 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.
Colombia Crest Gold
CLB-V $.31 (Jul 21, 2011)
ECRTF-OTCBB
75.5 million shares
Colombia Crest website
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Bob Moriarty
President: 321gold
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321gold Ltd
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