Colombian gold junior producer Soma Gold is looking to expand its La Ye plant to continue growing its gold production from its operations in Antioquia. With an all-in sustaining cost margin of about 50% and higher gold prices beckoning, it is looking at acquisitions. "I am reviewing possibilities both in Colombia and outside," VP exploration Chris Buchanan told Mining Journal during a site visit.

Soma has achieved a great deal since acquiring its initial assets in 2019, when it produced 16,168oz, navigating the exhaustion of the La Ye and Los Mangos mines, its initial production assets that it bought from Mineros in 2019, and the development of the Cordero mine, its current producer. The company is forecast to produce 36,000oz of gold this year and a target of 44,000oz in 2025, from Cordero, its third year of operation. Soma has also invested in mechanised mining, using mechanised cut and fill to improve efficiency.

The company also had to pivot following the unexpected resignation of former chief executive Javier Cordova in January. Cordoba's prior career included being Ecuador's Minister of Mines and Energy during the administrations of Rafael Correa and Lenín Moreno from February 2015 until January 2018. The current government of Daniel Noboa asked Interpol to issue an international arrest warrant on Cordoba, for alleged corruption during his time in public office.

More recently, in early July, the company navigated a community blockade as local communities sought to pressure the government for greater services, which was rapidly resolved through dialogue. Soma company operates a community investment programme, taking advantage of Colombia's Works for Taxes programme, in which the community helps decide the investment projects. It also helps secure funding from regional and national governments and NGOs like USAID so that it does not always pick up the tab for satisfying community development needs.

Soma Gold's Cordero mine portal in Antioquia, Colombia (Photo: Paul Harris)

Growth

Soma has plant infrastructure that could support the production of 100,000ozpa, and so it is increasingly funding exploration. Drilling continues to find new resources, allowing the company to maintain two years of production in its mine plan, but recent results include some of its highest-grade results ever. In early July, it reported 3.7m grading 31.4gpt, including 60cm grading 189.2gpt at Cordero. Such drill results led the company to believe it could achieve even higher production rates. "The aim is to produce 100,000ozpa in 2027 or 2028, at $1000/oz EBITDA margin," said shareholder Jean-Francoise Meilleur of PE Partners.

Raising production towards 100,000ozpa will be a product of exploration success and the increase of ore purchases under its small miner programme, which has been a successful strategy for regional neighbour Aris Mining at its Segovia Operations to the south. Soma wants to expand its 450tpd La Ye mill to take advantage of its 900tpd crushing capacity and also wants to bring its 100tpd El Limon mill near Zaragoza to the south, back into operation, and potentially expand it to process 400tpd. The nine-level El Limon mine is exhausted.

Cordero has seen no drilling below level six, some 250-300m below the surface. Given Aris Gold's mines at Segovia continue to produce at depths of more than 1000m below the surface, Buchanan hopes to take Cordero lower. Exploration could also give a new lease of life to the nearby La Ye mine, which is currently exhausted and on care and maintenance, having been exploited over seven levels. "We are trying to generate new targets in that area, where there could be deeper or en-echelon veins. We can go back into La Ye and develop down if find something," he said.

Soma continues to acquire concessions and now holds 41,000 hectares spread over 100km of the Otu Fault, a major regional structure. Buchanan aims to drill 20,000m this year with its own drills, with 15,000m in near-mine drilling at Cordero to build on current resources of about 230,000oz and the rest to explore the broader land package. "We are stepping away from the roads and rivers to less accessible areas where people have not explored before," Buchanan told Mining Journal.

A lack of exploration to define resources has seen some of its assets change hands several times in the years before Soma. Four Points Mining, Red Rock Resources, Para Resources and Grupo de Bullet previously owned the El Limon and Machuca area.

Soma Gold drilling near Cordero in Antioquia, Colombia (Photo: Paul Harris)

Capital

Growing production means the company has not raised equity since 2020. With the June quarter financials due to drop in the coming weeks, the company is sitting on about US$25 million in cash. Cashflow continues to fund mine development, a growing exploration budget, and debt repayment, with payments of $400,000 per month due to start in August to service its $24.9 million six-year term load, which has a 12% coupon.

Soma is tightly held, with insiders and key investors owning 75% of the outstanding shares. This partially explains its lack of liquidity, which is partially explained by its low trading volume, which averages 55,000 shares per day. This makes it difficult for other investors to build (and later sell) a position in the company and will lead to the company being overlooked.

Shares in Soma Gold are trading at 54c, valuing the company at C$49 million.