Continental getting set to be next Colombian gold play

Continental Gold is getting set to bring its portfolio of prime Colombian gold properties to the TSX through its reverse takeover of Cronus Resources (CZR-V).

The deal was initially announced on October 9 with Cronus shares being put under a trading halt order the day before. They still managed to jump to 62¢ from the 40¢ price they were trading at just two days before the halt was ordered.

Privately held, Bermuda-based Continental Gold will give investors an opportunity to partake in some of Colombia’s recently opening up gold plays. The country has enjoyed some recent market buzz as improved security and pro-business government policy has allowed Canadian juniors to explore its gold rich mountains.

Continental has seven 100% owned gold exploration projects on over 1,000 sq. km of exploration concessions.

The deal will see Continental shareholders take an 87% stake in the amalgamated company with Cronus shareholders retaining 13%.

The transaction values the new company at $75 million or $1.50 per share.

Continental’s flagship project is known as Buritica in the Antioquia Department of the country. It is roughly 100 km from Medellin and has access to solid infrastructure such as paved roads, water and power.

Thus far Continental has done 14,000 metres of diamond drilling on the property and says it has made several high grade discoveries.

Continental also has two active joint-ventures with AngloGold Ashanti (AU-N, AGG-A) and a group of concessions named Santander, totaling over 50 sq. km near Ventana Gold’s (VEN-V) La Bodega project.

The deal will also bring a loan of between $2 million and C$3 million to Continental by a third party lender within 30 days.

Ari Sussman – the chief executive of Colossus Minerals (CSI-T) and Cronus, is being tagged to stay on as chief executive of the new company.

Cronus will be able to elect one member to the board, with Continental choosing two nominees, and the remaining three being jointly agreed upon.

Cronus Resources had previously been valued for its land package surrounding the historical high-grade San Juan Mine in Baja, Mexico.