Drill results extend Banhos gold deposit to the northwest

Zacks Small Cap Research

By Steven Ralston, CFA

Yesterday, Colt Resources (GTP.V) announced the assay results for 27 additional diamond drill holes from the Banhos gold deposit at the Boa Fé gold project. The consecutively numbered holes (37 to 63) all intersected intervals of gold mineralization, and six of the 27 intersected multiple intervals. All were drilled at the Banhos gold deposit, which is located four kilometers northwest of Casas Novas.

To download a free copy of our most recent research report on Colt Resources, please click here: GTP.V 10-26-12

Noteworthy high-grade assay results at Banhos include inclined hole BFBH-12-047 intersecting 8.39 g/t gold over 6.88 meters (including 14.96 g/t gold over 3.70 meters) and inclined hole BFBH-12-048 intersecting 33.20 g/t gold over 1.70 meters. The longer low-grade intervals (all from inclined holes) were 0.65 g/t over 24.10 meters (BFBH-12-040) and 1.15 g/t over 12.50 meters (BFBH-12-059).

The drilling campaign at Banhos began in August 2012 and was designed to confirm and expand historical drilling results. The drilling pattern is based on a 50 meter x 50 meter pattern that consists of primarily inclined holes. The drilling results announced in November were concentrated in the northwestern half of the deposit. However, yesterday's announcement related to assay results on the southeastern half of the deposit, along with the drilling of six additional holes on strike to the northwest

In our opinion, the most important revelation from this announcement is the exciting positive assay results to the northwest, which extends the Banhos gold deposit beyond the scope of historical drilling. We already incorporate the mineralization at Banhos into our valuation model by utilizing historical estimates that we believe are valid despite not yet being NI 43-101 compliant. In the company's press release, a cross section diagram (figure 3) is provided of holes 58, 59 and 60, which provides a visualization of the zone of gold mineralization that extends to the northwest. Given these new drilling results, there is now a significantly higher probability that our valuation of the Banhos deposit will increase when the updated NI 43-101 compliant resource estimate is released during the first quarter of 2013.

Management continues to utilize the assay results of the drilling program to confirm and further advance its structural interpretation of the gold mineralization hosted by the Boa Fé shear zone. The mineralization at all three 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.

We reaffirm our Outperform rating and price target of $1.70, which is based on an estimated share value of attributable resources.


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