SolGold dives despite upbeat progress report

Shares in AIM-listed SolGold fell by more than 10% on Friday, despite a claim by the natural resources company's boss that further exploration of its Cascabel copper-gold project in Ecuador had the potential to produce “billions of tonnes".

SolGold, which is headquartered in Adelaide, Australia, issued an upbeat progress update on the Cascabel project, reporting that magnetic modelling had revealed at least three target areas for drilling near to its existing site at Alpala in the region. The company also said the work completed had enabled it to identify where best to begin its next test drilling.

"All of these targets, combined, represent the potential for billions of tonnes of copper gold mineralised porphyry, which we will test by drilling in due course," said SolGold chief executive Alan Martin.

However, despite his optimism, investors chose to focus on the company's failure to announce a positive result from a test drilling already undertaken. SolGold revealed it had now completed the drilling of "hole six", which reached a depth of just over 1,400 metres, but did not point to encouraging findings - it promised to release full results in a few weeks' time.

The market appears to have seized on this negative element of the update, marking the shares down a penny to 8.13p. That's below the 9p at which the company placed £4 million worth of stock last month, when it was still talking up the prospects of hole six.

SolGold has a wide following among retail investors and there was a mixed reaction to the company's announcement on bulletin boards today.

Some investors were encouraged by Martin's positive statement, but others complained that the report represents “promises of jam tomorrow".