coverage universe It’s Alive!
Over the past two weeks, the junior mining sector has finally shown signs of life. Over this period, the price of gold has rallied 3.1%, the price of silver has rallied 9.6%, and the TSX Venture Composite Index has rallied 5.1%. While average daily volumes remain relatively low at 146 million, they are up from less than 120 million at the end of July and continue to trend higher. With a breath of new life in the junior mining sector, we have seen selective outperformance, particularly for those companies with strong balance sheets. While the rally is welcome, the caveat is that much of the new interest in the sector has been driven by speculation of a renewed program of quantitative easing in the US, which may or may not come about in early September.
--Canaccord Genuity (8/29/2012)
KOOTENAY SILVER INC.
(KTN : TSX-V : C$1.18 | NOT RATED)
Kootenay Silver is a junior exploration company focused on the Promontorio Project, a historic producer in Sonora, Mexico. The company is led by Ken Berry, Chairman, and James McDonald, PGeo, President, and CEO. Mr. McDonald was cofounder of Black Bull Resources, National Gold (merged with Alamos Gold), and White Knight Resources, and currently serves on the Board of Alamos Gold Inc. (AGI : TSX | BUY, covered by Rahul Paul). Last week, Kootenay reported an updated resource estimate for the Promontorio Project.
• Kootenay reported an updated resource estimate for the Promontorio Project of 37.4 million tonnes (up 616%) grading 30.7 g/t Ag (down 42%), 0.44% Pb, and 0.51% Zn (containing 37.5 million ounces of silver, 373 million pound of lead, and 437 million pounds of zinc) in the measured and indicated category, and 9.7 million tonnes (up 1,392%) grading
32.6 g/t Ag (down 42%), 0.39% Pb, and 0.41% Zn (containing 9.6 million ounces of silver, 77.6 million pounds of lead, and 85.3 million pounds of zinc) in the inferred category, using a 15 g/t Ageq cutoff for the open pit portion and 35 g/t Ageq cutoff for the underground portion (Figure 9). The updated resource includes results from the Northeast Zone,
Southwest Zone, and Pit Zone, and is based on 65,092 metres of drilling. Since the last resource, Kootenay has completed an additional 37,900 metres of drilling, while also discovering the Northeast zone.
• The Promontorio silver deposit is a silver, gold, lead, and zinc diatreme system hosted by breccias and stockwork veining. Mineralization is currently open along strike (in both directions) and down dip. Kootenay continues to explore on the 80,000 ha Promontorio concession block where the company has identified several additional targets, including the Nopalera, Tordillo, La Negra, and Leona zones.
• The Dorotea Zone is located on the Promontorio concession, approximately one kilometre from the Promontorio Project. Surface sampling and trenching indicate that mineralization extends at least 1,000 metres. Highlights from the 2009 step-out drill program include hole KP-56-08 that intercepted 34.5 metres grading 1.73 g/t Au, 74.83 g/t Ag, and
2.42% Pb+Zn.
An analyst has not visited the properties held by Kootenay Silver Inc.
Investment risks and disclaimer
The commercialization risks associated with mineral exploration and development are high. We are not providing estimates, an investment rating, or target price for Kootenay Silver Inc.
Nicholas Campbell
Chris Lerch