Iamgold buys toehold in Colombia’s Middle Cauca belt

Iamgold (IMG-T, IAG-N) has agreed to buy a minority interest in two junior explorers with porphyry-gold-copper projects in Colombia’s highly prospective Middle Cauca belt south of Medellin. 

The major gold miner will invest $6.05 million for a 10.2% interest in Bellhaven Copper & Gold (NHV-V) and $3.42 million for a 19.9% interest in Colombia Crest Gold (CLB-V). Both juniors hold large land packages in the northern end of the 300-km-long Middle Cauca belt, which is home to porphyry gold deposits such as AngloGold Ashanti‘s (AU-N) 12.9-million-oz. La Colosa project and Sunward Resources‘ (SWD-V) 8.3-million-oz. Titiribi project.

Iamgold does not own any operating mines in Colombia but produced 395,000 oz. gold from its Rosebel gold mine last year in Suriname. It also owns the advanced-stage Quimsacocha gold-silver-copper project in Ecuador and  maintains a 100% interest in the Camp Caiman gold project in French Guiana, though progress there has been stalled while the company awaits new mining legislation.

Earlier this year, Iamgold announced it was spending $44 million on 18 grassroots and greenfield projects across West Africa, Quebec and South America, including Peru, Brazil and Colombia. The company additionally disclosed it is carrying out reconnaissance evaluation of “promising areas in Colombia, and is searching for advanced exploration opportunities or acquisitions.”

Bellhaven’s flagship project, La Mina, is the most advanced of either junior’s properties. A maiden resource estimate released last month established inferred resources of 1 million oz. gold, or 1.6 million oz. gold equivalent after copper credits.

The La Mina resource is contained in 40.56 million tonnes averaging 0.77 gram gold and 0.31% copper, or 1.26 grams gold equivalent, at the main La Cantera prospect, one of several porphyry-gold-copper prospects at La Mina undergoing exploration by Bellhaven. The company says the resource estimate proves La Mina is one of the highest-grade porphyry gold prospects in the Americas.

Colombia Crest’s properties are 10 km west of La Mina and 15 km south of Sunward’s Titiribi project. The company optioned its two main projects, Fredonia and Venecia, in late 2010 after spending several unfruitful years labouring on a gold project in Bolivia, which resulted in a 1-to-10 rollback and a name change from Eaglecrest Explorations. 

It hopes to drill an untested porphyry target called Arabia later in the year, pending provincial approvals. The company says it identified around 20 porphyry targets on the two properties so far, five of which have porphyry-copper-gold alteration outcropping at surface.

Arabia lies partially on the 75%-owned Venecia concession, held under an option agreement with Colombian Mines (CMJ-V), and partially on the 75%-owned Fredonia concession, held under an option agreement with the privately held Colombian company Grupo de Bullet.

“Iamgold is an ideal partner,” Hans Rasmussen, Colombia Crest’s president and chief executive officer, stated in a press release about the strategic investment. “Their technical teams have visited the Fredonia and Venecia projects during the last two years and have observed our progress towards defining a porphyry-gold-copper system. In addition to funding exploration, Iamgold will work with our management to provide technical input and assistance with the community and social responsibility programs, which further confirms their commitment to making the Fredonia and Venecia projects successful.”

Paul Zweng, Bellhaven’s interim CEO and director, similarly commented, “This investment represents a strong endorsement of the quality and potential of Bellhaven’s La Mina gold-copper project in Colombia . . . The private placement will build our treasury to approximately $9.6 million, allowing us to ramp up the exploration programs at La Mina.” 

Iamgold has agreed to subscribe for 11 million units of Bellhaven at 55¢ a unit and 12 million units of Colombia Crest at 28.5¢ a unit.

Shares of companies increased sharply following news of the investments by Iamgold on Oct. 26. Bellhaven rose 45%, or 18¢, to 58¢ on 808,000 shares traded, while Colombia Crest rose 13%, or 3¢, to 25¢ on 255,000 shares traded. 

The companies have 122 million and 132 million shares outstanding, respectively, on a fully diluted basis.