it has since sold to neighbor Agnico Eagle, flipping for a quick $4 million back in 2017. SMO.V still retains a 1% NSR which is expected to eventually be bought-out for $1.5M (a production decision could flow from AEM when they finish metallurgy testing at the new ore they are getting into at their La India open pit, the new ore appears more similar to Chipriona). In 2017 Sonoro turned its attention to advance the Cerro Caliche Gold Project.
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James O’Rourke
James is a freelance information services professional for various media relation firms and financial publications. He monitors and invests in the resource, technology, consumer staples, healthcare, agriculture, financial, energy, utilities, and biotechnology/pharmaceutical sectors.
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