Romios explores next to Galore Creek (May 28, 2010)

Right now, nearly everything about Romios Gold Resources (RG-V) is small – its $1.3 million budget, its $15-million market cap and its 27 sq. km Trek project – but the company believes that the Trek project’s location within the confines of the massive Galore Creek copper-gold project in Northwestern British Columbia could one day result in a big payoff.

On a map, the Trek property is a block of land nestled between the Galore Creek open-pit to the proposed mill site (about 15 km in distance). However, the project’s 50-50 owners, Nova Gold Resources (NG-T, NG-X) and Teck Resources (TCK.B-T, TCK-N), are now looking at building an 11km tunnel right through Romios’ Trek property to get there as a part of their revised prefeasibility study due out in mid-2011.

But the land has more value than that, points out Romios president Tom Drivas. The company has uncovered some promising mineralized zones close to the proposed mill.

“We drilled here for the last two years with gold results and we want to go back in June to start drilling again, hopefully with two to three drills to get a 43-101 resource,” Drivas says.

The discovery hole in October 2008 hit 131.4 metres grading 0.39 gram gold per tonne, 8.47 grams silver and 0.61% copper including 32 metres grading 1.05 grams gold per tonne, 25 grams silver and 2.06% copper. The mineralization was contained in a breccia zone.

Further drilling returned 151 metres grading 0.12% copper, 0.18 gram gold per tonne and 1.18 grams silver in a zone of stringer-type pyrite and chalcopyrite.

Another hole returned 5.5 metres of massive sulphide grading 0.14% copper, 8.49 grams gold per tonne and 4.1 grams silver.

Drivas blames the timing of the discovery on the slow development of the Trek zone: the Galore Creek project was shelved when construction cost estimates more than doubled to nearly $5 billion; the world credit crisis made it nearly impossible for juniors to raise money in late 2008 and 2009; and Teck found itself in dire straits after taking on US$9.8 billion in debt to buy Fording Canadian Coal just before the market crashed.

“So for the last few years the focus was not in that area but now the focus is coming back with Galore,” Drivas says.

He also points out that some major funds have invested in NovaGold including New York-based brokerage Paulsen & Co. with a $100 million investment and Quantum Partners, a private investment fund managed by Soros Fund management with nearly $75 million.

A new prefeasibility study on Galore Creek is expected in mid-2011, and if it’s positive, construction could start by 2013.

Regardless of what happens with Galore Creek, Drivas feels that drilling the Trek zone and the North zone, also located within the Galore Creek area, have potential and are worth developing. But if the Galore Creek project does get developed, Romios would like to make sure it’s not undervalued when the time comes to make a deal over the proposed tunnel and mill site.

“At 15 cents a share we are trading as a shell,” Drivas admits, later explaining that, “Our market cap is $15 million, and these guys want to spend $3 billlion to develop Galore. We are basically a rounding error in the total cost of the project.”

Romios will be needing some cash to continue its exploration program. Drivas hopes that it’s summer drill program will boost the company’s share price so the next financing won’t be too dilutive.

The company will also be doing further sampling and exploration work at its nearby Dirk and Newmont Lake projects.