100 Million Ounces of Gold
Bob Moriarty
Archives
Jul 22, 2011
My recent visit to Colombia was one of the most productive tours I have ever been on. I saw more companies with multi-million ounce gold potential than I have seen in any other country. I actually saw an entire district, with a 500-year mining history, that will probably prove out to contain over 100 million ounces of gold once modern exploration techniques are used. Don't let anyone convince you there is such a thing as peak gold, there is a lot of gold still lying around.
I wrote recently about a wonderful junior named Sunward. A few days after my visit to Sunward, I had the opportunity to visit the Fredonia and Venecia projects 75% owned by Colombia Crest Gold. (CLB-V).
These projects are located in the gold porphyry belt called the Middle Cauca Belt located in the Department of Antioquia some 40 km south of Medellin. Sunward with its 43-101 resource of 3.7 million ounces of gold is located to the north of Colombia Crest. B2 gold just drilled 1.1 g/t over 380 meters at their Quebradona property just to the south. The characteristics of targets are well known within the Cauca Belt. Colombia Crest has nine positive anomalies ready for drilling.
There is no rule or law that says governments have to be stupid. It's entirely voluntary on their part. Colombia Crest is the descendant of what used to be named Eagle Crest and what was a viable thriving junior mining company located in Bolivia with a share price of over $6 a share. Then Evo Morales was elected President of Bolivia. He set out to destroy the mining industry in what was the #1 mining country in the world for centuries. He succeeded.
Colombia Crest still has their San Simon gold project in Bolivia but President and CEO Hans Rasmussen of CLB has spent most of the last five years doing his best to keep the doors open. They are looking for a partner who would be interested in drilling San Simon but the project and the country is on the back burner.
In 2009 he optioned 75% of the 150 square km Fredonia property from Grupo de Bullet. The agreement calls for Colombia Crest to spend $2.9 million in exploration over three years, cash payments of $120,000 and 1 million shares to earn 50% interest. By taking any target to feasibility, Colombia Crest can earn an additional 25%.
Colombia Crest has an agreement with Colombia Mines on the 1985 hectare Venecia property to earn 75% over three years by spending $3 million in exploration, cash payments of $560,000 and 625,000 shares and warrants.
The past three years, especially since 2008 when Eagle Crest (Colombia Crest) crashed to $.20 have confused the market and created an exceptional opportunity for investors with vision. Colombia Crest nests right in the center of a giant band of gold porphyry deposits. The entire belt appears to be mineralized. They have a commanding land position on good terms with two different companies. They have gold; they just haven't drilled it yet. They just lack the market cap of everyone else.
Sunward (SWD-V) has a $245 million dollar market cap. They are located just to the north. Solvista SVV-V) has a $50 million dollar market cap. They are right next-door. Bellhaven (BHV-V) has a $32 million dollar market cap. They are adjoining and have had extraordinary drill results. It's a belt, it all has gold.
Colombia Crest has a $21 million dollar market cap.
With any gold project you need to consider the cost of producing gold and where you think the price of gold is headed. In an environment of increasing gold prices, a wise investor will try to find those projects with the lowest grades and higher costs of production to gain leverage. Gold porphyries are low grade, generally in the .5 g/t to 2.0-g/t range. The cost of production will be higher. This gives you the maximum leverage if you think gold is going up.
But the most important factor when looking at any junior company is management. I'll be blunt; the last 5 years do not in any way reflect the depth of management at Colombia Crest Gold. I met with company President and CEO Hans Rasmussen and I went on a tour of the property with Walter Lienhard. Management of CLB is first class and the price of the shares does not reflect either the potential of the projects or the quality of the management.
It's going to be a little difficult to make money by investing in Colombia Crest. The shares are not very liquid. A big seller has been in the market recently driving the price down to the low $.20s but I think that selling is finished. It's not going to be easy to pick up a position that you can make real money on.
The company is almost ready for major 15,000-meter drill programs with the first 5000-meter phase to begin in late fall depending on permits and accessibility. The company has identified a series of nested porphyries as their highest priority. I expect the value of the company to be a lot higher at the conclusion of the drill program.
Before Colombia Crest finishes their drilling, I expect the number of ounces of gold to be in excess of eight digits. All of the companies in the belt are going to be home runs; they are all well cashed up and well managed. But Colombia Crest is starting out cheaper and they have the most leverage. The belt will end up being 100 million ounces plus. There is gold enough for everyone.
As soon as I saw the potential of CLB, I bought some shares. I am biased. I think the company is especially well managed, well cashed up and cheap. They may be an advertiser in the future, I haven't talked to them lately, and I've been busy. But they are easy to talk to, the IR people are responsive and they seem to have to goods. You are always responsible for doing your own due diligence.
