Century Mark: Kootenay Silver's Aggressive Drill Program Towards 100 Million Silver Ounces in Northern Mexico

Currently on the books, Kootenay Silver's [KTN.V] silver equivalent resource on its flagship Promontorio silver project contains a combined Measured and Indicated silver resource of 61,679,000 silver equivalent ounces (37.5M oz's Silver, 372M lb's Lead, 436.9M lb's Zinc). In addition to the measured and indicated silver resources, there are an additional 14,469,000 silver equivalent ounces in the Inferred category (9.6M oz's Silver, 77.6M lb's Lead, 85.3M lb's Zinc).

Having kicked off an aggressive 30,000m drill and resource expansion program late last November (now roughly one-third complete), the company aims to reach the 100 million ounce silver equivalent milestone. With three drills operating seven days a week, the company should have a steady flow of drill results coming in over the next few months, as they work towards this impressive century mark. As well, while the drills are turning, the company looks to add to Promontorio's resource value with a new prospect of gold within its pyrite samples, and the newest discovery called the Phantom Zone, located under a previous geological blindspot. All of these events together are culminating for what could be a very intriguing 2013 for followers of the Kootenay story

Work to-date on the property identified the system to be open ended, with at least 5 new additional mineralized areas that so far are either undrilled or under drilled. That said, the data that is available was encouraging, and led to higher expectations on increasing the size of the deposit even further. A roadmap to a nine-digit resource was scribed.

The objective is now clearly to increase the size of Promontorio, and move it into the scoping prelimary economic assessment stage, while continuing to advance the project towards commercial production. Along the way, added value from gold in the pyrite, and the new Phantom Zone that could possibly contain mineralization over 6km will very likely push Kootenay through the next important milestones.

(Note to the Geos: The Promontorio is a large diatreme hosted system. It has both open pit and underground mining potential, with cut-off grades of 15 g/t and 35 g/t respectively. Average grades in the resource were 51.35 g/t for the open pit, and 48.75 g/t for the underground. The open pit option has an upside of being contained within mineable pit shells with potential economic upside.)

PROMISING PROMONTORIO

Located in the foothills of Sonora State, Mexico, 2.5 hours by car to the nearest airport, the Promontorio project is very accessible in a prime location. It is situated in close proximity to power and water and nearby towns, providing access to supplies and a local labor force.
The property is large in size, spanning over 80,000 contiguous hectares, with a 61 million ounce measured and indicated silver equivalent resource on the books. The Promontorio's diatreme resource has been acknowledged, underlining the project's large-scale potential, and numerous other mineral systems are also in place outside of the diatreme that offer a pipeline of new discovery potential.

So far, the market has recognized the 61 million ounce resource's value, but has neglected any further underlying value from the numerous other mineralization areas that offer substantial potential for new discoveries and further resource expansion.

It's taken approximately six years of quality exploration to prove up the current silver resource. What further work required on the property should do is allay a pipeline of new projects and new deposits coming on stream. Instead of just one ongoing project, the company appears to be defining an actual mining camp. According to their outlook, this has potential of more than just one deposit to be mined.

THE UNFORESEEN POSSIBLE GOLDEN BLUESKY

While the company's moniker denotes silver development as the primary focus, Kootenay Silver may have some gold tucked up its sleeve within its pyrite. The company identified refractory gold, which so far has provided very positive metallurgy to date.

Through oxidizing 100% of the pyrite available, Kootenay's initial tests have shown that they're capable of recovering approximately 94.5% of the gold. Before going full scale into the oxidation process, it appears that the company will conduct secondary tests to see what the recovery is when oxidizing only 50% of the contained pyrite, and then leeching the rest. If it's possible to unlock the gold at a lower oxidation amount (50% vs 100%), then it would also provide a significant impact on lowering the processing cost.

At this stage, they know they can recover the gold in place, but will want to see the economic impact would be if the oxidation + leech process is effective.

NEW DISCOVERY - THE PHANTOM ZONE

Located on the main structure that hosts the two main resource bodies (the Pit Zone and the NE Zone) in the diatreme and breccias, the Phantom Zone is the newest discovery in the Kootenay portfolio. If one were to follow the structure for about 700m to the SW of the Pit resource, they'd encounter a flatline veneer of post-mineral rock that sits atop of the hosting formation. This rock essentially created a massive blindspot on the structure. However, Kootenay followed this structure along strike for over 2km further, and discovered a window into that important host of the rock formation.

The window has since been named, the Phantom Zone, which is a series of high-level quartz veins with both significant gold and silver mineralization. So far in a number of locations, the company has found visible gold embedded into the surface of the quartz, and quite reasonably have been excited about the findings. Now the company is working on mapping the new zone, and conducting preparatory work before a drill test on location will be scheduled in the near future.

Geologically speaking, already there are indications that this structure is mineralized over the entire length of where the overlying post-mineral blinspot-inducing rock sits. If this is indeed the case, then essentially the structure could be mineralized over almost the entire length, which is nearly 6km. The act of proving this hypothesis presents a tremendous increase in blue sky potential for the entire trend.

THE BOTTOM LINE

Kootenay Silver had already solidified its flagship status with its Promontorio Mexico property, and is adding more fuel to the fire with the addition of the boost of gold in the pyrite, and the potential at the Phantom Zone. The company also has a generative project in BC that brings added value, however, it will be left to mention in a future article. The real meat and potatoes are set squarely on the plate of Promontorio, where the company seems to be making important strides in expanding the already in-place resource, and in moving on to the first preliminary economic assessment.

What should also be pointed out is that the company is still quite tight in its share structure. Kootenay comes on the lower-end of the micro-cap scale with only approximately 56.5 million shares outstanding. This still gives plenty of room under the cap for future financings without too much dilution. While many of their peers have felt the downward push on juniors over the last year and a half, Kootenay has only really been pushed sideways, and has retained much of the value despite the harsh market conditions.

Going forward the focus is going to have to justifiably stay on Promontorio, and the added blue sky it contains. So much of the investment dollars have been focused on the property that the other portions of the portfolio are a distant second. There is plenty of mining activity in Sonora, especially within a 150 kilometer radius of Promontorio. Quite a few well-known mines have sprung up in the region's latest rush that surrounds Promontorio. With nine operating mines, this is a very busy area-whereas only ten years ago there were none.

For Kootenay to get to the next stages of development will require steady leadership, and continued perseverance towards expanding the resource beyond 100 million ounce target and into PEA territory.

At its foundation, the company appears led by a team that's built to go that distance. Covered by a well-rounded board, Kootenay Silver has all roles filled from exploration through mine building. The timing that the company's storyline should coincide with is favorable if looked at with a bullish eye on silver.

Silver is indeed a precious metal, or poor man's gold so to speak; But it's also gaining ever-more importance as an industrial metal. Thanks to advanced usage within the healthcare sector, the gap left behind by the near disappearance of film development has more than been filled in terms of demands on silver. Bilateral demands upon silver give the metal a chance to outpace the leverage of gold in the coming two years.

Kootenay's timing has a chance to match the silver wave's crescent. Since 2010 the company has tripled its resource on Promontorio, and is looking to be on a path to quadrupling that mark. Getting to 61 million ounces has been rewarding for the company, but crossing 100 million ounces is a big milestone that with the current 30,000m drilling campaign seems attainable.

G. Joel Chury
for the Bottom Line Report

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