Colorado Resources’ shares septuple on BC porphyry hit

VANCOUVER — When the first hole ever drilled at a property returns 333 metres grading 0.51% copper and 0.67 gram gold per tonne from surface, resource investors sit up and take notice.

Such was the case for Colorado Resources (CXO-V), which saw its share price rise more than seven times on that exact news from its North ROK project in northwestern B.C.

When the trading started on April 25, CXO shares were worth 16¢. By market close they were trading at 54¢. By May 6 they had peaked at $1.25 and traded at 96¢ at press time.

“We’re excited,” says Adam Travis, Colorado’s president and CEO, a geologist who has spent much of his career in northern B.C. “I’ve been coming here to this region since 1987, so while it’s an overnight success in some ways, it’s been built on a lot of blood, sweat and tears over the years.”

North ROK straddles Highway 37, 200 km north of the town of Stewart. It is just 15 km northwest of Imperial Metals’ (III-T) Red Chris project, which is home to 301.5 million proven and probable tonnes grading 0.359% copper and 0.274 gram gold. Also nearby is NGEx Resources’ (NGQ-T) GJ copper-gold property, where Teck Resources (TCK-T, TCK-N) is spending $12 million to earn a 51% stake.

Colorado may have picked up North ROK because of its promising neighbourhood, but with the results from hole 1, the property now has credentials that are all its own.

The hole was collared at the northern end of an area showing coincident soil, magnetic and chargeability anomalies. Just 2 metres below surface the drill encountered “typical porphyry copper-style altered monzonite intrusion” in an intercept that stretched out for 242 metres and grades 0.63% copper and 0.85 gram gold. The intercept includes a 180-metre segment bearing 0.76% copper and 1 gram gold.

Below that, the hole hit altered volcanics at 0.2% copper and 0.19 gram gold through another 91 metres. Together, the two rock types returned 333 metres of 0.51% copper and 0.67 gram gold.

Colorado identified the overlapping anomalies last year, in a program that involved soil sampling and ground magnetic and induced-polarization (IP) surveying.

The work has outlined a soil anomaly extending along 700 metres and across 350 metres that coincides with areas of higher magnetic susceptibility and IP chargeability. The anomalies remain open along strike.

The effort also outlined a second magnetic feature on the flanks of the main chargeability anomaly, which Colorado tested with its second North ROK drill hole. Hole 2 returned weakly altered monzonite. Colorado says drill results for this hole are pending, but that “initial geological indication appears to show it is related to a different phase.”

Colorado owns 100% of North ROK, which has seen sporadic exploration since the 1970s. At that time, exploration at the site concentrated on the Edon stock, an early Jurassic quartz-monzonite intrusion that had created a large malachite stain. The work revealed pyrite-chalcopyrite and molybdenite in stockworks associated with propylitic and phyllic alteration.

In the 1980s attention shifted to another prospect to the southeast known as ROK-Coyote. Then in 2009, Brett Resources staked North ROK to test the area for extensions of the ROK-Coyote system, which it did through a 2010 sampling program. The effort returned silt samples from Mabon Creek with noteworthy copper, gold and molybdenum values.

Just as the project gained a bit of momentum, corporate developments pushed it to the background: Osisko Mining bought Brett for the company’s Hammond Reef gold project in northern Ontario. As Travis sees it, Osisko didn’t want anything to do with grassroots properties in BC.

A group of former Brett managers, however, did.

Travis and two of his Brett partners — Larry Nagy, who is now Colorado’s chairman, and Carl Hering, now a Colorado director — formed Colorado Resources and convinced Osisko to hand over the B.C. properties that Brett had staked as part of a $2-million regional exploration deal with Kinross Gold (K-T, KGC-N). The enticement for Osisko: the Kinross deal still demanded another $500,000 of work. Colorado agreed to take on the liability in exchange for a portfolio.

Kinross’ interest in the area has since waned. Two years ago the major had the right to opt in to three of the properties that came from the regional alliance. It opted in to one, completing a drill program at the Red Sky property west of William Lake, but has since dropped that stake. As such, Colorado now owns 100% of all the properties that came out of the Kinross deal, including North ROK.

These properties received little attention in 2011, however, because Colorado was focused on its Yukon properties. Last year, that changed — almost on a whim.

“I thought to myself, ‘Hey, I’d like to get back down to the Red Chris area — I’ve got some unfinished business there,’” Travis says. “So I took some of my technical team and we just parked on the edge of the highway and walked up. Almost right away, one of my guys says, ‘These are the best rocks I’ve seen all summer. What are we doing in the Yukon?’”

Travis organized a soil sampling and geophysical surveying program for the project, which accomplished most of its goals before getting cut short by winter. The results were enough that he punched a couple of holes into the ground, which was an easy decision, since Colorado was already planning to send a drill rig to the area to drill the nearby Eldorado property.

“Spring comes a little later up there . . . I rushed the drill up there and my guys said, ‘Hey, it might be nice weather in Kelowna, but it’s still freezing up here!’” Travis says. “So I told them to drill North ROK before Eldorado — because it’s right on the road, so it’s easier to access — figuring that once those two holes were done it would be warm enough to move the drill.”

Even though his geologists “begged” him to keep drilling at North ROK after they saw the core from the first hole, Travis stuck to his plan to drill one hole in each magnetic anomaly. Now that the results are in, the drill is heading back. Travis says they will plan their next holes based on the coincident soil, IP and magnetic anomalies, likely taking 100-metre stepouts from the discovery hole.

Colorado has the money to drill, having raised $16 million two years ago, with half of those funds still in the bank. Colorado has 39 million shares outstanding.