Metallurgy–the rest of the story In the Otis New Release dated January 8, 2020, Otis announced that the company achieved recoveries of greater than 92% after 200 days from 0.5-inch tuff from drill hole 17OKC-379. The recovery was nearly 86% on 1.5-inch tuff from the same hole. Also, the 3-inch run-of-mine tuff leached at 56%. Otis' V.P. of Exploration stated that the recovery from the 0.5" heap leach and 3" Run-of-Mine mineralized material "are significantly higher than the 82% and 50% recoveries used in our recently-released Preliminary Economic Analysis (PEA)." Let's explore the facts and the statement made by Otis because, in my opinion, the N.R. does not tell the whole story.
The rock tested, was derived from hole 17OKC-379, drilled in Otis' 2017 core program, not the RC program recently completed in 2019. The core that was analyzed was drilled within 35 meters of the surface and, therefore, was thoroughly oxidized. Not only that, but the core seems to have sat around for about a year and further oxidized in storage before it was delivered to Denver for metallurgical work in 2018. This one sample is not representative of mineralized rock from the deposit in general. Otis, stating that the results after 200 days of testing are "significantly higher," is an exaggeration because their PEA Technical Report (on their website) uses rock that comes from multiple intercepts, of varying lithology, deep within the deposit. Stating that near-surface oxidized tuff leached for 200 days is somehow "significantly higher" than recoveries from rock described in the PEA, leached for about 100 days is straining credibility. Unfortunatly, apples and oranges are compared.
As I recall, there are three rock types containing mineralization at Kilgore, the tuff, the sill/dike, and the Aspen sandstone. From the drilling performed in 2016 and 2017, Otis claims to have discovered a substantial amount of gold in the deeper Aspen Formation from an area called the "Aspen Corridor." In a February 9, 2017 release, the company listed 34 holes containing substantial Aspen mineralization, holes like 315 containing 30 m @5.37 g/t Au, Hole 308 containing 50 m @4.24 g/t Au, hole 309 containing 94 m @4.21 g/t Au and hole 318 containing 120 m @1.55 g/t Au. With that many holes in the thick high-grade Aspen Formation, I suspect perhaps 30-40% of the gold may be hosted in this unit. However, Otis makes no mention of the metallurgy of the Aspen only to state in their website that the Aspen Sandstone is a "siliciclastic arkose with carbon and graphite present." If graphite and carbon are integral parts of the rock, that is ususally not conducive to stellar metallurgy because carbon in the rock is preg-robbing (the carbon traps the gold). I'm surprised that Otis did not take a few of their 2019 holes deeper into the Aspen to test the metallurgy. Indeed, a deep, carbon-bearing sandstone is not going to have anywhere near the recovery of the oxidized tuff that they report in their 1/8/2020 press release, drilled within 35m of the surface.
The Bottom line is that Otis writing a news release to spin the metallurgy in a positive light is one thing, but stating that surface oxidized tuff is somehow better than the metallurgy portrayed in their 43-101 PEA on their website, is misleading at best and intentionally deceitful at worse. Be skeptical that the near-surface oxidized tuff, with the metallurgy stated, is somehow representative of what will be recovered when the deposit is mined is more than spin! More metallurgy work is needed, especially in the higher-grade Aspen sandstone depth. Otis needs to stop spinning and do the work required.