Colossus minerals (COLUF.PK) - Colossus is a name most have never heard of as it is in the precious metal mining industry where even the large producers are largely unknown by the average money manager and retail investor. Unlike other advanced stage mining companies (approx. 18 months from commercial production), Colossus possesses characteristics extremely unique relative to the rest of the complex. It has shown to have at least one extremely high grade gold deposit, bi-products of platinum and palladium (opposed to the usual silver, zinc, lead, copper, etc.) located in Brazil, which I consider to be one of the most mining friendly countries in the world. Serra Pelada was host to one of the largest precious metal rushes in Latin American history. Its sole focus is on its flagship property, Serra Pelada, which is proving to be one of the highest grade gold and platinum group metal deposits in the world. (SEE: CHART For Highlights).
Like any investment, Colossus comes with its share of risks but this is one story in the industry that has gone more or less overlooked. From what I’ve gathered from my time spent evaluating Colossus, the risk/reward ratio looks extremely compelling and definitely warrants a closer look. The following is a brief overview of management, financial position and developmental progress:
CEO - Ari Sussman whose resume includes 15 yrs involvement in the mining industry. Over the last decade he has raised hundreds of millions for various projects and been involved with the Titanium Corporation and Continental Gold.
COO - Paulo Fagundes – Has a very strong track record of executing mine development and expansion projects. He has proven himself through his general manger position at Yamana’s Mercedes mine, responsible for U/G development as later for the successful expansion at Its San Andreas mine.
CFO - Claudio Mancuso – With over a decade in the capital markets under his belt, he went on to become the VP of Agnico-Eagle from 2002-2009.
Financial Position – With everything on budget for the most part, Colossus has done an excellent job managing its exploration and capital costs incurred thus far. With over 80m of cash on hand at the end of Q2 2011, it is likely one more equity offering will be necessary before initial production commences.
Execution- With construction underway and continued exploration, Colossus has achieved several important milestones, namely the acquisition of an existing ball mill (which moves phase 1 production to 2H 2012 instead of 2013) and finalized plans to extract an initial bulk sample in the upper CMZ. This will be followed by two additional bulk samples from the middle and lower portions of the CMZ once appropriate underground development is reached later in 2012. A 3,500 meter U/G decline is on schedule with 200m completed, with acceleration expected, estimated completion by Q2 12’. 5 drills are currently operating with more to come in the near future. Installation of dewatering pumps and construction of a tailings starter dam are on-going and will be finished Q2 12’ and Q4 2011. Lastly construction of a processing plant completion is currently estimated for Q3 2012.
