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COLOMBIA GOLD – THE SMOKING STUFF WILL NEVER BE AS VALUABLE AS THE REAL MCCOY
Canadian Stock Exchanges by E.A. Schiller – Dec2009/Jan2010
In mid- November the gold bugs were dancing in the streets as gold broke the $1100 dollar barrier and charged ahead to plus $1140.00 and appeared ready to move on to greater levels with hiccups to slightly lower levels. Silver, platinum, and palladium respectively, were strong at $18.50 +, $1440.00 + and $370.00 + an ounce, and rhodium, now becoming more popular and regularly quoted ranging between $2,380.00 and $2680.00 an ounce (buy and sell rates). Like gold these metals burped lower from the levels cited. Rhodium is used in catalytical converters and as an alloy with platinum and palladium and now sold in coin form to the pleasure of numismatists.
Almost every junior to senior gold explorer, developer and miner saw their stock rise in concert with gold’s price rise. It is impossible to identify all the shakers and movers but I will try to highlight the companies that caught my attention. For starters we go to Colombia, the land famous for emeralds and marijuana and now gold. Always known as a source of gold since colonized by the Spanish in the fifteen hundreds, Colombia has never received the attention from international explorers due to the internal conflicts of the politics, the drug trade and terrorism. Remnants of golden treasures won from Colombian deposits are on displayed in the Gold Museum in Bogota and worth a visit. With many of these problems now put to rest, the country has been invaded by a wide range of international exploration companies who have brought modern geophysical and geological tools to investigate the country’s hidden gold treasures. The company that sparked the Colombian interest in recent times, like this year, is Ventana Gold Corp. (VEN-TSX-V) and their flagship La Bodega project in the historic California-Vetas gold mining district of northeastern Colombia in Santander Department. The property is located about 400 kms northeast of Bogota and 40 kms northeast of Bucaramanga. The general area has been the site of small scale gold mining since Pre-Colombian times. The district has been brought to fame through the efforts of Greystar Resources and their Angostura project where a 11.55 million ounce gold measured and indicated resource has been identified. The Ventana success story started in 2006 with an initial drill hole, the discovery hole, intersecting 107 meters grading 7.8 g/t Au. Since that time the company has not looked back with continued success in the project currently utilizing 10 drill rigs on the project. Mineralization at La Bodega occurs as a series of north-northwest- dipping parallel-sheeted vein zones, breccias and mineralized faults hosted within a broad, northeast trending regional fault zone. Drilling to date has concentrated on defining the mineralized structure over a strike length of 1,350 meters and widths of 20 to 80 meters and to a depth of 400 meters. Mineralization remains open to further expansion in several directions and other, nearby drill targets have been identified. The stock took off early in June starting at $2.25 and by early October it was $6.00 and in mid-November broke $12.00, then backed off slightly to the plus $11.80 range. Investors jumped in as impressive drill intersections were reported over this period. Stellar intersections ranging from 106.45 meters grading 7.81 g/t Au in hole 06-LB-001 (in 2006) to 12.75 meters grading 34.62 g/t Au in hole 07-LB-076. The latest surge in price rise was the new discovery of a parallel structure to the La Mascota zone on the Bodega project in a drill hole that intersected 14.0 meters grading 14.18 g/t Au.
A comparable success story to Ventana is Greystar Resources (GSL-TSX-V) who were one of the first companies to recognize the potential of Colombian gold deposits at a time there were a lot of doubting Thomasas about this once terror inflicted country. Less than 10 years ago Colombia was fraught with rival warlords, criminal mafias, kidnappings and endless civil wars. Greystar endured these conflicts ranging from a kidnapped driller to gun toating armed guards surrounding exploration camps and drill set ups. Greystar’s pride and joy is their Angostura gold-silver deposit with 330,907,000 tonnes of measured and indicated resources grading 1.09 g/t Au and 6.0 g/t Ag and 90,779,000 tonnes of inferred resources grading 1.19 g/t Au and 6 g/t Ag. Greystar’s stock has roller-coasted from plus $10.00 in 2006 to 60 cents in late 2008 to around $6.00 in mid- November. Currently the company is undertaking a program of metallurgical testing aimed at investigating the application of agitation leach and/or pre-oxidation as processing methods for intermediate sulphide mineralization. A March, 2009 prefeasibility study envisions average annual production at Angostura of 511,000 ounces of gold and 2.3 million ounces of silver over a 15 year mine life.
The new kid on the block neighbor to Greystar and Ventana is Galway Resources Ltd (GWY-TSX-V). Galway’s project area is 1.5 kms south-west of Ventana’s La Bodega project and 3.0 kms from Greystar’s Angostura project. The company has a compliant measured and indicated resource of 11.5 million ounces of gold plus 3.5 million ounces of inferred resources. Surface and subsurface sampling has discovered widespread gold mineralization on three areas known as El Dorado, Machura and Pie de Gallo. In addition Galway has four coal projects in Santander Department – California, GALCA, Victorio and Carboluis, all of which have the potential to yield a producing operation. Near the Carboluis property, Centromin Coal Company produces in excess of 300,000 tonnes of metallurgical coal annually for export and expected to increase to 600,000 tonnes per year. The other properties all have known coal deposits that will require drill testing to quantify resource numbers. The Galca project could become a home run for Galway as Prodeco, the Colombian subsidiary of Xstrata has begun a drilling program to evaluate this untested coal basin in Cesar Department. According to Galway president Robert Hinchcliffe this basin could host several new coal deposits and with excellent infrastructure in place offers a lot of upside to the company’s stock. In New Mexico Galway has the advanced Victoria molybdenum-tungsten project with the potential to produce 159 million pounds of Mo and 7.7 million STU’s of tungsten (W03). Galway stock has risen from around 10 cents this summer to the $1.20 level in mid -November.
Looking at other Colombia explorers we move south to an area near Medellin in the Department of Antioquia, and for those who track Miss Universe or Miss World beauty contests, the majority of winners’ from Colombia come from Medellin. Leading the pack here is B2Gold Corp (BTO-TSX-V) with an advanced gold project on their Gramalote Ridge Zone with a compliant inferred resource estimate of 74,375,000 tonnes grading 1.0 g/t Au totaling 2.39 million troy ounces of gold at a cut-off grade of 0.5 g/t Au. The Gramolote project is a joint venture with AngloGold Ashanti , one of the leading global gold producers with 20 gold operations in 11 countries and four continents. In addition B2Gold have optioned two projects from AngloGold at Miraflores and Quebradona, all in Antioquia Department. Elsewhere, the company owns a 95% interest in the operating Limon gold mine in Nicaragua producing about 43,000 ounces of gold annually, and will commence production in November on their nearby Orosi mine with an expected annual production rate of 84,000 ounces. The Limon mine is now in the final stages of resolving an illegal strike by workers. BTO’s stock was a high flyer in early 2008 trading around $2.40 and took a hit (like everybody) in late 2008 dropping to 30 cents but thanks to better times the stock in November was trading around $1.00.
For investors who want to get a better handle on how public companies operate and the geological, geophysical and geochemical tools available to them they should go the AME Roundup 2010 in Vancouver January 18 to 21. The Association of Mineral Exploration British Columbia has held this conference for the past 27 years and attracts thousands of participants to learn all about exploration and mining, in British Columbia and around the world. The event is held at the Bayshore Hotel and truly one of the mineral resource best venues of the year. Overlapping the Roundup is the Cambridge Vancouver Resource Investment Conference on January 17-18. Serious investors should try to attend one or both of these events.
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