Colt hunts gold and tungsten in Portugal

Montreal-based junior explorer Colt Resources (GTP-V) has focused on a few different projects since it hit the TSX Venture Exchange last February, but its eye has always been on Portugal.

Colt is the largest holder of mineral exploration rights in the country, with roughly 1,620 sq. km of concessions that include resource-stage gold and tungsten assets. The company’s original focus was on its Penedono gold project, but Penedono took a back seat to Colt’s more promising Tabuaco tungsten deposit and recently permitted Boa Fé-Montemor gold concession.

“Portugal is really opening its doors to investment right now,” executive vice-president and chief operating officer Declan Costello explains by phone. “It has some economic issues people like to dwell on, but the reality is Portugal has invested heavily in infrastructure, including highways, electrical systems and so on. The country has a hard-working and well-educated workforce. It’s a wonderful foundation on which to build.”

Up until early this year, Colt was mostly valued for its wholly owned Tabuaco tungsten project outside of Vila Real in northern Portugal. 

The company is undertaking infill and metallurgical drilling at the site, targeting a prefeasibility study by year-end. Colt is taking aim at a 2013 construction schedule, with a one-year build-out period leading to first production in 2014.

Tabuaco has indicated resources totalling 760,000 tonnes grading 0.58% tungsten trioxide (WO₃), and inferred resources of 1.3 -million tonnes grading 0.57% WO₃.

In mid-February Colt discovered the new Aveleira tungsten zone 750 metres north of its existing Tabuaco resource. Results from two holes collared at Aveleira include 6 metres of  1.25% WO₃, and 8 metres grading 0.44% WO₃.

“The discovery at Aveleira is very significant insomuch as it is what we expected to find,” Costello says. “As you drill along strike on the mountainside you’ll hit more of this stuff. The grades and widths are very good, and shows the project has the potential to really grow beyond the current 2-million-oz. resource. We think that resource would support a mine in its own right, but we want to put a little more meat on the bone going into feasibility.”

According to president and CEO Nikolas Perrault, Colt is holding discussions with “potential industry players and strategic partners” to negotiate offtake agreements and explore joint-venture opportunities.

“The key thing regarding partnerships is the quality of the asset,” Perrault says. “The grade is several times better than what’s being mined in Europe today, making it extremely attractive to many potential suitors. We just have to make the right decision for our shareholders.”

As resource drilling continues at Tabuaco, exploration excitement has emerged at Colt’s wholly owned Boa Fé-Montemor gold concession 100 km east of the capital Lisbon.

Though the property is relatively new to Colt’s portfolio, it has a wealth of historical data from exploration programs dating back to Rio Tinto’s (RIO-N) environmental base-line studies in 1991. Boa Fé-Montemor was most recently held by Australian explorer Tamaya Resources through 2008, before the company relinquished its rights due to bankruptcy.

“Tamaya was building a copper mine in Chile when the financial crisis hit them very hard,” Costello says. “I look forward to the day we can look back on this and label it, in a polite way, serendipitous for our core shareholders.”

After 30 years of high-quality drilling and trenching work, Colt needs to confirm only 5% to 10% of its historic database at the central zone to bring the deposit up to resource-estimate standards.

“We still have a ton of money that we’d otherwise have to spend on prospect drilling and early stage exploration, to get a good handle on these deposits,” Costello says. “This allows us to advance quite quickly — more quickly than any other company could with a project like this, given the fact that we only started drilling three months ago.”

Drilling to date has focused on a non-National Instrument 43-101 compliant resource that is located within 100 metres of surface and totals roughly 610,000 contained oz. gold at the central Boa Fé mining licence. 

Colt has five rigs running with its main target being the Chamine zone at the heart of the historic resource, though rigs are also collared at auxiliary targets, including: Casa Novas, Bracos and Banhos.

Results at Chamine to date, aimed at testing historic intervals, have returned high grades such as  45.1 grams gold per tonne over 3 metres, 15.5 grams gold over 7 metres and 31 grams gold over 3 metres. Colt’s most recent assays at the target were released to end April, and cut 5.6 grams gold over 17 metres and 23.6 grams gold over 5 metres.

“We firmly believe that we’re dealing with a major regional trend here,” Costello says. “It’s a regional shear system, and we control over 30 km of this thing. We know it’s only been explored close to surface, but we also know that similar deposits can extend to depth, so there is a lot of upside.”

Because of the shallow nature and relatively high-gold grades at the central Boa Fé experimental mining licence — which includes Chamine — Colt is working towards an open-pit model to prove the project’s economic viability. The company is planning on releasing an NI 43-101 compliant resource estimate later this year, before exploring potential gold anomalies in the greater 732-sq.-km Montemor land package.

“Once we get to mid-year and we publish our resource estimate, that will be a line in the sand,” Costello says. “It will demonstrate tonnes and grade for the project, and expand our exploration program to test for deeper extensions. We are defining new regional targets we can follow up on later this year. I must stress it’s not just one line of strike — we know there are repeat structures that imply many years of exploration ahead.”

Colt has 112 million shares outstanding and a presstime market capitalization of US$48 million. 

The company completed a two-pronged, US$8.7-million financing in early May. It was comprised of  a 10-million-share, bought-deal private placement at 50¢ per share for proceeds of US$5 million, as well as a non-brokered private placement of 7.4 million shares at 50¢ apiece, for another US$3.7 million.