Colt Resources jump starts exploration of
By Steven Ralston, CFA
A mere five days after being awarded the Borba exploration
Colt Resources (
announced the signing of a Memorandum Of Understanding (MOU) with
Star Mining Limited which outlines the key terms for a formal
definitive agreement that is expected to be executed within the
next two months. The proposed terms outlined in the MOU should
jump start the exploration and advancement of Borba.
Located in the North Alentejo portion of the Ossa-Morena Zone,
the Borba exploration concession extends over parts of both the
Alter do Chão-Elvas Belt and the Sousel-Barrancos Belt. Borba
encompasses 636 km
in an area previously mined for copper and explored for gold. The
area was mined for copper at Miguel Vacas between 1925 and 1991
when at least 1,650 tonnes of copper were produced. Also the old
copper mines of Bugalho and Zambujeira lie within the concession.
Since 1986, the region has been explored for gold, most recently
by Rio Narcea and Kernow Resources. Prior drilling results
confirm the presence of both gold and copper mineralization.
According to the MOU's anticipated course of action, Colt
Resources and Star Mining plan on jointly exploring the Borba
concession. After a definitive agreement is signed, Star Mining
can earn a 25% interest in Borba upon expending at least $350,000
in the completion of a work program over a period of 12 months.
Thereafter, Star Mining can earn an incremental 35% interest by
completing another work program with expenditures of at least
$750,000 over an additional 24 months. Another 20% interest can
be attained by expending $1,000,000 towards technical, commercial
and environmental programs required for completing a NI
43-101-compliant resource estimate. Then Star Mining will have
the right to purchase full ownership of the Borba exploration
license for $5.0 million within 18 months or $10.0 during the
subsequent 42 months.
We reaffirm our Outperform rating and price target of $1.70,
which is based on an estimated share value of attributable
resources indicated by Colt's NI 43-101 compliant mineral
resource estimates and certain non-compliant historical resource
estimates. We consider our valuation model to be conservative in
that it also includes prospective developmental costs at Boa Fé
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