Otis Gold Corp. (TSX VENTURE: OOO) ("Otis" or the "Company") is
pleased to provide an update of recent developments concerning the
Company's Kilgore Gold Project ("Kilgore"), Clark County, Idaho.
Upcoming Drilling Program
In 2010, Otis plans on drilling up to 8,000 metres at Kilgore.
Of this total, 6,000 metres is planned at the Kilgore Mine Ridge
deposit and resource area and 2,000 metres is planned at Dog Bone
Ridge. The latter constitutes a highly prospective drill target
that has been the subject of both historic drilling and a
successful 8.5-line km CSAMT Survey completed by Otis in November
2009. It is located approximately 1,400 metres southwest of the
deposit.
Otis has signed an agreement with Timberline Drilling Inc., of
Coeur d'Alene, Idaho to supply two core rigs to drill at Mine
Ridge. Drilling will be on a 24-hour basis, with approximately
6,000 metres spread between a minimum of 30 holes located
throughout four quadrants encircling the deposit's central Mine
Ridge area. Drilling is designed, in part, to convert inferred
resource material into the indicated category and to drill in-fill
and step-out holes to both upgrade the current resource and to test
for further resource expansion, as well as closure, where the
deposit remains open. Part of the drilling will also focus on
in-filling and off-setting higher-grade historic intercepts near
and along the Cabin Fault and its contact with an adjacent Tertiary
rhyolite dome, the possible source of mineralization for the
Kilgore gold system. The program will also concentrate on
off-setting and extending to the south higher-grade intercepts
found by Otis during its 2008 and 2009 drilling of the Mine Ridge
deposit core target area. A drilling contract for work at Dog Bone
Ridge has not yet been finalized.
Cost of the drill program at Kilgore is estimated to be US$2.5
million. Results from the drilling will be released as they become
available.
Mine Ridge Pre-Feasibility Study
Otis has initiated activities required to complete an
independent Pre-Feasibility Study on the Mine Ridge deposit.
Highlights of the study will include resource delineation, deposit
engineering, infrastructure review, and cost assessment work, as
well as the results of current detailed metallurgical testing and
the upcoming approximately 6,000-metre resource drilling program
for 2010. Completion of the study is scheduled for March 2011. Otis
is currently reviewing proposals from several independent
consulting firms and expects to confirm the appointment of a
primary contractor by June 2010.
Craig Lindsay, President and CEO of Otis commented, "Initiation
of the Pre-Feasibility Study at Kilgore marks a major milestone as
we move towards a commercial production decision."
Metallurgical Testing at Mine Ridge
As a first step toward the completion of the Independent
Pre-Feasibility Study, four bulk samples representing typical
Kilgore deposit ore types and bulk-tonnage grades were delivered to
McClelland Laboratories, Inc., Sparks, Nevada on April 15, 2010 for
bench-scale metallurgical testing. The samples range between
approximately 190 and 250 pounds of split HQ-3 size core material,
with estimated overall average grades in the 0.76 grams per tonne
Au (g/t Au) to 1.80 g/t Au range. Scope of the contracted work
includes sample preparation and head grade analyses, bottle roll
tests, screen size fraction analysis, and column leach tests for
each of the four samples. Results and a report of all findings are
estimated to be available in 5 months.
Historically, deposit metallurgy is considered excellent based
on favorable results of bottle roll and column leach tests
performed in 1995 and 1996 by Hazen Research, Inc., Golden,
Colorado on Echo Bay Mines drill core and RC cuttings. All bottle
roll tests resulted in greater than 90% gold extractability and
showed that the mineralization is not refractory. Column leach
tests indicate 94.3% recovery on oxidized material (-1/2" crush
size) and 86.9% on mixed/partially oxidized material (-1" crush
size), material types which together comprise the bulk of the
deposit. As noted in a 2002 Rayner and Associates and Van Brunt NI
43-101 compliant report on the property, the extraction of 86.9%
gold on mixed material after 75 days of leach time is excellent and
suggests that even coarser crush sizes may also lend themselves to
favorable extractability, thus enhancing deposit economics.
Mine Ridge NI 43-101 Compliant Resource
Between 1983 and 1996, a total of 122,257 feet of drilling in
190 holes was conducted on the Kilgore Project by Bear Creek,
Placer Dome U.S., Pegasus Gold, and Echo Bay Mines with the goal of
defining a +1 million once bulk-tonnage, open-pittable gold
deposit. A number of 43-101 non-compliant resource estimates were
computed on the bulk-tonnage mineralization by Placer Dome U.S. and
Echo Bay Mines. These estimates indicate a global resource of
between 561,000 and 706,000 ounces of gold contained in the deposit
depending on the cutoff grade used and the Company conducting the
estimate (see Otis News Release dated June 10, 2008). These
estimates, which are based on the above noted drilling, are
mentioned for historic and reference purposes only, the issuer is
not treating them as current mineral resources, and they are not to
be relied upon. Subsequent to these estimates, in 2002 Rayner and
Associates and Van Brunt conducted a NI 43-101 compliant resource
estimate on the Kilgore bulk-tonnage deposit at a cutoff grade of
0.010 ounces per tonne gold (opt Au). Their estimate comprises
218,000 ounces of drill-indicated gold (7.043 MM tons @ 0.031 opt
Au) and 269,000 ounces of inferred gold (9.661 MM tons @ 0.028 opt
Au).
In 1996, Echo Bay Mines completed an internal Initial
Engineering Assessment on Kilgore, planning to put the deposit into
production as an open pit. Some 10.1 MM tons of material at a grade
of 1.28 g/t was identified as being potentially minable. Capex was
estimated at $31.6 (US) million, cash costs at $222 (US)/oz, and
the mine life at 6.6 years (based on a production rate of 4,000
tons per day, or about 45,000 ounces of gold per year). They did
not proceed due to the low gold price, which at the time was less
than $300 (US)/oz, and also because of their deteriorating
financial position.
Recent Otis drill results (see Otis News Release dated March 23,
2010), in combination with other significant high-grade and
bulk-tonnage intercepts recorded for a number of the Company's
other holes drilled in the Kilgore deposit Mine Ridge core target
area during 2008 and 2009, indicate mineralized thicknesses and
average grades that are noticeably greater than those constituting
the majority of the historic Kilgore NI 43-101 compliant resource.
As a result, Otis expects that there is a strong possibility to
increase the overall size, grade, and economic viability of the
deposit. A new NI 43-101 compliant resource estimate at Mine Ridge
will be completed following completion of this year's drilling.
About the Company
Otis is a resource company focused on the acquisition,
exploration, and development of precious metal deposits in Idaho
and Nevada, USA. Otis is currently developing its flagship
property, the Kilgore Gold Project, Clark County, Idaho.
ON BEHALF OF THE BOARD
Craig T. Lindsay, President and CEO
This news release does not constitute an offer to sell or a
solicitation of an offer to sell any securities in the United
States. The securities have not been and will not be registered
under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act") or any state securities laws and may not be
offered or sold within the United States or to U.S. Persons unless
registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is
available.
The TSX Venture Exchange has neither approved or disapproved of
the contents herein.
Contacts: Otis Gold Corp. Craig Lindsay 604.683.2507
604.683.2506 (FAX) craig@otisgold.com
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