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August 21, 2012
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Kootenay Silver Announces Results of Updated NI
43-101
Resource Estimate on its Flagship Promontorio Silver
Project in Sonora, Mexico
Kootenay Silver
Inc. (TSX VENTURE: KTN.V)
is pleased to announce that an updated resource
estimate performed by SRK Consulting (U.S.) Inc. of
Lakewood, Colorado (“SRK”) on its Promontorio Silver
Project has resulted in a significant increase in
the size of Promontorio’s Measured and Indicated
mineral resources.
Resource
Statement
The open pit
mineral resources for the Promontorio Project are
36,018,000 tonnes grading an average of 51.35 g/t
silver equivalent classified as Measured and
Indicated Mineral Resources, with an additional
9,136,000 tonnes grading an average of 42.86 g/t
silver equivalent classified as Inferred Mineral
Resources. This resource is stated above a 15.00
g/t cut-off grade and contained within potentially
economically mineable pit shells.
Underground
mineral resources are 2,216,000 tonnes grading an
average of 48.75 g/t silver equivalent classified as
Indicated Mineral Resources, with an additional
3,077,000 tonnes grading an average of 53.90 g/t
silver equivalent classified as Inferred Mineral
Resources. The resource is stated above a 35.00 g/t
cut-off grade to reflect the higher mining costs
associated with underground production.
The mineral
resources are summarized in Table 1. The updated
Measured and Indicated resource contains an
estimated 61,679,000 oz AgEq with another 14,469,000
oz AgEq categorized as Inferred.
The following
material changes incorporated into the updated
resource estimation contributed to the significant
increase in the mineral resource;
-
Significantly, extensive additional drilling has
been incorporated into the new estimation. This
includes over 37,900 meters of new drilling to
expand the previous resource, as well as define
an entirely new area to the NE of the previous
resource. Over 22,000 samples were used in the
modeled wireframes compared to just over 3,000
for the previous model.
-
The new zones
of mineralization have been defined through
careful logging of the geology, and have been
defined as wireframes that are volumetrically
almost 15x larger than the previously modeled
high-grade core that limited the estimation.
-
Silver prices
used for calculations of cutoff grades and
equivalencies in the previous report were
$15/oz, less than half of the current 18-month
rolling average of $34/oz. This had a positive
significant impact on the amount of material
included in the pit optimization.
Table 1: Resource Statement for the
Promontorio Deposit, Sonora State, Mexico: SRK
Consulting (U.S.) Inc., July 31, 2012*
Notes:
* Mineral Resources are not Mineral Reserves and do
not have demonstrated economic viability. There is
no certainty that all or any part of the Mineral
Resources estimated will be converted into Mineral
Reserves estimate
1 Open pit resources stated as contained within a
potentially economically minable pit shell
2 Pit optimization is based on assumed silver, lead,
and zinc prices of $34/oz , $1.07/lb, and $0.97/lb
respectively, mill recoveries of 82%, 85% and 91%
respectively, a 1.5% NSR, mining costs of $1.20/t,
and a processing and G&A cost of $12.00/t
3 Break-even cutoff grades used were 15 g/t AgEq for
open pit mill material and 35 g/t AgEq for
underground material;
4 Silver equivalency is based on unit values
calculated from the above metal prices, and assumes
100% recovery of all metals.
5 Mineral resource tonnage and contained metal have
been rounded to reflect the accuracy of the
estimate, and numbers may not add due to rounding
Kootenay President and CEO James McDonald states, “It is
immensely satisfying to see the hard work and diligence
of our entire team on the ground and in the office be
rewarded by such an excellent result. We cannot
emphasize enough the significance that the 59 million
measured and indicated silver equivalent ounces are
contained within two optimized Whittle Pits. This bodes
extremely well for the potential economic viability of
the Promontorio project and our objective of seeing
Promontorio become a prominent Mexican silver
producer.”
Adds McDonald “In addition to the outstanding results,
the resource areas remain open in multiple directions
and have the potential to materially increase in size
yet again. The next steps will be to aggressively pursue
the expansion of these resources through drilling and to
advance geotechnical, engineering, groundwater and
environmental studies to be incorporated into assessing
the economic viability of the project.”
The mineral resources are reported in accordance with
Canadian Securities Administrators (“CSA”) NI 43-101 and
have been classified in accordance with standards as
defined by the Canadian Institute of Mining, Metallurgy
and Petroleum (“CIM”) “CIM Definition Standards – For
Mineral Resources and Mineral Reserves”.
This mineral resource estimate has been completed by
Matthew Hastings M.Sc, P.Geo under the direction of
Jeffrey Volk, M.Sc. C.P.G., FAusIMM, Principal Resource
Geologist with SRK, who has reviewed pertinent
geological information in sufficient detail to support
the data incorporated in the mineral resource estimate.
Mr. Volk is an Independent Qualified Person as defined
under NI 43-101 and is responsible for the mineral
resource estimate presented in this release.
Drilling data includes a total of 45,118 samples from
65,092m of drilling. Approximately 37,900m has been
drilled since the 2010 resource was completed. Of the
45,118 samples in the database, 22,658 lie within the
wireframes and were used in the resource estimation.
This is significantly more data than the previous
estimation, which used only 3,022 samples within the
modeled wireframes. Wireframes are three-dimensional
closed solids constructed in Vulcan™ and based on a
combination of logged geology and assay information.
These wireframes limit the estimation.
Three-dimensional wireframes were constructed for the
modeled domains using Leapfrog 3D™ modeling software as
well as Vulcan™. SRK modeled both the SW/Pit and NE
zones independently, and corrected inconsistencies with
the Leapfrog solids using Vulcan.
The average sample length for all samples is 1.44m.
Samples were composited to 3m lengths within the breccia,
stockwork, and PC zones. For the estimation, SRK used
Ordinary Kriging in the densely-drilled areas, and
Inverse Distance Weighting for the areas with more
widely-spaced drilling. SRK applied appropriate block
model validation techniques for a resource estimation at
this stage of project development.
Pit optimization was conducted using Whittle™ software
and evaluating the block model which was constructed in
Vulcan™. A cutoff for the pit optimization of 15 gpt
and 35 gpt silver equivalent for open pit and
underground was used respectively.
Measured, Indicated and Inferred Mineral Resources are
categorized as Measured being where at least 3 drill
holes occur within a 25 meter ellipsoid, Indicated being
where at least 3 drill holes occur within a 50 meter
ellipsoid and Inferred being where at least 2 drill
holes occur within a 75 meter ellipsoid. Blocks
estimated using Inverse Distance Weighting in the
widely-spaced drilling intermediate to the two
predominant zones were categorized as Inferred.
QA/QC
The majority of holes reported here were drilled with HQ
sized diamond drill core with some sections reduced down
to NQ sized core. Core samples were cut using a core saw
with 1 to 2 meter long sample intervals. A select few
holes drilled using reverse circulation methods were
included in the resource estimation, but are generally
in the areas of more widely-spaced drilling between the
two primary zones. Further Quality Assurance and Control
procedures and details on assays are disclosed on the
Kootenay Gold Inc. website.
SRK, with inputs from Kootenay on specific sections,
will be the author of an NI 43-101 compliant Technical
Report on the Mineral Resource Estimate for the
Promontorio Project, to be filed within 45 days of this
news release.
ABOUT KOOTENAY
Kootenay Silver Inc. is actively developing mineral
projects in the Sierra Madre Region of Mexico and in
British Columbia, Canada. Its flagship property is the
former producing Promontorio Silver mine in Sonora
State, Mexico. Kootenay’s objective is to develop near
term discoveries and long-term sustainable growth. Its
management and technical team are proven professionals
with extensive international experience in all aspects
of mineral exploration, operations and venture capital
markets. Multiple, ongoing J/V partnerships in Mexico
and Canada maximize potential for additional, new
discoveries while maintaining minimal share dilution.
For additional information, please contact:
James McDonald, CEO and President
at 403-238-6986
Ken Berry, Chairman
at 604-601-5652; 1-888-601-5650
or visit:
www.kootenaysilver.com
The TSX Venture Exchange has not reviewed and does not
accept responsibility for the adequacy or the accuracy
of this release. Cautionary Note to US Investors:
This news release may contain information about adjacent
properties on which we have no right to explore or mine.
We advise U.S. investors that the SEC's mining
guidelines strictly prohibit information of this type in
documents filed with the SEC. U.S. investors are
cautioned that mineral deposits on adjacent properties
are not indicative of mineral deposits on our
properties. This news release may contain
forward-looking statements including but not limited to
comments regarding the timing and content of upcoming
work programs, geological interpretations, receipt of
property titles, potential mineral recovery processes,
etc. Forward-looking statements address future events
and conditions and therefore involve inherent risks and
uncertainties. Actual results may differ materially from
those currently anticipated in such statements.
This press release uses the terms “Measured”,
“Indicated”, and “Inferred” resources. United States
investors are advised that while such terms are
recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does
not recognize them. “Inferred Mineral Resources” have a
great amount of uncertainty as to their existence, and
as to their economic and legal feasibility. It cannot be
assumed that all or any part of an Inferred Mineral
Resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or other
economic studies. United States investors are cautioned
not to assume that all or any part of Measured or
Indicated Mineral Resources will ever be converted into
Mineral Reserves. United States investors are also
cautioned not to assume that all or any part of a
Mineral Resource is economically or legally mineable.
2012 number 13
