Given the scope and timetable of the company’s work towards advancing the project, Colt Resources should have completed sufficient work for the Portuguese mining and environmental authorities to grant a definitive mining license for the Boa Fé gold project by the first quarter of 2014. Management intends to continue to rapidly advance the Boa Fé project and achieve gold production in 2015.
Management is also fast tracking the development of the Tabuaço tungsten project. Having been granted a Trial Mining License (aka Experimental Mining License) in February, the PEA on Tabuaço tungsten project is expected to be completed during the second quarter. Thereafter, management plans to conduct a pilot mill test on approximately 20 metric tons of scheelite ore from the São Pedro das Águias deposit. A feasibility study and an updated NI 43-101-compliant resource estimate are targeted for completion during the fourth quarter. Management expects to receive full mine permitting in 2015, complete mine construction in 2016 and achieve initial production in 2017.
Management is seeking a partner for the development of Tabuaço, which we would expect to be structured in a manner similar to the Santo António joint venture with the partner providing capital and further developing the project in order to earn a substantial stake in the project. In this manner, Colt Resources would be able to focus its capital resources on the development of the Boa Fé gold project in southern Portugal.
We reaffirm our Outperform rating. Our price target is $1.95, which is based on an estimated share value of attributable resources indicated by Colt’s NI 43-101-compliant mineral resource estimates and utilizes the current prices of gold and tungsten. The information provided by financial model of Option D in the PEA aided in fine tuning the timing and the amounts of both cash flow and capital expenditures expected during the life of the mine. We consider our valuation model to be conservative in that it also includes prospective developmental costs at Boa Fé and Tabuaço.