Colorado Goldfields Inc. (OTCQB: CGFIA)
Colorado Goldfields, Inc. is a Denver-based junior exploration and mining company primarily exploring for gold and silver. This seasoned management team targets historic gold camps with strong potential for multiple deposit discoveries.
The Colorado Goldfields business model provides an outstanding combination of former producing properties with excellent exploration and production potential and a currently inactive, modern, up to 700 ton per day capacity mill facility to allow for an attractive short-term production time frame.
This strategic plan is anticipated to allow Colorado Goldfields to reach its goal of profitability, potentially within the next 18 months.
March 1, 2011 Forecast for Pride of West Mill Gross Revenue
In response to the rapidly changing economics for gold pricing (New York spot gold closed at $1,433.20 bid on March 1, 2011, as reported by Kitco Metals Inc.), and associated costs of production, Company management has re-forecast the first year gross revenue for the Pride of the West Mill. Management now projects $14.3 million during the first 12 months of operation, which is an increase of $6.1 million.
Management also restates the gross dollar value of the gold produced from the Pride of the West Mill. At 0.35 ounces of gold per ton, and a price of $1,400 per troy ounce, that represents approximately $500 million in gross value, and at 0.8 ounces per ton, gross value of the gold would be in excess of $1 billion; not to mention the cost benefits of back-filling and potential reprocessing.
Summary Overview
The Company is exploring extensive surface and subsurface, high-grade mineralized zones at the Silverton mines. Based on the results obtained from Colorado Goldfield’s current early-stage exploration investment, the stage will soon be set for the dramatic next steps in the journey from discovery to determination of an economical ore body. At that stage, Colorado Goldfields will be able to exploit the advantages of its recent purchase of the Pride of the West Mill, which will allow for a shorter term production timeframe.
Pride of the West Mill
A modern gravity and flotation mill with up to-700 tons per day capacity. It is located within nine miles of all three mines, and is the only mill in the area. Toll milling for neighboring mines provides an additional revenue stream and the opportunity for future joint venture or acquisition opportunities
Brooklyn Mine
Approximately 600 acres of patented and unpatented claims located along the historic Brooklyn Mine. Since its discovery around 1900, the Brooklyn Mine has consistently produced exceptionally high-grade gold ore. An historic resource estimate of $13.8 million (14,535 ounces of gold times $950 per ounce) at a grade of 0.69 ounces per ton contained in two established and accessible ore shoots.
King Solomon Mine
The King Solomon Mine is located on the southern flank of King Solomon Mountain, just a few hundred yards up the mountain from the first discovery of gold in the San Juan Mountains in Little Giant Basin. Opened in 1876, the mine was in production until 1883. The King Solomon Mine located within 2 miles of the Company’s Pride of the West Mill.
Additional Considerations
Colorado Goldfields is also currently considering the acquisition or staking of other new properties in the San Juan County Mining District.
Pride of the West Mill
The Pride of the West Mill is a modern gravity, flotation and cyanide leach mill located on 120 acres, with offices, laboratory and water rights. The Mill has the capacity to refine up to 700 short tons per day. The permit for the Pride of the West authorizes the processing of gold, silver, lead, cooper, and zinc.
Colorado Goldfields acquired the Pride of the West Mill for $900,000 and the assumption of $300,000 in reclamation permit bond requirements. The mill was valued over $12M.
Historically, milling operations in Southwestern Colorado similar in scope to the Pride of the West Mill have generated from $5 million to $15 million annual gross revenue and typically are profitable in the first year of operations
Assay Lab Re-activation
Re-activating the assay lab at the mill includes the installation of an electronic microbalance for weighing the doré (semi-purified gold), beads derived from the fire assay and the gold bead remaining after the silver in the doré is dissolved, and an inductively coupled plasma atomic absorption spectrographic machine.
An agreement with the State of Colorado Division of Reclamation Mining and Safety (“DRMS”), to extend the time required to fully fund a $196,000 increase to the Company’s financial warranty to June, 2011.
The financial warranty is in effect a surety bond that serves to guarantee the ultimate reclamation of the site. The joint stipulation between the Company and the State of Colorado DRMS calls for four payments of approximately $49,000 beginning in March, 2011 and ending in June, 2011. Colorado Goldfields will have posted a total Financial Warranty of $515,130 as of June, 2011. The Company has successfully identified the funding source for the required payments, which will place the Company in compliance with the financial warranty increase requirements.
Institutional Investor Funding $1M
As stated in the June 3, 2010 press release, “the Company closed a funding arrangement with an institutional investor in the amount of $1 million. The financing will, over the course of the facility timeline, provide funding for the Company’s aged debt and for working capital requirements including work detail on the reactivation of The Pride of the West Mill.”
“It is very gratifying to see this kind of progress both in the financial and operations areas. The extension of the financial warranty requirement is the kind of tangible support that reaffirms our belief that our business plan is sound, and that we are certainly on the right track,” stated Stephen Guyer, CFO of Colorado Goldfields.
Gross Dollar Value $500M
Management also restates the gross dollar value of the gold produced from the Pride of the West Mill. At 0.35 ounces of gold per ton, and a price of $1,400 per troy ounce, that represents approximately $500 million in gross value, and at 0.8 ounces per ton, gross value of the gold would be in excess of $1 billion; not to mention the cost benefits of backfilling and potential reprocessing.
Brooklyn Mine
In September 2009, Colorado Goldfields Inc. executed a Mining Lease with Option to Purchase Agreement for the Brooklyn Mine in San Juan County, Colorado. The terms of the agreement include the issuance of 75,000,000 restricted shares of Class A common stock in Colorado Goldfields restricted in a lock up for a period of three years during which no sales or other conveyances may be undertaken, a work commitment averaging $200,000 per year, and a 5% Net Smelter Royalty. The lease automatically renews so long as ores, minerals, or metals are being produced or sold.
The Company has provided an update of the 2011 work plan for the Brooklyn Mine. Colorado Goldfields entered into a lease with an option to purchase the property in September 2009. At that time, the historic resource was valued at $13.8 million based on a gold price of $950 per ounce. With the increase in gold price, the current value of just the historic resource is estimated to be $20.4 million, an increase of $6.6 million.
The properties consist of approximately 600 acres of patented and unpatented claims located along the historic Brooklyn Mine and associated structures. Since its discovery in the year 1900, the Brooklyn Mine has consistently produced exceptionally high-grade gold ore.
An historic resource estimate of $13.8 million (14,535 ounces of gold times $950 per ounce) at a grade of 0.69 ounces per ton contained in two established and accessible ore shoots below the existing workings is based on well-documented and confirmed prior exploration. “We are targeting grades of 0.30 to 0.90 opt Au, however the Brooklyn Vein has produced ore with grades as high as 30.0 ounces of gold per ton,” stated Jonathan Moore, Project Geologist. “The Brooklyn represents a property that is perfectly aligned with our Company’s strategy of targeting past producing mining properties in historic districts for exploration and production,” said Moore.
Colorado Goldfields’ personnel have completed an extensive review of all available information concerning the exploration, past production, and the existing historic resource estimate (14,535 oz. gold at $1,400/oz., $20.4 million) of the project area, and have developed a specific and dynamic strategy for exploration.
The existing historic resource estimate for the Brooklyn Vein offers Colorado Goldfields a prime opportunity to develop a near-term minable reserve through confirmation and step-out diamond drilling. The expected resource blocks are located below the Number 2 Level of the mine and occur as down-dip extensions of known ore shoots. Most importantly, these ore shoots are open at depth and the continuity of mineralization is indicated by historic ore grade (0.10 to 2.13 ounces per ton of gold) drill intercepts over composite 4 foot mine widths.
King Solomon Mine
The King Solomon Mine is located on the southern flank of King Solomon Mountain, just a few hundred yards up the mountain from the first discovery of gold in the San Juan Mountains in Little Giant Basin. Opened in 1876, the mine was in production until 1883. The King Solomon Mine located within two miles of the Company’s Pride of the West Mill.
In September, 2009, Colorado Goldfields executed a Mining Lease with Option to Purchase for the King Solomon Mine. The lease with an option to purchase the King Solomon Mine included the issuance of 50,000,000 restricted shares of Class A common stock in Colorado Goldfields. The shares are restricted in a lock up provision for a period of three years during which no sales or other conveyances may be undertaken. A work commitment of $50,000 per year, and a 3.5% Net Smelter Royalty are also included in the lease/option. The lease automatically renews in 2012 so long as ores, minerals, or metals are being produced or sold.
The King Solomon Mine is located on the southern flank of King Solomon Mountain, just a few hundred yards up the mountain from the first discovery of gold in the San Juan Mountains in Little Giant Basin. Opened in 1876, the mine was in production until 1883. Newspaper accounts and shipping records of the day indicate that the product was good to very high grade silver ore with substantial credits for lead and copper.
The King Solomon Mine is of particular interest to Colorado Goldfields because of its strategic placement in Little Giant Basin. Although no activity has occurred on the property since 1883, nearby properties in Little Giant Basin have produced significant gold.
An exploration program is planned to determine whether the veins will become more important for their gold content with depth as has been the case in many of the San Juan County mining properties which were first mined for the silver content.
Silverton Mining District
Silverton is located in the San Juan Mountains, a rugged mountain range in the Rocky Mountains in southwestern Colorado. The area is highly mineralized (the Colorado Mineral Belt) and figured in the gold and silver mining industry of early Colorado. The Silverton district opened legally to miners in 1874, following the Brunot Treaty with the Utes. Mining reached its peak between 1900 and 1912, and the population of San Juan County peaked at 5,000. The area boasted four railroads, three smelters, and over thirty mills serving myriad gold and silver mines high in the mountains.
In the years since San Juan County saw several of the boom and bust cycles typical of the mining industry. The boom cycles saw an influx of people and industry and yielded millions of dollars worth of precious metals. Financial and environmental setbacks, such as Lake Emma’s flooding of the Sunnyside Mine in 1978, marked the decline of Silverton’s mining era. The Sunnyside, the last big mine in the region, closed in 1991.
“Aside from the obvious increase in value of the existing historic resource, this property is particularly exciting because it has been the site of several ‘specimen grade’ gold discoveries,” stated Stephen Guyer, CFO for Colorado Goldfields. “We are targeting grades of 0.30 to 0.90 ounces per ton of gold, however the Brooklyn Vein has produced ore with grades as high as 30.0 ounces of gold per ton,” stated Jonathan Moore, Project Geologist. “The Brooklyn represents a property that is perfectly aligned with our Company’s strategy of targeting past producing mining properties in historic districts for exploration and production,” said Moore.
Management Team
Lee R. Rice – President and Chief Executive Officer, Director
Mr. Rice is an experienced geological engineer, having worked as a geologist and engineer in the natural resources industry since 1970. Since 1990, Mr. Rice has been employed by, and is currently Chief Engineer for, Data Technology Services, Inc. a Colorado-based, privately owned company that provides information technology services to various industries, including finance, oil & gas, geology and chemistry. Prior to this, Mr. Rice held various geological, engineering and management positions with the U.S. Bureau of Mines and private industry. Mr. Rice holds a Bachelor of Science degree in Chemistry from Case-Western Reserve University and a Master of Science in Geology and Geological Engineering (with High Honors) from South Dakota School of Mines and Technology. Mr. Rice has been a Registered Professional Engineer in Colorado for more than 30 years and is a Registered Member of the Society of Mining, Metallurgy and Exploration. Mr. Rice is also a director of International Beryllium Corporation, a public company traded on the Toronto Venture Exchange with its headquarters in Vancouver, British Columbia.
C. Stephen Guyer – Chief Financial Officer, Director
Mr. Guyer is a senior financial executive, having served as Chief Financial Officer for both public and private firms. Prior to joining Colorado Goldfields, he was a founder and Chief Executive Officer of Antelope Technologies, Inc., an international high-technology manufacturing venture with offices in both the USA and Switzerland. Mr. Guyer has also erved as Chief Financial Officer for TCOM Ventures, Staff Administrators and the Moore Companies. Mr. Guyer was Chief Credit Officer for Monaco Finance and a divisional vice-president for a subsidiary of British Petroleum, and the former United Cable Television Corporation (now a part of COMCAST). Mr. Guyer holds an MBA, Finance, and Master of Arts, University of Denver, both with honors, a BA, Metropolitan State College, Magna Cum Laude, and BS, McPherson College.
John Ferguson – Director of Operations
Mr. Ferguson’s experience includes over 50 years of mining and milling experience. He studied Geology at Ft. Lewis College in Durango, and Mining Engineering at Colorado and the Colorado School of Mines.
Debbie Cokes – Manager, Environmental Affairs
Ms. Cokes has 27 years experience in the environmental field, with emphasis on mining operations and water treatment technologies.
Beverly Rich, Independent Director
Ms. Rich is the Treasurer for San Juan County, Colorado; Democratic Party Chairperson for San Juan County, Colorado; and is Democratic Party Chairperson for the 6th Senatorial District in Colorado. Ms. Rich graduated from Fort Lewis College in Durango, Colorado.
Norman J. Singer, Independent Director
Since 2006 Mr. Singer has been an independent investor in the oil and gas sector, having previously served as a senior consultant to a publicly traded oil company assisting the firm with their Turkish drilling program and assembling a U.S. based acreage position. From 1978 to 2004, Mr. Singer was with the Usaha Tegas Group of Companies, a $5 billion diversified multi-national enterprise, opening two new energy related subsidiaries in Houston, Texas, and Tulsa, Oklahoma. Mr. Singer was Senior Vice President, General Counsel and Director for Oceanic Exploration Company in Denver, Colorado. Additionally, he served as legal and economic advisor to the Ministry of Finance, Dar es Salaam, Tanzania and the U.S. State Department in Washington, D.C. Mr. Singer holds a BA in Economics from Colgate University, an MA in International Affairs and Economics from Tufts University in conjunction with Harvard University’s Fletcher School of Law and Diplomacy, and an LL.B. from Columbia University. Additionally, Mr. Singer has completed post graduate studies at the London School of Economics
CGFIA Fact Sheet: http://www.cologold.com/uploads/CGFIFactSheet.pdf
Contact:
Investor Relations
Colorado Goldfields, Inc.
10920 West Alameda, Suite 201
Lakewood, Colorado 80226
866-579-9444 or 303-984-0524
http://www.cologold.com
Notice regarding forward-looking statements. This news release may contain forward-looking statements or information within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements or information includes statements regarding the expectations and beliefs of management. Forward-looking statements or information include, but are not limited to, statements or information with respect to known or unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Forward-looking statements or information are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, risks and uncertainties relating to obtaining financing to meet the Company’s exploration program and operating costs during its exploratory stage, the interpretation of exploration results and the estimation of mineral resources and reserves, the geology, grade and continuity of mineral deposits, the possibility that future exploration, development or mining results will not be consistent with the Company’s expectations, accidents, equipment breakdowns, title matters, or other unanticipated difficulties with or interruptions in production and operations, the potential for delays in exploration or development activities or the completion of feasibility studies, the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, currency fluctuations, regulatory restrictions, including the inability to obtain mining permits and environmental regulatory restrictions and liability, the speculative nature of mineral exploration, dilution, competition, loss of key employees, and other risks and uncertainties, including those described under “Risk Factors” in the Company’s Annual Report on Form 10-KSB filed on December 27, 2007, and as amended on March 3, 2008, which is on file with the Securities and Exchange Commission, as well as the Company’s other SEC filings. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as is required under applicable securities laws.
Cautionary note to U.S. Investors — The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms on this website (or press release), such as “measured,” “indicated,” and “inferred” “resources,” which the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. Investors are urged to consider closely the disclosures in our 10-KSB which may be secured from us, or from the SEC’s website at http://www.sec.gov/edgar.shtml. This press release may contain information about adjacent properties on which we have no right to explore or mine. We advise U.S. investors that the SEC’s mining guidelines strictly prohibit information of this type in documents filed with the SEC. U.S. Investors are cautioned that mineral deposits on adjacent properties are not indicative of mineral deposits on our properties.
CGFIA Disclosure: Pentony Enterprises LLC entered will be covering CGFIA for a period of 90 days. We are not paid by the Company for this coverage, however, this company was brought to our attention by one of our friends in the smallcap industry, and as a consultant to CGFIA he suggested coverage. He recommends paying clients on a regular basis and on that basis alone we have agreed to cover CGFIA. We will not be buying or selling CGFIA stock at anytime during our coverage. There is a possibility that our initial coverage could lead to a contract directly with the company, however, that is not agreed to or suggested by the company. That is one of the key reasons, however, we often cover companies that we do not currently have a contact with. We were introduced to CGFIA through a third party, and that third party has made the Company aware that we are initiating coverage. To be clear, we have NOT been contracted for any shares or other compensation. One might consider the regular business that the referral source has sent us in the past and will almost certainly send to us in the future as a key reason we would cover a company on his behalf. To avoid all potential conflicts of interest, we never buy or sell shares into the open market during an active market awareness or investor relations program. This means that as we release new information about a particular covered company either on our site or otherwise authored by us, you can be confident we are not selling shares at the same time. We hold no other shares and will not be receiving further compensation in shares or that is share related during the promotional period of 90 days. Pentony Enterprises is not a registered investment adviser or a broker/dealer. Pentony Enterprises LLC makes no recommendation that the purchase of securities of companies profiled in this web site is suitable or advisable for any person, or that an investment in such securities will be profitable. In general, given the nature of the companies profiled and the lack of an active trading market for their securities, investing in such securities is highly speculative and carries a high degree of risk. Pentony Enterprises LLC | 1601 Berwick Drive | McKinney, Texas 75070.
