Sonoro Gold Corp Provides Key Updates on Mexican Mining Policy and Cerro Caliche Project
TL;DR
Sonoro Gold Corp's Cerro Caliche project holds significant potential for high returns with an estimated Internal Rate of Return (IRR) of 129% at a gold price of $2,400 per ounce.
The Cerro Caliche project's 2023 Preliminary Economic Assessment (PEA) estimates a nine-year open-pit heap leach mining operation based on a base gold price of $1,800 per ounce, with potential improvements due to increased gold prices.
The new regime in Mexico, under the Sheinbaum administration, is expected to bring more clarity to the mining sector, offering potential benefits to the industry and the local economy.
Sonoro Gold Corp's strategic positioning and the robust potential of the Cerro Caliche project make it an interesting investment opportunity amid evolving regulatory and market conditions.
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Sonoro Gold Corp Chairman John Darch recently addressed shareholders in a letter, detailing significant updates regarding the company's operations and the broader mining landscape in Mexico. The letter highlights the incoming Sheinbaum administration's potentially more favorable approach to mining, contrasting with the previous administration's proposed constitutional amendment to ban open-pit mining. This shift is expected to bring more stability and clarity to the sector, which could positively impact Sonoro Gold Corp’s operations.
Darch pointed to an article by industry analyst Fernando Mares of Mexico Business, which praised the appointment of moderates Marcelo Ebrard and Alicia Bárcena to lead the Ministry of Economy and SEMARNAT, respectively. These appointments are anticipated to provide clearer regulations and more consistent policies for the mining industry in Mexico. Given that Sonoro Gold Corp’s Cerro Caliche concessions are already owned by the company, any new ban on open-pit mining concessions is unlikely to impede the project's expansion.
Further, Darch shared updates from the company’s 2023 Preliminary Economic Assessment (PEA) for the Cerro Caliche project. The PEA estimates that the current resources could support an initial nine-year open-pit heap leach mining operation. Originally based on a gold price of $1,800 per ounce, the project’s economic outlook has improved substantially with gold prices reaching an all-time high of $2,450 per ounce in May 2024. Under these conditions, the project’s Pre-Tax Net Present Value (NPV5) has risen to $116.8 million with an Internal Rate of Return (IRR) of 85%. An internal review further estimates that with a gold price of $2,400 per ounce, the Pre-Tax NPV5 increases to $203.7 million with an IRR of 129%.
The updates underscore Sonoro Gold Corp’s strategic positioning and the strong potential of the Cerro Caliche project amid evolving regulatory and market conditions. These developments are crucial for stakeholders and investors, as they highlight the company's resilience and ability to adapt to changing economic and political environments while maximizing the project’s profitability.
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