By Steven Ralston, CFA
Earlier this week, Colt Resources (GTP.V) filed the financial statements and Management Discussion and Analysis (MD&A) for the year ending December 31, 2012. These documents are filed separately by many Canadian companies. This year’s filing was especially meaty, resulting in this series of blogs intended to convey the highlights of a very productive year by management.
During 2012, Colt Resources aggressively proceeded with drilling programs on the company’s two advanced stage projects in Portugal: the Boa Fé gold project and the Tabuaço tungsten project. Positive assay results were announced over 20 times throughout 2012, contributing to an initial NI 43-101-compliant resource estimate for the Chaminé and Casas Novas deposits at Boa Fé in July and subsequently, an updated NI 43-101-compliant resource estimate, which was completed in March 2013. In addition, a NI 43-101-compliant updated resource estimate for the Tabuaço tungsten project was announced in October 2012. Also, significant developments transpired on other projects, namely the Montemor Regional exploration concession, the Santo António gold project (formerly Penedono), the Borba exploration concession (gold/copper), the Cercal exploration concession (gold) and the Adorigo exploration concession (tungsten). Importantly, the company has been very successful in obtaining equity capital to finance the exploration and development of these projects.
The accelerated drilling campaign at the Boa Fé gold project during 2012 included not only confirmatory and exploratory drilling at Chaminé and Casas Novas, but also drilling at the Banhos, Braços and Ligeiro deposits. The assay results supported a subsequent updated NI 43-101 compliant mineral resource estimation of a total indicated resource of 340,310 ounces Au (1.74 g/t) and an inferred resource of 84,200 ounces Au (1.69 g/t). Importantly, the drilling campaign at Banhos, which was designed to confirm and expand historical drilling results, resulted in a significant resource (an indicated resource of 95,800 ounces Au) relative to Chaminé (91,700 ounces Au) and Casas Novas (146,100 ounces Au). In addition, Colt Resources conducted metallurgical test work on sample materials from the Chaminé deposit in an effort to identify the optimal process path to recover the contained gold.
The Boa Fé shear zone hosts a series of high grade, near-surface gold deposits and occurrences. The drilling campaign added to the understanding of these deposits. The mineralization at all three major deposits (Chaminé, Casas Novas and Banhos) appears to be associated with shallow dipping intrusive units, which are up to 20 meters thick. The most significant gold mineralization appears to occur in the kinks and fold hinges formed by the geological model of conjugate shear folding.
An infill drilling program at the São Pedro das Águias deposit at the Tabuaço tungsten project not only increased the geological confidence level, but also expanded the size of the indicated resource estimate of contained metal by 85.2% from 440,000 to 815,000 MTU WO3. Expansion of the entire resource, as well as upgrading the quality of a portion of the resource from the inferred to the indicated category, contributed to the incremental 375,000 MTU WO3 rise in the indicated resource estimate. The inferred resource was estimated to contain 720,000 MTU WO3 and included, for the first time, the mineralization at Aveleira.
In December 2012, the exploration license of the Armamar-Meda property (109.20 square kilometers or km2) expired; however, prior to expiration, Colt Resources applied for an Experimental Mining License (EML) for the area containing the Tabuaço tungsten project (45.13 km2). Having applied prior to expiration, Colt Resources was guaranteed, under the terms of the agreement with the government, to remain 100% owner of the Tabuaço property. The EML for the Tabuaço tungsten project was awarded in February 2013. This process is representative of the normal process of granting exploration concessions (rights) by the Portuguese Ministry of Economy or the DGGE.
Four shear corridors lie within the Montemor Regional concession (728.22 km2), namely the Monfurado, Mourel, Gouveia and Grou belts. Colt Resources conducted exploration programs targeting all four shear corridors, including prospecting, rock sampling, soil geochemical surveys, stream sediment surveys, trenching and diamond drilling. The drilling in Monfurado area contributed to an initial a NI 43-101-compliant inferred resource estimate of 25,600 ounces at that location, which was over twice the historic JORC-compliant resource estimate of 10,438 ounces.
In September 2012, Colt Resources entered into a joint venture with Consultoria Tecnica Ltda (Contécnica) to further develop the Penedono gold project. Contécnica, a privately-held Brazilian engineering consulting firm, will earn a 51% stake in the Penedono concession upon investing at least €2.0 million in the project over three years. In addition, Contécnica must pay €50,000 to Colt Resources when the JV obtains an Experimental Mining License. Colt Resources will retain a 49% stake in the Penedono concession while Contécnica incurs the capital commitment to further develop the project. The Santo António EML contains a number of significant vein systems of high grade gold mineralization, including the now-closed Santo António underground gold mine. There are 13 clusters of mineralized quartz veins in the San Antonio area, along with other vein systems of gold mineralization (Ferronha, Dacotim, Turgueira and Marofa). Santo António was mined most recently in the 1950’s by Companhia das Minas de Ouro de Penedono, when approximately 11,000 ounces of gold was produced through the underground mining of four of the 13 veins. As operator of the JV, Contécnica plans on conducting trial mining (via open pit) at Turgueira in order to test the potential for significant long-term production. In addition, Contécnica intends to recovery gold from the tailings at Santo António and de-water the Santo António underground mine by excavating a new adit (a nearly horizontal shaft). Thereafter, metallurgical test work will be conducted on the ore found in the old mine galleries.
As with the Armamar-Meda property, the exploration license for the Penedono property (51.22 km2) expired in October, but Colt Resources and Contécnica filed for an EML prior to the expiration of the exploration concession. The new EML, known as Santo António, was granted in February 2013 to the joint venture (Consórcio Penedono). Contécnica did not perform any field work in 2012; but Colt Resources has conveyed the documentation of all prior exploration work to Contécnica.
Lastly, Colt Resources was awarded three additional exploration concessions in 2012: Borba (gold/copper) in eastern Portugal, Cercal (gold) in southern Portugal and Adorigo (tungsten) in north-central Portugal. Located in the North Alentejo portion of the Ossa-Morena Zone, the Borba exploration concession extends over parts of both the Alter do Chão-Elvas Belt and the Sousel-Barrancos Belt. Borba encompasses 633.935 km2 in an area previously mined for copper and explored for gold. The area was mined for copper at Miguel Vacas between 1925 and 1991 when at least 1,650 tonnes of copper were produced. Also the old copper mines of Bugalho and Zambujeira lie within the concession. Since 1986, the region has been explored for gold, most recently by Rio Narcea and Kernow Resources. Prior drilling results confirm the presence of both gold and copper mineralization. The Borba exploration concession was granted to Colt Resources on February 25, 2013, and a joint agreement with privately-owned Star Mining will form the basis of Star being able to earn up to 100% of the Borba concession through exploratory work programs and additional milestones of development.
Colt Resources applied for an exploration license on the Cercal property in May 2012. Encompassing 455 km2, Cercal exploration concession is located about 110 kilometers due south of Lisbon and within the Iberian Pyrite Belt (IPB), a world-class metallogenic province of volcanic massive sulphide (VMS) deposits. The area has been mined for iron, copper, zinc, lead, silver and especially manganese. Exploratory work was conducted by Serviço Fomento Mineiro (the mineral exploration department of Portugal’s INETI or Instituto Nacional de Engenharia Tecnologia e Inovacao) from 1973 to 1979 and thereafter by Elf-Acquitaine, Empresa Mineira da Serra do Cercal Lda and Northern Lion Gold Corp. Colt’s management believes that the area covered by the exploration license has not been properly explored for gold and base metals. Also, Colt Resources applied for an exploration license on the Adorigo property in August 2012. Located in the vicinity of the former Armamar-Meda exploration license, the Adorigo exploration concession is a tungsten project with an approximate area of 164.98 km2.
In an upcoming blog, we will relate management’s business plans for 2013.
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