Continental struts its Colombian stuff (September 20, 2010)

There’s been a lot of buzz in some circles over Continental Gold (CNL-T), thanks to its portfolio of highly prospective gold projects in Colombia.

The company’s land package was put together in the 1990s just as investors were fleeing the troubled country. But Continental’s founder and chairman Robert Allen saw an opportunity and managed to acquire some of the choicest mining permits the gold-rich country had to offer.

While Allen sold off interests in many of those prospects to Canadian junior explorers and the like, he bundled some of best ones under the Continental Gold banner and listed the company last April.

Investors who were unfamiliar with the story are now starting to see what some of the pre-initial public offering buzz was all about with the latest drill results released from the company’s current main focus, the Buritica gold project in Colombia’s Antioquia province.

While the drill program tested two main areas on the property, the Veta Sur system and the Yaragua system, it was the results from Veta Sur that were the most eye-popping.

All six holes at Veta Sur intersected gold mineralization in the form of veins and disseminations over a total width of more than 50 metres with a highlight hole intercepting 14.3 metres grading 446 grams gold per tonne and 166 grams silver per tonne — much of that grade came from an intersection of 3 metres averaging 2,106 grams gold and 166 grams silver. The same hole also intersected 5.5 metres of 100.2 grams gold and 88.3 grams silver.

Other significant intercepts from Veta Sur included 8.5 metres at 23.67 grams gold and 149 grams silver, and 4.7 metres at 85.44 grams gold and 71 grams silver.

The company has now outlined mineralization at Veta Sur over 400 metres horizontally and 350 metres vertically. The zone is still open in all directions.

Not to be outdone, the Yaragua vein system returned its own stellar results, with highlight intercepts of 5.9 metres grading 21.34 grams gold and 49 grams silver, and 3.9 metres of 31.98 grams gold and 40 grams silver.

The Yaragua system currently feeds the largest underground vein-gold mine in the Buritica project area, which has been churning out gold since 1992.

Drilling at Yaragua focused on the extensions of Vein B to the east and the delineation of another vein set known as San Antonio.

The company says it hit potentially economic thicknesses and grades at Vein B over 350 metres horizontally and 300 metres vertically with highlight intercepts of 8.9 metres grading 10.28 grams gold and 9.3 metres of 6.37 grams gold and 44 grams silver.

Mineralization at Buritica is currently described as base metal-carbonate-type auriferous systems with gold mineralization in sets of high-grade veins and also in breccias bodies.

The Veta Sur system is contiguous with and to the southwest of Yaragua and was discovered in 2008.

Also of note from the results, was a drill hole north of the Yaragua system. The hole represented the first time the area had been drill tested and it returned 1.5 metres of 64.82 grams gold and 2.7 metres of 5.87 grams gold.

While not as impressive as some of the other results, the hole does point to a newly discovered vein system.

Continental currently has five surface and two underground diamond drills turning at the Veta Sur and Yaragua systems.

In Toronto on Aug. 31 — the day the drill results were released — the company’s shares were off 5¢ to $5.50 on 5.1 million shares traded. That slight drop in share price comes, however, after a steady climb from the $2.50 region since its shares began trading.