Wednesday, May 9, 2012

Treasure in the Sierra Madre

5/9/2012 9:55:33 AM | Richard (Rick) Mills
 
               


The Promontorio concession is located in the historic, prolific silver and gold- producing Sierra Madre region of northwest Mexico.
In December 2006, Kootenay Silver Inc. (TSX: V.KTN, Stock Forum) announced an agreement to acquire 100% interest in the former producing Promontorio Mine and the surrounding properties and mineral rights known as the Promontorio Concession. The claims cover approximately 79,000 hectares and are located in the historic, prolific silver and gold producing Sierra Madre Region of northwest Mexico.
Historical data from Promontorio shows individual holes with 1 kilogram (kg) of silver over 5 meters (m), 10m, 15m and an average silver grade of 367 grams per tonne (g/t). Historic reports also cite widths of 20 meters on average.
The project had seen some sporadic exploration and limited production (once in the 1920s and again in the 1980s) over the years but Kootenay’s exploration efforts represent the first thorough exploration program using highly advanced modern techniques.
Kootenay drilled over 50,000 meters and produced a 43-101 resource report which outlined 21 million ounces of silver equivalent - over 10 million ounces of silver along with substantial amounts of lead and zinc.
The independent mineral resource estimate from AGP Mining Consultants (AGP), for just the Pit Discovery Zone, comprises Indicated Mineral Resources of 5.22 million tonnes averaging 52.7 g/t silver, 0.86% lead and 0.96% zinc, containing 8.9 million oz Silver, 99.3 million pounds of lead and 110.8 million pounds of zinc.
AGP also estimated that Promontorio contains 0.65 million tonnes averaging 55.7 g/t silver, 0.94% lead and 1.00% zinc in the Inferred category, containing 1.17 million oz Silver,13.4 million pounds of lead and 14.3 million pounds of zinc.
That 43-101 report was published over 18 months ago, since that time KTN has drilled off another 35,000 m - an initial 10,000 m in RC and then 25,000 m of core.
Kootenay KTN is currently revising their 43-101 resource report to include all 85,000 meters of drilling.
We have said all along the proof will be in the drill bit, and thus far it has yet to let us down. Based on supporting scientific data and the advancements we are seeing now, we have every reason to believe we have a viable shot to double or triple our current resource, or more.” James McDonald, Kootenay Silver CEO
There is no doubt the Company has good reason for its optimism, 35,000 m of drilling has been done, this was after the initial resource estimate. There are some pretty outstanding results (all posted on the website for investors to look at) from a lot of that drilling yet to be incorporated into a new resource estimate.
Highlights:
  • 18 Meters of 254 gpt Silver Eqv Within 89 Meters of 84 gpt Silver Eqv (*Includes 120 gpt Silver and 3.1% Pb+Zn and 41 gpt Silver and 1.01%Pb+Zn)
  • 873 gpt AgEqv Over 18 M in NE Zone (471 gpt Ag, 9.42% Pb+Zn) and 150 gpt AgEqv Over 17 M in SW Zone (118 gpt Ag, 0.76% Pb+Zn)
  • 706 gpt Silver Eqv Over 16 Meters (370 Ag and 7.79 % Pb-Zn)
  • 120 M of 164 gpt Silver Eqv (68 gpt Ag & 2.24% Pb+Zn) Incl High-Grade Intervals; 31 M of 292 gpt Silver Eqv (118 gpt Ag & 4.06 Pb+Zn) and 13 M of 362 gpt Silver Eqv
  • 83 meters of 166 gpt Silver Equivalent (58.2 Ag gpt, 2.52% Pb +Zn) Including 329 gpt Silver Equivalent Over 6 Meters (111 gpt Ag, 5.11% Pb +Zn)
  • Step Out Drilling on Promontorio Intercepts 92 m of 147 gpt Silver Eqv (56 gpt Ag,2.11% Pb+Zn) Extending the SW Zone 100 M Down Dip. Includes 5 M of 378 gpt Silver Eqv (174 gpt Ag,4.72% Pb+Zn)
  • 205 meters of 117 gpt Silver Equivalent in Step-Out Drilling in Southwest Zone that includes 169 gpt Silver Equivalent over 50 meters.
Doubling or tripling its current silver resource at Promontorio could drive the total contained metal values on the project to over $1 billion. In short, if objectives are met, Promontorio, as it sits today, could well be a ‘Company Maker’.

The zones discovered to date are all open ended. After the new resource is out KTN will start another large program and start stepping off where the zones are still open ended and also start drill testing other targets in the immediate corridor zone.
Management believes the potential is for the resource to be in the 50 million ounce silver range plus an equivalent value in the lead/zinc. If so, shareholders have got a resource that could support a very significant silver producer for a 10 or 15 year time period.
Metallurgy
Preliminary metallurgy has been conducted on a composited 115 kg. sample taken from within the Pit Resource. The sample responded well to a standard lead/zinc sequential flotation flow sheet producing concentrates that would be highly saleable in the event a deposit is developed.
Locked cycle tests were conducted, 85 percent of the feed lead was recovered into a final lead concentrate containing 62 percent lead and 4250 g/tonne silver. On average, 82 percent of the silver reported to the lead concentrate and 7 percent reported to the zinc concentrate. Zinc was 91 percent recovered to the final zinc concentrate which graded 57 percent zinc.
Following lead and zinc recovery, 87 percent of the gold could be recovered into a pyrite concentrate. Sodium cyanide leach tests conducted on pyrite concentrates showed further work is required to develop a suitable process to extract gold from the pyrite concentrate.
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ABOUT THE AUTHOR
Richard (Rick) Mills
Richard is host of aheadoftheherd.com and invests in the junior resource sector. His articles have been published on over 200 websites, including: Wall Street Journal, SafeHaven, Market Oracle, USAToday, National Post, Stockhouse, Casey Research, 24hgold, Vancouver Sun, SilverBearCafe, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald and Financial Sense.

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