Gold diamonds

Ought to Gold Mining Buyers Contemplate Kilgore Minerals?

aurum
Written by aurum

We wrote about Kilgore Minerals this previous winter, as a result of it holds potential U.S. uranium properties. Whereas finding out the corporate, it turned evident the corporate’s uranium would take a backseat to the corporate’s gold property in southern Idaho. We reviewed Robert Bishop’s commentary in his self-published Gold Mining Inventory Report. Mr. Bishop is very thought to be an astute junior gold inventory picker, and his evaluation is sort of thorough. There may be little doubt Bishop holds excessive esteem for Kilgore Minerals’ Chief Government Norman Burmeister.

Extra importantly, the very profitable Pinetree Capital (Toronto: PNP) has made a major funding in Kilgore. Respectively, the Chief Government and CFO, Sheldon Inwentash and Larry Goldberg, of each Pinetree Capital and closely touted Mega Uranium (TSX: MGA), have personally invested in Kilgore Minerals. A current Forbes journal article took a swipe at each Mega Uranium and Pinetree Capital. Really, it was extra of a head butt. Pinetree Capital is again to buying and selling above C$17/share, up from a yr in the past when it traded for lower than $3/share. So the Forbes article was a non-event for Pinetree Capital. And their holdings in Kilgore Minerals, which reportedly are estimated at between 10 and 20 p.c of the corporate, have been handed by with out discover.

Property Historical past

Kilgore’s Idaho gold property has been explored for the reason that 1930’s, when a gold discovery was made by the Blue Ledge Co. Almost 50 claims have been staked in 1982 and leased to a Kennecott subsidiary within the mid Nineteen Eighties. Seven holes have been drilled. By 1990, Placer Dome acquired the property and drilled 39 holes, greater than 21,000 toes of drilling. A Pegasus three way partnership drilled one other 23 holes, practically 10,000 toes of drilling, by 1994. Echo Bay earned majority curiosity within the property, by 1996, after having spent $3.5 million drilling 122 holes for greater than 82,000 toes. In 1997, with the falling worth of gold and troubles within the mining sector introduced on by the Indonesia inventory fraud, Bre-X Minerals, Echo Bay dropped its exploration ambitions on Kilgore – and shelved all of its exploration tasks. In 1998, Latitude Minerals continued a modest exploration of slightly greater than 4,000 toes.

Close to the underside of the gold bear market, Kilgore Gold (an entirely owned subsidiary of Kilgore Minerals) acquired one hundred pc possession of the property. A brand new spherical of preliminary exploration recognized new gold targets. By 2004, Kilgore Gold expanded the corporate’s property holdings to three,000 acres. Has this property been drilled like Swiss cheese or does Norman Burmeister know what he’s doing? It’s had practically 200 diamond and reverse circulation drill holes, totaling greater than 126,000 toes of drilling.

In an earlier interview with Burmeister, he advised us, “I’m very enthusiastic about this mission. It was a property that was very excessive on Echo Bay’s listing.” Main corporations have expended greater than $8 million to outline a modest, and probably financial, useful resource. Not less than three totally different entities have established useful resource estimates on the Kilgore gold property. In 1996, Placer Dome reported 14.1 million tons, grading 0.04 ounces/ton and with a cut-off grade of 0.015, for a deposit of 561,000 ounces of gold. A yr later, Echo Bay launched a sectional estimate report exhibiting 18.7 million tons, grading 0.029, for a complete of 534,959 ounces of gold.

Nevertheless, the one useful resource estimate authorised by Canadian regulators (Kilgore trades on the Toronto Enterprise Change) is the Van Brunt/Rayner Technical Report, filed in October 2002, and which is compliant with Nationwide Instrument 43-101 (NI 43-101). This report confirmed about 7 million tons buying and selling 0.031, with a 0.01 cut-off grade, for an indicated useful resource of 218,000 ounces of gold. The report confirmed an inferred useful resource, including one other 269,000 ounces of gold. That is shut sufficient to the Placer Dome and Echo Bay estimates, however it’s unlikely to be mineable until Kilgore finds extra gold.

In the course of the 2004 drilling program, Norm Burmeister received the sniff of what may make this a beautiful acquisition by a serious gold firm. “We’re on the lookout for a excessive grade feeder system,” Burmeister advised us. Within the earlier drilling program, Burmeister received and inspiring intercept of 0.465 ounce per ton gold over 10 toes inside a broader 170-foot zone of low-grade mineralization at 0.04 ounces per ton. On Tuesday, Kilgore Gold made its announcement it could begin its chase to search out out if, certainly, there’s an elephant discovery of gold on its property.

In an electronic mail to us, Norm Burmeister wrote, “The high-grade zone, known as the “Elsa Zone”, was intersected at a core depth of 410 toes. You will need to notice that this gap was drilled in an space that had by no means been drilled some 4650 toes from the useful resource space.” The Elsa Zone is positioned inside the Canine Bone Ridge goal space. Burmeister additionally identified, “There are not any identified workings within the space, and there’s no identified gold mineralization on the floor, thus making the Elsa Zone a real ‘blind discovery.’ Kilgore’s blind discovery within the Elsa Zone proves there could also be some prospects within the very massive Canine Bone Ridge goal space.

Rationale

The aim of the 2006 drilling program, Burmeister advised us, is to find out “the true potential of the Canine Bone Ridge space goal.” Niel Prenn, an expert engineer with Mine Improvement Associates of Reno, Nevada, accomplished a scoping stage replace of Echo Bay’s 1996 evaluation of the mission. He wrote, “The mission seems to have moderately engaging economics if the ‘doubtlessly mineable materials’ could be doubled at $375/ounce gold worth.” Prenn noticed the Kilgore mission as one with a “massive epithermal gold deposit.” This confirmed an earlier geological report by Stanton W. Caddey, who wrote in an October 2003 report, “Exploration potential on the Kilgore property for greater than doubling the current gold useful resource with additional exploration drilling is thought to be wonderful.”

The encouraging drill gap in 2004 helped transfer this mission to the present drilling program. “We consider the Canine Bone Ridge goal space represents the core of the hydrothermal system that has generated the identified low grade useful resource at Kilgore,” Burmeister speculated. That’s why he’s drilling the Canine Bone Ridge goal space. The primary holes shall be offsets to the promising 2004 discovery gap. “We don’t know the path or dipping,” mentioned Burmeister, asking “Which method does it go?” The primary gap will assist Burmeister orient the path on the north aspect of the goal. Burmeister advised us, “The information we hope to realize from the Elsa Zone offsets shall be necessary in effectively testing different Elsa ‘look-a-like’ definitive targets inside the Canine Bone Ridge goal space.”

Expectations

A drill marketing campaign tends to accentuate expectations. Share costs are inclined to rally larger, relying upon market situations, throughout a drill marketing campaign. The corporate hopes to drill about twelve holes, down between 500 and 800 toes, within the goal space. The primary gap could also be encouraging, however the outcomes from that gap operate as an identifier for the place to position the subsequent drill gap. “The most effective goal has by no means been touched,” mentioned Burmeister, referring to the north aspect of the Canine Bone Ridge. As with many promising properties, they don’t all the time provide the simplest entry. On this case, Burmeister’s expectant goal on the north aspect of Canine Bone Ridge may solely be accessed by helicopter, if that’s the place he has to drill.

What occurs if Burmeister is correct in his evaluation? If his favored Canine Bone Ridge goal does signify the core of the hydrothermal system, then what is going to he have discovered? “As such, it represents a beautiful excessive grade epithermal vein-type gold goal,” Burmeister responded. “The profitable interception of excessive grade gold throughout the 2004 program confirmed this interpretation.”

In 1980, Burmeister based Bull Run Gold Mines, serving as Chief Government and creating a profitable Nevada gold mine. He organized the IPO, which led to a NASDAQ Nationwide Market itemizing, and ran the corporate for eight years.

For 13 years earlier than that, he was the chief geologist for Silver Customary Assets. Burmeister found the Mill Creek orebody in Elko (Nevada), which moved that firm ahead. The property was subsequently bought to Freeport-McMoran. Burmeister additionally conceived for Silver Customary of a novel regional exploration program, overlaying 10,000 sq. miles within the Yukon over practically unexplored territory. In a joint-venture with ASARCO, he helped discovery the Minto orebody within the Yukon. The copper-gold deposit is now going into manufacturing by means of Sherwood Copper.

After forty years within the mining trade, he hopes Canine Bone Ridge will add to his string of gold discoveries and company success tales.

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