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A Well-Rounded Junior
Kootenay Gold’s New Projects Generate Income For Its Mexico Silver Project
~ By Kevin Michael Grace, February 11, 2011
Geologist Jim McDonald was in the mining business 20 years when he Highlights from February 3 assay results include 38.8 g/t silver and 0.55
became President and CEO of Kootenay Gold Inc in 2003. A co-founder of g/t gold over 70.5 meters (including 58.6 g/t silver and 1.15 g/t gold over
what became Alamos Gold, McDonald pondered the state of the industry 24 metres), 149 g/t silver and 1.1 g/t gold over 10.5 metres, 17.7 g/t silver
and came to this conclusion: “Very few companies were generating new over 90 metres, 108.8 g/t silver over 16.5 metres, 26.9 g/t silver and 0.58
projects, and the ability to do that through prospecting would have more g/t gold over 36.4 metres and 23.6 silver over 45 metres.
and more value.” In 2011, as the ever-rising value of gold and silver have
made the majors desperate for new resources, Kootenay is well positioned “We are now in Phase 4 of Promontorio drilling, and it’s looking more
to supply them. promising than ever,” McDonald says. There are two rigs currently in
operation, seeking to expand the resource to the northeast and southwest.
“Our objective,” McDonald reports, “is 100 million ounces silver.”
This will take money, and so Kootenay leverages its over a dozen genera-
tive projects to reduce risk through joint ventures and to acquire assets.
The most recent example of this was on February 2, when the company
optioned 60% of four gold-silver-base metals properties in the Kootenay
region of BC to SG Spirit Gold for 4.8 million shares and $4.5 million in
exploration expenses.
In addition to SG Spirit, Kootenay has BC option-JV agreements with
Theia Resources, Fjordland Exploration, Orestone Mining, Northern Vertex
Capital and Astral Mining and Mexico agreements with Copper Creek Gold
and Klondike Silver. These agreements have secured Kootenay more than
20 million shares and $31 million in exploration funding.
Back in the 1990s, McDonald had watched as gold and silver hit bottom, “We’re receiving strong interest in our remaining generative projects,
and “A lot of assets were being given up by the majors at ridiculously low and pretty soon we’re going to have just about all of our early-stage stuff
prices.” He believed that gold and silver would rebound and that selective optioned out,” McDonald reports. He is particularly keen on BC’s Ross-
acquisition of these assets would generate great value. To pick the right land region, which he sees as a potential extension of Idaho’s gold-silver
assets, however, would require the right expertise. To that end, he joined deposits and where “there has been very little real exploration done over
forces with entrepreneur and former NHLer Ken Berry, now Kootenay’s the last 20 years.”
Chairman.
McDonald ponders the state of his company, and he likes what he sees.
McDonald then “collected under one roof a group of professional prospec- “We are a very well-rounded company,” he argues. “Our ability to assess
tors who had worked for various projects for 20 years.” The idea was to projects gives us quite an edge. We are also strong on the corporate and
“take advantage of our human capital, who are among the best in the busi- marketing side. That’s not something you see with every junior. Most have
ness at project generation: finding new properties through ground work one strength or the other, but we offer both.”
and quickly evaluating their potential.”
Kootenay has a market cap of $46 million and $10 million in cash. Shares
Kootenay chose to focus on central and southern British Columbia and fell to $0.43 in August but have recovered to $1.04. McDonald attributes
northern Mexico. It was in Mexico that Kootenay secured its flagship prop- the fall to “the general downturn in the industry following 2008″ and Koo-
erty: the 79,000-hectare Promontorio Silver Project in Sonora. Located on tenay‘s failed bid to buy Idaho’s Sunshine Silver Mine. “I think the market
the Sierra Madre Trend, which has produced 520 million ounces silver and became confused and got the impression we’d lost faith in Promontorio,
15 million ounces gold, it was bought in 2006 for $2 million. our main asset.”
Development at Promontorio is a century old. Between 1988 and 1990, Now that Promontorio is about a year from prefeasibility, McDonald is
48,000 tons of ore were processed. It was optioned in 1997 and then confident that confusion has been dispelled. He concludes, “Good silver
abandoned in 1999 because of low metals prices. After a series of drilling projects are scarce, so as we build up more ounces on Promontorio, we’ll
campaigns, an August 2010 43-101 resource estimate reveals 5.22 million become a more serious takeover target. We’re positioned for success.”
tonnes averaging 52.7 grams per tonne silver, 0.86% lead and 0.96% zinc
indicated (8.9 million ounces silver, 99.3 million pounds lead and 110.8
million pounds zinc). Inferred resources are 0.65 million tonnes averaging
Good silver projects are scarce, so as
“
55.7 g/t silver, 0.94% lead and 1% zinc (1.17 million ounces silver, 13.4
million pounds lead and 14.3 million pounds zinc). we build up more ounces on
McDonald says that Promontorio is proof that northern Mexico remains Promontorio, we’ll become a more
“highly prospective.” He declares, “The discovery rate there in the last de- serious takeover target
cade is, I believe, unparalleled. There are eight or nine mines in operation,
where a decade ago there were none.” — Jim McDonald
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