2012 Kilgore NI 43-101 Report

Transcription

TECHNICAL REPORT AND RESOURCE ESTIMATE FOR THE
KILGORE GOLD PROJECT
CLARK COUNTY,
IDAHO, U.S.A.
LATITUDE 44° 25’ 53” N by LONGITUDE 111° 59’ 52” W
For
OTIS GOLD CORP.
By
DONALD E. CAMERON
Consulting Geologist
SME Registered Member #4018521RM
MMSA QP Member # 01434QP
NI 43-101
Technical Report
Effective Date: July 31, 2012
Signing Date: September 7, 2012
TABLE OF CONTENTS
1
2
SUMMARY ............................................................................................................................................. 1
1.1
Location and Property History ...................................................................................................... 1
1.2
Geology and Mineralization .......................................................................................................... 2
1.3
Exploration and Drilling................................................................................................................. 2
1.4
Metallurgical Testing..................................................................................................................... 3
1.5
Mineral Resources ........................................................................................................................ 4
1.6
Environmental Studies and Permitting ......................................................................................... 6
1.7
Conclusions and Recommendations ............................................................................................. 6
Introduction .......................................................................................................................................... 8
2.1
Terms of Reference ....................................................................................................................... 8
2.2
Sources of Information and Data Used ......................................................................................... 9
2.3
Personal Inspections ..................................................................................................................... 9
2.4
Abbreviations and Acronyms ...................................................................................................... 10
3
Reliance on Other Experts .................................................................................................................. 13
4
Property Description and Location ..................................................................................................... 14
5
6
4.1
Property Location........................................................................................................................ 14
4.2
Land Area .................................................................................................................................... 14
4.3
Nature and Extent of Issuer’s Title and Type of Mineral Tenure ................................................ 15
4.4
Royalties, Back-In Rights, Environmental Liabilities, or Encumbrances ..................................... 17
4.5
Permits and Bonding to Conduct Work ...................................................................................... 17
4.6
Any Other Factors or Risks .......................................................................................................... 18
Accessibility, Climate, Local Resources, Infrastructure and Physiography ......................................... 19
5.1
Topography, Elevation, and Vegetation ..................................................................................... 19
5.2
Accessibility ................................................................................................................................. 20
5.3
Demographics, Local Resources, and Infrastructure .................................................................. 21
5.4
Nature of Transport .................................................................................................................... 21
5.5
Climate and Length of Operating Season ................................................................................... 21
5.6
Water, Power, Mining Personnel, Potential Processing Sites..................................................... 23
History ................................................................................................................................................. 24
6.1
Pre-Otis Gold ............................................................................................................................... 24
i
6.2
Historical Mineral Resource Estimate ......................................................................................... 25
6.3
Past Production ........................................................................................................................... 26
7
Geologic Setting and Mineralization ................................................................................................... 27
7.1
Regional Geology and Associated LS-Type Precious Metals Mineralization .............................. 27
7.2
Local Geology .............................................................................................................................. 30
7.2.1
Aspen Formation (Ka) ......................................................................................................... 32
7.2.2
Undifferentiated Tuffs – (Tlt) .............................................................................................. 33
7.2.3
Sills and Dikes of Intermediate Composition (Tct) .............................................................. 34
7.2.4
Biotite Rhyolite (Tpr) ........................................................................................................... 35
7.2.5
Quartz Porphyry (Tqp) ........................................................................................................ 36
7.2.6
Upper Pyroclastics (Tup) ..................................................................................................... 37
7.2.7
Tuff of Kilgore (Ttk) ............................................................................................................. 37
7.2.8
Local Structures................................................................................................................... 38
7.3
Property Geology and Mineralization ......................................................................................... 39
7.3.1
Mineralized Bodies and Mineralization Controls ................................................................ 39
7.3.2
Mineralization Paragenesis ................................................................................................. 43
7.3.3
Alteration ............................................................................................................................ 43
7.3.4
Trace Elements .................................................................................................................... 45
8
Deposit Types ...................................................................................................................................... 46
9
Exploration .......................................................................................................................................... 50
9.1
Pre-Otis Exploration History ....................................................................................................... 50
9.2
Otis Gold Exploration .................................................................................................................. 52
9.2.1
CSAMT Survey in the Kilgore Gold Project Area ................................................................. 52
9.2.2
Otis Soil Survey, North and South Grids ............................................................................. 55
9.3
10
2012 Exploration ......................................................................................................................... 57
Drilling ............................................................................................................................................. 58
10.1
Drilling and Survey Procedure..................................................................................................... 58
10.2
Type and Extent of Drilling .......................................................................................................... 58
10.3
EBX RC Drilling ............................................................................................................................. 60
10.4
EBX Core Drilling ......................................................................................................................... 61
10.5
Otis Core Drilling ......................................................................................................................... 61
10.5.1
2008 Otis Drill Program ....................................................................................................... 61
ii
10.5.2
10.5.3
10.5.4
10.6
RC and Core Comparisons ........................................................................................................... 62
10.7
Drill Recovery .............................................................................................................................. 65
10.8
Drill Hole Spacing ........................................................................................................................ 66
10.9
Analysis of Drill Hole Types and Orientations ............................................................................. 67
10.10
11
Summary of Otis Gold Drilling Campaigns .............................................................................. 69
Sample Preparation, Analyses and Security.................................................................................... 70
11.1
Prior to 2008 ............................................................................................................................... 70
11.2
Otis Gold Sample Preparation, Assays and Sample Security ...................................................... 70
11.3
ALS Chemex Procedures and Protocols ...................................................................................... 72
11.4
Reference Materials .................................................................................................................... 73
11.5
Blank Samples ............................................................................................................................. 78
11.6
Otis Gold Metallic Screen Work .................................................................................................. 79
11.7
Core Half Pairs ............................................................................................................................. 80
11.8
Check Assays ............................................................................................................................... 82
11.8.1
Kilgore 2008-2009 Drilling Check Assays ............................................................................ 82
11.8.2
Kilgore 2010 Drilling Check Assays ...................................................................................... 83
11.8.3
Kilgore 2011 Drilling Check Assays ...................................................................................... 84
11.8.4
Discussion............................................................................................................................ 85
11.9
12
Compromised Samples ............................................................................................................... 85
Data Verification ............................................................................................................................. 87
12.1
Database Validation .................................................................................................................... 87
12.2
Site Visit....................................................................................................................................... 88
12.3
Inspection and Sampling of Drill Core ......................................................................................... 88
12.4
Adequacy of the Data Used In Report ........................................................................................ 89
13
Mineral Processing and Metallurgical Testing ................................................................................ 90
13.1
EBX Test Program ........................................................................................................................ 90
13.2
2010 Otis Gold Column Leach Tests............................................................................................ 90
13.3
2011 Otis Gold Column Leach Tests............................................................................................ 92
13.4
Cyanide-Soluble Gold Assays ...................................................................................................... 95
iii
14
Mineral Resource Estimates ........................................................................................................... 97
14.1
Introduction ................................................................................................................................ 97
14.2
Drill Hole Database ..................................................................................................................... 97
14.3
Geologic Model ........................................................................................................................... 98
14.4
Data Analysis ............................................................................................................................... 99
14.4.1
Gold Assays ......................................................................................................................... 99
14.4.2
Gold Composites ............................................................................................................... 106
14.4.3
Domain Groupings ............................................................................................................ 107
14.4.4
Capping ............................................................................................................................. 108
14.5
Spatial Statistics and Correlograms .......................................................................................... 117
14.6
Specific Gravity and Tonnage Factors ....................................................................................... 118
14.7
Block Model Definition ............................................................................................................. 119
14.8
Estimation ................................................................................................................................. 119
14.9
Block Model Validation ............................................................................................................. 122
14.9.1
Bias and Volume-Variance Checks .................................................................................... 122
14.9.2
Gold Removed by Capping ................................................................................................ 126
14.10
Mineral Resource Classification ............................................................................................ 126
14.11
Mineral Resources Statement............................................................................................... 127
15
Environmental Studies, Permitting and Social or Community Impact.......................................... 129
15.1
Environmental Studies .............................................................................................................. 129
15.2
Cultural Inventory ..................................................................................................................... 129
15.3
Permitting ................................................................................................................................. 129
16
Adjacent Properties ...................................................................................................................... 130
17
Other Relevant Data and Information .......................................................................................... 131
18
Interpretation and Conclusions .................................................................................................... 132
18.1
Interpretation............................................................................................................................ 132
18.2
Conclusions ............................................................................................................................... 133
19
Recommendations ........................................................................................................................ 135
20
References .................................................................................................................................... 139
21
APPENDIX A. Summary of Significant Drill Hole Intercepts, Otis Gold 2008 - 2011..................... 143
22
APPENDIX B. Declustering Correlograms For Kilgore Deposit ...................................................... 146
23
Appendix C. Kilgore Domain Correlograms................................................................................... 149
iv
24
Certificate ...................................................................................................................................... 155
CERTIFICATE OF AUTHOR ............................................................................................................... 156
Tables
Table 1.1 Historical Mineral Resources for Kilgore Property (Rayner and Associates and Van Brunt,
2002)1. ........................................................................................................................................................... 1
Table 1.2 Kilgore Gold Project Mineral Resources Statement1,2................................................................... 5
Table 6.1 Historical Mineral Resources for Kilgore Property (Rayner and Associates and Van Brunt,
2002)1. ......................................................................................................................................................... 25
Table 8.1 Comparison of LS-Type Deposit Model and Kilgore Deposit Recognition Criteria (Source: Otis
Gold)............................................................................................................................................................ 48
Table 9.1 Listing of holes drilled into several of the anomalies on Dog Bone Ridge (Source: Otis Gold). .. 54
Table 10.1 Compilation of Kilgore Gold Project drilling (number of holes and footage) by company, 1983
through 2011, all areas (Source: Otis Gold). ............................................................................................... 59
Table 10.2 Average Core Recoveries for Otis Gold Drilling Campaigns, 2008 – 2011 (Source: Otis Gold). 66
Table 10.3 Drill Hole Spacing and Gold Grade by Bench Elevation. ........................................................... 66
Table 10.4 Gold Assay Statistics by Drill Hole Orientation. ........................................................................ 69
Table 11.1 Standard Reference Materials Used By Otis Gold 2008-2011 (Source: Otis Gold). .................. 73
Table 11.2 Descriptive Statistics for Core Half Pair Check Assays at ALS Chemex...................................... 80
Table 11.3 Check Assay Statistics, ALS-Chemex with Inspectorate. ........................................................... 82
Table 11.4 Statistics for Acme Check Assays Filtered to >0.05 g/T Au, 2010 Drill Holes. .......................... 83
Table 11.5 Statistics for Acme Check Assays Filtered to >0.05 g/T Au, 2011 Drill Holes. ......................... 84
Table 11.6 List of Compromised Samples (Source: Otis Gold). ................................................................... 86
Table 13.1 Samples Composing Otis Gold Column Tests at p80 of ½” at McClelland Labs (Source: Otis
Gold,Ka=Aspen Sandstone, Tpr=Felsic Dike). .............................................................................................. 91
Table 13.2 Otis Gold 2010 Column Test Results for Lithology Composites at p80 of ½” (12.5 mm) by
McClelland Labs ( McPartland 2011). ......................................................................................................... 91
Table 13.3 Samples Composing 2011 Otis Gold Column Tests at p80 of 1 ½” at McClelland Labs
(McPartland 2011; Tpr=Felsic Dike). ........................................................................................................... 93
Table 13.4 Otis Gold 2011 Column Test Results for Lithology Composites at p80 of ½” (12.5 mm) and 1
½” (38 mm) by McClelland Labs ( McPartland 2011; Tpr = Felsic Dike). ..................................................... 93
Table 13.5 Mean Gold Extraction by CN Leach Assay for Major Rock Types at Kilgore. ............................ 95
Table 14.1 Kilgore Database Table and Field Listing. .................................................................................. 97
Table 14.2 Lithologic Code Groupings for Kilgore Deposit. ........................................................................ 98
Table 14.3 Univariate Statistics of Clustered Composites (Au g/T). ......................................................... 107
Table 14.4 Decile Analysis for Capping of Declustered Composites, Main Zone...................................... 115
Table 14.5 Summary of Capping Results by Method and Final Capping Values by Domain. ................... 116
Table 14.6 Summary of Correlogram Models by Domain......................................................................... 117
v
Table 14.7 Summary of Specific Gravity and Tonnage Factors Applied to Kilgore Lithologies(Source: Otis
Gold).......................................................................................................................................................... 118
Table 14.8 Estimation Search Ellipsoids for Pass 1 – Pass 2 Estimates. .................................................... 119
Table 14.9 Composite Selection Parameters. ........................................................................................... 120
Table 14.10 Pit Optimization Parameters Used to Classify Mineral Resources........................................ 126
Table 14.11 Kilgore Gold Project Mineral Resources Statement1,2 .......................................................... 128
Table 18.1 Kilgore Gold Project Mineral Resources Statement1,2 ............................................................ 134
Table 19.1 Recommended Exploration Budget for Kilgore Project. ......................................................... 137
Figures
Figure 4-1 Kilgore Location Map (Source: Otis Gold,2012)......................................................................... 14
Figure 4-2 Otis Gold Kilgore Property Map (Source: Otis Gold, 2012). ...................................................... 15
Figure 5-1 Photo Showing General Southwesterly Dip of Plateau Containing the Kilgore Gold Deposit on
its Up-dip Northeastern Edge (Photo by Otis Gold).................................................................................... 19
Figure 5-2 Map Showing Access Route from Dubois, Idaho to the Kilgore Gold Project (Source USFS and
Otis Gold, 2012). ......................................................................................................................................... 20
Figure 5-3 Annual Precipitation Totals, Crab Creek (Cabin Creek) SNOTEL Station, Kilgore Gold Project,
Clark County, Idaho (Source: Otis Gold). .................................................................................................... 21
Figure 5-4 Distribution of Precipitation and Snow Water Equivalent (SWE) Throughout the Year, Crab
Creek (Cabin Creek) SNOTEL Station, Kilgore Gold Project, Clark County, Idaho (Source: Otis Gold)........ 22
Figure 5-5 Average Daily Temperatures, Crab Creek (Cabin Creek), SNOTEL Station, Kilgore Gold Project,
Clark County, Idaho (Source: Otis Gold). .................................................................................................... 22
Figure 7-1 Kilgore Gold Project Location Relative to the Northern Margin of the Snake River Plain and the
Centennial Mountains................................................................................................................................. 27
Figure 7-2 Western, Central, and Eastern Segments of The Snake River Plain and Kilgore Project Location
Relative to the Eastern Segment (Modified From Mabey, 1982). .............................................................. 28
Figure 7-3 Ages of Calderas Along the Snake River Plain – Yellowstone Hotspot Track (outlines with gray
fill; after Saunders And Hames, 2005). ....................................................................................................... 29
Figure 7-4 Locations For Many Of The 17-14 Ma Ls-Type Epithermal Deposits in the Northern Great Basin
– Northern Nevada Rift Area (Saunders And Hames, 2005). ...................................................................... 30
Figure 7-5 Local Geology, Kilgore Gold Project, Clark County, Idaho (Source: Otis Gold, 2012; Tbr Tpr).
.................................................................................................................................................................... 31
Figure 7-6 Generalized Geologic Cross Section Looking Northwest, Kilgore Gold Project, Clark County,
Idaho (Source: Otis Gold, 2012). ................................................................................................................. 32
Figure 7-7 Typical Aspen Formation (Ka) Sandstone and Siltstone (Photo by Otis Gold). ......................... 33
Figure 7-8 Typical Lithic Lapilli Tuff (Tlt, Photo by Otis Gold) ..................................................................... 34
Figure 7-9 Typical Bleached, Hydrothermally Altered Rhyolite (Tpr, Photo by Otis Gold) ......................... 35
Figure 7-10 Typical Highly Silicified Quartz Porphyry Cap Rock (Tqp, Photo by Otis Gold) ........................ 36
Figure 7-11 Typical Outcrop of Sinter and Explosion Breccia (Tup, Photo by Otis Gold). .......................... 37
vi
Figure 7-12 Plan View Showing Otis Gold Kilgore Gold Deposit Drill Holes by Year and Previous Resource
Outline (Source: Otis Gold, 2012). .............................................................................................................. 40
Figure 7-13 Cross-Section Looking West Through the Mine Ridge Core Area of the Kilgore Gold Deposit,
Clark County, Idaho (Source: Otis Gold, 2012; Unit names vary slightly from descriptions in text)........... 41
Figure 7-14 Visible Gold In Late-Stage Quartz Veinlet, Otis Core Hole 08 OKC-193 (Photo by Otis Gold). 44
Figure 8-1 Diagram Showing Structural and Volcanic Features Related to the Deposition of Epithermal
Precious Metal Deposits in a Caldera-Related Environment (Rytuba, 1994). ............................................ 47
Figure 9-1 Bubble Map Showing Arsenic In Soil Anomalies in the Gold Ridge Area, EBX, 1996 (Source:
Otis Gold). ................................................................................................................................................... 50
Figure 9-2 Airborne Magnetics Flown by Aerodat for EBX In 1996 ( interpretation and annotation are by
Otis Gold). ................................................................................................................................................... 51
Figure 9-3 Inverted Resistivity Sections and Resistivity/Structure Targets for Dog Bone Ridge (sections
from Wright, 2009; color spectrum indicates high or low resistivity values). ............................................ 53
Figure 9-4 Brecciated Felsic Dike in Hole 10 OKC-243 at Dog Bone Ridge Containing 0.731 g/T Au (Photo
by Otis Gold). .............................................................................................................................................. 54
Figure 9-5 Typical Soil Sampling Site Showing Collection of Material from the “C” Soil Horizon (Photo by
Otis Gold, 2011). ......................................................................................................................................... 55
Figure 9-6 Map of Gold-In-Soil Anomalies Associated with the North and South Soil Grids, 2011. .......... 56
Figure 10-1 Plan Showing All Drill Holes in Kilgore Deposit by Company (Indicated Resource and
optimized pit displayed in background, scale in feet). ............................................................................... 59
Figure 10-2 Histogram illustrating drilling by company including footage by year for Otis (Source: Otis
Gold)............................................................................................................................................................ 60
Figure 10-3 Paired Data Comparison, RC and Core at 10-Foot Maximum Separation. .............................. 63
Figure 10-4 Results of Independent Block Estimates Using RC and Core for Comparison. ....................... 64
Figure 10-5 Distribution of RC and Core Composites in the Kilgore Deposit (Y=North, X=East in local
coordinate system, scale in feet)................................................................................................................. 65
Figure 10-6 Kilgore Drill Hole Spacing by Bench Elevation. ........................................................................ 67
Figure 10-7 Rose diagram of Kilgore drill hole orientations. ...................................................................... 68
Figure 11-1 Measuring and Logging Drill Core at Otis Gold Logging Facility, St. Anthony, Idaho (Photo:
Otis Gold). ................................................................................................................................................... 71
Figure 11-2 Photographing Core Prior to Splitting (Photo: Otis Gold)........................................................ 71
Figure 11-3 Control Chart of Rocklabs Standard OxC88, Certified Value 0.203 g/t Au. ............................. 74
Figure 11-4 Control Chart of Rocklabs Standard OxC72, Certified Value 0.205 g/T Au.............................. 74
Figure 11-5 Control Chart of Rocklabs Standard OxF65, Certified Value 0.805 g/T Au. ............................. 75
Figure 11-6 Control Chart of Rocklabs Standard OxF85, Certified Value 0.805 g/T Au. ............................. 75
Figure 11-7 Control Chart of Rocklabs Standard OxG83, Certified Value 1.002 g/T Au. ............................ 76
Figure 11-8 Control Chart of Rocklabs Standard OxH55, Certified Value 1.282 g/T Au. ............................ 76
Figure 11-9 Control Chart of Rocklabs Standard OxH66, Certified Value 1.285 g/T Au. ............................ 77
Figure 11-10 Control Chart of Rocklabs Standard HiSilK2, Certified Value 3.474 g/T Au. .......................... 77
Figure 11-11 Control Chart of 147 Blank Samples Submitted Between 2008 and 2011. ........................... 78
Figure 11-12 Otis Study Comparing 50-gram Fire Assay vs. 1 kg Metallic Screen Analysis For 97 Samples.
.................................................................................................................................................................... 79
vii
Figure 11-13 Scatterplot of Otis Gold Core Half Pairs With 5% and 10% Relative Error Lines, 2008 – 2011
Data. ............................................................................................................................................................ 81
Figure 11-14 Q-Q Bias Check for Otis Gold Core Half Pairs from 2008 -2011 Campaigns. ......................... 81
Figure 11-15 Q-Q Bias Plot of Inspectorate Check Assays for Pairs >0.05 g/T Au, 2008-2009. .................. 82
Figure 11-16 Q-Q Bias Plot, Acme Lab Check Assays Filtered to >0.05 g/T Au, 2010. ................................ 83
Figure 11-17 Q-Q Bias Plot, Acme Lab Check Assays Filtered to >0.05 g/T Au, 2011. ................................ 84
Figure 13-1 Graph Showing Column Test Results vs. Time for the Three Lithology Composites, 2010 (Data
from McPartland (2011). ............................................................................................................................ 92
Figure 13-2 Otis Gold 2011 Column Leach Test Results (McPartland 2012). ............................................. 94
Figure 13-3 Scattergram Comparing 271 Fire Assays with Cyanide-Soluble Assays for Three Different
Rock Types (Source: Otis Gold, Tpr = Felsic Dike, Aspen Formation = Aspen Sandstone). ......................... 95
Figure 14-1 Geologic Plan of Solid Model Showing Topography Intersection(Black line, right) and Drill
Hole Composites Coded by Gold Grade in opt, 7100 Elevation Bench (Scale in Feet). .............................. 99
Figure 14-2 Histogram and Probability Plot for Gold, Raw Assays. .......................................................... 100
Figure 14-3 Boxplot and Statistics of Raw Assays—Gold vs. Rock Type. .................................................. 101
Figure 14-4 Boxplot and Statistics of Raw Assays—Gold vs. Silicification. ............................................... 101
Figure 14-5 Boxplot and Statistics of Raw Assays—Gold vs. Argillic Alteration. ...................................... 102
Figure 14-6 Boxplot and Statistics of Raw Assays—Gold vs. Tourmaline Alteration. ............................... 102
Figure 14-7 Boxplot and Statistics of Raw Assays—Gold vs. Chlorite Alteration. .................................... 103
Figure 14-8 Boxplot and Statistics of Raw Assays—Gold vs. Oxidation. ................................................... 103
Figure 14-9 Change of Gold Grade Across Ka-Tct Contact........................................................................ 104
Figure 14-10 Histogram and Probability Plot Showing Distribution of Sample Lengths. ......................... 105
Figure 14-11 Scatterplot Showing Relationship of Gold to Sample Length. ............................................. 106
Figure 14-12 Histogram of Gold Grade, Declustered 10-Foot Downhole Composites. ............................ 107
Figure 14-13 Perspective View of Kilgore Estimation Domains (Main is default thus not shown). ......... 108
Figure 14-14 Location of Outlier Composites With Respect to Other Composites (Y= North, X=East, scale
in feet). ...................................................................................................................................................... 109
Figure 14-15 Histogram and Probability Plot for Gold Composites, Aspen Formation. ........................... 110
Figure 14-16 Histogram and Probability Plot for Gold Composites, Main Zone....................................... 111
Figure 14-17 Histogram and Probability Plot for Gold Composites, Aspen-Tct Domain. ......................... 112
Figure 14-18 Histogram and Probability Plot for Gold Composites, MRF Domain. .................................. 113
Figure 14-19 Histogram and Probability Plot for Gold Composites, Tqp. ................................................. 114
Figure 14-20 Metal Content, Tons, and Gold Grade By Gold Cutoff Grade for Main Zone. ..................... 116
Figure 14-21 Kilgore Block Model Definition. ........................................................................................... 119
Figure 14-22 Plan Showing 3-D Shell (red) Around Blocks Estimated in First Pass and Meeting Other
Indicated Resources Criteria (Scale in feet). ............................................................................................. 120
Figure 14-23 Block Model Section 10100N Showing Gold Grade in Blocks and Drill Holes: Indicated
Resource > 0.24 g/T Au (0.007 opt) Solid-Filled, Inferred Blocks Unfilled. (Also, optimized pit shell at gold
price $1650; scale in feet). ........................................................................................................................ 121
Figure 14-24 Block Model Section 15200E Showing Gold Grade in Blocks and Drill Holes: Indicated
Resource > 0.24 g/T Au (0.007 opt) Solid-Filled, Inferred Blocks Unfilled. (Also, optimized pit shell at gold
price $1650; scale in feet). ........................................................................................................................ 121
viii
Figure 14-25 Block Model Grade X Thickness Contour Map at 0.34 g/T Au (0.01 opt) Cutoff Grade (Figure
by Otis Gold, 2012). .................................................................................................................................. 122
Figure 14-26 Plot Showing Composite and Block Grades in N – S Swaths Across Deposit....................... 123
Figure 14-27 Plot Showing Composite and Block Grades in E – W Swaths Across Deposit...................... 124
Figure 14-28 Plot Showing Composite and Block Grades in Vertical Swaths Across Deposit. ................. 124
Figure 14-29 Comparison of Main Zone Estimate to HERCO-corrected Main Zone Composites, Grade and
Metal. ........................................................................................................................................................ 125
Figure 14-30 Grade-Tonnage Curve for Indicated Mineral Resources. .................................................... 127
Figure 19-1 Exploration targets in the resource area of Kilgore project showing Resource Pit Outline,
Indicated resource grade shell (red), major faults, and current drilling (scale in feet). ........................... 136
ix
1
SUMMARY
Otis Gold Corp. (Otis Gold) engaged consulting geologist Donald E. Cameron, M.S. in Geology, Registered
Geologist (S.M.E.) and QP Member (M.M.S.A.), to perform a resource estimate for the Kilgore gold
deposit, part of its Kilgore Gold Project, Idaho, U.S.A. This report documents Mr. Cameron’s
independent estimation of the mineral resources of the Kilgore deposit as of June 1, 2012. The resource
estimate was prepared in compliance with Canadian Institute of Mining and Metallurgy and Petroleum
(CIM) Estimation of Mineral Resource and Mineral Reserves Best Practices Guidelines and this report
was prepared by Mr. Cameron (Author) according to the guidelines of Form 43-101F1, and Companion
Policy 43-101CP, as amended by the Canadian Securities Administrators (CSA) and enacted on June 30,
2011.
Donald E. Cameron is a Qualified Person under the Instrument and conducted a site visit to the Kilgore
property on June 1, 2012. The conclusions and recommendations in this report reflect his best
independent judgment in light of the information available to him as of the effective date of this report,
July 31, 2012. This report may, at the author’s sole discretion, be revised if additional information
becomes known to him subsequent to the effective date.
1.1
Location and Property History
The Kilgore gold deposit is part of Otis Gold’s flagship Kilgore Gold Project, a volcanic-hosted epithermal
gold property located on the northern margin of the eastern Snake River Plain, approximately 5 miles
west-northwest of the small rural hamlet of Kilgore, Clark County, Idaho (Figure 4-1). Otis Gold has a
100% undivided interest in 232 unpatented Federal lode claims on U.S. Forest Service lands. The area is
mountainous; relief on the Kilgore property is 2000 feet (610 m) at elevations above 6400 feet (1950 m).
The property’s initial discovery and earliest known gold exploration and production work was reported
to have been in the 1930’s by the Blue Ledge Company. Evidence of Blue Ledge’s activity remains as
several underground adits, prospect pits, and a mill foundation, though there is no record of gold
production from this period. Six different companies have explored the Kilgore property in modern
times, beginning with Bear Creek Mining in 1983, followed by Placer Dome U.S., Pegasus, Echo Bay
Exploration, Latitude Minerals, Kilgore Gold, and Otis Gold. Each of the companies conducted one or
more campaigns of drilling that presently total 205,150 feet. A 43-101 Technical Report by Rayner and
Associates and Van Brunt (2002) reviewed previous work through 1996 and supported an estimate of
mineral resources (Table 1.1):
1
Table 1.1 Historical Mineral Resources for Kilgore Property (Rayner and Associates and Van Brunt, 2002) .
Classification Cutoff Grade (opt) Au opt Tons(000’s) Ounces(000’s)
Indicated
Inferred
0.010
0.010
0.031
0.028
7,043
9,661
218
269
1
Units are Imperial: tons are short tons, grade is ounces per short ton, ounces are troy ounces.
Technical Report --Kilgore Gold Project – Otis Gold Corp.
1|Page
The information in Table 1.1 is presented as historical information and does not represent a current
estimate. The author did not rely upon the 2002 estimate (Table 1.1) in any way in his preparation of
the mineral resource estimate presented herein. The author used information included in previous
reports, but relied solely on his own review and judgment to make his estimates of mineral resources.
The estimate presented in later sections of this report is the only one to be considered current and
reliable.
1.2
Geology and Mineralization
The Kilgore Deposit is related to a zoned low sulfidation (LS) epithermal hot-spring system in volcanic
rocks of Late Miocene age. Gold mineralization is the classic disseminated, bulk-tonnage type similar to
volcanic-hosted gold deposits at Round Mountain, Nevada and McDonald Meadows, Montana. K-Ar age
determination on hydrothermal adularia tentatively dates mineralization at 5.3 Ma (Late Miocene). At
Kilgore, the main mineralization control is a major northwest-trending structural zone, the Northwest
Fault zone, and is closely associated with a series or set of northwest-trending, high-angle en echelon
rhyolite dikes and dike swarms, with some individual bodies up to as much as 400 feet (120 m) thick. At
least one nearly perpendicular northeast-striking fault, the Mine Ridge Fault (MRF), is a strong host to
mineralization and a principal focus of historic work. Lithic tuff, the most abundant host rock, is also
mineralized in proximity to the dikes. The underlying Cretaceous-Age Aspen Formation, comprising
siltstones and calcareous sandstone, is a host near its contact with the overlying volcanic rocks and the
intrusive rock.
Gold mineralization is associated with pyrite, electrum, native gold, galena, sphalerite, stibnite,
cinnabar, and a host of sulfides, sulfosalts, and selenides containing silver, copper, cobalt, nickel, and
tungsten. Gangue minerals include quartz, adularia, manganiferous siderite, illite, kaolinite, barite, and
dumortierite/tourmaline. Alteration is zoned from quartz and quartz-adularia associated most strongly
with gold alteration to more distal argillic and propylitic alteration.
1.3
Exploration and Drilling
The 43-101 technical report by Rayner and Associates and Van Brunt (2002) summarized exploration
activities through 2002. Echo Bay Exploration (EBX) was the most active explorer up to that time,
performing airborne HEM surveying, regional geologic mapping, soil sampling, and collection of baseline
soil data. The EBX work demonstrated that the Kilgore deposit has a strong gold, arsenic, antimony,
mercury, and selenium geochemical signature. An EBX geophysical survey identified a large resistivity
high on the flank of the Kilgore resource area, larger district-scale highs, and a magnetic low south of the
Kilgore resistivity high. Drill-testing of this anomaly discovered mineralization at Dog Bone Ridge west
and southwest of the Kilgore deposit. Otis Gold conducted a CSAMT survey on this target in 2009 in
order to identify near-surface alteration and underlying structures that could be possible feeder zones.
A resistivity high was drilled in 2010 returning anomalous results up to 0.731 g/T Au below 340 feet (104
m) depth.
In 2011, Otis Gold contracted two soil surveys over the Kilgore property, one covering each extension of
the deposit along the Northwest Fault zone. The North area grid covers the gap between the current
2|Page
Kilgore deposit and the EBX geochemical grid composing the Gold Ridge target. The North area grid
results appear to extend the potential for offsetting strong mineralization in the most northwesterly drill
holes on the edge of the current deposit another 1300 feet (400 m) to the northwest (North area
target). Otis Gold considers this target a priority and announced preparation of a cultural inventory and
new Plan of Operations for road building and a drilling program contingent on market conditions and
funding. The southeastern grid also demonstrated scattered anomalies along the same trend that Otis
Gold plans to follow up at some point with helicopter-supported drilling.
In 2012, Otis Gold received a permit for 4000 m of drilling, including approval of six helicopter drill pads
located on the geochemical anomalies 1.3 km northwest of the Kilgore deposit called the Gold Ridge
target. The balance of the drilling is planned for sites accessible on the existing road system.
Seven companies since 1983 have explored Kilgore with drilling, comprising 107 RC holes and 185 core
holes totaling 205,150 feet (62,530 m), with 138,722 feet (42,280 m) drilled in the Kilgore gold deposit
area, the subject of this report. Two of the drill holes are PQ-size for metallurgical tests. Otis Gold
drilling, comprising the period 2008 – 2011 and nearly half of the deposit footage, is all core. QA/QC
information is not available for drilling campaigns before EBX in 1994, but drill hole logs and assay
certificates are available in Otis Gold’s offices, and all assays were performed at commercial
laboratories. EBX conducted studies of metallic screen assays, included in-house standards in its sample
submissions, and obtained check assay information from a second laboratory. Otis Gold included
standards and blanks with its submissions, collected core half pair data, and submitted pulps prepared
at the primary laboratory for check assays to secondary commercial laboratories. The programs point to
some bias in the primary lab, ALS Chemex, versus the check labs, but the commercial standards analyzed
there display no variation of concern from the certified values.
1.4
Metallurgical Testing
Rayner and Associates and Van Brunt (2002) discuss metallurgical work conducted by EBX in 1995 at
Hazen Research that comprised bottle roll tests and seven column tests on RC cuttings and drill core
composite samples separated into various oxide, transition, and non-oxide material categories. In 1996,
EBX did follow-up work to test recovery: 1) with depth; and 2) different crush sizes up to 1” (25 mm).
Bottle roll recoveries with depth showed inconclusive results, complicated by substantial variability in
head grade between samples. The column test at 1” (25 mm) crush size, performed on a composite of
oxide and mixed oxide-fresh material from drill hole 95EKC-128, achieved 86.6% extraction in 75 days,
comparable to results achieved in the 1995 column tests at ½” (12.5 mm) crush size. The authors noted
a possible relationship between gold head grade and the recoveries achieved and remarked that a
number of samples had higher calculated heads than the initial assay. The studies recommended tests
at coarser crush sizes based on the favorable leaching characteristics obtained in the preliminary ones.
Otis Gold contracted McClelland Labs, Reno, NV, to perform column tests on samples of mineralized
material from four drill holes composited by three main lithologies, Aspen Formation, lithic tuff, and
felsic dike. The samples had relatively high grade like the earlier tests, except the lithic tuff which was
run-of-mine grade. At a ½” crush size, column recoveries were 69.8%, 81%, and 85.3%, respectively.
3|Page
The testwork performed at McClelland indicated an expectation of cyanide consumption at 1.3 lbs
NaCn/ton and 2.0 – 4.5 lbs of lime/ton.
At the end of 2011, Otis Gold prepared three low-grade composites from two PQ drill holes for the
purpose of performing comparison column testing at 1½” and ½” crush sizes.
The two oxide
composites, one of rhyolitic intrusive (Tpr), and the other of lithic tuff (Tlt), were low-to-medium grade
(0.4 – 0.7 g/T Au). The unoxidized composite of Tpr assayed 1.2 – 1.4 g/T Au. The tests achieved
recoveries of 71 – 85% at the coarser crush with little difference between the coarse and fine crush
except in the oxidized Tpr composite which benefited from finer crushing. A high percentage of the gold
leached in the first 30 days; leaching of the ½” material was, in all cases, more rapid than the 1½”
material. Lime addition of 2.0 – 4.5 lbs/ton was sufficient for maintaining reactive alkalinity during
column leaching. The preliminary work suggests cyanide consumption rates of 1.3 lbs NaCN/ton of ore
in commercial production.
A broader program comparing 271 fire assays with cyanide-soluble assays indicates that there is
variability in amenability to cyanidation in the Kilgore deposit and that the cyanide solubility
differentiates strongly between rock types at grades >0.8 g/T Au.
1.5
Mineral Resources
The mineral resource estimates presented herein follow the guidelines of the Canadian Securities
Administrators' National Instrument 43-101 and Form 43-101F1(F) and conform with generally accepted
CIM Estimation of Mineral Resource and Mineral Reserves Best Practices Guidelines. Mineral resources
have been classified in accordance with the "CIM Standards – For Mineral Resources and Reserves:
Definitions" (November 27, 2010).
The Kilgore resource drill hole database is a series of tables in a Microsoft EXCEL® workbook that are
exported to comma-delimited files and then imported to Micromine® format files. The principal tables
are for hole location, downhole survey, lithology and alteration, and assays. The clustered assay file has
25,942 gold assays which have a high coefficient of variation (CV). The lithologies include codes from
different logging campaigns and they have been lumped into five principal units, Aspen Formation, lithic
tuff, rhyolite dikes and sills, intermediate dike, and quartz porphyry, and two minor ones. The assay file
is merged with the lithology file so that each assay interval has the corresponding lithology and
alteration codes. Geologic modeling and statistical analysis demonstrate five distinct domains: 1) Aspen
Formation; 2) Aspen-Dike/Sill contact zone; 3) Main zone; 4) Mine Ridge Fault zone, and 5) Quartz
Porphyry zone.
The assays are composited to 3 m (10 feet) for the estimation, breaking at domain contacts. Grade
capping by domain is performed on the resulting 13,925 gold composites instead of assays because the
latter demonstrate grade dependence on length. The quartz porphyry domain is not capped; caps on
the other domains range between 4 g/T Au and 25 g/T Au.
4|Page
Correlograms were obtained for three of the domains using SAGE2001® software and modeled with low
nuggets and 1 – 2 exponential structures. The principal axis of the Main zone follows the northwest
trend of the Northwest Fault zone, or 309 degrees. The principal axis of the Mine Ridge Fault zone
follows the northeast trend of the fault. The principal and secondary axes for the Quartz Porphyry
correlogram are subparallel to the strike and dip of the unit. These domains were estimated by
ordinary kriging using the correlogram axes to guide the search ellipse. The other domains were
estimated by inverse distance because data spacing in them was too wide to obtain a reliable
correlogram.
The Micromine block model comprised 6-by-6-by-3 m (20-by-20-by-10-ft) blocks discretized in a pattern
of points 3 X 3 X 2. For tonnage calculations, specific gravity for each of the five major lithologic units
was assigned to the blocks by taking averaged values from testing programs undertaken by previous
operators and by Otis Gold with standard wax coat immersion weighing methods and other methods.
Grade estimates for each domain were made using only the composites tagged to the same domain.
Blocks were considered for Indicated mineral resources if at least two drill holes and three composites in
at least two quadrants were found within a correlogram-based search ellipse with dimensions up to a
maximum of 75 m (245 feet) for the kriged domains, and within ellipses with maximum dimension of
135 m (440 feet) in the inverse distance-estimated domains, and if they fell within an optimized pit shell,
discussed below. All other interpolated blocks were classified as Inferred mineral resource.
Mineral resources are reported on the basis of a gold price of $1,650 (U.S.) per ounce (Table 1.2). In
order to establish a reasonable prospect of economic extraction in an open pit context, the Indicated
1,2
Table 1.2 Kilgore Gold Project Mineral Resources Statement
Resource Category
Metric Tons Au (g/T) Au Ounces
(T)
Measured
Indicated
Total Measured and Indicated
Inferred
27,352,000
27,352,000
20,230,000
0.59
0.59
0.46
Short Tons
Au
(Troy)
(t)
(opt)
520,000
520,000
300,000
30,130,000
30,130,000
22,290,000
0.017
0.017
0.014
1
Mineral resources are at a gold cut-off grade of 0.24 g/T (0.007 opt).
Items are rounded off to reflect the precision of the estimate, thus metal quantity varies slightly from the product of tons and
grade.
2
resources herein are contained within an optimized pit shell with pit walls set at 45 degrees. The
estimated recovery is 90 percent for gold. Costs include mining cost estimates of $1.93 (U.S.) per ton for
ore and $1.82 (U.S.) per ton for waste, processing costs estimates of $7.72 (U.S.) per ton, and selling
costs of $5 (U.S.) per gold ounce. The resource cut-off grade 0.24 g/T Au (0.007 opt Au) is considered to
be a reasonable estimate of potential break-even mining economics based on the price, cost, recovery
and mining assumptions. There is no assurance that mineral resources will be converted into mineral
reserves. Mineral resources are subject to further dilution, recovery, lower metal price assumptions,
and inclusion in a mine plan to demonstrate economics and feasibility of extraction.
5|Page
1.6
Environmental Studies and Permitting
A Golder Associates Preliminary Environmental Report (2010) prepared for Otis Gold provided an
overview of studies and permits that will be required to develop the Kilgore Project. The report stated
that issues may arise during studies and permitting, but the information available at the time of the
report did not identify a fatal flaw. As a follow-up to a report recommendation, Otis Gold contracted
with North Wind, Inc. to do hydrologic monitoring and meteorological and air quality monitoring for a 1year baseline study to begin in the summer of 2012. Work on the Kilgore Project is subject to annual
USFS Plans of Operation (POO) that must be submitted in advance. A POO has been approved for
exploration work in 2012.
1.7
Conclusions and Recommendations
The author has reviewed data and reports supplied by Otis Gold pertaining to the project and has found
them to be reasonable in the context in which they are being used.
Kilgore is a low-sulfidation, epithermal, volcanic-hosted disseminated and structure-controlled gold
system in a caldera environment. The deposit is in place beneath a silicified cap that was at, or close to
the paleosurface at the time of formation of the gold deposit. Gold was deposited largely in the
relatively thin cover of Tertiary volcanic and subvolcanic rocks that were emplaced unconformably on
Cretaceous sedimentary rocks, with some mineralized feeders and disseminated mineralization also
occurring below the contact.
The project will benefit from standardizing units of measure and considering the current mix, the metric
system and UTM grid coordinates may serve it best. Drill hole orientations are not optimum for the
capture of structurally controlled mineralization. The grade capping and the separation of the MRF
domain done in this estimate address the risks caused by this circumstance, but grade estimates will
improve by optimizing infill and extension drilling orientations in future campaigns.
The electronic database is sufficiently accurate for resource estimation, although it is very simplified and
contains some averaged assays from historic drilling campaigns.
The geologic interpretation is
somewhat limited by the use of a single set of cross-sections to interpret lithology, mineralization,
structure, and alteration. This has caused some areas of the deposit to be unestimated or classified as
Inferred Resources for lack of complete information. Drill spacing in the lower part of the deposit is
inadequate to generate a reliable correlogram. RC holes as a whole are higher in grade than core holes;
the protocol of drilling with triple tube core barrels and face discharge bits should be continued. Bulk
sampling will be necessary to resolve the discrepancy between RC and core.
Check assay campaigns undertaken by Otis Gold highlight a positive assay bias at ALS-Chemex relative to
Acme and Inspectorate for campaigns in 2008 – 2009 and 2011. Commercial standards submitted by
Otis Gold to Chemex show no signficant or systematic bias relative to the certified values. ALS Chemex
metallic screen checks of Otis Gold core hole gold assays suggests that the latter may be biased low
6|Page
because the metallic screen assays are 8% higher on average than the routine standard 50 g fire assay
entered in the database.
The individual domain resource estimates are generally contiguous and form a body of mineralization
potentially amenable to bulk tonnage mining in an open pit setting. This appears to be supported by
the metallurgical studies performed to date by previous companies and Otis Gold.
Otis Gold should execute the recommended exploration program of 7000 m of drilling to follow positive
results from the 2011 program in the North zone, helicopter-supported drilling of the Gold Ridge target,
and some drill holes to extend mineralization or upgrade resource classification to Indicated resources in
various areas in, and adjacent to the Kilgore deposit which are now classified as Inferred resources.
7|Page
2
2.1
INTRODUCTION
Terms of Reference
Otis Gold Corp. (Otis Gold) engaged consulting geologist Donald E. Cameron, Registered Geologist
(S.M.E.) and QP Member (M.M.S.A.), to perform a new resource estimate of the Kilgore gold deposit,
part of Otis Gold’s Kilgore Gold Project, Idaho, U.S.A. A previous estimate of mineral resources was
described in a 43-101 Technical Report by G.H Rayner and Associates and Bruce H. Van Brunt entitled
Technical Report for the Kilgore Project , dated October 27, 2002.
This report documents Donald E. Cameron’s independent estimation of the mineral resources of the
Kilgore deposit as of June 1, 2012. The resource estimate and this report were prepared by Mr.
Cameron (Author) according to the guidelines of Form 43-101F1, and Companion Policy 43-101CP, as
amended by the Canadian Securities Administrators (CSA) and enacted on June 30, 2011.
Donald E. Cameron is a Qualified Person under the Instrument and conducted a site visit to the Kilgore
property on June 1, 2012. The conclusions and recommendations in this report reflect his best
independent judgment in light of the information available to him as of the effective date of this report,
July 31, 2012. This report may, at the author’s sole discretion, be revised if additional information
becomes known to him subsequent to the effective date. Use of this report acknowledges acceptance
of the foregoing conditions.
The term ‘Kilgore Gold Project’ refers to the entire area covered by the unpatented Federal mining
claims upon which the mineral resources are located and exploration programs conducted by Otis Gold.
This report makes recommendations for specific work and a budget for the Kilgore project.
Unless otherwise indicated, all references to dollars ($) in this report refer to currency of the United
States.
The author does not have, nor has it previously had any material interest in Otis Gold or related entities.
The relationship with Otis Gold is solely a professional association and agreement between it and the
author for the purpose of preparing the Mineral Resource estimates and this report. The payment of
fees by Otis Gold to the author is not contingent on the results of this report.
This Technical Report and all publications, exhibits, documentation, conclusions, and other work
products obtained or developed by the author for this Technical Report are for the sole and exclusive
use of Donald E. Cameron, M.S. in Geology, Registered Member (#4018521RM) of the Society of Mining
Engineers (SME) and QP Member (#01434QP) of the Mining and Metallurgical Society of America
(MMSA). This Technical Report was prepared specifically for the purpose of complying with Canadian
Securities Administrators National Instrument 43-101 and may be distributed to third parties and
published without prior consent of the author if the Technical Report is presented in its entirety without
omissions or modifications, subject to the regulations of NI 43-101. Consent is expressly given for
submission of this Technical Report by Otis Gold to all competent regulatory agencies, included but not
8|Page
limited to the British Columbia Securities Commission, the Ontario Securities Commission, the Alberta
Securities Commission, the TSX-Venture Exchange, and the Toronto Stock Exchange. However, all
reports, publications, exhibits, documentation, conclusions, and other work products obtained or
developed by the author during completion of this Technical Report shall be and remain the property of
the author. Unauthorized use or reuse by third parties of reports, publications, exhibits, documentation,
conclusions, and other work products obtained or developed by the author for the purposes of this
Technical Report is prohibited. Use of this report acknowledges acceptance of the foregoing conditions.
2.2
Sources of Information and Data Used
Otis Gold provided the author with compilations of data used as a basis of this report, principally from
geologic mapping, cross-sections, and drilling campaigns.
This report is based, in part, on internal company technical documents, maps, published government
reports, company memoranda, data and reports prepared by laboratories and professional consultants
in various disciplines, and public documents and statements made by Otis Gold. The NI 43-101
Technical Report by Rayner and Associates and Van Brunt (2002) was relied upon for historical
information on technical aspects and mineral resources for the Kilgore deposit up to that date.
The maps and tables for this report were produced by the author, by Otis Gold, or modified from reports
written for Otis Gold by others. Illustrations or tables are derived from sources other than the author
are acknowledged in the caption below the figure or above the table.
The author presents the results of certain calculations that include a degree of precision most
appropriately handled by rounding in the derivation of sums, products and averages. The author does
not regard the small errors generated by rounding to be material.
The conclusions and recommendations in this report reflect the author’s best independent judgment in
light of the information available to him at the time of writing. The author reserves the right, but will
not be obliged, to revise this report and conclusions if additional information becomes known to him
subsequent to the date of this report.
2.3
Personal Inspections
The author made a site visit to the Kilgore property on June 1, 2012 where he inspected pertinent
outcrops, mineralization, drill sites, and project setting. The author visited Otis Gold’s core preparation
and storage facilities in St. Anthony, Idaho and Spokane, Washington. He inspected drill hole assay logs
and certificates, quality control information, geologic maps and sections, and took six samples from
surface and drill core for which he maintained secure custody and performed independent analysis for
gold at a certified laboratory. Although he cannot validate and verify all of the information that
composes the Kilgore database, the author has found no issues based on his site visit and other
inspections which would preclude estimation of mineral resources.
9|Page
2.4
Abbreviations and Acronyms
Measurements are generally reported in metric units in this report. Where information was originally
reported in Imperial units, conversions may have been made according to the formulas shown below.
Discrepancies may result in slight variations from the original data in some cases due to rounding of
values. Abbreviations, measures and acronyms used in this report are explained in the list below:
AA
Ag
As
Au
BLM
cm
CN
CSAMT
EBX
EM
ft
g/T
g
GPS
GxT
H2S
ha
HCl
HEM
Hg
HNO3
HQ
Hz
ID
IEC
IMC
ISO
K-Ar
Ka
kg
km
lb
degree Centigrade
degree Fahrenheit
atomic absorption
silver
arsenic
gold
Bureau of Land Management
centimeter = 0.3937 inches
cyanide
Controlled Source Audio Magneto-Telluric
Echo Bay Exploration
Electromagnetic
feet = 0.3048 m
grams/tonne (metric)
1 g = 0.0010 kg
Global Positioning System
Grade x Thickness
sulfuric acid
hectare – 2.471 acres
hydrochloric acid
Helicopter EM
mercury
nitric acid
commonly used core diameter = 2.5 inches
frequency defined as the number of cycles per second
Idaho
International Electrotechnical Commission
Idaho Mining Claim
International Organization for Standardization
Potassium-Argon (referring to age date technique)
Aspen Formation
kilogram = 2.2046 pounds
kilometer = 0.6214 miles
pound, 0.4536 kg
10 | P a g e
LDL
LS-type
m
Ma
mean
median
mm
MM
MOU
NaCN
NAD
NAE
NaOH
NGB
NI 43-101
NNR
NQ
NSR
opt
Ounce
PDUS
POO
ppb
ppm
RQD
SNOTEL
SWE
Q-25
Q-75
QA/QC
QP
RC
SD
SG
Sb
sq
Sr
SRP
Standard
T
ton
T, tonne
lower detection limit
low-sulfidation-type of mineralization (quartz-adularia)
meter = 3.28 feet
million years old
arithmetic average of group of samples
50th percentile of a distribution
millimeter = 0.0394 inches
Million
Memorandum of Understanding
Sodium Cyanide (used in heap leaching)
North America Datum
North American Exploration
sodium hydroxide
Northern Great Basin
National Instrument 43-101
Northern Nevada Rift
commonly used core diameter = 1.88 inches
Net Smelter Royalty
troy ounces per short ton, 1.0 opt = 34.2857 g/Tonne
Troy ounce, or 31.1035 g
Placer Dome U.S.
Plan of Operations
parts per billion
parts per million = g/T
Rock Quality Designation
Snowpack telemetry
Snow Water Equivalent
2nd quartile
3rd quartile
Quality Assurance/Quality Control
Qualified Person
Reverse Circulation
Standard Deviation
Specific Gravity
antimony
square, as in sq km
strontium (87Sr is an isotope of strontium)
Snake River Plain
Standard Reference Material
Township
unit of measure = 0.9072 metric tons
metric tonne = 1.1023 short tons
11 | P a g e
TF
Tpr
Tct
Ttk
Tlt
Tqp
Tup
Troy ounce
USFS
UTM
VLF
Tonnage Factor (number of cubic feet containing 2,000 lbs of rock)
Tertiary rhyolite flows and domes, also referred to as Tbr, Felsic Dike on some graphics
Tertiary intermediate-composition dikes and sills
Tertiary tuff of Kilgore
Tertiary lithic tuff
Tertiary quartz porphyry
Tertiary upper pyroclastics (sinter and explosion breccia)
31.1035 grams
United States Forest Service
Universal Transverse Mercator
Very Low Frequency
12 | P a g e
3
RELIANCE ON OTHER EXPERTS
The NI 43-101 Technical Report by Rayner and Associates and Van Brunt (2002) is relied upon for
historical information on technical aspects and mineral resources for the Kilgore deposit up to that date
but not for the current estimate of resources.
The author relies upon descriptions, statements, and illustrations by Otis Gold with respect to the status
of its mineral claims as described in Section 4 and for environmental studies, issues, and permits
described in Section 15. These items are presented for information purposes as required by NI 43-101
and the author has no opinion with respect to these items. The author exercised all reasonable due
diligence in checking, confirming and testing project data, but has relied on Otis Gold’s information and
presentation in formulating his opinions.
Otis Gold geologists John Carden and Mitch Bernardi provided a substantial portion of the illustrations
and text in this report, particularly for Sections 4 – 10, and 15. The author has thoroughly reviewed and
edited these sections and takes responsibility for their content.
13 | P a g e
4
4.1
PROPERTY DESCRIPTION AND LOCATION
Property Location
The Kilgore deposit is situated on the northern margin of the eastern part of the Snake River Plain (SRP),
approximately 5 miles west-northwest of the small rural community of Kilgore, Clark County, Idaho
(Figure 4-1). The core of the Kilgore deposit, known as the “Mine Ridge” area, is centered on longitude
111° 59’ 52” W and latitude 44° 25’ 53” N. Alternative location coordinates of this core area, as
measured in the Universal Transverse Mercator (UTM) Geographic Coordinate System, are 492556E and
4920494N, NAD 83, Zone 12.
Figure 4-1 Kilgore Location Map (Source: Otis Gold,2012).
4.2
Land Area
Otis Gold’s Kilgore Gold Project land position comprises 232 unpatented federal lode mining claims
located on U. S Forest Service land, Caribou-Targhee National Forest, Idaho (Figure 4-2). Included in this
claim position are: 1) a core group of 162 contiguous claims, (150 that were obtained 100% by Otis Gold
from Bayswater Uranium Corp. in late 2011 and an additional 12 claims staked by Otis in late June of
2010); and 2) an additional and mostly adjacent 70 claims staked by Otis Gold on February 2-7, 2012.
These latter claims were staked approximately 1 mile downslope from, and in the West Camas Creek
flats area north and east of the deposit to obtain ground for possible potential future processing
facilities and infrastructure. In total, the 232 federal lode mining claims comprise approximately 4,640
acres (7.25 square miles) located in all or parts of Sections 8, 9, 15-22 and 27-34, T13N, R38E, Boise
Meridian, Clark County, Idaho. The current mineral resource lies wholly within Otis Gold’s property.
14 | P a g e
Figure 4-2 Otis Gold Kilgore Property Map (Source: Otis Gold, 2012).
4.3
Nature and Extent of Issuer’s Title and Type of Mineral Tenure
In 2008 Otis Gold entered into a Memorandum of Understanding (MOU) to form a joint venture with
Bayswater Uranium Corporation on the Kilgore property and additional gold assets, Hai and Gold Bug,
Lemhi County, Idaho, all held under Bayswater’s wholly-owned US subsidiary, Kilgore Gold Company.
Per the terms of the MOU, Otis could earn 50% in the joint venture with a cash payment of $100,000
and 500,000 common shares of Otis Gold stock upon execution of a Joint Venture Agreement. Otis Gold
could earn up to a 75% interest with additional payments, issuance of more shares and additional
exploration expenditures. Bayswater would retain a 2.0% net smelter royalty (NSR) on gold produced
from the property, with Otis Gold given the right to purchase up to 75% of the 2.0% NSR.
On November 30, 2010 Otis announced the finalization of a renegotiated agreement to purchase 100%
interest in the Kilgore Gold Project and related assets (Hai and Gold Bug) from Bayswater for staged
payments of $1.75 million and 2 million common shares of Otis Gold common stock. This new purchase
agreement replaced the previous agreement of 2008, and eliminated the existing 2.0% NSR to
Bayswater. On November 23, 2011, Otis made a final cash payment of $175,000 to Bayswater and
issued the final tranche of Company stock to complete the purchase, resulting in Otis Gold’s 100%
ownership of Kilgore, Hai, and Gold Bug. Quit claim deeds were filed and recorded with both the BLM
and Clark County, Idaho Recorder’s Office, which conveyed 100 percent of the property’s ownership and
title from Bayswater’s wholly-owned US entity Kilgore Gold Company to Otis Gold’s wholly-owned U.S.
entity, Otis Capital USA Corp.
15 | P a g e
Otis Gold contracted with landman R.W. McKamy of Billings, Montana, to conduct a professional land
title search and land title opinion to corroborate and verify its claim ownership in late 2011. Excerpts of
the results and findings of McKamy’s 2011 and 2012 work are summarized below:
1) The property description and location were taken from: 1) the land status records and mining
claim files of the Bureau of Land Management (BLM) in Boise, Idaho; 2) the indices and records
of Clark County Records; and 3) documents provided by Otis Capital USA Corp.
2) Onsite examinations were conducted in 2011, which included BLM Land Status Records, mining
claim files at the BLM Office in Boise, Idaho, and BLM Internet sites for General Land Office
Records, LR 2000, and Geo-communicator. The records of the Clark County, ID were also
examined in 2011.
3) Otis Capital USA Corp. holds title of record to 162 unpatented lode claims located on U.S. Forest
Service lands in accordance with the United States 1876 mining laws 43 CFR Ch11-3800, as
amended, and in accordance with Idaho Statutes Title 47, Mines and Mining, Chapter 6,
Location of Mining Claims.
4) A listing of the claims shows that claims Otis 1-12 (Lead File IMC 201716) were staked by and
claimed by Otis Capital USA Corp. in its own right on June 23, 2010, and 150 lode claims were
acquired by Quit Claim Deed dated November 30, 2011. Idaho Mining Claim (IMC) numbers
assigned to all of these claims by the BLM are as follows:
Claim Name
FOB 13
FOB 16
FOB 17
FOB 28
FOB 29
FOB 31
MC 1
MC 4
Gozer 2
Cat 2
Rex 1-32
Rey 1-47
Gwen 1-53
Gwen 54-61
OTIS 1-12
BLM Serial Number
IMC 77092
IMC 77095
IMC 77096
IMC 77106
IMC 77107
IMC 77109
IMC 161374
IMC 161377
IMC 174947
IMC 177033
IMC 185109-185140
IMC 185688-186638
IMC 186532-186584
IMC 186639-186646
IMC 201716-201727
5) The 162 Certificates of Location for the claims and required maps were timely recorded in the
office of the Clark County Clerk, Dubois, Idaho, and with the BLM State Office in Boise, Idaho.
The Affidavits of Annual Maintenance Fee payment was timely recorded in the Office of the
Clark County Clerk and Recorder, Dubois, Idaho. The annual payments were received and
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verified by the BLM, and are valid until August 31, 2012, at which time another annual payment
will be due.
Otis Gold staked CAMAS 1-70 in February, 2012. Their corresponding Idaho Claim Numbers are shown
below:
CAMAS 1-70
IMC 209304-209373
The author is unaware of any title opinion by a professional landman concerning these claims.
4.4
Royalties, Back-In Rights, Environmental Liabilities, or Encumbrances
Otis Gold reports that there are no royalties, back-in rights, payments, environmental liabilities, or any
other encumbrances affecting its holdings based on the results of McKamy’s title review work (McKamy,
2011; McKamy, 2012). McKamy’s findings are summarized below:
1) There are no valid existing claims of record in conflict with these held by Otis Capital USA Corp.
There are no liens, judgments, suits, or any litigation involving either Otis Capital USA Corp. or
the claims it holds in Clark County Records, Idaho, nor in the land files at the BLM State Office in
Boise, Idaho.
2) Otis Capital USA Corp. owns 100% interest in the subject 162 lode mining claims. The property
has no recorded reserve royalties, rights, agreements, or encumbrances, and no environmental
or tax liabilities of record.
Annual assessment filings/fees continue to be required by the BLM to keep the claims in good standing
and for Otis Gold to retain the property mineral rights. Finally, and to the extent known by the author,
there are no environmental liabilities nor are there any significant factors and/or risks that may affect
access, title, or the right or ability to perform work on the property.
4.5
Permits and Bonding to Conduct Work
Because all of the 232 federal lode mining claims are located on USFS ground, permits required to
conduct work proposed for the property are obtained through the Caribou-Targhee National Forest local
headquarters in Dubois, Idaho. Because Otis Gold has been able to perform all of its drilling on the
previously established project drill-roads, the annual POO permitting is expedited and reclamation
bonding requirements are minimized. Otis Gold’s permit to drill has always been issued by the USFS
within the framework of a Categorical Exclusion (CE), where the permitted activities are deemed
acceptable to all local parties, with no substantive or negative comments of appeal received.
A permit application for Otis Gold’s POO was originally submitted on February 2, 2012. The Plan was
amended and resubmitted on March 29th to allow for additional drilling on established roads in Otis
Gold’s North Target area, where the deposit is currently open to the northwest and northeast. Recent
changes now require a notice and comment period for all CE’s. Otis Gold’s POO and CE statement were
posted in the Idaho Falls Register on April 12th and a permit was issued by the USFS on May 30, 2012 to
conduct a 14 -20-hole program consisting of 4,000 m of HQ core drilling. The permit allows Otis Gold to
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drill on six sites at the Gold Ridge target, located one km northwest of the Kilgore deposit. Otis is
preparing a POO to build 1,350 m of new roads into the “North Area” target.
Otis Gold must maintain a reclamation bond with the USFS, which is rolled forward every year with each
new annual POO and corresponding permit. Otis Gold’s exploration plan and the estimated amount of
surface disturbance involved are used to calculate a monetary reclamation bond assessment that must
be posted by Otis Gold before it can begin its work. The bond, originally posted in 2008, is held in a
holding account until all of Otis Gold’s reclamation work is completed. As of April 2012, bond monies in
the amount of $9,275.00 are held at the Idaho Branch of the East Idaho Credit Union to cover project
reclamation.
Additional permits needed on an annual basis include temporary permits to obtain water for drilling as
administered by the State of Idaho, Department of Water Resources in Idaho Falls, Idaho. Historically,
this permit has been is granted within a two week period. Permits for 2012 drilling were obtained in
April.
Idaho State Land Use Permit No. LU 800561 was acquired by Otis Gold from the Idaho State Department
of Lands on February 17, 2012 to conduct exploration on 480 acres of Idaho State Lease Land in the NW,
NE, and SE quarters of Section 16, T13N, R38E, Clark County, Idaho. This land is located in the West
Camas Creek drainage and flats, approximately one mile north of the deposit.
4.6
Any Other Factors or Risks
The USFS may place access restrictions on the property if extreme danger of forest fire is present but
this action has never been required during Otis Gold’s drilling of the property. The author does not know
of, or been informed of any other significant factors or risks that may affect access, title, or the right or
ability to perform work on the property.
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5
5.1
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY
Topography, Elevation, and Vegetation
The Kilgore deposit is in a mountainous region on the northern margin of the SRP between the SRPproper to the south, and the Centennial Mountains to the north, an east-west range that forms the
Continental Divide in this part of the Rocky Mountains. Elevations in the overall project area range from
approximately 6,400 feet (1,951 m) to 8,400 feet (2,560 m) above sea level, and elevations in the
deposit area range from about 7,000 feet (2,134 m) to 7,800 feet (2,377 m) above sea level.
Topography defining the project area and its immediate surroundings comprises a gently southwestdipping plateau (Figure 5-1), underlain by a layered, southwest-dipping pile of Miocene-Pliocene
volcanic rocks that form a dip-slope. The landform terminates in a northeast-facing slope break at
Kilgore in a transition to the lowlands of the West Camas Creek drainage.
Figure 5-1 Photo Showing General Southwesterly Dip of Plateau Containing the Kilgore Gold Deposit on its Up-dip
Northeastern Edge (Photo by Otis Gold).
The Kilgore Project has a growing season of less than 70 days, with vegetation characterized by open
Douglas fir, lodgepole pine, and subalpine fir forests. Mountain brush and sagebrush cover the lower
elevations. Other common native plant species found in the project area include spirea, pinegrass,
mountain snowberry, and gooseberry currant. No plant species protected under the endangered
Species Act are known from Clark County, and no special-status plants were found during Golder
Associates Preliminary Environmental study of the area during 2010 (Golder Associates, 2010).
Numerous animal species exist in the project area due to the high level of habitat diversity and large
tracts of forested and open land present. Game species noted in the area include mule deer, elk, moose,
blue grouse, and mourning dove. Small mammals documented within the project area include red
squirrel, beaver, deer mice, shrews, and voles. Carnivores noted in the area include coyote, weasel,
mountain lion, black bear, grizzly bear, wolverine, and wolf (JBR Environmental Consultants, 1997). Over
nineteen bird species have been recorded within the project area, including the northern goshawk, redtailed hawk, American kestrel, and great horned owl. Amphibians include spotted frogs and western
toad. Domesticated cattle graze in the West Camas Creek drainage area.
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5.2
Accessibility
Road access to and through the deposit area is good, with a network of paved and historic unimproved
drill roads serving as the direct route to the deposit area (Figure 5-2). Four-wheel drive may be required
in early spring or wet weather.
Figure 5-2 Map Showing Access Route from Dubois, Idaho to the Kilgore Gold Project (Source USFS and Otis Gold, 2012).
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5.3
Demographics, Local Resources, and Infrastructure
The closest infrastructure to the Kilgore Project is the small rural community of Kilgore, Idaho, located
approximately 5 miles east-southeast of the deposit (Figure 5-2), which has a minimum of supplies and
resources. Dubois, Idaho, the county seat, is located approximately 26 miles by paved road from the
town of Kilgore, Idaho. Dubois offers a nearly full-service community with a gas station, grocery store,
bank, restaurant, and other amenities.
5.4
Nature of Transport
Access to the property is excellent by car, truck, and 4-wheel drive vehicle on paved and unimproved
roads. The Union Pacific Railroad operates a major freight rail line running through Spencer, Idaho,
approximately 10 miles southwest of the deposit, and through Dubois, Idaho, approximately 26 miles to
the southwest of the deposit.
5.5
Climate and Length of Operating Season
Climate in Clark County in the vicinity of the Kilgore Gold Project is defined by mainly cold, snowy
winters and warm and relatively dry summers. The Natural Resource Conservation Service (NRCS)
maintains the Crab Creek weather station and Snowpack Telemetry (SNOTEL) site only 0.5 miles north
downslope of the Kilgore gold deposit and northwest of Crab Creek. SNOTEL reports an annual
precipitation average of 28.7 inches, but the annual totals vary (Figure 5-3).
Figure 5-3 Annual Precipitation Totals, Crab Creek (Cabin Creek) SNOTEL Station, Kilgore Gold Project, Clark County, Idaho
(Source: Otis Gold).
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December and May are typically the wettest months of the year, while August and September are the
driest months (Figure 5-4). A little more than half of the annual precipitation falls as snow (Figure 5-4).
Figure 5-4 Distribution of Precipitation and Snow Water Equivalent (SWE) Throughout the
Year, Crab Creek (Cabin Creek) SNOTEL Station, Kilgore Gold Project, Clark County, Idaho
Average daily temperatures from the SNOTEL site show that, on average, temperatures at Kilgore are
below freezing (0° centigrade, or 32° Fahrenheit) from November through April, with daily maximums of
34.5° centigrade (95° Fahrenheit) occurring in July and August (Figure 5-5).
Figure 5-5 Average Daily Temperatures, Crab Creek (Cabin Creek), SNOTEL Station, Kilgore Gold
Project, Clark County, Idaho (Source: Otis Gold).
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The length of a typical operating/exploration drilling season is generally from about May 15 to early
December, depending on snowmelt and associated water runoff conditions in the spring and snow
accumulation conditions late in the year.
5.6
Water, Power, Mining Personnel, Potential Processing Sites
Otis Gold’s 232 federal lode mining claims allow the Company mineral and surface access rights under
established US Mining Law. Power exists as a line paralleling the USFS Road 006, West Camas Creek
Road located one mile northeast of the deposit. Water is plentiful in the West Camas Creek drainage 1.5
miles north-northeast of the deposit. Results of core drilling by both EBX and Otis Gold reveal that the
water table in the deposit area is generally at depths of between 200 feet and 400 feet below the
surface, suggesting a possible source for process water that would have less impact than drawing it from
West Camas Creek. An ample source of labor is available from the towns of Dubois, Rexburg, Rigby, and
Idaho Falls, Idaho, all within 60 miles of the deposit, from southern Montana and northern Nevada, and
from the local rural and general population base. The area features potential sites for processing plants,
water storage, heap leach pads and facilities. One site option is Otis Gold’s CAMAS federal lode mining
claims, located largely in the flats north of the deposit.
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6
6.1
HISTORY
Pre-Otis Gold
Historic work on the Kilgore gold deposit is summarized in the Technical Report by Rayner and
Associates and Van Brunt (2002). Early gold exploration at the deposit was conducted in 1937 by the
Blue Ledge Company (1934, State of Idaho Annual Mining Yearbook). Evidence of mining activity
remains as several underground adits, prospect pits, a mill foundation, and a tramway. Although miners
reportedly uncovered “considerable ore of commercial value” (Campbell, 1937), there is no evidence in
the form of tailings that metals were ever recovered from the ores. Further, there is no evidence of
placer mining in the gulches below the deposit, although it is probable that panning lead to the
discovery of the lodes (Benson, 1986).
A total of 54 unpatented lode claims were located to cover the core area of the Kilgore deposit by
Dennis Forsberg and Foster Howland in 1982. Several mining companies conducted exploration on
these claims, including Bear Creek Mining in 1983 -1985, Placer Dome U.S. (PDUS) in 1990 - 1992,
Pegasus Gold in 1993 - 1994, and EBX in 1994 - 1996.
Bear Creek leased the claims from Forsberg and Howland in 1983. The Bear Creek program comprised
seven RC and core holes during its tenure. Placer Dome drilled 39 holes, including 5 core holes,
conducted rock and soil sampling, ran a gradient array IP/resistivity survey, located 82 unpatented lode
mining claims, and ran metallurgical tests. The drilling continued through a 50-50 joint venture between
Placer Dome and Pegasus with an additional 23 holes.
EBX conducted more systematic exploration and evaluation of the Kilgore deposit spending $4.7 million
between 1994 and 1996. Exploration included drilling 122 new drill holes, re-logging all previous drill
holes, airborne helicopter electro-magnetic (HEM) surveying, regional geological mapping and soil
sampling on the backside sinter, or Dog Bone Ridge target area. It performed bottle roll and column
leach metallurgical studies, collected environmental baseline data, did resource modeling and
completed initial engineering assessment studies of the main Kilgore deposit area.
In all, between 1984 and 1996, a total of 122,257 feet in 190 holes were drilled on the Kilgore deposit
and proximal targets with the goal of defining a +1 million ounce bulk-tonnage, open-pittable gold
deposit. The majority of this drilling concentrated on the Kilgore gold deposit, the subject of this NI 43101 report. No further drilling was done on the deposit until Otis began its work in 2008, a hiatus of 12
years since the last historic drilling was completed by EBX in 1996.
Latitude Minerals entered into a 49% - 51% joint venture agreement with EBX on September 2, 1998 and
drilled a sinter cap and explosion breccia area, now known as Dog Bone Ridge, located roughly 4,000
feet (1220 m) west-southwest of the main Kilgore deposit on Mine Ridge. Latitude drilled six holes,
three of which encountered anomalous gold mineralization averaging 91.4 m (300 feet) thick and
extended well-mineralized intercepts at least 300 feet west-northwest of EBX hole 96 EKC-178. The drill
results also revealed extensive alteration characteristic of volcanic-hosted gold systems.
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In 2002, Kilgore Gold, a wholly-owned subsidiary of Kilgore Minerals, acquired 100% ownership of the
property from Forsberg and Howland. From 2002 – 2006, Kilgore Gold conducted detailed field
mapping and structural analysis work on Dog Bone Ridge in order to delineate drill targets to further
expand on EBX’s and Latitude’s work in the area (Caddey, 2003). In 2004, Kilgore Minerals expanded its
property position to 3,000 acres and drilled six core holes into the Dog Bone Ridge target area for a total
of 1566 m (5,319 feet). Significant gold mineralization comprising a 51.8 m-thick (170 feet) intercept
from 112.8-m to 164.6-m (370 – 540 feet) deep and grading 1.25 g/T Au was encountered in hole KG042, however no mineralization of significance was found in the other five holes (Kilgore Minerals news
release dated September 7, 2004; Pancoast, 2004). The Company drilled eight additional core holes
totaling 1697 m (5,569.4 feet) in 2006. Drill hole KG06-01, an offset to KG04-02, encountered 12.6 m of
mineralized material from 155.6 m (510 feet) to 168.2 m (552 feet) grading 1.30 g/T Au.
In 2008, Otis Gold formed a joint venture with Bayswater and began its exploration programs on the
Kilgore deposit.
6.2
Historical Mineral Resource Estimate
Rayner and Associates and Van Brunt (2002) reported a NI 43-101 compliant resource estimate in a
Technical Report for Kilgore Gold. These authors, following methodology developed for in-house EBX
resource estimates, estimated grade to regular 30 x 30 x 15 foot blocks. The resource comprised
separate estimates of three lithologic domains, Lithic Tuff, Crystal Tuff, and Aspen Formation, and
12,788 assay intervals. Compositing to 15-foot intervals, two composites >1.0 opt Au were excluded
from the estimate as outliers. Composites were further restricted to an interpreted 0.010 gold shell.
Slightly anisotropic relative gold variograms were used to design search ellipses for the individual
domains with maximum dimensions of 140 – 150 feet and minimum distances of 120 – 140 feet. Blocks
estimated by more than 6 composites and 3 or more drill holes were considered Indicated Resources,
presented in Table 6.1.
1
Table 6.1 Historical Mineral Resources for Kilgore Property (Rayner and Associates and Van Brunt, 2002) .
Classification Cutoff Grade (opt) Au opt Tons(000’s) Ounces(000’s)
Indicated
Inferred
0.010
0.010
0.031
0.028
7,043
9,661
218
269
1
Units are Imperial: tons are short tons, grade is ounces per short ton, ounces are troy ounces.
The estimation technique for the resources in Table 6.1 was ordinary kriging. The resources in this
report update the 2002 report based on new geologic interpretations and additional drill information
collected by Otis Gold. The mineral resources in Table 6.1 should not be considered a current resource.
The author has not used or relied upon this information in making the estimates of mineral resources
presented in this report.
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6.3
Past Production
Other than a few carloads of material mined and stockpiled at the deposit in 1937, no production is
known or reported from the property (Campbell, 1937).
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7
7.1
GEOLOGIC SETTING AND MINERALIZATION
Regional Geology and Associated LS-Type Precious Metals Mineralization
The Kilgore deposit is located on the northeast margin of the Miocene-Pliocene Kilgore Caldera complex
located in the eastern part of the Snake River Plain (SRP) (Figure 7-1). The SRP is an arcuate depression
of low topographic relief that extends 600 km across southern Idaho and conspicuously truncates
structural and geologic outcrop trends of the Basin and Range geologic province and the northern Rocky
Mountains (Leeman, 1982; Mabey, 1982). The SRP is the most prominent Cenozoic feature in the state
of Idaho.
Figure 7-1 Kilgore Gold Project Location Relative to the Northern Margin of the Snake River Plain and the Centennial Mountains.
Geologic relationships and a bulk of recent radiometric dating work demonstrate that since the middle
Miocene, approximately 16.5 million years ago, the SRP geologic province has been characterized by
bimodal rhyolite and basalt volcanism and associated caldera development that has progressed
eastward with time from the Owyhee Plateau of extreme southwestern Idaho and the Northern Nevada
Rift area of northern Nevada along the SRP to its current and active focus at Yellowstone National Park
in Wyoming (Ekren et al., 1982; Leeman, 1982; Mabey, 1982). The development of this eastwardyounging bimodal volcanism and chain of calderas, which includes the Kilgore Caldera, is attributed to
west-southwestward movement and passage of the North American plate over a stationary melting
anomaly, or plume-like zone of hot and molten magma rooted at least several hundred km below the
surface (Leeman, 1982). This melting anomaly or “hotspot” is known as the “North America hotspot” or
“Yellowstone hotspot.” In terms of an overall regional geologic model that explains the placement of the
Kilgore Caldera, and ultimately the associated Kilgore deposit, eruptions occurred in the SRP province as
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western North America drifted southwesterly over the hotspot during the past 16.5 million years; this
action created a chain of volcanic centers or calderas extending from the Oregon-Nevada-Idaho border
east-northeast across southern Idaho to Yellowstone’s present location in Wyoming, comprising the
present day SRP low topographic feature and geologic province (Figure 7-1).
The SRP is described as a depression, downwarp, graben, rift, and lateral rift. Based on geological and
structural evolution and features, the SRP is broken into three segments: western, central, and eastern
(Figure 7-2; Leeman, 1982, Mabey, 1982). The western SRP is a graben-like structure bounded by northtrending en echelon normal faults believed related to those of the mid-Miocene Northern Great Basin
(NGB) - Northern Nevada Rift (NNR) (Mabey, 1982), although part of the southwest margin is apparently
downwarped (McIntyre, 1972). Christiansen and McKee (1978) have suggested that the NNR and the
western SRP developed as a continuous rift about 17 Ma, with the two structural zones offset later by
faulting. The central and northeast-trending eastern SRP segments are interpreted to comprise a
structural downwarp based on inward-dipping attitudes of volcanic and sedimentary rocks along their
margins and a lack of evidence for bounding faults. This latter setting best describes the attitudes of the
layer-cake-type volcanic and sedimentary host-rock stratigraphy at the Kilgore deposit on the northern
margin of the eastern SRP, where units dip gently southwest away from the deposit toward Spencer,
Idaho and into the SRP. Overall, the eastern SRP appears to be a downwarp containing a complex of
calderas with a great thickness of silicic volcanic rocks overlain by a veneer of interbedded basalt flows
and sedimentary rocks (Mabey, 1982).
Figure 7-2 Western, Central, and Eastern Segments of The Snake River Plain and Kilgore Project Location Relative to the Eastern
Segment (Modified From Mabey, 1982).
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Results of recent work reveal a striking genetic association between the LS-type epithermal
mineralization and its link to the SRP hotspot model. LS-type volcanic-hosted deposits in the northern
Nevada (NGB - NNR area) and extreme southwestern Idaho areas are associated with calderas and
bimodal volcanism located close to the extreme southwestern end of the “Yellowstone hotspot” track
(Figure 7-3). Based on K/Ar and 40Ar/39Ar age determinations on adularia from the deposits, they are
mid-Miocene in age (Figure 7-3; Saunders et al., 1996; John et al., 1999; John, 2001; Saunders and
Hames, 2005; Saunders et al., 2008). Some of the LS-type precious metals deposits included in these
studies and depicted in Figure 7-4 are important examples and prototypes of high-grade and/or open-pit
mineable bulk tonnage deposits, such as Sleeper (16.1 – 15.5 Ma age), Midas (15.1 – 15.2 Ma age),
Ivanhoe (15.2 Ma age), Mule Canyon (15.6 Ma age), and DeLamar (15.7 Ma age) (Saunders and Hames,
2005).
Figure 7-3 Ages of Calderas Along the Snake River Plain – Yellowstone Hotspot Track (outlines with gray fill; after Saunders And
Hames, 2005).
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Figure 7-4 Locations For Many Of The 17-14 Ma Ls-Type Epithermal Deposits in the Northern Great Basin – Northern Nevada
Rift Area (Saunders And Hames, 2005).
Saunders and Hames (2005) and Saunders et al. (2010) suggested that other LS-type Au-Ag deposits may
have formed at other localities eastward (perhaps younger) along the mid-Miocene to present
“Yellowstone hotspot” track. The Kilgore deposit, hosting a 5.3 million year old LS-type gold
mineralization on the northern margin of the Kilgore Caldera within the eastern part of the SRP and
“Yellowstone hotspot” track”, is an actual example of this. Two other younger calderas (Figure 7-1)
occur east of Kilgore and may host gold deposits.
7.2
Local Geology
The Kilgore Project area is on the northeastern portion of the Kilgore Caldera, which comprises a series
of Miocene to Pliocene lithic and tuffaceous pyroclastic units and flows that lie on deformed basement
sandstones and siltstones (clastic sediments) of the Aspen Formation of Cretaceous age. These rocks
are locally cut by rhyolitic flow-domes, felsic to intermediate dikes, intermediate bodies and sill material,
and mafic dikes. No rocks older than Cretaceous are found in the area. The geologic map of the Kilgore
area (Figure 7-5) shows all of the important rock units known to exist in the area.
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Figure 7-5 Local Geology, Kilgore Gold Project, Clark County, Idaho (Source: Otis Gold, 2012; Tbr Tpr).
Figure 7-6, a generalized geologic cross-section, shows a gently southwest-dipping, northwest-striking
layer-cake-type stratigraphic sequence of Cretaceous Aspen basement rocks and unconformably
overlying Miocene-Pliocene volcanic rocks. These compose a southwest-dipping plateau containing the
deposit. A Pliocene post-mineral ash-flow tuff, the tuff of Kilgore (Figure 7-5), which has been dated at
4.3 Ma (Benson, 1986), blankets much of the stratigraphy in the plateau area and some areas of
hydrothermal alteration associated with the Kilgore mineralizing system.
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Figure 7-6 Generalized Geologic Cross Section Looking Northwest, Kilgore Gold Project, Clark County, Idaho (Source: Otis Gold,
2012).
Those units most pertinent to the local geologic setting are described in the following subsections from
Otis Gold sources and previous publications. Nomenclature is based on distinguishing characteristics
from hand specimen review, outcrops, drill core, and road cuts, and from correlation with known units
in adjacent areas. Important units are described in ascending order from oldest to youngest based on
published age dates where available, as well as from corroborating stratigraphic and structural
relationships observed and known to exist in the area by Otis Gold geologists.
7.2.1 Aspen Formation (Ka)
This Cretaceous unit, pre-caldera in origin, represents the pre-caldera basement or floor. The name
Aspen Formation is used to refer to this rock unit locally; however, uncertainty exists as to whether it is
actually part of the Upper (?) Cretaceous Frontier Formation (Mansfield, 1920), the lower Cretaceous
Kootenai Formation (Mitchell and Bennett, 1979), or the late Cretaceous-to-Paleocene Beaverhead
Formation (Witkind and Prostka, 1980). In addition, each formation contains members that are very
similar in composition and texture. The Aspen Formation is the oldest formation in the project area and
occurs in the north and north-central parts.
Total thickness of the Aspen Formation is unknown, but Scholten et al. (1955) report a thickness in
excess of 1,067 m (3,500 ft) about 40 km (25 mi) to the west in the southeastern Tendoy Range.
Contours of the top of the Aspen Formation based on drill data in and around the project area, road cut
outcrops, and surface mapping indicate that the surface dips moderately to the southwest toward
Spencer, Idaho and the eastern SRP.
In outcrop, the Aspen Formation is generally gray to greenish-gray, strongly weathered, and pulverulent,
with subtle to indistinct bedding. Aspen Formation sedimentary rocks comprise mostly immature
coarse- to fine-grained salt-and-pepper-textured lithic graywacke interbedded with lesser amounts of
locally carbonaceous black siltstone and shale, all of which are locally calcareous (Figure 7-7). In drill
core, Aspen Formation rocks present compact, thin-bedded layers of tightly packed and rounded to subrounded sand and silt particles within well-indurated and intercalated graywacke and siltstone
sequences. Graywacke generally varies from light gray to dark gray and sometimes contains 2-4 mm
32 | P a g e
dark streaks resembling carbon (?) leaders or shale “rip-ups.” Locally, slightly coarser conglomeratic
phases, believed to be part of the late Cretaceous to Eocene Beaverhead Formation, occur where they
developed in stream channels cut into, and preserved at the top of the Aspen.
Figure 7-7 Typical Aspen Formation (Ka) Sandstone and Siltstone (Photo by Otis Gold).
Review of Aspen Formation features found in drill core shows repetitive fining-upward cycles, with some
of the rocks, particularly siltstones and shales, revealing considerable penecontemporaneous softsediment deformation such as warping, slumping, and folding, along with slump breccias and chaotic
textural intermixing. Locally, angular rip-up clasts of black siltstone and shale are present within
graywacke; some graywackes have been “forcefully injected” by underlying siltstones and shales.
Carbonaceous matter in the rocks indicates that the environment of deposition was an inland lake
containing a shallow, reducing, subaqueous environment. Slump features are thought to reflect gravityinduced movement of sediments in a subaqueous environment (Pettijohn, 1975).
The top 30 - 60 m (100 - 200 feet) of the Aspen Formation is a host to gold mineralization throughout
the Kilgore deposit where its calcareous matrix has been replaced by silica. It locally contains quartz
microveins, is iron-stained, and is cut by gold-bearing mafic dikes.
7.2.2 Undifferentiated Tuffs – (Tlt)
The undifferentiated tuffs form a complex series of lithic lapilli tuffs, locally crystal-rich ash-fall tuffs, and
pumice-rich rocks, all of local extent. Specifically, most occur along the northeastern edge of the Kilgore
Caldera and comprise one of the main host rock units for the Kilgore deposit. Generally, most of the
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tuffs are medium-gray, ashy tuffaceous material that contains variable amounts of lapilli-sized angular
to sub-angular fragments of dark gray Aspen Formation sandstone and siltstone, pumice fragments,
quartzite, and various volcanic and rhyolite rocks ranging in size from 2 mm to 64 mm, as well as rare
larger “blocks” greater than 64 mm in diameter (Figure 7-8). These fragments are supported by an ashy
matrix with broken fine-grained plagioclase crystals and quartz crystal fragments. Tlt varies greatly in
appearance due to the amount and content of the lithic fragments contained within it and the degree of
welding present. Also adding to the different look is the superimposed quartz-adularia alteration and
silica flooding that has “bleached” the rock from its characteristically medium-gray color, to a lighter
gray or cream color in some places.
Figure 7-8 Typical Lithic Lapilli Tuff (Tlt, Photo by Otis Gold)
Otis Gold geologic staff believes that this pyroclastic material is associated with rhyolitic source material,
corroborated by Bensen (1986). Tlt is greater than 300 m (1,000 feet) thick locally in the deposit area.
7.2.3 Sills and Dikes of Intermediate Composition (Tct)
A sill-like body of presumed intrusive origin occurs at the base of Tlt and in the very uppermost part of
Aspen Formation stratigraphy, where it is conformable to bedding and appears to have intruded and
pried it apart. Dubbed by numerous previous workers as “crystal tuff” or unit Tct, Otis geologists now
apply the term Tct to this sill and other hypabyssal sills and dikes of intermediate to andesitic
composition, parts of which were subjected to quartz-adularia alteration subsequent to emplacement.
Thin-section analysis of material from this unit shows none of the features found in a typical tuff such as
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welded glass shards. Thickness of the principal sill in the deposit area ranges between 30 - 90 m (100 –
300 feet).
A northwest-trending altered hornblende andesite intrusive body locally in excess of 90 m (300 feet)
wide and at least 150 m (500 feet) long occurs northwest of the Mine Ridge fault and underlies the
North Target area. The unit is a host for gold mineralization.
7.2.4 Biotite Rhyolite (Tpr)
A series of flow-domes, plugs, and dikes of rhyolitic composition occur in a wide northwest-trending belt
or zone that crosses through the project and surrounding areas (Figure 7-5). This zone trends roughly
parallel to Basin-and-Range-style normal faults in the area and to older northwest-trending regional
faults (Mabey, 1982; Benson, 1986). The rhyolite is reddish-brown to light pink in color with coarse flow
foliation commonly present. The flows and domes generally have well-developed vitrophyric margins
with local spherulitic and lithophysal zones. The rhyolite comprises trace to 1% fine-grained biotite, 1%
to 5% plagioclase and sanidine, and scattered fine-grained distinctive quartz eyes in an aphanitic, locally
pilotaxitic groundmass (Figure 7-9). The presence of biotite is diagnostic where the rhyolite is fresh,
however, weathering, hydrothermal alteration, and bleaching generally removes, or alters most of the
biotite, replacing it completely and/or liberating iron to form rusty-red and yellow-brown oxide stains.
Figure 7-9 Typical Bleached, Hydrothermally Altered Rhyolite (Tpr, Photo by Otis Gold)
According to Benson (1986), the age of this unit is 7.9 ± 0.4 Ma based on K-Ar age dating of biotite in a
vitrophyre by Krueger Enterprises Inc. (Geochron Laboratories Division), Cambridge, Massachusetts.
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7.2.5 Quartz Porphyry (Tqp)
The quartz porphyry is a thick, relatively crystal-rich flow unit located in the central and northwest parts
of the local area containing the deposit (Figure 7-5). The unit name reflects the presence of distinctive
quartz phenocrysts throughout the rock, which is generally massive, although it locally has coarse flow
foliation. Tqp is generally light gray with 2% to 10% coarse-grained quartz and sanidine phenocrysts in a
micro-spherulitic groundmass (Figure 7-10). Some of the phenocrysts are at least 4 mm in diameter,
with many of the quartz phenocrysts containing central inclusions of what appear to be
microphenocrysts of alkali feldspar (Benson, 1986).
Figure 7-10 Typical Highly Silicified Quartz Porphyry Cap Rock (Tqp, Photo by Otis Gold)
Near to, and overlying the deposit, the unit forms coarse boulder talus slopes and craggy resistant
outcrops of highly silicified material. It has a basal spherulitic vitrophyre that is intensely clay altered;
the vitrophyre is thought to have acted as a partial barrier to the ascending mineralizing fluids that
created the Kilgore deposit. The unit attains a thickness of as much as 180 m (600 feet) based on an
intersection in Bear Creek drill hole KG-3.
According to Benson (1986), local stratigraphic relations and K-Ar age dates of Tpr and of aphyric
rhyolite in the extreme northeastern and southwestern parts of the Kilgore area constrain the quartz
porphyry to be older than 5.9 ± 0.3 Ma and younger than 7.9 ± 0.4 Ma. Further, the rhyolite of Spring
Creek, a unit located just northeast of the Kilgore area and thought to be correlative with Tqp, has a K-Ar
age date of 6.3 ± 0.3 Ma, which also falls within this range (Morgan et al., 1984).
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7.2.6 Upper Pyroclastics (Tup)
The upper pyroclastic unit covers an area of approximately one square mile just southwest of the
deposit in the central part of the map area (Figure 7-5). The unit comprises hot-spring sinter material,
silicified explosion breccia, crumble breccia, clast-supported breccia, and unsorted, non-bedded to
poorly-bedded lithic breccia at least 90 m (300 feet) thick (Figure 7-11). It forms the capping
stratigraphic unit at the top the southwest-dipping plateau just up-slope, and southwest of the Kilgore
deposit. Tup appears to represent a widespread and preserved silica cap and silicified explosion breccia
layer that developed as the surface expression of a hot spring-type epithermal system. Additionally, this
unit covers much of the Dog Bone Ridge target area. Tup is interpreted to be a large vent zone (zones)
that broke through a previously formed silica cap forming a fallout apron above the Tqp unit. The
evidence is that the silicified explosion breccia contains local fragments of coarse sand-sized silicified
material, Tqp, Tpr, and much clast-supported breccia. Berger and Eimon (1982), Silberman (1982), and
Berger (1985), describe similar sinters, breccias, and fallout aprons related to numerous other classic hot
spring epithermal systems and related precious metals deposits.
Figure 7-11 Typical Outcrop of Sinter and Explosion Breccia (Tup, Photo by Otis Gold).
7.2.7 Tuff of Kilgore (Ttk)
The tuff of Kilgore is a widespread welded ash-flow tuff that forms a gently southwest-dipping (less than
5°) blanket over the southern, western, and northwestern parts of the local area containing the project
(Figure 7-5). This unit, dated at an average age of 4.3 Ma (Morgan et al., 1984), is clearly post-mineral in
nature as it caps hydrothermally altered rocks related to the Kilgore mineralizing system, yet shows no
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signs of being hydrothermally altered. K-Ar age determination on hydrothermal adularia at the Kilgore
deposit dates mineralization at 5.3 ± 0.2 Ma (Benson, 1986), which is older than the age of the tuff of
Kilgore.
The tuff of Kilgore is generally purple gray to dark reddish-brown in color, with 1% to 7% mediumgrained crystals of sanidine, plagioclase, and rare quartz in a very fine-grained glassy, locally devitrified
matrix. Unit thickness is locally up to 150 m (500 feet), with a black to reddish-brown vitrophyric base
that is up to 12 m (40-feet) thick (Benson, 1986). The unit is moderately to strongly welded, generally
eutaxitic, and locally rheomorphic, with strong lineation.
Petrographic, radiometric, and field studies reveal that the tuff of Kilgore is equivalent to the tuff of
Heise, which has a K-Ar age date of 4.3 ± 0.15 Ma (Armstrong et al., 1980). The tuff of Heise crops out
within the neighboring Rexburg Caldera complex. Embree and others (1982) suggest that the caldera
source for both tuff units is near Kilgore, Idaho, with the tuff of Heise representing the distal facies of
the tuff of Kilgore where the former ponded in the Rexburg Caldera complex.
7.2.8 Local Structures
Three main structural trends are recognized in the Kilgore deposit area: 1) N60°W; 2) N10°-30°E; and 3)
E-W-to S70oE. These are corroborated by detailed local geological and structural mapping by Benson
(1986), field structural investigation work to identify local exploration target areas and mineralized
trends by Caddey (2003), detailed local unpublished geological and structural mapping by EBX geologists
in 1995, and recent geological field studies by Otis Gold geologists.
The N60°W structures served as important controls to mineralization evidenced by: 1) the direct
association of the emplacement of gold mineralization at the Kilgore deposit with the Northwest Fault;
and 2) additional scattered areas of gold mineralization and voluminous silicified vent breccia associated
with the Dog Bone Ridge target area, localized along the northwesterly extension of the N60°W-trending
McGarry Canyon Northwest Fault. The McGarry Canyon Northwest Fault lies approximately 760 m
(2,500 feet) southwest of and parallel to the Northwest Fault (Figure 7-5).
The Northwest Fault and possible parallel structures compose a N60°W-trending fault zone at least 6 km
long containing: 1) the Kilgore deposit area; 2) its southeasterly extension into the Prospect Ridge area;
and 3) Otis Gold’s Gold Ridge target located approximately 1.0 km (3,300 feet) northwest of the deposit
(Section 9). Overall, the trend of this fault zone is characterized by the emplacement of a belt of
shallowly-emplaced rhyolite plugs, dikes, and domes, and andesite bodies. The Northwest Fault zone is
partially or completely capped by Tqp, much of which is highly silicified (Benson, 1986).
The McGarry Canyon Northwest Fault comprises a zone at least 3 km (1.8 miles) in length that includes a
northwest-trending silicified vent zone and hydrothermal fluid conduit with related explosive pyroclastic
volcanism, rhyolitic volcanism, dike emplacement, and epithermal activity (explosion breccia and sinter)
in the Dog Bone Ridge area (Caddey, 2003). Surface exposures along the central part of Dog Bone Ridge
consist of linear, siliceous, tectonic, and phreatic explosion breccias localized along a 1.6 km (1 mile)
length of the McGarry Canyon Northwest Fault. Erosion-resistant surface outcrops forming the ridgeline
38 | P a g e
are intensely silicified, brecciated, and healed with at least three generations of low-temperature
varieties of chalcedonic and opaline quartz (Caddey, 2003).
Northeast of the Kilgore deposit, the West Camas Creek drainage (Figure 7-5) may be the expression of a
ring fracture related to the Kilgore caldera.
A strong possibility exists that these northwest-trending structures represent older local structures,
subsequently occupied and reactivated by younger Basin-and-Range structures, all just inboard of the
northeast margin and ring fracture zone of the Kilgore Caldera. Interpretations based on Otis Gold
drilling suggest that these structures served as the conduits and focus for the emplacement of
northwest-trending rhyolite and andesite bodies with which the gold mineralization is directly
associated.
Prominent N10°-30°E-trending local structures in the Kilgore deposit area include the Mine Ridge, Cabin
and 28 faults (Figure 7-5), with a number of others outside the deposit area including the McGarry
Canyon Northeast, Bearcat, and many that are unnamed in the Gold Ridge area (Benson, 1986; Caddey,
2003). The possibility exists that these northeast faults may represent radial fractures that developed
from doming by igneous intrusion during Kilgore Caldera development. Results of detailed structural
analysis by Caddey (2003) reveal both dominant radial and concentric structural patterns attributed to
doming by local igneous intrusion, with major ore controls for precious metals mineralization consisting
of intersections of N60°W- and N10°-30°E-trending faults and fault zones.
Gold grade-thickness maps and EBX geophysical/airborne magnetic data (Woolham, 1996) suggest the
presence of an E-W - S70oE structure that crosses the heart of the Kilgore deposit into the West Camas
drainage. The regional and local context of this apparent structure is not clear.
7.3
Property Geology and Mineralization
Primary host rocks for mineralization in the Kilgore deposit are mostly of volcanic or subvolcanic origin
comprising Tlt, sub-vertical rhyolitic dikes, dike swarms, and andesitic bodies that cut the Tlt.
Subordinate host rocks are of sedimentary origin and comprise the Cretaceous Aspen Formation
basement. Although mineralization is characterized by the low-grade, bulk-mineable type, it also
includes interspersed higher-grade/bonanza-type material mostly associated with: 1) sub-vertical
fissures and fault zones; and 2) primary lithologic contacts between the dikes, sills, Tlt, and Aspen
Formation.
7.3.1
Mineralized Bodies and Mineralization Controls
The Kilgore deposit is a zone of mineralization with a length of approximately 750 m (2450 feet) and a
width of 600 m (2000 feet).
Drilling and prospecting by Otis Gold has extended the limits of
mineralization (Figure 7-12) beyond those shown by Rayner and Associates and Van Brunt (2002).
39 | P a g e
N
Figure 7-12 Plan View Showing Otis Gold Kilgore Gold Deposit Drill Holes by Year and Previous Resource Outline (Source: Otis
Gold, 2012).
Thickness of the Kilgore mineralization spans a vertical distance of 235 m (775 feet) throughout the
stratigraphy of the deposit, generally from a lower elevation of 2040 m (6,700 feet) in the Prospect
Ridge area at the southeast end of the deposit to an upper elevation of about 2280 m (7,475 feet) in the
Mine Ridge core area of the deposit. Mineralized intercepts generally average 40 m (130 feet) and
range up to 90 m (300 feet) in thickness in the Mine Ridge core and North Target areas. Figure 7-13 is a
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representative cross-section demonstrating the continuity of deposit mineralization (dashed red line)
and details of individual intercepts, together with host rock geology and structure.
Figure 7-13 Cross-Section Looking West Through the Mine Ridge Core Area of the Kilgore Gold Deposit, Clark County, Idaho
(Source: Otis Gold, 2012; Unit names vary slightly from descriptions in text).
Significant mineralized zones on the property form a generally continuous deposit that extends from
Prospect Ridge on the southeast, to Mine Ridge in the core or central part, to the North Target area on
the north and northwest (Figures 7-12 and 7-13). The geology and apparent detailed mineralization
controls vary from one area to the next.
Mine Ridge comprises the core of the Kilgore deposit and the bulk of the gold mineralization contained
within it. The major geologic controls to mineralization are the Northwest Fault Zone and a sheeted
rhyolite dike swarm (Tpr) emplaced along it. Two of the largest dikes in the swarm are in excess of 50-m
(164 feet) wide locally and appear to extend continuously along the entire northwest trend of
mineralization. Gold mineralization is spatially associated with the rhyolite dikes and their contacts with
porous and permeable lithic tuffs (Tlt). Higher-grade gold tends to occur at these contacts, and also
close to contacts with the intermediate-composition dikes and sills (Tct) that intrude the shear zone.
Some of the higher-grade mineralization is localized in sub-vertical to vertical fissure, shear, and
fault/fracture zones. Tlt hosts significant disseminated mineralization that forms more extensive zones
away from the dike contacts.
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Fault intersections are another structural control of mineralization. Numerous high-grade intercepts
exist in the area of the Mine Ridge fault and near its intersection with the Northwest fault (Figure 7-5).
An example is Otis core hole 08 OKC-191 that contains 55.4 m (182 feet) @ 6.15 g/T Au near this
intersection (Figure 7-12). Small-scale chemical and/or physical controls to gold deposition are indicated
by concentrations of gold noted in Aspen Formation lithic fragments included in Tlt. The sedimentary
fragments appear to have been favorable sites for gold deposition (Benson, 1986; Otis Gold geologists,
oral communication, 2012).
The upper 30 – 60 m (100 – 200 feet) of the Aspen Formation serves as a major host environment to
gold mineralization in the Mine Ridge area, especially at the upper contact of the Aspen Formation with
the overlying Tct sill. Here the unit is variably silicified, displaying quartz microveining, development of
iron oxides along micro fractures, oxidation of sulfides, the presence of pyrite stringers, and chloritic,
ankeritic, and probable magnesian alteration. Quartz veins and sheared quartz vein zones cutting Aspen
rocks, as well as the edges and margins of mafic dikes intruded into the Aspen Formation, all serve as
environments for the deposition of higher-grade gold values. Typical thicknesses and grades of
mineralized intercepts found in the upper part of the Aspen Formation in Otis Gold core holes include
30.4 m @ 2.53 g/T Au from 86.3 m to 116.7 m in 10 OKC-210, and 33.1 m @ 1.27 g/T Au from 206.0 m to
239.1 m in 11 OKC-253 (Figure 7-12).
In the Prospect Ridge area, mineralization 60 – 180 m (200 – 600 feet) wide tends to follow the
northwest trend of a Tpr dome near the Cabin Fault area (Figure 7-5) and dike offshoots, or later
rhyolite dikes extending northwest. Mineralization is disseminated in the rhyolite and host Tlt, but also
appears to be centered over a pre-mineral basement fault that has no surface expression.
Mineralization is locally enhanced at contacts between units. The Northwest Fault appears to be a
major control for emplacement of Tpr and mineralization events. The style of mineralization and
controls in the Prospect Ridge area appear to be an extension of those found in the Mine Ridge area of
the Kilgore deposit.
The North Target lies just northwest of the northeast-trending Mine Ridge fault (Figures 7-5 and 7-12).
Mineralization is hosted by an andesite dike and Tlt. In contrast, the Mine Ridge area mineralization on
the southeast side of the Mine Ridge fault is associated with a rhyolite dike swarm. The North Target
was discovered through drilling late in the 2011 drill season and comprises an open-ended northnorthwest extension of the Kilgore deposit. This new area of mineralization is characterized by
numerous intercepts, some in excess of 100-m (330 feet) thick, and one within 6 m (20 feet) of the
surface (Otis Gold Corp. October 6 and December 8, 2011, and January 12, 2012 News Releases).
Examples of some of the new intercepts drilled in the area include 35.0 m @ of material grading 0.88 g/T
Au from 22.9 m to 57.9 m in hole 11 OKC- 256, 114.3 m of material grading 0.89 g/T Au from 6.1 m to
120.4 m in core hole 11 OKC-258, 118.8 m of material grading 0.89 g/T Au from 35.1 m to 153.9 m in
hole 11 OKC-259, and 39.6 m of material grading 0.70 g/T Au from 24.1 m to 63.7 m in core hole 11 OKC281 (Figure 7-12). These new intercepts represent the thickest and shallowest part of the Kilgore deposit
encountered to date in an area previously thought to represent the boundary or edge of the deposit.
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7.3.2 Mineralization Paragenesis
Sulfide and precious metal mineral species found throughout the Mine Ridge core area include pyrite,
electrum, native gold (some visible), galena, arsenopyrite, sphalerite, stibnite, cinnabar, naumannite
(Ag2Se), aguilarite (Ag4SeS), argentite-acanthite, chalcopyrite, wolframite (ferberite), and rare
pyrargyrite (Ag3SbS3) (Benson, 1986; Otis Gold geologists, oral communication, 2012). Benson’s (1986)
scanning electron microscope and energy dispersive X-ray spectrometry studies on heavy mineral
concentrate grains from historic Bear Creek drill samples in the area found additional mineral species,
including an unknown type composed of Ag-Pb-Bi-Se-S, galena with minor Se and Ag, gersdorffite
(NiAsS), and cobaltnickelpyrite ((Ni, Co, Fe)S2) with minor chalcopyrite. All of the silver minerals,
electrum, and gold occur as discrete grains and within pyrite. Panned concentrate studies of gold grains
conducted by Hazen Research, Inc. (1995) for EBX found spongy, lacy, rectangular, splinter, and
amoeboid morphologies with rich yellow color and sizes in the 25 - 150 micron range.
Gangue minerals found in the area are mostly quartz, adularia, manganiferous siderite, pyritepyrrhotite, illite-sericite, kaolinite, barite, and dumortierite/tourmaline.
7.3.3
Alteration
7.3.3.1 Alteration Paragenesis
Adularia is an abundant alteration mineral, often occurring with quartz or fine-grained silica. Felsic-tointermediate dike rocks commonly show pervasive quartz–adularia alteration and replacement, and
some adularia occurs on fractures (Larabee, 2012; Benson, 1986).
Silicification generally occurs as fine-grained replacement and flooding of Tlt, various dikes, and the base
of the Tqp. Silicification is also present throughout the Mine Ridge core area as irregular quartz veins,
quartz stockwork vein zones, sheared quartz-vein zones on, and along dike margins, quartz
microveinlets and microveinlet zones, and late-stage cavity-filling quartz crystals, locally coated with
rare, late-stage, visible gold. Some visible gold grains occur in oxidized selvage material along the
margins of late-stage quartz veins (Figure 7-14). Some of the best developed areas of quartz veining
generally occur along the margins of the northwest-trending dikes in the Mine Ridge area, along and
parallel to the northeast-trending Mine Ridge fault, and near, and at the intersection of northwest- and
northeast-trending structures. The Mine Ridge Fault zone is an estimation domain and modeled
separately in the estimate of mineral resources due to its different statistical characteristics, discussed in
Section 14.
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Figure 7-14 Visible Gold In Late-Stage Quartz Veinlet, Otis Core Hole 08 OKC-193 (Photo by Otis Gold).
Dumortierite, commonly found in the Mine Ridge area and logged in numerous historic core holes as
tourmaline, is closely associated with higher-level quartz stockwork vein zones and also exists as radial
sprays and needle-like replacements of spherulites in vitrophyre at the base of Tqp where it caps the
deposit in the Mine Ridge area. It occurs distal to, and along the margins of silicified and mineralized
quartz-vein material in the upper 30 -90 m (100 - 300 feet) of core holes 95 EKC MET-5 and 08 OKC-191
near the intersection of the Northwest Fault zone and Mine Ridge fault. Replacement of feldspars and
matrix material in Tlt is also a common mode of occurrence. The species generally forms blue-green
radiating bundles, spots, and clots of acicular crystals with an average grain size of less than 1 mm. An
analog for the occurrence of dumortierite at Kilgore is in the gold-dominant areas of epithermal
precious metal deposits of the Rochester District, Nevada (Knopf, 1924).
Other alteration minerals reported by Otis Gold geologists include illite, “sericite”, kaolinite, chalcedony,
opal, amethyst, barite, calcite, a Mn-Fe carbonate mineral, “limonite”, goethite, and hematite. Sericite
is a generic term for fine-grained white mica or ordered clay mineral. Limonite is a catch-all term for tan
or rusty-colored oxidation mineral(s) rather than a formal mineral name. Jarosite, a yellowish primary
or secondary iron-aluminum sulfate, was noted by the author on the site visit.
7.3.3.2 Alteration Zoning
Kilgore shows typical alteration zoning from proximal quartz-adularia through argillic to distal propylitic.
Major alteration types commonly found in the Mine Ridge area include quartz-adularia, silicification,
argillic, propylitic, and tourmalinization (in part dumortierite, see above).
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Quartz-adularia is a dominant alteration type in parts of the Kilgore deposit where it is present as
flooding, a component of quartz veinlets, and in breccias, as well as local fracture coatings. Adularia is
not coded or systematically logged, thus its provenance is difficult to describe in detail. Some of what is
logged as silicification includes adularia alteration.
Argillic alteration includes bleaching of host rocks in the Mine Ridge area, with the development of illite,
sericite, and kaolinite (Larabee, 2012). Feldspars and groundmass in tuff and dike host rocks are
commonly partially to completely replaced, with feldspar crystals revealing crystal casts and ghost
crystal outlines where nearly totally replaced. In general, the extent of argillic alteration ranges from
pervasive to structurally controlled replacement depending on the host rock.
Propylitic alteration is mostly evident deeper in Otis core holes as chlorite and pyrite, along with sparse
epidote and calcite. These minerals mostly occur on fractures and as disseminations, particularly
throughout parts of Tct, in gold-bearing hornblende andesite bodies, and in altered Aspen Formation
siltstones and sandstones, imparting a light to dark green color to them. Detailed logging of Otis core
holes by staff geologists reveals that groundmass and mafic phenocrysts in late-stage, gold-bearing
mafic dikes are also commonly chloritized, particularly where they cut the Aspen Formation and, as
such, are barely distinguishable from the latter.
Dumortierite (and/or tourmaline) is most prevalent in the upper part of the Kilgore deposit (Benson,
1986).
7.3.4 Trace Elements
The geochemical signature of Kilgore is consistent with an epithermal chemical signature, one high in
gold, arsenic, antimony, mercury and selenium. Arsenic exhibits the strongest correlation to the deposit
where it is clear that there is a significant arsenic anomaly on top of, and down-slope from the deposit.
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8
DEPOSIT TYPES
Gold mineralization at Kilgore is an example of the zoned low sulfidation (LS) epithermal hot spring
precious metals (Au, Ag) deposit type associated with caldera-related volcanic activity commonly found
in, and also north of the Basin-and-Range province of the Western United States. These deposits are
commonly bulk-tonnage, low-grade, and amenable to open-pit mining. Numerous scientific articles
have been written and published on this deposit type concerning its origins, physical, chemical, and
geological settings, recognition criteria, major- and trace-element geochemistry, zoning, alteration
types, ore mineralogy, ore grades and distribution of ore, and mining characteristics. Models are
described in papers by Buchanan (1981), Silberman (1982), and Berger (1985), among others, and the
reader is referred to these for more information on the subject.
Epithermal hot spring-type precious metal (Au, Ag) deposits form at low to moderate temperatures in
the near-surface environment. They generally form at depths of less than 1.5 km and temperatures of
less than 300° C in subaerial environments within volcanic arcs at convergent plate margins, intra- and
back-arc settings, and in post-depositional settings (Robert et al., 2007). Most epithermal precious
metals deposits are of Cenozoic age. Epithermal deposits are found in all rock types, but historically,
some of the largest occur as disseminated bulk-tonnage and/or stockwork-type vein deposits in volcanic
rocks (e.g., Round Mountain, Nevada; McDonald Meadows, Montana). Nearby deposits of this type
are the Grassy Mountain deposit, Oregon and the deposits at Sunbeam, Idaho (Grouse Creek and
Sunbeam). Active geothermal areas such as Steamboat Springs, Nevada, Broadlands, New Zealand
(White, 1974), and Norris Geyser Basin in Yellowstone Park, Wyoming, are modern-day analogs of
epithermal hot spring-type precious metal deposits that are currently forming.
Kilgore presents district features common to many epithermal hot spring deposits such as:
Relationship to caldera activity and structures (Rytuba, 1994);
Extensional structural environments characterized by high-angle normal faulting and/or
dilational zones proximal to strike-slip fault structures;
Proximity and temporal association with shallow rhyolitic intrusions and effusive volcanic
centers;
The Kilgore deposit lies along the structural intersection of the SRP rift zone and the Kilgore Caldera.
Gold mineralization is related to late-stage, northwest-trending, high-angle rhyolite dikes and andesitic
intrusive bodies that appear spatially associated with the Northwest Fault and other parallel faults.
A schematic diagram shows the structural and volcanic features related to the deposition of epithermal
precious metals deposits in a caldera-related environment (Figure 8-1). The Kilgore setting is similar.
Kilgore lies along a major northwest-trending controlling regional structure, the Northwest Fault. This
fault lies just inside of, and tangential to the arcuate northeast part of the Kilgore Caldera margin and
structural ring fracture zone. The West Camas Creek drainage is believed to lie along, and demark the
northeast part of the Kilgore Caldera margin/structural ring fracture zone.
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Figure 8-1 Diagram Showing Structural and Volcanic Features Related to the Deposition of Epithermal Precious Metal Deposits
in a Caldera-Related Environment (Rytuba, 1994).
Numerous late-stage rhyolite ring domes/flow domes exist along the northeast part of the Kilgore
Caldera margin and structural ring fracture zone, as well as slightly inboard from it. Gold mineralization
is related to late-stage, northwest-trending, high-angle rhyolite dikes and andesitic intrusive bodies.
Epithermal deposits are often grouped into high-sulfidation and low-sulfidation (LS) types based on
variations in their hypogene sulfide assemblages (Sillitoe and Hedenquist, 2003). Kilgore is a prime
example of the latter, or LS-type. Fluids responsible for formation of LS-type deposits are similar to
waters tapped by drilling beneath hot springs into geothermal systems, waters that are reduced and
neutral-pH.
Kilgore displays alteration typical of the variants in LS systems, including characteristic lateral and
vertical zoning. Laterally, alteration grades from proximal quartz-adularia through argillic to distal
propylitic assemblages. Vertically, quartz and adularia occur in a central zone capped by silica and clay
alteration and grading to propylitic alteration at depth.
At the deposit scale, LS gold deposits are typically hosted in volcanic, lacustrine, or epiclastic units, but
can also be hosted by basement rocks, as at Kilgore. Both low-grade disseminated and structurally
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controlled high-grade deposits can form, the Mine Ridge fault zone (MRF) being an example of the
latter. Syn-mineral mafic dikes are also common in these deposits (Sillitoe and Hedenquist, 2003) and
they occur at Kilgore where they locally host high-grade mineralization.
Mineralization at Kilgore comprises a typical epithermal assemblage of small quantities of pyrite,
electrum, silver, mercury, and base metal sulfides, sulfosalts, and selenides.
Otis Gold considers the recognition criteria for epithermal volcanic-hosted LS model (Table 8.1) essential
to its exploration of the Kilgore deposit.
Table 8.1 Comparison of LS-Type Deposit Model and Kilgore Deposit Recognition Criteria (Source: Otis Gold).
Recognition Criteria
LS-Type Deposit Model
Kilgore Deposit
Type
disseminated and structurally controlled
mineralization, open-space veins (high
grade) and stockwork mineralization
common
disseminated and structurally controlled
mineralization, late open-space quartz veins
(some with high grade Au) and high-angle
fractures, quartz stockwork veining in Mine
Ridge core area
Textures
veins, cavity fillings (bands, colloforms,
druses), breccias
disseminations, veins and shear zones (on edges
of high-angle dikes), hydrothermal breccias,
minor banded quartz veins, silica replacement
and fracture filling, stockworking, fine-grained
quartz-adularia flooding and replacement,
quartz microveining
Ore Mineralogy
pyrite, electrum, gold, sphalerite, galena,
arsenopyrite
pyrite, electrum, native gold (some visible),
galena, arsenopyrite, sphalerite, stibnite,
cinnabar, naumannite, aguilarite, argentiteacanthite, chalcopyrite
Gangue Mineralogy
quartz, adularia, chalcedony, calcite, illite,
carbonates
quartz, adularia, illite, sericite, kaolinite,
chalcedony, opal, calcite, chlorite, pyrite,
tourmaline (dumortierite), iron oxides and
hydroxides (limonite, goethite, hematite),
amethyst, barite, carbonates (manganosiderite?)
Geochemical Suite
Au, Ag, Zn, Pb, Cu, Sb, As, Hg, Se
Au, Ag, Zn, Pb, As, Sb, B, Hg, Cu, Se
Alteration
quartz-adularia through argillic to distal
propylitic
quartz-adularia through argillic to distal
propylitic, silicification, tourmalinization,
pyritization, chloritization
Host rocks
volcanic and basement sedimentary rocks
volcanic and basement sedimentary rocks
Mafic Dikes
commonly present
present and often associated with high-grade
(+10 g/T) gold values
Deposit Form/Styles Of
Mineralization
48 | P a g e
Table 8.1 is not comprehensive of all characteristics of LS-type epithermal deposits, but illustrates eight
criteria that compare well to the Kilgore setting, leaving little doubt that the lithologies, structure,
mineral paragenesis, and mineralization styles show a strong correlation to other known deposits of this
class.
49 | P a g e
9
9.1
EXPLORATION
Pre-Otis Exploration History
Rayner and Associates and Van Brunt (2002) discuss exploration programs conducted by EBX. Additional
information about these programs is presented in this report to give the reader a clear perspective on
the geologic setting and exploration potential of the Kilgore property.
Prior to EBX’s involvement with the Kilgore property, very little exploration was performed outside of
the core of the deposit on, or near Mine Ridge. The most active period was between 1994 and 1997,
when EBX performed: 1) soil sampling; 2) regional geologic mapping; 3) an airborne magnetic and
helicopter EM (HEM) survey; and 4) false color satellite imaging. Based on fault projections, EBX drilled a
few blind holes through the sinter cap on Dog Bone Ridge.
In 1996, EBX collected 1,857 soil samples over the Kilgore property. The data were compiled, but a
rigorous interpretation was never made. They demonstrate anomalies in gold, arsenic (Figure 9-1),
antimony, mercury and selenium over the deposit. Arsenic exhibits the strongest correlation to the
deposit where it is clear that there is a significant arsenic anomaly on top of, and down-slope from the
deposit. The EBX data also show that strongly anomalous arsenic occurs on the forested slope lying 1
km to the northwest of the Kilgore deposit. This target has been identified by Otis Gold as its Gold Ridge
target permitted for helicopter-supported drilling in 2012.
Figure 9-1 Bubble Map Showing Arsenic In Soil Anomalies in the Gold Ridge Area, EBX, 1996 (Source: Otis Gold).
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In 1996, EBX contracted Aerodat of Toronto, Canada, to complete a 180 sq km helicopter-borne
electromagnetic, magnetic, radiometric, and Very Low Frequency-Electromagnetic (VLF-EM) survey. The
data were never fully reduced or followed-up. Results of Aerodat’s work are summarized below:
1. A large resistivity high covers the property, with the Kilgore deposit located on the
northeast flank of the high;
2. A circular resistivity high exists 4.8 km west of the Kilgore resource and is surrounded by
a ring-shaped magnetic feature;
3. The Kilgore deposit and core claims lie on the northeast flank of a large, round magnetic
anomaly thought to be a caldera margin that is at least 14 km in diameter;
4. A large ring-shaped magnetic feature to the north of the claim block may be the edge of
another caldera;
5. A linear northeast-trending magnetic low at least 4.8 km in length extends through the
property in the area of Dog Bone Ridge; and
6. An east-west magnetic low parallels the southern margin of the Kilgore resistivity high.
The relationship of the magnetic features to the Kilgore deposit is shown in Figure 9-2.
Figure 9-2 Airborne Magnetics Flown by Aerodat for EBX In 1996 ( interpretation and annotation are by Otis Gold).
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9.2
Otis Gold Exploration
The exploration that Otis Gold performed on the Kilgore property between 2008 and 2011 consisted of
two programs. The first program (2009) was a CSAMT survey at Dog Bone Ridge used to detect
resistivity anomalies under the sinter cap. The second (2011) was a multi-element soil survey used to
detect anomalies along the strike-length of the Northwest Fault, thought to be the controlling feeder
along which dikes and gold mineralization occur in the Kilgore setting.
9.2.1 CSAMT Survey in the Kilgore Gold Project Area
EBX, Latitude Minerals, and Kilgore Gold drilled a number of holes into the dip-slope sinter apron
(paleosurface) of the volcanic cap in the Dog Bone Ridge area, the location of which is shown in Figure 91. Some of the holes encountered ore-grade mineralization at depth. Examples are holes KG-04-02
containing 51.8 m @ 1.25 g/T gold and 96 EKC-178 containing 99.4 m @ 0.418 g/T Au.
All the mineralization encountered at Dog Bone Ridge is in the subsurface, as it is at the Kilgore deposit,
and is covered by a 50 - 100 m (165 – 330 foot) -thick cap of barren siliceous sinter and explosion
breccia, rendering geochemistry from surface sampling nearly useless. Prior to the involvement of Otis
Gold at Kilgore, a systematic geophysical survey to explore under this cap had never been conducted. In
October 2009, Otis Gold commissioned Zonge Geoscience, of Reno, Nevada, to perform a Controlled
Source Audio Magnetoof 8.5 line-km
of data coverage. The objective of this survey was to delineate near-surface alteration as well as
underlying structures and feeder zones.
The survey was conducted using a 50 m (165 foot) electric-field receiver dipole in spreads consisting of
four electric-field dipoles with a magnetic field antenna located in the center of the spread. The
magnetic antenna was oriented perpendicular to the survey line. Measurements were made at
frequencies ranging from 1 Hz to 8192 Hz in binary steps. Each current electrode consisted of three pits
lined with aluminum foil and soaked with salt water. The electrodes were connected to the transmitter
with lengths of insulated 14-gauge wire, separated by approximately two meters.
The survey tested for low-to-moderately resistive bodies containing higher resistivity cores associated
with structures that may have acted as conduits for gold mineralization. Resistivity of a rock is generally
controlled by rock porosity. Dense compact rocks, such as those affected by silicification, tend to be
highly resistive. Structural zones often produce relatively low resistivity due to increased porosity
resulting from broken rock. Mixtures of rock and alteration types produce resistivity results that are
difficult to interpret.
Figure 9-3 presents all six (6) inverted resistivity sections overlain by a structural interpretation.
52 | P a g e
Figure 9-3 Inverted Resistivity Sections and Resistivity/Structure Targets for Dog Bone Ridge (sections from Wright, 2009; color
spectrum indicates high or low resistivity values).
Clearly evident on all sections is a surface layer with predominantly high resistivity overlying variable,
but predominantly less resistive material. A notable exception is Line B that exhibits a uniform high
resistivity layer for most of its length. This high surface resistivity is interpreted as representing the
sinter cap and explosion breccia – rock unit Tup. The dotted lines separate the two resistivity domains
and the dashed lines identify interpreted structures. For reference, the geochemical signature of the
EBX soil anomaly (Figure 9-1, Gold Ridge target) is shown in yellow, with the Kilgore deposit to the
northeast shown in salmon color.
EBX Hole EKC-178, collared on Dog Bone Ridge, drilled into the core of the low resistivity anomaly of line
D and encountered 99 m @ 0.418 g/T Au. Wright (2009) discusses this intercept and recommends
testing other anomalies. Kilgore Gold intercepted 51.8 m @ 1.25 g/T Au in hole KG-04-4 that was nearly
coincident with the low resistivity anomaly detected at the end of Line C.
53 | P a g e
Otis Gold selected five targets on Dog Bone Ridge (Figure 9-5) and drilled four of them, Sites 1 – 4, in
2010.
Table 9.1 Listing of holes drilled into several of the anomalies on Dog Bone Ridge (Source: Otis Gold).
OKC-240 drilled into high resistivity anomaly E4. From surface to 341.2 feet (104 m), the hole
encountered barren siliceous sinter and explosion breccia that contained no detectable gold. From
341.2 feet (104 m) to 797.2 feet (243 m), the hole cut a felsic dike that contained slightly anomalous
gold. Drill hole OKC-242, drilled into Anomaly E3, encountered mostly siliceous sinter, but very little
detectable gold. The most interesting hole was OKC-243 collared near Kilgore Gold’s hole KG-04-4. This
hole encountered a 98 foot-thick (30 m) hydrothermally altered and brecciated felsic dike with gold
grades up to 0.731 g/T Au. Some of the breccia appears to be cemented with iron oxides (Figure 9-4;
dark material between clasts).
Figure 9-4 Brecciated Felsic Dike in Hole 10 OKC-243 at Dog Bone Ridge Containing 0.731 g/T Au (Photo by Otis Gold).
54 | P a g e
9.2.2 Otis Soil Survey, North and South Grids
In October 2011, Otis Gold contacted North American Exploration (NAE) and commissioned two soil
surveys at Kilgore. The surveys were conducted along the trace of the Northwest Fault to determine if
this structural feature could be traced further northwest or southeast of the existing road system. If
anomalies could be detected, then road construction would be warranted to test them. The “C” soil
horizon was sampled just above bedrock. Samples were collected with a sharp-shooter type shovel. Any
large roots and/or other organic matter and small stones over the size of about 1.5 cm were removed on
the shovel blade and the soil was placed into clean 6 x 20 cm (2.5” x 8”) cloth bags (Figure 9-5).
Figure 9-5 Typical Soil Sampling Site Showing Collection of Material from the “C” Soil Horizon (Photo by Otis Gold, 2011).
After each soil sample was collected, the corresponding waypoint number was written on the sample
bag and a GPS coordinate was collected using the NAD 83 Continental Datum. At each sample location a
2.5 x 7.5 cm (1” x 3”) aluminum tag with a waypoint number was scribed on it and attached to
vegetation along with a ribbon of pink flagging so that the site could be relocated. NAE collected 266
samples from the North Soil Grid at 30 m x 30 m spacing and 415 samples from the South Soil Grid at 30
m x 60 m spacing. The samples were put in rice bags by NAE and transported directly to Chemex’s “clean
lab” in Winnemucca, Nevada, where they were prepped and shipped to Reno, Nevada for analysis by
Chemex Labs.
After results were received from the North Soil grid, the data were contoured using Golden Software’s
SURFER , with results plotted on an orthophoto map. The data display a strong and significant linear
55 | P a g e
gold-in-soil anomaly that closely aligns to the extension of the Northwest Fault (the apparent structural
conduit to the system) controlling the overall northwest trend of the deposit (Figure 9-6).
N
Figure 9-6 Map of Gold-In-Soil Anomalies Associated with the North and South Soil Grids, 2011.
The anomaly opens the possibility of a 400 m extension of the Kilgore deposit to the northwest beyond
where +100-metre thick intercepts of 0.89 g/T Au were discovered in holes 11 OKC-258 and 259 (Figure
7-5). The gold anomaly is supported by trace-element geochemistry characteristic of a typical
epithermal gold system. The North area anomaly fills a portion of the gap between the Gold Ridge target
further to the northwest and the Kilgore deposit to the southeast.
The South Soil Grid (Figure 9-6) displays a very strong and coherent gold-in-soil anomaly that covers
approximately 15,000 sq m in the Prospect Ridge target area. This anomaly overlies a section of the lithic
tuff that is identical to rock that hosts the majority of the Kilgore deposit.
An additional 1350 m (4450 feet) of new roads will be necessary to access the North and South Grid
areas to conduct further exploration and drilling. This must be done by submission of a Plan of
Operation to the USFS to access the eleven anomalies, nine on the North Grid and two on the South Grid
(Figure 9-6).
56 | P a g e
9.3
2012 Exploration
A permit was issued by the USFS on May 30, 2012 to conduct a 14 – to 20-hole program consisting of
4,000 m of HQ core drilling on existing roads in the Kilgore deposit area and from six helicoptersupported sites to test the Gold Ridge target located 1 km to the northwest. On July 31, 2012, Otis Gold
announced preparation of a cultural survey and a POO to build 1350 meters of new roads to access the
North area target. The company stated that conducting the programs was contingent on market
conditions and raising new capital.
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10 DRILLING
10.1 Drilling and Survey Procedure
Approximately 68% of the footage in the Kilgore deposit (94,261 feet) is core drilling performed by Bear
Creek, PDUS, EBX and Otis Gold. All the drilling performed by Otis Gold is HQ core. The remainder of
the drilling (44,461 feet) was by reverse circulation (RC) methods. No RC drilling, however, has been
conducted since 1995. Rayner and Associates and Van Brunt (2002) discuss the pre-Otis Gold programs.
Otis Gold geologists Bernardi and Carden, who worked for EBX during the Kilgore RC and core programs,
provided some additional information about EBX programs which is included in this report.
Upon conducting a new aerial topographic survey in UTM in 2011, Otis Gold commissioned Forsgren and
Associates, Inc., an engineering firm and licensed surveyor to pick up hole collars. Of the total, 98 were
located and given UTM and local coordinates using conversions calculated with the survey instrument in
the field. Of the others, VULCAN® software generated local coordinates for the remaining drill holes in
the drill hole database using a matrix transformation algorithm. The drill hole database contains only
the Imperial unit local coordinates for the drill holes.
10.2 Type and Extent of Drilling
Drilling at Kilgore can be divided into all drilling on the property and a subset of drilling specific to the
area of the Kilgore deposit. The drilling subset was used for the resource estimate, the subject of this
report. In the nearly 30 years between 1984 and 2012, seven exploration companies, including Otis Gold
Corp, have drilled the Kilgore property. Table 10.1 shows that 292 holes were drilled on the property
totaling 205,150 feet (62,530 m). Of all the drilling performed at Kilgore, 68% or 215 holes, comprising
138,722 feet (42,282 m), are located in the Kilgore deposit area (Figure 10-1) and included in the
resource calculation.
58 | P a g e
N
Figure 10-1 Plan Showing All Drill Holes in Kilgore Deposit by Company (Indicated Resource and optimized pit displayed in
background, scale in feet).
Table 10.1 Compilation of Kilgore Gold Project drilling (number of holes and footage) by company, 1983 through 2011, all areas
59 | P a g e
Otis Gold performed 46% of the drilling on the Kilgore Gold Project (Figure 10-2), of which all 99 holes
were core for a total of 67,935 feet (20,707 m). The majority of the Otis Gold holes (92 HQ core holes)
were drilled at the Kilgore deposit along with 2 PQ metallurgy core holes for 64,404 feet (19,630 m) over
an 850 m strike length (Figure 10-2). Five holes were drilled in the sinter apron on Dog Bone Ridge
outside of the Kilgore deposit area.
Figure 10-2 Histogram illustrating drilling by company including footage by year for Otis (Source: Otis Gold).
10.3 EBX RC Drilling
Reverse circulation drilling comprises 32% of the Kilgore database by footage. The drilling procedure
consists of impact/rotation-driven advance with a hammer bit on the end of a string of double-walled
pipe. Drilling was generally done “dry,” in that no water was injected. If a small amount of water was
encountered in the hole, then water was injected so the bit and crossover did not get clogged with clayrich mud. The cuttings were returned outside of the inner tube for 10-feet and then entered into a
“crossover.” The cuttings were sent up the center chamber of the pipe by air to an enclosed cyclone
splitter (if dry) that separated the air from the sample. A dust sock on top of the cyclone assured no
fines were lost. The sample was stored in a hydraulic hopper until the 5-foot run was complete and then
dumped into a “Jones” or Gilson adjustable splitter. Samples were placed in new Hubco cloth bags and
a number was assigned (hole number and depth).
If water was encountered during the drilling procedure, then the sample was passed through an
adjustable rotating wet splitter and funneled into a bucket to collect the sample and water that also
contained fines in suspension. A commercial flocculent was added to the bucket and the fines were
allowed to settle before the water was decanted from the solids. A clean bucket was used every 5 feet.
60 | P a g e
After the fines settled, the sample and fines were put into a pre-labeled Hubco Sentry II bag made of
polypropylene fabric and sealed by a drawstring.
During the drilling procedure, a characterization sample of the chips was collected on the reject side of
the splitter in a sieve, washed and logged for its lithology, mineralogy and oxidation state and then
placed in plastic polypropylene compartment chip trays for later reference. The bags of drill cuttings
were shipped to Bondar-Clegg in Vancouver, B.C. (later ALS-Chemex), and primarily analyzed for gold
content by 1 assay-ton fire assay methods. Original assay certificates are in Otis Gold’s possession and
filed at their exploration office in Spokane, Washington.
10.4 EBX Core Drilling
EBX drilled 67 core holes for a total of 14,978 m of HQ drilling. Otis Gold geologists who worked for EBX
on the project state that the drilling was performed with triple-walled core tubes and face-discharge
bits.
10.5 Otis Core Drilling
10.5.1 2008 Otis Drill Program
Otis acquired the Kilgore property late in 2008 and conducted an abbreviated drilling program in
October and November of that year employing Timberline Drilling of Coeur d’Alene, Idaho, utilizing a
Sandvik DE 140 core rig outfitted with a triple-tube core recovery system and face-discharge bits. During
2008, Otis Gold’s plan was to further explore a high-grade core initially drilled by EBX and look for
continuity to determine if an underground mining scenario was possible. Four (4) HQ holes were
completed (08 OKC-191 through 194) for a total of 2,083 feet (635 m) drilled. Results of the drilling
showed that the mineralized thicknesses and average grades were substantially greater than those
constituting the majority of the historic intervals drilled in the area.
The main objective of the 2009 drill program was to fill in a central area of the deposit that lacked
drilling. Cabo Drilling of Surrey, B.C., conducted the drilling. A total of 12 HQ-3 core holes using one
Boyles Hydra 56 core rig was drilled from eight sites for a total of 10,243 feet (3,122 m) drilled. All holes
were drilled in the Mine Ridge core area of the deposit to infill previously untested areas and to test for
thick intercepts of mineralization comprising a bulk-tonnage gold deposit. Otis Gold’s results obtained
mineralized thicknesses and average grades noticeably greater than those from the majority of historic
holes drilled in the area.
Timberline Drilling was contracted again in 2010 and mobilized two Sandvik DE-140 core drills equipped
as in 2008. Drilling was performed in double shifts around-the-clock. Thirty-five (35) HQ-3 holes were
drilled in the deposit area for 18,301 feet (5,578 m). Of the 35 holes drilled, 31 contain significant gold
mineralization. Additionally, five holes comprising 3,531 feet (1,076 m) were drilled to preliminarily test
the CSAMT anomalies in the Dog Bone Ridge area, but only anomalous gold was detected (Section 9.2.2
of this report).
61 | P a g e
Timberline was again contracted in 2011 using the same triple-tube core recovery and face discharge bit
systems employed the contractor in its previous two campaigns. Thirty-nine (39) HQ-3 holes and two
PQ-size metallurgy holes were drilled for a total of 30,246 feet (9,218 m) looking for the boundaries of
the deposit on the north, and to test for the southeastern extension of mineralization into the Prospect
Ridge area. Of the 39 holes, 28 contain significant gold mineralization. The deposit was extended into
the Prospect Ridge area and northwest to the limits of the existing road system. Intercepts greater than
100 m (330 feet) thick were discovered in holes 11 OKC-258 and 11 OKC-259 at the north edge of the
drill pattern associated with thick dikes.
10.6 RC and Core Comparisons
The resource database excludes seven RC drill holes with suspected downhole contamination due to
water inflows based on core twin holes, caliper measurements of RC holes, and observed assay cyclicity
at rod changes (Rayner and Associates and Van Brunt, 2002, Otis Gold, pers. Commun.). No RC drilling
has been performed on the Kilgore deposit since 1995.
62 | P a g e
Figure 10-3 Paired Data Comparison, RC and Core at 10-Foot Maximum
Separation.
RC-core comparisons are made in three ways: 1) Between 10-foot downhole composites within specified
radii; 2) Between inverse distance-weighted estimates for each hole type; and 3) Univariate (clustered)
statistics for each hole type at various cutoff grades.
For the first method, Micromine provides a utility that allows spatial comparison of paired data. The
comparison is run on radii of separation of 5, 10, and 15 feet. The data compared are two drill hole RCcore twins, composites near the collar of holes drilled from the same platform, and holes which cross at
depth. The output is a table showing the fields from the core hole and the fields from its RC pair within
the specified radius and listing the separation distance. Statistical comparisons are generated from the
output file. Figure 10-3 shows Q-Q plots at a 10-foot radius of separation in 2 separate grade ranges.
Clearly, at any gold grade range the RC composites show a positive bias compared to the core holes. The
comparison includes data from 21 core holes and 18 RC holes. The bias is reflected in an RC mean gold
ppm value of 2X the mean of the core hole pairs.
Method 2, the separate RC and core IDS estimates, employ the same sample configuration, search,
capping (15 g/T Au) and weighting algorithms so that the comparison is as valid as possible. The results
at zero cut-offs show a significant positive bias in grade and contained metal with the RC holes versus
the core holes. At higher cut-off grades, the difference in grade at cutoff is slight, and even slightly
reversed, but the amount of metal in the RC estimate is 30 – 50% higher (Figure 10-4).
63 | P a g e
The third method, a comparison of clustered mean grades results for 10-foot downhole composites do
not as clearly demonstrate a large difference between core and RC. The mean core hole gold composite
grade is 0.25 g/T Au at a 0.0 g/T Au cutoff grade versus 0.39 g/T for RC. Upon applying a 0.3 g/T Au
cutoff grade, the means are 1.16 g/T Au and 1.46 g/T, respectively. This indicates a significant positive
RC bias. However, if a single RC outlier of 262 g/T Au is eliminated from the comparison, the mean RC
grade is 1.18 g/T Au, effectively equal the core grade. The third method is less robust because it doesn’t
take into account the imperfect spatial overlap of the two data sets (Figure 10-5). To some degree, the
clustered statistics compare the drilling in one area with another, not just RC with core.
Figure 10-4 Results of Independent Block Estimates Using RC and Core for Comparison.
64 | P a g e
N
Figure 10-5 Distribution of RC and Core Composites in the Kilgore Deposit (Y=North, X=East in local coordinate system, scale in
feet).
Otis Gold geologists are aware of issues related to water inflow-induced contamination in RC holes and
washing-out of soft matrix material and fracture coatings in core samples. At this time, it is evident that
there is a positive grade bias in the paired RC data and a contained metal bias for RC data versus core.
Unfortunately, it is not possible to know which data set is more representative of the in situ
mineralization without adding separate bulk sample data, such as a decline, trenching, or test pits, to
the data analysis. The most obvious examples of compromised drill holes are removed from the data
analysis. The use of triple-tube core recovery systems combined with face-discharge drill bits used by
EBX and Otis Gold since 1995 is an effort to improve the quality of gold sampling in the Kilgore deposit,
representing approximately 57.4% of the total footage drilled. At Kilgore, RC samples compose only 33%
of the assays in the final resource database.
10.7 Drill Recovery
Otis Gold measured core recovery between blocks marking runs in the boxes. Recoveries averaged 90%
or better for the drilling campaigns (Table 10.2).
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Table 10.2 Average Core Recoveries for Otis Gold Drilling Campaigns, 2008 – 2011 (Source: Otis Gold).
Company
# of Core Holes
Average Core Recovery
Otis Gold Corp 2008
Otis Gold Corp 2009
Otis Gold Corp 2010
Otis Gold Corp 2011
4
12
34
41
98.6%
97.4%
95.0%
93.8%
The averages do not include the collar of the hole to approximately 20 feet depth. Of 8,404 intervals
recorded, only 5% have <50% recovery.
10.8 Drill Hole Spacing
Table 10.3 below summarizes drill hole spacing in the Kilgore deposit on a bench-by-bench basis; Figure
10-6 is a graphic representation of the results. The calculations are made by the author’s EXCEL® utility,
Hole Spacer_2D, that calculates the distances in two dimensions of all drill composites on a bench, bins
the results, and returns statistics on mean and median drill hole spacing for the directions which have
the tightest drill spacing. The columns “Az X” and “Az Y” list the azimuths along which the drill hole
minimum spacing is achieved on each bench, as measured by either the mean value or median value. In
most cases, the median value is the preferred statistic because it is less affected by more erratic hole
spacing at a deposit’s periphery.
Table 10.3 Drill Hole Spacing and Gold Grade by Bench Elevation.
Bench
6500
6600
6700
6800
6900
7000
7100
7200
7300
7400
7500
7600
7700
Mean X
603.1
343.5
293.9
181.6
163.3
147.2
142.3
142.3
130.2
129.5
142.1
173.3
144.0
Mean Y
495.2
393.9
290.8
214.3
184.7
153.3
128.1
128.1
122.3
121.4
114.1
168.1
166.3
Median X
531.9
311.6
220.1
158.4
127.6
124.3
116.3
116.3
97.3
101.7
133.6
147.9
146.1
Median Y
295.2
194.0
149.4
170.1
142.0
127.0
109.1
109.1
96.4
90.0
103.4
104.3
123.8
Az X
88
7
11
9
5
7
1
1
87
87
7
7
4
Az Y
178
166
101
99
95
97
91
91
177
177
162
167
94
Au_ppm
0.028
0.024
0.039
0.116
0.239
0.298
1.023
0.257
0.327
0.226
0.322
0.208
0.043
Most of the data are concentrated between the 6700 and 7600 benches. The graph and the table show
that on these benches, the median spacing varies from 125 X 100 feet near-surface to >200 feet with
depth. The closer spacing near the hole collars reflects clustering of multiple holes from the same drill
pad, and more crossings of angle holes. At depth, the holes tend to diverge, a factor considered in the
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Figure 10-6 Kilgore Drill Hole Spacing by Bench Elevation.
estimation methods chosen for some of the deeper mineralization. Drill hole spacing is too wide at
depth to permit application of geostatistical methods to the estimation.
10.9 Analysis of Drill Hole Types and Orientations
Kilgore drilling is a mix of core (NQ- and HQ-size) and reverse circulation (RC), the latter confined to the
earlier drilling campaigns as discussed above. The distribution of drill hole types, shown spatially in
Figure 10-5, includes 129 core holes and 77 reverse circulation holes. The two hole types are fairly well
interspersed but there are some clustering of hole types on the fringes of the deposit.
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Drill hole orientations vary between vertical and angled and are oriented in a few preferred directions.
The rose diagram (Fig. 10-7) shows a major clustering at azimuth 230. The other principal group is
vertical holes, shown in the ‘0’ sector. Less pronounced groupings of holes occur along azimuths 50,
90/270, and 150.
Figure 10-7 Rose diagram of Kilgore drill hole orientations.
This is a concern for grade estimation because the vertical and azimuth 230 drill holes are subparallel to
one of the principal structural and mineralization trends in the deposit, the northeast-trending faults
such as the Mine Ridge and Cabin faults. Table 10.4 lists drill hole mean gold assay grades grouped by
drill hole orientation:
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Table 10.4 Gold Assay Statistics by Drill Hole Orientation.
Group
Blank
CountAll
Count
Total
Mean
StDev
Range
Minimum
Q1
Median
Q3
Maximum
Skewness
Kurtosis
95%
97%
98%
99%
99.50%
1
0
5404
5404
1566
0.290
1.632
57.53
0.003
0.026
0.069
0.189
57.528
21.92
587.4
0.82
1.32
1.90
3.10
57.53
2
0
4014
4014
1286
0.320
4.313
262.2
0.003
0.026
0.077
0.189
262.176
56.61
3398
0.90
1.36
1.86
2.89
262.18
3
0
764
764
165.6
0.217
0.6945
12.05
0.003
0.01375
0.061
0.181
12.050
11.55
168.4
0.79
1.15
1.49
1.92
12.05
4
0
459
459
177.7
0.387
1.24
21.16
0.003
0.052
0.129
0.305
21.166
11.77
178.7
1.19
1.73
2.74
5.17
21.17
5
0
443
443
104.4
0.236
0.5245
5.275
0.003
0.012
0.043
0.194
5.278
4.677
29.36
1.07
1.69
1.90
2.59
5.28
6
0
2211
2211
636.8
0.288
0.7261
15.25
0.003
0.041
0.103
0.267
15.257
10.05
152.4
1.01
1.48
2.07
3.14
15.26
Group 1
Group 2
Group 3
Group 4
Group 5
Group 6
Vertical Holes
AZ 230 Holes
Az 50 Holes
Az 270 Holes
Az 90 Holes
Various
78
59
13
7
7
42
The table does not show a clear relationship between mean gold grade and drill hole direction, however
Group 4 (Azimuth 270) shows the highest mean grade despite not having the highest outlier assay.
While this bias suggests possible under-representation of gold in the dominant drilling trends, Group 4
composes only a small fraction of the total data. The geologic interpretation is mostly based on a set of
100 foot-spaced cross-sections that parallel the dominant 230-azimuth trend of the drilling.
10.10 Summary of Otis Gold Drilling Campaigns
Appendix A contains tables showing significant intervals of mineralization tabulated by Otis Gold for
each of its drill campaigns. The holes are shown in plan in Figure 7-12.
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11 SAMPLE PREPARATION, ANALYSES AND SECURITY
11.1 Prior to 2008
Details of all of the procedures used by Bear Creek, Pegasus and Placer Dome are not documented. Bear
Creek used Bondar-Clegg as its laboratory in 1984 and 1985. Placer Dome used Silver Valley Labs of
Kellogg, Idaho in 1991 and 1992, and Pegasus used Bondar-Clegg in 1993 and 1994.
EBX followed a procedure for recovering drill core and transporting it nearly identical to the one
described in more detail below for Otis Gold in later campaigns. After the core was recovered, it was
placed in standard wax-coated cardboard core boxes and driven directly to St. Anthony, Idaho, where it
was secured in EBX’s St. Anthony office. Each box was photographed and logged. To eliminate splitting
bias, the core was not split; whole core was sent to Bondar-Clegg Labs for fire assay in 1994. In 1995
and 1996 the primary assayer was Chemex Labs. Rayner and Associates and Van Brunt (2002) describe
sampling and quality control performed by EBX. EBX used both Bondar-Clegg and Chemex between
1994 and 1996. Work done included comparisons of metallic screen assays with standard fire assays.
The results did not show that metallic screen assays were consistently higher than conventional fire
assays. The authors presented tables of results for four EBX in–house standards prepared by BondarClegg and check assays comparing Chemex to Cone Geochemical. The check assay results varied by
year with Cone higher in 1995 and Chemex in 1996.
Otis Gold geologists have provided the author with additional information about the EBX campaign. In
1994, EBX contracted Chemex to perform 253 2-assay ton check assays on new pulps from coarse
rejects (Bernardi and Wendland, 1995). In 1995, 305 new pulps of selected intervals were chosen for
check assays performed by Cone Labs of Reno, Nevada (Wendland and Bernardi, 1996).
11.2 Otis Gold Sample Preparation, Assays and Sample Security
The drilling was performed by Timberline Drilling of Coeur d’Alene, Idaho, in 2008, 2010 and 2011 and
by Cabo Drilling of Surrey, B.C., in 2009. Otis Gold followed a set procedure during its drilling programs.
At the site, the driller and helper carefully removed the core, initially cleaned any lubricants or mud
from the core and placed it into new standard wax core boxes. Each core run was recorded along with
the depth of the run by wooden blocks put at the end of each run by the driller. Hole number, box
number, and the footage interval for each box were marked in indelible marker on the boxes. The
geologist made a brief field log of the core lithology.
All filled boxes of core were transported in a pickup truck by Otis Geologists to the company’s logging
facility in St. Anthony, Idaho every 24 hours where geologists logged the core. The boxes were stored in
locked commercial storage facilities in St. Anthony. In 2008, some of the core was logged in Spokane
Washington.
Between 2008 and 2011, Otis Gold generated 12,168 samples that went into the deposit database.
Generally, samples were collected, logged, and analyzed in the same consistent manner over the 4-year
span. Each core box contained approximately 10 feet (3 m) of drilled core, which, if excessively dirty,
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was washed to remove mud and any drilling fluids. A geologist designated the intervals to be sampled,
logged the core (Figure 11-1), and recorded basic parameters (i.e. recovery, RQD, lithology, structure,
alteration, species of iron oxides and whether iron oxide was pervasive throughout the core or along
fractures). After the core was logged, a red ribbon was placed at the beginning and end of each assay
interval (usually about 5 feet or less) and the sample number recorded on the ribbon. All boxes of the
whole core were photographed (Figure 11-2).
Figure 11-1 Measuring and Logging Drill Core at Otis Gold Logging Facility, St. Anthony, Idaho (Photo: Otis Gold).
Figure 11-2 Photographing Core Prior to Splitting (Photo: Otis Gold).
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A marker board with the drill-hole number, ID code and interval of the drill core to be photographed
was included in all core photos. During the logging process, the core was inspected for the presence of
vein material, and if a vein was identified, the geologist marked the core with a dashed “split” line that
roughly divided the vein in half for core splitting. The core was then split with a hydraulic core splitter,
half the core kept in the box, and the other half bagged in a clean 45 x 60 cm (18” x 24”), 8-mil,
industrial-strength, polyethylene sample bag secured with a wire tie. The hole number and sample ID
were written on each bag in indelible marker. The hydraulic splitter was cleaned between samples to
avoid cross-contamination. About 5-6 bags of sample were consolidated into 60 x 90 cm (24” x 36”) rice
bags for transport to the lab.
In 2008-2010, the samples were loaded by Otis technicians and transported either directly to a ALS
Chemex Representative in Bellingham, Washington, or to a locked storage unit in Issaquah, Washington,
to insure sample security and integrity until picked-up by ALS Chemex personnel for processing in their
North Vancouver, Canada lab. In 2011, the procedure was slightly modified and samples were
transported by Otis personnel via pick-up truck to Elko, Nevada, and delivered directly to ALS Chemex’s
facility for sample preparation. With each hole, a Certified Standard Reference material was inserted
every 15 samples for QA/QC purposes. Several duplicates and blanks were included for analysis with
samples from every hole for quality control. The samples, standards, duplicates, blanks and submittal
sheets for each hole were delivered to ALS Chemex. Results of Otis Gold’s QA/QC program are discussed
later in this section.
11.3 ALS Chemex Procedures and Protocols
ALS Chemex performed all geochemical analysis by Otis Gold. ALS Chemex Laboratories in North
America is an ISO 9001:2008 certified laboratory. The North Vancouver, BC lab, where most of Otis
Gold’s samples were analyzed, and Reno, Nevada laboratories hold Standard Council of Canada ISO/IEC
17025 accreditations. ALS Chemex used the following procedures:
Samples were received at ALS Chemex in either their North Vancouver (2008-2010) or Elko
(2011) facility.
Samples were logged into a tracking system and a bar code label attached (LOG-22).
Excessively wet or damp samples were dried in drying ovens (DRY-21).
Fine crushing of rock chip and drill samples was to standard of 70% passing a 2mm sieve
(CRU-31).
Samples were split using a riffle splitter (SPL-21).
A sample split of up to 1,000 g was pulverized with > 85% of the sample passing a 75 micron
sieve (PUL-32).
One sample pulp was used for the analytical work and the second pulp returned to Spokane
and catalogued for future reference.
The prepared sample was fused with a mixture of lead oxide, sodium carbonate, borax, silica
and other reagents, as required, inquarted with 6 mg of gold-free silver and then cupelled to
yield a doré bead.
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The bead was digested in 0.5 mL of dilute nitric acid (HNO3) in a microwave oven, 0.5 mL of
concentrated hydrochloric acid (HCl) added, and the bead further digested in the
microwave.
The digested solution was cooled, diluted to a total volume of 4 mL with de-mineralized
water, and analyzed by atomic absorption against matrix-matched standards.
The gold content was determined by a 50-g fire assay with atomic absorption finish (AuAA24) to an upper limit of 10 grams. Over-limit samples were analyzed by fire assay,
gravimetric finish (Au-GRA22).
Internal quality control measures employed by ALS Chemex included the insertion of standards,
duplicates and blanks (about 10% of the total samples in each analytical run). The QC data were
analyzed to make sure the reference materials and duplicate analyses fell within precision and accuracy
requirements.
Inspectorate Labs (2008 and 2009) and Acme Labs (2010 and 2011) were used by Otis as a check on the
primary analytical results produced by ALS Chemex. Both Labs have ISO 9001 and ISO/IEC 17025
accreditation.
11.4 Reference Materials
All reference samples (standards) used by Otis between 2008 and 2011 comprise commercial standards
obtained from Rocklabs of New Zealand, a common supplier of certified materials for the minerals
industry. A total of eight (8) reference standards was used during the period and submitted as 680 check
samples (Table 11.1). Generally, a sealed kraft envelope of reference material was inserted into the
sample stream for gold analysis at a frequency of one in every 15-20 of Otis Gold’s drill core samples
submitted and labeled sequentially with the sample numbers. The lab was instructed to analyze all
samples and pulps in numerical order. When the assay results were received from the lab, the standards
were checked and results recorded.
All eight standards used included recommended mean values. Assay result statistics for each standard
Table 11.1 Standard Reference Materials Used By Otis Gold 2008-2011 (Source: Otis Gold).
for the period are summarized in Table 11.1. Control charts for gold values obtained for each standard
and provided to the author by Otis Gold are charted in Figures 11-3 through 11-10 using a template
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provided by the vendor, Rocklabs. The calculated S.D., maximum, and minimum values in Table 11.1
should not be confused with the control limits shown on the charts which are based on the performance
of the standard at ALS Chemex.
Figure 11-3 Control Chart of Rocklabs Standard OxC88, Certified Value 0.203 g/t Au.
Chart OxC88 (Figure 11-3), a very low grade standard, shows a modest negative bias relative to the
certified value and a drift with time.
Figure 11-4 Control Chart of Rocklabs Standard OxC72, Certified Value 0.205 g/T Au.
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Chart OxC72 (Figure 11-4) shows two large outliers, however the standard is too low grade to be of
much utility.
Figure 11-5 Control Chart of Rocklabs Standard OxF65, Certified Value 0.805 g/T Au.
Chart OxF65 (Figure 11-5) performs well, showing only one outlier for the period utilized.
Figure 11-6 Control Chart of Rocklabs Standard OxF85, Certified Value 0.805 g/T Au.
Chart OxF85 (Figure 11-6) generally performs well showing only three outliers for the period utilized.
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Figure 11-7 Control Chart of Rocklabs Standard OxG83, Certified Value 1.002 g/T Au.
Chart OxG83 (Figure 11-7) performs well against the certified value with four scattered outliers.
Figure 11-8 Control Chart of Rocklabs Standard OxH55, Certified Value 1.282 g/T Au.
OxH55 (Figure 11-8) shows a slight positive bias relative to the certified value and clustered outliers. No
apparent action was taken with these.
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Figure 11-9 Control Chart of Rocklabs Standard OxH66, Certified Value 1.285 g/T Au.
OxH66 (Figure 11-9) was a problematic standard during one series of batches. Multiple outliers noted
in batch 7 triggered re-assay of the batch in another submission.
Figure 11-10 Control Chart of Rocklabs Standard HiSilK2, Certified Value 3.474 g/T Au.
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Chart HiSilK2 (Figure 11-10) performs well against the certified value with only one outlier.
11.5 Blank Samples
Otis Gold inserted blind blank samples into the sample stream on a random basis throughout its Kilgore
drilling program. Initially, Otis used several commercially prepared blanks per hole. The blank samples
were expensive and gave mixed results. When the blanks ran out in 2009, and partly due to their high
cost, the practice was discontinued until the summer of 2010.
In mid-2010, Otis Gold included new blank sand samples collected from the sand dunes at the south
edge of the Snake River Plain near St. Anthony. While these are not truly blank, they seemed to yield
much more consistent assay results and, as a result, were utilized during Otis Gold’s 2010 and 2011 drill
seasons.
Acceptable values for blank samples are considered to be equal to or less than five times the lower
detection limit (LDL) of the analytical method used. The LDL for gold by the analytical technique used by
Chemex labs is 0.005 ppm Au. Therefore, gold values equal to or less than 0.025 ppm are considered to
be within acceptable analytical limits. Of the 147 blanks submitted, 100% returned values of less than
0.025 ppm for Au (Figure 11-11).
Figure 11-11 Control Chart of 147 Blank Samples Submitted Between 2008 and 2011.
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No coarse blanks were used in any of the drill campaigns. Some contamination in the crushing process,
or bag swaps could have occurred at the laboratory and these problems would have remained
undetected by the procedures in place.
11.6 Otis Gold Metallic Screen Work
Otis Gold analyzed 97 samples by metallic screen methods to determine if there was a “nugget effect”,
and if a 50-gram assay would be a representative and meaningful assay to determine the true gold
content of the core. The study was intended to resolve conflicting results for metallic screens vs.
conventional fire assays in 1994 and 1995 by EBX. The mean of the metallic screen assays was 5.70 g/T
Au, while the mean standard fire assay was 5.2 g/T. The bias existed at every quartile and is evident on
a Q-Q plot (Figure 11-12).
Figure 11-12 Otis Study Comparing 50-gram Fire Assay vs. 1 kg Metallic Screen Analysis For 97 Samples.
The difference in the means is 9%, similar to the linear regression for the Q-Q sorted data. Results
selected are representative of the mineralization.
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11.7 Core Half Pairs
Otis Gold geologists prepared core half pairs for selected sample intervals during the program by
submitting the remaining half of the core after splitting as a separate sample. The data are not true
duplicates but they give an indication of possible sample bias introduced in the core splitting process.
From 2008 through 2011, they analyzed a total of 174 duplicate pairs. The primary sample was identified
by the sample number and the duplicate sample was identified with the suffix “D”. ALS Chemex analyzed
both samples. Table 11.2 below summarizes the statistics of a subset of the analyses of the original and
duplicate samples, filtered on a pair average >0.05 g/T Au:
Table 11.2 Descriptive Statistics for Core Half Pair Check Assays at ALS Chemex.
Basic Statistics
Mean
Minimum
1st Quartile
Median
3rd Quartile
Maximum
Variance
Std Dev
CV
RMS CV
Original
0.240
0.006
0.091
0.16
0.2875
2.07
0.076702
0.276951
1.151659
43%
Duplicate
0.249
0.009
0.071
0.142
0.309
1.68
0.081629
0.285707
1.146927
The statistics of the core half pairs are similar, despite having a considerable precision error described by
the coefficient of variation of the relative mean squares, RMS CV. A scattergram of the data (Figure 1113) shows two apparent labeling or handling errors from a single drill hole 10OKC-227 that plot on the Y
axis. A check of the data using a Q-Q plot indicates the pairs are not biased (Figure 11-14); the data tend
to demonstrate a lack of bias generated by the core sampling technique.
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Figure 11-13 Scatterplot of Otis Gold Core Half Pairs With 5% and 10% Relative Error Lines, 2008 – 2011 Data.
Figure 11-14 Q-Q Bias Check for Otis Gold Core Half Pairs from 2008 -2011 Campaigns.
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11.8 Check Assays
11.8.1 Kilgore 2008-2009 Drilling Check Assays
Inspectorate Labs of Vancouver, B.C, performed check assays on 75 pulps from the 2008-2009 drilling
season. The ALS Chemex assays are more elevated than Inspectorate’s, except for the maximum value
(Table 11.3).
Table 11.3 Check Assay Statistics, ALS-Chemex with Inspectorate.
Basic Statistics
Mean
Minimum
1st Quartile
Median
3rd Quartile
Maximum
Variance
Std Dev
CV
RMS CV
ALS Chemex
1.753
0.06
0.292
0.67
1.815
15.45
7.961673
2.821644
1.609847
31%
Inspectorate
1.69
0.051
0.24
0.583
1.783
27.977
13.46951
3.670083
2.165276
The data are imprecise—RMS CV is elevated for check assay data. The imprecision could be due to poor
Figure 11-15 Q-Q Bias Plot of Inspectorate Check Assays for Pairs >0.05 g/T Au, 2008-2009.
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homogenization of the pulp, whether originally or through transport to the check lab, or to other causes.
A Q-Q plot (Figure 11-15) and the inset show that at data ranges up to 5 g/T the best linear fit of the
data gives an ALS Chemex bias versus Inspectorate of 18%. The few remaining data show that the bias
continues at higher grades, except for the highest grade sample pair where the relationship is reversed.
Two pairs with average values <0.05 g/T Au are eliminated from the data set in the graph above.
11.8.2 Kilgore 2010 Drilling Check Assays
Acme Labs of Vancouver, B.C., performed check assays for 399 samples from Otis Gold’s 2010 drilling
season. The data set is filtered to include only 215 sample pairs with an average value of >0.05 g/T Au.
The ALS Chemex assays are more elevated than Acme’s (Table 11.4).
Table 11.4 Statistics for Acme Check Assays Filtered to >0.05 g/T Au, 2010 Drill Holes.
Basic Statistics
Mean
Minimum
1st Quartile
Median
3rd Quartile
Maximum
Variance
Std Dev
CV
RMS CV
ALS
0.399179
0.015
0.08
0.161
0.42
5.03
0.509858
0.714044
1.788779
34%
Acme
0.352883
0.039
0.078
0.138
0.362
4.92
0.384146
0.619795
1.756376
The data have imprecision similar to the previous seasons. A Q-Q bias check (Figure 11-16) shows an
Figure 11-16 Q-Q Bias Plot, Acme Lab Check Assays
Technical Report --Kilgore Gold ProjectFiltered
– OtistoGold
>0.05Corp.
g/T Au, 2010.
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overall high bias at ALS Chemex of 10% which is reversed to -10% for pair data averaging 5 g/T or less.
11.8.3 Kilgore 2011 Drilling Check Assays
Acme Labs of Vancouver, B.C., performed check assays on 352 samples from Otis Gold’s 2011 drilling
season. Filtered to pairs with average grades >0.05 g/T Au, 145 remaining pairs show more elevated
statistics at ALS Chemex.
Table 11.5 Statistics for Acme Check Assays Filtered to >0.05 g/T Au, 2011 Drill Holes.
Basic Statistics
Mean
Minimum
1st Quartile
Median
3rd Quartile
Maximum
Variance
Std Dev
CV
RMS CV = 34%
Original
0.399179
0.015
0.08
0.161
0.42
5.03
0.509858
0.714044
1.788779
Duplicate
0.352883
0.039
0.078
0.138
0.362
4.92
0.384146
0.619795
1.756376
The data have imprecision similar to the previous seasons, and the possible causes for this are as
discussed in the previous section. A Q-Q bias check (Figure 11-17) shows a positive ALS Chemex bias
Figure 11-17 Q-Q Bias Plot, Acme Lab Check Assays Filtered to >0.05 g/T Au, 2011.
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for levels > 0.5 g/T Au between 8.5% for data filtered to >1.0 g/T Au to 13% for the larger data set with
pair values up to 4.9 g/T Au.
Two of the three check assay data sets, 2008-2009 with Inspectorate and 2011 with Acme, show
pervasive positive bias with ALS Chemex, whereas 2010 results show mixed results, with values up to 5
g/T Au showing a negative ALS Chemex bias and the higher grades a positive bias.
11.8.4 Discussion
There is a possible explanation for the seemingly contradictory results of the control samples, which
show no ALS Chemex bias versus certified reference materials, and the check assay programs that show
a general, and significant high bias of ALS Chemex versus two accredited laboratories over a period of
four years. Otis Gold did not request that the check labs do a re-homogenization step, such as a 10-15
second grind of the pulp in a pulverizer, in any of the three check assay campaigns. The bias is most
evident for sample pairs with grades > 1 - 2 g/T Au. The metallic screen assay results suggest a
significant presence of free gold in the pulps, especially in samples with grades > 2 g/T Au. Gold and
sulfides are dense relative to the gangue in the sample and tend to settle to the bottom of any loose
material given the opportunity. Segregation of the free gold may have occurred in the pulp envelopes
during storage, handling and shipment back-and-forth in trucks between the laboratory and the storage
sites. If the check laboratory simply withdrew a new 50-g sample increment from the pulp envelope asreceived it was likely from the top where there were fewer dense gold particles. Precision is poor
between ALS Chemex and the check labs which would be expected if the pulps were inhomogeneous
when they were sampled for assay. The hypothesis presented here could be tested by re-submitting a
representative group of the samples to one of the check labs with instructions to re-homogenize before
withdrawing a new 50 g sample for assay, provided sufficient material remains in the pulp envelopes. If
not, any set representative of the drilling campaigns could be used instead.
11.9 Compromised Samples
Otis Gold reports that some drill core samples from the 2011 drill campaign were initially compromised
by Otis Gold’s technicians. Otis Gold geologist Dr. John Carden noticed, during one trip to the lab in
2011, that many of the samples submitted to the laboratory were not split. When this was further
investigated, it was discovered that one of the core preparers had taken a short-cut and split only half
the 5-foot-assay interval while submitting whole core for the other half of the 5-foot interval. Once this
was discovered, all samples that the splitter had processed during the year came under suspicion and it
was determined that 668 samples, or 12.3% of the samples assayed during the year, may have been
compromised (Table 11.6).
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Table 11.6 List of Compromised Samples (Source: Otis Gold).
Hole Number Interval
Sample Numbers Samples Affected
(footage)
11 OKC-262
0-300
1-60
60
11 OKC-263
75-536
15-100
86
11 OKC-266
0-385
1-75
87
505-565
100-111
11 OKC-268
0-650
1-108
108
11 OKC-269
0-820
1-163
163
11 OKC-271
326-431
60-79
45
551.5-711
105-130
11 OKC-280
305-435
62-87
26
11 OKC-281
199-400
40-80
41
11 OKC-283
0-270
1-52
52
TOTAL
668
For each interval, Otis Gold recorded the weights of the individual samples submitted and the weights of
the remaining core in the boxes. The remaining core for each interval was submitted as a separate
sample. The final assay was the weighted average of the two samples, equal to the whole core,
calculated with the following formula:
((Weight Sample #1 x g/T Au) + (Weight Sample #2 x g/T Au))/Total Weight
The author is of the opinion that the measures taken are appropriate and adequate for this group of
samples.
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12 DATA VERIFICATION
12.1 Database Validation
The author performed a number of different tasks and checks to verify the technical data included in
this report. A random check of assay certificates stored in Otis Gold’s offices in Spokane, Washington
covered the 17 drilling programs conducted to date on the property between 1984 and 2011. The
author chose holes that compose approximately 10% of the resource database, 21 drill holes in all, and
compared all of the assays shown on the certificates (2,486) with the corresponding entry in the
electronic database used for resource estimation.
The assay error rate from this check is 1.9%, almost all minor rounding errors apparently related to
conversions from assays originally generated in units of ounces per short ton to grams per metric tonne,
or vice-versa. Other errors included improper entry of detection limit assays. The author found two
possible transcription errors and a series of assays that were entered out-of-order. Removal of the
minor rounding and detection limit errors generates an error rate of 0.1%, an acceptable level for
resource estimation. The author noted that some of the assays in the campaigns up to 1992 are
averages of the original and internal laboratory check assays. This is not a recommended practice, but it
is not evident in the assays for the later campaigns which compose the bulk of the assay database.
The drill hole information is organized in file folders and notebooks. The author noted whether the
physical information included the written log, core photographs, a map or reference section, original
certificate, a summary or assay listing, survey data, recovery log, and RQD log.
This data was not
complete for all holes; e. g., some holes are reverse circulation drill holes and thus do not have
photographs, recovery, and RQD. Two files contained the downhole survey records, eight included
photographs, five included maps and/or sections showing the drill hole geology and assays, eleven files
had recovery measurements, and ten had RQD measurements. All drill holes had written logs and all of
the certificates were found in the files. A final check included comparing an interval or two of high
assays in the database with the drill log to see if the assays corresponded to the geologic notes. In some
cases, there was no correspondence due to a lack of detail in the log, or in others, because gold is not
visible and the controls are not apparent. In a few cases, higher gold appeared to have a definite
association with silicified or tourmalinized intervals, faulting, and oxidation noted in the logs.
Assisted by Otis Gold geologists, the author conducted comprehensive checking of the electronic
database provided by Otis Gold prior to any resource work. The database comprises tables for collar
information, downhole survey, assay, lithology and alteration. The collars were checked against
topography to make sure they plotted properly, and the hole traces checked to look for kinks and
corkscrews, which indicate survey errors. A Micromine software database validation was the principal
checking tool used to detect overlapping intervals, intervals extending beyond the depth of the drill
hole, anomalous downhole changes in azimuth and dip, duplicate intervals, interval information out-ofsequence, information with no corresponding collar, and other checks. A secondary check technique
was use of filters in EXCEL® to detect spurious codes, handling inconsistencies for detection-limit assays,
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inconsistent hole naming, and other tests. Errors were corrected as a result of these checks in several
sessions at Otis Gold’s office.
The author reviewed RC and core assay comparisons and the relationship between hole orientation and
grade, discussed in Section 10.
Some 2010 and 2011 drill hole downhole surveys were originally entered in the database without
magnetic declination corrections. The corrections were made using the appropriate correction for the
year in which the holes were measured.
Otis Gold geologists reviewed the geologic model on cross-sections with the author and the basis for the
interpretation of faults and lithologic contacts. The fault model required some additional interpretation
to enable 3-D modeling which was completed by the author and Otis Gold geologists. Otis Gold
presented a digitized geologic interpretation of the model based on a single set of cross-sections. The
sections are not all consistent in their lateral projections and depth extensions which cause some local
anomalies and limitations in the grade estimation. The author has recommended additional geologic
modeling work to smooth the interpretation and resolve some fault projections.
12.2 Site Visit
Otis Gold geologists facilitated the author’s site visit on June 1, 2012. The general situation and layout
of the property was noted; one of the claim corners in the newest group, CAMAS 8, was located and the
notice inspected. Claims posts were not noted in the core area of the Kilgore deposit and have probably
long since been destroyed or displaced. The author inspected exposures of each lithologic unit, typical
alteration assemblages, and evidence for the Mine Ridge Fault trace. He took GPS locations and
photographs of nine drill holes, representing campaigns from 1990 to 2011, and matched them to UTM
NAD83 coordinates supplied by Otis Gold. The author reviewed the memoranda concerning the
conversion of the Imperial system local grid (mine grid) to corresponding UTM coordinates supplied to
Otis Gold by licensed surveyor, Forsgren Associates, Inc., but performed no independent checks on the
calculations. The author noted that monuments for the most recent drill holes and many ones from the
1990’s are readily seen and appear to be correctly placed relative to the maps and sections supplied by
Otis Gold, and the electronic information.
Well-mineralized material doesn’t crop out at Kilgore due to a thin cover of soil and talus. The author
took samples from locally derived float to test stockwork-veined and silicified rhyolite and rhyolite autobreccia near a caved adit along one of the drill roads to test for the presence of gold. The sample
returned 0.335 g/T Au.
12.3 Inspection and Sampling of Drill Core
The site visit included an inspection of core preparation and storage facilities in Otis Gold’s St. Anthony
field office, and an inspection of drill cores. Upon arrival, the author requested an inspection of
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mineralized intervals in drill holes 10OKC-220, 11OKC-263, 11OKC-256, and 11OKC-250.
Drill hole
11OKC-263 was not available for inspection because all of the core was sent for assay to solve a
sampling problem that arose during the drill program (Section 11.9). The requested intervals in the
other three holes were logged geologically by the author and samples taken for independent assay by
sawing selected lengths of core under the author’s supervision, taking half for the sample. A sample
from 11OKC-256 from 80 - 85 feet ran 0.522 g/T Au, the original 1.56 g/T Au. A sample from 280 -285
feet ran 2.123 g/T Au, whereas the original sample ran 6.25 g/T Au. A sample from 11OKC-250 ran 0.263
g/T Au, whereas the original sample ran 0.493 g/T Au. The sample assays are all lower than the certified
original assays, but they are selected samples from the boxes that are not necessarily representative of
the entire length of the sample interval. The first two samples had quartz veinlets and strong adulariaquartz alteration apparent in hand specimen. The third interval is an oxidized lithic tuff with only
moderate signs of mineralization.
An additional visit was made by the author to the Otis Gold core storage facility in Spokane, WA where
holes from 2009 and earlier are stored, and a few from 2010. Three drill holes were examined, 10OKC220, 09OKC-197, and 08OKC-193. From the former, a sample from 149 -154 feet assayed 3.173 g/T Au,
the original 16.3 g/T Au. A sample for 09OKC-197, 531 – 536 feet assayed 2.252 g/T Au, the original 5.26
g/T Au. A sample from 08OKC-193, 328 – 330.1 feet assayed 1.113 g/T Au, the original 1.315. These
three samples represent the other half of the core that was remaining in the core box intervals stated.
The author used Inspectorate of Reno, NV, a certified laboratory, for the analyses which were all by fire
assay with atomic absorption finish and a 1-assay ton charge. Inspectorate shows no problems with
internal blank assays, but its gold assay results on two standards are both >3% low. Core halves are not
duplicate samples and substantial variance can be expected. The check samples confirm the presence of
gold. The data collected compose insufficient samples to make conclusions about the adequacy,
accuracy, and precision of the assaying over the history of the project. The lower bias of the check
samples is, however, a concern and the findings are similar to the check assay results discussed in
Section 11.
12.4 Adequacy of the Data Used In Report
The geologic and assay databases have an industry-standard degree of content, organization, continuity,
and documentation for a project at the exploration stage. Assay results between laboratories show a
high degree of variance, both EBX data comparing Cone to Chemex, and 2008 – 2011 Otis Gold data that
compares Inspectorate and Acme to ALS Chemex. The variance is addressed in this study by capping of
metal-at-risk in the estimation. The author is of the opinion that taken as a whole, the database is
sufficient for resource estimation.
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13 MINERAL PROCESSING AND METALLURGICAL TESTING
13.1 EBX Test Program
Prior to Otis Gold, the only company to do any significant metallurgical testing was EBX. Rayner and
Associates and Van Brunt (2002) discussed the EBX programs which included:
1. Mineralogical characterization and bottle roll tests performed on RC cuttings grouped by
oxidation type (1995);
2. Column leach tests, in conjunction with (1), on drill core averaging between 0.03 and 0.05 opt
Au (1.0 – 1.7 g/T Au) and categorized by geologists as oxide, mixed, and sulfide, crushed to p80
of ½” (12.5 mm);
3. Column leach tests in 1996 on oxidized and unoxidized drill core with a grade of 0.023 opt Au
(0.8 g/T Au) from a single hole at p80 1” (25 mm); and,
4. Bottle roll testing on 15 composite samples from a core hole to test the amenability of rock to
cyanide leaching with depth.
Work was performed by Hazen Research, Inc., of Golden, CO. Recoveries obtained in the columns at
p80’s of ½” (12.5 mm) and 1” (25 mm) were 86.6% after 75 days for the coarser size mixed oxide and
non-oxide, and 81% and 94% recoveries after 60 days for the mixed and oxide samples at p80 ½” (12.5
mm), respectively. Rayner and Associates and Van Brunt (2002) conclude: “In summary, this sample (3,
above) of mixed oxide/non-oxide ore showed gold extraction characteristics similar to those in Kilgore
mixed oxide/non-oxide samples previously examined. Like the previously studied ore, this ore showed
indications of being “nuggety”, as evidenced by a wide range of observed head assays and a calculated
head grade higher than the analyzed head grade in both the bottle roll and column leaches. While the
extraction characteristics of this ore appear to be similar to those in the previously examined sample, this
sample was of lower grade. Due to the relatively high extraction observed at this crush size, combined
with the relatively low grade of the ore, it is recommended that a column study be undertaken to
determine if similar extractions can be achieved with coarser ore.”
Bottle roll recoveries with depth showed inconclusive results, complicated by substantial variability in
head grade between samples. Otis Gold geologists point out that there is little sulfide at Kilgore and the
term “unoxidized” is most appropriate to describe rocks with little, or no obvious oxidation minerals.
13.2 2010 Otis Gold Column Leach Tests
In 2010, Otis Gold made a decision to investigate the heap leach characteristics of each host rock
separately to provide information for mine planning and to confirm a heap leach scenario for potential
economics. Otis delivered six barrels of halved HQ core separated into three lots to McClelland Labs in
Reno, Nevada. This material composed the feed for separate column leach tests of the three main host
rock types, Ka, Tlt, and Tpr, collected from four holes in the deposit area. The column tests were
performed at a p80 of ½ inch (12.5 mm) feed size. A complete listing of the holes that went into the
study, as well as the oxidation state and grade of each interval, is given in Table 13.1. The assay grade
highlighted in yellow is a weighted average calculated from the primary assays received from ALS
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Table 13.1 Samples Composing Otis Gold Column Tests at p80 of ½” at McClelland Labs (Source: Otis Gold,Ka=Aspen Sandstone,
Tpr=Felsic Dike).
Chemex. The calculated head grade was derived from McClelland by combining the gold that was
extracted during the leach process and adding in the grade of the spent ore left in the column.
The composite samples, weighing between 93 kg and 123 kg, were stage-crushed in their entirety to a
p80 of ½ inch (12.5 mm) size. Samples were each thoroughly blended and split to obtain approximately
68 kg for each column. Each sample was blended and split to obtain 1 kg for triplicate head assays.
Column tests were not optimized for NaCN consumption. The columns used 3.1 to 3.9 lbs NaCN;
however, projected NaCN consumption in production heaps is typically 25% to 33% of the NaCN
consumption in laboratory testing (Table 13.2). McPartland (2011) states that the column test cyanide
consumption encountered during commercial production would probably not exceed 1.3 lbs NaCN/ton
of ore. Lime additions of 2.0 to 4.5 lbs/ton were sufficient for maintaining reactive alkalinity during
leaching. Final leach results for the three columns are summarized in Table 13.2 and shown graphically
in Figure 13-1.
Table 13.2 Otis Gold 2010 Column Test Results for Lithology Composites at p80 of ½” (12.5 mm) by McClelland Labs (
McPartland 2011).
Rock Type
% Gold Recovery
Achieved
Approx. % of
Deposit
CN Consumption
(lbs/ton ore)
Lime Consumption
(lbs/ton ore)
Tpr
Tlt
Ka
85.3%
81.0%
69.8%
28%
60%
7%
3.15
3.36
3.91
3.00
3.36
3.91
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Tlt and Tpr host most of the gold mineralization in the Kilgore deposit. For the composites of these
rocks, the tests show that approximately 77% of the gold extracted during the column leach process is
recovered in 30 days. The leach curves for Tpr and Ka flattened after about 90 days (Figure 13-1),
whereas the leach curve for Tlt was still positive and climbing after 109 days, suggesting slightly more
than 81% can be expected with a longer leach time. Recovery results generally agree with the EBX tests,
especially if recovery is partially a function of grade.
Figure 13-1 Graph Showing Column Test Results vs. Time for the Three Lithology Composites, 2010 (Data from McPartland
(2011).
The sample with the lowest recovery is Ka, the Aspen Formation that is sandstone/graywacke with local
carbon seams in the matrix and few sulfides. The difference in Aspen Formation recovery may partly be
due to lithology and partly to its less oxidized character. Sills and dikes composing the unit Tct were not
represented in the study.
13.3 2011 Otis Gold Column Leach Tests
In 2011, Otis Gold mobilized a drill rig to obtain PQ core (83 mm diameter) for metallurgy. Hole 11 OKC285 was a twin of hole OKC-258 and hole 11 OKC-287 was a PQ twin of hole 10 OKC-228. Both holes
were logged, but not assayed or split. Twins of three mineralized intervals, weighing about 1,000 lbs
each, were put into new nalgene barrels within a few weeks of drilling and driven directly to McClelland
Labs in Reno, Nevada for column leach tests. Otis Gold segregated the samples by rock type to make
three new composites:
MTF-1 - An oxidized bulk sample of Tlt
MDO-2 - An oxidized bulk sample of Tpr
MDS-3 - An unoxidized bulk sample of Tpr
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Table 13.3 summarizes the content of each composite, including oxidation state, recovery, average
assay and calculated head assays.
Table 13.3 Samples Composing 2011 Otis Gold Column Tests at p80 of 1 ½” at McClelland Labs (McPartland 2011; Tpr=Felsic
Dike).
The three PQ diameter core samples were crushed to a nominal 80% passing a 1 ½” (38 mm) screen.
Each sample was then split into two samples and one was further crushed to 80% ½ inch (12 mm) to
directly compare the difference between the leachability of the two crush sizes. The samples were
homogenized. Crushed composites were each thoroughly blended and split to obtain approximately 68
kg for the 6-inch diameter column and 150 kg for the 10” diameter column. Each sample was blended
and split to obtain 1 kg for triplicate head assays reported in Table 13.3 (yellow).
Results of the leaching for the three samples at a nominal 12.5 mm and 38 mm crush size are compared
Table 13.4 Otis Gold 2011 Column Test Results for Lithology Composites at p80 of ½” (12.5 mm) and 1 ½” (38 mm) by
McClelland Labs ( McPartland 2011; Tpr = Felsic Dike).
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and summarized in Table 13.4 and Figure 13-2. The data show that there is little difference in gold
recovery from the two crush sizes of samples MDS-3 and MTF-1. The biggest differences occur in Sample
MDO-2 where there was a 12% drop in gold recovered in the coarser crush. In all cases leaching was
more rapid at the finer crush size. This study suggests the possibility to process run-of-mine material at
Kilgore.
Figure 13-2 Otis Gold 2011 Column Leach Test Results (McPartland 2012).
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13.4 Cyanide-Soluble Gold Assays
ALS Chemex performed 271 cyanide leach assays by AA13 method, a 1-hour 0.25% NaCN/0.05% NaOH
leach, to understand the relationship of amenability to leaching to rock type (Table 13.5).
Table 13.5 Mean Gold Extraction by CN Leach Assay for Major Rock Types at Kilgore.
Rock Type Number of Samples Number of Holes Mean % CN Extraction of Au
Tlt
162
12
59%
Tpr
80
7
61%
Ka
29
3
47%
Aspen Formation (Ka) shows lower amenability to CN, similar to the 2010 column test results. A
scattergram of gold values for each sample determined by the two methods, fire assay vs. cyanidesoluble assay (Figure 13-3), shows that the data for the three rock fields overlap at levels below about
0.8 g/T Au.
Figure 13-3 Scattergram Comparing 271 Fire Assays with Cyanide-Soluble Assays for Three Different Rock Types (Source: Otis
Gold, Tpr = Felsic Dike, Aspen Formation = Aspen Sandstone).
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At grades greater than 0.8 g/T Au, Tlt seems to be more amenable to cyanide extraction than Tpr, a
separation not evident in the mean statistics in Table 13.5. The Aspen Formation tends to have the least
recovery at higher grades.
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14 MINERAL RESOURCE ESTIMATES
14.1 Introduction
The mineral resource estimates presented herein follow the guidelines of the Canadian Securities
Administrators' National Instrument 43-101 and Form 43-101F1(F) and conform with generally accepted
CIM Estimation of Mineral Resource and Mineral Reserves Best Practices Guidelines. Mineral resources
have been classified in accordance with the "CIM Standards – For Mineral Resources and Reserves:
Definitions" (November 27, 2010).
This section presents updated mineral resource estimates for the Kilgore deposit. Historical estimates of
resources for the Kilgore deposit are discussed in Section 6.3 and listed in Table 2.1. This mineral
resource estimate is based on a new block model that incorporates drilling information, an updated
geologic interpretation, bulk density test work, and geostatistical modeling of gold grade. The cutoff
grade used for reporting and classification is based on the concept of a heap leach gold mining and open
pit scenario. Estimates are made using Micromine software.
14.2 Drill Hole Database
The Kilgore drill hole database is stored in EXCEL® format; four tabs contain respectively collar
information, downhole survey measurements, assays, and combined lithology/alteration. The
information is transcribed manually from written paper logs and has been extensively checked by Otis
Gold for transcription errors and other inconsistencies. Table 14.1 lists the principal database fields:
Table 14.1 Kilgore Database Table and Field Listing.
Collar
hole_id
max_depth
x
y
z
type
hole_path
Survey
hole_id
depth
Azimuth
azimuth_raw
dip
Assay
hole_id
depth_from
depth_to
samp_id
Au_ppm
Interval
Lithology
hole_id
samp_id
depth_from
depth_to
lithology
silicification
argilization
chloritization
tourmaline
oxidation
faulting
All drill hole locations are measured in a local grid system in Imperial coordinates (feet). Downhole
surveys are a mix of camera shots and Reflex instrument readings. The azimuth field incorporates a
correction for magnetic declination. Assays are reported in ppm with a precision of 3 decimal places; i.e.,
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ppb precision. All statistical analysis and estimation are carried out using the gold ppm data and are
subsequently converted to gold in ounces per short ton for reporting purposes. For purposes of
statistical analysis and estimation, the database is exported to comma-delimited files which are
subsequently imported to Micromine–format data files, Microsoft EXCEL®, and other software.
Lithology codes evolved through several stages of logging and evolution of the geologic model for the
deposit over time. The coding in the database reflects these different logging campaigns, but they can
be grouped to represent the geologic units (Table 14.2):
Table 14.2 Lithologic Code Groupings for Kilgore Deposit.
Lith Code Groupings
10 + 11 +15
20
31 + 50
32 + 40
33 + 40
35 + 60 + 70
5
Explanation
Ka Aspen Formation (Sandstone, siltstone)
Tlt
Tertiary lithic tuff
Tpr
Tertiary porphyritic (biotite) rhyolite
Tct
Tertiary sills and Tertiary mafic dikes
Tdm
Tertiary mafic dike (NA)
Tqp
Tertiary quartz porphyry
Qal
Alluvium (NA)
Alluvium and Tdm are negligible entities in the deposit and are ignored. Seven drill holes are eliminated
from the final drill hole database based on suspected contamination, survey problems, and known
drilling and recovery problems. The final Kilgore database comprises 207 drill holes with 25,969 assay
records and 26,199 lithology/alteration records. For data analysis, the assay and lithology tables are
merged to a table comprising 26,097 records, 98 of which have no assay.
14.3 Geologic Model
The geologic model is an important component of the statistical analysis of the database and its use in
estimation. The model principally comprises a set of cross-sections oriented N400E toward the
northwest at a scale of 1:600 and spaced 100 feet apart showing lithology, faults, and gold grade
envelopes. The trace of the major faults is available from these sections and surface mapping. The
digitized rock units have been modeled into 3-D shapes by linking bounding strings from section-tosection. The exception is the lithic tuff (Tlt) which is too irregular to model. Tlt shapes are extruded to
each section limit forming a group of 81 individual solids. Because some of the faults are subparallel to
the sections, these are modeled from the surface traces and sectional dips. The lithologic shapes are
trimmed according to their hypothesized relative ages; from lowest priority to highest, Aspen, Tlt, Tct,
Tpr, and Tqp. The northwest-trending faults are trimmed by the Cabin and Mine Ridge Faults.
The geologic model shows some local inconsistencies and the digitized shapes are irregular around the
edges of the drill pattern (Figure 14-1). These issues leave a few small areas in the deposit and a rather
large amount of material on the fringes without lithology assignment. The lithology and alteration
coding in the database is used for the statistical analysis of these units; the lithology and structure
models are used for coding bulk density to the block model and for domain assignment. Thus, due to the
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local complexities of the geology and the more generalized geologic units, some drill hole codes are
inconsistent with the geology solid in which they lie.
N
Figure 14-1 Geologic Plan of Solid Model Showing Topography Intersection(Black line, right) and Drill Hole
Composites Coded by Gold Grade in opt, 7100 Elevation Bench (Scale in Feet).
Some of this can be reduced in future work by reconciling the model using plans and sections
perpendicular to the ones currently constructed.
14.4 Data Analysis
14.4.1 Gold Assays
Kilgore gold assays compose a highly skewed population with a very high coefficient of variation (Figure
14-2) influenced strongly by one high-grade assay of 524 g/T Au. The grade of the 75th percentile is < 0.2
g/T Au.
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Kilgore Au_ppm, Intervals =< 20 feet (Uncapped)
N
m
45
2
Frequency (Percent)
40
35
min
q
0.25
q
0.50
q
0.75
max
30
25
20
25943
0.31
14.81
12.46
0.00
0.02
0.07
0.19
523.95
Class width = 0.05
The last class contains
15
10
5
0
0.00
0.63
1.88
1.25
2.50
Au_ppm
Kilgore Au_ppm, Intervals =< 20 feet (Uncapped)
100
Au_ppm
10
1.0
0.10
0.010
0.01
0.1
1 2
5 10
20 30 40 50 60 70 80
90 95
98 99
99.9
99.99
Cumulative Probability (percent)
Figure 14-2 Histogram and Probability Plot for Gold, Raw Assays.
Mineralization in volcanic-hosted, low-sulfidation epithermal deposits tends to display elements of
lithologic and alteration control. The relationship of gold assays to rock type, alteration type, and redox
state is shown in Figures 14-3 – 14-8, a series of box-and-whisker plots.
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Figure 14-3 Boxplot and Statistics of Raw Assays—Gold vs. Rock Type.
Figure 14-4 Boxplot and Statistics of Raw Assays—Gold vs. Silicification.
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Figure 14-5 Boxplot and Statistics of Raw Assays—Gold vs. Argillic Alteration.
Figure 14-6 Boxplot and Statistics of Raw Assays—Gold vs. Tourmaline Alteration.
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Figure 14-7 Boxplot and Statistics of Raw Assays—Gold vs. Chlorite Alteration.
Figure 14-8 Boxplot and Statistics of Raw Assays—Gold vs. Oxidation.
Mean gold grade and skewness is highest in the lithic tuff (Tlt) and rhyolite dome (Tpr) units. The
younger quartz porphyry unit (Tqp) has the lowest gold levels. Gold mineralization is positively
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correlated with moderate-strong silicification, tourmalinization, and oxide, and negatively correlated
with argillization and chloritization.
Contact analysis is a technique whereby sample grades in different lithologies are compared across
lithologic or other contacts and graphed to show the transition. If the transition is sharp from one unit to
another the results support treating the units as separate estimation domains, otherwise units can be
treated as soft boundaries or grouped. Otis Gold geologists observe that higher grade mineralization
appears to be controlled by faulting and certain lithologic contacts; e.g., Figure 14-9, which shows the
gold grade across the Aspen (Ka) – Sills/Dikes (Tct) contact.
Figure 14-9 Change of Gold Grade Across Ka-Tct Contact.
Distinct breaks appear to occur at this contact, and less so at the contacts of Tlt with Tpr and Tct
contacts. The Ka-Tct contact zone is considered a distinct mineralized domain. The Tpr and Tct contacts
with the Tlt are complex and it is not clear how to define spatial domains based on these contacts with
the current drill spacing and geologic model. Some of these contacts are structural, thus control of
mineralization may be a mixture of lithology and secondary structures.
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Whereas one contact, Ka-Tct, is recognized by means of the contact analysis, another one is based on
graphical review of outlier occurrences in grade around the Mine Ridge Fault. An envelope drawn to
straddle this fault is distinctly higher in grade than the surrounding assays and captures an apparent
spatial alignment of higher grade assays. This domain is called the MRF zone.
Epithermal deposits tend to have tighter elevation ranges than other types of deposits, but this can vary
by district. Kilgore gold assays are at peak average levels in the 6900 – 7600 level band (Table 10.3) and
decay rapidly downward from there.
Gold assay sample lengths tend to cluster strongly at 5 feet (1.5 m), composing 87% of the samples
(Figure 14-10). A significant second cluster of sample lengths occurs at 10 feet (3 m), representing 2.5%
of the data. A small number of samples exceed 10 feet (3 m) in length. Figure 14-11 shows that sample
interval lengths < 10 feet (3 m) contain a disproportionate number of high-grade assays. This occurs
where the geologist notes visible gold or a high-grade vein or structure for which he deems it
inappropriate to mix the high-grade with barren wall-rock. The global mean grade of samples >= 10 feet
(3 m) is roughly equal to those <10 feet (3 m). If a 1.0 g/T Au cutoff is added to the filter, then the grade
of samples <10 feet (3 m) is 225% of the grade of samples >=10 feet (3 m). The distribution of sample
lengths, and the grade bias in shorter sample intervals suggests that compositing to 10 feet (3 m) is
appropriate for further data treatment, including capping and variography.
Figure 14-10 Histogram and Probability Plot Showing Distribution of Sample Lengths.
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Figure 14-11 Scatterplot Showing Relationship of Gold to Sample Length.
14.4.2 Gold Composites
Gold assays are composited to 10-foot (3 m) intervals down-the-hole using all of the data in the assay
table. Intervals without assays are not considered in the compositing. The composite file excludes those
composites less than 4 feet long. The lithology/alteration table is merged to the assay composites on the
same intervals using the dominant character lithology/alteration code so that all information is in one
file comprising 13,295 records. Eighteen composites are without lithologic codes, including 16 from one
drill hole from intervals deeper than 1,090 feet. Some of the alteration codes are missing because they
weren’t logged; e.g., in the case of chlorite 1942 records have the missing data code.
Another processing step to the composite file is calculation of x, y, z location coordinates for the center
point of each composite. Of the composites, 147 of them (1.1%) are less than 10 feet in length and these
average 6 feet (1.2 m) long. Eighty-four assay intervals are > 10 feet long (3 m), with the longest interval
38 feet (11 m). These samples are also composited on 10-foot (3 m) lengths, but their influence is
negligible. Most of them are <0.05 g/T Au and the highest grade of these, a 20-foot (6 m) RC sample has
a grade of 0.89 g/T Au. Univariate statistics for the composite file are shown in table 14.3, weighted by
interval length:
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Table 14.3 Univariate Statistics of Clustered Composites (Au g/T).
Normal Statistics
Logarithmic Statistics
Minimum
0.003
No of points
13295
Maximum
262.176 Mean of natural logs -2.59192
No of points
13295
Geometric Mean
0.075
Sum
3935.435 Geometric Std. Dev. 4.72719
Mean
0.296
Natural Log Variance 2.41284
Variance
6.8775 Nat. Log Std Deviation 1.55333
Std dev
2.6225
Sichel's V
2.41266
Coeff. of variation
8.86
Sichel's Gamma
3.34119
Weighted Mean
0.296
Sichel's T-Estimator 0.25018
Weighted Std. Dev. 2.62804
Weighted Variance 6.9066
Median
0.077
The distribution appears to be quasi-lognormal with the geometric mean approximately equal to the
median of the untransformed data. The coefficient of variation continues high, as for the assays. The
declustered histogram of the composite data has a lower median, mean and coefficient of variation
(Figure 14-12). The declustered histogram is prepared by kriging with an overall deposit correlogram
model to a block model and accumulating the kriging weights to each composite in the input file. All but
11 composites are used in the estimate.
Figure 14-12 Histogram of Gold Grade, Declustered 10-Foot Downhole Composites.
14.4.3 Domain Groupings
The investigation of the relationship of gold assays to lithology, alteration, oxidation, elevation, and fault
blocks results in clear associations with contacts, faults, and lithology. The positive statistical
associations of gold with silicification and tourmalinization, and negative associations with argillization
and chloritization do not show clear spatial separation based on contouring and other graphic methods
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in section and plan. It is sometimes advantageous to constrain geostatistical estimates by domains in
order to reduce the variance of the sample population as well as respect the geologic controls.
Univariate statistics for the quartz porphyry (Tqp) rock type show low gold grade and smaller coefficient
of variation than the other units. The unit has a 3-D geologic interpretation making it convenient to
separate from the rest of the population. The Aspen Formation also shows low mean gold grade,
especially away from the Ka-Tct contact. Higher gold grades appear to straddle the soft contact, and are
fairly easily contoured. An Aspen-Tct contact domain is treated separately, and the Aspen Formation
below, and around it is also separated. Last, a 3-D solid is digitized around the Mine Ridge Fault, the MRF
domain in this estimate. All other material in the Kilgore deposit is assigned a domain “Main”. In
summary, further statistical treatment of the Kilgore drill data is by domain, these being:
Aspen
Main
Aspen-Tct
MRF
Tqp
The composite file is tagged by domain and they are all treated as hard boundaries modeled with solids,
except the Main zone. Figure 14-13 shows the nature and relative location of the domains with respect
to each other.
Figure 14-13 Perspective View of Kilgore Estimation Domains (Main is default thus not shown).
14.4.4 Capping
The nature of the Kilgore gold distribution suggests that capping of gold grades to appropriate levels is
necessary to lower grade estimation risks. Capping is performed on 10-foot (3 m) composites due to the
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concentration of high-grade samples in intervals of short length discussed in section 14.4.2. High-grade
composites are fairly clustered, with a concentration in the more densely drilled Mine Ridge Fault area
(Figure 14-14). A few outliers occur around the fringes of the drilling pattern and these have the
potential to cause overestimation of material at a low cutoff grade. Three different methods of capping
are considered: 1) Capping to the inflection point on a probability plot of clustered gold composites with
lognormal scale; 2) Decile analysis on declustered composites; and 3) Capping to an inflection point in a
plot of the contained metal by cutoff using declustered composites. Capping is reviewed on a domain
basis and the capping customized to the sample population in each domain. The declustered data sets
are generated by accumulating kriging weights for composites from domain-specific individual
preliminary estimations by kriging using only drill core composites.
Figure 14-14 Location of Outlier Composites With Respect to Other Composites (Y= North, X=East, scale in feet).
Probability plots by domain (Figures 14-15 – 14-19) suggest capping levels that vary by domain. Capping
levels are selected where the slope breaks steeper from a straight-line relationship.
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Figure 14-15 Histogram and Probability Plot for Gold Composites, Aspen Formation.
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Figure 14-16 Histogram and Probability Plot for Gold Composites, Main Zone.
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Figure 14-17 Histogram and Probability Plot for Gold Composites, Aspen-Tct Domain.
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Figure 14-18 Histogram and Probability Plot for Gold Composites, MRF Domain.
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Figure 14-19 Histogram and Probability Plot for Gold Composites, Tqp.
The decile method is applied to each domain according to the method of Parrish (1997), an example of
which is shown for the Main zone (Table 14.4). The criteria for capping have been entered as formulas
in a spreadsheet which returns a suggested capping value based on the method.
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Table 14.4 Decile Analysis for Capping of Declustered Composites, Main Zone.
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Grade-tonnage-metal curves often display inflection points in the slope of the curve of the difference in
contained metal between cutoffs (e.g., Figure 14-20).
Figure 14-20 Metal Content, Tons, and Gold Grade By Gold Cutoff Grade for Main Zone.
In the tons-grade-metal curve above, the slope of the contained metal curve becomes erratic at
between 6 and 7 g/T Au. This occurs because there are fewer composites controlling the metal content
at higher cutoffs, thus implying risk to overall metal content. The indicated level of capping by this
method is where the curve is no longer stable; in this case at 6 -7 g/T Au.
Table 14.5 summarizes the results for different methods of capping of the 10-foot composites and the
levels chosen:
Table 14.5 Summary of Capping Results by Method and Final Capping Values by Domain.
Domain
Units
Probability
Plot
Decile
Analysis
GTM
Capping Value
Selected
# Comps
Affected
Aspen
Main
Aspen-Tct
MRF
Tqp
g/T
g/T
g/T
g/T
g/T
5
8
4
20
None
4
4
None
27
N.A.
3
7
5
25
N.A.
4
6
5
25
None
2
32
4
6
0
The capping levels chosen for gold are based on consideration of the three methods, picking values
toward the middle of the range. Capping results are high for the MRF, but the high-grade samples do
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not have a lot of weight because they are surrounded by many other composites. Thus, they do not
affect the metal estimate as much as if they occurred in isolated drill holes. The statistics of the Tqp
domain suggest that no capping is necessary for this low-grade zone.
14.5 Spatial Statistics and Correlograms
As a first step, bench composites on 20-foot centers are gridded using an isotropic search to discover
trends and concentrations in the gold downhole composites on 100 foot-spaced cross-sections. The
gridding indicates a number of trends, including:
Northwest trend, shallow southwest or flat dip
Northwest trend, steep, parallel to Northwest and parallel faults
Northeast trend, steep, parallel to Mine Ridge and Cabin faults
East-West trend.
The east-west trend appears real rather than an artifact of search parameters and perhaps ties to trends
noted from the geophysical surveys (Section 9.1).
A correlogram for the entire deposit using a 10 g/T Au cap yields a first structure with a maximum range
of 60 feet, strongly anisotropic with the long axis oriented and plunging northeast, or subparallel to the
Mine Ridge Fault trend. The second structure has 4X the range and is isotropic. This correlogram applied
to the declustering of composites using a GSLIB kriging program. The search is based on a single model
of the correlogram. This model is also very anisotropic to the northeast with an intermediate axis plunge
steeply southwest. The declustering correlogram models are included in Appendix B.
Three of the Kilgore estimation domains are modeled with directional correlograms, Main zone, MRF,
and Tqp, shown in Table 14.6. Composite capping for correlograms is set at 10 g/T Au in order to
facilitate modeling. The down-the-hole variogram employs a 10-foot lag and is used to model the nugget
(C0) for each domain. The directional variograms are modeled with 30-foot lags using SAGE2001®
software. For modeling, in all cases lag drift is limited to 10-15%.
Table 14.6 Summary of Correlogram Models by Domain.
Modeled Distances(ft)
Model 1/Model 2
3rd
1st
2nd
3rd
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
6/-52
122/193 9/248
47/200
118/-50 46/1567 23/54
18/52
62/-71
1694
386
188
Ellipse Axes Azimuth/Plunge*
Zone
1st
2nd
Aspen
N/A
N/A
Asp-Tct N/A
N/A
Main
309/23 52/28
MRF
29/1
120/40
Tqp
92/17
179/-9
*Plunge upward is +, down is –
Model Description
Type
N/A
N/A
Exp/Exp
Exp/Exp
Exp
C0
N/A
N/A
.108
.020
.116
C1/C2
N/A
N/A
.656/.236
.688/.292
.884
117 | P a g e
In the Main zone, the correlogram ellipsoid has a principal trend northwest-southeast, with an easterly
plunge. The MRF domain correlogram is strongly anistropic, oriented northeast and plunging moderately
northwest. The Tqp correlogram is oriented more or less parallel to the strike and dip of the volcanic
stratigraphy in the Kilgore deposit area. The Main and MRF domains have two models and the Tqp has a
single model. The correlogram models are attached to this report in Appendix C.
Neither reliable nor geologically plausible correlograms nor indicator variograms are attainable for the
Aspen and Aspen-Tct domains. Drill spacing is part of the issue because these are deeper units where
there are fewer holes. The other issue is the clustering of drill hole orientations in the deposit; 70% of
the drill holes are vertical or have an azimuth of either 50 or 230 degrees. Due to the apparent short
ranges of correlation and the clustering of drill orientations, most correlogram directions have
insufficient data to model.
14.6 Specific Gravity and Tonnage Factors
Material densities vary in the deposit due to the presence of different lithologies, alteration
assemblages, and tectonic overprint. Several bodies of test work verify tonnage factors used in this
report, although the work should be characterized as preliminary. Table 14.7 summarizes the tonnage
factors assigned to rock types:
Table 14.7 Summary of Specific Gravity and Tonnage Factors Applied to Kilgore Lithologies(Source: Otis Gold).
Unit
Aspen (Ka)
Sills/Dikes (Tct)
Lithic Tuff (Tlt)
Rhyolite Intrusion (Tpr)
Quartz Porphyry (Tqp)
Unassigned
No. Samples Specific Gravity Tonnage Factor
5
2
139
5
7
N.A.
2.54
2.66
2.50
2.41
2.55
12.61
12.04
12.81
13.29
12.56
12.81
Whole core density measurements involving wet and dry (sealing the core in wax) were performed by
several labs, mainly commissioned by Otis Gold and performed by ALS Chemex Labs, Vancouver, B.C.,
and by Pegasus Gold, with analysis performed by N.A. Degerstrom Labs, Spokane, WA. Aspen, Tct, Tpr,
and two Tlt measurements include several with wax coating. The Tqp samples are all taken from surface
outcrop and are not wax-coated. For Tlt, Otis Gold determined specific gravity measurements of 139 1.5
inch x 3 inch-size sawn core billets of lithic lapilli tuff (Tlt. ) An Ohaus triple beam balance weighed the
rock in air and in water without wax coating. Specific gravity was derived by the formula:
SG = Weight in air/(Weight in air - weight in water)
Each sample was weighed twice in order to assure accuracy. Units for resource estimation are Imperial.
Specific gravity, a dimensionless unit, can be converted to tonnage factor (T.F.) measurements by using
the website:
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http://www.gordonengland.co.uk/conversion/density.htm
to convert SG to X lbs/ft3. Tonnage factor (TF) is derived using the formula:
(2,000 lbs/ton) / (X lbs/ft3) = TF (ft3/ton)
The sawn billet Tlt average result is two percent higher than the results of two determinations of whole
core using wax-coated immersion methods, a negligible difference.
14.7 Block Model Definition
The Kilgore block model is an unrotated regular model constructed in Micromine software with extents
sufficient to cover all known mineralization. Block definitions are summarized in Figure 14-21.
Figure 14-21 Kilgore Block Model Definition.
The model consists of 20 X 20 X 10 foot blocks based on a selective open pit mining with heap leach
scenario. The block size in x and y correspond to approximately 20% of the drill spacing. Discretization is
set at 3 x 3 x 2 points per block, for x, y, and z, respectively. Each block is coded with a code of 1 if the
centerpoint is below topography, and 0 if above. Density (Tonnage Factor) is assigned to each block
according to its rock type assignment, or 12.81 if unassigned.
14.8 Estimation
The general estimation method for the deposit is ordinary kriging, but the Aspen and Aspen-Tct contact
zone domains are estimated by inverse distance-squared methods (IDS). Each domain is estimated
separately in multiple passes using only composites tagged with the same domain code. Table 14.8
summarizes the search parameters used for the block model estimates:
Table 14.8 Estimation Search Ellipsoids for Pass 1 – Pass 2 Estimates.
Zone
Ellipse Axes Azimuth/Plunge* Search Distances/Anisotropy
1st
2nd
3rd
1st
2nd
3rd
Pass2 Factor Pass3 Factor
Aspen
Aspen-Tct
Main
MRF
Tqp
320/0
320/11
309/11
29/0
92/17
50/20
53/15
31/-36
119/80
179/-9
50/-70
15/-71
233/-52
119/-10
62/-71
250/1
225/1
200/1
225/1
450/1
250/1
150/.6
120/.6
112/.5
225/.5
166/.65
79/.35
80/.4
45/.2
90/.2
1.4
1.5
1.5
1.45
1.4
1.4
1.5
1.5
1.45
1.4
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Main Zone and Tqp domain search ellipsoid axes parallel the correlogram model using a nugget and
single exponential model which are easier to visualize than the two-model correlograms (Main Zone), if
a slightly worse fit. The search radius for the Main zone is set to just less than 100% of the sill of the twomodel correlogram. The Tqp search is approximately one-third of the indicated range of the Tqp
correlogram. The Aspen Formation search approximates the average strike and dip of the formation
with a moderate anisotropy imposed on the minor axis (steep plunge) direction. The MRF search
employs the principal correlogram axis strike and axial ratios, but rotates the plunge steeper to conform
to the projected dip of the Mine Ridge Fault. This is supported by the single model correlogram which
shows a steeper plunge than the two-model correlogram used for sample weighting. The Aspen-Tct
contact zone is based on review of sections and plans and is similar to the Aspen Formation search.
Composite selection parameters are listed in Table 14.9:
Table 14.9 Composite Selection Parameters.
Pass
Type Max/Quad Min Comp Min Holes Max/hole Variable
1
Quad 2
3
2
3
Au_cap
2
Oct
2
2
1
None
Au_cap
2 (Aspen) Oct
2
2
2
3
Au_cap
3
Oct
2
2
1
3
Au_cap
The composite selection criteria and search ellipse leave only a few unestimated blocks in the main
portion of the deposit. Material estimated by the first pass is considered for classification as Indicated
mineral resource, and material estimated by the second pass is considered for classification as Inferred
mineral resource discussed below. A representative plan and perpendicular cross-sections are shown in
Figures 14-22 – 14-24.
N
Figure 14-22 Plan Showing 3-D Shell (red) Around Blocks Estimated in First Pass and Meeting Other Indicated Resources Criteria
(Scale in feet).
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Figure 14-23 Block Model Section 10100N Showing Gold Grade in Blocks and Drill Holes: Indicated Resource > 0.24 g/T Au
(0.007 opt) Solid-Filled, Inferred Blocks Unfilled. (Also, optimized pit shell at gold price $1650; scale in feet).
Figure 14-24 Block Model Section 15200E Showing Gold Grade in Blocks and Drill Holes: Indicated Resource > 0.24 g/T Au (0.007
opt) Solid-Filled, Inferred Blocks Unfilled. (Also, optimized pit shell at gold price $1650; scale in feet).
High continuity of grade occurs at very low gold levels, but there is a degree of continuity at the grade
shell cutoff, 0.007 opt Au, shown on the cross-sections.
Deposit metal is concentrated in the central area around the Mine Ridge Fault and its intersection with
the Northwest Fault zone intersection. Figure 14-25 shows metal accumulation in the block model
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based on contouring block model gold grade X model thickness above a cutoff of 0.34 g/T Au (0.010
opt).
Figure 14-25 Block Model Grade X Thickness Contour Map at 0.34 g/T Au (0.01 opt) Cutoff Grade (Figure by Otis Gold, 2012).
Other concentrations of gold occur in the North Target Area and along an west-southwest trend on the
west side of the deposit, discussed in Section 7. The overall trend of mineralization follows the
Northwest Fault zone. The block model estimates are entirely within the Kilgore Gold Project property
boundaries, discussed in Section 4.
14.9 Block Model Validation
The validation methods summarized below demonstrate that the block model is a reasonable spatial
representation of grade and tonnage and is not materially biased in the range of likely cut-off grades for
this type of deposit. The capping scheme has removed some risk involved in recovering the estimated
contained metal in a mining operation.
14.9.1 Bias and Volume-Variance Checks
Block model validation comprised four methods:
1. Visual inspection of the kriged block model in section and plan view comparing it to the
composite data and the domain boundaries;
2. Comparison of a nearest-neighbour (NN) model with the kriged and IDS models;
3. Construction of swath plots that compare average composite grades to the model grades in
directional swaths through the deposit; and
4. Grade–tonnage curves for estimated grades in the Main zone with theoretical HERCO
distributions.
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The author performed many visual checks of the model with the drill hole and domain information to
determine if the areas with information were estimated properly, and whether projections of gold grade
appeared appropriate based on the nearby composites. Several runs of the estimation were made to
satisfy these checks, adjusting estimation parameters and criteria as necessary.
The nearest-neighbour model grade at a cut-off grade of 0.0 opt Au is 100.5% of the interpolated final
model. This gives assurance that globally there is an insignificant global bias in the kriging method.
The kriged model Indicated resource blocks and the corresponding nearest-neighbor model blocks are
compared using Swath plots plotted on 50-foot spacing across the deposit in east-west, north-south,
and vertical directions (Figures 14-26 – 14-28). The plots show that the kriged estimate is unbiased in all
areas of the deposit with respect to the nearest-neighbor estimate except at the far east, far north, and
lowest four benches. The nearest-neighbour estimate appears to be biased slightly positive at these
extremes. These areas comprise relatively few blocks and the bias is not a material concern to the
validity of the kriged estimate. By its nature, the kriged estimate is more smoothed than the nearestneighbor estimate because it is an interpolation using more than one composite for each estimate.
Swath Plot--Au Grades--Kilgore
0.6
0.5
Au g/T
0.4
0.3
0.2
0.1
0
14000
14500
15000
15500
16000
16500
Easting
Auok Model
AuNN
Au comp
Figure 14-26 Plot Showing Composite and Block Grades in N – S Swaths Across Deposit.
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Figure 14-27 Plot Showing Composite and Block Grades in E – W Swaths Across Deposit.
Swath Plot--Au Grades--Kilgore
0.8
0.7
0.6
Au g/T
0.5
0.4
0.3
0.2
0.1
0
6600
6800
7000
7200
7400
7600
7800
8000
Elevation
Auok Model
AuNN
Au comp
Figure 14-28 Plot Showing Composite and Block Grades in Vertical Swaths Across Deposit.
Some differences between the composites and the kriged model occur near the margins of the deposit,
especially in the north and deep parts. These differences are to be expected because unlike the blocks,
composites are neither confined to the pit nor limited by a resource classification. The comparison of
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composites to the kriged and nearest-neighbor estimates is most valid in the central portions of the
graphs where no obvious bias is noted.
The validity of the block model estimates with regard to change-of-support is checked with HERCO
(Hermitian Correction Model). HERCO uses a change of support coefficient (r) and Gaussian
transformation of the input data and the block-model estimates (such as an ordinary kriging estimate of
gold). The grade-tonnage curve for the HERCO-adjusted composite file is the theoretical grade tonnage
curve for the deposit given the input assumptions. HERCO uses the variogram and the histogram of
declustered composite gold grades to produce a calculation of the histogram of the block model grades.
Program input is a declustered histogram of sample values, the block variance as a coefficient (r) of the
point (composite) variance, the deposit correlogram or variogram, the block size, and the discretization
of the blocks.
Figure 14-29 Comparison of Main Zone Estimate to HERCO-corrected Main Zone Composites, Grade and Metal.
For Kilgore’s Main Zone domain, the block/point factor is 0.5758, obtained from the output of the
kriging program. The grade-tonnage curve comparison of the kriged estimate for the Main zone, the
largest contributor to resources, is compared to the HERCO-corrected composite file in Figure 14-29. At
the cutoff of 0.24 g/T Au (discussed in section 14.10), which is approximately equal to the resource
cutoff in Imperial units (0.007 oz/t Au), the kriged model has 87% of the grade and 99% of the metal of
the volume-corrected composites. The result suggests that at cutoff grade the Main model is somewhat
smoothed compared to the ideal model but contains the amount of metal predicted by HERCO at the
cutoff. The author’s opinion is that the result validates the kriged model for the Main zone.
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14.9.2 Gold Removed by Capping
A comparison of the final model with a run using uncapped gold grades demonstrates that 14% of the
gold is removed in the final model by capping at the grade cut-off used for resource reporting. This
amount represents metal-at-risk removed that could be considered upside potential to be confirmed by
further sampling or mining.
14.10 Mineral Resource Classification
Mineral resources are classified in accordance with the CIM Definition Standards for Mineral Resources
and Mineral Reserves, adopted November 27, 2010. Mineral resources are exclusive of mineral reserves
and do not include dilution. Readers are cautioned that mineral resources that are not mineral reserves
do not have demonstrated economic viability.
Estimates of Kilgore mineralization are classified as resource by the criteria of whether they are
estimated in the run using the 1st pass search ellipse and if they lie within a conceptual ultimate pit shell
that uses reasonable, but optimistic parameters as summarized in Table 14.10. Pit shell generation is by
Micromine software, which uses the industry-standard Lerch-Grossman algorithm.
Table 14.10 Pit Optimization Parameters Used to Classify Mineral Resources.
Parameter
Mining Cost—Ore
Mining Cost---Waste
Processing Cost/ore ton
Recovery
Refining and Selling Costs/oz
Rehab Cost/ton
Pit Slopes—degrees, all sectors
Selling Price/oz
Value
$1.75
$1.65
$6
90%
$5
$1
45
$1650
The pit optimization considers only the 1st pass estimate blocks as potential economic material.
Estimated mineralized material that displays reasonable geological and grade continuity through
appropriate exploration work and sampling that is estimated in the first pass, and which shows positive
economic potential from the pit optimization constructed using the parameters in Table 14.10, is
considered likely to support economic extraction and is thus classified as Indicated resource. The
effective operating cut-off grade is 0.005 opt gold defined by the formula below:
Cut-off grade= Operating cost/ ((Price - Selling Cost) x Recovery)
Operating cost includes mining, processing, and rehabilitation (reclamation) costs. The cutoff grade
used for reporting Indicated resources is 0.007 opt gold.
Inferred resources are mineralized material which is estimated in the 2nd and 3rd search passes, have
assumed geological and grade continuity based on limited sampling and information, and are not
already classified as Indicated resources. A portion of the Inferred resource lies within the pit shell. It
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cannot be assumed that all or any part of an Inferred mineral resource will be upgraded to an Indicated
or Measured mineral resource as a result of continued exploration.
The pit shell is shown on the sections and plans (Figures 14-22 – 14-24). A grade-tonnage curve (Figure
14-30) for material considered for inclusion in the Indicated mineral resource statement shows the
sensitivity of resource tons, grade, and ounces to gold cutoffs.
Figure 14-30 Grade-Tonnage Curve for Indicated Mineral Resources.
Tonnage and metal are quite sensitive to the grade cutoff chosen. Resources are reported at a cutoff
grade of 0.007 opt Au (0.24 g/T): between 0.015 opt Au and 0.025 opt Au the ounces above cutoff grade
vary between 337,000 and 202,000 (Figure 14-30).
14.11 Mineral Resources Statement
Table 14.11 summarizes the gold mineral resources for the Kilgore Gold Project. Mineral resources have
an effective date of July 31, 2012. There are no known environmental, permitting, legal, titles, taxation,
socioeconomic, market or political factors that would materially affect the mineral resources stated
herein. Readers are cautioned that mineral resources that are not mineral reserves do not have
demonstrated economic viability. There are no mineral reserves on the Kilgore property at this time.
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1,2
Resource Category
(T)
Measured
Indicated
Inferred
27,352,000
27,352,000
20,230,000
0.59
0.59
0.46
Short Tons
Au
(Troy)
(t)
(opt)
520,000
520,000
300,000
30,130,000
30,130,000
22,290,000
0.017
0.017
0.014
1
grade.
2
Indicated mineral resources lie within a Lerch-Grossman pit shell using the parameters listed in Table
14.10. Resource reporting is in metric units with Imperial system units also shown for informational
purposes and consistency with the text and methodology of the report. There is no assurance that
mineral resources will be converted into mineral reserves. Mineral resources are subject to further
dilution, recovery, lower metal price assumptions, and inclusion in a mine plan to demonstrate
economics and feasible of extraction.
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15 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY
IMPACT
15.1 Environmental Studies
In December of 2010, Golder Associates prepared a Preliminary Environmental Report (Golder, 2010) to
provide Otis with an overview of potential ecological and environmental issues that may be
encountered in developing a new mine, identify potential roadblocks to development, and outline the
environmental permit, process, and additional baseline studies that will be necessary to develop the
project. The report identifies the various permits that will be required on the local, state and federal
level if this project goes to a mining stage. The Golder report states that in general, the company did not
identify any issues that they consider to be fatal flaws. They state that, as project development and
design continue, and specific studies are completed for the project facilities, it is possible that issues
may surface that are currently difficult to identify.
The Golder Report recommends that general baseline studies for the immediate project area be
initiated. In 2011, Otis Gold contracted North Wind Inc., a wholly owned subsidiary of Cook Inlet Region,
Inc. (CIRI), an Alaska Native Corporation, to conduct the baseline study. As an engineering and
environmental consulting firm, the company planned a program to include hydrologic, meteorological,
and air quality monitoring for a one-year study to begin when funds are available.
15.2 Cultural Inventory
In 2010, North Wind Engineering of Idaho Falls, Idaho, performed a cultural inventory of the Gold Ridge
area and Otis Gold’s Plan of Operation was approved by the USFS to drill six helicopter-supported sites
in the area.
15.3 Permitting
As covered in Section 4.5 of this report, the Kilgore project is mostly located on federal ground
administered by the Department of Agriculture, United States Forest Service (USFS). The local
headquarters for this portion of the Caribou-Targhee National Forest is located in Dubois, Idaho. Every
year Otis Gold submits a POO with the USFS who issues a permit, usually within 30 to 60 days, under a
Categorical Exclusion. Also each year, Otis Gold posts a bond that is released back to the company as
reclamation is completed at the conclusion of each drilling campaign. Activities permitted in the past
included building over 40 drill sites, plans for a helicopter-supported drill program, brushing of 8 line-km
and conducting a CSAMT geophysical survey, opening closed roads, and conducting several soil surveys.
In May of 2012 there was a change in the way the USFS processes proposed Plan of Operations in the
National Forest. The plan received by the agency now has to be published in the Idaho Falls Register for
a 30-day comment period. If no material or significant objections are received, then the permit will be
granted and exploration can begin. If there is a material objection, then the Plan of Operation goes to a
public hearing for further discussion.
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16 ADJACENT PROPERTIES
There are no surrounding mineral properties adjacent to Kilgore.
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17 OTHER RELEVANT DATA AND INFORMATION
No additional information or explanation is necessary to make this Technical Report understandable and
not misleading.
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18 INTERPRETATION AND CONCLUSIONS
18.1 Interpretation
The Kilgore deposit is a typical example of a largely volcanic-hosted low-sulfidation epithermal gold
deposit in a caldera setting. These deposits typically occur as a result of hydrothermal alteration and
explosive brecciation when various factors trigger boiling of ascending, heated fluids interacting with
groundwater and local rock formations. Kilgore exhibits many features characteristic of these deposits
including a sinter terrace that formed near, or at the surface at the time of deposition. On a district
scale, the intrusive and volcanic activity giving rise to the gold mineralization appears to be related to
large caldera-related faults, of which the Northwest Fault may be one. At deposit scale, this fault and
other perpendicular ones intersect where they likely created dilatant zones that permitted the
introduction of intrusive rocks and associated metal-bearing hydrothermal fluids.
Mineralization at a more local scale in these systems typically is controlled by various factors; at Kilgore,
fault structures and the contact of the lithic tuff with various shallow-seated intrusions control most of
the high-grade gold mineralization. Other mineralization comprises disseminations and stockwork
quartz veinlet zones in rocks that fractured after being subjected to silicification and hydrothermal
brecciation. Quality control work demonstrates a degree of nugget effect, not unexpected, but further
work will show how much is intrinsic and how much is due to protocols and procedures in use up to the
date of this report.
Hydrothermal alteration is pervasive, including an upper massive silicified cap that appears to have
confined the gold mineralization to zones beneath it, tourmalinization in the upper reaches of the
mineralized zone, pervasive quartz-adularia central to the gold mineralization and local and peripheral
argillic alteration, well-developed along fault and tectonic breccia zones. The fringes of the deposit are
affected by a weak propylitic alteration.
The gold deposit can be modeled with five principal domains distinguished by mineralization
characteristics, structure and lithology:
Aspen Formation
Main
Aspen-Tct contact
Mine Ridge Fault zone (MRF)
Quartz porphyry
These are modeled separately because they appear to deport differently with geostatistical analysis.
Mineralization is interpreted to follow a general northwest trend with a moderate-to-steep plunge. The
trend is modified by higher grade mineralization that follows the Mine Ridge Fault zone which trends
northeast. The quartz porphyry capping formation is lower grade and mineralization appears to be
following more closely the strike and gentle southwest dip of the unit than the northwest trend.
Mineralization at the Aspen – Tct contact appears to more or less parallel that contact, but the data are
insufficient to confirm this with geostatistics. The Aspen Formation also contains too few data to
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produce a reliable correlogram, as was reported in the previous report by Rayner and Associates and
Van Brunt (2002). The MRF and Aspen- Tct domains represent significant changes to the methodology
versus the previous estimate, facilitated by the substantial drilling and interpretation that has taken
place during the campaigns by Otis Gold between 2008 and 2011.
18.2 Conclusions
The author has reviewed the information supplied by Otis Gold for the Kilgore Gold Project and has
found it to be reasonable in the context in which it is used herein. The author has modified geological
interpretations to some degree where deemed appropriate and necessary to do the resource
estimation, and has applied his own independent judgment in his application of Otis Gold information to
the resource estimates.
Kilgore is an epithermal, volcanic-hosted disseminated and structure-controlled gold system in a caldera
environment. The deposit is emplaced beneath a silicified cap that was at, or close to the paleosurface
at the time of formation of the gold deposit. Gold was deposited largely in the relatively thin cover of
Tertiary volcanic and subvolcanic rocks that were emplaced unconformably on Cretaceous sedimentary
rocks, with some mineralized feeders and disseminated mineralization also occurring below the contact.
RC and core assays do not compare well, with paired data comparisons and separate estimates showing
that RC assays are higher than core. Issues are identified with both types of data which will not be fully
resolved without collecting bulk samples. The various operators of the project have been alert to
recovery and sampling issues and appear to have taken measures to reduce sample bias, reflected in the
core drilling techniques used.
Kilgore drill orientations are locally limited due to permit restrictions and topography. The drill hole
orientation is not optimum for the capture of structurally controlled mineralization. Some drill holes are
oriented along mineralized structures, whereas others miss it altogether because they are drilled
parallel to them. The grade capping and the separation of the MRF domain done in this estimate
address the risks caused by this circumstance, but there may be upside in optimizing infill and extension
drilling orientations in future campaigns. Drill spacing in the lower part of the deposit is inadequate to
generate a reliable correlogram for two of the domains, the Aspen Formation and the Aspen-Tct
domains.
The electronic database is sufficiently accurate for resource estimation, although not without some
areas for improvement. The database is very simplified and contains some averaged assays from
historic drilling campaigns. The geologic interpretation is somewhat limited by the use of a single set of
cross-sections to interpret lithology, mineralization, structure, and alteration. This has caused some
areas of the deposit to be unestimated or classified as Inferred resources for lack of complete
information.
Commercial standards submitted by Otis Gold to ALS Chemex show no indications of bias. ALS Chemex
metallic screen checks of standard 50 g gold assays suggests the latter may be biased low because the
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metallic screen assays are 8% higher than the routine standard 50 g fire assay entered in the database.
Check assay campaigns undertaken by Otis Gold highlight a positive assay bias at ALS Chemex relative to
Acme and Inspectorate for campaigns in 2008 – 2009 and 2011, especially for samples assaying > 1 – 2
g/T Au. Check assay data for 2010 does not show this bias. Precision is also poor between ALS Chemex
and the check labs. Taken together, the evidence from metallic screens and the check assay program
suggests that there is liberated gold in the pulps which segregated during transport of the pulps from
one site to another, biasing the checks low. The author’s check samples of from six core intervals all
returned lower values than the original assays.
The individual domain resource estimates are generally contiguous and form a body of mineralization
potentially amenable to bulk tonnage mining in an open pit setting. This appears to be supported by
the metallurgical studies performed to date by previous companies and Otis Gold. The estimated
mineral resources for the Kilgore Gold Project (Table 18.1) conform to standards set forth in NI 43-101
for Indicated and Inferred mineral resources. Indicated mineral resources lie within a Lerch-Grossman
pit shell using the parameters listed in Table 14.10.
1,2
Resource Category
(T)
Measured
Indicated
Inferred
27,352,000
27,352,000
20,230,000
0.59
0.59
0.46
Short Tons
Au
(Troy)
(t)
(opt)
520,000
520,000
300,000
30,130,000
30,130,000
22,290,000
0.017
0.017
0.014
1
grade.
2
Resource reporting is in metric units with Imperial system units also shown for informational purposes
and consistency with the text and methodology of the report. There is no assurance that mineral
resources will be converted into mineral reserves. Mineral resources are subject to further dilution,
recovery, lower metal price assumptions, and inclusion in a mine plan to demonstrate economics and
feasible of extraction.
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19 RECOMMENDATIONS
The coordinate system for the project is a local Imperial coordinate system that may have served its
purpose at the early stages, however, surveying has historically been performed in UTM NAD83. Some
of the drill holes cannot be re-located and have been adjusted to local coordinates mathematically from
UTM. The assays from most of the drilling campaigns are reported in ppm, ppb, or g/T units, but much
work is performed using ounces per short ton because of the Imperial coordinate units. The author
recommends consideration of adding the UTM coordinates to the drill hole database and using that grid
and metric measurements for all project work going forward. This will reduce the possibility of
conversion errors and facilitate reporting to international standards.
The geologic model can be improved by building an additional set of sections perpendicular to the
northeast-southwest set currently available. Interpretation on the orthogonal set will produce more
reliable surfaces for the Mine Ridge and Cabin Faults, both nearly parallel to the current set. Both
sectional interpretations should be intersected with plans spaced at a maximum of 50 feet vertically to
complete the interpretation of the faults and the intrusive rocks. The grade model will also improve
because the current interpretation did not account for all of the volume of material in the core of the
deposit, and was very erratic at the deposit fringes. The Mine Ridge, Cabin, East, and West faults ( the
latter part of the Northwest Fault zone) all had to be projected to depth from a single set of sections or
from surface measurements extrapolated to depth.
The structural patterns at Kilgore dictate that the optimum orientations for drilling are E-W or N-S at
moderate angles. Drilling grids based on these orientations will be more efficient in terms of meters
required to achieve desired drill spacing and produce the most reliable information. The deeper Aspen
and Aspen-Sill/Dikes contact zone require tighter drill spacing than presently available in order to apply
geostatistics.
Doing so will likely permit reclassification of some Inferred resource to Indicated
resource.
In the immediate deposit area, additional drilling is recommended along the northwest extension of the
Northwest Fault zone to offset strong mineralization encountered in 2011 drill holes 11OKC-256, 258,
259, 280 and 281 (North zone target). The target also appears to be open along its apparent plunge to
the northeast (Figure 19-1).
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N
Figure 19-1 Exploration targets in the resource area of Kilgore project showing Resource Pit
Outline, Indicated resource grade shell (red), major faults, and current drilling (scale in feet).
A previously unrecognized east-west gold grade trend appears with isotropic contouring of the
composite data. Drilling is recommended along the trend to offset mineralization in 94EBR-85. A few
drill holes should be oriented to cross the projection of the Mine Ridge Fault on the north flank of the
deposit where most current drill holes are subparallel to it. A similar target occurs along the southeast
extension of the Cabin Fault in the vicinity of hole 11OKC-265. Figure 19-1 shows two areas at the
southeast margin of the current resource which, with infill drilling, have the potential to be converted to
Indicated resource. The proposed program to test soil anomalies discovered to the northwest of the
Kilgore deposit with a helicopter drilling program should be undertaken by Otis Gold (Gold Ridge target,
Figure 7-12).
The author thus recommends an exploration program and other work to further test the North zone,
evaluate the Prospect Ridge geochem target, and infill areas of Inferred resources in the main Kilgore
deposit such as its northeast flank and the West trend. The drill program is 7,000 m in approximately 25
- 35 drill holes with duration of approximately five months. Some of the drilling will be from existing
roads, but a portion will require either new road construction or helicopter support. Other work
includes geological modeling and resource estimation, environmental sampling and baseline work, and
metallurgical testing. Otis Gold’s local facilities, including field office and core shed are sufficient to
support the program.
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The exploration budget includes expenditure categories and costs supplied by Otis Gold which the
author accepts as reasonable at the effective date of this report (Table 19.1).
Table 19.1 Recommended Exploration Budget for Kilgore Project.
Item
Cost
(US$)
Administration
Assays
Computer Model/Mineralogy
Contractors
Drilling
Environmental
Field/Camp Supplies/office supplies
Equipment (pump rental & tanks
Metallurgy
Reclamation, permits, bonds
Surveying
Travel/Transportation
Spokane Off./ St. Anthony Off. Utilities
Consulting/Wage
Subtotal
Contingency (5%)
Total
1,000
132,000
45,000
26,000
1,294,000
104,000
5,000
6,000
25,000
7,000
23,000
47,000
54,000
296,000
2,065,000
103,000
2,168,000
The budget provides funds for direct drilling cost, assays, and all necessary supporting personnel and
logistics support for the duration of the program. Other line items provide funding for additional
metallurgical testing of samples from the program and the environmental baseline study. Drill road
construction is not included in the budget but may be needed to provide good access to some of the
targets. A new POO to allow at least 1,350 m of new road construction should be undertaken to
facilitate the access.
Additional information should be added to the assay file of the drill hole database to make it more
complete. Sample numbers from the assay certificates should be added to the assay table, and each
lab’s assays reported separately instead of entering calculated average values. A column for calculated
values can be added to the assay table, but the original data should be entered as they appear on the
certificates. RQD and recovery should be added to a table for collection and compilation of geotechnical
information. Downhole survey information should be entered exactly as it is recorded, including
information such as uncorrected azimuth, temperature and magnetic field. The collar, survey, and
geotechnical tables should include appropriate metadata such as date, logger, drilling company, etc.,
useful information for reference and facilitating audits.
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Otis Gold should consider an additional routine QA/QC type of blind sample comprising 5% of rejects
with re-numbered bags. These can be taken from mineralized zones for preparation of a second pulp at
the primary laboratory with instructions to perform a homogenization pass through a riffle splitter
before splitting to obtain the new subsample. The resulting assay done with identical procedures and
protocols as the first will be considered a prep duplicate which will give good information about the
precision of the assays and adequacy of protocols.
Instead of sand or commercial blanks, blanks comprising coarse, barren volcanic material should be
inserted in sequence after the last mineralized interval or at a frequency of 5% of the total samples, as
appropriate. They should be numbered in sequence to avoid giving the lab an indication as to the type,
or source of material; i.e., they should be blind samples.
The check assay programs undertaken by Otis Gold should be continued at a rate of 20% of all samples
from the mineralized zones at the 0.005 opt Au (0.2 g/T) cutoff, selected randomly from within the
zones. The bias and imprecision noted from past check assay programs should be investigated to
ascertain the role played by free gold in the sample pulps. Some experimentation with final grind size
may yield more consistent results, but ultimately it may be necessary to routinely perform metallic
screen assays for the final assay inside the 0.005 opt Au (0.2 g/T) cutoff intervals in each drill hole. At a
minimum, future drill campaigns should include metallic screen assay checks as has been done
previously by Otis Gold.
Additional bulk density determinations should be performed on whole core samples using wax coating
methods, especially for the heterogeneous lithic tuff unit which is represented by uncoated, small
samples. Samples of quartz porphyry core should also be submitted for the determinations because
they are more representative than surface samples.
The Kilgore deposit minerals contain elements that may potentially interact with water in the surface
weathering environment, including carbonates, sulfides, sulfates, and oxides. Likely economic and
waste rock in the pit shell should be subjected to static tests such as pH and acid-base accounting,
kinetic testing, and leach testing. Collection of some baseline information on this issue, and other
environmental factors before the project is advanced much further will assist Otis Gold in the permitting
process.
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20 REFERENCES
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Tooker, editor, Geologic characteristics of sediment- and volcanic-hosted disseminated gold
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preprint no. 82-13. SME-AIME mtg., Dallas, Texas.
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Dome U.S., Inc., Kilgore Gold Project, Clark County, Idaho: Echo Bay Exploration, Spokane
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Dickinson, W.R., and Payne, W.O., eds., Relations of tectonics to ore deposits in the southern
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Bur. Mines and Geol., p.146.
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Tectonics and Regional Geophysics in the Western Cordillera: Geol. Soc. of America
Memoir 152, p. 283-312.
Ekren, E.B., McIntyre, D.H., Bennett, E.H., and Marvin, R.F., 1982, Cenozoic stratigraphy of Western
Owyhee County, Idaho, in Bill Bonnichsen and R.M. Breckenridge, editors, Cenozoic
Geology of Idaho: Idaho Bur. of Mines and Geol. Bull. 26, p. 215-235.
Golder Associates, 2010, Kilgore Mine – Preliminary Environmental Scoping Report: Report to Otis
Gold Corp., 92 p.
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23 p., 3 appendices.
JBR Environmental Consultants (JBR), 1997, Final Report Biological Baseline, Echo Bay Exploration
Inc., Kilgore Exploration Project: JBR Consultants, Elko, NV, 23 p.
John, D.A., Garside, L.A., and Wallace, A.R., 1999, Magmatic and tectonic setting of Late Cenozoic
epithermal gold-silver deposits in northern Nevada, with an emphasis on the Pah Pah and
Virginia Ranges and the Northern Nevada Rift: Geol. Soc. of Nevada Spec. Pub. 29, p. 64158.
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John, D.A., 2001, Miocene and early Pliocene epithermal gold silver deposits in the northern Great Basin,
western USA: Characteristics, distribution, and relationship to magmatism: Econ. Geol., v.
96, p. 1827-1853.
Kilgore Minerals Ltd., 2004, Kilgore – “Discovering the Lion’s Share”: Kilgore Gold Company Kilgore
Project Investor Relations PowerPoint Presentation, Vancouver, B.C., 12 p., 24 plates.
Knopf, A., 1924, Geology and ore deposits of the Rochester district, Nevada: U.S. Geol. Survey Bull.
762, 78 p.
Larabee, B., 2012, Identification and analysis of alteration minerals collected from rock cores from the
Kilgore Mine, ID: Western Washington University Geol. Dept. Senior Thesis, Bellingham,
WA, 72 p.
Leeman, W.P., 1982, Development of the Snake River Plain – Yellowstone Plateau Province, Idaho and
Wyoming: An Overview and Petrologic Model, in Bill Bonnichsen and R.M. Breckenridge,
editors, Cenozoic Geology of Idaho: Idaho Bur. Mines and Geol. Bull. 26, p. 155-177.
Mabey, D.R., 1982, Geophysics and Tectonics of the Snake River Plain, Idaho, in Bill Bonnichsen and
R.M. Breckenridge, editors, Cenozoic Geology of Idaho: Idaho Bur. Of Mines and Geol.
Bull. 26, p. 139-153.
Mansfield, G.R., 1920, Coal in eastern Idaho: U.S. Geol. Survey Bull. 716-F, 31 p.
McKamy, R.W., 2011, Quit Claim Deeds – Kilgore Gold Company to Otis Gold – County and BLM
Filing: Report to Otis Gold Corp., 7 p.
McKamy, R.W., 2012, Opinion concerning upcoming Technical Report 43-101: Report to Otis Gold
Corp., 5 p.
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MLI Job No. 3428, McClelland Laboratories Inc. Report to Otis Gold Corp., 17 p.
McPartland, J.S., 2012 Report on Heap Leach Cyanide Testing-Kilgore Drill Composites. MLI Job No.
3614, 26 p.
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Morgan, L.A., Doherty, D.J., and Leeman, W.P., 1984, Ignimbrites of the eastern Snake River Plain:
Evidence for Major Caldera-Forming Eruptions: Jour. Geophys. Res., v. 89, no. B10, p.
8665-8678.
Otis Gold Corp., October 6, 2011, Otis Drills 100-Metre Plus Gold Intercepts; Discovers New Extension
to Mine Ridge Deposit: Online Posting of Otis Gold News Release, http://www.otisgold.com.
Otis Gold Corp., December 8, 2011, Otis Drills 48.8 M of 1.05 G/T Au at Kilgore; New Intercepts
Further Extend Open-Ended Mineralization: Online Posting of Otis Gold News Release,
http://www.otisgold.com.
Otis Gold Corp., January 12, 2012, Otis Releases Complete Kilgore 2011 Drill Results; Mine Ridge
Deposit Continues to Expand: Online Posting of Otis Gold News Release,
http://www.otisgold.com.
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Pancoast, L.P., 2004, Summary – 2004 Kilgore Drill Program: unpublished report, 4 p.
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Proceedings of Exploration 07: Fifth Decennial International Conference on Mineral
Exploration, p. 691-711.
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Witkind, I.J., and Prostka, H.J., 1980, Geologic Map of the Lower Red Rock Lake Quadrangle,
Beaverhead and Madison Counties, Montana, and Clark County, Idaho: U.S. Geol. Surv.
Misc. Geologic Inv. Map I-1216, scale 1:62,500, sheet 26 x 38 inches.
Woolham, R.W., 1996, Report on a combined helicopter-borne electromagnetic, magnetic, and
radiometric survey, Kilgore gold project, Clark County, Idaho: Aerodat, Inc. survey for Echo
Bay Exploration, Inc., 14 p.
Wright, J.L., 2009, Kilgore Gold Property CSAMT Survey, Report to Otis Gold Corp., 16 p.
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21 APPENDIX A. Summary of Significant Drill Hole Intercepts, Otis Gold 2008 2011
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22 APPENDIX B. Declustering Correlograms For Kilgore Deposit
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23 APPENDIX C. Kilgore Domain Correlograms
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24 CERTIFICATE
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CERTIFICATE OF AUTHOR
I, Donald E. Cameron, Consulting Geologist, do hereby certify that:
1. I am a Consulting Geologist with address at 21200 E. Country Vista Drive, Apt C101, Liberty Lake,
WA 99019, U.S.A.
2. I graduated with a degree in Bachelor of Arts in Geology from University of Wisconsin, Madison in
1974. In addition, I have obtained a Masters of Science Degree in Geology in 1976 from the
University of Arizona, Tucson.
3. I am Registered Member #4018521RM of the Society of Mining Engineers and Member #01434QP of
the Mining and Metallurgical Society of America.
4. I have worked as a Geologist for a total of 35 years since my graduation from university. My relevant
experience includes employment as exploration, mining, and project geologist for The Anaconda
Company(1976 – 1986), geology consultant in exploration and mining (1986 – 1990), Chief Mine
Geologist, Cannon Mine (1990 – 1995), Senior Geologist and Chief Geologist for Hecla Mining Co.
(1995 – 2005), Chief Mine Geologist for Bema Gold (2005 – 2007), Director of Technical Services for
Kinross Gold (2007 – 2011), and independent consulting geologist (2011 – Present), including
experience in resource estimation, project and production geology, feasibility studies, databases,
QA/QC and exploration.
5. I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and
certify that by reason of my education, affiliation with a professional association (as defined in NI 43101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the
purposes of NI 43-101.
6. I am responsible for the preparation of Sections 1 - 23 of the technical report titled “TECHNICAL
REPORT AND RESOURCE ESTIMATE FOR THE KILGORE GOLD PROJECT, CLARK COUNTY,
IDAHO, U.S.A.”, with an effective date of July 31, 2012, and dated September 7, 2012 (the “Technical
Report”) relating to the Kilgore Gold Project. I visited the Kilgore Gold Project on June 1, 2012 for a
total of one day.
7. I have not had prior involvement with property that is the subject of the Technical Report
8. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument 43-101.
9. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in
compliance with that instrument and form.
10. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority
and any publication by them for regulatory purposes, including electronic publication in the public
company files on their websites accessible by the public, of the Technical Report.
11. As of June 1, 2012, to the best of my knowledge, information and belief, the entire Technical Report
contains all scientific and technical information that is required to be disclosed to make the Technical
Report not misleading.
12. Dated this 7th day of August, 2012.
________________________________
Donald E. Cameron
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2012 Kilgore NI 43-101 Report

Transcription

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