Kootenay Gold climbs on Promontorio drill results (December 10, 2007)

Vancouver – Kootenay Gold‘s (KTN-V) share price shot up after news that the company hit significant precious and base metal mineralization in 20 of 22 holes drilled in a phase one drill program at the company’s flagship Promontorio project in Mexico.

Drilling encountered wide to moderate intervals of high-grade silver-gold-lead-zinc breccias in a porphyry breccia setting, many starting from surface. The program targeted three areas.

The best results in the Pit Breccia area came from a 5 to 25 metre wide zone that occurs near the bottom of the breccia above a reverse fault. The longest intersection came from hole 2, which returned 23 metres grading 233.5 grams silver per tonne, 1.47 grams gold per tonne, and 3.79% combined lead-zinc from 71 metres depth.

Also in the Pit Breccia zone, Hole 5 returned 14.4 metres of 338.9 grams silver, 1.8 grams gold, and 4.54% lead-zinc from 66 metres downhole, including 5.9 metres grading 664 grams silver, 2.65 grams gold, and 7.98% lead-zinc. Similarly, hole 9 cut 18.4 metres of 366 grams silver, 3.54 grams gold, and 6.74% lead-zinc from 62 metres depth, including 6.7 metres grading 671.2 grams silver, 3.46 grams gold, 7.87% lead-zinc.

The results outline a 120-metres strike and a 160-metre dip extent for the Pit Breccia zone. The host rock is andesite that is brecciated, fractured, and variously altered and mineralized throughout.

In the Adobe Breccia, drill encountered a well-developed and well-mineralized breccia starting from surface and continuing to a minimum vertical depth of 195 metres. Hole 17 intersected 77.8 metres grading 30.9 grams silver, 0.43 gram gold, and 1.29% lead-zinc from 8 metres depth, including 36 metres grading 48.4 grams silver, 0.77 gram gold, and 2.19% lead-zinc. Hole 22 returned 151 metres grading 46 grams silver, 0.48 gram gold, and 1.56% lead-zinc.

In the Central Breccia test area, hole 15 intersected 2 metres of 579.8 grams silver, 0.98 gram gold, and 7.86% lead-zinc from 63 metres depth. Hole 14 returned three short intersections with lower-grade mineralization. The zone has been tested in an area 175 metres wide by 270 metres long; airborne geophysics indicate the mineralized area may extend over a significantly larger area.

News of the first Promontorio drill results boosted Kootenay Gold’s share price by 79 in mid-day trading before settling slightly to gain 61 or 58% by day’s end, closing at $1.66 on record 3.3 million shares traded. The company now has a 52-week trading range of 85 to $1.84 and has 18.8 million shares issued.

The Promontorio project, which lies on the western margin of the Sierra Madra Occidental rhyolite volcanic belt, is accessible by road in the dry season from Ciudad Obregon, a sizeable city located 75 km to the southwest.

Promontorio consists of four claims covering some 37,000 hectares in northwestern Mexico. Before Kootenay Gold picked it up last year, the project had been worked sporadically for the previous 100 years, seeing small-scale production and limited drilling.

In the early 1900s Manhattan Exploration developed an inclined shaft reaching to a depth of 158 metres, collared in the hanging wall of the northeast-striking fault on a prominent outcrop. The company started sinking a production shaft but the Yaqui rebellion forced work to a halt.

In the mid-1950s, another exploration company dug an 85-metre long open cut, 7 to 25 metres wide and 20 metres deep. A (non-National Instrument 43-101-compliant) feasibility study in 1973 estimated Promontorio held ore reserves of 384,000 tons grading 0.12% copper, 2.8% lead, 1.74% zinc, 367 grams silver, and 1.5 grams gold to a depth of 100 metres below the floor of the open cut.

In the late 1980s a Mexican mining firm built a 200-ton-per-day mill and processed 48,000 tons of ore before low metal prices closed the mine in 1990.