Colossus extends mineralization at Serra Pelada (November 01, 2010)

VANCOUVER — The first step-out results on Colossus Minerals’ (CSI-T, OC1-F) recently expanded Serra Pelada land package show continued high-grade gold-platinum- palladium mineralization.

The results come from a 7.7-sq.-km land package Colossus acquired from Vale (VALE-N) in March that significantly increased its overall holdings in Brazil’s Para state from only 1 sq. km. The expanded property is adjacent to and largely surrounds the initial property.

Colossus is exploring the property in a joint venture with Coomigasp, a 45,000-member cooperative of local miners, with Colossus holding 75% ownership of the total land package.

The drilling was designed to extend the Central Mineralized zone southwest into the new land package, with results indicating a steeply dipping mineralized sub-zone.

Drilled roughly 450 metres from a historic open pit, Hole 72 hit 8.4metres carrying 53.13 grams gold per tonne, 0.06 gram platinum per tonne and 0.12 gram palladium per tonne, then 25 metres averaging 30.19 grams gold, 3.53 grams platinum and 4.25 grams palladium. Hole 65 returned 5.2 metres carrying 12.89 grams gold, 0.49 gram platinum and 0.7 gram palladium, and then 3 metres grading 28.45 grams gold, 0.12 gram platinum and 0.36 gram palladium. All results were between 215 and 270 metres depth.

Drilling is ongoing to further extend the Central Mineralized zone southwest, as well as to the northeast.

Serra Pelada saw a huge gold rush in the 1980s, when up to 80,000 artisanal miners produced an estimated 2 million oz. gold from a hand-dug pit. The 400- metre by 300-metre by 100-metre pit eventually succumbed to collapsed walls and flooding, causing production to trail off. Colossus is looking to extract what is left in the pit and the surrounding area.

Earlier in October the company released more results from several zones on the original Serra Pelada property.

From the Central Mineralized zone, hole 55 hit 52.4 metres grading 18.57 grams gold, 8.34 grams platinum and 11.33 grams palladium from 209 metres, while roughly 700 metres northwest, hole 66 intersected 1.8 metres of 32.07 grams gold from 139 metres in the Portal zone.

In the GT zone, hole 56B cut 8.3 metres carrying 12.4 grams gold, 0.58 gram platinum and 0.92 gram palladium and hole 57 hit 21.4 metres averaging 6.51 grams gold, 0.6 gram platinum and 0.96 gram palladium, with both estimated to be true widths and extended the zone by more than 50 metres along strike.

Mineralization is hosted mainly by fine-grained carbonaceous rocks but also occurs in iron oxide-rich breccias and silicified zones. The oxidized zone is more than 300 metres deep.

The results are part of a 5,000- metre drill program that targets the down-plunge projection of the Central Mineralized zone and also extensions of the newly discovered gold-platinum group metals zones.

For more effective exploration, the company is driving a 3,500- metre, $15-million decline. The company will be able to start underground drilling in early 2011, while the decline is expected to be complete in roughly a year.

As part of an amended deal with Coomigasp, Colossus must make monthly payments of about $200,000 to the cooperative as well as finance all development costs. Once production begins Colossus must make premium payments ranging from US$16 per oz. to US$26 per oz. to Coomigasp, depending on the amount of metal produced.

Colossus Minerals share price rose 7¢ to close at $8.38 on the extended mineralization news. The company has a 52-week trading range between $4.00 and $9.14, and 86 million shares outstanding.