Kootenay Silver Inc. TSX.V – KTN

Richard (Rick) Mills

AheadoftheHerd.com

 

As a general rule, the most successful man in life is the man who has the best information

 

Kootenay's Promontorio Silver Project

 

A 43-101 Resource Estimate released in August of 2010 shows the property contained indicated and inferred resources of over 10 million ounces of silver along with substantial amounts of lead and zinc. The overall contained metal values at Promontorio were estimated at $320 million.

 

Since August 21st 2012 KTN has put out two significant news releases, the first was in regards to an updated resource estimate – resources have gone from an in ground value of $320 million to over two billion dollars using today’s silver price. In two short years KTH has increased shareholder value by a factor of over six times while keeping the share count at a very respectable 59.5 million fully diluted.

 

In addition to the outstanding results, the resource areas remain open in multiple directions and have the potential to materially increase in size yet again. The next steps will be to aggressively pursue the expansion of these resources through drilling and to advance geotechnical, engineering, groundwater and environmental studies to be incorporated into assessing the economic viability of the project." Kootenay President and CEO James McDonald

 

The second news release, dated September 26th 2012, was a silver price sensitivity analysis on the silver equivalent resource on Promontorio.

 

Moreover, using the lowest metal prices observed over the three-year period, Promontorio still maintains a benchmark measured and indicated silver equivalent resource totaling over 60 million ounces." Kootenay President and CEO James McDonald

 

Resource Statement

The open pit mineral resources for the Promontorio Project are 36,018,000 tonnes grading an average of 51.35 g/t silver equivalent classified as Measured and Indicated Mineral Resources, with an additional 9,136,000 tonnes grading an average of 42.86 g/t silver equivalent classified as Inferred Mineral Resources. This resource is stated above a 15.00 g/t cut-off grade and contained within potentially economically mineable pit shells.

Underground mineral resources are 2,216,000 tonnes grading an average of 48.75 g/t silver equivalent classified as Indicated Mineral Resources, with an additional 3,077,000 tonnes grading an average of 53.90 g/t silver equivalent classified as Inferred Mineral Resources. The resource is stated above a 35.00 g/t cut-off grade to reflect the higher mining costs associated with underground production.

The mineral resources are summarized in Table 1. The updated Measured and Indicated resource contains an estimated 61,679,000 oz Ag Eq with another 14,469,000 oz Ag Eq categorized as Inferred.

Resource Statement for the Promontorio Deposit, Sonora State, Mexico.

 

Open Pit

Reported at a 15 g/t AgEq Cutoff

AgEq Oz
(000's)

Ag Oz
(000's)

Pb Lbs
(000's)

Zn lbs
(000's)

Tonnes
(000's)

Grade

AgEq
(gpt)

Ag
(gpt)

Pb
(%)

Zn
(%)

Measured

17,092

10,428

102,613

120,342

9,170

57.97

35.37

0.51

0.60

Indicated

42,371

25,675

257,043

301,592

26,848

49.09

29.74

0.43

0.51

M+I

59,463

36,104

359,656

421,934

36,018

51.35

31.18

0.45

0.53

Inferred

9,136

6,038

47,351

56,354

6,630

42.86

28.32

0.32

0.39

 

 

 

Underground

Reported at a 35 g/t AgEq Cutoff

AgEq Oz
(000's)

Ag Oz
(000's)

Pb Lbs
(000's)

Zn lbs
(000's)

Tonnes
(000's)

Grade

AgEq
(gpt)

Ag
(gpt)

Pb
(%)

Zn
(%)

Indicated

2,216

1,371

13,284

14,987

1,414

48.75

30.15

0.43

0.48

Inferred

5,333

3,555

30,217

28,960

3,077

53.90

35.94

0.45

0.43

 

 

 

Total

Reported at multiple cutoffs

AgEq Oz
(000's)

Ag Oz
(000's)

Pb Lbs
(000's)

Zn lbs
(000's)

Tonnes
(000's)

Grade

AgEq
(gpt)

Ag
(gpt)

Pb
(%)

Zn
(%)

Measured

17,092

10,428

102,613

120,342

9,170

57.97

35.37

0.51

0.60

Indicated

44,587

27,046

270,327

316,579

28,262

49.06

29.72

0.43

0.50

M+I

61,679

37,474

372,940

436,921

37,432

51.25

30.68

0.44

0.51

Inferred

14,469

9,593

77,568

85,314

9,707

46.36

32.57

0.39

0.41

 

“It is immensely satisfying to see the hard work and diligence of our entire team on the ground and in the office be rewarded by such an excellent result. We cannot emphasize enough the significance that the 59 million measured and indicated silver equivalent ounces are contained within two optimized Whittle Pits. This bodes extremely well for the potential economic viability of the Promontorio project and our objective of seeing Promontorio become a prominent Mexican silver producer." Kootenay President and CEO James McDonald

 

Kootenay Silver completed a sensitivity analysis of varying metal prices at 18, 24 and 36-month trailing averages - an industry standard, 18 month trailing average was used in the NI 43-101 Resource estimate.

"When you apply even the most conservative metal prices observed during the 18 to 36 month period, there is less than a 4% variance in Promontorio's measured and indicated resource. This is due to the impact of the high silver grades in the diatreme system, which is also exciting as it has a positive impact on the economic dynamics of the resource.” Kootenay President and CEO James McDonald

Sensitivity Table for 18, 24, and 36 month metal prices

 
Total M+I Resource: Open Pit and Underground

 

Metal Prices Used*

AgEq

Ag

Pb

Zn

Tonnes

Grade

M Oz

M Oz

M Lbs

M Lbs

Mt

AgEq (gpt)

Ag (gpt)

Pb (%)

Zn (%)

18 Month $34

61.7

37.5

372.9

436.9

37.4

51

31

0.45

0.53

24 Month $31

62.8

36.9

368.1

430.9

35.9

54

32

0.46

0.54

36 Month $26

65.6

36.1

360.0

421.1

33.8

60

33

0.48

0.56

 


Total Inferred Resource: Open Pit and Underground

 

Metal Prices Used*

AgEq

Ag

Pb

Zn

Tonnes

Grade

M Oz

M Oz

M Lbs

M Lbs

Mt

AgEq (gpt)

Ag (gpt)

Pb (%)

Zn (%)

18 Month $34

14.5

9.6

77.6

85.3

9.7

46

31

0.36

0.40

24 Month $31

14.3

9.2

73.9

81.4

9.0

49

32

0.37

0.41

36 Month $26

13.5

8.3

64.7

71.7

7.4

56

35

0.39

0.44

 

18 Month Prices Used: Ag $34/oz, Pb $1.07/lb, Zn $0.97/lb, Open Pit Cutoff 15 gpt AgEq, Underground Cutoff 35 gpt AgEq


24 Month Prices Used: Ag $31/oz, Pb $1.04/lb, Zn $0.97/lb, Open Pit Cutoff 17 gpt AgEq, Underground Cutoff 38 gpt AgEq


36 Month Prices Used: Ag $26/oz, Pb $1.01/lb, Zn 0.96/lb, Open Pit Cutoff 20 gpt AgEq, Underground Cutoff 45 gpt AgEq


Impact of Varying Cutoffs on Promontorio Resource

 

The following table shows the impact of varying cutoffs on the Promontorio Resource at 10, 15, 20 and 25 gpt silver equivalent ounces with 15 gpt silver equivalent ounces being the cutoff used in the resource estimate.


Total Measured and Indicated Resource: Open Pit and Underground

 

AgEq Cutoffs Used* (Open Pit / Underground)

AgEq

Ag

Pb

Zn

Tonnes

Grade

M Oz

M Oz

M Lbs

M Lbs

Mt

AgEq (gpt)

Ag (gpt)

Pb (%)

Zn (%)

10 gpt / 22 gpt

65.9

40.1

397.3

466.7

45.4

45

27

0.40

0.47

15 gpt / 35 gpt

61.7

37.5

372.9

436.9

37.4

51

31

0.45

0.53

20 gpt / 45 gpt

58.0

35.2

351.9

411.2

31.9

57

34

0.50

0.59

25 gpt / 58 gpt

54.3

32.9

330.1

384.8

27.2

62

38

0.55

0.64

 


Total Inferred Resource: Open Pit and Underground

 

AgEq Cutoffs Used* (Open Pit / Underground)

AgEq

Ag

Pb

Zn

Tonnes

Grade

M Oz

M Oz

M Lbs

M Lbs

Mt

AgEq (gpt)

Ag (gpt)

Pb (%)

Zn (%)

10 gpt / 22 gpt

19.5

12.7

108.9

119.3

16.4

37

24

0.30

0.33

15 gpt / 35 gpt

14.5

9.6

77.6

85.3

9.7

46

31

0.36

0.40

20 gpt / 45 gpt

11.7

7.9

60.4

67.2

6.7

54

36

0.41

0.45

25 gpt / 58 gpt

9.9

6.7

50.3

56.5

5.1

61

41

0.45

0.51

 

18 Month Prices Used: Ag $34/oz, Pb $1.07/lb, Zn $0.97/lb

 

Conclusion

 

If you believe in the adage ‘mines are made, not discovered’ then the time has come to turn your attention to Kootenay Gold Inc. TSX.V – KTN.

 

Drawing from the experience of its management team, led by Company CEO and Chief Geologist James McDonald, Kootenay is applying the same pragmatic approach to its flagship Promontorio Silver Project in Sonora Mexico, that has helped companies McDonald has been associated with, such as Alamos Gold Inc., turn into accomplished producers.

 

Since first acquiring the historic past producer in 2005, Kootenay has taken no shortcuts in its quest to systematically exploit the vast silver resources believed to exist within Promontorio’s 79,000 hectare borders. Based on its success to date and the projects maturing status, the Company’s comprehensive approach appears to be paying off.

 

Richard (Rick) Mills

 

rick@aheadoftheherd.com

www.aheadoftheherd.com

 

Richard is the owner of Aheadoftheherd.com and invests in the junior resource/bio-tech sectors. His articles have been published on over 400 websites, including:

 

WallStreetJournal, SafeHaven, MarketOracle, USAToday, NationalPost, Stockhouse, Lewrockwell, Pinnacledigest, UraniumMiner, Beforeitsnews, SeekingAlpha, MontrealGazette, CaseyResearch, 24hgold, VancouverSun, CBSnews, SilverBearCafe, Infomine, HuffingtonPost, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, CalgaryHerald, ResourceInvestor, Mining.com, Forbes, FNArena, Uraniumseek, FinancialSense, Goldseek, Dallasnews, Vantagewire, Resourceclips and the Association of Mining Analysts.

 

If you're interested in learning more about the junior resource and bio-med sectors, and quality individual company’s within these sectors, please come and visit us at www.aheadoftheherd.com

 

***

 

Legal Notice / Disclaimer

 

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

 

Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

 

Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.

 

Richard Mills does not own shares of Kootenay Silver Inc.

 

Kootenay Silver Inc. TSX.V – KTN is a sponsor of Richard’s site aheadoftheherd.com

 



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