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Solomon Gold says Newmont JV progresses faster than expected, plans Fauro drilling in Q2

Solomon Gold (AIM: SOLG) said the Newmont joint venture is now moving forward at a faster pace than expected.  Despite a slow start to the proposed drilling program - as more geological data was gathered and interpreted -, in just the second year of the agreement, Newmont has decided to spend in excess of A$5 million on exploration. 

Solomon is confident the obstacles and delays to the planned drilling program have now been either removed or addressed, and it looks forward to the generation of results at a faster pace in 2010.

The JV agreement to secure financial and technical backing of Newmont Mining Corp’s (NYSE: NEM) subsidiary Newmont Ventures Limited was part of Solomon’s strategy of lowering its reliance on the exploration program on Guadalcanal Island in the Solomon Islands.

Newmont Mining is earning up to 51% in the project through expending US$6 million over three years, with an option to increase its stake to 70% thereafter by expending a further US$6 million within 2 years.

The company has also published its financial results for the six months to 31 December 2009, reporting a loss of A$0.91 million compared to A$0.45 million for the equivalent period of the previous year, which was a result of higher administrative expenses, which rose from A$0.5 million to A$0.73 million, and an acquisition cost of A$0.33 million.

In late 2009, the company finalized terms for the acquisition of Acapulco Mining, which holds extensive tenements over a large project area in and around Mt Perry and which sits only 15 km (kilometres) from Lihir Gold's Mt Rawdon mine with a 1 million oz resource producing 100,000 oz pa (ounces per annum) of gold in Queensland. The second acquisition of the year was for Central Minerals, which holds exploration licences covering a huge area along the eastern edge of the Bowen Basin in Central Queensland.

Both Queensland projects acquired are 100% owned and operated by Solomon Gold, which has set out a six month exploration plan and budget for the assets with the intention of defining a resource and bringing it into production as soon as practicable.

Solomon Gold was granted an exploration licence in November 2009 over a highly prospective area on Fauro Island, where the company identified gold contents between two and six times the levels found in highly anomalous samples on its project on the main island of Solomon Islands, Guadalcanal. Samples taken at the time showed gold values of up to 169 g/t (grammes per tonne). An airborne magnetic and electromagnetic survey over the area is currently underway with a drill program expected to commence in Q2 2010 to test anomalies identified.

Solomon said the Queensland acquisitions and the development of the Fauro island project was meant to de-risk and diversify the company’s assets.

Disclosure: The author holds no positions in the company