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Disclaimer
COLTF: Playing Strong on Gold in Portugal
Colt Resources is a Canadian-based exploration company that focuses on acquisition, exploration, and development of mineral properties. The company’s mining properties are in Portugal and Canada, where it holds 100% ownership in all of its projects. In Portugal, Colt Resources has emerged as one of the largest holders of mining and exploration rights and also has become one of the most significant gold and tungsten lease portfolio holders in the mineral-rich European country. Colt Resources Portugal mining assets contributes around 92% of the company’s portfolio, and Portugal has a mining friendly jurisdiction with reliable infrastructure and known mineral potential. A complex and diverse geologic formation provided Portugal with significant potential in base and precious metals, as well as strategic mineralsand rare earth elements. Changes to mining policy encourages investment in mineral exploration in Portugal, which was one ofEurope’s largest producers of copper, tin, and tungsten concentrates and an important exporter of industrial and ornamental stones. As the Portuguese government strengthens its forward-looking economy, the country has encouraged mining as a key factor.
In Portugal, the company holds a total area of 2,162 square kilometers, in which it was granted mineral exploration rights for the Montemor gold exploration concession. In Montemor, it holds a wholly owned experimental mining license for Boa Fe gold projects, where it has 47 square kilometers of total mining area. The Boa Fe belt is estimated to contain several parallel gold mineralized zones and various gold deposits such as Banhos, Casas Novas, Chaminé, Ligeiro, and Braços.
Apart from the Boa Fe gold project, Colt Resources also received an experimental mining license for Tabuaco for its tungsten project. Tungsten is known as a strategic metal, primarily used for industrial purposes. These two projects are expected to be in production in next 18 to 36 months. Colt Resources already completed the first phase of these two projects in February, where it drilled 32 and 22 holes, respectively, for gold and tungsten. Further, it anticipates an additional drilling of 18,400 feet in the remaining first half of this year. The strong focus on these two projects in Portugal will strengthen its operating performance, which in turn will lead to strong growth.
Projects and Concessions
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Boa Fe gold project: continues to be fast-tracked
The Boa Fe mining project is one of the company’s two advance projects located in the northern central section of the Montemor gold exploration concession, 100 kilometers east of Lisbon. Colt Resources has 100% ownership of this project. The company completed the gold project’s first phase in February, in which it completed drilling 32 holes, and the drilling samples are under testing in Spain. In the first phase the infill drilling program was designed to estimate total recoverable resources from this project. Going further in advance stages, the company will continue the feasibility studies and mine development with expected production in 2015.
The Boa Fe mining area includes a more than 30-kilometer-long major shear zone, which is estimated to have several high-grade gold deposits with significant depth potential. Earlier, these surface zones were shallow drilled and trenched by other operators focused on a 10-kilometer strike length out of an extent of more than 30 kilometers. So the remaining shear zones in the Montemor area are still unexplored, which encouraged the company to focus in this particular area for mining and expects to deliver initial gold revenue by 2015. The initial metallurgical test has shown that gold is easily recoverable here through a combination of conventional methods such as gravity and flotation.
Estimated Resources
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As per the NI43-101 mineral resource estimate in March 2013, it examines only six significant target gold deposits in Boa Fe: Chaminé, Casas Novas, Banhos, Braços, Ligeiro and Monfurado. The estimation stated that potential and economically mineable pit has a cut-off above of $0.44 gram per tons (g/t) Au. So the estimated resource of the grades will have improved returns of around 6.07mt at 1.74 g/t Au (340.31k oz) indicated, or 1.55mt at 1.69 g/t Au (84.20k oz) inferred. This advanced gold project will enable the company to improve operating results upon completion in 2015.
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Moreover, SRK Consulting completed a PEA for this project in May 2013 where it showed different processing approaches that will result in different operating costs, capital requirements, and rate of returns. It identified four options as shown above. Colt Resources has evaluated and chose option C and D for its Boa Fe gold project. As these two options have a comparatively lower cost requirement and associated risk, this can improve the internal rate of return (IRR) for the project. So I expect applying these two processes, the company can achieve a higher return longer term, which in turn will strengthen its financial performance.
Conclusion:
The company’s strong focus and ongoing development of advance gold project in Portugal has a significant upside. With 100% ownership, Colt Resources is expected to realize a tailwind for growth upon completion of the project in 2015. Looking at its estimated recoverable resources and available PEA options, the company will strengthen its overall return structure.
