Kootenay Gold is actively developing mineral projects in the Sierra Madre Region of Mexico and in British Columbia, Canada. The Company’s flagship property is the former producing Promontorio Silver mine in Sonora State, Mexico. The Company's objective is to develop near term discoveries and long term sustainable growth. Encouraging results from ~28,000 meters of drilling at Promontorio suggests the possible existence of a large Porphyry system similar to major producing deposits within the region. Kootenay’s management and technical team are proven professionals with extensive international experience in all aspects of mineral exploration, operations and venture capital markets. Multiple, ongoing J/V partnerships in Mexico and Canada maximize potential for additional, new discoveries while maintaining minimal share dilution.

Kootenay Gold’s Promontorio Silver Project - a mine in the making?

In the world of resource finance, exploration and development, there are three essential ingredients necessary to achieve success: an experienced exploration team with a proven track record, assets that demonstrate near-term potential to develop into major resources, and management with the ability to finance a project to a development decision.

Since first acquiring its flagship Promontorio Silver project in Sonora, Mexico in 2005, Kootenay Gold (“Kootenay”)(CVE:KTN) has been successful in all aspects of its strategic development, advancing the historic producer, while also raising over C$30 million along the way for project development.

Most recently, Kootenay completed a C$6 million non-brokered public financing led by Sprott Asset Management (TSE:SII) – underlining the investment case of this rapidly advancing silver play.

Under the direction of James McDonald, Kootenay has completed over 35,000 meters of multi-phase drilling on Promontorio, moving the project to its current advanced stage of development. McDonald has been a key driver in the success of the Promontorio project, and brings a strong track record of helping companies, such as Alamos Gold, move from exploration to production.

The investment community started to take note of Kootenay’s success late last year, when the company’s stock began a sharp ascent after it released an NI-43-101 compliant resource estimate for Promontorio and confirmed a new 10,000 meter drill program was underway.

Shares in Kootenay have since more than doubled to over $1.00.

It is not entirely surprising that Promontorio is located in Mexico- after all, the country ranks as the world’s largest silver producer. The mine itself was a former-producing mine, partially worked prior to the 1920s, again in the mid-1970s, 1980s, and from 1997 to 1998. Kootenay secured the right to a 100% registered and beneficial interest in the Promontorio project, which consists of contiguous claims covering a total area of approximately 79,000 hectares.

The initial excitement from the NI-43-101 resource report was not unwarranted. The independent calculations estimated core Pit Zone resources contained 5.22 million tonnes averaging 52.7 g/t silver, 0.86% lead and 0.96% zinc, containing 8.9 million oz silver, 99.3 million pounds of lead and 110.8 million pounds of zinc, as well as 0.65 million tonnes averaging 55.7 g/t silver, 0.94% lead and 1.00% zinc. The report estimated an inferred 1.17 million oz silver, 13.4 million pounds of lead and 14.3 million pounds of zinc.

Using a conservative silver price of $15/oz, Kootenay estimated the Promontorio mine contains $320 million in recoverable metals. Keep in mind that silver is now trading at well over $40/oz. At $40/oz and 82% recovery (the recovery rate used by analysts in the NI-43-101 report), the value of silver in the Pit Zone alone, excluding inferred amounts, is worth over $290 million.

Considerable work is being undertaken to increase the size of the Pit Zone resource, using the NI-43-101 report as a guide. Exploratory drilling outside the immediate zone has so far been successful, showing consistent widespread silver mineralization. In an interview, President and CEO James McDonald suggested that confirmation of these additional discoveries could increase the company’s core reserves by two-to-three-fold. This, he said, would make Kootenay comparable in size to that of midsize producers in Mexico.

Silver strategists believe a short-term correction in prices may be in order, but the upward march is likely to continue. Unlike gold, silver is a highly versatile metal used in industry, photography and jewelry, and also a strategic metal due to its use in the aerospace and defense sector. Its qualities have made it a store of value; some even believe governments have or will begin accumulating the metal in strategic reserves. Such uses will support and drive silver prices in the foreseeable future.

This bodes well for Kootenay and its Promontorio Silver property. While current estimates have been for the main Pit Discovery Zone, exploratory drilling has been taking place outside the main site and finding consistent success.

The Pit Zone, which is approximately 200 meters by 300 meters in size, sits at the corner of a parcel with an “L” shaped footprint within the Promontorio holding. Exploration is now ongoing along a 1 kilometer mineralization corridor along the Northeast “leg”. Recently, the company reported significant intercepts of high-grade silver mineralization along this entire stretch. A new pit at the Northeast zone has now become a high priority area.

The company intends on aggressively pursuing this new expansion area by conducting multiple, closely spaced drillings to determine continuity within the known zones of silver mineralization and its precise geometry. The new priority targets have the potential to add to the current reserves. A new independent resource calculation is planned for the near future to validate this potential.

The company will also conduct extensive drilling to the NE and SW outside this main Pit Discovery zone, where silver mineralization has been traced over the entire one-kilometer strike length of the property’s corridor.

Kootenay is well capitalized with cash reserves of about $7 million. This should allow the company to continue its aggressive drilling into the foreseeable future.

With its expansive drilling campaign and planned updated independent resource calculation of the Northeast zone, there are multiple upcoming catalysts for the stock. Should the company’s estimates bear out and silver prices hold up, Kootenay looks to have a very sizeable silver reserve that could rival that of several mid-tier producers in the region.