Pilot, Nevada Sunrise jump on strong drill results

Shares in Pilot Gold (TSX: PLG; US-OTC: PLGTF) and Nevada Sunrise Gold (TSXV: NEV; US-OTC: NVSGF) got a welcome boost after solid drill results on their jointly held Kinsley Mountain gold project in Elko County, Nevada.

Pilot, the operator at Kinsley, holds a 78% stake in the large gold property while ­Nevada Sunrise holds the remainder.

The partners cut 6.85 grams per tonne gold over 41.7 metres in one of the first two holes of their 2014 drilling program. The hit included oxidized intercepts of 16.3 grams gold over 8.5 metres and 20.5 grams over 3.6 metres. The second hole returned 13.7 metres of 1.70 grams gold, including 7.1 grams over 1.5 metres.

These results sent Pilot shares up nearly 20% on Feb. 27 to close at $1.58, while Nevada Sunrise’s shares more than doubled to 46.5¢.

Pilot drilled both holes on Kinsley’s Western Flank target, as 30-metre east and 30-metre west stepouts from discovery hole 91. The hole, drilled late last year, returned 36.6 metres of 8.53 grams gold from 232 metres depth. More importantly, it hit a new host horizon that hadn’t been drilled before.

Pilot’s CEO Matt Lennox-King says that the “high-grade discovery comes from an older unit — or a lower unit — called the ‘Secret Canyon.’ So this has not only confirmed but also changed our thinking of what’s going on at Kinsley.”

The recent drill results have expanded the initial size of the discovery zone by extending the mineralization 30 metres west and east of hole 91. Pilot says the high-grade zone lies flatter than originally thought. The zone has an east–west orientation and remains open in all directions.

To better define the new gold zone, Pilot has budgeted a 17,000-metre, $4.5-million drill campaign this year. It kicked off the first leg of the program in mid-January, where it allocated 3,700 metres to infill drilling and extending the Western Flank discovery towards the Right Spot target. Drill results and soil sampling to date suggest that the targets could form a gold mineralized zone spanning more than 1 km.

“Over time they will incrementally connect up, so it’s all one big connected system, or deposit,” Lennox-King says.

Along with testing the strike length at Western Flank, Pilot will also drill targets south and north of the past-producing Kinsley mine. The northern part of Kinsley has never been tested before, and Lennox-King says Pilot should begin drilling the area in August, once it receives an exploration permit.

The Western Flank target sits 550 metres northwest of the past-producing pits at Kinsley. Previous owner Alta Gold Co. produced 135,000 to 138,000 oz. gold from 1995 to 1999 from these pits. Alta abandoned the mine due to low gold prices.

Pilot bought an option to earn a majority interest in the 30 sq. km Kinsley property in September 2011, and owns 78%. Pilot’s CEO says that historically the average drilling depth at the project was 65 metres, leaving the potential at depth unexplored.

“It’s kind of the classic story in Nevada in that in the seventies and eighties, people drilled shallow holes and were only looking for oxides. And as thinking has changed and as targets have changed — and I think technology as well — people started drilling deeper and testing bigger and better concepts, and being successful.”

Pilot’s team made the Western Flank discovery 230 metres below surface. Before that, Pilot’s team, formerly at Fronteer Gold, discovered and advanced the 2.6 million oz. Long Canyon gold deposit, 100 km north of Kinsley. Newmont Mining (NMC: TSX; NEM: NYSE) then bought Long Canyon through its 2011 acquisition of Fronteer.

Now Pilot Gold intends to apply the exploration strategy and success it had at Long Canyon to Kinsley Mountain. It notes the gold mineralization at Kinsley is similar to Long Canyon’s, as well as other Carlin-style, sediment-hosted gold systems in the area.

“What has us so excited is that we came into Kinsley two years ago with a concept and a model. We were confident we would suceed, and up to the Western Flank discovery, we had been. But to be able to drill big, thick, repeatable intercepts of high-grade oxide mineralization is incredibly exciting . . . and we believe we are onto a great project,” Lennox-King says.

Outside of Nevada, Pilot Gold holds the prospective TV Tower and Halilaga projects in northwestern Turkey.