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Otis Completes Successful Kilgore 10,000 metre Drill Program

Stockhouse Editorial
0 Comments| 7 days ago

Click to enlargeOtis Gold Corporation (TSX: V.OOO, OTCQB: OGLDF, Forum) is a junior gold mining company whose flagship property is the Kilgore Gold Project, located in Clark County, Idaho. The Kilgore Deposit is an open-pit, heap leach oxide gold project which contains a current NI 43-101 Indicated resource of 520,000 ounces grading 0.59 g/t Au and an Inferred resource of 300,000 ounces grading 0.46 g/t Au.  Otis owns a 100% interest in Kilgore, and the project is subject to no royalty burden. 

The Company’s work on this project dates back to the end of 2008, when it was first permitted for drilling. As Otis has zeroed in on the gold mineralization at Kilgore, it has produced steadily more robust intercepts from its drilling programs. It’s most recent highlights from their recently completed 2016 drill program include 120.4 m of 1.55 g/t Au, 85.4 m of 2.50 g/t Au, 69.1 m of 2.07 g/t Au, 30.5 m of 5.37 g/t Au and 114.3 m of 1.00 g/t Au. Further information can be found here.

  1. Otis just completed a 40 hole, 10,000 metre drill program Kilgore.  Can you provide some background on this program?

Our 2016 program was designed to follow up on some pretty strong results we generated in 2015 at the north end of our Kilgore Deposit, which intercepted holes ranging from 50 to 100 m in thickness and grading in the range of 2 to 4 g/t Au (see Otis News Release dated January 14, 2016).Many of these holes were open-ended, and bottomed in an underlying sedimentary unit known as the Aspen Formation.As background, the large majority of our existing resource is hosted in volcanic lithic tuff and accompanying high-angle dykes which overlay the Aspen Formation.Our 2016 program was designed to target potential mineralization in this Aspen Formation, which underlies the entire length of Kilgore Deposit and previously has never been explored in any coordinated manner.
  1. Can you explain why this Aspen Formation was never targeted historically?

Well, in the late 1980s and early 1990s, gold was trading in the range of $350 per ounce and bulk tonnage miners were generally targeting very shallow open pit deposits.  At Kilgore, this shallow mineralization was generally hosted in volcanics that were no deeper than 100 to 150 metres.  As well, the volcanic rocks generally have very good metallurgical characteristics.  So, companies such as Pegasus Gold and Echo Bay Mines, which explored Kilgore during this period, generally drilled relatively shallow holes and typically stopped drilling at the contact between the volcanic lithic tuff and the underlying Aspen sedimentary unit.  As a result, the potential in this deeper mineralization was never explored.  As a side-note, when I say “deeper”, we are talking about mineralization that is no more than 300 metres down, and much of it significantly shallower, so well within the depths of conventional open pit, heap leach mines.

  1. Have you had any success targeting mineralization in the Aspen Formation in 2016?

Yes, drilling into the Aspen has been incredibly successful.  We completed a 40 hole, 10,000 meter drill program in November, and to date have issued results on the first 28 holes.   Some of our hits in the Aspen Formation include 69.1 m of 2.07 g/t Au, 85.4 m of 2.5 g/t Au, 30.5 m of 5.37 g/t Au and 120.4 m of 1.55 g/t Au. 

  1. Can you talk about the potential impact of these drill results on the Kilgore Deposit?

The Kilgore Deposit has a current NI 43-101 Indicated mineral resource of 520,000 ounces of gold at a grade of 0.59 g/t and an Inferred mineral resource of 300,000 ounces of gold at a grade of 0.46 g/t.One of the “knocks” on Kilgore has been the relatively low reported grade of the existing resource (of which about 85% is hosted in the aforementioned volcanics).While I don’t want to oversimplify the science behind resource estimation, it would appear pretty likely that we have a strong potential to grow both the size and grade of the Kilgore Deposit with these thick, higher grade results being achieved in the underlying sedimentary Aspen Formation.
  1. What is next for the Kilgore Deposit?

We have a final 12 holes to release, which should be available this month.  On a parallel basis, we are currently updating our cross-sections and geologic model to reflect the results received this Fall. This will be followed by an updated resource estimate, which we hope to complete this Spring.  Depending on the resource estimate, we’d like to move towards work on a maiden PEA.  Additionally, we are currently in the early stages of developing our 2017 drill program, which clearly will be focused on further expansion of mineralization in the Aspen Formation as well as drilling at other targets.

  1. Can you talk about targets at the Kilgore Gold Project beyond the existing Kilgore Deposit?

Absolutely.To be very frank, we have been focused on developing the resource at our existing deposit, and haven’t done a very good job of communicating the potential at additional targets at Kilgore.It is very well-established that deposits at volcanic hosted epithermal gold systems come in bunches.The Kilgore Deposit is only the first of what could be numerous deposits at our project.For instance, targets known as Gold Ridge and Prospect Ridge have very similar geologic signatures to that displayed at the Kilgore Deposit, and we are very excited about their potential.We are in the process of better defining drill targets at these emerging locations through tools such as ground-based magnetics and soil sampling programs, as well as reviewing historic data, and as we move forward these will become targets that you will more about.
  1. Otis Gold’s operations are in Idaho. We have talked about Idaho’s regulatory climate for mining in the past.  Can you refresh us on this aspect of your operations?

We recognize this is a critical issue when assessing a mining project.We are fortunate in that Idaho has a long history of mining and is generally very supportive of both open pit and underground mining operations across a broad range of commodities.Specifically, It is very well known for the production of silver (Hecla Mining just completed the deepest shaft in the USA at their Lucky Friday Mine) , molybdenum (the Thompson Creek mine is reportedly the world’s largest open pit moly mine) and phosphates (including mines operated by Monsanto and Canada’s Agrium).As well, gold also has a long history in Idaho, including successful open pit, heap leach mines such as the Beartrack (Median Gold) and Black Pine (Pegasus Gold) mines.Indeed, Kilgore itself was mined in the 1930s as underground mining operation. Otis has developed a good relationship with both the US Forest Service (our primary permitting authority) and community groups.So, while we recognize the challenges of mine permitting in general, we feel very comfortable about the regulatory climate in Idaho and the potential to permit at Kilgore specifically.
  1. Otis has a track record of completing above market financings with no warrants.  Can you briefly address this?

We are fortunate in that we have been supported by an extremely loyal and enthusiastic group of private investors, many who are based in the United Kingdom.  They have taken a much longer-term view on their investment in Otis, and see their entry points at these levels as being cheap on any metric.  Further, they have been very cognizant of the potential to crush shareholder value through low-priced financings that contain dilutive warrant structures whereby investors sell off underlying common shares when they become free-trading and “ride the warrant”.  As a result, they have been comfortable with financings that are both priced above market and contain no warrants, which has allowed us to maintain a good share structure and access an appropriate level of capital to implement our development program.

  1. Can you talk about the prospects for the junior gold mining sector in 2017?

I feel good about the prospects in general.Obviously, 2016 was a better year for the gold sector and the junior gold mining market in particular…the price of gold strengthened, interest levels increased and as a result valuations rose and more capital became available.The market certainly took a breather in the second half of the year, which is typical in the early stages of bull market.As we move into 2017, the general sense I get is that optimism has returned to the sector, I think we’ll see some strengthening in the price of gold due to global political factors and I firmly believe that a broader range of the market will start to get interested in the sector.Companies with good assets and management will benefit from these factors, and as a result I think 2017 will be an exciting year for Otis.

FULL DISCLOSURE: Otis Gold Corp. is a paid client of Stockhouse Publishing.

Tags: GOLD

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