Encouraging Drilling Finds Multiple Intercepts of High-Grade Gold

Q: How has the company progressed from a gold exploration and development company to a producer at its Cerro Caliche project?

A: Sonoro has completed almost 55,000m of drilling, of which just over 7,000m will be used to update our existing 420,000-ounce measured, indicated and inferred gold resource. With this drilling, together with metallurgical and other studies, we completed an updated preliminary economic assessment in June for a 15,000-ton-per-day heap leach operation. Our preliminary mine plan is now complete and we have submitted our environmental impact study to the authorities. We expect to complete a new mineral resource update in the coming weeks and anticipate an increase in the size and grade of the mineralization. We are also advancing discussions regarding project debt finance. We are well along the way in terms of becoming a gold producer. Regarding the project’s location, Sonora is the most prolific gold-producing state in Mexico, with over 32 percent of the country's gold production being mined in Sonora. Mining has been carried out in Sonora for hundreds of years, so the locals are very pro-mining. At the same time, there is a ready supply of experienced miners and skilled contractors.  This all makes for a very good working environment.

Q: What are the highlights of the company's updated Preliminary Economic Assessment (PEA) and what message does it seek to convey to the mining community?

A: Our initial PEA was already very positive and the results from the recently-updated PEA are even better. For example, the project's after-tax net present value was increased from US$41.5 million to US$53.5 million and the after-tax internal rate of return went from 32.4 percent to 45.6 percent.  The initial capital costs dropped from US$32 million to US$26 million and the project's cash costs fell from $1,227 per ounce of gold to US$1,206. Annual production is estimated at 45,000 ounces of gold over a projected mine life of seven years. Our plan is to keep drilling the property's extensive near-surface oxide gold mineralization with the goal of extending the mine life. As a result, we expect to lower the per ounce cash costs. I think the message the PEA conveys to the local mining community is that Cerro Caliche is well on its way to becoming a mine and for the local industry there will be more businesses and jobs in the pipeline.

Q: What do you think the new geological information that was not included in the PEA will show in the updated resource estimate scheduled for fall 2022?

A: The drilling was very encouraging, with multiple intercepts of high-grade gold, in many cases near the margins of our conceptual mine pit shells, which is ideal in terms of adding to the potential to expand the existing gold resource. For example, at El Colorado, hole SCR-299 intercepted 10.67m, averaging 9 grams per ton of gold and SCR 286 cut 27.4m, averaging 5.36 grams per ton of gold, below and slightly southeast of the existing pit shell. I think we should see a pretty meaningful increase in mineralization. The multiple high-grade intercepts we encountered at El Colorado and beyond give me reason to believe the western zone will provide a boost to the size and grade of the mineralization in this sector.

Q: How are the company's efforts to extend the life of the Cerro Caliche mine developing and what factors make you believe this is possible?

A: It is too early to speculate regarding what we can accomplish in terms of extending the mine life except to say that we are very optimistic. I believe if there is an increase in the resource as we expect, in a few weeks it should be very clear what kind of mine life increase is reasonable. We say this because we already have the potential for a seven-year operation, which is demonstrated in our PEA. Once our mineral resource is updated, we can then calculate how it incorporates into the current mine plan and from that, how it impacts the mine life. We are excited to see what the impact will be given the significance of last year's drilling results.

Q: What is the permitting status for Cerro Caliche and what has been the biggest challenge you have faced?

A: We have submitted our Manifesto de Impacto Ambiental (MIA), which is our environmental impact assessment, and expect to file shortly the change of use, or Autorización del Cambio de Uso de Suelo. It has been a relatively straightforward process. Our area is already quite disturbed from previous mining so there are no competing interests. At the same time, we have Agnico Eagle's Santa Gertrudis project close to us to the north and the Mercedes Mine about 8km to the southeast on the same geological structure. Also, the Cerro Prieto Mine is adjacent to us on the  western boundary. We are in an area where the government and locals are very supportive.

Q: What has been the greatest exploration discovery for the company in 2022 and how has this impacted the company's plans?

A: The most significant exploration results this year came from the El Colorado zone where we intercepted high grade gold mineralization on the northern, western and southern sides of the planned pit shell. We also deepened the mineralization at Colorado, suggesting the potential for an enlarged and deeper pit shell. These are pretty substantial intervals, such as SCR 286, which returned a 27m interval averaging 5.36 grams of gold per ton. More moderate but still very good results were returned as we increased drilling density in other zones. Having said that, we expect that some very good holes from last year should end up contributing to our upcoming resource update. The overall impact of these results should allow us to continue developing the project as we originally planned.

Q: What will be the main objective of your next exploration program and in which area will you focus?

A: Part of our drilling will be to test for on-strike southeastern extensions of El Colorado, San Quintin and several other newly-mapped mineralized zones to the west of El Colorado. We have reported some really good high-grade gold intercepts, so it is a priority to see if these zones will continue. We also plan to drill further to the northeast on the El Rincon plateau where we see a great deal of potential and where we have established that the oxide gold mineralization begins at surface and extends to a depth of 30 to 50m. It could be ideal for bulk mining. This is another area where we think we can add ounces, so drilling to define it is among our objectives. We have only assessed approximately 30 percent of the property's potential, so there is a great deal of drilling and exploration ahead of us.

Q: What would make 2023 a better year for Sonoro Gold and what are the biggest opportunities?

A: We expect to construct our proposed mining operation in 2023, so it is shaping up to be a transformational year for the company and its stakeholders, which means shareholders, the Sonoro team and the nearby community because our proposed operation should really add to employment and contribute to the economy. Building the mine and starting production should make 2023 an exceptional year.

Sonoro Gold Corp is a dynamic gold and silver mineral exploration company with a portfolio of exploration-stage properties in Sonora. The company has a highly experienced management mining team made up of business and finance professionals with a successful track record in  discovery through resource development.