Soma Gold forecasts higher output in 2025
Fri Nov 29 2024
Soma Gold Corp. (TSX-V:SOMA, OTCQX:SMAGF) reported third-quarter financial results and provided updates on its operations and exploration efforts for the nine months ending September 30, 2024, highlighting progress in its Colombian projects.
The company produced 6,639 gold equivalent (AuEq) ounces in Q3 2024, contributing to 20,565 AuEq ounces year-to-date, down from 25,106 AuEq ounces in the same period last year.
Soma attributed the lower output to a combination of external and operational factors, including an eight-day community blockade that reduced production by approximately 750 ounces.
The company posted income of $1.2 million for the period, equivalent to $0.01 per share. EBITDA was $22.7 million, with adjusted EBITDA of $23 million.
Income from mining operations totaled $17 million, while cash costs per ounce of gold sold at the Cordero operations averaged $1,261.
Geoff Hampson, Soma’s CEO, acknowledged the challenges but underscored the company’s financial performance. “We are pleased with the financial performance this quarter, which remained on budget,” Hampson said.
“Cash resources are growing as capital-intensive projects wind down, although gold production was lower than expected due to external and operational factors,”
Hampson explained that the blockade stemmed from local frustrations over road improvements promised by the Municipality of Zaragoza in cooperation with Soma. The blockade was lifted after eight days.
Hampson also pointed to operational challenges. “The average head grade was lower than expected due to narrower and fragmented veins causing higher dilution and a lower-than-historical average grade. The unplanned development work required to access the higher-grade zones in Upper Cordero and the Venus Gap also added to costs and increased waste,” he said, noting that production from these zones is expected to begin in Q1 2025.
Soma highlighted advancements in its exploration initiatives along the Otu fault, with 14,000 meters of drilling completed year-to-date out of a planned 18,000 meters for 2024. The company has contracted additional rigs to accelerate exploration on high-priority targets, aiming to increase resources and identify future mining opportunities.
“Our exploration efforts continue to improve our interpretation of the geological structures in the Otu Valley, enabling us to identify and verify high-priority exploration targets through mapping, soil sampling, stream sediment analysis and channel sampling inside several of the small mines along the trend,” Hampson said.
Additionally, Soma is finalizing permitting for the Nechi mine, expected to start production in 2026, and progressing efforts to formalize agreements with two small-scale miners, a move projected to increase total gold output by 10% in 2025.
The company also announced amendments to its subordinated note with Conex Services, extending the repayment deadline to July 31, 2030. The updated terms allow Soma to repay the loan in full or in part at any time during the term.
“We are pleased that Conex Services agreed that prioritizing increased exploration and resource expansion will better position the company to repay the loans at a later but near-term date,” Hampson said. “Having the ability to repay the loans in full or in part at any time gives the company great flexibility in managing its balance sheet.”
Soma also advanced Phase 1 of a road-building project as part of its commitments to the local community.
Source: https://www.proactiveinvestors.com/