Kootenay Gold climbs on Promontorio drill results (December 24, 2007)

Vancouver — Kootenay Gold’s (KTN-V, KOOYF-O) share price shot up after news that the company hit significant precious and base metal mineralization in 20 of 22 holes drilled at its flagship Promontorio project in Mexico.

First-phase 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, 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 down-hole, 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 and 7.87% lead-zinc.

The results outline a 120-metre strike length 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, drilling 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 61, or 58%, closing at $1.66 on a record trading volume of 3.3 million shares. The company now has a 52-week trading range of 85-$1.84 and 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 sizable city located 75 km southwest.

Promontorio consists of four claims covering some 370 sq. km 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 158 metres depth; the company started sinking a production shaft but the Yaqui rebellion forced work to a halt.

In the mid-1950s, the property saw further development, with another company digging an 85-metre-long open cut. A 1973 feasibility study estimated Promontorio held historic reserves of 384,000 tonnes 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.

And 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.