Columbus Gold gains attention with Montagne d'Or takeover potential and Nevada upside

A string of recent news from Columbus Gold Corp. (CGT:TSX; CBGDF:OTCQX) prompted several experts to comment on prospects for Montagne d'Or in French Guiana, and also on recent progress made at Eastside in Nevada.

Analyst Michael Curran, in his research note of Dec. 5, observed that the Montagne d'Or project "is in a joint venture with Nord Gold N.V. (NORD-LSE, not rated, not covered), a global mid-tier gold producer, who can earn a 50.01% interest by spending US$30MM and completing a feasibility study by March 2017. . .the Montagne d'Or deposit, which hosts just under 5MMoz of gold resources, is part of the Paul Isnard property located in west-central French Guiana."

James Kwantes of Resource Opportunities stated on Dec. 13 that "Montagne d'Or has excellent infrastructure and would be one of the highest-grade open pit gold projects in the Americas. At a US$1,200 gold price, a PEA for Montagne d'Or modelled an NPV of US$450 million (5% discount rate), after-tax IRR of 23% and annual gold production of 273,000 ounces in the first 10 years at all-in sustaining costs of US$711/oz. Capex would be US$366 million, with a 3-year payback."

Kwantes believes "JV partner Nordgold is the natural acquirer for Columbus' 44.99% stake in Montagne d’Or. Nordgold is a fast-growing and acquisitive Russian-based producer listed on the London Stock Exchange. . .Nordgold's latest financials paint a picture of a thriving mining company generating healthy cash flow. . .the company's Gross mine in Russia is expected to go into production in the first quarter of 2018, after which Montagne d'Or will be the only major gold deposit in Nordgold’s pipeline."

Thibaut Lepouttre concurs, stating in a Sept. 21 Caesars Report that, "if history repeats itself, Nordgold will try to acquire 100% of Montagne D'Or, and after checking up on the company's financial health, we have no doubt the Russian company will be able to fund an acquisition of the remaining interest as the total price tag for the 44.99% stake will very likely be lower than the free cash flow Nord Gold generates in a semester."

Columbus is further advancing the Montagne d'Or project, announcing this past summer that it had obtained "two Exclusive Exploration Permits on strike of the east and west extensions of Columbus Gold's Montagne d'Or gold deposit." In November, the company stated that an "exploration-focused drilling program is being planned for commencement in January, with the objective of assessing expansion potential. . . the program will consist of 41 core holes, for a total 6,750 meters, designed as a first pass investigation of exploration targets on strike of, and in very close proximity of the currently defined mineral resources that form the deposit."

James Kwantes of Resource Opportunities noted that "two holes will test the depth of mineralization—little drilling has been done below 250 metres at Montagne d'Or. Drill permits are in hand and Columbus is building roads and drill pads and mobilizing drills this month. Columbus is fully financing the exploration program."

Columbus Gold is also actively exploring in Nevada. The company announced on Dec. 5 the results of a maiden resource estimate for its early-stage Eastside gold-silver project: "At a cut-off grade of 0.15g gold per tonne and a US$1,300 gold price, Columbus Gold calculates from the estimated resources that Eastside contains pit-constrained Inferred resources of 35,780,000 tonnes grading 0.63g gold equivalent per tonne, for a total of 721,000 ounces of gold equivalent."

Columbus also noted that "Eastside has outstanding infrastructure for mining and processing, and metallurgical testing indicates that gold and silver at Eastside are amenable to cyanide leaching, whether oxide or sulfide."

Robert Giustra, CEO of Columbus Gold, commented: "Considering that only about one square kilometer of the large 58 square kilometer property has been drilled so far, and only 136 holes drilled, a maiden resource of 721,000 ounces constrained in a pit, is an excellent start."

Michael Curran of Beacon Securities stated that "the company noted that perhaps another 50% of mineralized material from the 136 hole programme completed to date did not make it into the in-pit resource (suggesting the total project resource could have been closer to 1MMoz if not constrained by a pit shell)." Curran added that "an economic resource at Eastside needs to be materially bigger (+3MMoz?), thus while a decent starting point, CGT has plenty of work (and potential) left at Eastside."

Two days later Columbus announced high-priority drill targets at Eastside, homing in on targets gleaned from "both geologic and alteration mapping combined with geochemical sampling." The company noted, "this mapping has identified 41 separate rhyolite domes, which Columbus knows to be important for controlling gold mineralization from its drilling at the Original Target at Eastside."

James Kwantes of Resource Opportunities stated that "the architect of value creation in Nevada is none other than geologist Andy Wallace of Cordex, Columbus's exclusive exploration partner in Nevada. In a nutshell, Columbus has a Nevada discovery pioneer running their exploration programs in one of the world’s best gold mining jurisdictions."

Columbus consolidated its land package in November at its Bolo project in Nevada by acquiring the Uncle Sam patented claim and by swapping its non-core Weepah asset in exchange for the elimination of an NSR royalty.

Curran summed up by stating, "we view Columbus Gold as an attractive speculative play for development success in French Guiana, with investors receiving exploration success potential in Nevada for free."

Want to read more Streetwise Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Columbus Gold Corp. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content