Continental Gold expands resource at Buritica

Continental Gold (TSX: CNL; US-OTC: CGOOF) has tabled an increased resource estimate for its Buritica gold development project in northwestern Colombia that also reinterprets the way the company sees its deposits and incorporates new zones, called “broad mineralized zones” (BMZs).

The company tabled its prior resource in 2015, and based it more on surface drilling, as opposed to underground drilling. After completing the project’s feasibility study in 2016, the company began mine construction, focusing on underground development.

“With that, our understanding of the geological system has evolved immensely,” Continental Gold CEO Ari Sussman says in an interview with The Northern Miner. “Being able to be underground — see it, touch it, feel it and reinterpret it.

“So instead of focusing on individual veins, we’re focusing on zones. This is going to be much more efficient for mining.

“It should make for a much easier time for our mine-planning team.”

As Sussman explains, when Continental started drilling more tightly spaced holes, it picked up these bulkier zones, or BMZs. As a result, the company has been able to aggregate zones at Buritica, incorporating material lying in between high-grade veins that it had previously deemed waste into its resource estimate. “One thing about the system is that it has remarkable continuity both along strike and vertically,” Sussman says.

Continental Gold special advisor David Reading (left) and CEO Ari Sussman aboard a helicopter between Medellin and the Buritica gold project. Photo by David Perri.

He says the company has chased BMZ1 vertically, with drilling to more than 400 metres. It expects that, as it finds more BMZs, they will all have a similar verticality. It hasn’t traced BMZ2 very far yet — to less than 100 metres — but says the zone remains open at depth. Continental has three BMZs, so far, but Sussman says it may have found a fourth close to BMZ1. The company has only drilled one hole into the zone, and says it’s waiting on additional assays to confirm whether or not it’s a BMZ.

Along with its ongoing underground development and more drilling, the company re-logged 40% of its historical core. It then simplified its geological interpretation of the project’s gold-bearing bodies from 89 veins into 27 vein packages and three BMZs.

Its work led to a 19% increase in Buritica’s overall measured and indicated resource and a 30% increase in the project’s overall inferred resource.

The project now has 15.45 million measured and indicated tonnes grading 10.54 grams gold per tonne and 41.8 grams silver per tonne for 5.23 million oz. gold and 20.8 million oz. silver.

It also contains 20.36 million inferred tonnes at 8.87 grams gold and 39.3 grams silver for 5.81 million oz. gold and 25.8 million oz. silver.

That’s not including the BMZs, which total 580,000 measured and indicated grading 4.64 grams gold and 12.3 grams silver for 90,000 oz. gold and 200,000 oz. silver, as well as 1.51 million inferred tonnes at 4.41 grams gold and 9.4 grams silver for 210,000 oz. gold and 500,000 oz. silver.

In 2019, the company will drill 73,500 metres at Buritica, including 55,000 metres of definition drilling, some of which will go into BMZ areas to prepare for stope mining. The company will use the remaining 18,500 metres to infill BMZ areas.

The company recently drilled its best BMZ interval to date at BMZ1, cutting 88.91 grams gold over 20 metres from 324 metres downhole including 3,194.51 grams gold over 1 metre.

Other recent infill intercepts from BMZ1 cut 16.55 grams gold over 41 metres from 168 metres downhole, 15.36 grams gold over 16 metres from 251 metres downhole and 48.03 grams gold and 6 metres from 149 metres downhole.

The company is halfway through building its mine. It expects to have all its underground development done by the end of 2019, and most of its surface work, as well. It aims to pour first gold in 2020’s first half and ramp-up to commercial production over the following six months.

In 2018’s second quarter, Continental updated the project’s anticipated capital expense to between US$475 million and US$515 million. It does not have enough cash to finish construction.

“Obviously we will be talking to our strategic shareholder, Newmont,” Sussman says. “The asset doesn’t have any stream, royalty, or gold loan against it, so those options are on the table and being evaluated. In addition, we’re looking at taking more debt.

“As it stands today we have US$275 million in debt, so there’s lots of flexibility to tack on a little extra to cross us over the line, without being dilutive to shareholders.”

Newmont Mining (NYSE: NEM) has a 19.9% stake in Continental. Sussman says the company spoke to Newmont after it announced it would acquire Goldcorp (TSX: G; NYSE: GG).

“Immediately when they announced the Goldcorp transaction as a company we were concerned,” Sussman says. “But we called them and they committed that they are supportive of Continental Gold and the continued development of our project. They’re not going anywhere.”

Shares of Continental Gold are trading at $2.35 with a 52-week range of $1.76 to $4.01. The company has a $443-million market capitalization.

“This resource update we put out just shows how substantial of a deposit this is,” Sussman says, “and the amazing thing to us is we have no idea where the ends of this are in terms of growth. It’s going to get much bigger. There’s no question that we’re confident of that.”