Property Location and Description

The Armamar-Meda concession (“Armamar-Meda” or the “Concession”) covers some 218 km² and is located in north central Portugal; it partially surrounds and is contiguous with the Penedono and Moimenta-Almendra concessions (Figure 1).

Paved and gravel roads provide good access throughout the Concession. Infrastructure and local resources are excellent. Elevations range from 175 m above sea level along the Távora River to nearly 1,000 m on local hilltops. Valley bottoms and hillsides in the Tabuaço area are characterized by terraces planted as Port-wine vineyards and small olive, almond, and fruit orchards.

Ownership

Colt Resources Inc. (“Colt” or the “Company”) has a 100% interest in the Armamar-Meda concession. On December 10, 2007, the Company entered into a prospecting and exploration license agreement with the Direcção-Geral de Energia e Geologia (DGEG), a branch of the Government of Portugal, whereby the Company was granted the exclusive right to prospect and explore for base and precious metals on the Armamar-Meda concession.

The initial term of the exploration license agreement was for three years ending December 10, 2010, and can be extended twice on an annual basis. Upon expiry of the initial term, Colt shall relinquish, on an annual basis, 50% of the area covered by the exploration license. Colt applied for and was granted an extension to the exploration license agreement. On December 10, 2010, Colt relinquished 50% of the area covered by the initial term of the exploration license: the initial Concession area was reduced from 436 km² to 218 km².

During any extensions, Colt must incur annual expenditures of at least €100,000. Colt must also pay an annual license fee to the Government of Portugal. The Government of Portugal retains a right to either 10% of net mining income or a 1% to 4% Net Smelter Return (NSR). The Government of Portugal also retains a right to a discovery premium of 100,000€.
 

Fig. 1: Location map of northern concessions: the Armamar-Meda concession (pale yellow) partially surrounds and is contiguous with the Penedono and Moimenta-Almendra concessions. Note location of major gold and tungsten targets in the area.

Geological Setting

The Armamar-Meda concession is located at the border zone of two major geologic units in northern Portugal, namely the Hercynian age Beiras granite batholiths and the Lower Cambrian Douro Valley Schist-Greywacke Complex (“SGC”). The latter is comprised of shale, schist, siltstone, sandstone and greywacke, with subordinate conglomerate and carbonate beds that were folded, faulted and subsequently regionally metamorphosed: intrusion of Hercynian granites produced contact-metamorphic haloes.

In the NW part of the Concession, referred to as the Tabuaço area, SGC rocks are in contact with the Armamar-Tabuaço granite batholith with which many tin and tungsten occurrences are associated. Hercynian deformation of the lower part of the SGC (Bateiras Formation) produced a NW-SE trending, gently NW plunging anticline referred to as the Távora Anticline (see inset: Figure 2).

The economically important Bateiras Formation outcrops along the Távora River Valley. The “core” zone of the anticline contains important carbonate and skarn horizons. Metasomatism of some carbonate horizons produced the quartz-garnet-amphibole-pyroxene skarns that are host to tungsten-tin mineralization. 

Figure 2: Geology and location map of main target zones in the area of the Tabuaço tungsten project: including São Pedro das Águias, Quinta das Herédias, Aveleira SE, Aveleira NW, Quintã, Távora river slope, and Quinta do Paco. Skarn horizons at São Pedro das Águias and Quintã contain the most significant tungsten mineralization of the Tabuaço area. Inset represents schematic trace of Távora Anticline: 1) São Pedro das Águias-southwest limb, 2) Quintã- hinge zone, 3) Quinta do Paco- northeast limb. (Regional location of the Tabuaço tungsten project is shown in Figure 1).

Mineralization

Past exploration led to the identification of tungsten mineralization associated with distinct stratigraphic “horizons” within metasedimentary rocks near the contact with the Armamar-Tabuaço granite. These stratigraphic horizons consist of calc-silicate hornfels and skarns. Tungsten mineralization was noted in three zones referred to as São Pedro das Águias, Quintã and Quinta do Paço Zones (collectively the “Zones”) (Figure 2).

The São Pedro das Águias Zone is situated along the SW limb and within a possible subsidiary syncline fold of the Távora Anticline (Figure 2). In this area outcrops a gently dipping, well-developed main or upper skarn horizon up to 19 m in thickness that hosts significant scheelite (CaWO₄) mineralization. Less well developed “lower” skarn horizons occur stratigraphically below the main or upper skarn horizon. The Quintã Zone is situated in the hinge area of the Távora Anticline. Previous geological work identified several sub-horizontal tungsten bearing skarn horizons. Historic sampling reported skarn thickness of over 4 m with grades ranging from 0.17% to 0.76% W. At the Quinta do Paço Zone are located a series of outcrops found intermittently over a NW-SE strike length of nearly 1.5 km located on the NE limb of the Távora Anticline. Skarn, calc-silicate and carbonate rock horizons range from 0.15 m to 1m thick with tungsten grades up to 1.52% W.

The São Pedro das Águias area contains the most significant tungsten mineralization of the Tabuaço area. Tungsten is found as fine to coarse disseminations of scheelite within skarn horizons. The skarns are virtually devoid of sulphides and contain very low molybdenum, which is very favourable for potential mineral processing.

Exploration History

Regional small-scale mining activity probably dates to Roman times. In the Tabuaço area, small-scale tin mining operations date back to the mid-1900s or earlier. There is also evidence of small-scale tungsten mining in the 1940s. In the 1970s, government geologists (“SFM”) discovered the “Tabuaço” tungsten occurrences along the Távora River.

In 1981 and 1982, a consortium formed by SPE and SEREM, explored the Tabuaço occurrences focusing on three mineralized zones. Exploration included geological mapping, UV lamp prospecting, grab and channel rock sampling, prospecting, heavy mineral stream sediment and soil sampling. Six diamond drill holes were drilled at São Pedro das Águias: the northernmost hole, S9, intersected the widest mineralization: 19.35 m at 1.18% WO₃ (Table 1).

Based on limited drilling, SPE-SEREM estimated a potential geologic historical resource of about 1 million tonnes grading 0.87% WO₃ (the geologic resource is not compliant with NI 43-101 standards and is presented only as an historic reference).

Table 1: Significant historic diamond drill results from the São Pedro das Águias Zone: drilling by the SPE-SEREM Consortium, 1981-1982.

 ¹ Results for Hole S6 were not reported

Colt Resources Inc.: Exploration Work and Results

Starting in 2008, initial surface mapping, prospecting, channel and rock sampling conducted by Colt confirmed the presence of thick scheelite-rich skarn horizons in the Tabuaço Area, locally averaging greater than 0.5% WO₃.

A detailed mapping and sampling program over the complete São Pedro das Águias Zone, including the main skarn horizon, the lower skarn horizons (lying some 20 m below the main skarn horizon), as well as its lateral SE and possible NW extensions, yielded significant results. A total of 88 grab, chip and channel rock samples were collected by Colt: average results are presented in Table 2.

Table 2: Results from rock sampling by Colt Resources Inc., 2008 – 2009: Tabuaço project. Zone locations as indicated in Figure 2.

A total of 19 rock samples from the Quinta das Herédias area main skarn horizon show a weighted average of 0.241% WO₃. More significant average tungsten grades were obtained from the São Pedro das Águias main skarn horizon where 23 channel samples taken across the width of the horizon, but over a total outcrop extension of 260 m, produced a total weighted average grade of 0.673% WO₃. This includes at least 6 channel samples with grades greater than 1% WO₃: e.g. 1.680% WO₃ over 3.5 m, 1.645% WO₃ over 1.7 m, 1.435% WO₃ over 1.2 m. This also includes 6 samples, collected over a continuous width of 23.3 m, which averaged 0.454% WO₃.

The Aveleira SE and Aveleira NW zones, located 450 m north and 750 m NE of the São Pedro das Águias area respectively, are zones of skarn outcrops that may represent along strike continuations of the skarn stratigraphy at São Pedro das Águias (Figure 2). Outcrop exposure is poor due to deep weathering and thick soil cover. At least two clusters of skarn outcrops were located and sampled. No overall widths of mineralized skarn horizons were determined. Limited chip and grab samples returned encouraging average results of 1.142% and 0.566% WO₃, respectively (Table 2). Of 9 samples collected, 8 samples returned values greater than or equal to 0.3% WO₃.

The Quintã-Távora zone lies to the north of the Aveleira NW zone and may represent a continuation of that mineralization to the north. Once again, exposure is poor, outcrops are scarce and the true width of skarn beds could not be determined. At least three separate zones of skarn were sampled. Average results from these zones are as follows: Quintã south slope, 0.368% WO₃; Quintã east slope, 0.295% WO₃; Távora river slope, 0.207% WO₃ (Table 2). Best grades include 0.728% WO₃ over 1.2 m; 0.435% WO₃ over 1.05 m; 0.395% WO₃ over 1.5 m; and, 0.343% WO₃ over 3.7 m.

In the first half of 2010, Colt drilled nine holes, for a total of 815.45 m, at São Pedro das Águias. Highlights are indicated below; drill results are presented in Table 3 (Colt press releases dated February 3 and June 14, 2010):

• Hole DHT-09: main skarn horizon, 21.60 m @ 0.54% WO₃ from 93.60 - 115.20 m;
  includes 2.40 m @ 1.11% WO₃ from 93.60 - 96.00 m; and,
  includes 5.00 m @ 0.88% WO₃ from 99.00 - 104.00 m.
  (Note: Hole DHT-09 was drilled at 45 degrees inclination: drill interval of 21.60 m is not true width of the main skarn horizon.)
• Hole DHT-01B: main skarn horizon, 18.80 m grading 0.73% WO₃ from 19.15 - 37.95 m; 
• Hole DHT-02: main skarn horizon, 13.60 m grading 0.93% WO₃ from 52.60 - 66.20 m; 
• Hole DHT-08: main skarn horizon, 12.00 m @ 0.60% WO₃ from 42.40 - 54.40 m; 
  includes 5.35 m @ 1.09% WO₃ from 42.40 - 47.75 m.
• Hole DHT-06: main skarn horizon, 5.18 m @ 0.34% WO₃ from 12.64 - 17.82 m.
• Hole DHT-05: main skarn horizon, 9.70 m @ 0.38% WO₃ from 16.95 - 26.65 m; 
  includes 2.50 m @ 1.25% WO₃ from 16.95 - 19.45 m.

Table 3: Tabuaço Tungsten project: WO₃% drill results.

*downhole interval

Figure 3: Tabuaço tungsten project: Drill cross-section, holes DHT-08 and DHT-09.

In early September 2010, Colt contracted the services of a metallurgical engineer to conduct a scoping level metallurgical test program for the recovery of tungsten from samples of the Tabuaço tungsten project. Colt collected and shipped a mini-bulk sample consisting of mineralized skarn from drill hole core intervals as well as from outcrop. Results of preliminary metallurgical testing of skarn mineralization from São Pedro das Águias are expected in the first quarter of 2011 (Colt press release dated September 2, 2010).

Metallurgical and structural elements favourable to potential mining at São Pedro das Águias include the following:

• Relatively high tungsten grades in the order of 0.5% WO₃ and higher,
• Mineralization consists of fine to coarse disseminations of scheelite (CaWO₄),
• Mineralized skarn horizons are virtually devoid of sulphides, and
• Skarn horizons are relatively thick, 5 to 20 m, and gently dipping, 5º to 25º.

In late 2010, Colt commenced a definition drilling program at São Pedro das Águias consisting of 15 diamond drill holes, a total of 1530 m. An initial resource estimate is planned immediately following completion of the drill program (Colt press release dated November 29, 2010).

Summary and Exploration Potential

Geologic work carried out to date at the Tabuaço area of the Armamar-Meda concession has identified scheelite mineralized skarn horizons along the western slope of the river Távora that display potential to host a significant mining operation. These mineralized skarn horizons occur as locally well-exposed outcrops, discontinuous outcrop clusters, and float extending for a total strike length of around 1.7 km from the Quinta das Herédias zone in the SE to the Quintã-Távora slope area in the NW (Figure 2).

At least one main horizon and possibly two lower horizons have been noted. Where well-exposed, the main skarn horizon is mostly flat lying to gently dipping, 5º to 25º, and ranges in width from 5 m to 20 m. The extent of these horizons remains open along strike beyond the Quintã-Távora Zone to the northwest and at depth.

The main skarn horizon in the São Pedro das Águias area exhibits the best exposure, largest width, greatest strike continuity, and highest tungsten grades in the Tabuaço area. Outcrop sampling by Colt indicates the main horizon has an average surface grade of 0.673% WO₃. Several outcrop channel samples show grades greater than 1% WO₃. Historic shallow drilling of the main horizon produced drill results grading as high as 1.180% WO₃ over an interval of 19.35 m.

Due to soil cover, extensions of the São Pedro das Águias main horizon up to the Quintã-Távora Zone, a strike length of nearly 1 km, as well as recently discovered skarns zones located some 50 to 60 m below the São Pedro das Águias main horizon, remain poorly explored and have never been drill tested. These zones greatly add to the potential of the area.

In 1981 and 1982, following drilling on the São Pedro das Águias main horizon, SPE-SEREM estimated a potential geologic resource* of about 1 million tonnes with an average grade of 0.87% WO₃ (Note: geologic resource is not compliant with NI 43-101 standards). This estimation was very preliminary being based on results from a few shallow drill holes and channel sampling. Grade estimation used blocks grading between 0.63 and 1.06% WO3. The areal extent of this historical resource estimation was less than 300 m by 180 m: this covers less than half of the potential area of the main skarn horizon at São Pedro das Águias.

*Note: The historical resource is based on very limited drilling. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves. The company is not treating the historical estimate as current mineral resources or mineral reserves. The historical estimate should not be relied upon. 

Conclusions and Recommendations: Summarized from NI 43-101 report

Conclusions

“The earlier mining history and the more recent Colt exploration programs have identified several tungsten ± tin mineralized areas on the Armamar Meda concession. It is apparent that the geological settings are favourable for the discovery of economic deposits. The extent of the known mineralized zones has yet to be fully tested or delineated.” (Gruenwald, 2010)

“Colt’s 2008 to 2010 exploration programs have successfully met their objective of confirming the presence of and identifying high-grade tungsten potential at Tabuaço. The full extent and potential of the mineralized areas have yet to be realized.” (Gruenwald, 2010)

Recommendations

“The results of exploration to date justify continued exploration on the Armamar Meda concession. The continued delineation of the Tabuaço tungsten mineralization is a high priority. Given the nature of skarn deposits it will be necessary to conduct closely spaced diamond drilling (~25 m) in the SPA [São Pedro das Águias] or other prospective tungsten skarns. This work will be a requirement for the determination of a mineral resource.” (Gruenwald, 2010)

Tabuaço Tungsten Project - Colt drill result highlights to date 1

1. See press releases dated June 14, 2010, March 24, 2011, May 9, 2011, May 24, 2011, August 4, 2011, October 3, 2011 and October 11, 2011 for drill result announcements
2. Downhole interval
3. True Width was determined assuming the mineralization has an average dip of -20o and strike of 315o

Tabuaço Tungsten Project - Initial Resource Estimate 1 – Highlights

• Prepared by SRK (UK) and SRK(Exploration Services) with inputs from SRK (Denver);
• Classification of the Mineral Resource is based on quality control data, geological continuity and borehole spacing. * * The estimate is considered to have reasonable prospects for eventual economic extraction, as it is constrained by a cut-off grade derived from reasonable underground mining and processing costs;
• A cut off grade of 0.3% WO3 has been used to constrain the Mineral Resource estimate;
• This cut-off grade is based on a WO3 price of US$300/mtu2, an underground mining cost of US$30/t and a processing cost of US$22/t, as supplied by SRK Denver, and agreed by Colt Resources;
• The deposit remains open in all directions.

References

Gruenwald, W., 2010, TECHNICAL REPORT (NI 43-101) ON THE ARMAMAR MEDA CONCESSION, Northern Portugal.