Goldcorp to pay $7.3M for stake in Colorado Resources

VANCOUVER — Goldcorp (TSX: G; NYSE: GG) is finding a foothold in northwestern B.C.’s historic Golden Triangle region with a plan to inject $7.3 million into Colorado Resources (TSXV: CXO) for exposure to the junior’s 305 sq. km KSP gold-copper property in the region.

Colorado’s president and CEO Adam Travis tells The Northern Miner during a phone interview the new money will help expand the company’s 7,500-metre drill program, which is targeting extensions of high-grade gold mineralization at KSP’s flagship Inel project.

Inel is 15 km southeast along strike of Skeena Resources’ (TSXV: SKE; US-OTC: SKREF) past-producing Snip gold mine, where head grades averaged 25 grams gold per tonne.

“Goldcorp shares our enthusiasm for KSP, and for Inel in particular,” Travis says. “When I heard they were looking for properties with district-scale potential, I thought we were made for each other — we’re the largest landholder of any junior explorer in the district. It’s a big property with big potential.”

Location map of Colorado Resources’ exploration properties in northwestern B.C.’s Golden Triangle district. Credit: Colorado Resources.

Over 100 sq. km of the KSP property is covered with clay-silica and iron alteration, after hydrothermal fluids escaped from an underlying porphyry system. The gossan carries over 0.1 gram gold in soil samples, making it one of the largest anomalies seen in the Golden Triangle.   

The Golden Triangle is named after a cluster of gold-rich deposits found within a belt of deformed volcanic rocks, including Seabridge Gold’s (TSX: SEA; NYSE: SA) 10.2 billion lb. copper and 38.8 million oz. gold KSM porphyry camp, and Pretium Resources’ (TSX: PVG; NYSE: PVG) 9.1 million oz. Brucejack epithermal gold mine.

Travis says better markets have spurred exploration in the region, which has led to GT Gold’s (TSXV: GTT; US-OTC: GTGDF) high-grade gold discovery at its Tatogga property, 20 km northeast of Imperial Metals’ (TSX: III; US-OTC: IPMLF) Red Chris copper-gold mine.

A drill rig at Colorado’s KSP copper-gold property in northwestern B.C.’s Golden Triangle district. Credit: Colorado Resources.

“People have finally woken up to the idea that this is a great place to make a discovery. It’s nice to see the eyeballs and investors come back again,” Travis says. “There are ten junior explorers with drilling projects in the Triangle … Brucejack is in production, Seabridge is spending money next door at its Iskut project and Skeena is looking at drilling underground at Snip. The more these companies drill, statistically speaking, the more discoveries will be made. It’s the right place to be.”

Before Goldcorp’s investment, Colorado’s $4-million exploration program at Inel was enough to raise its interest in KSP from 51% to 80%. The property is under a joint venture with SnipGold, a wholly owned subsidiary of Seabridge.

Colorado has since amended its agreement to buy the other 49% interest in the property for $1 million in cash, 2 million Colorado shares and a 2% net smelter return royalty.

“If we stuck with the previous agreement, by the time we agreed on a new joint venture we would’ve lost the exploration season,” he says. “I knew I had a big fish on the hook and wanted to make sure there was nothing to stumble us to advance the project forward this year.”

Assay highlights from 2016 drilling at Colorado Resources’ Inel project, with collar locations of this year’s proposed drill holes. Credit: Colorado Resources.

Travis says that depending on weather and logistics, Colorado may double its current drill campaign at KSP.

The drill campaign is targeting the down-dip extension of mineralization outlined in last year’s 8,900-metre drill campaign, which tested a 300- by 600-metre area within a 1 by 1.5 km soil geochemical anomaly averaging 1.27 grams gold. Results included 23.2 metres of 4.12 grams gold and 113.6 metres of 1.67 grams gold.

The Colorado Resources investment is Goldcorp’s latest addition to its growing portfolio of investments in junior explorers. Since early 2016, Goldcorp has driven $64.3 million into juniors to increase its exposure to greenfield discoveries.

The miner plans to invest up to $100 million in 15 to 20 juniors, as announced in January at the Association for Mineral Exploration Roundup convention in Vancouver.

Other juniors in Goldcorp’s portfolio include Triumph Gold (TSXV: TIG), Gold Standard Ventures (TSXV: GSV; NSYE-MKT: GSV), Sirios Resources (TSXV: SOI), Independence Gold (TSXV: IGO) and Auryn Resources (TSX: AUG; US-OTC: GGTCF).

Workers in the core shack at Colorado Resources’ KSP gold-copper property in northwest British Columbia. Credit: Colorado Resources.

Goldcorp’s investment in Colorado Resources, due by private placement, will consist of 10 million units at 26¢ per unit, and 12.7 million flow-through units at 36.5¢ each. Each unit includes one share and one half warrant, with each whole warrant exercisable within 30 months at 45¢ per warrant.

Once completed, Goldcorp would have a 14.25% stake in Colorado.

Shares of Colorado have traded within a 52-week range between 18¢ and 53¢ and closed at 35¢ at press time. The company has 96.3 million shares outstanding for a $34-million market capitalization.