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Outcome Visualization Project as of Oct 22, 2021: Sonoro - Cerro Caliche HL OP Scenario
Project:Cerro CalicheLocation:MexicoStage:7-Permitting & Feasibility
Net Interest:100% WIUncapped NSR:2.0%Target Metals:Gold Silver
OV Project ID:1000027OVP Posted:8/9/2020OVP Retired:
Current OV ID:1000076Current OV Confirmed:9/15/2021Visualizer:JK
Sonoro Gold Corp (SGO-V)
ProfileSearchWeb SiteTreeForumSEDARQuoteIPV
Issued
102,300,593
Price
$0.205
Working Capital
$964,524
Key People: Kenneth MacLeod (CEO), John M. Darch (Chair), Salil Dhaumya (CFO), Jorge Diaz (VP OP), Neil H. Maedel (VP FI), Melvin A. Herdrick (VP EX), Katharine E. Regan (Sec)
Diluted
165,997,817
Insiders
11.8%
As of
6/30/2021
Visualized Outcome: Sonoro: Cerro Caliche 15,000 tpd HL OP Scenario
The Cerro Caliche project hosts four parallel trends of low sulphidation epithermal mineralization called Cabeza Blanca-El Colorado, Buena Suerte, Japoneses, and El Rincon-Veta de Oro which have been the focus of past artisanal mining that targeted the higher grade veins within this system oxidized to a depth of at least 200 m. Several groups including Cambior have explored the property since the 1990s with the goal of outlining a low grade open-pittable heap leachable resource but these efforts were hampered by fragmented ownership. Sonoro delivered a PEA on Sept 15, 2021 for a 15,000 tpd open pit heap leach mining scenario with a measured, indicated and inferred resoruce of 32,158,000 tonnes at 0.41 g/t gold and 4.1 g/t silver with 74% and 27% recovery and a 2.1 strip ratio. An earlier OV published on Aug 9, 2020 envisioned a scenario where a series of open pits can be mined and heap leached at 15,000 tpd for a total resource of 75 million tonnes at 0.4 g/t gold and 4 g/t silver mined over 14 years. The cost assumptions were based on Argonaut's PEA for its San Agustin project. An updated OV on May 7, 2021 assumed that the tonnage goal of 75 million tonnes could achieve a LOM grade of 0.55 g/t. A lower CapEx and Sustaining Capital than Argonaut's San Agustin was adopted to reflect lower crushing intensity and a plan to use contract mining, though this led to a higher OpEx than San Agustin. However, the resource supporting the PEA came in 25% lower at 0.41 g/t gold, and CapEx proved higher than $25 million after Sonoro determined that it did need a 3 stage crusher and could not trly on contract mining. The purpose of this OV is to emulate the basic assumptions of the 43-101 PEA plus the speculative expansion of the resource to 75 million tonnes at the same grade to support a 14 year mine life. Although Sonoro has not officially stated it plans to develop the mine on the basis of the PEA, it appears that this is its goal if it can secure direct funding or possibly pursue an EPCM arranagement. This OV is intended to show the value potential of the tonnage expansion scenario at the spot price.
Visualized Outcome Summary: Sonoro: Cerro Caliche 15,000 tpd HL OP Scenario
Deposit Scenario: 75,000,000 t @ 0.41 g/t Gold, 4.10 g/t Silver
Mining Scenario: Open Pit 15,000 tpd 13.7 yrs, CapEx $32.2 million, SustCapEx $11.2 million, OpEx $12.34/t (USD)
LOM Payable: 717,000 oz gold, 2.6 million oz silver
Economic Outcome (USD): Revenue Model at OV designated Metal Prices

Annual AverageLife of Mine (LOM)LOM Stats
Recoverable Revenue:$100,457,570$1,376,131,097$18/t ore Recoverable Value:
   Smelter/Transport Costs:($2,009,151)($27,522,622)2.0% of Recoverable Revenue
Gross Payable Revenue:$98,448,419$1,348,608,47598.0% of Recoverable Revenue
   Royalties:($1,968,968)($26,972,169)2.0% of Gross Payable Revenue
Net Payable Revenue:$96,479,450$1,321,636,30596.0% of Recoverable Revenue
   Mining Cost:($29,701,875)($406,875,000)43% of OpEx - $5.43/t ore
   Processing Cost:($34,875,750)($477,750,000)51% of OpEx - $6.37/t ore
   Other Cost:($2,956,500)($40,500,000)4% of OpEx - $0.54/t ore
   Sustaining Cost:($800,000)($11,200,000)1% of OpEx - $0.15/t ore
Total Operating Cost:($68,334,125)($936,325,000)71% of Net Payable Revenue - OpEx - $12.48/t ore
Pre-Tax Cash Flow:$28,145,325$385,311,30529% of Net Payable Revenue - $5.14/t ore
   Taxes:($9,801,996)($134,182,296)35% of Pre-Tax Cash Flow - $1.79/t ore
After-Tax Cash Flow:$18,343,330$251,129,00919% of Net Payable Revenue - $3.35/t ore
Note: Concentrate transport costs, smelter treatment costs and retention are subtracted from recoverable revenue to get gross payable revenue to which the uncapped royalty rate for the project is applied. The annual average of LOM sustaining cost is expensed as an annual operating cost. Annual average figures reflect full production years.
Economic Outcome (USD): Royalty Model for 1% NSR at OV designated Metal Prices
Mine Life:14 yearsStartupNPV 5%NPV 10%NPV 15%
Annual Avg NSR:$964,795Now$8,955,525$6,391,612$4,766,826
LOM NSR:$13,216,3632022$8,529,071$5,810,557$4,145,066
Economic Outcome - Discount Rate: 7.0% - CAD AT NPV: $146.0 million - Good Speculative Value
Gross Rock Value (USD/t):$27Recoverable Rock Value:$18Payable Rock Value:$18
LOM Net Payable Revenue (USD):$1,321,636,305LOM PT Cash Flow (USD):$385,311,305LOM AT Cash Flow (USD):$251,129,009
USD Pre-Tax NPV:$196,785,995Pre-Tax IRR:87.4%Pre-Tax Payback:1.1
USD After-Tax NPV:$117,774,887After-Tax IRR:56.8%After-Tax Payback:1.8
CAD Fair Spec Value Low:$72,767,214CAD Fair Spec Value High:$109,150,821CAD Implied Project Value:$34,029,552
Price Target if Visualized Outcome delivered by Expl-Dev Cycle without dilution: CAD $0.88
Fair Speculative Value Stock Price Range: CAD $0.44 - $0.66
MSV (Market Cycle S Curve): Market Speculative Value represents the typical market pricing pattern of a new discovery as it moves through its exploration-development cycle. The irrational pricing behavior of the yellow channel contrasts with the fair speculative value of the blue channel as defined by the rational speculation model because during the pre-economic study stages there is great uncertainty about how big the discovery will turn out.
Fair Speculative Value Ladder
USD OV NPVCAD OV NPVExch RateDilutedNet Interest
$117,774,887$145,534,4281.2357165,997,817100.00%
Project StageUncertainty RangeCAD FSV RangeCAD FSV per Share RangeCAD MSV per Share Range
Grassroots 0.5% - 1.0% $727,672 - $1,455,344 $0.00 - $0.01 $0.01 - $0.02
Target Drilling 1.0% - 2.5% $1,455,344 - $3,638,361 $0.01 - $0.02 $0.02 - $0.04
Discovery Delineation 2.5% - 5.0% $3,638,361 - $7,276,721 $0.02 - $0.04 $0.04 - $0.66
Infill & Metallurgy 5% - 10% $7,276,721 - $14,553,443 $0.04 - $0.09 $0.44 - $0.88
PEA 10% - 25% $14,553,443 - $36,383,607 $0.09 - $0.22 $0.22 - $0.66
Prefeasibility 25% - 50% $36,383,607 - $72,767,214 $0.22 - $0.44 $0.22 - $0.44
Permitting & Feasibility 50% - 75% $72,767,214 - $109,150,821 $0.44 - $0.66 $0.22 - $0.44
Construction 75% - 100% $109,150,821 - $145,534,428 $0.66 - $0.88 $0.44 - $0.66
Production 100% $145,534,428 $0.88 $0.88 - $1.10
Market Speculative Value Stock Price Range: CAD $0.22 - $0.44
Warning: while the market spec value (S-Curve) and fair spec value channels presented in project value terms track the evolving expected ultimate outcome value, when presented in stock price terms the expected stock prices are subject to dilution through future equity financings or project interest farmouts.
Alternative Metal Price Scenarios

Metal 1Metal 2Metal 3Metal 4

GoldSilver

Spot:$1,792 /oz$24.31 /oz

OV Assigned:$1,792 /oz$24.31 /oz

Pessimistic:$1,300 /oz$24.31 /oz

Optimistic:$2,300 /oz$24.31 /oz

Fantasy:$3,000 /oz$24.31 /oz

Note: for Metal 1 pessimistic, optimistic and fantasy price scenarios, OV assigned prices are used for Metals 2-4
Economic Outcomes with Alternative Metal Price Scenarios

USD PT NPVUSD PT IRRUSD AT NPVUSD AT IRRAT Payback yrs
Spot:$196,785,99587.4%$117,774,88756.8%1.8
OV Assigned:$196,785,99587.4%$117,774,88756.8%1.8
Pessimistic:($6,839,572)2.9%($8,453,839)1.8%12.0
Optimistic:$406,781,324168.3%$247,971,991107.1%0.9
Fantasy:$696,315,951279.8%$427,483,459176.2%0.6
Fair Speculative Value for Alternative Metal Price Scenarios
Stage: Permitting & Feasibility - 50.0% - 75.0%

CAD AT NPVCAD Target PriceCAD FSV RangeCAD FSV per Share RangeCAD MSV per Share Range
Spot:$145,534,428$0.88$72,767,214 - $109,150,821$0.44 - $0.66$0.22 - $0.44
OV Assigned:$145,534,428$0.88$72,767,214 - $109,150,821$0.44 - $0.66$0.22 - $0.44
Pessimistic:($10,446,409)($0.06)($5,223,204) - ($7,834,807)($0.03) - ($0.05)($0.02) - ($0.03)
Optimistic:$306,418,989$1.85$153,209,494 - $229,814,242$0.92 - $1.38$0.46 - $0.92
Fantasy:$528,241,311$3.18$264,120,655 - $396,180,983$1.59 - $2.39$0.80 - $1.59
View Detailed Visualized Outcome (KRO Members Only)
Disclaimer: A visualized outcome is one of many possible outcomes for an exploration project as it moves through the 9 stages of the exploration-development cycle from grassroots to a producing mine with failure as an outcome at any point along the way. The range of possible outcomes for the physical nature of a deposit shrinks after delivery of an initial 43-101 resource estimate. While the nature of the deposit constrains the range of mining scenarios, the cost assumptions will vary as the project moves through the feasibility demonstration stages of the cycle, which affects the economic value of the final outcome. This economic value will also vary according to the prices of the metals targeted for extraction which may change during the years it takes for a project to become a mine. An outcome visualization is thus a compilation of best guess assumptions for the key variables that drive the discounted cash flow model, the basis for assigning an economic value to a mine. An OV is not intended as a prediction, but rather as a framework that allows the incorporation of new information generated by the exploration-development cycle for the project into a valuation model on an ongoing, dynamic basis.
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