Solomon Gold (LON:SOLG) said the first hole of 2012 at the Hambusimaloso prospect at the Mbetilonga project in the Solomon islands has reached 400 metres and is expected to be sunk to 700m.

MBT008 is targeting previous trenching results, including 80m at 1.76 per cent copper, and 30 metres at 0.88 per cent copper, and if it is successful, a second hole will be drilled.

The news was part of a wider update on activities at the firm's Guadalcanal joint venture (GJV) between the company and Newmont Mining's subsidiary - NVL Solomon Islands Ltd.

Newmont is funding the exploration activities and is earning 70 per cent in the joint venture. Last year, it spent US$7.91 mln, with US$4.92 mln expected in 2012.

Solomon said that last year saw activity across four of the five prospecting licences - the focus being on the Sutakiki and Mbetilonga licences.

At Sutakiki, the firm said exploration was underway. The project has thrown up "outstanding" results previously, at Taborora, where Solomon hit 354 metres at at 0.5g/t gold and 0.13 per cent copper.

In 2011, at Taborora, two holes intersected significant gold and copper, including 259m at 0.28g/t gold and 0.11 per cent copper from 362m to the end of hole at 621 metres in hole SUT001.

Recent work has provided definitive evidence of a gold-copper porphyry mineral system at Taborora and that targets exist below the historical drilling, and potentially in adjacent positions, said the company.

Other exploration within the GJV tenements includes the preparation for a sampling programme within the Central prospecting licence.

The company told investors: "Solomon Gold is encouraged by these results and will provide further updates as data are received. Joint venture meetings are now being held quarterly and the Solomon Gold team is taking active interest in the development and implementation of the exploration programme."

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Solomon Gold (LON:SOLG) has added to its project portfolio by acquiring the right to buy up to 85 per cent in a highly prospective gold-copper-silver project in Ecuador.

The company has signed a binding letter of intent with Cornerstone Capital Resources (CVE:CGP) over its 5,000 hectare Cascabel gold-copper-silver property. Field work is expected to kick off in May with Solomon looking to move the project towards the drilling stage "as soon as possible".

The project is located in northern Ecuador within the Andean western cordillera, which Solomon said hosts “numerous Tier 1 world class copper-gold deposits” through Chile, Peru, Ecuador and Colombia.

These projects include the Junin copper-molybdenum deposit with a resource of 982 million tonnes at a grade of 0.89 per cent copper and the La Colosa gold deposit, which hosts 468 million tonnes at 0.86 grammes per tonne (g/t) gold.

Under the terms of the deal, Solomon can buy a 65 per cent stake in the project by making a series of private placements in Cornerstone totalling C$850,000 and spending US$7.8 million on exploration over four years.

Solomon can earn an additional 20 per cent by funding further work towards completion of a bankable feasibility study, which has been capped at US$20 million.

The Cascabel project area contains copper and gold anomalism in soil and rock chip sampling and, according to Solomon, could potentially accommodate a large discovery.

Solomon will initially be targeting a copper and gold mineralisation with grades of up to three per cent copper and 5.9 g/t gold that has been mapped over an area of 3x2 kilometres.

“The Cascabel property demonstrates all the features that we would like to see in an early stage gold-copper porphyry project, and to partner with a highly respected company such as Cornerstone enhances the probability of success,” said chief executive of Solomon Gold Malcolm Norris.

Gold-Copper Opportunities

Solomon Gold is undertaking a comprehensive review of new gold-copper opportunities in the southeast Australasian region and in Central and South America.

The company recently acquired three new early stage exploration properties with low minimum spend requirements in the Solomon Islands.

The licences, which span 389 square kilometres, have returned encouraging gold geochemical and geological results, including anomalous gold from stream sediment sampling, during early stage exploration. 

Solomon Gold (LON:SOLG) has acquired three new early stage exploration properties in the Solomon Islands.

It bought Honiara Holdings Pty Ltd, which owns the properties, for A$50,000. According to Solomon, the licences have low minimum spending requirements.

The prospecting licences span a 389 square kilometre area. The company says that early stage exploration has already been completed and it returned encouraging results.

Solomon’s exploration team plans to follow up the initial work during the second quarter of this year.

The company owns a portfolio of exploration assets in the Solomon Islands and in Australia, they are a mix of wholly owned projects and joint ventures.

At Rannes project in Queensland, one of the more advanced project’s in the portfolio, a new resource estimate is expected in the coming weeks.

It will follow the last estimate, in November 2011, which took the resource to 812,000 ounces of gold equivalent.  Solomon has a 2 million ounce target for the project.

The group is also exploring for gold on the Solomon’s Fauro and Guadalcanal islands. 

The breakdown of the resource is 25.5 million tonnes at 1.0g/t gold equivalent for 812,307 ounces of contained gold equivalent (486,935 gold ounces and 13.01 million silver ounces).

Importantly, the resources are all close to or at surface which may potentially lead to a low stripping ratio at Rannes.

Solomon's share price shot up around 50% overnight after it unveiled the upgrade to the market.

Highlighting how quickly Solomon is moving the project forward, the latest upgrade follows hot on the heels of the September upgrade, which boosted ounces by 24%.

Drilling at Rannes continues at Kauffmans, Crunchie , Shilo, Double Scoop and Nicks Prospects, with a total project-to-date discovery cost just A$6.70 per ounce.

Malcolm Norris, chief executive, commented “The board is highly encouraged by today’s further resource estimate upgrade.

"Exploration also continues at the 21 other nearby prospects, which have been identified in the Rannes Project area, with the aim of delivering the company’s objective of defining two million ounces of gold equivalent."

The project is located around 150 kilometres west of the major central Queensland port city of Gladstone.

Meanwhile it says that drilling continues at the project towards a 2 million ounce target. Rannes is found in central Queensland, Australia.

"The board is highly encouraged by today's resource estimate upgrade,” said chief executive Malcolm Norris.

“Drilling continues at the Kauffmans, Crunchie, Shilo, Double Scoop and Nicks prospects with shallow, percussion drilling and deeper diamond drilling. 

“Exploration also continues at the 21 other nearby prospects, which have been identified in the Rannes project area, with the aim of delivering the company's objective of defining two million ounces of gold equivalent.”

Solomon reported that the Rannes gold resource has been increased from 675,779 to 812,000 ounces.

The project’s total inferred mineral resource is now estimated at 25.5 million tonnes grading 1.0 grams per tonne gold equivalent. The upgrade included an extra 102,000 ounces at the Kauffmans prospect and an additional 34,000 ounces at the Crunchie prospect.

It said that the additional resource ounces are associated with deeper resources from a number of good intersections at depth.  

Solomon added that the mineralisation component remains open at depth, to the north, east and south. And drilling in the deepest hole has still only tested to a depth of 240 metres below surface, it added. 

Solomon said that its total discovery cost to date is A$6.70 an ounce. Additionally it explained that the project may potentially have a low stripping ratio because the resources are all close to or at surface.

In today’s statement chief executive Malcolm Norris also highlighted that Nick Mather continues to play an active role in the company.

"The board is also delighted that Nick Mather, who stepped across from his former role as CEO to executive director in October this year, remains fully involved with the day-to-day running of the company,” he said.

“With Nick's knowledge and support, the team look forward to driving towards the stated target of 2 million ounce gold equivalent in inferred resources at Rannes, and in contributing to the strategic direction of Solomon Gold and assessing growth opportunities for the company."

At 13:00 on AIM Solomon Gold shares were up 3.375p, or 38 per cent, trading at 12.25p each.

The bank said that recent drill results at its Rannes project in Queensland demonstrate that the firm can build up gold resources here and at other sites nearby.

Meanwhile, the Solomon Islands – where drilling at the firm’s Fauro 100% owned Fauro project shows mineralisation with multi-million dollar potential – is “highly prospective for gold and any significant find would be transformational”, said Fairfax.

At Guadalcanal in the Solomon Islands, a joint venture agreement with Newmont Mining “has potential for substantial discovery”, said the bank.

Newmont, which has the right to earn 51% by spending US$6 million over three years and 70% by spending US$12 million over six years, is attempting to identify a mineralised system that contains multimillion ounce gold potential.

Fairfax said that it was using Solomon’s 100% owned Rannes project as a floor to its valuation of the company.

“Applying a simply US$100 per ounce valuation on the gold prospect in Rannes of 543,858 ounces of gold equivalent, we get US$54 million for the project or £0.12 per share.” it said.

“If Rannes grows to the two million ounce target, then our valuation could grow substantially from here.”

Fairfax said that Mount Perry, Solomon’s other 100% owned project in Queensland, could show similar value to Rannes, while Fauro and Guadalcanal potentially could be worth US$22 million and US$17 million to the company.

Taking these figures into account, Fairfax has set a price target for the shares of £0.32.

Solomon’s shares last traded at around half this target.

The bank said that recent drill results at its Rannes project in Queensland demonstrate that the firm can build up gold resources here and at other sites nearby. Meanwhile, the Solomon Islands – where drilling at the firm’s Fauro 100 per cent-owned Fauro project shows mineralisation with multi-million dollar potential – is “highly prospective for gold and any significant find would be transformational”, said Fairfax.

At Guadalcanal in the Solomon Islands, a joint venture agreement with Newmont Mining “has potential for substantial discovery”, said the bank. Newmont, which has the right to earn 51 per cent by spending US$6 million over three years and 70 per cent by spending US$12 million over six years, is attempting to identify a mineralised system that contains multimillion ounce gold potential.

Fairfax said that it was using Solomon’s 100 per cent-owned Rannes project as a floor to its valuation of the company. “Applying a simply US$100 per ounce valuation on the gold prospect in Rannes of 543,858 ounces of gold equivalent, we get US$54 million for the project or 12 pence per share,” it said. “If Rannes grows to the two million ounce target, then our valuation could grow substantially from here.”

Fairfax said that Mount Perry, Solomon’s other 100 per cent-owned project in Queensland, could show similar value to Rannes, while Fauro and Guadalcanal potentially could be worth US$22 million and US$17 million to the company.

Taking these figures into account, Fairfax has set a price target for the shares of 32 pence.

At lunchtime today, Solomon’s shares were trading 1.2 per cent lower at 16.05 pence each.

Only last month, the company reported high grade intercepts from the deep drilling at Kauffmans and today it said previously unreported drilling found 10 metres with 4.02 grams per ton gold and 24.5 g/t silver from 116 metres, including 4 metres with 9.65g/t gold and 30.7g/t silver from 118 metres in hole KAU96.

Results from hole KAU98 include 5.61 g/t gold and 21.4g/t silver from 124 metres in the top percussion drilled section and 24 metres with 3.28g/t gold and 9.8g/t silver from 277 metres in the deeper core drilled section.

The firm is targeting a resource of more than 2 million ounces of gold overall at Rannes and the Kauffmans-Homestead prospect is an important part of the 3,306 square kilometre project.

The campaign at Kauffmans-Homestead is below the estimated inferred resource of 9.04 million tonnes at 0.85g/t gold equivalent for 247,044 ounces of contained equivalent gold and the deeper drilling aims to expand this current gold equivalent resource for the prospect to 550,000 ounces.

Chief executive Nick Mather said "following the company's announcement made in July, where further encouraging high grade gold and silver results from the deeper drilling were reported, the board is pleased to report again on encouraging high grade intercepts at Kauffmans-Homestead. 

“Further drilling of the nineteen prospects so far defined at Rannes is planned to meet the company's gold target of 2 million ounces in the Central Rannes Area, the board is confident that the currently defined gold and silver system at Central Rannes gives way to deeper high grade epithermal gold mineralisation in the boiling zone of these epithermal gold-silver systems."

Solomon Gold has both reverse circulation and diamond drill rigs currently active at its Central Rannes project.  The RC rig is drilling to define gold and silver mineralisation in areas of coherent high order gold in soil and across its 30 kilometre long newly defined gold province centred on Rannes in Central Queensland.

The diamond drill rig is drilling deep extensions of mineralisation under the existing Kauffmans resource.

Broker Fairfax hailed the "good drill results" saying that following on from the data in July, they should provide the basis for a resource upgrade at Kauffmans prospect and towards its overall resource target at the Central Rannes project.

The latest highlights included 20 metres at 8.44 grams per tonne (g/t) gold and 12.1g/t silver from 88 metres.

Within this intersection were some bonanza grade hits, such as 4 metres at 37.8g/t gold and 27.1g/t silver, and 2 metres at 60.4g/t gold and 35.9g/t silver.

Importantly for Solomon is that Kauffmans-Homestead remains open at depth below the existing drilled intersections and estimated Inferred Resource.

The current drilling campaign is targeted to expand the current 247,000 gold resource at the prospect by drill testing underneath and along strike from higher grade intersections encountered at depth.

The gold target at Kauffmans-Homestead is 550,000 ounces, which forms part of the two million ounce target for the total Central Rannes Area.

The highlights included a 24 metre section from drill hole MBT001 that returned 0.23 per cent copper and a 46 metre section from MBT002 containing 0.25 per cent copper.

This second hole on the Vuanimaho Prospect also returned 0.34 grams per tonne of gold.

The update was provided by a subsidiary of Newmont Mining, Solomon’s partner in the Guadalcanal Joint Venture.

It revealed that a new porphyry target is emerging at the Hahala Prospect, in the western section Mbetilonga.

“Frequent sampling results of one per cent copper, up to a maximum of 22.8 per cent copper have been returned,” Solomon said today.

Separately, drilling has been completed and assay results are pending for MBT003 and MBT004 holes at the Havehahala Prospect, while drilling continues on MBT005.

At 10.15 am the shares were changing hands at 20.7 pence, up 2.08 pence, and in the past year the stock is up almost 230 per cent.

The main catalyst for that share price movement has been the Fauro Island project, which was fast-tracked last October following a £15 million City fundraiser.

Solomon believes Fauro has the potential to host a world class gold deposit, similar to the massive Lihir mine, which holds one of the world's largest gold resources.

Shares in Solomon Gold (LON: SOLG) spiked 11 per cent in early trade after the group revealed some encouraging early results from the Mbetilonga Project on the Solomon Islands.

The highlights included a 24 metre section from drill hole MBT001 that returned 0.23 per cent copper and a 46 metre section from MBT002 containing 0.25 per cent copper. 

This second hole on the Vuanimaho Prospect also returned 0.34 grams per tonne of gold.

The update was provided by a subsidiary of Newmont Mining, Solomon’s partner in the Guadalcanal Joint Venture.

It revealed that a new porphyry target is emerging at the Hahala Prospect, in the western section Mbetilonga.

“Frequent sampling results of one per cent copper, up to a maximum of 22.8 per cent copper have been returned,” Solomon said today.

Separately, drilling has been completed and assay results are pending for MBT003 and MBT004 holes at the Havehahala Prospect, while drilling continues on MBT005.

At 10.15 am the shares were changing hands at 20.7 pence, up 2.08 pence, and in the past year the stock is up almost 230 per cent.

The main catalyst for that share price movement has been the Fauro Island project, which was fast-tracked last October following a £15 million City fundraiser.

Solomon believes Fauro has the potential to host a world class gold deposit, similar to the massive Lihir mine, which holds one of the world's largest gold resources.

With $12 million cash at bank, Solomon Gold is well placed to deliver on the company's target of two million ounces of gold equivalent resources at the Central Rannes area.

The upgrade comes following work at the Crunchie and Kaufmmans Homestead prospects, part of the 3,306 square kilometre tenement area.

The firm is targeting a resource of more than 2 million ounces of gold at the Rannes project.

CEO Nicholas Mather said today of the development, "Total Solomon Gold inferred mineral resource estimate at Rannes is now 14.81 million tonnes at 1.14g/t gold equivalent for 543,858 ounces of contained equivalent gold."

This was with a gold to silver ratio of 1:40 and a 0.35g/t gold equivalent cut-off grade, he added.

At Crunchie, the Inferred resource estimate was 5.77 million tonnes at 1.60g/t gold equivalent for 296,813 ounces of contained equivalent gold (87,189 ounces gold and 8.35 million ounces of silver), based on a gold to silver ratio of 1:40 and a 0.35g/t gold equivalent cut-off grade.

Meanwhile, drilling at Kauffmans Homestead, has revealed an Inferred resource estimate of 9.04 million tonnes at 0.85g/t gold equivalent for 247,044 ounces of contained equivalent gold (186,010 ounces gold and 2.33 million ounces silver), based on a gold to silver ratio of 1:40 and a 0.35g/t gold equivalent cut-off grade.

Mather went on to say that Crunchie had shown particularly high silver grades, notably in the deepest holes, with over 8 million ounces contained.

Hole CRU67 hit 4 metres at 2.75g/t gold and 106g/t silver from 118 metres, and hole CRU69 encountered 2 metres with 1.19g/t gold and 316.5g/t silver from 110 metres.

The Kauffmans deposit remains open at depth, below the estimated resource and a deep drill campaign has been started there to increase both the gold and silver resource.

"The areas north and west of Crunchie are targeted for near term drill testing for additional silver gold mineralisation," added Mather.

Solomon Gold said the resources currently defined at Crunchie and Kauffmans Homestead should be amenable to open-pit mining, subject to the outcomes of feasibility studies.

D'Aguilar Gold (ASX: DGR) owns 35.2 million shares (12.4%) in Solomon Gold.

The company revealed results for the four of the six holes drilled so far on the historic mine, which forms part of the larger Mount Perry project.

Chief executive Nicholas Mather said the results were 'very encouraging'.

Highlights included:

- 4 metres at 0.30 grams per tonne (g/t) gold, 45g/t silver and 0.68% copper from 56 metres;
- 2 metres at 3.30g/t gold, 163g/t silver and 3.17% copper from 32 metres;
- 14 metres at 1.24g/t gold, 21.8g/t silver and 0.61% copper from 80 metres; and
- 22 metres at 2.4g/t gold, 27.2g/t silver and 0.64% copper, including 8 metres at 5.11g/t gold, 63.8g/t silver and 1.52% copper.

The prospect is one of several exploration sites Solomon acquired in Queensland in late 2009.

Solomon is currently working towards producing a maiden resource estimate for the Mount Perry project, but recent drilling has been held up slightly due to the un-seasonally poor weather in north east Australia.

The developments were noticed by London City broker Fairfax:

In a morning note, which featured the company, the broker said it expected to see some new resource news from other Australian prospects shortly from drilling at Rannes and Kauffmanns amongst others.

"The projects are being worked hard and while heavy rains have slowed access to some sites the crews now appear to be making up for lost time," said Fairfax.

"Solomon Gold are progressing on a number of fronts and are rapidly adding value to their prospects. A steady flow of drill results should interest investors and the potential for resource upgrade could benefit the shares.

"Results from recent drilling at Faro in the Solomon Islands look interesting and the Guadacanal jv with Newmont has potential to show spectacular results".

This morning the company announced a resource upgrade for the Rannes project, taking the resource a fifth of the way to its 2 million ounce target.

It announced a maiden 203,000 ounce gold resource for the Kauffmans prospect. The total resource at the Rannes project - which comprises a series of prospects in central Queensland - has almost doubled to 404,000 ounces.

“Today’s resource announcement is a substantial step forward and marks the potential for economic mine development,” Fairfax analyst John Meyer said in a note to clients. 

“Investors are now seeing strong progress both in Australia and in the Solomon Islands with the promise of more to come.”  

In the Solomon Islands the company has a number of projects, the most advanced are the joint venture with Newmont Mining (NYSE:NEM) on Guadalcanal and its wholly-owned exploration project on Fauro Island.

With a particularly bullish take on Solomon’s ongoing development Meyer said: “While many explorers are slow to progress a rare few appear to make progress on all fronts. We wonder if the team at Solomon ever sleep when looking at the results and progress being made.” 

Meyer adds: “If every exploration company was as driven as Solomon Gold then the world might not suffer commodity shortages and there would be much less opportunity for investors.”

Indeed the company has a very busy calendar at the moment.

On Guadalcanal Newmont kicked off a new drill programme earlier this month. The programme will include 5,600 metres of drilling and it will cost Newmont, who is earning into a 70 percent stake, around US$6 million.

Meanwhile at Fauro, the project that sparked a 100-plus percent spike to the shares on surface sampling results last year, a 9,900 metre drill programme is also underway. Early drill results from the first hole have already confirmed a down-dip extension of gold-bearing veins that were outcropping in surface trenching.

Now following this morning’s resource update Solomon plans to carry-out geophysical surveys at Kauffmans to select near-term drill targets.

The Rannes project is made up of three main areas: Rannes Central, Police Camp Creek and Brother & Cooper. 

The Crunchie, Homestead and Kauffmans prospects are more advanced parts of the Central Rannes area, which also includes the Cracklin Rosie and Porcupine Pie prospects.

“Step-out drilling from known gold mineralised zones, are planned with a view to increasing the resource in the Central Rannes Area. Porcupine Pie, Crackling Rosie and Shilo are the prime new resource targets,” Nicholas Mather said.

At Kauffmans, Solomon has now defined an inferred mineral resource of 7.7 million tonnes grading 0.82 grams per tonne gold equivalent, for 203,000 of contained gold equivalent. Furthermore it highlights that there are multiple prospects that are in close proximity to Kauffmans that provide ‘excellent potential’ for a significant expansion to the existing resource.

“The Kauffmans prospect should be mineable by open cast making the mining simpler and it is possible that a strike length of some 1.5km may emerge if mineralisation joins with Homestead and Shilo gold prospects nearby,” Meyer said.

“Management are targeting an ambitious 2 million ounces resource within the Rannes prospect area which if economically mineable could transform the company from explorer to miner within relatively short order.”

The analyst rates Solomon as a ‘buy’, although with so many moving parts he said it is difficult to give the company a formal valuation.

Meyer told Proactive Investors that he believes the new Kauffmans resource is worth around US$20 million at this stage, by giving a US$100 an ounce for the 203,000 inferred ounces of gold - although he acknowledged that this may be a slightly forward looking. 

This morning the shares gained a modest 1 penny a share, about 3.6 percent, to trade at 28.75 pence a share. At this level the entire company is worth just over £81 million.