Property Location and Description

The Santa Margarida do Sado concession (“Santa Margarida” or the “Concession”) consists of 360 km² of prospective ground located in southern Portugal some 110 km by highway SSE of Lisbon. The concession extends from near the Atlantic coast in a SE direction for approximately 45 km. Situated near the center of the concession is the town of Grandola (Figure 1).

The area has a network of paved main highways from Lisbon to the Algarve and other smaller gravelled roads criss-crossing the property. Access is excellent in all parts of the concession. The town of Grandola is the main supply center with a population of 15,000 inhabitants catering to well developed local agricultural, cork, and pine tree harvesting industries.

Experienced mining and exploration personnel are available in the mining communities of Aljustrel and Neves Corvo located SE of the c. Electrical power is accessible from the national grid high tension lines that cross the property.

Fig. 1: Location map of southern concessions: the Santa Margarida do Sado concession is located some 110 km by highway SSE of Lisbon. Note proximity of the Montemor project and Montermor Regional concession to Santa Margarida do Sado concession.

Ownership

Colt Resources Inc. (“Colt” or the “Company”) has a 100% interest in the Santa Margarida do Sado concession. On September 17, 2009 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 Santa Margarida do Sado concession.

The initial term of the exploration license agreement is for two years ending September 17, 2011 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.

In order to maintain the contract in good standing, Colt must carry out specified minimal exploration commitments, incur specified minimal annual exploration expenditures, and must also pay an annual license fee to the Government of Portugal.

Minimal annual exploration expenditures are as follows: for the first two years of the initial term, 1st year 100,000€, 2nd year 300,000€; subsequent 1 year extensions, 500,000€. The DGEG, at its discretion, retains the right to 10% of net profit, with an increasing percentage based on total profit, or 3% Net Smelter Return (NSR). In addition, the DGEG retains the right to a discovery premium of 500,000€ to be paid in stages upon attribution of mining rights to the Company in relation with the Santa Margarida do Sado concession.

Geological Setting

The Iberian Pyrite Belt (“IPB”) is a 60 km wide by 250 km long mineralized belt that extends from the SW coast of Portugal near Setubal to the Guadalquivir River near Seville, Spain (Figure 2). This world class massive sulphide environment has been explored for many years and a number of important mines have been discovered and exploited for copper, lead, zinc, ±silver and ±gold. The IPB is host to 5 supergiant volcanogenic massive sulphide (VMS) deposits greater than 150 million tonnes (Figure 2).

Two of these supergiant VMS deposits occur in Portugal, namely Neves Corvo and Aljustrel, and are located 75 and 35 km SE, respectively, of Santa Margarida (Figure 2). Both mines are in operation and each one is comprised of at least 5 massive sulphide lenses totaling nearly 200 million tonnes. Neves Corvo was discovered in 1977, through drill testing of a major gravity anomaly. At Aljustrel, there is evidence of copper mining in its upper enrichment zone dating back to the “Romans”; other sulphide lenses were discovered between 1956 and 1970, based on testing gravity anomalies.

Three known VMS deposits are located in the immediate area of Santa Margarida: Lousal, Caveira and Lagoa Salgada (Figure 3). The Lousal mine (approximately 8 km to the south) was active until 1988 and produced a reported historical resource of around 6 million tonnes averaging 0.7% copper, 0.8% lead, 1.4% zinc, 1 g/t gold and 20 g/t silver. Caveira (approximately 2 km to the south) is a smaller deposit where surface gossan cap was exploited in Roman times for gold and silver; while its deep-seated massive sulphides were exploited during the 20th century. Approximately 6 km to the northeast of Santa Margarida, is the Lagoa Salgada deposit, discovered in 1992 by the Portuguese Geological Survey IGM, based on drill testing a gravity anomaly. This deposit has a reported drill Inferred Mineral Resource in the order of 2 million tonnes averaging 0.36% copper, 4.44% lead, 5.03% zinc, 1.19 g/t gold and 74 g/t silver.

Over virtually all the Santa Margarida do Sado concession, the prospective IPB basement rocks are concealed under Tertiary (and Quaternary) cover sediments of the Sado Basin (Figure 2). These range in thickness from a few metres to well in excess of 300 m. It is interesting to note that the last two deposits to be discovered in the IPB, Lagoa Salgada in Portugal and Las Cruces in Spain, both discovered in the 1990’s, lie concealed beneath thick Tertiary cover. On the Portuguese side of the IPB, areas overlain by thick cover sediments of the Sado Basin, as at Santa Margarida, represent areas of high potential and remain one of the “last frontiers” for the discovery of new massive sulphide deposits in Portugal.

Fig. 2: Detail of the Iberian Pyrite Belt of southern Portugal showing location of supergiant volcanogenic massive sulphide deposits relative to the Santa Margarida do Sado concession.

Exploration History

Exploration in the vicinity of Santa Margarida was first carried out in the late 1980s by the exploration department of the Portuguese government, the IGM, now called the LNEG. Later, in the early 1990s, exploration was carried out by Rio Tinto and more recently by Redcorp Ventures Ltd.

As a result of previous exploration campaigns, there is now considerable accumulated exploration data that can be acquired from the government LNEG at a low cost. There is aeromagnetic coverage over virtually all the concession area, as a result of a survey run by Rio Tinto in 1992, which clearly indicates where the prospective volcanic belts run underneath the cover sediments. Some historical drill holes also give insight with respect to the concealed basement geology.

Figure 3: Map showing outline of the Santa Margarida do Sado concession (Colt Resources # 12870) and adjacent concessions: status as of June 15, 2010. Also shown are surrounding known VMS deposits.

A significant proportion of the concession was covered with ground gravity surveys: data is available from a multitude of different gravimetric surveys, different operators, different grids, and different station densities. There are two areas within the concession that have not been covered by gravimetric surveys. Previous work from individual surveys has shown there are known gravity anomalies on the concession. However, these anomalies have never been drilled or have not been properly drill tested. 

Exploration Potential

The Iberian Pyrite Belt (IPB) displays one the world’s best geological environments with potential for world-class volcanogenic massive sulphide deposits:

“Total original sulphides in the deposits [of the IPB] is estimated at more than 1.7 billion tons; ore metal tonnages (ore mined plus resources and reserves) exceed: 20 Mt Cu, 34 Mt Zn, 12 Mt Pb, 44000 t Ag and 850 t Au…. the IPB is arguably the largest and the most important metallogenic province for this type of deposit in the world.” (Carvalho, 1999)

The IPB is host to 5 of 11 supergiant volcanogenic massive sulphide (VMS) deposits: deposits with greater than 150 million tonnes of ore. The IPB is host to the largest, Rio Tinto, and to the richest, Neves Corvo, of the supergiant deposits. Two of these supergiant VMS deposits occur in Portugal, namely Neves Corvo and Aljustrel, which are located 75 and 35 km SE, respectively, of the Santa Margarida do Sado concession (Figure 2):

“Among the largest [of the supergiant deposits] is Rio Tinto, Spain’s portion of the Iberian Pyrite Belt (IPB), with contained ore in excess of 1.535 Bt. The richest supergiant produced to date is Neves Corvo on the Portuguese side of the IPB, with ore in excess of 270 Mt, with 8.8 Mt of contained metal. At the average metal prices to date for 2006 (Cu=$1.75/lb, Zn=$1.25/lb, Ag=$6.00/oz), this orebody was originally worth in the order of 26 billion dollars (US).” (Galley et al., 2007)

Exploration Work

Colt commissioned a NI 43-101 compliant technical report on the Santa Margarida do Sado concession. Part of the mandate of the report is compilation, levelling, and re-interpretation of available historical gravimetric data coverage over the concession to confirm or add to known gravimetric anomalies. Completion of the technical report is expected in early 2011.

Following reception of the technical report, Colt expects to carry out additional ground geophysical surveys to select and prioritize gravity anomalies. Priority targets will be drilled.

References

Carvalho, D., 1999, Exploration Strategies in the Iberian Pyrite Belt: A Young, Mature, or Senile Mineral Exploration Province? Mining Development Strategies With a Focus on the Case of the Iberian Pyrite Belt. Technical Journey 25th September 1998 Lisbon, Portugal

Galley, A.G., Hannington, M.D., and Jonasson, I.R., 2007, Volcanogenic massive sulphide deposits, in Goodfellow, W.D., ed., Mineral Deposits of Canada: A Synthesis of Major Deposit-Types, District Metallogeny, the Evolution of Geological Provinces, and Exploration Methods: Geological Association of Canada, Mineral Deposits Division, Special Publication No. 5, p. 141-161.