Guayabales Project: High-Grade Discoveries and Drilling Expansion Fuel Collective Mining's Growth Trajectory

The Guayabales Project in Colombia, operated by Collective Mining Ltd., has emerged as a pivotal asset in the global mining sector, driven by recent high-grade sub-zone discoveries and an aggressive drilling campaign. As of June 2025, the project's progress underscores its potential to deliver a robust, multi-metal resource base with transformative economics for the company. This analysis explores how these developments position Collective Mining to capitalize on its discoveries and why investors should take notice.

The High-Grade Sub-Zone Breakthrough

The project's Apollo system has become the epicenter of exploration success, with the identification of two high-grade sub-zones (HZ1 and HZ2) and the potential for a third. HZ1, first reported in late 2024, has expanded to span 230 meters of strike length, 70 meters in thickness, and over 180 meters vertically. Recent drilling, including APC104-D1's 150.55-meter intercept at 6.16 g/t gold equivalent (AuEq) and APC104-D5's 106.35m @ 9.05 g/t AuEq, highlights its exceptional grade consistency. Meanwhile, the newly discovered HZ2, enriched in copper and silver, delivered standout results like 57.25m @ 5.64 g/t AuEq within a 114.40-meter interval. These zones remain open in multiple directions, suggesting further upside for mineralization.

The economic significance of these discoveries lies in their ability to elevate the project's overall grade profile. High-grade intervals reduce processing costs and increase revenue per tonne, a critical factor for mine feasibility. With Collective Mining targeting up to 11 high-grade sub-zones within the Apollo system's top 1,000 meters, the potential for a step-change in resource quality is clear.

Drilling Expansion and Resource Definition

Collective Mining's 70,000-meter 2025 drill program—already 87,000 meters into its campaign—is a testament to the project's priority. Nine drill rigs are active at Guayabales, with two deep-capacity rigs set to join by Q3 to test the Ramp Zone, a newly identified deep high-grade area returning intercepts like 57.65m @ 8.18 g/t AuEq. This zone's vertical depth and high grades (up to 20.21 g/t AuEq) suggest it could become a cornerstone of the project's underground mining plans.

The drilling strategy is multi-pronged:
1. Sub-zone Expansion: Testing the limits of HZ1, HZ2, and potential third zones.
2. Bulk Tonnage Definition: Filling gaps in the block model to support open-pit and underground mine planning.
3. Strategic Metals Focus: Targeting tungsten-rich zones in the upper 150 meters, where grades of 0.66% WO3Eq align with rising U.S. demand amid import restrictions expected by 2027.

The stock's performance has tracked closely with drilling updates, rising by 22% year-to-date as assay results poured in. However, it remains undervalued relative to peers, trading at a discount to its peers' average price-to-cash ratio, reflecting its early-stage status.

Economic Drivers: Beyond Gold

Guayabales' polymetallic nature is a key differentiator. While gold and silver dominate, tungsten's inclusion adds strategic value. With U.S. import restrictions looming, tungsten prices have surged to USD $14.75/lb, and the project's tungsten-rich upper zones could support an early-stage open-pit operation. This diversification reduces reliance on gold price volatility and positions Collective Mining to benefit from multiple commodity cycles.

The project's 11.9% projected internal rate of return (IRR) hinges on achieving resource metrics comparable to the nearby Marmato Mine (1.6 million ounces). A revised resource estimate expected by Q4 2025 will be a critical catalyst, as it could redefine the project's scale and economic viability.

Risks and Mitigation

Despite its promise, Guayabales faces hurdles:
- Assay Backlog: Results from 13 drill holes remain pending, which could impact grade assumptions if outcomes disappoint.
- Commodity Volatility: Gold prices below $1,800/oz or a tungsten price collapse could strain economics.
- Permitting Risks: While Colombia's regulatory environment is stable, community engagement remains vital to avoid delays.

Collective Mining mitigates these risks through $78 million in cash reserves, a 44.5% insider ownership stake, and CEO Paul Cowley's track record of transforming projects into mines (e.g., Mexico's La Colorada). The fast-tracked $9.8 million acquisition of full project ownership also reduces dilution concerns.

Investment Case: A Compelling Near-Term Opportunity

Guayabales is a project with high growth leverage to drilling success. Key near-term catalysts include:
- Q4 2025 Resource Estimate: Potential to exceed 1.5 million ounces, triggering a re-rating.
- Feasibility Study: Expected in 2026 to outline a 3–5-year development timeline.
- Tungsten's Strategic Play: Rising prices and geopolitical tailwinds could boost valuations.

Analysts project a CAD 3.50 price target (up 20% from current levels), assuming successful resource upgrades and feasibility results. For investors seeking exposure to a high-grade, multi-metal project with a clear path to production, Collective Mining presents an attractive entry point.

Conclusion

The Guayabales Project's high-grade sub-zones and aggressive drilling campaign have solidified its status as a top-tier exploration story. With a robust financial base, strategic tungsten exposure, and management's execution track record, the project is primed to deliver a transformative resource upgrade. For investors willing to look past near-term assay uncertainty, Guayabales offers a compelling risk-reward profile in a sector hungry for new, high-margin discoveries.

Investment Recommendation: Buy Collective Mining Ltd. (CMG) with a 12–18 month horizon, targeting a CAD 3.50 price objective. Monitor Q4 2025 resource estimates and tungsten price trends for confirmation.