Ben

We wrote about Kilgore Minerals this past winter, because it holds prospective U.S. uranium properties. Although studying the business, it became evident the company’s uranium would take a backseat to the company’s gold property in southern Idaho. We reviewed Robert Bishop’s commentary in his self-published Gold Mining Stock Report. Mr. Bishop is extremely regarded as an astute junior gold stock picker, and his analysis is quite thorough. There exists little doubt Bishop holds high esteem for Kilgore Minerals’ Chief Executive Norman Burmeister.

Much more importantly, the extremely profitable Pinetree Capital (Toronto: PNP) has produced a important investment in Kilgore. Respectively, the Chief Executive and CFO, Sheldon Inwentash and Larry Goldberg, of each Pinetree Capital and heavily touted Mega Uranium (TSX: MGA), have personally invested in Kilgore Minerals. A latest Forbes magazine post took a swipe at both Mega Uranium and Pinetree Capital. Actually, it was far more of a head butt. Pinetree Capital is back to trading above C$17/share, up from a year ago when it traded for less than $3/share. So the Forbes write-up was a non-event for Pinetree Capital. And their holdings in Kilgore Minerals, which reportedly are estimated at amongst ten and 20 percent of the organization, have been passed by without having notice.

Property History

Kilgore’s Idaho gold property continues to be explored considering that the 1930’s, when a gold discovery was created by the Blue Ledge Co. Virtually 50 claims were staked in 1982 and leased to a Kennecott subsidiary in the mid 1980s. Seven holes had been drilled. By 1990, Placer Dome acquired the property and drilled 39 holes, more than 21,000 feet of drilling. A Pegasus joint venture drilled an additional 23 holes, practically 10,000 feet of drilling, by 1994. Echo Bay earned majority interest in the property, by 1996, after acquiring spent $3.5 million drilling 122 holes for a lot more than 82,000 feet. In 1997, with all the falling cost of gold and troubles inside the mining sector brought on by the Indonesia stock fraud, Bre-X Minerals, Echo Bay dropped its exploration ambitions on Kilgore – and shelved all of its exploration projects. In 1998, Latitude Minerals continued a modest exploration of a little a lot more than four,000 feet.

Close to the bottom of the gold bear marketplace, Kilgore Gold (a wholly owned subsidiary of Kilgore Minerals) acquired 100 percent ownership of the property. A new round of preliminary exploration identified new gold targets. By 2004, Kilgore Gold expanded the company’s property holdings to 3,000 acres. Has this property been drilled like Swiss cheese or does Norman Burmeister know what he is carrying out? It’s had nearly 200 diamond and reverse circulation drill holes, totaling more than 126,000 feet of drilling.

In an earlier interview with Burmeister, he told us, “I’m really excited about this project. It was a property that was extremely high on Echo Bay’s list.” Major companies have expended far more than $8 million to define a modest, and possibly economic, resource. At the least three different entities have established resource estimates on the Kilgore gold property. In 1996, Placer Dome reported 14.1 million tons, grading 0.04 ounces/ton and with a cut-off grade of 0.015, for a deposit of 561,000 ounces of gold. A year later, Echo Bay released a sectional estimate report displaying 18.7 million tons, grading 0.029, for a total of 534,959 ounces of gold.

Even so, the only resource estimate approved by Canadian regulators (Kilgore trades on the Toronto Venture Exchange) may be the Van Brunt/Rayner Technical Report, filed in October 2002, and which is compliant with National Instrument 43-101 (NI 43-101). This report showed about 7 million tons trading 0.031, having a 0.01 cut-off grade, for an indicated resource of 218,000 ounces of gold. The report showed an inferred resource, adding another 269,000 ounces of gold. That is close adequate for the Placer Dome and Echo Bay estimates, however it is unlikely to be mineable unless of course Kilgore finds far more gold.

For the duration of the 2004 drilling plan, Norm Burmeister got the sniff of what might make this an appealing acquisition by a significant gold organization. “We are trying to find a high grade feeder technique,” Burmeister told us. Within the prior drilling system, Burmeister got and encouraging intercept of 0.465 ounce per ton gold more than 10 feet within a broader 170-foot zone of low-grade mineralization at 0.04 ounces per ton. On Tuesday, Kilgore Gold created its announcement it would commence its chase to seek out out if, indeed, there’s an elephant discovery of gold on its property.

In an e-mail to us, Norm Burmeister wrote, “The high-grade zone, known as the “Elsa Zone”, was intersected at a core depth of 410 feet. It’s important to note that this hole was drilled in an area that had in no way been drilled some 4650 feet from the resource location.” The Elsa Zone is positioned inside the Dog Bone Ridge target region. Burmeister also pointed out, “There are no identified workings in the location, and there is certainly no identified gold mineralization at the surface, therefore making the Elsa Zone a correct ‘blind discovery.’ Kilgore’s blind discovery in the Elsa Zone proves there may be some prospects inside the very significant Dog Bone Ridge target location.

Rationale

The purpose with the 2006 drilling system, Burmeister told us, would be to decide “the true prospective with the Dog Bone Ridge area target.” Niel Prenn, a expert engineer with Mine Advancement Associates of Reno, Nevada, completed a scoping level update of Echo Bay’s 1996 assessment of the project. He wrote, “The project seems to have reasonably attractive economics if the ‘potentially mineable material’ might be doubled at $375/ounce gold price.” Prenn saw the Kilgore project as one with a “large epithermal gold deposit.” This confirmed an earlier geological report by Stanton W. Caddey, who wrote in an October 2003 report, “Exploration possible at the Kilgore property for far more than doubling the present gold resource with additional exploration drilling is regarded as outstanding.”

The encouraging drill hole in 2004 helped move this project towards the latest drilling program. “We think the Dog Bone Ridge target region represents the core with the hydrothermal technique that has generated the known low grade resource at Kilgore,” Burmeister speculated. That is why he’s drilling the Dog Bone Ridge target region. The very first holes is going to be offsets towards the promising 2004 discovery hole. “We don’t know the direction or dipping,” said Burmeister, asking “Which way does it go?” The initial hole will assist Burmeister orient the direction on the north side with the target. Burmeister told us, “The expertise we hope to gain from the Elsa Zone offsets will likely be important in effectively testing other Elsa ‘look-a-like’ definitive targets within the Dog Bone Ridge target location.”

Expectations

A drill campaign tends to intensify expectations. Share prices have a tendency to rally greater, depending upon market situations, in the course of a drill campaign. The business hopes to drill about twelve holes, down amongst 500 and 800 feet, inside the target location. The very first hole could possibly be encouraging, but the final results from that hole function as an identifier for exactly where to location the following drill hole. “The greatest target has in no way been touched,” stated Burmeister, referring towards the north side of the Dog Bone Ridge. As with many promising properties, they don’t constantly give the easiest access. In this case, Burmeister’s expectant target on the north side of Dog Bone Ridge might only be accessed by helicopter, if that is exactly where he has to drill.

What takes place if Burmeister is correct in his assessment? If his favored Dog Bone Ridge target does represent the core with the hydrothermal program, then what will he have found? “As such, it represents an appealing high grade epithermal vein-type gold target,” Burmeister responded. “The effective interception of high grade gold throughout the 2004 plan confirmed this interpretation.”

In 1980, Burmeister founded Bull Run Gold Mines, serving as Chief Executive and creating a profitable Nevada gold mine. He arranged the IPO, which led to a NASDAQ National Market listing, and ran the business for eight years.

For thirteen years prior to that, he was the chief geologist for Silver Normal Resources. Burmeister found the Mill Creek orebody in Elko (Nevada), which moved that firm forward. The property was subsequently sold to Freeport-McMoran. Burmeister also conceived for Silver Normal of a novel regional exploration plan, covering 10,000 square miles inside the Yukon more than almost unexplored territory. In a joint-venture with ASARCO, he helped discovery the Minto orebody in the Yukon. The copper-gold deposit is now going into production by means of Sherwood Copper.

Following forty years inside the mining business, he hopes Dog Bone Ridge will add to his string of gold discoveries and corporate good results stories.

Penny stocks — online stock trading — hot penny stocks