Columbus Gold broadens footprint in French Guiana

Columbus Gold (TSX: CGT; US-OTC: CGTFF) wants to become a dominant player in the fledgling gold mining industry in French Guiana, an overseas department of France on the northeast coast of South America, which is made up mainly of tropical rainforest.

The junior and its Russian partner, Nordgold, already own 44.9% and 55.01% of the Montagne d’Or gold deposit in northwestern French Guiana, where they are moving forward with permitting and development.

But they’re looking to expand their footprint, and, as part of that strategy, Columbus entered into an agreement in August 2018 to acquire up to a 70% stake in Iamgold’s (TSX: IMG; NYSE: IAG) Maripa gold project in eastern French Guiana, 50 km south of the capital city of Cayenne. Maripa consists of five contiguous exploration permits spanning 120 square kilometres.

Columbus signed a letter of intent in April to acquire an exploration permit on a third project, although the company doesn’t specify its exact location, stating in a press release that it “covers the core of one of the most prominent placer gold mining districts in French Guiana, which is exposed to illegal artisanal hard rock mining of high-grade quartz-gold veins.”

After a preliminary geological evaluation of the area, Columbus says that “an important shear-tension vein system exposed by mine workings was prospected over a lateral distance of 1.6 km,” and “quartz vein material sampled on the dumps of workings returned [the] best gold values of 13.10, 24.35, 67.40, 96.25 and 160 grams gold per tonne.”

At Maripa, Iamgold drilled 106 drill holes on the property between 2000 and 2006. Exploration focused on five large targets around gold geochemical anomalies: Changement, Filon Dron, Maripa Sud-Est, Rhyodacite and Filon Scieur.

The best historic intercepts include 36 metres of 4.3 grams gold per tonne; 11 metres of 12.4 grams gold; 35 metres of 1.8 grams gold; 26 metres of 2.5 grams gold and 22 metres of 2.2 grams gold.

While first-pass drilling of the targets was limited to shallow depths that averaged 67 metres within the oxidized saprolite, Columbus says, all five targets “returned drill intersections of economic interest, with demonstrated potential for expansion and mineral resource delineation.” In addition, the company says, several large gold geochemical anomalies on the property remain untested.

Core storage at Columbus Gold’s Montagne d’Or gold project in northwestern French Guiana. Credit: Columbus Gold.

Exploration began in April. The work program will include a detailed interpretation of the five partly drilled gold zones, as well as more regional data. This year’s work program will consist of core reclogging and drill hole database validation, as well as geological mapping and field validation. The company also plans to conduct a 256 sq. km airborne geophysical survey at 100-metre line spacing. In addition, Columbus will process and merge its 2018 LiDAR topographic and airborne magnetic data and undertake infill and step-out drilling.

Maripa is situated along the southern border of a regional deformation zone known as the Northern Guiana Trough, which can be traced across northern French Guiana into neighbouring Suriname, where Iamgold operates its Rosebel gold mine. Columbus says Maripa’s geological setting is similar to Rosebel.

Under its option agreement, Columbus can acquire a 50% interest by spending US$5 million and finishing an internal scoping study within five years.

At that point, if Iamgold doesn’t want to participate in a fifty-fifty joint venture, Columbus can earn another 20% stake by completing a preliminary feasibility study over another three years. Under that circumstance, the project would be a 70:30 joint venture.

For now, Columbus is pinning its hope on its flagship Montagne d’Or project, which has an estimated 3.85 million oz. gold in 85.1 million measured and indicated tonnes grading 1.41 grams gold per tonne, and another 960,000 contained oz. gold within 20.2 million inferred tonnes grading 1.48 grams gold.

A bankable feasibility study in 2017 envisions an open-pit mine producing 214,000 oz. gold a year at total cash costs of US$666 per oz., and all-in sustaining costs of US$779 per ounce.

In November 2018, Columbus announced that it had told the French authorities it intended to move forward with permitting and development of the project. The decision signalled Columbus’ intention to modify the project after public hearings.

The company has agreed to make several changes, including producing energy on-site to eliminate environmental impacts from connecting to the local power grid and building a 106 km aerial power line. This modification would remove the risk of power-supply disruptions to the Guyanese population. Columbus has also agreed to prioritize renewable energy, particularly solar panels, on already deforested land.

Columbus also agreed to commit to the International Cyanide Management Code and look for alternative gold-extraction methods. Other recommendations include reducing the size of waste dumps; increasing the surface area of the tailings storage facility and lowering the retainment dams; sourcing less material from quarries outside the mine site; and mitigating the transportation of explosives on public roads.

In January, Nordgold, Columbus’ joint-venture partner on the project, increased its stake in the Canadian junior to 9.96% on a non-diluted basis, and 11.18% if it were to exercise all of its warrants.

Nordgold is owned by Russia’s Alexey Mordashov, who is worth an estimated US$18 billion. Mordashov created Nordgold by spinning off the gold-mining assets of Russian steel giant Severstal in 2012. Since then he has quietly picked up stakes in Canadian mining companies.

In October 2016, Nordgold acquired all of the shares of Northquest that it did not already own, taking possession of the junior’s Pistol Bay gold project in the Arctic. This acquisition followed Nordgold’s purchase of Canada’s High River Gold Mines.

Columbus is trading at 18¢ per share in a 52-week range of 16¢ to 32¢. The company has a $30-million market capitalization.