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Sonoro Gold Looks Ahead

John Darch - Sonoro Gold
Chairman of the Board


Mon, 02/14/2022 - 11:40

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Q: What progress is being made at Cerro Caliche?

A: Over the past few years, the operations at Cerro Caliche evolved from highly prospective exploration to development, following a successful drilling program. Our goal within the next 12 months is to begin production. We completed a preliminary economic assessment (PEA) that will support financing for seven years, initially. During the first three years of operation, we expect to produce in excess of 50,000oz of gold a year.

Q: How did the company's PEA showcase the potential of Cerro Caliche and how does it change the company's priorities or plans?

A: The PEA validated our 2019 business plan, which aimed to move to production as quickly and professionally as possible to a financially sustainable operation that will allow us to continue operating and expanding. Achieving this would extend the conceptual seven-year mine life to a minimum 14 years.

Q: How will the company's recent financing agreement align with the company's plan to bring the mine into production as soon as possible?

A: We started drilling in early December. We expect to acquire financing of about US$2.5 million, which will enable us to fund drilling until March or April. Depending on the results, we will decide whether to do additional drilling or to move straight to production. We will continue to discuss financing with potential project lenders to begin our Caliche operation within 12 months. The drilling will show that Cerro Caliche’s potential is considerably higher than the PEA indicates. We plan to continue expanding our assets to reach a minimum of 1 million oz, which would prove that Cerro Caliche has a life of at least 14 years.

Q: As a junior mining company, what have been the main difficulties in accessing financing? 

A: Under the circumstances, we have been successful in acquiring financing despite several factors. The first barrier is that the market sentiment toward gold and mining companies is not strong, so we are fortunate to have shareholders that believe in the project. Second, December is the traditional tax-law setting period in which Canadian investors can book gains on behalf of other companies, which can be offset against losses. As a result, some investors are selling shares simply because of the tax environment. We have explained to shareholders that December is the wrong time to invest and, even though we are selling Sonoro shares now, this is only for tax reasons and the shares will be repurchased during the first quarter of 2022.

Q: What financing alternatives are gaining strength and why is Sonoro Gold considering them?

A: The company comprehensively studies all sources of financing, such as project debt, royalties, gold, amounts of debt and equity. Our concerns as a mining company are shared by lenders and thanks to our experience, we are able to work with them. We are always studying what is best for Sonoro.

Q: What factors have made Sonoro Gold financially successful in comparison to other mining companies?

A: Sonoro has the five essential components that make a company successful: people, property, corporate structure, business plan and access to financing. We have the experienced team commonly seen in a midtier mining operation and a clear vision. The company transformed its shareholder base and financing changed from family and friends to institutional players in 2020. In April, the company began receiving international funding from the US, Germany, Switzerland and Asia. Our objective will be to establish our resources in accordance with the PEA, which indicates the potential for 1.6 million oz.

Q: What are the changes that you see in investor confidence in Mexico and how has that been affected by the sociopolitical climate?

A: We have not been affected by issues faced in other parts of Mexico because of our location. We are also the only landowners and are not interfering with other operations. For that reason, we have been well received and have faced no difficulties. Our shareholders are very attracted to Mexico and Cerro Caliche because they see its advantages.

Q: What are the main challenges you have faced this year in terms of ESG and how have you overcome them?

A: In this project, we will offer the local community employment and we will have a plan for the long-term restitution of the mine. Sonoro has been in the mining business for 35 years and understands the importance of these issues. Mining disrupts the earth but as long as companies are responsible and respectful, they can work with the environment and supply local communities with employment, water, roads and an income.

Q: What are the next catalysts for the company and what should the mining sector expect from the project in 2022?

A: 2022 is going to be an interesting year. We had so many achievements over the last couple of years that it is hard to see how we could top them. But through additional drilling, we will show that the assets and grades shared in the PEA will continue to grow. We are determined to get to production, which would be a significant achievement for a small company in such a short time. 

Sonoro Gold Corp is a gold and silver mineral exploration company with a portfolio of exploration-stage properties in Sonora and a highly experienced mining team with a successful track record in discovery through resource development.

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