10th December 2008
Solomon Gold Guadalcanal Tenement Renewals and Exploration progress update
Tenement Renewals
The Directors of Solomon Gold plc (�Solomon� or �the Company�) advise that exploration licences PL 02/05 Koloula, PL 03/05 Central Guadalcanal, and PL 04/05 Mbetilonga have been renewed by the Solomon Islands Minister for Mines Energy and Rural Electrification, for a period of two years, to 7 December 2010. A further period of 8 months has been added to the current tenure of exploration licence PL 05/05 Sutakiki, to 10 July 2009. The renewals for Koloula, Central Guadalcanal, Mbetilonga and the extension to Sutakiki provide the basis for the company to continue to progress the exploration for large porphyry copper gold orebodies on Guadalcanal.
Term Sheet Negotiated with Newmont
On 26 November 2008 Solomon Gold announced that it had finalised a Term Sheet outlining the principal terms of a proposed definitive agreement with Newmont Ventures Limited, a wholly owned subsidiary of Newmont Mining Corporation (NYSE: NEM) (�Newmont�) in respect of Solomon Gold�s copper gold exploration projects on the island of Guadalcanal, Solomon Islands.
Under the terms of the proposed agreement, Newmont may earn up to an 80% interest in five exploration licences (Koloula PL 02/05, Central Guadalcanal PL03/05, Mbetilonga PL04/05, Sutakiki PL05/05 and Kuma PL08/05).
Subject to finalisation of a definitive agreement, the Term Sheet provides for Newmont to earn up to a 70% interest by expending US$12 million over 5 years in two stages.
The Term Sheet also provides that Solomon may dilute a further 10%, to 20% (with Newmont�s interest being increased by 10%, to 80%) and be fully funded to mining with repayment of its share plus interest from 90% of its share of cash flows or distributions. Other terms include the provision for Solomon Gold to manage the program for at least the first year, agreed fees to be paid to the manager, and pro-rata contributions to minimum budgets of $1m per annum after Newmont earns 51% in stage 1, should it not elect to proceed to 70% in stage 2.
Newmont currently proposes to second at least one of its geoscientists, experienced in porphyry projects discovery and assessment in the South Pacific, to the project.
Newmont is currently conducting due diligence investigations and the renewal of the tenements is an important development in that regard. A definitive agreement is currently being negotiated and Solomon Gold expects to be able to execute it with Newmont by January 26, 2009 (within the 60 day due diligence period).
The Solomon Gold board considers Newmont�s interest in Guadalcanal Island to be a significant demonstration of support for the prospectivity of Solomon Gold�s projects on Guadalcanal Island. Newmont is one of the world�s leading gold project development and operating companies, with considerable experience in the south west Pacific and Indonesia.
Chupukama Mapping and Sampling Results
Results have been received for soil sampling traverses over aeromagnetic anomalies adjacent to known gold anomalous areas at Chupukama. The samples show elevated levels of copper mineralisation, which in the context of the magnetic anomaly and adjacent gold mineralisation, outline a copper porphyry target. Copper anomalism ranges from 0.1% copper to 1.37% copper in soil samples across a core zone 200m wide. The mineralised system on the basis of magnetics and gold results in the eastern portion covers an area of 1km x 1km. The core zone, coincident with a magnetic high feature, is some 200 x 700 metres and is surrounded by magnetic low features indicative of an alteration zone of up to 300 metres wide.
Solomon Gold expects that the target zones at Chupukama will be properly and more intensively investigated in the course of the next field exploration program.
Ngella Nickel Prospects
The Company has defined a maiden resource of nickel laterite mineralisation on its wholly owned Ngella nickel prospect in the Florida Islands group north of Honiara. An indicated and inferred resource of 1.695 Mt at a grade of 0.6% nickel and 0.06% cobalt has been defined.
Based on mineralisation at higher grades persisting at depth in most of the test pits dug to date a target of a total 5.4 Mt at a grade of1.0% Ni and 0.1% Cobalt has been outlined. Further extensions are prognosed to the south, where results are awaited. The Company is encouraged by the presence of platinum in the mineralised zones with anomalous palladium. Best results to date have included 2.02% nickel, 0.23% cobalt and 0.147g/t platinum and 0.11g/t palladium.
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By order of the Board
Kevin Nagle
Company Secretary
For more information contact:
Kevin Nagle
Company Secretary
+61 7 3303 0660
info@solomongold.com
Mr Stephen Weir
RFC Corporate Finance
Nominated Advisor
Tel +61 2 9250 0048
Stephen.Weir@rfc.com.au