VANCOUVER — It’s been a couple of years since Zonte Metals (TSXV: ZON) first spotted — and applied for — fractional claims over joint-venture partners’ AngloGold Ashanti (NYSE: AU) and B2Gold’s (TSX: BTO; NYSE-MKT: BTG) multimillion-ounce gold Gramalote gold deposit, 80 km northwest of Medellin, Colombia, but the country’s secretary of mines continues to deny the Nova Scotia-based junior rights to the land title.
The department reaffirmed its decision to Zonte in late January on the grounds that the area in dispute — which measures 0.3 sq. km — is too small to become a mine, and the application would interfere with the joint-venture partners’ potential mining operation.
According to Terry Christopher, president and CEO of Zonte, the company’s application has not been processed with respect to the country’s mining code, stating that “there is no minimum size” on land applications, and points to a recently issued title in Colombia that covered less than 0.001 sq. km.
Christopher tells The Northern Miner during a phone interview that the company intends to advance the dispute through Colombia’s court system.
“We’re basically at this point in the process now where we can sit down with the secretary of mines and explain our case to them, and vice versa,” he says. “Once we get past this meeting we can finally go to a special court … and according to our legal counsel, the special court is the level where we need to be to have the power to request the application to be processed in respect to the mining code.”
Zonte first sieved through the country’s land titles in 2013, when it identified a number of narrow gaps between title areas — otherwise known as “fractional” claims — sitting across Gramalote, and submitted an application for title.
The gaps measure 21 metres wide and 600 metres long, 13 metres wide and 400 metres long, and 58 metres wide and over 500 metres long.
“I don’t know why they’re there, but it looks like someone tried to match it point by point and missed by 20 or 30 metres,” he says. “There are a bunch of these that we’ve identified, and this one was the first in line.”
Christopher says that Zonte wasn’t the first company to notice the fractional claims — to his knowledge, an individual made a similar application over the ground in 2006, and a subsidiary of AngloGold Ashanti repeated the same process in 2009 — but neither attempts to close the ground were successful.
“The way it works in Colombia is that if you miss an application deadline — no matter if you’re right or wrong — the application dies … so the onus is on you to keep your eye on the ball,” he says.
After rejections from the department since 2013, Zonte armed itself with a legal counsel helmed by a former director at Colombia’s secretary of mines, and “without that particular guidance, we would’ve just walked away,” Christopher adds.
Although Christopher couldn’t provide any timelines on when the company can expect a final resolution, he says that he’s “impressed with the speed at which things happen in court.
“We made an application in mid-August last year to get the secretary of mines to issue us a formal answer, and they were dragging their heels and missing all the dates … so when we finally went to court about it, the judge was strict to set specific dates for an answer,” he says.
Gramalote is an intrusive-hosted and structurally controlled gold deposit with 2.69 million oz. gold within 132.7 million measured and indicated tonnes grading 0.63 gram gold per tonne, and 3.36 million oz. gold within 239.7 million inferred tonnes grading 0.44 gram gold.
While Zonte made its initial claim applications, B2Gold and Ashanti evaluated the deposit for development and released a preliminary economic study in March 2014, which envisaged a 14-year mine life, producing 317,500 oz. gold per year at cash costs of US$664 per oz.
The US$1.2-billion mine would have a US$398-million after-tax net present value (using a 5% discount rate and US$1,351 per oz. gold) and an 11.5% internal rate of return.
But in the face of deteriorating gold prices, Gramalote’s chance of becoming one of the first modern commercial-scale gold mines in Colombia took a hit when B2Gold said it would not move forward on a feasibility study until market conditions improve.
For Zonte, Christopher says the the company’s strategy is to “get through the application process according to the rules outlined in the mining code.
“We have prepaid our law firm, which will take us all the way through special court, so we’ll see what happens after that,” he says.
Zonte Metals has traded within a 52-week range of 2¢ to 15¢, and closed at 7¢ at press time. The company has 26.2 million shares outstanding for a $2-million market capitalization.