Colt’s top project is the Penedono gold property in northeastern Portugal
Colt Resources acquired the Penedono gold property in mid-2007 and it
is the company’s top prospect. It represents almost 75 percent of our core
valuation of €3m for total exploration assets. Six separate gold targets have
been identified on the 10,500-hectare property, which has seen exploration
intermittently since the 1930s. The company drilled the project in 2007 and
it proposes a 1,500-metre programme to fulfill its spending requirements
for 2008.
The Extra High property in British Columbia also ranks highly
Colt signed an option agreement with a sister company, Zab Resources
Inc, that currently gives Colt a 67-percent interest in the Extra High massive
sulphide gold, silver and base metals prospect near Kamloops in British
Columbia. The project hosts a modest historical resource of 375,000 tonnes,
grading 4.0 grams of gold and 55 grams of silver per tonne, with a combined
zinc and lead content of over eleven percent. Colt proposes a 1,500-metre
drill programme on Extra High this year, leading to a NI 43-101-compliant
resource calculation.
The Armamar Meda prospect adds to the potential of Penedono
Late in 2007, the company acquired licences covering the Armamar Meda
property, which surrounds the Penedono property. Colt considers the
43,600-hectare property favourable for tungsten, base and precious metals.
Exploration is at an early stage and the company plans modest expenditures
to fulfill the terms of its agreements, but the project offers added exploration
potential to Penedono. The presence of a known scheelite-bearing tungsten
occurrence adds considerable interest to this concession.
Exploration risk remains high
Although Colt’s key properties contain known mineral deposits, none has a
formally delineated compliant resource, and successful development depends
entirely upon further exploration success. A high proportion of the company’s
valuation is locked up in this exploration potential. Assessing fair value
for Penedono is therefore difficult and subjective. As with any exploration
company, there is a significant degree of risk associated with the potential
investment rewards. Further exploration may not delineate sufficient economic
mineralisation to support our base hypotheses.
Our core valuation is in line with market’s perception of early stage exploration...
We assess Colt’s current value at C$0.26 per share, with significant
potential for appreciation through exploration success. Continued successful
development results in valuations as high as C$1.61 per share, on our model,
in the post-permitting environment. The company’s Extra High and Armamar
Meda properties and other prospects offer further upside potential.
