Otis Gold is a Canadian-based mineral exploration company with a portfolio of quality precious metals projects located in Idaho. The Company is currently focused on exploring its flagship Kilgore Gold Project, located in Clark County Idaho, approximately 60 miles north of Idaho Falls.
The Kilgore Gold Project has a NI 43-101 compliant resource of 520,000 ounces of drill-indicated gold (27.3 million tonnes @ 0..59 gpt Au, 0.24 gpt Au cutoff) and 300,000 ounces of inferred gold (20.2 million tons @ 0.46 gpt Au, 0.25 gpt Au cutoff).
Otis Gold inks joint venture with Lateral Gold for Oakley project
Otis Gold Corp. (CVE:OOO) (OTCQX:OGLDF) has inked a joint venture deal for its Oakley project in Idaho with Lateral Gold Corp (CVE:LTG), giving Otis both cash and a significant potential shareholding in Lateral.
The deal will also give Otis more support to focus on developing its flagship property, the Kilgore gold project in Clark County, Idaho.
The letter of intent allows for Lateral to earn up to an initial 70 per cent stake in Oakley, which is a classic epithermal hot spring-type gold project that has an NI 43-101 inferred resource of 235,000 ounces of gold at a grade of 0.55 grams per tonne (g/t).
The project consists of 107 federal lode mining claims and several Utah State leases in Cassia County, Idaho, approximately 15 miles south of the town of Oakley and just north of the Utah/Nevada border.
“We are very excited to have Lateral Gold as a partner to assist us in moving the Oakley Project forward," said Otis president and CEO, Craig Lindsay. "Otis stands to be rewarded in the form of both cash and a significant potential shareholding in Lateral should the Oakley Project achieve the development targets that we envision for it.”
Under the terms of the deal, Lateral will pay a combination of cash, property expenses and shares of its company. It will pay a total of $915,000 to Otis in cash, as well as $5.7 million of work expenses on the project and a total of 4.95 million common shares, all according to staged payment schedules spanning as much as five years from the acceptance date.
The deal also requires that Lateral provide NI 43-101 resource estimates on or before both the third and fourth anniversary dates, and a preliminary economic assessment by the fifth anniversary date, at which time the 70 per cent interest will have been earned.
Once Lateral has earned the 70 per cent, it will have the option to boost its stake by a further 10 per cent in exchange for $1.5 million in cash and 2.0 million Lateral shares. It will then have the right to earn the final 20 per cent interest by issuing an additional 5.0 million Lateral shares and a cash payment based on a multiple of any inferred gold resources contained in a NI 43-101 report.
A net smelter return royalty of 2.5 per cent will be issued to Otis in connection with any lands subject to the deal that are not already encumbered by royalty agreements.
Otis currently has a 70 per cent stake in Oakley, which is being increased to 100 per cent through a separate transaction with its joint venture partners, the closing of which must occur prior to the Lateral agreement.
Otis and Lateral said they aim to close by mid-February a definitive agreement, which still needs approval by the TSX Venture Exchange.
In late October last year, Vancouver-based Otis said it would soon begin a 1,700 metre, 9-hole reverse circulation drill program at its Kilgore project in Idaho, focused at the north/northwest end of the deposit, where five holes drilled in 2011 expanded the strike length of the deposit by around 150 metres.
The drilling was scheduled to be wrapped up by the end of November.
Otis has been bulking up its team as it advances the development of the Kilgore project, recently appointing Dr. Roger Norwich as a director.
Otis Gold unveiled last summer an updated NI 43-101 resource estimate for Kilgore. The deposit now contains an indicated resource of 520,000 ounces gold in 27.35 million tonnes at a grade of 0.59 grams per tonne (g/t) gold, representing an increase of 138 per cent in the number of ounces and 328 per cent in the number of tonnes compared to the deposit’s 2002 estimate.
Additionally, Kilgore has an inferred resource of 300,000 ounces gold in 20.23 million tonnes at a grade of 0.46 g/t gold, representing an increase of 12 per cent in the number of ounces and 131 per cent in the number of tonnes versus the 2002 estimate.