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Otis Gold Corp. (TSXV:OOO) is an exploration company focused on building a strong portfolio of precious metals properties in mining-friendly Idaho. Otis Gold’s flagship property is the advanced exploration-stage Kilgore Gold Project which contains a 2012 NI 43-101 Indicated Resource of 520,000 ounces at a grade of 0.59 g/t gold and an Inferred Resource of 300,000 ounce at a grade of 0.46 g/t gold. In 2016, the Company initiated a drill program totaling 10,300m over 40 holes, and a new resource estimate is planned for 2017.
The Kilgore deposit features: gold mineralization of a similar type to the world-class deposits found at Round Mountain, Nevada; excellent gold recoveries that support the potential for lower-cost production; amenability to open-pit mining methods; the possibility for an expansion of the size and grade of the existing resource, most importantly the underlying Aspen Formation; and multiple exploration targets that feature the same geologic signature as that which exists at the existing Kilgore Deposit.
Results from its Fall 2015 drill program at Kilgore released in January 2016 demonstrated some of the highest grade and thickest intercepts ever drilled at Kilgore with higher-grade bulk-tonnage intercepts ranging from 50.4 metres (m) to 94.5m thick and grading from 2.05 to 4.24g/t gold. Many of these holes were located in the largely untested Aspen Formation underlying the existing resource.
As a result of the strong drill results from 2015, Otis developed a follow-on drill program for 2016 targeting this underlying sedimentary Aspen Formation. Assay results released in September 2016 from the first six holes of this program program at Kilgore showed bulk-tonnage intercepts ranging from 55m to 120m thick and grading from 0.82 to 1.55 g/t Au have been intersected.. In October, Otis announced further drill results including 30.5m grading 5.37 g/t Au and 114.3 m grading one g/t Au, and advised that an increase in the drill program to 10,300m over 40 holes. In December, Otis released a third set of results that included 85.4m grading 2.50 g/t Au, 69.1m grading 2.07 g/t Au and 50.3m grading 2.04 g/t. Most importantly, most of this mineralization occurred in the underlying sedimentary Aspen Formation, and has confirmed Otis’ belief that this rock unit has the potential to hot significant additional gold mineralization at Kilgore.
With these strong drill results rolling in, Otis announced the staking of an additional 230 federal lode mining claims, a 116-percent increase in its land position, bringing the total land package to 8,720 acres.
On the financing front, Otis announced the closing of a $2,298,860 private placement priced at $.17 per share in August 2016. The Company also generated approximately $840,000 in capital through the exercise of warrants in October 2016, and announced another private placement in December totaling $500,000 at a price per share of $.27. It should be noted that both private placements were priced significantly above market, and neither financings were burdened with dilutive warrants.
- Portfolio of gold and silver projects located in mining-friendly Idaho.
- Near-term producer with an established gold resource: approaching 1.0 million ounces and growing.
- Strong potential for expansion at open-ended Kilgore Deposit with additional multi-million-ounce potential at Gold Ridge and Prospect Ridge.
- 100 percent-owned Kilgore Gold Project is not subject to royalties or residual interests.
- Experienced technical team – made up of core of Echo Bay Mines US exploration team.
- 2016 drill intercepts include:
- 4m of 0.85 g/t Au in hole 16 OKR-316
- 0m of 1.03 g/t Au in hole 16 OKR–317
- 4m of 1.55 g/t Au in hole 16 OKR-318
- 5m of 0.82 g/t Au in hole 16 OKR-321
- 5m of 5.37 g/t Au in hole 16 OKR-315
- 3m of 1.00 g/t Au in hole 16 OKR-327
- 4m of 2.50 g/t Au in hole 16 OKR-338
- 1m of 2.07 g/t Au in hole 16 OKR-348 and
- 3m of 2.04 g/t Au in hole 16 OKR-330
- A10,300m, 40-hole drill program at the Kilgore Gold Project was completed in November 2016, with final results pending.
- Dog Bone Ridge drilling achieved positive early stage drill results and remains lightly explored.
Key Property: Kilgore Gold Project
Otis Gold’s flagship property is the 100-percent-owned Kilgore Gold Project located in Clark County, Idaho about 15 miles to railhead and interstate highway. Excellent infrastructure is nearby including a significant local water supply (a permanent well exists on the property itself) and power lines in the town of Kilgore (located three miles from the deposit).
Idaho’s government takes a practical stance when it comes to its resource and mining policies. The mining industry has played an integral role in shaping the economic development and strength of the State since its founding. Once a stop on the long road to Oregon and California during the 1850s gold rush, Idaho experienced its own gold rush era beginning in 1860. The subsequent population boom led to Idaho becoming officially recognized as a United States Territory in 1863.
The Kilgore Project of 8,720 acres is comprised of a volcanic-hosted epithermal gold system located on the northern margin of the Kilgore Caldera in the eastern Snake River Plain. Historical exploration work consisting of approximately 37,000m in 190 holes of both core and reverse ciruculation drilling was conducted between 1983 and 2012.
Multi-million ounce, open-pit potential
Mineralization at Kilgore is similar to that of the multi-million ounce deposits found in Round Mountain, Nevada and McDonald Meadows, Montana. Currently, the Kilgore deposit measures 3,281 feet long by 1,968 feet wide and remains open in multiple directions with five areas showing expansion potential.
Since 2008, Otis Gold’s exploration work has focused on outlining a sizeable bulk mineable deposit area amenable to open pit methods. Between 2008 and 2011, geophysical surveys and drilling programs at Kilgore continued to support a high degree of confidence in the presence of a high-grade zone in the Kilgore Mine Ridge area of the property which has the potential for open-pit mining and a low-strip ratio estimated at 1.5:1 or less.
In 2009, Otis Gold conducted a CSAMT geophysical survey on the Dog Bone Ridge target area of the property about 3,937 feet southwest of the known Kilgore deposit. Results indicated the presence of numerous sizeable and geologically significant resistivity anomalies underlying the target area.
In 2011, a discovery hole was drilled in the Prospect Ridge target located immediately to the southeast of the Kilgore Mine Ridge deposit area. The first four holes comprise intercepts that extend the Mine Ridge deposit at least 427 feet beyond its previously known southeastern boundary and include:
- Hole 11 OKC-252: 64.0m of 0.40 g/t gold, inclusive of 22.9m at 0.78 g/t gold
- Hole 11 OKC- 249: 10.6m at 1.20 g/t gold
Otis Gold detailed results from its Fall 2015 drill program at Kilgore in January 2016, announcing that bulk-tonnage intercepts ranging from 164 feet to 328 feet thick and grading from 0.02 to 0.15 g/t gold had been intersected. Noteworthy intercepts included:
- Hole 15 OKR-304: 56.4m of 2.05 g/t gold (ended in mineralization)
- Hole 15 OKR-305: 59.5m of 3.79 g/t gold
- Hole 15 OKR-308: 50.3m of 4.24 g/t gold (ended in mineralization)
- Hole 15 OKR-309: 94.5m of 4.21 g/t gold (ended in mineralization)
Drilling, consisting of approximately 3,200m in 19 Reverse Circulation holes, was focused on the Crab Claw, a large and previously untested gap on the deposit’s west end, and the North Target, located north-northwest of and immediately adjacent to the Kilgore resource.
Fall 2015 Drill Program Highlights
The grade and thickness of drill intercepts showed strong potential to expand the size and grade of the Kilgore resource. A need for further drilling in and around the Crab Claw was identified after all 10 holes drilled were found to be mineralized with six holes bottoming in mineralization hosted by Late Cretaceous Aspen Formation sedimentary rocks. Remaining open-ended and at depth, Crab Claw is the western/southwestern extension of the higher-grade core of the Kilgore deposit. While numerous historic holes bottoming in higher-grade Aspen Formation-hosted mineralization have been drilled in the Kilgore deposit, they had not been explored further resulting in more opportunities for expansion of the deposit. Drilling in the North Target has also opened up potential for further lateral expansion.
“The 2015 drill results are a significant milestone in the ongoing development of the Kilgore Deposit,” said Craig Lindsay, Otis Gold’s President and CEO. “We are very excited about the Crab Claw drill results, which are some of the highest grade and thickest intercepts ever drilled at Kilgore, and we remain extremely optimistic about additional expansion potential in the North Target.”
2016 Assay Results – First Six Holes
Otis released assay results in September 2016 from the first six holes of its ongoing drill program at Kilgore, where bulk-tonnage intercepts ranging from 50.4m to 94.5m thick and grading 2.04 to 4.24 g/t gold have been intersected. The drill program was recently expanded to about 10,300m over 40 holes.
Intercepts from the first six holes include:
- Hole 16 OKR-316: 56.4m of 0.85 g/t gold (bottomed in Aspen Formation)
- Hole 16 OKR-317: 61.0m of 1.03 g/t gold (largely in Aspen Formation)
- Hole 16 OKR-318: 120.4m of 1.55 g/t gold (in Tertiary sill and Aspen Formation)
- Hole 16 OKR-321: 55.5m of 0.82 g/t gold (in lithic tuff and Tertiary sill)
Gold mineralization, defined by intervals of significant thicknesses and grades that remain open-ended throughout much of the deposit, was discovered during the 2015 Kilgore drill program in the largely untested Aspen Formation sedimentary rocks. Results show that the Aspen Formation has potential to host significant additional mineralization.
Drill Program Result Highlights
All five holes targeting the Aspen Formation encountered open-ended mineralization and depth, indicating the need for additional drilling. Drill results from 2015 and 2016 confirm that mineralization in the Aspen basement sedimentary rocks is more extensive than previously indicated, while the grade and thickness of drill intercepts at depth in the Aspen Formation show strong potential to expand the size and grade of the Kilgore resource. The Tertiary intrusive sill overlying the Aspen Formation and locally found in the upper part also hosts mineralization with strong potential.
“We are very pleased with this first set of six holes from our ongoing 36-hole program,” said Lindsay. “They support our geologic model and belief that potential exists to expand the Kilgore Deposit at depth in the Aspen sedimentary unit underlying the main deposit, which currently is primarily hosted in volcanics.” Additional drilling is planned to further refine this potential and to explore the Crab Claw located north of the existing deposit. Additional drill results were released in October and November 2016, and a final 12 holes are pending.
Land Position at Kilgore Expanded 116 Percent
Following the staking of an additional 230 federal lode mining claims, Otis Gold announced in October 2016 a 116-percent increase in its land position at the Kilgore Gold Project, increasing the land package to 8,720 acres.
“We have been generating very strong drill results at Kilgore since the release of our NI 43-101 Technical Report and Resource Estimate in 2012, and as a result of both drill success and the continued delineation of additional exploration targets beyond the existing known gold deposit, we felt it was very important to expand our land position,” explained Lindsay.
NI 43-101 Resource Estimate
In 2012, more than three years of exploration work led to the release of a NI 43-101 compliant Resource Estimate on Kilgore. The 2012 Resource Estimate includes all historical drilling, plus an additional 92 HQ core holes totaling 19,630 meters drilled by Otis Gold between 2008 through 2011. Estimate Resources at Kilgore include an Indicated 520,000 ounces of gold in 27.35 million tonnes at a grade of 0.59 g/t gold; and an Inferred 300,000 ounces of gold in 20.23 million tonnes at a grade of 0.46 g/t gold. The Company plans to update its resource estimate in 2017 following receipt of all assays from its 2016 drill program.
Stellar Metallurgical Results
Otis Gold has received positive metallurgical results and an environmental pre-feasibility study which showed no material impediments to permitting an open pit, heap leach operation at Kilgore. Metallurgical testing results indicate the Mine Ridge area of the deposit is amenable to heap-leach processing. Excellent gold recoveries were reported averaging greater than 80 percent at 1.5” crush size based on column leach testing.
Other Gold Properties
Otis Gold holds interest in three other properties in gold-rich Idaho including the advanced-stage Oakley Gold Project and the grassroots Gold Bug and Hai Projects.
Oakley Gold Project
The Oakley Gold Project covers approximately 4,000 acres and is located in Cassia County, Idaho and consisted of three primary targets: Blue Hill Creek, Matrix Creek and Cold Creek properties. A 2008 CSAMT survey identified multiple drill targets on the properties. The latest drill results at the Oakley Gold Project include three holes which intercepted gold mineralization including:
- Hole BHC1401: 123m of 0.691 g/t gold
- Hole BHC14-03: 41.1m of 0.705 g/t gold; and
- Hole BHC14-04: 113.9m of 0.405 g/t gold
Otis Gold filed an updated NI 43-101 Technical Report and Resource Estimate in September 2016 for the Blue Hill Creek and Matrix Creek gold-silver properties, situated about 15 miles south of Oakley, Idaho. The pit-constrained mineral resource estimate, totaling an Inferred Resource of 163,000 ounces Au grading 0.51 g/t contained in 9,972,000 tonnes of ore with a cut-of 0.31 g/t Au, was drawn from a drill-hole database comprising 5 core holes totaling 1,308 meters and 28 reverse circulation drill holes totaling 3,403 meters. The drill-hole database contains gold assay analytical information for 2,224 sample intervals. Assay grades were capped at 1.8 gpt.
Gold Bug and Hai Projects
The Hai Property covers historical gold workings known as the Little Chief Extension in Lemhi County, Idaho. The Gold Bug Property is located three miles from the Hai Property and covers extensive eluvial gold placer workings in an area believed to be favorable for large tonnage, low-grade gold mineralization similar to other gold deposits in the region.
Craig Lindsay MBA, CFA — President
Craig Lindsay has more than 20 years of experience in corporate finance, investment banking and business development in both North America and Asia. He is currently Managing Director of Arbutus Grove Capital Corp., a private company offering corporate finance and merchant banking services. Lindsay was a Founder and President of Magnum Uranium Corp. until its merger with Energy Fuels Inc. As well, he was a Vice-President in the Corporate Finance and Investment Banking Group at PricewaterhouseCoopers LLP. Lindsay was Founder of Malaspina Capital Ltd., a junior capital pool company, and was responsible for identifying its merger with Miranda Mining Corp., a Mexico-based gold producer acquired by Wheaton River Minerals.
Mitch Bernardi M.Sc. Geology — Chief Geologist
Mitch Bernardi has over 30 years of experience in the mining industry and a proven exploration track record of mineral resources and discoveries in gold, zinc, copper, yttrium, rare earths, and uranium. The bulk of Bernardi’s experience, some 20 years, has been in precious metals property generation, exploration, and development, having worked on numerous deposit types while employed by Latitude Minerals, Echo Bay Mines, Cyprus Metals Exploration, Meridian Minerals, Unocal – Molycorp, Inc., Amoco Minerals and Magnum Uranium Corp.
Discoveries directly associated with Bernardi as project leader or as co-discoverer include the Kilgore gold deposit, Idaho (706,000 ounces Au), Coulterville gold project, California (70,000 ounces Au), Crypto zinc deposit, Utah (6.01MM Tons @ 8.68% sulfide zinc), Pan gold deposit, Nevada (400,000 ounces Au), Santiam copper breccia pipe, Oregon, and the Blue Hill Creek gold/silver deposit, Idaho (230,000 ounces Au.)
John Carden, Ph.D Lic. Geo. — Consulting Geologist
John Carden has more than 30 years of experience in exploration management, teaching, and research. He has broad experience in managing large exploration programs and has a proven track record for discovery of ore deposits in the western United States, with a gross metal value of more than $765 million.
From 1986 through 1998, Carden was with Echo Bay Mines. During the period from 1992 to 1998, he was Echo Bay’s Director of U.S. Exploration, where he directed the work of two district geologists, eight senior geologists and a GIS specialist. This group was successful in generating 35 funded projects over a five-year period. While at Echo Bay, he discovered the 600,000 ounce Lamefoot gold deposit, Echo Bay’s highest grade and lowest cost producer, and the Easy Junior gold deposit, a 250,000-ounce sediment-hosted gold deposit located in White Pine County, Nevada.
Most recently, he has consulted on gold projects in Mexico for Minefinders in Chihuahua and Sonora states, in Zacatecas for Corex Gold Corp. and in the U.S. for Magnum Uranium Corp. Carden has a Ph.D. in Geology from the Geophysical Institute, University of Alaska, and an M.Sc. degree in Geology from Kent State University. He is a Licensed Geologist in the State of Washington and a member of the American Institute of Professional Geologists and a Fellow of the Society of Economic Geologists. Carden was a Director of Paramount Gold and Silver Corp through to the completion of its recent merger with Coeur Mining Inc.
Donald E. Ranta, Ph.D. P.Geo — Director
Donald Ranta is an exploration and development mining executive experienced in planning, implementing and directing successful exploration and acquisitions throughout North and South America and internationally. He is a former president and board member of the Society for Mining, Metallurgy, and Exploration (SME) and former Vice-President, Finance and board member of the American Institute of Mining, Metallurgical, and Petroleum Engineers (AIME).
Ranta has successfully directed and led innovative exploration efforts resulting in the discovery, evaluation and/or acquisition of several major deposits including Montana’s McDonald and Mexico’s Santa Gertrudis gold ore bodies. He has also participated in the acquisition or discovery of Baja California’s Paradones Amarillos, Idaho’s Kilgore, Montana’s Seven-Up Pete, Mexico’s Dolores gold-silver, Burkina Faso’s Youga gold and Russia’s Kuranakh gold deposits. In addition, has been a Vice-President of Exploration for Echo Bay Mines and Manager/Vice-President for North American Exploration at Phelps Dodge Mining Company. Ranta was formerly the Chairman, President, CEO and Director of Rare Element Resources and a Director of Animas Resources Ltd.
Dr. Roger Norwich — Director
Roger Norwich was a founding Director of formerly TSX-V listed Mexican Silver Mines Ltd, which completed a merger with Rio Alto Mining Limited (“Rio Alto”) in 2009. He remained an Independent Director of Rio Alto (which has since been acquired by Tahoe Resources Inc.) through to June of 2014, a period during which Rio Alto grew from a development asset through to a mid-tier gold producer. Norwich was previously a Director of Otis from 2012 to 2014.
Currently, he is non-Executive Chairman of Mexico-based Grupo Minero Panuco S.A. de C.V, a private company which has producing copper and gold assets in Mexico. Additionally, he has wide-ranging board experience with both publicly-listed and private enterprises. Most recently, he joined the Board of Directors of Inkron Limited, a private company based in Hong Kong which is involved in nanometal (nanocopper and nanosilver) production for the electronics industry.
Norwich has a BA in Geology and Archaeology (1974) from Manchester University England. He also holds Bachelor of Medicine and Bachelor of Surgery degrees from Manchester University. Early in his career, he worked as an oil exploration geologist for Texaco and gained experience in the North Sea, the Gulf of Mexico and the Permian Basin.
Dr. Tim Miller— Director
Tim Miller has enjoyed a long and distinguished career in progressively senior roles with Standard Life Assurance Company, Wang UK Limited, Glaxo Wellcome plc and, most recently, with Standard Chartered Bank plc. During his tenure with Standard Chartered Bank plc, his roles included Chairman, Standard Chartered Bank Korea and Director level roles in the areas of corporate governance and human resources. As Director, Property, Research and Assurance, he was a Member of the Group Management Committee and had functional responsibility for over 3,000 employees in a role that reported to the Group Chief Executive. The position included responsibility for the Human Resources, Corporate Real Estate, Corporate Secretariat, Legal, Compliance and Assurance (including Regulatory Risk), Internal Audit and Economist/Global Research Group-wide functions.
Miller, who was awarded a Companion of the Chartered Institute of Personnel and Development designation in 2009, has a Doctor of Business Administration degree from the Nottingham University Business School, an MBA from the Scottish Business School and an M.Litt and BA from the University of Stirling.
Sean Mitchell — Director
Sean Mitchell has more than 16 years of experience in business, with a specific focus on corporate financing and investment banking activities.