Kootenay Silver Inc (KOOYD)

[basserdan]

Singing the Song of Sonora: Kootenay Silver's Promontorio Receives Agnico-Eagle Stamp of Approval and Adds Gold to the Mix

The Bottom Line Report
May 29, 2013

As the company rapidly approaches the 100 million ounce silver equivalent target on its flagship Promontorio project, Kootenay Silver [TSX:KTN.V; OTC:KOOYF] recently received a $4.75 million vote of confidence from a well-known mining heavyweight, and boosted its resource through an injection of an additional 506,000 ounces of gold.

Liking what it had seen during its aggressive vetting and acquisitions within the silver-rich state of Sonora, Mexico, major Agnico-Eagle [AEM - TSX, AEM - NYSE] invested $4.75 million into Kootenay Silver to close out April. Coming on the heels of acquiring the La India project through a takeover of Grayd Resources, Agnico-Eagle turned its attention to Kootenay's Promontorio Project. Following the investment by Agnico, Kootenay updated its resource estimate at Promontorio (see May 14, 2013 news release), bringing the flagship's Measured and Indicated Resource to 92,035,000 oz silver equivalent AgEq with another 24,326,000 oz AgEq categorized as Inferred.

The investment by Agnico-Eagle represented a near 10% stake in Kootenay, but also opened Kootenay up to access Agnico's Sonora-based technical team. For Kootenay, the investment and resource growth represents an important milestone, achieved within what's been a very successful 2013.

Agnico-Eagle joins celebrity investor Eric Sprott in taking a major stake in the Kootenay story, while maintaining a bullish stance on silver going forward. Coupled with the addition of a newly included gold resource, it appears Kootenay is getting much closer to its stated goal of 100 million ounces in silver equivalent, thanks to recent favorable metallurgy studies done on the property.

DRILLING RESULTS PENDING

The target within the Promontorio is a diatreme hosted system, that Kootenay's Dr. Tom Richards accurately likened to GoldCorp's [G - TSX, GG - NYSE] Penasquito project. The Penasquito is one of the largest deposits in North America, hence Richards' likening of Promontorio to the prolific Goldcorp asset is a very serious claim, and one that those following the Kootenay story cannot ignore.

Additional results from this campaign are expected in the next few weeks to a month.

ALLURE OF SONORA AND OTHER OPPORTUNITIES

Agnico's interest in Kootenay followed the company's claim that beneficial metallurgy would allow Kootenay to add some significant gold numbers to the ever-growing resource calculation.

While Promontorio is indeed the company's flagship, Kootenay also has other generative properties throughout the Sonora region, some of which are near to La India, as well as Alamos Gold's [AGI - TSX, AGI - NYSE] Mulatos Mine. These additional properties have been a part of the Kootenay portfolio over the last 7 years, it's not a far reach to expect further work to be done on these as well.

THE LATEST PROMONTORIO RESOURCE UPDATE

Within the latest updated resource statement on Kootenay's flagship, the company was able to include new metallurgical data and information to support the recovery of gold. At this stage, the open pit mineral resources for the Promontorio contain an estimated 44,504,000 tonnes that grade at an average of 64.32 g/t AgEq in the Measured and Indicated category, and an additional 14,564,000 tonnes Inferred at an average of 51.95 g/t AgEq.

The update, prepared and provided by SRK Consulting, incorporated the new evidence supporting gold recovery, however, did not include any of the drilling that's been completed since August of 2012. In that time since, the project has delivered very good results, with two separate drilling results announcements over that span.

These favourable announcements during that time included:

- January 30, 2013: Drilling results for 47 meters of 62 g/t AgEq, including 17 meteres of 94 g/t AgEq (with 47 meters grading 31 g/t Ag, and 1.32% lead and zinc or ?Pb+Zn') and (17 meters grading 48 g/t Ag and 2.0% Pb+Zn);

- March 13, 2013: Step-out drilling results for over 10 metres of 104 g/t AgEq (with 81 g/t Ag, and 0.97% Pb+Zn), which included 3 metres of 246 g/t AgEq (with 176 g/t Ag, and 3.04% Pb+Zn), and 9 metres of 47 g/t AgEq (with 33 g/t Ag, and 0.60% Pb+Zn) in a New Discovery Zone.

In addition to the open-pit resources, SRK also included an addition of underground mineral resources, to the tune of approximately 215,000 tonnes grading at an average of 56.96 g/t AgEq (M+I) and another 1.265 million tonnes grading at an average of 61.17 g/t AgEq Inferred.

THE BOTTOM LINE

Within a challenging market setting that's not been an easy environment to raise capital, Kootenay was able to attract a strategic investment with Agnico-Eagle's new involvement. Agnico was already quite active in the Sonora region, having vetted many of the projects already underway there, and acquiring Grayd Resources in 2012 for $275 million, to take over La India which is scheduled to start pouring gold in 2014. With the amount of time that both companies have been involved in Sonora, the $4.75 million investment by Agnico-Eagle appears to be that of a sign of mutual respect.

Going forward, Kootenay now has more than enough cash in hand to meet its development goals for 2013 and beyond. However what may be the key to this that makes for more excitement at the table in Kootenay's boardroom is the access to the technical expertise and regional knowledge sitting at the table with Agnico-Eagle.

Going forward, the group eagerly awaiting the results now includes Agnico-Eagle, Sprott, and many others that believe in Promontorio's promise.

G. Joel Chury
for the Bottom Line Report

http://www.vantagewire.com/articles/singing-song-sonora-kootenay-silvers-promontorio-receives-agnico-eagle-stamp-approval-and-a