Promising Drill Results Indicate Expansion Potential at Cordero Mine
Soma Gold Corp. (TSXV:SOMA; OTC:SMAGF; WKN:A2P4DU) has announced promising results from its 2024 diamond drill program at the Cordero Mine on the Bagre Project in central Colombia. What do these results say about the potential for this project?
Soma Gold Corp. (TSXV:SOMA; OTC:SMAGF; WKN:A2P4DU) has announced promising results from its 2024 diamond drill program at the Cordero Mine on the Bagre Project in central Colombia. The drilling, which included 19 diamond drill holes totaling 2,759 meters, targeted the up-dip extension of the Cordero Vein. Highlights from the drilling results include significant gold intercepts such as 31.4 g/t Au (grams per tonne gold) over 3.7 meters, including 189.2 g/t Au over 0.6 meters, and 13.1 g/t Au over 1.5 meters, among others. These findings indicate the potential for additional gold resources in previously untested areas of the mine.
The Cordero Deposit, hosted in the El Carmen Stock, features gold-bearing quartz veins that have been mined from Level 2 to Level 6 of the mine. The recent drill program aimed to evaluate the western side of a cross-cutting mafic dyke that had previously halted development above Level 2. The new high-grade intercepts west of this dyke present an exciting opportunity to expand the mine's resource base.
Soma's Vice President of Exploration, Chris Buchanan, remarked in the company press release, "The initial high-grade intercepts west of the dyke are exciting and represent an opportunity to add additional ounces to the mine plan that can be accessed from current underground developments."
The Market For Gold
Recent trends indicated a positive outlook for gold prices, with analysts predicting potential gains in the near future. On July 12, Kitco reported, "Prices look to end their second week above US$2,400 an ounce, with analysts looking for a potential move to a fresh all-time high." Despite some volatility, such as the brief dip following the Producer Price Index report, gold maintained critical support levels. Neils Christensen from Kitco noted, "While Friday's Producer Price Index did take some momentum away from gold, the precious metal was able to hold critical support at US$2,400 an ounce." This resilience bolstered confidence among investors and analysts alike.
The sentiment among market experts was also reflected in recent surveys and reports. Ernest Hoffman of Kitco mentioned on July 12, "The latest Kitco News Weekly Gold Survey shows industry experts nearly unanimous on gold's bullish prospects for the coming week, while retail sentiment is also firmly in optimistic territory." This widespread optimism was underpinned by the robust performance of gold in the face of economic challenges.
Frank Holmes provided a comprehensive analysis of the impact of inflation on commodities on July 8, highlighting their role as effective hedges against rising prices. He cited data from the American Farm Bureau Federation, noting, "The cost of a typical Independence Day spread for 10 people jumped to US$71.22 this year, up 5% from last year and a whopping 30% from five years ago." Holmes emphasized the correlation between inflation and commodity returns, referencing Goldman Sachs' research: "A 1 percentage point increase in U.S. inflation has historically led to a real return gain of 7 percentage points for commodities." This data underscored the potential of tangible assets like silver, oil, and gold to retain value better than paper assets in times of rising prices.
The Federal Reserve's monetary policy continued to be a crucial driver of gold prices. Dovish comments from Federal Reserve Chair Jerome Powell bolstered gold's bullish momentum. Neils Christensen from Kitco noted, "Gold is seeing fresh bullish momentum following relatively dovish comments from Federal Reserve Chair Jerome Powell, coupled with weaker-than-expected inflation in the Consumer Price Index." These developments created an environment conducive to higher gold prices, as lower interest rates reduced the opportunity cost of holding non-yielding assets like gold.
Economic data further reinforced this positive outlook. Joaquin Monfort from FXStreet highlighted on July 11, "Gold rises after U.S. Consumer Price Index data for June comes out cooler than expected." This sentiment was echoed by Marc Chandler, Managing Director at Bannockburn Global Forex, who stated, "Gold rose for the third consecutive week, helped by lower U.S. interest rates and a weaker dollar." The combination of dovish Fed policies, coupled with ongoing economic uncertainties, provided a strong foundation for gold's continued performance. As central banks around the world grappled with inflation and economic growth, gold remained a favored asset among investors seeking stability and value preservation.
Market sentiment towards gold remained robust, driven by a confluence of economic and geopolitical factors. Marc Chandler, Managing Director at Bannockburn Global Forex, emphasized the positive market sentiment by stating, "Gold rose for the third consecutive week, helped by lower U.S. interest rates and a weaker dollar." This optimism was reflected in the bullish projections of analysts who saw gold prices reaching new highs in the near future. For example, James Stanley, senior market strategist at Forex.com, remarked, "In my opinion, this is still in bulls' control, and the fact that they held support through Q2, even with multiple bearish formations in play, highlights that control element well."
Technical analysis further supported the bullish outlook for gold. Alex Kuptsikevich, senior market analyst at FxPro, noted, "Gold's climb above US$2,400 bodes well for prices, and he sees potential for a new all-time high that's hundreds of dollars above the previous one." Additionally, the formation of supportive technical patterns indicated strong underlying momentum. Kuptsikevich explained, "From the technical analysis perspective, the potential upside target in gold in case of a resistance breakout is the level of US$2850." This analysis suggested that gold had significant room to run, provided key technical levels were maintained.
Additionally, the role of central bank buying continued to underpin the gold market. Bert Melek, Head of Commodity Strategy at TD Securities, forecasted on July 11, "Gold to hit US$2,475 in Q1 of 2025," citing robust central bank demand as a key factor. This sentiment was echoed by the World Gold Council, which noted increased investment demand in Europe, aligning with recent rate cuts. As central banks and investors alike turned to gold as a hedge against economic uncertainty and currency debasement, the precious metal's appeal remained strong. This confluence of positive market sentiment, technical support, and sustained central bank buying positioned gold favorably for continued gains.
Soma's Catlaysts
The latest drilling results at the Cordero Mine underscore several potential catalysts for Soma Gold Corp. First, the high-grade intercepts west of the previously problematic dyke indicate that there are untapped resources that could significantly boost the company's gold output. These new resources are expected to be integrated into the mine plan, potentially enhancing production levels and extending the mine's life.
The geological model developed from this drill program will aid in planning the necessary development work to initiate mining operations on Level 1 later this year. Soma's exploration team is working on an internal resource model based on these results, which will guide the development and expansion efforts at the Cordero Mine.
Additionally, Soma's exploration activities extend beyond the Cordero Mine. The company is evaluating numerous small-scale mines in the vicinity of Machuca, with soil grid surveys delineating several anomalies for follow-up. The upcoming drilling on these soil anomalies, expected to begin in Q3 2024, could uncover further high-grade gold resources, bolstering Soma's exploration portfolio and potentially leading to new mining opportunities.
Soma's strategic position along the Ot? Fault, which spans over 100 kilometers and includes high-grade gold occurrences, also positions the company to leverage regional mineralization trends. This extensive property holding enhances Soma's potential for discovering and developing additional high-grade gold deposits, contributing to long-term growth and value creation for shareholders.
Streetwise Ownership Overview*
Soma Gold Corp. (TSXV:SOMA;OTC:SMAGF;WKN:A2P4DU)
*Share Structureas of 5/24/2024Source: Thomson Reuters & Soma Gold Corp.Ownership and Share Structure
Headquartered in Vancouver, B.C., Soma Gold Corp. has a market cap of US$40.19 million and trades in a 52-week range of CA$0.30 and CA$0.74. As of December 31, 2023, it had CA$1.8 million in the bank, with a monthly exploration budget of CA$330,000.
As a profitable company, it has no burn rate.
According to Reuters, 67.45% of the company is held by management and insiders.
CEO and Chairman Geoffrey Hampson has 17.17% and 0.56% through his wholly owned companies Hampson Equities Ltd. and Lake Forest Development Corp., Vice President Jean-Francois Meilleur has 0.52%, Director Glenn Walsh has 0.31% directly and 44.07% through his wholly owned company, Conex Services Inc., and CFO Greg Hayes has 0.12%.
A further 0.70% of control is vested in institutions.
Palos Management Inc. has a 0.27% stake, and Marmite Capital AG has one comprising 0.33%. Strategic investor Eric Sprott owns 750,000 shares bought in a private placement (0.82%).
2.26% is with strategic investors.
The rest is with retail investors.
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Important Disclosures:
Soma Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. In addition, Soma Gold Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Soma Gold CorpJames Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.