Columbus Gold (CGT.V) has announced it has received the new resource estimate from Coffey. As expected, due to an erroneous calculation made by Coffey, both the amount of ounces and the grade has come down. Using a cutoff grade of 0.3g/t gold, the average grade drops from 1.44g/t to just 0.9 g/t and the amount of ounces has decreased from 5.37Moz to 4.6 Moz. If you’d use a higher cut-off grade of 0.5g/t, the gold resource decreases from 5.17Moz to ‘just’ 4Moz, but what’s more important is the decrease in average grade from 1.58g/t to 1.1 g/t.
We are fine with the overall amount of ounces, but we consider the drop in grade to be more dangerous for the project. As the Paul Isnard project is located in the middle of the jungle, the average grade of the project will be very important to determine whether or not this project will be viable. That being said, Columbus Gold plans to drill another 19,000 meters this year, and this drill program will mainly be focused on the zone with the most consistent and highest grade mineralization, so we hope the remaining part of the drill program will allow Columbus Gold to increase the average grade of the project. We won’t see the 1.48g/t back when using a 0.4g/t cutoff grade, but if the average grade at that cutoff could increase from 1g/t to 1.1 or 1.15g/t, this could already have a material impact on the economics of Paul Isnard.
Disclosure: The author holds a long position in Columbus Gold. Please see our disclaimer for current positions.