Hidden Treasure for Columbus Gold
Columbus Gold has a magnificent 4.9 million ounce gold deposit in French Guiana. I wrote about it in some detail last November. The stock is up by 33% since then and they just announced an updated resource. Columbus Gold has a Joint Venture in French Guiana with a Russian company where the Russian company has an option on 50.1% of the project for spending $30 million in exploration. So in essence, the Columbus Gold shareholders are getting 2.45 million ounces of gold for their market cap of $59 million. Or they are getting gold for about $24 in the ground per ounce.
This may come as a giant surprise to no one but at some point the Russian company will buy the remainder of the Paul Isnard project. They would be nuts not to. Presumably it would be at some premium to the market. I’d guess that projects at this stage should be worth $50 to $100 an ounce in a purchase. On that basis Columbus Gold is a cheap call on gold. But Columbus Gold has a hidden gold treasure in Nevada that I visited a week or so ago.
Lost in the glare from the almost 5 million ounces of gold at Paul Isnard is the stable of 15 different projects CGT owns in Nevada. Columbus gold intends to make or break one of them this year with a 65,000-meter, 250-300-hole drill program at their Eastside gold project near Tonopah, Nevada.
Columbus Gold has completed three phases of a five-phase drill program designed to outline a major gold resource at Eastside. The first three phases consisted of about 8000 meters of drilling. Results were encouraging with 13.6 meters of 2.42 g/t gold in phase 1, 27 meters of 1.82 g/t gold in phase 2 and 64 meters of 1.43 g/t gold in phase 3.
The project centers around some 41 separate rhyolite domes that Columbus Gold believes controls the gold mineralization at Eastside. The gold project measures 46.4 square kilometers or 17.9 square miles.
Geologists like to drill just to be drilling but lest we forget, the purpose of all exploration is to either make a mine or to reject the project. In these days of a scarcity of money for exploration, 2500-meter programs are giant. But 2500 meters of drilling really is a form of hobby mining, not serious mining.
Columbus Gold is serious at Eastside. They are either going to prove a minable resource or kill the project just as soon as possible. I don’t expect them to complete the entire 64,000-meter program if the initial results don’t suggest something big. They are fully funded for the entire program but looking to kill it if they need to just as soon as possible.
It might seem strange that I’m talking about a company with a high potential for being bought out soon with a project that doesn’t contribute a single dime to the market cap of the company but Columbus and I know something you don’t know. Remember when I said their JV partner on the Paul Isnard project was Russian?
The most evil man in recorded history, V Putin, heads Russia. He was responsible for the Black Plague, sinking of the Titanic, the loss of the Civil War by the Confederacy, the murder of Lincoln, Kennedy and Garfield and bares personal responsibility for the Holocaust. V Putin couldn’t get a permit for a bicycle in the United States much less a gold mine. He is even anti mom-jeans.
When Nord Gold N.V. buys Columbus Gold, it will be for Paul Isnard. They will hand everything in Nevada right back to Columbus Gold if it’s 20 ounces of gold or 2 million. Columbus Gold shareholders are getting a free ride on the money carousel with the incipient drill program at Eastside. If it hits big, they hit big. If all they find is rock, it doesn’t hurt shareholders at all. The market isn’t giving any value to the project so only good things can happen.
I am not a shareholder of Columbus Gold and have no financial relationship with them. If anything, I’m neutral. I really like the management and the Paul Isnard story and personally give Eastside a 50/50 shot. It either works or it doesn’t. Drilling rhyolite domes is hardly a slam-dunk or a fast way to easy profits. Do your own due diligence.