Continental Gears Up To Be Next Colombian Gold Play (November 23, 2009)

Continental Gold is getting set to bring its portfolio of prime Colombian gold properties to the Toronto Stock Exchange through its reverse takeover of Cronus Resources (CZR-V).

The deal was initially announced on Oct. 9 with trading in Cronus shares having been halted the previous day. The stock still managed to jump to 62¢ from the 40¢ it had been trading at just two days before the halt was ordered.

Privately held, Bermuda-based Continental Gold will give investors an opportunity to partake in some of Colombia’s gold plays, which have recently been opening up. The country has enjoyed some recent market buzz as improved security and pro-business governmental policy has allowed foreign juniors to explore its gold-rich mountains.

Continental’s properties were acquired by Bob Allen, an American expat and entrepreneur who has been acquiring prospective mining ground in Colombia for the past 20 years. Allen is tagged to serve as chairman once the company is listed.

Continental currently has seven wholly owned gold exploration projects covering more than 1,000 sq. km of exploration concessions.

The new company will likely begin trading in Toronto in January, with Continental shareholders taking an 87% stake in the amalgamated company and Cronus shareholders holding the remaining 13%.

The transaction values the new company at $75 million or $1.50 per share.

Continental’s flagship project, Buritica, is in Colombia’s Antioquia Department. Roughly 100 km from Medellin, it benefits from access to high-quality infrastructure such as paved roads, water and power.

Money raised from the public offering, however, will quickly go into some of Continental’s other priority projects.

Thus far, Continental has completed 14,000 metres of diamond drilling at Buritica and says it has made several high-grade gold discoveries.

Continental also has two active joint ventures with AngloGold Ashanti (AU-N, AGD-L) and a group of concessions named Santander, totalling more than 50 sq. km near Ventana Gold’s (VEN-V, VENGF-O) La Bodega project.

The deal will also bring a $2-3 million, third-party loan to Continental within 30 days.

Ari Sussman, chief executive of Colossus Minerals (CSI-T, COLUF-O) and Cronus, is being tagged to stay on as chief executive of the new company. There is no word yet on whether Sussman plans to abandon his post at Colossus to focus exclusively on Continental.

Cronus will be able to elect one member to the board, with Continental choosing two, and the remaining three being jointly nominated.

Cronus had previously been valued for its land package surrounding the historical high-grade San Juan gold mine in Baja, Mexico.