Kootenay Silver (CVE:KTN), which last month put to bed a $4.75 million investment from Agnico-Eagle Mines (NYSE:AEM), has today unveiled an updated resource estimate that includes the gold content at its main Promontorio silver project in Mexico, on the back of new metallurgical data that supports the recovery of the yellow metal.
Shares of the junior company rose by more than 1.2 per cent on Tuesday, to 82 cents.
Despite the new gold content, the company told investors that the updated resource estimate, by SRK Consulting, does not include any drilling completed since the last resource report was announced in August last year.
The updated estimate for the project reveals a contained 92 million silver equivalent ounces in the measured and indicated category, with another 24.3 million ounces in the inferred resource category.
It compares with the 61.68 million silver equivalent ounces in the measured and indicated category announced last August, as well as another 14.47 million inferred ounces, at a cut off grade of 15.00 g/t.
"This is an exciting day for Kootenay and its shareholders. The company is extremely pleased with the findings of the resource estimate and proud to be approaching the 100 Million ounces, silver equivalent milestone," said president and CEO James McDonald in a statement Tuesday.
"Two key factors contributed to the success of the updated resource estimate. First, the important addition of the gold content to the resource has added significantly to the resource value. Secondly, resulting from the addition of gold, the resource is now contained in a single larger optimized Whittle Pit, as opposed to two individual smaller pits reported in the August 21, 2012 resource estimate."
The new resource is made up of 44.5 million tonnes grading an average of 64.32 grams per tonne (g/t) silver equivalent in the measured and indicated category, with an additional 14.6 million tonnes in the inferred category grading 51.95 g/t. Kootenay said the resource is stated above a 20 g/t silver equivalent cut-off, and is contained with a "potentially economically mineable pit shell".
Underground resources hold 215,000 tonnes in the measured and indicated category grading 56.96 g/t, with an additional 1.27 million inferred tonnes grading 61.17 g/t, at a cut off of 45 g/t to reflect the higher mining costs of underground mining.
The addition of the gold content was the result of additional metallurgical test work, which the company said had a "significant impact" on the silver equivalent grade and ounces.
The report is based on data from 65,092 metres of drilling, with a further resource update expected at the conclusion of the company's current 30,000 metre drilling campaign, sometime in the third quarter of this year.
In late April, Kootenay inked a strategic partnership with Agnico-Eagle, which as a result of the financing, now owns 9.96 per cent of the company's shares on a non-diluted basis, or 14.23 per cent if warrants are exercised.
In an interview with Proactive Investors at the time, Kootenay’s CEO also highlighted the company’s 80,000 hectare contiguous land package in Sonora, Mexico, which provides it with “excellent upside potential” for high grade discoveries well within the complex, as well as separate from it.
"Agnico-Eagle is a very highly regarded mining company that boasts technical expertise and that is bullish on the potential in Sonora State, Mexico. They like that exposure there, and our whole land package in addition to Promontorio," he said in April.