Columbus Gold CEO talks Montagne d’Or, Eastside

VANCOUVER — Columbus Gold (TSX: CGT; US-OTC: CBGDF) has had a busy to start to the year as it worked on a feasibility study at its joint-ventured Montagne d’Or gold project in French Guiana and updated a resource estimate at its Eastside gold-silver project in Nevada.

Montagne d’Or has been advanced steadily since Columbus struck an option agreement with Nordgold (LON: NORD) in late 2013. The Russian gold miner is set to earn a 55% interest in the project by finishing the feasibility study and spending US$30 million in working expenses over the past three years.

“When we entered into the agreement with Nordgold we instituted a short window in terms of timing for the resource estimates and economic studies,” Columbus Gold chairman and CEO Robert Giustra says during an interview.

A drill crew working at Columbus Gold and Nordgold’s Paul Isnard gold project in French Guiana. Credit: Columbus Gold.

“That set the schedule for drilling and obviously prioritized in-fill drilling over exploration. There really wasn’t time to step-out and drill deeper holes or test new targets. Now we’re in a position to look at the expansion potential, and all the holes along the boundaries of the deposit are open,” he adds.

The partners have delineated an indicated resource at Montagne d’Or of 83.2 million tonnes grading 1.45 grams gold for 3.9 million contained oz., plus inferred resources of 22.4 million tonnes at 1.55 grams gold for 1.1 million contained ounces, all at a 0.4 gram cut-off grade.

A core sample from Columbus Gold’s Paul Isnard project. Photo by Columbus Gold.

Gold mineralization at Montagne d’Or is hosted in a 400-metre-thick sequence of intercalated felsic and mafic volcanic and subordinate volcaniclastic rocks that strike east and dip steeply south. Near-surface gold resources are in four closely spaced stratiform, sub-parallel, east- to west-striking and south-dipping sulphide mineralized horizons.

The partners will soon carry out a 5,500-metre drilling program to explore targets on strike of and close to the existing deposit. Most of the drilling, including 22 holes on four drill fences, will target possible extensions up to 5 km to the west, where airborne geophysical surveys have identified prospective volcano-sedimentary sequence.

The companies will also test the Gustave geochemical anomaly east of Montagne d’Or, as well as potential depth extensions.

“In the east there’s really only that one historic hole,” Giustra says. “We figured it was drilled right into the vein, but that intercept is actually in the hanging wall. So that’s just a hint of what type of potential we might be looking at on the eastern side. If we hit at that Gustave target over there, I suspect you’ll see a much larger program in the future.”

The feasibility study will build on a mid-2015 preliminary economic assessment (PEA) that models a US$366-million operation producing 235,000 oz. gold annually via three-stage crushing, ball milling, a gravity gold-recovery circuit, nine carbon-in-leach tanks and a cyanide detoxification circuit.

“It’s all about costs right now,” Giustra says. “We’ve been working on that, and one of our big improvements is the cost of energy. We’d previously contemplated generating it on-site, but now we’re confident we’re going to get a grid connection, which will result in a 45% drop in energy costs. The upfront capital expenses will rise in that case, because we’ll have to build a transmission line.”

An environmental impact assessment is expected mid-year, and Columbus says it doesn’t anticipate permitting complications.

Giustra adds that Columbus is operating under the assumption it will move forward under the Montagne d’Or partnership after Nordgold assumes its 55% interest. Columbus is looking at financing alternatives to fund its anticipated 45% obligation for development.

“That’s our intention, but Nordgold has its own way of doing business, and it’s an evolving situation,” Giustra cautions. “We envision ourselves being very involved, and we’re looking at construction loans, streams and different financial options.”

The core shack at Columbus Gold’s Paul Isnard gold project in French Guiana. Credit: Columbus Gold.

Meanwhile Columbus is also advancing its wholly owned Eastside gold-silver property, 32 km west of Tonopah in western Nevada, along U.S. Route 95.

The company released a maiden resource on the project in December, which includes pit-constrained inferred resources of 35.8 million tonnes grading 0.63 gram gold for 721,000 contained ounces.

Columbus expanded its land position in January when it picked up the Castle gold project from Seabridge Gold (TSX: SEA; NYSE: SA) for 1.75 million shares. The new property lies along Eastside’s southern extent.

“We have ounces at Eastside, and those are typical oxides,” Giustra says. “We’re sitting on 1 million combined oz. after the Castle acquisition, but a quarter of that is historic and non-compliant with National Instrument 43-101 standards. We anticipate starting a drill program at Eastside in March that will look at targets outside the current deposit.”

Columbus’ recent prospecting work has established three geochemical targets outside of Eastside’s Original zone, which seem to be part of a continuous, hydrothermal alteration zone or cell that extends 5.5 km north to south.

Columbus hopes to find more near-surface oxide gold close to the existing resource.

The Eastside gold-silver project sits along U.S. Route 95. Credit: Columbus Gold.

“The drill program in March will look outside the Original zone at what we’re calling Target 5,” Giustra says. “The target is a look-alike to the existing resource based on geochemistry, but the top has eroded off. At the Original zone we see the better grades at 100 to 200 metres from surface.”

On Feb. 15, Columbus closed a $5-million bought-deal offering, wherein it issued 8 million shares priced at 63¢ each. The company has traded in a 52-week range of 35¢ to $1.09, and closed at 91¢ per share at press time. Columbus has 151 million shares outstanding for a $139-million market capitalization.

“There’s financial support for exploration near and around existing deposits,” Giustra says. “Pure exploration plays remain hard to fund, but clearly we have the ounces. I get the impression that these expansion scenarios are supported by the market right now.”