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Colossus Minerals (TSX:CSI) this morning published a preliminary resource estimate for its Serra Pelada gold-platinum-palladium mine in Brazil, making good on its promise to put the NI 43-101-compliant estimate out by the end of December.
The resource for Serra Pelada — a joint venture between Colossus, which owns 75 percent, and Cooperativa de Mineração dos Garimpeiros de Serra Pelada (“COOMIGASP”), which owns 25 percent — is based on 248 surface core holes drilled by Colossus between 2007 and 2012, and 26 underground holes completed by the company in 2013.
According to the press release, Serra Pelada hosts 557,000 tonnes in the indicated category, containing 230,000 ounces of gold, 48,000 ounces of platinum and 71,000 ounces of palladium. The indicated tonnage shows gold grades of 12.8 grams per tonne, platinum grades of 2.7 g/t, and 4 grams per tonne of palladium. On the inferred side, Serra Pelada is showing 88,000 tonnes graded 8.6 g/t gold, 1.7 g/t platinum, and 2.5 g/t palladium, with a contained 24,000 ounces gold, 5,000 ounces platinum and 7,000 ounces palladium.
“The constrained RPA [RPA Inc] model identifies the areas where both underground and surface diamond drilling have left gaps in the block model and indicate where the mineralized deposit is open to potential expansion. Additional drilling from both surface and underground will be necessary in order to find the extents of the mineralization,” Colossus’ vice president of exploration, Graham Long, said in a statement.
The positive development for Colossus is a welcome change from the run of bad news that has plagued the Brazil-focused junior gold company this year.
As Gold Investing News reported in November, Colossus was on track to start commissioning the mine this past July, with production starting in the first quarter of 2014, but an issue with dewatering forced Colossus to delay its production timetable. That led to problems with financing, despite a $33 million financing in August, and was exacerbated by the fact that Colossus did not have a resource estimate which which to entice potential investors.
The delays and cash flow troubles have weighed heavily on the company’s stock price, which fell another 63 percent in mid-morning trading today. Year to date, the $5.9 million market cap company is down close to a 100 percent.
At the beginning of December Colossus tried to put the company back on solid footing with a new strategy, that involved the cessation of underground development in order to focus on de-risking the project and reducing costs. Part of that plan included publishing a resource estimate by the end of the year.
On the financing front, Colossus said on December 6 that it would need $70 million to take Serra Pelada into production. Working toward that goal, on December 18 Colossus announced that it had entered into agreements with two funders for two tranches of financing worth approximately $21 million. Two days later, however, the deal fell through.
In an ominous sign of the company’s financial position, Colossus warned today, in the same press release announcing the resource estimate, that it may no be able to raise enough capital to continue doing business past December 31, 2013.
Securities Disclosure: I, Andrew Topf, hold no investment interest in any of the companies mentioned.