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Kootenay Gold Employs Sound Strategy to Maximize Mineral, Minimize Dirt


My thirteen year-old daughter is studying mining in her grade eight social studies class. She tells me that when asked for the first three things they thought of about mining, the students in her class named: dirt, explosives and gold. My daughter then informed me that following their logic, a good mining company basically has less dirt and more gold. There was something elegant and simple to her conclusion, I thought. All these exploration companies with different strategies, different exploration and management styles, all essentially attempting to maximize gold, or silver as the case may be, and minimize dirt.

Kootenay Gold (TSX.V:KTN) is a company with a sound strategy for dirt, explosives and gold. Notice how the company describes its approach: To create generative exploration discoveries, establish junior venture partnerships and acquire advanced stage projects.

Clearly, Kootenay is strategic in its effort to find minerals and see projects grow and flourish. Kootenay’s teams are actively exploring in BC and Mexico to find resources that could become a real resource and mine. Their strategy of creating joint venture agreements with other companies allows them to increase their chances of finding something by casting their net wide, while simultaneously decreasing risk.

In the company’s Management Discussion and Analysis dated June 30, 2007, Kootenay listed six separate generative exploration projects in Mexico and British Columbia. Relying on joint venture agreements with companies like Klondike Silver and Astral Mining reduces risk to Kootenay because it minimizes dilution to Kootenay stock. Instead of having to raise funds on the stock market, Kootenay creates revenue by, in effect, selling a percentage of the spoils of exploration. At the same time, Kootenay is able to leverage the success of the exploration they jointly undertake by holding stock in the partner company.

Also, by associating their projects with companies like Klondike Silver and Amador Gold Corp., both of which are led by the highly respected and massively successful Richard Hughes, Kootenay is running with the best in the business.

And all the while Kootenay can focus its efforts on its 100% owned property of promise. The company’s flagship, advanced-stage Promontorio Silver Project located in Northwestern Mexico is home to a past-producing mine and open pit. It covers approximately 37,000 hectares and four adjacent claims.

A previous feasibility study from 1973, which is not NI 43-101 compliant, estimated an ore reserve of 384,000 metric tons with grades of 0.12% copper, 2.8% lead, 1.74% zinc, 1.5 g/t gold and 367 g/t silver. The recommendation following the feasibility study was to move toward production as well as further exploration on the property to increase the resource.

However, exploitation of the estimated reserve has been limited. During the early 1960s and late 1980s a Mexican-built mine and small open pit produced 48,000 tonnes of oxide and sulphide ore. Along with so many other mines, operations at Promontorio halted on the heels of the gold bear market in the 1990s.

War Eagle Mining undertook further exploration on the property in the late 1990s, including mapping, line cutting, geophysical surveys and drilling. However, under the full weight of the bear market, the exploration junior abandoned the project. Enter bull market and Kootenay Gold, which plans to capitalize on both the resource opportunity and the timing.

Kootenay is currently conducting a 3,000-metre drill program on the Promontorio Property; results are expected in the next 30 to 60 days. Highlights from chip samples in the spring included 480 g/t silver over an estimated true width of 19m as well as 2.51 g/t gold, 11,199 ppm lead and 17,284 ppm zinc. Plans are to continue drilling on three other identified mineralized zones, which together comprise a small 200m x 400m area of a total mineralized trend along a strike of 2000m with a width of 500m. With completion of the Phase I drill program, which aims to confirm historic data, the company plans a Phase II program to test additional targets on the trend. Consistent with Kootenay’s strategy to focus on advanced stage projects, Kootenay has secured the right to 100% registered and beneficial interest in the project.

During the last year Kootenay has pursued an aggressive growth strategy. With Phase I exploration at the Promontorio progressing well, Kootenay will continue, along with JV partners of choice, to develop their many generative exploration projects across Mexico and BC. Certainly, some will thrive and others will not. Kootenay will dedicate an incredible amount of expertise, time, thought and financial resources to developing exploration opportunities and watching them grow.

This article is intended for information purposes only, and is not a recommendation to buy or sell the equities of any company mentioned herein. It is based on sources believed to be reliable, but no warranty as to accuracy is expressed or implied. The opinions expressed in the article are those of the author except where statements are attributed to individuals other than the author, in which case the opinions are those of the individual to whom they are attributed.

The author and are not shareholders in the companies herein mentioned, and the author, as an employee of Resourcex Publishing Corp is expressly prohibited for owning any securities about which they may write for a period of 30 days prior to and 30 days after initial publication of the article in which the securities of any company are mentioned.
Published: 2007-10-10
Author: Katherine Young

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