Colt to Start Portugal Gold Mine in Early 2014 After Price Gains
By Firat Kayakiran - Apr 23, 2012 10:52 AM ET
Colt Resources Inc. (GTP), an explorer for gold in Portugal, is seeking to bring its Montemor mine into production in early 2014 after price gains spurred development.
“We’re hoping that by June we’ll have an economic deposit and then we can consider moving a little bit quicker than people anticipate,” Chief Executive Officer Nikolas Perrault said today by phone ahead of Colt’s resources update in two months’ time. He sees the mine costing less than $100 million to build.
Colt, based in Montreal, took over the Montemor concession in southern Portugal after previous owner Tamaya Resources Ltd. filed for bankruptcy during the global financial crisis. It’s among gold developers boosting investment in exploration after prices for the precious metal increased for 11 years in a row.
Gold resources at Montemor were estimated by the previous operator at about 600,000 ounces after drilling only 100 meters (330 feet), Perrault said. “Even less than a million ounces would be very economic” because high-grade ore is near the surface, he said, without giving a current resource estimate.
Portugal, expected to contract 3.3 percent this year, is seeking to attract investment to its mining industry to stimulate economic growth. The government announced the start of gold and silver mining tenders for concessions in Mertola, Albernoa and Alcoutim in March, and in November signed 10 mining contracts with exploration companies including Colt.
Attractive Targets
“We’re going to be expanding our current drilling program quite substantially; we have numerous regional targets that have never been drill-tested,” Perrault said. “The previous drilling was in mid-2000 and gold was $700 an ounce, so we have a lot of targets that were deemed not worthy back in those days but are extremely attractive now.”
Gold is trading above $1,600 an ounce on the London Metal Exchange, after reaching a record $1,900.05 in September.
“We’re in the process of finding a new level for gold and the new level is a bit higher than what it is right now,” Perrault said. “This project is extremely attractive as it is; because of the high-grade nature of the system even if the gold price goes down a bit we can make some serious money here.”
Colt also owns a tungsten project in northern Portugal. It’s in talks with potential partners for the venture and plans to select one in the next 12 months, according to the CEO.
“The strategy is to develop the tungsten project with an industry player or a strategic partner and the gold project directly on its own,” he said.
Prices for tungsten, a metal used to harden steel in ballistic missiles and in drill bits, have risen after China imposed export restrictions on the metal. While China provides about 85 percent of global supplies, tungsten is also mined in countries including Russia, Bolivia, Peru and Portugal.
“We have what is arguably the highest grading non- developed tungsten project in Europe,” Perrault said. “It’s quite attractive and we think we’ll be able to choose the right partner for the benefit of our shareholders.”
