Sonoro Chairman’s Letter (Oct 2020)

October 3, 2020

Dear Shareholders,

It has been approximately eight weeks since we completed our very successful $8,000,000 financing.  Following the closing, we changed the Company’s name to Sonoro Gold Corp. to better reflect our principle focus which is gold exploration and development, with the objective of commencing gold production at our Cerro Caliche project in 2021. In addition to the name change, Sonoro also initiated a two-pronged drilling campaign at our Cerro Caliche Gold project.

In the first prong, our focus is the 6,000 meter 20-hole core drilling program to test deep, high-impact, high-grade gold exploration targets as first disclosed on June 26, 2020 in the News Release:  Sonoro Drilling Targeting High-grade Epithermal Gold Mineralization at Cerro Caliche.  We believe that this campaign has exceptional potential, but it is important to recognize it is a high-risk and high-reward program.  In comparison, Sonoro believes that its longer-term strategy to build value and establish a revenue stream from our proposed Cero Caliche mine comes with considerably lower-risk.

This is where the second prong comes into play.  By this I refer to our ongoing drilling campaign which is intended to define and significantly expand Cerro Caliches existing shallow 201,000 oz. at 0.545 grams per ton AuEq inferred resource [1].  This second prong is a critical component of the seminal path we are taking which we believe has the potential to transform Sonoro into significant gold producer.

The deep drilling will test targets averaging between 150 and 350 meters below the surface for potentially mineable zones of high-grade gold mineralization.  In contrast, our shallow drilling is focused on testing for near-surface gold mineralization at depths from 50 meters to 120 meters at its deepest.  As you would expect, the deeper holes take significantly longer to complete in comparison to the shallow drilling which generally is very fast.  The consequence is that, while we anticipate drilling approximately 4,800 meters in 14-16 core holes by mid-December, during the same period we also expect to complete over 8,000 meters in 50-60 shallow reverse circulation holes.

Mel Herdrick, our VP of Exploration, is already credited with the discovery and definition of six major gold and copper deposits.  He has designed and is directing the execution of Sonoro’s drilling campaign, which is based on both the proven, low-sulphidation epithermal gold deposit geological model, together with a substantial body of geological data supporting our chosen targets to be tested for high-grade potential.  It is all very encouraging, however, I must caution investors that as good as our chances may appear, in the end it is high-risk exploration, so while our excitement and optimism grows, we remain mindful of the need to temper our enthusiasm with the reality that we cannot predict the results with any certainty.

In terms of our shallow drilling however, I would like to emphasize Sonoro’s management’s confidence that we will have a highly successful outcome.  The shallow drillings focus:  17 zones of near and at‑surface gold mineralization is known, mapped and already partially drilled.  Based on more than 20,000 meters of drilling already completed and over 6,000 surface samples, it has a targeted, and we think, very realistic resource potential of approximately 75 to 100 million tonnes with grades potentially average a net between 0.3 g/t to 0.5 g/t AuEqR[2].  The ‘net’ indicates the estimate after factoring in its projected 70% gold heap leach recovery rate as employed in the NI 43-101 technical report (see footnote 1).

Time (and an estimated roughly 50,000 meters of drilling) will tell.  Until then a gentle reminder that the potential tonnages and grades set forth above, and the associated analysis of geological potential, are at present conceptual in nature, as there has been insufficient drilling exploration to define the stated potential mineral resource. It is uncertain if further exploration will result in the associated exploration targets being delineated as a mineral resource.  These potential estimates are separate from the current inferred mineral resources referenced above and at footnote 1.  For a more complete understanding I recommend that you review the more detailed information in our May 25, 2020 or more on this, you can refer to the Cerro Caliche Project Development Report.

As we have stated in previous news releases, the 0.5 grams gold per tonne gold grade compares favorably with already producing heap leach operations in the area.  In fact grades as low as 0.3 to 0.4  grams per ton are being mined (see footnote [3]). This reality underlies the rationale for our strategic plan to develop an open-pit heap leach operation to establish a near-term source of revenue.  If we can establish that revenue stream, it would in turn help to fund our longer-term objective of developing Sonoro into a gold producer, and thereby delivering significant value for our shareholders.  Of course, we are mindful that the feasibility of our strategy plan remains to be tested.  To that end, the assay data from the prior and current drilling programs, along with the results of the current metallurgical testing program, will be applied toward the completion of a new independent NI 43-101 compliant PEA, anticipated by February 2021.

The development of the proposed open-pit heap leach mine is advancing under the direction of our VP of Operations, Jorge Diaz, a Mining Engineer who has a multi-decade history of operating and successfully developing heap leach gold mines in the region for companies including Glamis Gold, Alamos Gold, Penoles, Lusmin and Eldorado Gold.  We have also commenced work with local Mexican contractors who have established their ‘best practices level’ capabilities contracting for companies including Agnico Eagle and Argonaut Gold.  By restricting our contractors to local companies, we expect to minimize any potential COVID-19 related delays.  We have also found this route likely to significantly lower CAPEX with a corresponding acceleration in the payback period.  Concurrently, we are investigating limited-recourse project debt and potentially a Gold Bond to fund the proposed mine.  Knowing this, I am anticipating an exceptionally exciting and rewarding 2021.

In short, Sonoro’s management is implementing what it considers an ideal multi-track strategy which balances the high-risk, potentially very high-impact deeper exploration program with the comparatively lower-risk shallow drilling to expand and develop our established NI 43-101 resource which is the basis of our proposed mine.  If the core drilling results in a high-grade discovery, the impact on our share price could be significant.  But critical to our strategy, regardless of the outcome of the core drilling exploration campaign, our path to revenues will continue.

As our multi-track strategy is executed over the next six months, the future potential share price catalysts have the potential to be driven by:

  1. A discovery from our deep high-impact core drilling exploration program.
  2. A contemplated independent NI 43-101 compliant PEA which shows robust economics together with detailed engineering and later subsequent project financing which will be based on an updated NI 43‑101 compliant resource, incorporating data to the end of December 2020.
  3. Drill results which could materially increase our shallow NI 43-101 gold resource as we complete infill and step out drilling at the Cerro Caliches 17 zones of near and at surface gold mineralization.

Knowing these catalysts, I think it is important to emphasize the key elements that we believe combine to make Sonoro Gold an exceptional opportunity:

  1. A diversified, proven, complementary and success-orientated management and operations team.
  2. Two properties, but most importantly our flagship Cerro Caliche, where we have established a 201,000 oz. AuEq [4] inferred resource which we hope to develop to production; this resource also has a very high potential to be increased, as indicated by our exploration target of 70 – 100 million tonnes grading 0.3 – 0.5 g/t gold t[5]. Additionally, at Cerro Caliche, there remains the potential to discover mineable high-grade gold vein systems, which are projected to coalesce below the existing shallow gold mineralization.
  3. An excellent share structure where insiders, management and technical teams are committed and motivated by their combined 22% stake.
  4. A clear Business Plan and Execution Strategy to generate new revenue well within 24 months, while concurrently conducting high-impact exploration drilling and drilling to expand the shallow gold resource at Sonoro’s main project, Cerro Caliche.

In addition to our exploration and development activities, we recognize the need to build a substantial base of loyal shareholders which understand our goals and how we intend to achieve them.  To address this need, we are also rolling out cost-effective marketing programs which cover North America, Europe and Asia.  With the tailwind of the current gold bull market, we are finding that, of the investors which are new to the gold mining sector, a growing number are highly receptive to our story and, as we execute and reach various milestones, I think it is reasonable to expect our investor following to grow.

In Conclusion
Sonoro has the best of both worlds.  While it is positioned to benefit from a potentially game-changing high-grade discovery, we are by no means dependent on this outcome.  Whatever the results, Sonoro’s proposed mine development and the associated lower-risk drilling to expand its shallow gold resource, and later our anticipated expansion of the planned heap leach mine, creates the very real possibility that the Company will experience years of growing revenues and increasing gold resources.  In the nearer term, these factors should also provide a powerful catalyst for an increasing share price.

In closing, I would like to thank you for showing your faith in Sonoro Gold and its management by becoming a shareholder, while promising to keep you fully informed of our progress during what I anticipate will be a very exciting and rewarding future for our company and its shareholders.

Kind Regards,

                    John M. Darch, Chairman.
Sonoro Gold Corp.

Forward-Looking Statements Caution: This report to Sonoro Gold Corp. shareholders contains certain “forward-looking statements” within the meaning of Canadian securities legislation, relating to, among other things, the potential results of a 6,000 meter 20-hole core drilling program to test deep potential high-grade gold exploration targets, the potential results of a shallow drilling program to expand Cerro Caliches existing shallow inferred resource estimate, the potential to develop a Cerro Caliche open pit mine and establish a heap-leach production operation during 2021, a forecast that a proposed heap-leach gold production operation will be cash flow positive, the completion of a new independent NI 43-101 compliant PEA, by February 2021, and the possibility of securing a limited-recourse project debt financing and potentially a gold bond financing to fund the proposed mine. Although the Company believes that such statements are reasonable based on current circumstances, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are statements that are not historical facts; they are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “projects,” “aims,” “potential,” “goal,” “objective,” “prospective,” and similar expressions, or that events or conditions “will,” “would,” “may,” “can,” “could” or “should” occur, or are those statements, which, by their nature, refer to future events. The Company cautions that forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made and they involve a number of risks and uncertainties, including the risks that the Company will not be able to secure sufficient future financing necessary to fund all of its proposed exploration and development of its Cerro Caliche Project, or to fund its other project exploration and development business; future exploration results will be unfavourable and will not support the proposed plan to build a heap leach mining operation or justify further exploration efforts; equipment failures, accidents, or external problems (e.g. civil unrest, public health emergencies) may materially increase the Company’s business expenses or delay (or prevent altogether) the execution of the Company’s business plans; and unanticipated changes in the legal, regulatory and permitting requirements for the Company’s mineral exploration programs and development plans for its projects, at present, all of which are located in Mexico, may prevent the Company from carrying out some or all of its business plans. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law or the policies of the TSX Venture Exchange. Readers are encouraged to review the Company’s complete public disclosure record on SEDAR at www.sedar.com for further information regarding the Company’s business and the risks associated therewith.


[1]NI 43-101 Technical Report on the Cerro Caliche Property, July 26, 2019, Strickland, D., Sim, R.C. prepared for Sonoro Metals; comprised of an inferred resource of 201,000 AuEq ounces at a grade of 0.55 AuEq (0.495 g/t Au and 4.3 g/t Ag)
[2] Assuming AuEqR = (Au g/t × 0.72) + (Ag g/t × 0.01133 ×0.30); these potential tonnages and grades are conceptual in nature, as there has been insufficient exploration to define a mineral resource.
[3]As reported on the website of Argonaut Gold (ArgonautGold.com) regarding mining at its El Castillo Complex.

[4] As stated above, readers are cautioned that these potential tonnages and grades, and the associated analysis of geological potential, are conceptual in nature, as there has been insufficient exploration to define the stated potential mineral resource.

[5]See footnote 1.

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