By Steven Ralston, CFA

There have been several significant developments and announcements concerning Colt Resources (TSXV:GTP.V) in the last few weeks. Colt: 1) released drill results from an area near Tabuaço which further indicate that the potential for mineralization extends beyond the area previously identified; 2) announced additional drilling results from Boa Fé; 3) entered into a JV to develop the Penedono concession in order to better focus on the and Boa Fé and Tabuaço projects; and 4) accelerated its drilling campaigns, having contracted for five additional drill rigs (three at Boa Fé and two at Tabuaço).

Last week, Colt Resources announced the assay results for seven drill-holes from Tabuaço and one from the Tabuaço-Aveleira gap. Significant intersections include 0.93% WO3 over 13.34 meters (drill hole DHT-66) and 1.50% WO3 over 10.01 meters (DHT-57).  Based on the infill drilling results, management is more confident on the continuity of São Pedro das Águias deposit.

In addition, the results from the Tabuaço-Aveleira gap and from previously announced results from the northern section of Aveleira (which is located about 700 meters north of Tabuaço) indicate that additional tungsten deposits in scheelite skarns to the north have the potential to expand the size of the overall resources in and around the Tabuaço project area. Moreover, to accelerate the drilling program, Colt Resources contracted with Portuguese drilling contractor Geocontrole for two additional drilling rigs, both of which should be onsite now.

Last month on August 27th, 2012, Colt released results for 21 drill-holes at Boa Fé. Of these, 19 were from the Casas Novas deposit, one from Chaminé and one from Covas. High-grade gold mineralization was again intersected at Chaminé with 4.14 meters grading 5.04 g/t Au, which was part of 15.16 meters grading 2.78 g/t (BFCH-12-036). At Casas Novas, bulk gold mineralization was encountered in 14 of the 19 drill holes, with an additional hole intersecting high-grade gold mineralization, specifically hole BFCN-12-014 assaying 13.06 g/t over 3.47 meters and 8.14 g/t over 2.00 meters. Qualitatively, drilling results continue to confirm the company’s model in which high-grade gold primarily occurs in areas of shear intersections and deformations that have acted as fluid conduits for the mineralization. The exploration has expanded to the Banhos deposit where there is a historical JORC-compliant estimated inferred resource. Three additional drill rigs contracted from Spektra Jeotek SA are being brought on site, and Colt is moving towards the preparation of a Preliminary Economic Analysis.

As Colt’s management continues to focus on the development of Boa Fé and Tabuaço, the company has entered into a joint venture with Contécnica to further develop the Penedono gold project. Contécnica, a privately-held Brazilian engineering consulting firm, is able to earn a 51% stake in the Penedono concession after investing at least €2.0 million in the project over three years. In addition, Contécnica must pay €50,000 to Colt Resources when the JV obtains an Experimental Mining License. The capital commitment from Contécnica enables Colt to focus its capital resources on Boa Fé and Tabuaço while retaining a 49% stake in the Penedono concession.

We reaffirm our Outperform rating and price target of $1.35, which is based on an estimated share value of attributable resources.

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