Colombian Mines buoyed by assets

VANCOUVER — Colombian Mines (TSXV: CMJ; US-OTC: CMBPF) has remained active on the exploration front through a hybrid strategy of project generation and organic discovery.

President and CEO Robert Carrington’s journey in Colombia started nearly 25 years ago, and with that experience, he’s amassed a portfolio of projects, along with a technical team dedicated to uncovering greenfield opportunities.

In the early 1990s in Colombia, Carrington placed a series of properties into a private company that would generate opportunities for Placer Dome, as well as work with a few Toronto-listed juniors.

“Following that I returned to North America, since Colombia had gotten quite dangerous at that time, though I was always drawn to the geology,” he recounts during a phone interview. “We kept monitoring the situation, and when the Colombia Supreme Court ratified the election amendment to the Constitution in late 2005, we decided it was time to drop the hammer and form Colombian Mines.”

During his time searching for projects for Placer Dome, Carrington put together what he calls a “pretty substantial” database of Colombian projects, which gave him an advantage when a junior-led staking rush started in the country in early 2006. It was still tough for smaller companies, though, as Colombian administrators were still creating — and are still tweaking — a framework under which international explorers could apply for mineral tenure.

“The will is there to do it, but the knowledge isn’t,” Carrington comments. “The Colombian authorities want to do it themselves, for example, they won’t even really go to Chile or Peru to figure out what has worked there. They’re bent on reinventing the wheel, and that’s part of the problem, since most of the administrative agencies only have a background in oil and gas, and a bit of coal.”

The latest difficulties stem from a country-wide moratorium on new mineral applications in 2011.  But with the restriction lifted in July 2013, it looks like exploration is set to reopen. Colombian Mines put together a group of projects before the moratorium, however, so the company has advanced a variety of assets through joint ventures and in-house exploration efforts over the past three years.

Near the top of Carrington’s wish list during the company’s formation was the Yarumalito gold–copper porphyry target in the Marmato mining district, 110 km south of Medellin. Colombian Mines completed 16,000 metres of drilling at the site before Teck Resources (TSX: TCK.B; NYSE: TCK) came onto the scene in 2012 in the form of a joint venture that could see the major earn a 70% interest in the project. Teck agreed to fund US$10 million in exploration at Yarumalito and make staged cash payments and private placements totalling US$5.5 million to earn its stake.

“The property covers five to six individual porphyry targets and Teck wanted to test a couple of those,” Carrington explains when asked about 2,500 metres of drilling the companies completed in 2013. “It was a relatively small program, so it was basically scout drilling. All of the holes hit gold mineralization, and though I wouldn’t say it was economic, it was significant that virtually every hole was mineralized from top to bottom.”

Together, the companies have reinterpreted airborne geophysics at Yarumalito, and almost all of the 14.5 sq. km property is now covered by a soil geochemical survey. Three types of mineralization have been identified at the site, including gold–copper porphyry-type mineralization; contact-related mineralization in sediments intruded by the porphyry system; and high-grade, structurally controlled mineralization.

“Teck’s in the process of formulating what they want to do down there this coming year. I suspect with the general status of the market we’ll be focused on re-evaluating some of the historic data on the project,” Carrington says. “Yarumalito was actually one of the properties I worked in the 1990s, so there are almost 10,000 surface rock samples and several thousand soil geochemical samples, as well as property-wide aeromagnetic and radiometric surveys.”

On the in-house exploration front, Colombian Mines’ flagship is its wholly owned El Dovio asset, 120 km north of Cali. El Dovio hosts polymetallic gold–silver–copper–zinc mineralization in a volcanogenic massive sulphide deposit setting.

In September 2013 the company reported results from a maiden drill program at El Dovio’s Sabana Blanca zone, with highlights including: 3.3 metres grading 2 grams gold per tonne, 27 grams silver per tonne, 6.83% copper and 0.83% zinc from 56 metres depth in hole 13-07; and 18 metres of 1.2 grams gold, 3.24 grams silver, 0.57% copper and 0.46% zinc from 60 metres depth in hole 13-06.

“One tremendous success during drilling was when we noticed there was much more pyritite than we had been able to identify in outcrop,” Carrington says, adding that the company intends on drilling 2,000 metres in 2014 to chase the mineralization along strike and down dip. “So we ran an orientation-magnetics survey and came up with gang-buster results. We found almost perfect relation with the mineralization at Sabana Blanca.”

El Dovio has shown attractive early stage metallurgical results. The company reported recoveries from non-oxidized mineralization at Sabana Blanca of 96% for gold and copper, and 94% for zinc. Carrington says it is “hands down” the highest flotation recovery he’s seen in his career, and attributes it to the coarseness of the crystal sizes of the sulphides, along with the paragenesis of the deposit.

Colombian Mines’ second in-house exploration asset, identified by prospecting, is its Mercedes gold–silver–copper property near the town of Natagaima. Rock-chip sampling of outcrops there has returned grades up to 49 grams gold, 773 grams silver and 26.4% copper.

“There are a pretty high manganese element and a really low toxicity suite,” Carrington notes. “You literally cannot buy meaningful arsenic, antimony or mercury numbers at Mercedes. That’s really typical of intermediate sulphidation-type epithermal systems, so it’s really promising. We had a chance to go down and follow one of the bigger veins, and I’m really pumped because we walked over half a kilometre of unbroken outcrop.”

To support its theory, Colombian Mines completed high-resolution airborne magnetic and radiometric surveys at Mercedes in early February. The company identified multiple, large, linear-magnetic anomalies — some running for over 7 km — commonly associated with coincident potassium anomalies. The coincident anomalies are typical of large epithermal systems, and are spatially associated with high-grade gold–silver–copper occurrences the company identified during surface sampling.

“The insane grades are coming from up on the north end, where the crews are focusing on the stream-sediment samples at the moment,” Carrington says. “Where else in the world can you go out and find those grades without even a prospect pit on them?”

And those are just the highlights for a company that holds a number of other prospects in Colombia. Carrington says Colombian Mines has around five confidentiality agreements outstanding with companies contemplating joint ventures.

“Certainly we’d look at a partnership at El Dovio with the right company,” he adds. “The re
ality is we’re a junior company, and in the current market, de-risking assets is a big part of the equation. It would also allow us to focus our resources on something like Mercedes.”

Carrington says the company has enough in its treasury to complete the work programs it has laid out across its portfolio for the coming year. Colombia Mines raised US$2 million to start 2014. The bulk of the capital stemmed from a 6 million unit placement with the World Bank’s International Finance Corporation, which has authority from its board to invest up to US$4.5 million in future financings.

Colombian Mines shares have traded within a 52-week window of 19¢ and 51¢, and rose 33% over the first four weeks of 2014 en route to a 40¢ close at press time. The company maintains 46 million shares outstanding for an $18.3-million market capitalization.

“We’re hoping the markets get better and we can raise more funds, since that’s really the key element in how fast we can advance these projects,” Carrington says. “Colombia still seems to be one of the better regions, there really seems to be a premium for companies working in the country. I think we’re pretty much the largest project generator down there.”