Colossus Minerals Inc. (TSX:CSI,OTCQX:COLUF) is a precious metals mining company nearing production at its Serra Pelada project. Serra Pelada, located in the mineral prolific Carajas region in the State of Pará, Brazil, is host to one of the highest grade gold and platinum group metals deposits in the world. Between 1980 and 1986, Serra Pelada was the site of the largest precious metals rush in Latin American history.
From its initial public offering in February 2008 to date, Colossus has raised over CAD$360 million, grown from a junior explorer to a developer, been granted environmental and mining licences and is in the process of constructing an underground mine at Serra Pelada.
Managed by a skilled team of proven mine-builders with years of experience in business, geology, engineering and development, Colossus is well along the path to producing gold and platinum group metals by mid-year 2013.
- High-grade precious metals project in Brazil—grades at Serra Pelada are among the highest on record
- 100,000 metres drilled to date with significant exploration upside on expanded land package
- Metallurgical processing straight forward with excellent recoveries
- Project is fully permitted – environmental, installation & mining licenses acquired in 2010
- Construction underway with first production planned mid-2013
- Potential to be in lowest cost quartile of producers globally
Serra Pelada Project
Colossus Minerals’ flagship project, Serra Pelada is located near the mineral prolofic Carajas region in northern Brazil in the State of Pará. The Serra Pelada Project is a joint venture between Colossus (75 percent) and Cooperativa de Mineração dos Garimpeiros de Serra Pelada (“COOMIGASP”) (25 percent). Discovered in 1979, Serra Pelada was home to the largest ever gold rush in Latin America. Artisanal farmers using hand-dug open-pit operations mined an estimated 2 million ounces of gold plus platinum and palladium from Serra Pelada. Historically, the “Central Mineralized Zone” (CMZ) at Serra Pelada was mined along 350 metres strike length to depths of about 110 metres. Access and infrastructure are excellent including roads, power, water and skilled labour. Colossus is currently developing an underground decline which will provide access for underground exploration, definition drilling and access to the orebody for production.
Serra Pelada Geology
Serra Pelada is a sediment hosted, fully oxidized, high-grade gold-platinum-palladium deposit. Gold-platinum-palladium mineralization at Serra Pelada overprints metasediments occupying the hinge of a large fold. Colossus has outlined multiple mineralized zones including the CMZ and the Lower Limb (formerly the GT Zone). The CMZ comprises a steeply dipping body in the fold hinge zone that extends onto the upper and lower limbs of the fold. The Lower Limb mineralization in general represents shallow dipping gold-platinum-palladium mineralization and predominantly occurs associated with an iron oxide rich breccia.
On June 18, 2012, assay results from the 15,000 metre surface drilling program were announced. Please refer to the Company’s news release for the technical information regarding the Company’s drill program.
On July 16, 2012 (see news release), Colossus released the results of additional metallurgical tests on the CMZ which showed overall (gravity + flotation) recovery rates of approximately 97 percent gold, 80 percent platinum and 83 percent palladium. The test results confirm a saleable concentrate can be produced with a final PGM grade (before calcining) of 66.7 grams per tonne.
GT and Lower Limb Zones
Drill results from work conducted on the GT Zone and the lower portion of the CMZ demonstrated that the GT Zone and the CMZ are connected. All of the intercepts in the lower limb of the large fold structure hosting the mineralization at the Serra Pelada property are now referred to by the Company as Lower Limb.
The results continue to prove that the Lower Limb is well mineralized. The Company completed the infill drilling on sections 50NE and 100NE and found that the mineralization is contiguous from the formerly identified GT Zone (now Lower Limb) area through the GT-CMZ gap area and into the lower limb portion of the CMZ—confirming that the zones do connect. The current exploration drilling is focused on extending the zone southeastward and filling in the gap between the GT Zone and lower limb portion of the CMZ on those sections that still have little to no drill-hole information between the two zones. Drilling is underway to begin to test for the extension of the lower limb mineralization up-dip of the limb towards the northwest which is in the direction of the LL Zone.
- SPD-153 was drilled near section 50NE and designed to test the gap between the GT Zone and the CMZ. The hole intersected two higher grade intervals of 6.64 g/t gold, 0.15 g/t platinum and 0.60 g/t palladium over 0.75 metres and 12.65 g/t gold, 0.31 g/t platinum and 0.56 g/t palladium over 1.0 metre in a broader lower grade envelope of mineralization representing the lower limb zone. Importantly, this hole closes the gap between the two zones along this section thus confirming that the mineralization is contiguous in the large scale fold structure along the lower limb.
- SPD-154 was drilled on section 175NE and designed to test for the presence of mineralization between a roughly 90 metre gap between the GT Zone and the CMZ. The hole returned 4.13 g/t gold, 13.40 g/t platinum and 19.93 g/t palladium over a 4.00 metre interval and confirms the continuity of the mineralization between the two zones. Additional drilling will tighten up the greater than 40 metre wide gaps that still remain on this section.
- SPD-158 was drilled on section 100NE and designed to test an open area between the GT Zone and the lower limb portion of the CMZ. The hole intersected a mineralized portion of the lower limb roughly 25 metres south east of the defined GT Zone. The hole returned 7.57 g/t gold, 1.55 g/t platinum and 4.07 g/t palladium over 6.35 metres and closed the gap between the two zones demonstrating once again that the lower limb mineralization is contiguous from the GT Zone to the bottom of the CMZ.
- SPD-159 was drilled on section 75NE and designed to fill in a gap in the drilling of the lower limb portion of the CMZ in this area. The hole intersected an upper limb mineralized zone containing 23.49 g/t gold, 0.06 g/t platinum and 0.22 g/t palladium over 5.30 metres and a lower limb mineralized interval of 5.94 g/t gold, 0.31 g/t platinum and 0.72 g/t palladium over 5.50 metres confirming the presence of the zone in this area and filling in the gap in the model.
- SPD-161 was drilled on section 75NE and designed to test for the presence of the GT Zone mineralization in an area where no drill hole data had previously existed. The hole was successful in intersecting a broad mineralized envelope that returned 3.17 g/t gold, 1.97 g/t platinum and 2.63 g/t palladium over 13.7 metres including a higher grade core that returned 5.26 g/t gold, 4.14 g/t platinum and 5.30 g/t palladium over 6.4 metres. This hole was collared on the same section and roughly 95 metres northwest of hole SPD-159 described above. Upcoming drilling will fill in the approximately 100 metre distance that exists between these two holes.
- SPD-165 was drilled on section 375NE and designed to intersect the GT Zone mineralization 25 metres southeast of the bonanza grade interval recently encountered in hole SPD-142 (see press release dated April 25, 2012). The hole returned 54.48 g/t gold, 0.69 g/t platinum and 5.42 g/t palladium over 3.30 metres confirming that the high grade mineralization continues in the direction of the historic Serra Pelada pit. Drilling is currently testing the up-dip direction behind the bonanza hole.
The upper limb mineralization encountered in hole SPD-159 (see June 18, 2012 news release) returned values of 23.49 g/t gold, 0.06 g/t platinum and 0.22 g/t palladium over a 5.30 metre interval making it one of the best upper limb results for the 2012 drill campaign and extends the upper limb mineralization up-dip of the zone by roughly 27 metres. The drilling will continue testing the upper limb at the same time as the lower limb mineralization which is the main focus of the current campaign.
Geological Cross Section 100NE – Connecting the Zones Across the Lower Limb
Exploration Potential on New Ground
Elefante Auger Drilling Program
The Elefante Area is located approximately two km southeast fo the Serra Pelada deposit. Host rock in this area consists of Archean aged sedimetns belonging to the Rio Fresco Formation which aslo hosts the Serra Pelada orebody.
Colossus has been conducting an auger drilling program on the Elefante area to define targets for a diamond drilling program to be conducted in the fourth quarter of 2012. The results to date are encouraging as intercepts in soils close to surface show high grade precious metal mineralization.
The first phase of diamond drilling will consist of approximately 500 metres of HQ caliber drilling and will test for the bedrock source of the saprolite enriched auger drill holes as well as test the fold of the sedimentary package for signs of carbon upgrading similar to that which is found in the high-grade CMZ at Serra Pelada.
Elefante Auger Drilling Program Results (see March 12, 2012 news release)
- Auger drilling intersected high grades in Elefante including SPTRD-017 (124.78g/t Au, 6.52g/t Pt and 7.67g/t Pd over 1.5 m).
- Values ranging from 1.06 g/t to 18.00 g/t of Au all within two metres from surface
- SPTRD090 returned 1.5 metres of 2.71 g/t Au, 0.11 g/t Pt and 0.12 g/t Pd in the saprolite – taken with other results suggests a broad halo of gold mineralization in the Elefante Area sourced by a deeper bedrock zone.
Elefante Auger Drilling Program Results (see August 20, 2012 news release)
- SPTRD-135 returned values of 13.08 g/t platinum and 4.19 g/t palladium from 0.5 to 1.0 metre below surface.
- SPTRD-160 returned values of 4.40 g/t gold from 1.5 to 2.0 metres below surface.
- SPTRD-169 returned values of 8.70 g/t gold from 1.5 to 2.0 metres below surface.
Moving Forward to Production
Colossus plans to extract an initial bulk sample for testing from the CMZ in the second half of 2012. Construction of the Gravity Processing Plant is expected to be completed in the first quarter of 2013. Also in early 2013, Colossus expects to have a NI 43-101 compliant reserve statement outlining the initial resource and reserve estimate, allowing the Company to accurately predict future earnings.
Initial production at Serra Pelada is expected to begin in mid-2013 with a target mining rate of 1,000 tonnes per day by underhand cut & fill methods that work from the top of the orebody down, excavating under cemented rock fill. Trucks will haul ore to the surface via an underground decline. This method is used at a number of high-grade gold mines including Goldcorp’s Red Lake Mine and Barrick’s Miekle Mine.
Colossus remains on track to start initial production early in the second half of 2013 at a rate of 250 tonnes per day (tpd). The Company’s ramp-up plans for reaching 1,000 tpd by the end of Q1 2014 are still on track.
Process plant construction remains on schedule for commissioning to begin early in the second half of 2013; the total project is currently 70% complete. More than 97% of engineering & procurement is complete, 80% of concrete has been poured, half the structural steel for the project has been delivered to site and structural steel erection commenced in late February. Other critical infrastructure construction also remains on schedule. The power line and power house are on track to be commissioned early in the second quarter of 2013 while the tailings dam is expected to be ready in conjunction with mill commissioning.
In January 2012, Colossus announced the acquisition of the 633 hectare Cutia Property from Cooperativa Mista do Garimpeiro de Cutia (COOMIC). Located approximately 13 kilometres to the southeast of Serra Pelada, it is accessed by same road. It is hosted in same geological formation as Serra Pelada, with three metre thick quartz veins outcropping on surface. The main structural feature on the property is the Cutia Fault Zone which traverses the property in a roughly east-west orientation and divides the property between felsic metavolcanics to the north and mafic metavolcanics to the south according to the DNPM maps. The mineralized breccia and quartz vein system that has been historically mined by COOMIC occurs along this fault zone. The quartz veins range from three to five metres wide on surface and contain varied amounts of disseminated, pyrite, malachite and iron oxide minerals as well as the occasional speck of visible gold.
A recent university study reported grab sample results of 66g/t Au, 10g/t Ag and >0.5% Cu. In addition to a site visit, as part of the due diligence process, an airborne geophysical survey was conducted over the Cutia property using a proprietary VTEM (versatile time-domain electromagnetics) system which measures the magnetic and electromagnetic signatures of the underlying property. A total of 303 line kilometres were flown over the property with line spacings of 50 metres in an N-S direction with tie lines flown perpendicular to the survey lines in an E-W direction and spaced every 500 metres. The survey was successful in delineating a roughly 4.8 kilometre long contact zone between two major lithologies. The auriferous quartz vein system on the property occurs at this contact zone. Several highly magnetic bodies as well as weak electromagnetic anomalies were found in the data and will be ground truthed during a follow-up mapping and prospecting program. Numerous inferred lineaments also resulted from the geophysical interpretation. These lineaments may represent fault and shear structures and make for good exploration targets as they may host auriferous vein material similar to the known showings on the property.
Colossus Minerals is nearing production at its Serra Pelada project located in the mineral prolific Carajas region in the State of Pará, Brazil. The property, the site of the largest precious metals rush in Latin American history, is host to one of the highest grade gold and platinum group metals deposits in the world.
The management team boasts proven mine-builders with years of experience in business, geology, engineering and development. The Company has been granted environmental and mining licences and is in the process of constructing an underground mine at Serra Pelada with production slated for mid-2013. Studies show exvellent recoveries and the potential to be in the lowest cost quartile of producers globally.
Significant portions of the expanded land package have yet to be explored, offering further upside. Auger drilling of the Elefante Area, located a stone’s throw from the Serra Pelada deposit, has shown encouraging intercepts in soils close to surface indicating high grade precious metal mineralization. Diamond drilling on this area is expected to commence in the fourth quarter of 2012.
Claudio Mancuso – Director and Chief Executive Officer
Mr. Mancuso has over 10 years experience in the mining industry and capital markets. Prior to joining Colossus, he served as Vice President, Treasurer of Agnico-Eagle Mines Limited, a position he held since January 2009. Prior to that appointment, he served Agnico-Eagle in various financial management positions. Prior to joining Agnico-Eagle in 2002, he held positions at the Ontario Securities Commission and BDO Dunwoody LLP, a public accounting firm. Mr. Mancuso was appointed to the Colossus Minerals Board of Directors, effective as of October 15, 2012. Mr. Mancuso is a graduate of the University of Waterloo and is a Chartered Accountant.
David Anthony – President and COO
Mr. Anthony is a mining engineer with more than 30 years experience in the mining industry and brings strong engineering and mineral processing expertise. In 2010 and 2011, Mr. Anthony was the Vice President & Senior Project Director, Cliffs Natural Resources Inc. and from 2001 to 2010 Mr. Anthony held senior positions at Barrick Gold in Tanzania responsible for the development of the Bulyanhulu, Buzwagi and Tulawaka mines which are three of the four world-class gold and copper operations which form African Barrick Gold (“ABG”). Mr. Anthony was appointed Chief Operating Officer of ABG in 2009. ABG was listed on the FTSE in 2010 with a market capitalization of $3.8 billion. From 2005 to 2009, Mr. Anthony was the General Manager and Project Director of the Buzwagi Mine for Pangea Minerals Limited. Mr. Anthony also worked for Kinross, as the Project Director, responsible for execution of the Fruta del Norte Project. Prior to his appointment at Colossus is currently the Senior Vice President, Mining of Forbes & Manhattan. Mr. Anthony is also Chairman of Tembo Gold Corp, a Canadian based mine development company, with interests in Tanzania. Mr. Anthony graduated from Queens University in 1979 with a Bachelor of Science in Mining Engineering (Mineral Processing).
Alden Greenhouse, CFA – Chief Financial Officer
Mr. Greenhouse has over 10 years capital markets experience. Prior to joining Colossus, Mr. Greenhouse held various senior positions within RBC Capital Markets in commodity risk management, foreign-exchange and fixed income. Prior to joining RBC, Mr. Greenhouse was a Senior Analyst at Dominion Bond Rating Service. Mr. Greenhouse is a graduate of the Michael G. DeGroote School of Business at McMaster University (B.Com), the London School of Economics, University of London (M.Sc.), and he holds the CFA designation from the CFA Institute.
Graham Long – Vice President, Exploration
Over 25 years’ experience in the mining industry, spent the majority of his career with Agnico-Eagle Mines where he held progressively changing roles from exploration geologist to Exploration Manager for Canada.
Mr. Long has a broad range of mining experience having worked in several operating mines both underground and open-pit as well as experiencing the discovery of a gold deposit and seeing it through to production.
Ann Wilkinson – Vice President, Investor Relations
Ms Wilkinson possesses over 20 years experience in the mining industry in the investor relations and other management roles. Prior to joining Colossus, Ann served as Vice President, Investor Relations of Breakwater Resources Ltd., a position she held from October 2005. Preceding that appointment she was Breakwater’s Corporate Secretary. Before joining Breakwater in 1995 she held a number of roles with several capital market firms and a couple of junior gold exploration companies. Ms Wilkinson has a B.A. (Economics) from the University of Western Ontario.
Jason Brooks, CA – Vice President, Finance
Mr. Brooks has more than 10 years of finance and accounting experience in the mining industry. He most recently served as Assistant Controller of NewGold Inc., an intermediate gold producer. Previously, he spent six years with Barrick Gold Corporation in various financial management positions. Prior to joining Barrick, he spent five years at BDO Dunwoody LLP, a public accounting firm. Mr. Brooks is a graduate of the University of Western Ontario and is a Chartered Accountant.
Lesley Duncan – Vice President, Corporate Secretary
Ms. Duncan has over 10 years legal experience in the capacity of securities law clerk and corporate secretary. Prior to joining Colossus, Ms Duncan was Corporate Secretary of Breakwater Resources Ltd. from November 2007 to October 2011. Preceding that appointment she was Breakwater’s Corporate and Securities Law Clerk. Before joining Breakwater in October 2006 she held a number of securities law clerk positions between 2001 and 2006 at various Toronto law firms and at a mutual fund company. Ms Duncan is a member of Canadian Society of Corporate Secretaries.
BOARD OF DIRECTORS
David Anthony 2,3 – Director
John Frostiak, P. Eng. 1,2,3 – Director and Q.P.
Greg Hall 3 – Director, Q.P.
Mel Leiderman, CA 1,2- Director
Douglas Reeson, M.B.A. 1,2 – Director
Antenor F. Silva Jr. 3 – Director
John S.M. Turner – Director
David Garofalo – Director
Alberto Arias – Director
1 Member of the Audit Committee
2 Member of the Corporate Governance and Compensation Committee
3 Member of the Health, Safety and Environmental Committee