Judging by the share price, investors reckon that Kootenay Gold has a bright future ahead. Since last October the shares have risen steadily from just below C50 cents. But in the last week they have suddenly taken off, and risen in an almost straight line from C90 cents to C1.27. A quick look at recent news items shows that Dick Whittington, a mining graduate from the Royal School of Mines, joined the company as a director towards the end of March. That appointment underlines that Kootenay is now starting to build its team for the development of the Promontorio silver project in Mexico. Dick took Farallon Mining right through from discovery to production in four years as chief executive, and only left the company when it was taken over by Nyrstar. So he comes to Kootenay still in his prime.
The latest news from Promontorio will also have done nothing but good for the share price either, as the company has disclosed some excellent grades from a further 10 holes in its ongoing 10,000 metre drill programme there. One hole intersected 237 grams per tonne silver equivalent over 51 metres, including 562.2 grams per tonne over 18 metres. The other metals, as so often, were lead and zinc. The prices used to calculate the silver equivalents were more than conservative, though, with silver taken at US$15 per ounce, compared with the current stellar U$40 silver price. The lead and zinc prices used were pretty advantageous too, at US97 cents per pound for lead, compared with the current US$1.25 per pound, and US91 cents per pound for zinc, compared with the current US$1.08 per pound. Just as important, the drill holes encountered consistent, widespread silver mineralisation and multiple high-grade silver intercepts in the newly extended Northeast and Southwest Zones at Promontorio, which sit outside of the current 43-101 pit resource.
Kootenay chief executive Jim McDonald focused on this theme when he said: “we are consistently hitting high and medium grade silver mineralization to the north east of our pit resource, which has expanded the North East Zone to over 300 metres, double the strike length of our resource. Moreover, widely spaced step out holes have encountered multiple, high grade silver intercepts confirming the exciting upside potential of the entire 1.0 kilometre long mineralized corridor at Promontorio". This RC drilling programme is nearing completion, but a diamond drill has now been brought on site to test the deposit at depth as it still seems to be open. At the same time a programme of closely spaced infill drilling is being planned, to tie in all the various zones of silver mineralisation with a view to updating the resource estimate.
Promontorio is very important to Kootenay Gold, but it is not the be all and end all, as the company is also developing projects in Mexico and in British Columbia to the point where a joint venture partner can be brought in to share the risk. Back in November, for instance, Kootenay acquired 100 per cent ownership of the Silver Fox silver-copper property in the south east of British Columbia. Silver Fox lies on trend with the Western Montana copper sulphide belt, which currently contains the largest silver resource in the USA. The geological characteristics of the two are very similar, as both consist of Revett type silver-copper sediment hosted deposits. If the major discoveries in northwest Montana, such as Montanore and Rock Creek, are anything to go by Silver Fox could prove to be an exciting new exploration discovery in an underexplored area with potential to deliver very large silver-copper deposits. In due course Jim should not find it too difficult to bring in a partner, but until he signs on the dotted line Silver Fox remains wholly owned, and it can only add value.
Virtually at the same time as it announced the acquisition of Silver Fox, Kootenay also announced that a joint venture had been agreed with Northern Vertex, under the terms of which Northern Vertex can earn a 60 per cent interest in the Copley gold property on the Nechako Plateau in central British Columbia. Before this right can be exercised it has to hand over shares to Kootenay and carry out C$2.2 million worth of exploration work within four years. And one more joint venture was announced before Christmas - with Fjordland on seven properties in British Columbia. Kootenay then finished off the year by raising C$6 million from a non-brokered private placement.
But hardly had the team managed to draw breath over the holiday than they were back with a succession of announcements about further joint ventures in both Mexico and British Columbia. It was also interesting to see how quickly the partners got stuck into drilling at Copley and confirmed a number of large gold-bearing structures. The results were said to indicate that the geological characteristics at Copley are very similar to those at Richfield’s Blackwater discovery 40 kilometres to the south. This has to be seen as very encouraging, particularly as Richfield has just been bid for by New Gold, with Blackwater as the main attraction.
In spite of all this, Jim McDonald leaves no doubt that Promontorio is the flagship project. He would now like to follow up on the step out results and the extended one kilometre mineralised corridor to produce two upgraded resource estimates this year. To that end he is seeking more drill rigs at the moment. And he makes no bones about the fact that his aim is to get up to 100 million ounces of silver. A scoping study on Promontorio should follow in 2012, and if the silver price is performing at that time as Minews expects, the study could be a doddle. Jim is going to be in London before Easter for the Master Investor Show, so there will be an opportunity for UK-based investors to learn more about the fascinating portfolio of projects he has built for Kootenay. He remains convinced, however, that it is the excellent drilling results from Promontorio which is pushing the share price along.
Source: Charles Wyatt, minesite.com
