We wrote about Kilgore Minerals this past winter, simply because it holds potential U.S. uranium properties. While studying the company, it became evident the company’s uranium would take a backseat towards the company’s gold property in southern Idaho. We reviewed Robert Bishop’s commentary in his self-published Gold Mining Stock Report. Mr. Bishop is very regarded as an astute junior gold stock picker, and his analysis is quite thorough. There is certainly tiny doubt Bishop holds high esteem for Kilgore Minerals’ Chief Executive Norman Burmeister.
More importantly, the really productive Pinetree Capital (Toronto: PNP) has produced a significant investment in Kilgore. Respectively, the Chief Executive and CFO, Sheldon Inwentash and Larry Goldberg, of both Pinetree Capital and heavily touted Mega Uranium (TSX: MGA), have personally invested in Kilgore Minerals. A recent Forbes magazine write-up took a swipe at each Mega Uranium and Pinetree Capital. Truly, it was a lot more of a head butt. Pinetree Capital is back to trading above C$17/share, up from a year ago when it traded for less than $3/share. So the Forbes write-up was a non-event for Pinetree Capital. And their holdings in Kilgore Minerals, which reportedly are estimated at in between ten and 20 % with the company, have been passed by with no notice.
Property History
Kilgore’s Idaho gold property continues to be explored given that the 1930’s, when a gold discovery was made by the Blue Ledge Co. Practically 50 claims have been staked in 1982 and leased to a Kennecott subsidiary within the mid 1980s. Seven holes were drilled. By 1990, Placer Dome acquired the property and drilled 39 holes, a lot more than 21,000 feet of drilling. A Pegasus joint venture drilled another 23 holes, virtually 10,000 feet of drilling, by 1994. Echo Bay earned majority interest within the property, by 1996, right after possessing spent $3.5 million drilling 122 holes for more than 82,000 feet. In 1997, with all the falling price tag of gold and troubles inside the mining sector brought on by the Indonesia stock fraud, Bre-X Minerals, Echo Bay dropped its exploration ambitions on Kilgore – and shelved all of its exploration projects. In 1998, Latitude Minerals continued a modest exploration of a bit much more than 4,000 feet.
Near the bottom from the gold bear market, Kilgore Gold (a wholly owned subsidiary of Kilgore Minerals) acquired 100 % ownership from the property. A brand new round of preliminary exploration identified new gold targets. By 2004, Kilgore Gold expanded the company’s property holdings to three,000 acres. Has this property been drilled like Swiss cheese or does Norman Burmeister know what he is doing? It is had virtually 200 diamond and reverse circulation drill holes, totaling much more than 126,000 feet of drilling.
In an earlier interview with Burmeister, he told us, “I’m really excited about this project. It was a property that was very high on Echo Bay’s list.” Key corporations have expended more than $8 million to define a modest, and probably economic, resource. At least three different entities have established resource estimates on the Kilgore gold property. In 1996, Placer Dome reported 14.1 million tons, grading 0.04 ounces/ton and using a cut-off grade of 0.015, for a deposit of 561,000 ounces of gold. A year later, Echo Bay released a sectional estimate report displaying 18.7 million tons, grading 0.029, for a total of 534,959 ounces of gold.
Even so, the only resource estimate approved by Canadian regulators (Kilgore trades on the Toronto Venture Exchange) is the Van Brunt/Rayner Technical Report, filed in October 2002, and which is compliant with National Instrument 43-101 (NI 43-101). This report showed about 7 million tons trading 0.031, with a 0.01 cut-off grade, for an indicated resource of 218,000 ounces of gold. The report showed an inferred resource, adding an additional 269,000 ounces of gold. This is close sufficient for the Placer Dome and Echo Bay estimates, but it is unlikely to become mineable unless Kilgore finds far more gold.
During the 2004 drilling plan, Norm Burmeister got the sniff of what may make this an appealing acquisition by a major gold organization. “We are seeking a high grade feeder program,” Burmeister told us. In the prior drilling system, Burmeister got and encouraging intercept of 0.465 ounce per ton gold over 10 feet within a broader 170-foot zone of low-grade mineralization at 0.04 ounces per ton. On Tuesday, Kilgore Gold created its announcement it would commence its chase to seek out out if, indeed, there’s an elephant discovery of gold on its property.
In an email to us, Norm Burmeister wrote, “The high-grade zone, called the “Elsa Zone”, was intersected at a core depth of 410 feet. It’s important to note that this hole was drilled in an location that had by no means been drilled some 4650 feet from the resource area.” The Elsa Zone is situated within the Dog Bone Ridge target area. Burmeister also pointed out, “There are no identified workings in the location, and there is certainly no acknowledged gold mineralization at the surface, therefore generating the Elsa Zone a accurate ‘blind discovery.’ Kilgore’s blind discovery within the Elsa Zone proves there could possibly be some prospects in the really huge Dog Bone Ridge target location.
Rationale
The objective from the 2006 drilling system, Burmeister told us, is to determine “the true possible from the Dog Bone Ridge location target.” Niel Prenn, a skilled engineer with Mine Advancement Associates of Reno, Nevada, completed a scoping level update of Echo Bay’s 1996 assessment from the project. He wrote, “The project seems to have reasonably appealing economics if the ‘potentially mineable material’ can be doubled at $375/ounce gold value.” Prenn saw the Kilgore project as one using a “large epithermal gold deposit.” This confirmed an earlier geological report by Stanton W. Caddey, who wrote in an October 2003 report, “Exploration possible in the Kilgore property for far more than doubling the present gold resource with additional exploration drilling is regarded as excellent.”
The encouraging drill hole in 2004 helped move this project towards the existing drilling plan. “We think the Dog Bone Ridge target area represents the core from the hydrothermal system that has generated the identified low grade resource at Kilgore,” Burmeister speculated. That is why he is drilling the Dog Bone Ridge target area. The very first holes will be offsets towards the promising 2004 discovery hole. “We don’t know the path or dipping,” said Burmeister, asking “Which way does it go?” The very first hole will assist Burmeister orient the direction on the north side with the target. Burmeister told us, “The expertise we hope to gain from the Elsa Zone offsets will probably be crucial in efficiently testing other Elsa ‘look-a-like’ definitive targets inside the Dog Bone Ridge target area.”
Expectations
A drill campaign tends to intensify expectations. Share prices tend to rally increased, depending upon marketplace conditions, in the course of a drill campaign. The company hopes to drill about twelve holes, down in between 500 and 800 feet, in the target region. The primary hole could be encouraging, however the results from that hole function as an identifier for exactly where to spot the next drill hole. “The best target has in no way been touched,” stated Burmeister, referring towards the north side of the Dog Bone Ridge. As with many promising properties, they really don’t usually give the simplest access. In this situation, Burmeister’s expectant target on the north side of Dog Bone Ridge may only be accessed by helicopter, if that’s exactly where he has to drill.
What occurs if Burmeister is correct in his assessment? If his favored Dog Bone Ridge target does represent the core from the hydrothermal method, then what will he have observed? “As such, it represents an appealing high grade epithermal vein-type gold target,” Burmeister responded. “The effective interception of high grade gold in the course of the 2004 system confirmed this interpretation.”
In 1980, Burmeister founded Bull Run Gold Mines, serving as Chief Executive and creating a effective Nevada gold mine. He arranged the IPO, which led to a NASDAQ National Marketplace listing, and ran the business for eight years.
For thirteen years ahead of that, he was the chief geologist for Silver Normal Resources. Burmeister found the Mill Creek orebody in Elko (Nevada), which moved that firm forward. The property was subsequently sold to Freeport-McMoran. Burmeister also conceived for Silver Normal of a novel regional exploration system, covering ten,000 square miles within the Yukon over nearly unexplored territory. Inside a joint-venture with ASARCO, he helped discovery the Minto orebody inside the Yukon. The copper-gold deposit is now going into production by means of Sherwood Copper.
Following forty years within the mining industry, he hopes Dog Bone Ridge will add to his string of gold discoveries and corporate accomplishment stories.
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