Coltstar Ventures Inc. wishes to update its shareholders on our activities during the last year as well as present management’s views on Coltstar’s assets and our plans to develop them going forward.
Before delving into the operating details of the company, it is important to understand management’s view of where a small junior like Coltstar sits in the global resources marketplace today and how we plan to prosper.
In brief, it is our view that over the last 10 to 15 years the global market has seen both a dramatic increase in competition for resource projects and a commensurate decrease in the number of attractive advanced or “brownfield” opportunities that became available following the fall of the Soviet Union. The emergence of additional competition in the form of financial players (hedge funds et al) as well as sovereign mining companies from the BRIC and other nations is well-established. Additionally, increased commodity demand due to population and wealth increases around the globe have combined with the increased competition to make this business both more challenging and more attractive and profitable than ever before. The key remains quality assets – either those that are well-known and therefore scarce, or early-stage and less well- known.
The management of Coltstar has significant experience in the global junior resource industry and has a track record of identifying, acquiring and developing very attractive projects.
Given the current context in which the mineral industry operates, and as a junior company with limited capital, we need to “pick our spots” and work strategically to secure quality assets that offer significant potential for increasing shareholder wealth and value. This leads to a focus on three strategies:
1. Exploration Ground
We feel strongly that we are now coming into an era where there will be a proportionally greater emphasis placed on exploration. This is due to the factors mentioned above and the obvious natural depletion of existing resources. Given these realities, we feel that Canada is the number one place on Earth for a junior to be looking for quality exploration ground. There are multiple factors, which
make Canada a natural choice for Coltstar’s exploration focus, including natural geologic endowment, attractive entry costs to acquire and hold ground, certain and predictable regulatory environments, culture, logistics, government datasets, and world class technical and support community.
We will continue to build on the impressive track record of management in identifying and acquiring opportunities in the most prospective geological terrains. In these areas, some degree of the initial risk has been absorbed by prior exploration and we can opportunistically benefit from their previous work to allow us to pick up and continue with the development of the asset.
Coltstar’s management team is presented with investment opportunities on a continual basis, and from time to time, and where appropriate, we will participate from an investment standpoint in what we feel represents a spectacular risk-reward/cost ratio for the company.
These three strategies have been employed to date and will be discussed in detail below. However, it is worth noting that, for the foreseeable future, the vast majority of our corporate focus will be dedicated to Canada.
We feel strongly that we have to carefully guard the capital structure of the company as our industry is known for the significant capital that must be raised and deployed in the development and ultimate operation of assets. We are exceptionally well positioned to be opportunistic for the benefit of the company in outlining high value exploration opportunities; seeking out ever scarcer Brownfield opportunities; and making strategic investments that we feel have exceptional upside potential. We will need to finance by way of selling new equity but we will do so with a clear goal that capital raised will have a significant multiplier effect on value creation.
Mackenzie Mountains Iron Copper Project (Mackenzie Project)
The projects known as BigIron and BigCopper have been renamed the Mackenzie Mountains Iron Copper Project (Mackenzie Project). We felt that this name was suitable and appropriate given the geographical context in which we were operating, and the significance of this project to Coltstar, and the Northwest Territories. The Mackenzie Project comprises 85 mineral claims and one prospecting permit (920 km2) covering a 170 km-long belt underlain by the prospective Rapitan and Coates Lake Groups. The Mackenzie Project was staked in two (2) phases over the mid to late summer of 2010.
The project is adjacent to the Snake River (Crest) iron deposit, which is owned by Chevron Canada. Crest is widely accepted to be the 2nd largest, undeveloped iron ore deposit in the world. The Crest deposit has a historical, non 43-101 compliant, drill-indicated resource estimate of 5.6 billion tons @ 47.2% Fe and a regional resource estimated at 18.6 billion tons.
We have great confidence that this mineralization continues onto the Mackenzie Project for many tens of kilometers. We believe this to be the case as a result of rock and silt sampling that Coltstar has conducted near our border with Crest, and regional reconnaissance of the Mackenzie Project area, where iron
mineralization has been reported during staking over many kilometers. In addition, large scale regional Government of Canada silt sampling conducted on our project area (done prior to Coltstar’s acquisitions) has identified numerous iron-in-silt anomalies. We have identified large areas of significant river iron staining apparent downstream from the mapped Rapitan Group. Further, there are several Crest drill holes that carry significant iron intercepts on or near the border with the Mackenzie Project.
There were 7 test holes drilled on the NWT side of Chevron’s Crest property. However, Crest Exploration’s assessment report only included raw data for four of these drill holes (N1, N3, N5 and N7) which are located within one kilometer of our northern boundary. Review of the raw data, included in the assessment report, revealed the following results:
During the 2010 staking program, 5 grab rock samples were collected near our boundary with the Crest. These very significant results are tabulated below:
A total of 32 silt samples were collected to follow-up on regional National Geochemical Reconnaissance (NGR) sampling and increase sample density on the Mackenzie Project. This sampling identified drainages with anomalous iron geochemistry, and further defined existing anomalies to identify areas prospective for iron formation. Samples were handled in compliance with NGR standard. Two clusters of anomalous iron-in- silt values (one is 40 km long the other is 20 kilometers long) were outlined and are coincident with the anomalies defined by the regional Geological Survey of Canada silt sampling program. They are also coincident with mapped exposures of the Rapitan Group.
We were further encouraged to find that the Coates Lake formation was trending in close parallel proximity to the Rapitan Formation. The Coates Lake formation has significant copper analogues already existing in this very formation to the south of where we now hold ground. This group of rocks is stratigraphically beneath the Rapitan Group and hosts many copper showings in the area. The Coates Lake Copper Deposit has a 43- 101 compliant resources of 33.6 million tonnes grading 3.92% copper and 9 grams per tonne silver. Drilling at the Keele River deposit (located 90 km southwest of the Mackenzie Property) intersected zones up to 12.5 m thick grading 2.7% copper. These deposits, owned by Western Copper, are similar in geology to those of the famously rich Zambian Copper Belt in Africa.
The close parallel relationship of the Rapitan and the Coates Lake Formations offers a unique logistical opportunity to explore both at once world class iron and copper terrain.
It is interesting to spend a moment discussing ‘why us’? Why are we so fortunate to have acquired this ground? We believe the answer lies in a confluence of factors that we have benefited from. The list begins with the discovery of the Crest deposit by Chevron in the early 60’s when “big oil” was working over Canada doing massive regional exploration (as mentioned above, a trend we feel is coming around again). At this time, the prize was to develop iron mines that could supply the Japanese (and later Korean) industrial complex. In short, the Australians won this race with their north west coast Pilbara assets, and Crest was soon shelved and has stayed that way until some additional desk work was done a few years ago-primarily by Hatch Consulting.
In the early to mid sixties, the geology of Coltstar’s Mackenzie Project was not mapped, and in fact, was eventually mapped by the Geological Survey of Canada in the mid-seventies. This mapping did delineate the Rapitan Group and associated iron formation. We have theorized that Chevron mothballed the project in order to concentrate on their core oil and gas projects. Furthermore, the Crest/Mackenzie Project sits within the eastern portion of the Selwyn Basin and has been historically an overlooked/under explored part of Canada, largely due to its remoteness.
Regional Assets and Infrastructure
The emergence and development of the Mackenzie Corridor as one of the pre-eminent resource regions of the world is to Coltstar’s management, a certainty. Furthermore, remoteness is a relative thing. As we look back in history we see examples of enormous resources being the invitation for infrastructure development to come along as the next layer of wealth creation and overall economic value and social development. Some of the best examples are the Labrador iron ore railroad construction and the “Roads to Resources” program of the sixties which led to the development of Inuvik. This was the first planned town north of the Arctic Circle in Canada. Part of the “Roads to Resources” program of Prime Minister John Diefenbaker, it was originally founded in 1958 after the initial construction of the Dempster Highway which linked the area to the Alaska Highway.
From an infrastructural standpoint, a number of announcements and developments both in the Northwest Territories and adjacent jurisdictions are particularly encouraging in terms of project logistics. The first of these is the Mackenzie Pipeline Project, which very recently received the approval of federal Cabinet. Development of the Mackenzie Pipeline, potentially as early as 2016, would ensure that resource projects in the Northwest Territories, including Coltstar’s Mackenzie Mountain Iron/Copper Project, would have access to an inexpensive and reliable energy source for development purposes.
While the development of the Mackenzie Pipeline will improve mineral production logistics, two other infrastructural projects will greatly enhance the transportation logistics of Coltstar’s Mackenzie Mountain Iron/Copper Project: the construction of the Alaska-Canada Rail Link (“ACRL”) and the completion of the Dempster Highway in the Northwest Territories. Due to the mutual dependence of resource development economics and railway development, Alaska, the Yukon and British Columbia have recently completed a Feasibility Study, which assesses the potential for a rail connection between these North American jurisdictions and North Asia, which is experiencing significant increases in demand for commodities, including iron ore and copper. According to the ACRL project website, the project participants are now working together to attract other strategic patners to move the development of this very important rail link forward.
Ashmont was a founding investment opportunity that we could not pass up, and based on very significant investment at this current round, our equity in Ashmont is valued at $4.5 million CDN.
In summation, we want to demonstrate to shareholders and investors what we have achieved during the last year and give guidance as to how we both view assets and try to uncover value in this global resource market. We will continue to be active, primarily in Canada. We will continue to keep value in the forefront of our minds, only issuing further equity with the express purpose and clear vision for how that equity will benefit Coltstar’s projects. Finally, we will use this Corporate Update as a “bell ringing” event to signal that we will promote the virtues and value of CTR to the best of our ability. We truly believe we have an assemblage of world class assets – their development will be transformational to Coltstar and profitable for all shareholders.
Chairman and CEO
Coltstar Ventures Inc.