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Otis Gold Corp sizing up the jigsaw at Kilgore gold project

The junior mining firm has just released data from fieldwork conducted last year
Otis Gold Corp sizing up the jigsaw at Kilgore gold project
Otis is developing gold projects in Idaho

Otis Gold Corp (CVE:OOO, OTC:OGLDF) is putting together the jigsaw at its flagship Kilgore project in Idaho and likes what it's seeing.

The firm has just released data from fieldwork conducted last year - a 34-line-km ground-based geophysical magnetometer survey conducted last Fall and a soil geochemistry survey.

Results encouraged and have led to the identification of many high-priority drill targets, it said.

Drilling is planned to start in late July this year at Kilgore, with 8,000 meters envisioned,  which will be focused on expanding the deposit.

But what is the deposit?

Kilgore spans over 5,130 acres and is targeting an epithermal type deposit. It has a  current NI 43-101 resource of 520,000 ounces of indicated gold from 27.3 million tons at 0.59 grams per ton (gpt) gold, and 300,000 ounces of inferred golf from 20.2 million tons at 0.46 gpt gold.

In January this year, Craig Lindsay, the group's founder and chief executive,  told Proactive: "The style of deposit that we have produces gold today in the western United States. It's one of the largest styles of gold deposits from a production perspective in the USA and these things make money at current gold prices."

Near term goals for the firm include to start a preliminary economic assessment (PEA).

Kilgore has been in the frame before. In the 1980s and 1990s a number of gold companies saw its huge potential.

One in particular, Echo Bay Mines, was ready to press the trigger on a 45-50,000-ounce operation in the late 1990s that would have survived at US$350 gold.

But the development was shuttered when the price of the yellow metal tanked.

The former owner suspected it had uncovered not one deposit, but a number of gold, ‘volcanic-hosted’ targets potentially containing 2-3mln ounces of gold.

“Geologists will tell you epithermal systems are like grapes: they come in bunches and you never find just one grape on the bunch,”  Lindsay  said last October.

"When someone asks what I can see, I am comfortable talking about the potential for a 2-3mln ounces assuming one or two of the additional targets achieves the size of the existing target. Talking about anything bigger at this stage is difficult."

The firm has already completed 10,000m of drilling in 40 holes, and the drillbit is set to start turning again soon.

The group is currently engaged in permitting 27 drill stations at Kilgore and seven sites at the Gold Ridge exploration target and it is working with the US Forest Service to obtain approval to coincide with the planned drills start in around three months' time.

The program will include two metallurgic test holes to enable metallurgical studies on the Aspen corridor host rock. and what it calls a "robust geophysics survey" over the remainder of the Kilgore project, including Prospect Ridge and Dog Bone Ridge, and a comprehensive soil survey.

Other irons in fire

The group also has the Oakley Gold Project comprising 1,360 acres, also in Idaho, which is 15 miles south of the town of Oakley and just north of the Utah/Nevada border.  It has two primary targets - Blue Hill Creek and Cold Creek. It also hosts the Matrix Creek property.

Last month Otis reached an agreement to increase its interest in the Blue Hill Creek and Matrix Creek gold-silver properties from 80% to 100%.

Simultaneously the existing net smelter royalty (NSR) on these projects will be reduced from 2.5% to 2.0%.

Elsewhere, it has the Hai Property, which was included in a portfolio of projects that Otis joint ventured from Bayswater Uranium as part of its agreement to earn an interest in the Kilgore project in 2008. 

Also, the firm 's Gold Bug property lies three miles from the Hai property and comprises nine lode claims.

In February , Otis announced that Agnico-Eagle Mines Ltd (NYSE:AEM) had taken a strategic investment in the firm via a placing, to the tune of over $5mln.

Agnico now has around 9.95% of the shares and has the right to participate in certain equity financings by Otis in order to maintain that stake.

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Otis Gold Corp Timeline

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