from muskoka on smartinvester.caAt one point I was expecting Mike and I would be going into the PP and also have some shares to distribute to our "friends" here, but they ended up placing the entire PP with Bolder. Not a bad deal if they get it filled, as with $0.70 warrants this will add a lot to their treasury down the road if exercised, with minimal dilution.
Here is a report I prepared for this anticipated financing and our distribution.
Doug
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Colibri Resource Corp. www.colibriresourcecorp.com
28,747,392 shares Fully Diluted
Mike Kachanovsky and I met with President Lance Geselbracht and Director (Geo) Jim Irwin on Wednesday February 21/07 in Toronto. They flew in to meet with and do a presentation to Sprott Securities and Agnico Eagle the previous day and arranged to meet with us the following day. Both are substantial shareholders and I wouldn’t rule out that they will be increasing their position in this round of financing. I believe Sprott already own approx 10% of the company from the IPO.
The overview is that the company is of the opinion that all 3 of their properties have the potential to host substantial open pit deposits. The Ramard property is the most advanced at this point with exciting grades of surface and near-surface zinc and silver. Drill results from the Colibri property are due out late March (maybe later) and will tell us a lot about the gold potential here. The Leon property is the least explored but it seems that wherever chip samples have been taken to date, (and there have been quite a large number taken), they have found a large variety of surface mineralization.
The financing just announced should see them through a full 12 months of drilling with 2 rigs.
Drill Program
Colibri is planning a unique approach to their drill methodology. I have heard some disparaging comments about their past use of a percussion drill. Comments like “useful only for drilling for water” come to mind. Jim Irwin is of a different mind, and I find his reasoning appealing. For one thing the percussion drill will give them 30 meters a day of drilling at quite a low cost. They have a lot of property to explore and that’s a lot of discovery! As for resulting accuracy Jim figures it is likely +90%. More than good enough when they have such vast tracks of land they want to drill. A percussion drill delivers rock chips which are bagged and marked at one meter intervals for the labs. They also plan to contract a core drill rig to complement the percussion rig. If plans stay on track they will be drilling with 2 rigs for up to a full year continuously. That’s a lot of news flow!
Properties:
Colibri Property
https://www.colibriresourcecorp.com/s/Colibri.asp
This was always their main project, in that they felt it held the best odds for home-run success. The Colibri property is only 40 kilometers from the Newmont/Penoles La Herradura mine “the largest operating gold mine in Mexico”. It is on trend and has identical geology with La Herradura who are producing gold at a cost of under $145 per ounce. Penoles has staked ground around them on 3 sides and very recently completed some drilling near (just meters from) their border. The first Colibir drill program (January ’06) was a disaster. The drill crew was fired before the program was completed. There were very poor recoveries with many holes having zero recovery of core. Two of the best holes were: 117m of .94gpt gold with 85% recovery & 118m of 2.09gpt gold with 54% recovery. They later discovered that the drill fell over a cliff on-route to the site, and was patched together in the field and never performed properly. According to Jim the geology is such that like the La Herradura mine, they would not need to crush the ore. Blasted rock would go directly to the leach pad. The current drill program is just completed with over 90% core recovery. Initial lab results should be out mid to late March. Jim is quite optimistic for positive results here.
Ramard Property
https://www.colibriresourcecorp.com/s/Ramard.asp
The Ramard property is the main reason I am over-weighting Colibri Resources in my portfolio. The multiple surface and near-surface grades and widths of zinc and silver are truly amazing. At this stage they are only drilling shallow holes with a percussion drill to try and prove up a resource. One of the better holes (somewhat typical) graded 253 gpt silver, 2.3% lead, 8.5% zinc over 6m from 1.5 to 7.5m in a hole that from 0 – 22.5m (drill depth) grades were 75gpt silver, 0.70% lead and 2.6% zinc. The company is hoping to prove out a bulk tonnage resource of considerable size and “the mineralized zone remains open in all directions”. I feel that they cannot lose here, as if they fail to prove up their hoped for open-pit resource the rich veins can easily (IMO) be mined profitably. This would be a smaller production mine but still a success. Also review news posted on their website dated Jan 25/07 and Feb 12/07 for latest drill results not yet incorporated into the content of the property page. Another 18 or so holes are yet to be reported from the labs.
Leon Property
https://www.colibriresourcecorp.com/s/Leon.asp
This is the one I understand the least. It has definitely got a lot of potential, but I will just quote from the website here and ‘bold’ what I feel are key sections…” In 2004, the Company acquired the Leon property, also in Sonora, Mexico, consisting of 3,400 hectares (8,500 acres). Like the Colibri property, Leon is in a region of known, large tonnage plymetallic deposits. The immediate area shows evidence of extensive underground mining. The Company was able to consolidate 10 old claims into this claim block, which hosted past-producing gold-silver, lead-zinc or copper-molybdenum mines. Based on historical exploration, Colibri geologists now believe that the property has the potential to host a large-scale open-pit mine, containing gold-silver, copper, molybdenum and other base metals.
The historical exploration has provided important clues about which exploration targets to prioritize on the property. Drill targets have been delineated, and the Company may seek a joint venture partner in order to conduct a thorough work program on the property.”
General Comments
These properties are not recent acquisitions as geologist Jim Irwin has been working on them and patiently assembling (negotiating) small parcels one at time for years, until they covered the districts he (and his brother) were most interested in. They then vended them into Colibri to raise the necessary capital to conduct a proper exploration program. Jim was quite enthusiastic about the latest work underway by Dr. Jonathan Nourse. His progress on new detailed 3D analysis of the geology has helped big-time in understanding how the system works, and provides substantial support in planning the ongoing drill programs.
Jim explained that they do not have the professional resources to properly manage more than one or two projects to completion. It is expected that this next drill program will result in the elimination of one or two properties from their core stable, likely sometime in the next year. They will either drop or JV at least one project. They have made the decision to acquire Ramard, and the paperwork is underway to finalize the acquisition. They hope to be able to prove up a “resource” by 1st Q 2008. The future of the Colibri and Leon projects will depend on results from future drilling and/or offers from other companies. With Newmont, Penoles and Agnico Eagle already in the loop, I expect: Ramard and Colibri to both interest Agnico Eagle who are sitting on a lot of cash from an excellent 2006. Colibri could get a lot of attention from Newmont/Penoles if drilling proves what is hoped for, and Leon for now is a wild card. Just my thoughts, not facts.