Otis Gold Corp (BE:OOO) confirms the potential that the uplifted Aspen Formation is a larger, higher-grade mineralized zone, underlying the existing deposit, with “strong potential” to expand the Kilgore resource, in Idaho. We maintain our Buy rating.
Summary of the 2016 40-Hole Drill Program at the Kilgore Gold Project
•36 of the 40 holes in the 2016 drill program intercepted reportable gold mineralization, 11 in the Lithic Tuff and Dikes (the host for the existing deposit), and 25 holes in the newly discovered Aspen Formation.
•The Aspen Formation appears to be an uplifted “northwesterly-trending belt or corridor in the northern half of the deposit,” to “depths of up to 300-meters below the surface… with some still open at depth.”
•Drill results in the Aspen Formation are often higher grade gold with thicker intercepts than the deposit, including 16 OKC-349 with 120.4 meters of 1.18 g/t, 16 OKC-353 with 128 meters of 1.79 g/t (Tertiary Sill and Aspen), and 16 OKC-354 with 27.5 meters of 2.63 g/t (Dike and Lithic Tuff) and 80.8 meters of 1.87 g/t.
In our opinion, the newly-discovered uplifted Aspen Formation, a result of proper geologic reinterpretation, has the potential to significantly expand the existing resource estimate. Otis Gold will be completing important cross-sections which may demonstrate the near surface expanse of a growing sub-parallel resource, suggesting potentially more attractive economics. We expect Otis Gold to carefully build a resource model that may lead to an updated resource estimate early in the second quarter of 2017. We maintain our Buy rating and price target of C$0.50 per share.