Kootenay adds gold to Promontorio resource

VANCOUVER — Kootenay Silver (KTN-V) always knew there was gold alongside the silver at its flagship Promontorio project in Sonora, Mexico, but without proof the gold was economically recoverable, the company had to exclude the yellow metal from its resource estimates.

But new metallurgical test work shows that 70% of the gold can be pulled from Promontorio’s diatreme breccia-hosted mineralization, so Kootenay has officially added gold to its resource count.

As a bonus, the gold makes Promontorio’s resource fit into one large pit — instead of the two smaller pits that the silver-only resource required.

The single open pit now encompasses 44.5 million measured and indicated tonnes grading 27.77 grams silver per tonne, 0.35 gram gold per tonne, 0.4% lead and 0.47% zinc, plus 14.6 million inferred tonnes averaging 24.95 grams silver, 0.28 gram gold, 0.28% lead and 0.31% zinc. As such, the planned pit contains a total of 51.4 million oz. silver, 638,000 oz. gold, 482 million lb. lead and 558 million lb. zinc.

Kootenay also calculated an underground resource below the pit that uses a cut-off grade of 45 grams silver equivalent, rather than the 20 grams silver-equivalent cut-off used for the pit resource. The underground resource totalsg 215,000 measured and indicated tonnes grading 22.89 grams silver, 0.28 gram gold, 0.4% lead and 0.55% zinc, plus 1.3 million inferred tonnes averaging 26.57 grams silver, 0.37 gram gold, 0.36% lead and 0.38% zinc.

Kootenay’s metallurgical test work suggests that Promontorio’s rocks lend themselves to good ­recoveries. The planned processing circuit involves crushing and grinding, followed by: lead flotation to create a lead-silver concentrate; zinc flotation to produce a zinc-only concentrate; and pyrite flotation to recover the gold.

This process recovers 74% silver, 81% lead and 88% zinc from Promontorio’s rocks. As for the other precious metal, 65% of the contained gold recovers to the pyrite concentrate, while another 9% recovers to the lead concentrate.

Gold would be extracted from a pyrite concentrate using cyanidation and pressure oxidation, which recovers 94% gold from concentrate.

Kootenay expects that a mine at Promontorio could recover 70% of the deposit’s gold. This would change the mine’s economics, since Promontorio hosts 663,000 oz. gold.

This number will likely grow along with the total resource tonnage at the project — Kootenay is drilling at Promontorio, and expects to update the resource again later this year. The gold-focused resource update has not included any of the drilling completed since the previous calculation in August 2012.

Results released since then include notable hits outside of the resource envelope, such as 47 metres grading 31 grams silver, 0.67% lead and 0.66% zinc in hole 121; 60 metres of 31 grams silver, 0.58% lead and 0.6% zinc in hole 129; and 10 metres of 81 grams silver, 0.59% lead and 0.38% zinc in hole 135.

News of the gold-focused resource update left Kootenay’s share price unchanged at 81¢. The company has a 52-week share price range of 62¢ to $1.25, and 63 million shares outstanding.