July 04, 2012

Kootenay Silver Expects To Deliver A Significant Resource Upgrade At Promontorio Imminently

By Sally White

“Within this resource update we may very well see numbers in the 40 million to 50 million-plus range”, says chairman Ken Berry.

In the medium to longer term, Ken says, he is targeting “100 million ounces-plus silver, with an equivalent lead-zinc component.”

Kootenay recently completed a two-staged programme on Promontorio that included 35,000 metres of drilling. “The programme was immensely successful”, says Ken, “consistently returning medium to high-grade results over widespread zones of silver mineralisation”.

In an inaugural note last year analysts at Union Securities forecast that the resource at Promontorio was likely to come in at at least 105.5 million silver equivalent ounces. “There could be further upside to our estimate”, added Union.

“These types of systems can typically be very large in size and can result in the discovery of numerous deposits. Examples of major deposits in Mexico associated with diatreme systems include the Pitarrilla silver-lead-zinc deposits in Durango and the Peñasquito silver-gold-lead-zinc mine located in northern-central Mexico,” Ken explains.

So how far away is production? The history of production at Promontorio is intermittent, although the first small underground operation, funded by JP Morgan, operated from the early 1900s to 1925.

Several attempts have been made in the intervening years, but none have been as serious as Kootenay’s plan. This has been to “drill, drill, drill”, and the result is that the resource update is right on schedule.

After it’s out, says Ken, the company will need to conduct scoping and baseline studies “in an effort to fast-track future mine permitting and development”.

Kootenay has already commissioned and completed an initial hydrologic study on the ground water resources on the project. This will form the basis for additional studies going forward in the longer term for prefeasibility level evaluation of mine water supply.

Included will be likely dewatering flow rates needed for potential open-pit and underground mining and mine water supplies.

Meanwhile, a detailed geotechnical logging programme has been designed by Saguaro Geosciences of Arizona that goes beyond the basic specific gravity and rock quality (RQD) data currently being recorded.

As things stand, there is enough money in the bank for the work that’s currently planned. Kootenay closed the half year at the end of March with working capital of C$4.2 million and with cash and cash equivalents of C$2.4 million, so it is funded for the immediate future, and has enough room for manoeuvre to be able to devote a little attention to its joint venture projects in Mexico and British Columbia.

The joint venture with Pinecrest Resources on the Espiritu Polymetallic vein/breccia property at Sonora in Mexico has recently been the subject of an encouraging update, when Kootenay announced initial phase one drill results from five diamond drill holes in this silver-rich mineralized area.

The highest individual section assayed one metre of 187 grams per tonne silver and 1.87% lead plus zinc. Pinecrest and Kootenay are now reviewing the technical data in order to work out what to do next.

But while Espiritu looks good, Ken emphasises that “the top priority at this time remains advancing Promontorio’s silver resource”. Kootenay’s share price has held up relatively well amidst the ongoing market uncertainty, and is currently trading around C
.86 against the 12-month range of between C
.76 and C$1.38.

However, the new resource figure at Promontorio should show that Kootenay has a very sizeable silver reserve which could make it into a potential mid-tier producer, and that could wake the market up pretty quickly.

Source: http://minesite.com/news/kootenay-silver-expects-to-deliver-a-significant-resource-upgrade-at-promontorio-imminently