Columbus Gold (CGT.V) has released its long-awaited resource update at the Paul Isnard gold project in French Guiana after completing an additional 26,000 meters of drilling in 2014.
The total resource estimate now stands at almost 4.9 million ounces of which in excess of 75% is classified as an indicated resource. The total amount of gold isn’t increasing much, but we’d like to point out two important improvements in this resource estimate compared to the previous one. First of all, the average grade of the resource has increased to 1.48 g/t gold which is a remarkable improvement compared to the 1 g/t in the previous resource estimate. Secondly, the majority of the ounces is now in the ‘indicated’ category whereas all ounces were in the inferred category before. The resources look quite robust as even if you’d use a cutoff grade of 0.7 g/t (compared to the 0.4 g/t in the base case), Paul Isnard would still contain in excess of 4.4 million ounces of gold at an average grade of in excess of 1.75 g/t.
We are positively surprised by the jump in the average grade. We were expecting a small improvement to 1.2-1.25 g/t but an average grade of almost 1.5 g/t is much better than what we were hoping for and this could be a major boost for the project as the economics of Paul Isnard will look much better. We are now really looking forward to see the results of the Preliminary Economic Assessment which is expected to be completed this quarter.
This updated resource estimate is a major step forward for Columbus Gold, and we expect the PEA to prove the project will be viable with an after-tax IRR of at least 20% using a gold price of $1250/oz.
Disclosure: The author holds a long position in Columbus Gold. Columbus is a sponsor of the website. Please see our disclaimer for current positions.