Monday, 13 February 2012

Solomon Gold nears upgraded gold resource at Rannes on the back of more high grade assays

Solomon Gold (AIM: SOLG) is looking to release an upgraded Inferred Resource at its Rannes gold and silver Project in Queensland towards the end of the current March quarter as it continues to target 2 million ounces of gold equivalent.

The current Inferred Resource, which was upgraded by 20% in November last year, is 812,000 ounces of gold equivalent comprising 486,935 ounces of gold and just over 13 million ounces of silver.

Highlighting the potential of the Rannes Project is the very competitive discovery cost of A$6.70 per ounce versus an average of $60 per ounce in Australia.

Another defining factor of the project is exploration to date has only tested the top 200 metres of two prospects.

At a conservative resource ounce valuation of A$70 per ounce, Rannes is worth $57 million. To put this into perspective, Solomon Gold currently has a market cap of around A$50 million.

Drilling on the Kauffmans and Crunchie Prospects continue to deliver strong drill intercepts, which will be incorporated in the new resource upgrade.

At Crunchie highlight intercepts include:

- 5 metres at 1.9 grams per tonne (g/t) gold and 211.2g/t silver;
- 4 metres at 2.6g/t gold and 86.5g/t silver;
- 2 metres at 0.8g/t gold and 149.5g/t silver; and
- 26 metres at 1.3g/t gold and 65.1g/t silver

While at Kauffmans drilling has returned a best result of 28 metres at 0.8g/t gold and 11.1g/t silver.

Chief executive Malcolm Norris said Solomon is encouraged by these results.

“We are improving our understanding of the mineralised systems and are lowering project risk,” he said.

“The current wet season has commenced and our drilling rate slowed, but that will be ramped up again in the second quarter of 2012.

“In the meantime we are dramatically improving our understanding of the deposits and commencing preliminary metallurgical testing”.

Reverse circulation and diamond drilling since November last year has comprised 27 holes for 4,046 metres at Crunchie, and 13 holes for 2,466 metres at Kauffmans.

Follow-up drilling is also being undertaken at Kauffmans to explore the up-dip and down-dip extensions of the high grade intersections of 2 metres at 33g/t gold and 22.6g/t silver, and 2 metres at 10g/t gold and 120g/t silver.

The current Inferred Resource also does not include results from nearby prospects such as Double Scoop and Porcupine, which have delivered some promising results including 28 metres at 0.5g/t gold and 11g/t silver, and 16 metres at 1g/t gold and 10.7g/t silver.

These results will be followed up in the next round of drilling and brought into Solomon’s growing resource inventory.

2012 Exploration Program

Exploration work in the Rannes Project area in 2012 will include:

- Further resource drilling at Kauffmans and Crunchie;
- Drilling at Double Scoop and Porcupine and addition of these to the resource inventory;
- Drill testing of the multitude of surface anomalies in the vicinity of the main prospects; and
- Exploration throughout the 30 kilometre long belt, comprising additional soil sampling and geophysical surveys to define additional targets for drilling.

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