THIS IS WHAT ITS ALL ABOUT!Otis Gold’s Kilgore Drilling Program has multi-million ounce potential
Thu 12:53 pm by Richard Badauskas
Otis Gold (TSX-V: OOO) is a Canadian based gold explorer with a focus on U.S. properties in Idaho. The Company is currently drilling at the 100% owned, advanced stage Kilgore Gold Project, in Clark County, Idaho, and has development plans for 4 other projects that include Hai, Gold Bug, Buckhorn and Oakley.
Kilgore is located 60 miles north of Idaho Falls, on the southern flank of the Centennial Ridge, northeast of the Kilgore Caldera, covering 3,250 acres and hosts a low sulfide, volcanic epithermal hot spring-type gold deposit.
Kilgore was previously explored by Echo Bay Mines, Placer Dome and Pegasus Gold, who completed 34,000 metres of drilling to define a historic, non-compliant, indicated resource at Mine Ridge of 17 million tonnes at 0.031 oz/t, or 1.046 g/t Au, for 520,000 ounces, and an inferred resource of 5.6 million tonnes at 0.033 oz/t, or 1.131 g/t Au, for 186,000 ounces of gold.
In 1996, Echo Bay Mines completed feasibility studies to establish an open pit gold mine at Mine Ridge, containing a mineable resource of 11 million tonnes at 1.28 g/t Au. The production rate was estimated at 4,700 tonnes per day for an annualized output of 45,000 ounces over 6.6 years, totaling 297,000 ounces of gold. The total conceptual gold potential within Kilgore was estimated at 2 to 3 million ounces. Unfortunately the project failed on economic grounds, at a time when the gold price had declined below US$300 per ounce.
In 2004, Kilgore Minerals completed a study confirming attractive economic returns with gold at US$375 per ounce, but required a doubling of historic gold resources to justify the capital investment. A NI 43-101 Technical Report confirmed an Indicated Resource of 7.0 million tonnes at 0.031 oz/t, or 1.063 g/t Au for 218,000 ounces, and an Inferred Resource of 9.7 million tonnes at 0.028 oz/t, or 0.960 g/t Au for 269,000 ounces; metallurgical tests also confirmed recoveries of gold exceeding 90% from the near surface oxides.
Otis Gold commenced exploration at Kilgore in 2008, and in 2010 deployed $2.5 million to complete 7,700 metres of drilling at Mine Ridge, where 46 of 51 holes confirmed significant gold mineralization, and that the resource remained open in 4 directions. Scout drilling at Dog Bone Ridge noted gold potential to the west, and environmental studies confirmed that the property was devoid of any environmental issues that would inhibit mining.
Selected high grade intersections at Mine Ridge indicating further potential included 27.4 metres at 37.0 g/t Au, 6.1 metres at 54.7 g/t Au, and 22.9 metres at 7.6 g/t Au, and confirmed intervals and grades that were noticeably greater than historic drilling.
Mine Ridge sits on a major fault line that also carries several identified cross faults. Additional targets along this line include Gold Ridge and Prospect Ridge, which creates a minimum strike length of 3,000 metres. Dog Bone Ridge is located to the southwest of the fault line, and contains 5 separate targets that carry a combined footprint that are 5 times larger than Mine Ridge.
Dog Bone Ridge, originally identified byby Echo Bay and others, has the potential to host Mine Ridge style mineralization hidden beneath an average 25 metre thick sinter cap. A CSAMT geophysical survey completed in 2009 identified numerous zones of high resistivity that may indicate the presence of a high grade gold feeder system, where reconnaissance drilling at KG 042 intersected 51.8 metres at 1.25 g/t Au, in a rhyolite dyke with quartz veinlets.
The first phase of the 10,000 metre 2011 drilling program is underway and includes approximately 4,450 metres in 21 holes at Mine Ridge, and is aimed at infill and step out drilling on open mineralization to the west, northwest south, east, and down dip of the current open pit resource.
The second target that will be tested is Prospect Ridge, which may be a potential extension of Mine Ridge, has been defined over a length of 700 metres and width of 200 metres. Drilling on this target will include approximately 3,450 metres in 16 holes. Some scattered historic drilling in this area encountered significant mineralization including 15.2 metres at 1.27 g/t Au, which Otis Gold confirmed in hole 10 OKC 221, intersecting 76 metres at 0.77 g/t Au, including 13.7 metres at 2.88 g/t Au.
Additional drilling at Dog Bone Ridge and Gold Ridge will be completed in a second phase program of 2,100 metres spread over 10 holes.
Otis Gold has also completed independent metallurgical studies confirming a maximum gold recovery of up to 94.3% from oxidized ore, with no adverse technical issues. The oxidized resource is 93% contained within dike and lithic tuff material, reporting recoveries from dike material of 85%, and lithic tuff of 81%, with the balance of 7% of the mineralized ore resource contained with the Aspen Formation, reporting a recovery of 70%. Positive recoveries from column leach tests confirm that the Mine Ridge deposit is readily amenable to standard heap leach process technology, with up to 77% of the gold recovered within 30 days, and reinforce the excellent recoveries that were reported by Echo Bay in earlier historic metallurgical studies.
The company aims to complete 3D modeling of Mine Ridge and complete a magnetic survey over the entirety of the Kilgore Project area, so that further drilling targets can be accurately identified. An updated NI 43-101 resource estimate is also expected for Mine Ridge in the very near term.
Ongoing environmental base line studies will also get underway, in anticipation of pre feasibility studies that should follow once the current drilling program confirms extended economic mineralization.
The company also 100% owns the Oakley Project, in Cassia County, which covers an epithermal hot spring style gold exploration target with a NI 43 -101 compliant Inferred Resource of 235,000 ounces of gold at 0.549 g/t Au. This resource is contained within 3,500 acres of known gold occurrences along a 5 mile long strike line, with major targets at Blue Creek and Cold Creek, where historic drilling at Blue Creek in 22 of 26 holes intersected gold mineralization and extensive zones of silification, and where 10 holes bottomed in rock containing in excess of 0.34 g/t Au. Significant results included 30 metres at 1.22 g/t Au, and 79 metres at 0.89 g/t Au.
A CSMAT Survey in 2008 identified a coherent and continuous low-resistivity anomaly or sheet like zone at Blue Hill Creek that is 1.5 kilometers long, at least 1.5 kilometers wide, and up to 200 meters thick. The anomaly is open to the north and south, extends to the surface on the east, and is up to 300 meters deep at its westernmost margin. A smaller anomaly was also identified at Cold Creek. The project is drill permitted, and Otis plans to either joint venture the project or implement an in-house drill program..
Cash in treasury is $4.6 million as at March 31, 2011, and is sufficient to maintain an aggressive development program at Kilgore, drilling at Oakley and other projects, and addition of new projects in Idaho, Nevada or Utah. The $19 million market cap of Otis Gold currently places an enterprise value of roughly $26 per resource ounce of gold, where the peer group average approaches $130 per ounce, and provides shareholders with very substantial upside potential.
do your own due diligence
herb