Colossus Minerals Inc. (TSX:CSI,OTCQX:COLUF) is a development-stage mining company focused on bringing its 75% owned Serra Pelada gold-platinum-palladium Mine into production. The Serra Pelada Mine is a joint venture between Colossus and COOMIGASP located in the State of Pará, Brazil. Serra Pelada, located in the mineral prolific Carajas region in the State of Pará, is host to one of the highest grade gold and platinum group metals deposits in the world. Between 1980 and 1986 Serra Pelada was host to the largest precious metals rush in Latin American history. Colossus Minerals Common Shares, warrants and notes trade on the Toronto Stock Exchange (TSX) under the symbols CSI, CSI.WT.A, CSI.WT.B and CSI.NT respectively and in the United States its Common Shares trade on the OTCQX under the symbol COLUF. The Company is headquartered in Toronto, Canada.
- High-grade precious metals project in Brazil—grades at Serra Pelada are among the highest on record
- Metallurgical processing expected to be straight forward with excellent recoveries
- Project is permitted – environmental, installation & mining licenses acquired in 2010
- Construction underway with first production planned for second quarter 2014
- Potential to be in lowest cost quartile of producers globally
- 110,000 metres drilled to date with significant exploration upside on expanded land package
Colossus Minerals’ flagship project, Serra Pelada is located in the mineral prolific 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 miners hand-dug a pit and mined an estimated two million ounces of gold plus unknown quantities of 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.
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. For a complete table of assay results, please click here.
Moving Forward to Production
Initial production at Serra Pelada is expected to begin in the second quarter of 2014.
As of November 14, 2013, the Company had completed approximately 2,300 metres of total development; 1,500 primary and 800 metres secondary development. On July 15, 2013, the Company announced that some dewatering wells (bores) and pumps were not performing to design specifications and, as a result, the Company required additional dewatering capacity in order to mine the Central Mineralized Zone (“CMZ”) in a sustainable, effective and efficient manner.
As disclosed in September 2013, several bores and pumps have been repaired and six bores are now operating. Refurbishment of three additional bores was not successful. Total dewatering capacity is currently at 790 m3 per hour. Three more bores are in the process of being refurbished. Two additional bores with a capacity of 250 m3 per hour each are being established. Installation of this equipment has been delayed due to issues of mobilizing drill rigs to site and equipment supply. It is currently expected that the first of the two new wells will be operational by early December 2013.
The rate of recharge to the bore field has been observed to be approximately 20% higher than anticipated during the period September and October 2013. This is being investigated by our hydrological consultants. It is considered likely that this is the result of interconnection with an aquifer. Recently, the rate of recharge has reduced to the rate expected from the hydrological model and the bore field water level has resumed its anticipated rate of drawdown. Prior to this observation, in the third quarter, the Company decided to build contingency into its dewatering program by drilling the second of the two new wells referenced above. Establishment of this well is already underway and it is expected to be operational by mid December 2013. The Company has concluded that certain wells are not salvageable. Total capacity, upon completion of the two new wells and the refurbishment program, is expected to increase total flow to the range of 1300 – 1400 m3 per hour. The Company’s hydrology consultants continue to monitor recharge rates and water table drawdown and the Company believes that the targeted dewatering capacity has sufficient contingency to remove the volume of water necessary to allow sustainable mining in 2014. Infrastructure development in the red and grey siltstone has not been impacted however and continues to progress according to plan. The resources of the Company are focused on mine infrastructure development and additional dewatering in order to achieve the Company’s plans of delivering ore to the process plant during the second quarter 2014.
Expansion of the ventilation system has progressed with completion of Phase I, which included installation of vent fans and ductwork in the mine, to draw air through the vent raise and increase air flow to 45m3/s. This three-fold increase in air volume to the underground operations was achieved by the end of the third quarter. At this time, there is sufficient ventilation to complete all infrastructure up to the point that production mining starts. In order to achieve the planned rates of production, the ventilation system requires further expansion to 140m3/s. This will provide sufficient air to support four crews and sets of equipment. The Phase II expansion work includes widening and concrete lining the artisanal shaft which will be used as a ventilation raise as well as to provide secondary access and egress. Development of the drift to tie the ramp to this ventilation raise at depth is advanced by approximately 75%. The Phase II ventilation system upgrade is approximately 60% complete. The additional three-fold increase in air volume is expected to occur in the first quarter of 2014, with completion of the shaft expansion and installation of associated surface vent fans.
|September 2013||Continue to progress decline complete #4 pump station and advance vent access. Start Horizon 1 mineralization access drives in the south and east.||- 77 metres total development – average of 2.6 metres per day- Decline development – 45 metres
- Pump station development – 11 metres
- North access – 2 metres. Heading complete for diamond drill bay.
- Vent access and other secondary development – 19 metres
|October 2013||Continue to progress decline until the depth of the Horizon 2 mineralization access drive is reached. Complete vent access and advance vent shaft expansion toward completion.||- 92 metres total development – average of 3.0 metres per day- Decline development and Diamond Drill bay – 33 metres. Pump station development – 25 metres
- Vent access – 36 metres advance
- Vent shaft extended to 37 metre depth
|November 2013||- Continue Horizon 1 and start Horizon 2 access drives.- Continue the Phase II ventilation upgrade project.
- Continue development of underground sump system to handle increased production of water from workings and diamond drill activity.
- Develop North access ore drives on Horizon 1
|December 2013||- Continue development of North ore access drives in Horizon 1- Start development of South ore access in Horizon 1.
- Start development of ore access drives in Horizon 2.
- Continue Phase II ventilation upgrade
- Increase total dewatering rate from 790 m3/h to the range of 1,300-1,400 m3/h
|January 2014||- Continue ramp development toward Horizon 3- Continue development of ore access drives in Horizon 1 & 2.
- Continue Phase II ventilation upgrade.
|February 2014||- Continue ramp development toward Horizon 3, plus infrastructure (sumps, diamond drill bays, remuck)- Continue development of ore access drives in Horizon 1 & 2.
- Continue Phase II ventilation upgrade.
|March 2014||- Continue ramp development toward Horizon 3, plus infrastructure (sumps, diamond drill bays, remuck)- Continue development of ore access drives in Horizon 1 & 2. Continue Phase II ventilation upgrade to achieve tie in with shaft bottom and access drift.|
The various phases of the process plant construction, along with respective percentages complete are presented in the table below.
|September 17||November 14|
|Structural steel fabrication||100%||100%|
|Structural, mechanical, piping & electrical installation||88%||95%|
|Ventilation Upgrade Phase I||100%||100%|
|Ventilation Upgrade Phase II||55%||60%|
|Tailings impoundment facility||80%||95%|
|Rehabilitation of dewatering bore field||85%||90%|
|Expansion of dewatering capacity||30%||80%|
- Process plant construction is progressing well. Significant milestones achieved since the last development update include:
- Inspection of buildings for the purpose of signing off handover of facilities to the Company is advanced. Commissioning of unit operations is underway.
- The primary crusher area’s structural steel, platework and associated equipment installation is 100% complete. Electrical and instrumentation installations are approaching completion.
- Commissioning of the primary crusher continued in August.
- The reagent handling area structural steel, platework and associated equipment installation is 100% complete. Electrical and instrumentation installations are progressing.
- All of the structural steel and platework is 100% erected.
- Mechanical installations and piping in the grinding building are progressing well with this area now 90% complete.
- Significant progress has been made in erecting the conveyor systems. Conveyor belts are installed and ready for commissioning.
- The primary screen, scrubber and a number of tanks have been installed in the Scrubbing & Screening building. Installation of pipe and electrical equipment has been advanced to +50%.
- Civil construction of the gold room is complete. Erection of tanks and other mechanical installations in the gold room area are progressing.
Other infrastructure construction has progressed as planned. The power house is complete and fully operational, to supply standby power, plus meet 100% of mine site needs during “peak power periods”. Connection to the National grid has been achieved.
As of November 14, 2013, construction of the tailings dam has been advanced to 95% completion. Demobilization of the earthworks contractor is in progress.
Colossus Minerals is nearing production at its Serra Pelada mine 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 second quarter 2014.
David Massola – Interim CEO and Chief Financial Officer
Mr. Massola has over 30 years of experience in the mining industry and has held a broad range of executive and management positions in Canada, Chile and the United States. Mr. Massola was President and Chief Executive Officer of Continental Nickel Limited from 2011 until it was acquired by IMX Resources Limited in 2012. Mr. Massola served as Chief Financial Officer and Senior Vice President of Globestar Mining Corp. from 2006 until it was acquired by Perilya Limited in 2011. Prior to joining GlobeStar, Mr. Massola served as Chief Financial Officer and Vice President of De Beers Canada, Inc. from 2001 to 2006, where his responsibilities included arranging debt facilities and the implementation of all accounting systems and financial controls for the Victor and Snap Lake mines. Prior to joining De Beers, Mr. Massola spent 20 years at BHP-Billiton where his roles included the position of Vice President of Finance at BHP Diamonds Inc. where he was responsible for all financial aspects of the Ekati Diamond Mine from the construction period through commercial production. Mr. Massola holds a BSc degree in Accounting from the University of California.
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).
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.
Greg Ho Yuen, LLB - Vice President, Legal and Corporate Secretary
Mr. Ho Yuen was called to the Bar in 1994. Prior to joining Colossus, he was a Partner in the Global Mining Group at Fasken Martineau DuMoulin LLP with an emphasis on corporate finance, mergers & acquisitions and mining law. At Faskens he represented Canadian and international issuers and underwriters in domestic and international public offerings and private placements, mergers & acquisitions and other business combinations. An advisor on Canadian securities laws (including NI 43-101 issues, continuous disclosure and corporate governance), Mr. Ho Yuen represented domestic and international mining clients in the negotiation of earn-in and joint venture agreements, as well as the financing of their exploration and development projects. A frequent speaker on M&A transactions, equity financing techniques, securities law and the resources sector, he has also appeared before various panels and committees to address the issue of Canadian securities regulatory reform. Mr. Ho Yuen is a former director of the Prospectors and Developers Association of Canada and former co-Chair of its Securities Committee. He is currently a member of the Canadian Institute of Mining Metallurgy and Petroleum and the Rocky Mountain Mineral Law Foundation.
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.
BOARD OF DIRECTORS
John Frostiak, P. Eng. 1,2,3 – Director and Q.P.
Douglas Reeson 1,2 – 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