SolGold’s new CEO takes a fresh look at Cascabel’s Alpala development

Australia-based copper project developer SolGold (TSX: SOLG; LSE: SOLG) is taking a more measured approach to developing its Alpala copper-gold project at the Cascabel property in Ecuador, new managing director and CEO Darryl Cuzzubbo tells The Northern Miner in an interview.

The Alpala deposit in the country’s north has been one of the most promising porphyry copper and gold discoveries of recent years. It has the potential to produce copper for more than five decades at a time when demand from electrification and decarbonization of the global energy system means supplies will not be able to meet demand from 2025 onwards.

Its potential has drawn two Australian giants to invest in the company, BHP (NYSE: BHP; LSE: BHP; ASX: BHP) and Newcrest Mining (TSX: NCM; ASX: NCM), and more recently, Franco Nevada (TSX: FNV), the world’s most significant royalty and streaming company.

With a fresh leadership bolstered by industry-leading investors, “there’s a lot that BHP and Newcrest can bring to really explore the full potential of Cascabel,” said Cuzzubbo.

Cuzzubbo took the reins on December 1, 2021, after serving as chief manufacturing supply officer at explosives maker Orica, where he moved in 2015 after a 24-year career at BHP.

He is replacing Keith Marshall, who served as interim CEO when co-founder Nick Mather stepped down from the post after some 45% of shareholders opposed his re-election. He continues to sit on the company’s board.

The rebellion was led by Cornerstone Capital Resources (TSXV: CGP), its joint venture partner in the flagship Cascabel project.

According to Cuzzubbo, the Alpala discovery contains roughly about 14% of total copper and about 15% of total gold in new major deposit discoveries in the last decade.

Once developed, Alpala at Cascabel is expected to produce an average of 150,000 tonnes of copper, 245,000 ounces of gold and 913,000 ounces of silver in concentrate per year during its 55-year life-of-mine.

“I think copper is the commodity to be in,” Cuzzubbo said. “And I think we’ll be bringing Cascabel online at exactly the right time to meet this sort of escalating demand for copper as we transition to renewables, electric vehicles. The other thing that drew me to SolGold is the larger Cascabel project.

“This will be a long life, very low cost and relatively large mine, and our prefeasibility study will bring that to bear when that comes out in a few months,” said Cuzzubbo.

One of his first acts as new chief was to delay the advanced Cascabel prefeasibility study to optimize it.

“We said that we would release the PFS in quarter two of this year and we’re on track to do that. One of the key reasons we pulled it back is we wanted to optimize it commercially. We have a clean sheet of paper here.

“And as similar to what Fortescue Metals (ASX: FMG) did in the iron ore sector over a decade ago, we’ve got an opportunity to redefine the capital intensity and the ramp-up schedule. We’re going to put forward something absolutely deliverable, but we believe that we can further commercially optimize this opportunity.”

He said the strategy entails reducing risk exposure. “Our investors need to know that this project will be deliverable. If you look at mining, even with autonomous trucks, it’s still a relatively immature technology from a digital integration and automation perspective. And it’s tough for existing assets to correct that cheaply.

“But when you’ve got a clean sheet of paper, you can set the mine up to be fully digitally integrated. That is the best way to optimize your recovery and your costs, but very importantly, from an ESG perspective, to minimize your energy and water usage,” said Cuzzubbo. “We have the opportunity to get that right from the outset.”

As it stands today, over the first 25 years of mining, the average annual Alpala production is expected to be 207,000 tonnes of copper, 438,000 oz. of gold and 1.4 million ounces of silver. 

The overall measured and indicated resource base comprises 2.66 million tonnes grading 0.53% copper-equivalent, containing 9.9 million tonnes copper, 21.7 million oz. gold and 92.2 million oz. silver.

The deposit also has a high-grade core comprising 442 million tonnes at 1.4% copper-equivalent for contained metal content of 3.8 million tonnes copper, 12.3 million oz. gold and 33.3 million oz. silver.

The core of the deposit measures about 900 metres in height and 500 metres in diameter, lending itself to the block cave mining method. Cuzzubbo said this mining method could result in reduced start-up costs and environmental and logistical advantages.

While the company is hard at work with the PFS optimization, it plans in parallel the continued resource delineation program at the Tandayama-America satellite deposit and the continued resource extension at the Alpala deposit.

“We’re exploring further because that might be a way of bringing copper forward ahead of when the underground would come on,” he said.

SolGold also has the Porvenir project in Ecuador, where it continues to undertake exploration work.

According to Cuzzubbo, “a fair amount of definition” still needs to go into it. “But what is worthy of note is where Cascabel is a very large underground mine, Porvenir is much smaller, but it’s at the surface. So, you can see from a risk profile, it’s very different,” said the executive.

Because the company views itself as having the first-mover advantage in Ecuador, management also assesses potential near-surface mining options at the Cascabel project.

The company’s focus since 2012 has been on the riches of the underexplored section of the Andean Copper Belt in Ecuador. In addition to the Tier 1 Cascabel project and the Porvenir project, SolGold has identified several highly prospective priority projects throughout Ecuador and is exploring these in parallel with the development of Cascabel.

“Given our landholdings of more than 3,000 sq. km you’d have to say that there’s got to be other economic copper porphyry projects, and these porphyries don’t just stop at the Ecuadorian border. I’m confident that the probability is on our side that we will find other deposits. So, I see a lot of discovery opportunity exactly at a time when the world needs more copper,” said Cuzzubbo.

Although Ecuador only recently opened its doors to outside miners, Cuzzubbo is confident the government has created a legislative environment supportive of mining.

“We’ve secured an investment protection agreement last November with iron-clad guarantees. When we met with the president last time, he offered to talk directly to our investors, which we will do after releasing the PFS so they can hear directly from him about the support that we’ve got with the government. I would say Ecuador as a country is open for business,” Cuzzubbo said.

SolGold’s Toronto-quoted equity is up about 17.5% over the past 12 months at 47c per share, which gives it a market capitalization of about $1.13 billion.