Continental rebounds following sharp mid-week decline

Vancouver — Continental Gold (CNL-T) bounced back 7% or 53¢ during the March 8 trading session, closing at $7.95 per share after releasing high-grade assays on 13 drill holes collared on its 100%-owned Buritica gold-silver-zinc property in Antioquia, Colombia. Continental prices rose on above-average trade volume of 426,500 shares.

The company fell to a first quarter low of $7.27 per share on March 6, dropping over 9% on the same days as gold prices plummeted and a sell-off occurred that saw the S&P/TSX Composite Index decrease by 255 points.

 The 13 assays are part of a 2012 drill program at Buritica expected to exceed 60,000 metres. According to Continental CEO Ari Sussman, the well-funded gold explorer has a budget of $58 million set aside for exploration and development this year and is operating ten rigs on the Buritica site.

The most recent results focus on extending the Yaragua and Veta Sur systems, with step-out programs targeting vein sets outside a resource estimate released in September 2011.

The initial estimate identified measured and indicated resources at Yaragua and Veta Sur totaling 1.1 million tonnes grading 17.8 grams gold per tonne and 42 grams silver per tonne or 630,000 oz. contained gold and 1.5 million oz. contained silver at a 3 grams gold cut-off.

The 2012 drill program will target further inferred resources in the two systems equalling 6.9 million tonnes of 11.4 grams gold and 43 grams silver totalling 2.5 million oz. contained gold and 9.5 million oz. contained silver.

Continental continues to hit high-grade intercepts on the project, with the most recent 13-hole results returning notable grades at depths exceeding 500 metres.

Holes 249 and 234 extend strike lengths of several Yaragua veins to the west. Hole 249 features an intercept of 7 metres grading 139.53 grams gold starting from 269 metre depth, including a 4 metre interval of 239.6 grams gold.  Hole 234 was a step-out 200 metres farther west that intercepted 1.4 metres of 46.7 grams gold.

Step-outs to the east of Yaragua indicate the system may be continuous in that direction as well. Hole 230 highlights include 8 metres of 37.9 grams gold and 12 grams silver starting from 481 metres depth, marking the deepest and highest-grade intercept encountered on the system’s eastern extension. Hole 236 was collared farther northeast and returned intercepts from the northernmost vein system that include 3.4 metres grading 15.2 grams gold and 129 grams silver.

Continental also encountered new vein sets at Veta Sur, a step-out to the southwest returned an intercept of 14 metres grading 27.99 grams gold and 57.3 grams silver at 256 metres depth, including an interval of 2.7 metres grading 131.1 grams gold and 201.2 grams silver.

Underground channel samples on the HW and Sophia veins also provided grounds for optimism. Sofia highlights include values of 89.7 grams gold and 63 grams silver over 1.85 metres true width. Samples of the HW vein include grades of 24.4 grams gold and 44 grams silver over 1.24 metres along a 61-metre vertical raise.

Continental continues to expand reserves and resources at Yaragua and Veta Sur. Yaragua has a current drill outline of 650 metres along strike by 800 vertical metres and Veta Sur’s outline has been intersected along 550 metres of strike and 1,180 vertical metres.

In a note to clients, Raymond James analysts said, “We recommend investors accumulate shares of Continental on what we view as significant exploration potential growth and rapid development (de-risking) of its key asset, the 100%-owned Buritica gold-silver-zinc project in Colombia.”

The capital markets firm predicts that results from the complete 2012 drill program will lead to an updated resource and reserve estimate later this summer, followed by a preliminary economic assessment on the project to end the year. Raymond James updated Continental to an “outperform” rating and $12.50 target price in mid-February.