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TORONTO (miningweekly.com) – In light of the bolder gold price in recent months, gold majors looking for their next growth projects now have an ideal window in which to secure future growth projects, before institutional investors once more become bullish on mining prospects and send share prices higher, says Otis Gold CEO Craig Lindsay.
Lindsay told Mining Weekly Online that interest in its Kilgore gold project, in Idaho, had dramatically increased since the start of the year.
“My life these days is a little more interesting,” he quipped, pointing to renewed interest in the project from potential suitors, bolstered by a 15% higher gold price so far this year. “We have uncovered a district story,” he added.
Kilgore comprised a volcanic-hosted low-sulphidation quartz adularia epithermal gold system. The deposit was comparable with the Round Mountain mine, in Nevada, where a 50:50 joint venture between Barrick Gold and Kinross Gold, with Kinross as the operator, was currently producing 170 000 oz/y.
The property was previously mined by Blue Ledge Mining in the mid 1930s as a high-grade underground operation, Lindsay notes.
Echo Bay then developed a plan to put the Kilgore deposit into production as an openpit, based on potentially mineable resources of 11-million tonnes grading 1.28 g/t and a 6.6-year mine life based on a production rate of 4 700 t/d. This arrangement was expected to produce 45 000 oz/y of gold.
RESOURCE UPSIDE
Kilgore had a current indicated resource comprising 520 000 oz of gold grading 0.59 g/t and inferred resources of 300 000 oz gold at 0.46 g/t.
Lindsay explained that the grade and thickness displayed excellent overall continuity of mineralisation and lent itself to openpit exploitation, with a low strip ratio estimated at 1.5:1 or less.
Lindsay noted that Otis continued to successfully raise capital in the very difficult market environment. He advised that ten groups of institutional investors had by now bought into the company. It had avoided dilution by not issuing any warrants. “We have seen some very dilutive financing structures, but not us - we have been able to build a stronger shareholder base, even adding projects during this time.”
He wondered whether investors discounted Otis stock owing to being located in Idaho, but noted that the state had a rich mining history, being host to significant mines such as the Thompson Creek molybdenum mine, the Coeur d’ Alene silver district and phosphates in the south. Midas Gold was also moving forward with a six-million-ounce project in the state. Lindsay stated that this was a “good stamp of approval on Idaho’s permitability”, from which Otis would benefit too.
EXPLORATION
The company this summer planned to drill 6 200 m over 30 holes on priority targets with infill on Crab Claw, as well as stepout targets, while testing the deeper potential of the underlying orebodies. Lindsay said the company would have to raise money for that to happen.
Otis got involved with the Kilgore project in 2008 and, to date, had drilled about 23 768 m in the main Kilgore deposit area.
There were five areas open with step-out potential to grow the deposit. Crab Claw had open-ended intercepts of 50 m to 100 m of 2 g/t to 4 g/t gold. Further, the North Target had intercepts of 80 m to 120 m of about 1 g/t gold. Recent Kilgore intercepts included 121.9 m at 1.04 g/t, 59.5 m at 3.79 g/t, 50.3 m grading 4.24 g/t and 94.5 m at 4.21 g/t.
The deposit was open into what was known as the “Boulder Field” and south into Prospect Ridge.
The Kilgore deposit was about 1 000 m long by 600 m wide and open in multiple directions. The company held a 100% interest and there were no remaining royalties on the property. Lindsay noted that the region had strong NW and NE structural controls in the deposit.
In 2014 the company permitted new roads for drilling the Crab Claw prospect.
Otis expected to update the resource by November and to complete a preliminary economic assessment on Kilgore by Spring 2017.
The company’s TSX-V-listed stock on Friday rose to a new 12-month high at C$0.19 apiece, having gained 55% since the start of the year.