Kootenay Silver Inc. (KTN.V) is an exploration company actively engaged in the discovery and development of mineral projects in Mexico and in British Columbia, Canada. Claiming one of the largest junior portfolios of silver assets in Mexico, KTN.V provide significant leverage to silver prices; > 136M oz Silver Eqv. (M&I)* & 35M oz Silver Eqv. (Inf.).
KTN.V is primarily focused on the expansion of its current silver resources, new discoveries and the near-term economic development of its priority silver projects (Columba, La Cigarra, and Promontorio Mineral Belt).
Coverage was initiated June 2021. and a note was issued on February 2022.
News releases
Mar. 2 - Reports Aztec - Kootenay JV Drills Best Hole Yet Intersects 3.42 gpt Au over 51.7m at Cervantes:CAL22-05 represents the best gold mineralized intersection drilled to date at the Cervantes project; 15 additional holes awaiting.
Mar. 9 - Announce Closing Of $6.25 Million Private Placement: Closed its previously announced brokered private placement offering for gross proceeds of $4.78M consisting of 29,881,000 units at $0.16 per Unit, with a non-brokered portion of the offering for gross proceeds of $1.47M; 9,181,500 Units at the same unit price.
Mr. James McDonald, Chief Executive Officer and a director of the Company and a related party to the Company within the meaning of MI 61-101, subscribed for 1,000,000 Units. Mr. McDonald now beneficially owns, or exercises control or direction over, 4,028,200 Common Shares or approximately 1.12% per cent of the issued and outstanding Common Shares (or approximately 1.89% per cent).
Mar. 22 - Aztec JV Reports Strong Drill Results Intersecting 0.53 GPT AU Over 138.3M And 0.88 GPT AU Over 54.7M From Cervantes. CAL22-008; 0.884 gpt Au over 54.7 m including 13.7 metres of 1.965 gpt Au in, located at the southeastern edge of the mineralized zone;CAL22-009; 0.50 gpt Au over 86.6 m at the southern edge of the central portion of the mineralized zone;CAL22-010; 0.53 gpt Au over 138.3 m including 10.67 m of 1.622 gpt Au in, located in the central portion of the mineralized zone. Eight more holes are to be delivered.
Apr. 13 - Reports Aztec - Kootenay JV: Intersects 0.87GPT Gold Over 152.4M Including 2.05GPT Gold Over 33.5M At Cervantes Project. CAL22-012 returned 152.4 metres grading 0.87 gpt Au including 33.5 metres grading 2.05 gpt Au.
May 5 - Reports Aztec - Kootenay JV: Intercepts 0.42 gpt Gold over 68.4 Meters Including 2.25 gpt Gold over 10.6 Meters in the California Zone, Cervantes Project, Sonora, Mexico. CAL22-015 returned 0.421 gpt gold over 68.4 meters and a deeper interval of 2.246 gpt gold over 10.6 meters; CAL22-016 returned 0.475 gpt gold over 56.2 meters.
The first multi-element ICP results show good relationships between Au, Cu, Bi, Ag and As, with prospective grades and widths for Cu and Ag for a potential porphyry deposit model. The Aztec-Kootenay JV has now completed its Phase 2 Reverse circulation (RC) program of 26 holes, totaling 4,649 metres at the Cervantes Property.
May 6 - Set to Commence 15,000 Meters of Drilling at Columba High-Grade Silver Project, Mexico: Two diamond core drills are scheduled to arrive within the next few days. Drilling for this program will focus on several areas.
Previous top results: F Vein; CDH-19-41: 787 gpt silver over 5.95M within 650 gpt silver over 7.45M and 159 gpt silver; D Vein CDH-21-110: 932 gpt silver over 6.07M within 650 gpt silver over 17.8M and 453 gpt silver over 29.9M; B Vein CDH-21-82: 1186 gpt silver over 4.6M within 9M of 691 gpt silver; JZ Trap Zone: CDH-21-103; 2035 gpt silver over 6M within 805 gpt silver over 17M and 333 gpt silver over 44M; East Block: CDH-21-101: 1190 gpt silver over 0.5M within 459 gpt silver over 1.6M.
June 14 - Announces AZTEC-KOOTENAY JV Final Gold Results From 2021-2022 Drill Program on Cervantes: The 2021-2022 Reverse Circulation (RC) Phase 2 drill program in Sonora, Mexico. The program involved 26 RC drill holes with a combined total of 5,249 meters that tested four targets (California, California North, Jasper, and Purisima East). The Cervantes project is a 65/35 joint venture with Kootenay holding a 35% participating interest.
The JV has now completed its Phase 2 RC program of 26 holes, totaling 5,249 meters at the Cervantes Property.
July 26 - Aztec Minerals Becomes 100% Owner of Cervantes Property in Sonora, Mexico: Aztec will indirectly acquire Kootenay’s 35% interest in the joint venture company (“JV Corp.”) that holds the Cervantes porphyry gold-copper project in Sonora, Mexico As consideration for the acquisition, Aztec will issue to Kootenay 10,000,000 common shares in the capital of Aztec, at a price of C$0.25 per share, and Kootenay will retain a 0.5% Net Smelter Return Royalty (“NSR”). Upon completion of the Transaction, JV Corp. will be a wholly owned subsidiary of Aztec.
Aug. 4 - Announces Update on 15,000-Meter Drill Program at Columba High-Grade Silver Project, Mexico: A considerable proportion of assay results are outstanding, and a pause was initiated, awaiting receipt of results to assist in targeting of additional step-outs. Assays will be released once final assays are received and compiled.
Aug. 11 - Announces Option Agreement Amendment for Columba High-Grade Silver Project, Mexico: Successfully amended the schedule on the final payment for the property due in November 2022. The amended agreement splits the final November 2022 payment into a series of payments due in August, November, December 2022 and January, April, and May of 2023. Payments range from US$215,000 (August 2022 and May 2023) to US$480,000 (November 2022) and US$430,000 (December 2022, January, and April 2023).
Aug. 16 - Intercepts 11.3M of 449 gpt Silver, 0.3% Lead and 0.66% Zinc: And 1.5M averaging 1,395 gpt Silver, 0.94% Lead and 5.3% Zinc at Columba: Results extend known mineralization at both the D Vein and F Vein targets.
D Vein; CDH-22-115; averaging 449 gpt silver over 11.3M from 81.1M downhole. Highest grade intercept 795 gpt silver, 0.95% lead and 1.47% zinc over 1M; CDH-22-119; 1,395 gpt silver over 1.5M within 416 gpt silver over 7.74M. Highest grade intercept 1,550 gpt silver and 0.95% lead and 4.5% zinc over 0.89M.
F Vein; CDH-22-118; 107 gpt silver over 7.0M, 75M deeper than previously released hole CDH 21-96 with 425 gpt silver over 2.37M
Aug. 19 - Kootenay Silver Clarifies August 12, 2022 Private Placement Announcement from Kootenay Resources Inc: news release disseminated on August 12, 2022 headlined "Kootenay Resources Inc. Announces Private Placement financing of up to $800,000" is related to Kootenay Resources Inc. a private reporting issuer and is not related to the common stock of Kootenay Silver Inc. a TSX Venture listed company.
Kootenay Resources Inc. is an exploration company engaged in the exploration and discovery mineral projects in British Columbia, Canada and was formed as a spin-out of Kootenay Silver Inc. in which prospective Canadian assets were transferred to Kootenay Resources Inc. Kootenay Silver Inc. currently holds ~3.2 M shares of Kootenay Resources Inc.
Sep. 1 - Drills 574 gpt Silver and 2,330 gpt Silver in D and F Veins Respectively at Columba: F Vein: CDH-22-121: High grade of 2,330 gpt silver, 0.06% lead and 0.80% zinc across drill length of 1.63M; D Vein: CDH-22-122: Interval from 194.1M down hole averages 574 gpt silver with 0.19% lead and 0.66% zinc over 3.9M.
"Each new batch of results continues to justify our excitement for the Columba Project. We are seeing both the D and F Vein expanding with additional drilling and are planning additional work to evaluate the many high priority targets that remain undrilled." - KTN.s CEO.
The drill exploration program was designed to step out on mineralized veins along strike and to depth within the target-rich Columba Silver Project, the program was paused due to slow turnaround of assays. Results herein represent the balance of assays awaited. Based upon the reported Phase 4 results, Kootenay has initiated design of an expanded drill program to target high priority veins to assess the large magnitude of the mineralized system at Columba. The F, D and B Veins will be targeted with step out along strike and to depth and numerous untested high-priority areas at Columba. Nearly all drill results across the project remain open to expansion.
Oct. 18 - Announces $4.0 Million Private Placement Financing of Units: $0.10 per Unit; Warrant 0.15 cents.
Oct. 25 - Amends Terms of Private Placement Financing Unit: $0.09 per Unit (Warrant at $0.135 cents) for gross proceeds of up to $4M.Net proceeds are for working capital requirements and other general corporate purposes.
Nov. 1 - Saddened to Announce the Passing of Brian Groves
Nov. 2 - Announces Increase of Size of Private Placement: From $4M to $4,34M from the sale of up to 48,309,179 units at $0.09 per Unit (Warrant at $0.135 cents)
Nov. 8 - Announces Closing of $5M Private Placement: Approximately $3.56 million consisting of 39,561,110 units of the Company, including the full exercise of the option granted to the Agents, at a price of $0.09 per Unit (Warrant 0.13 cents) , with a non-brokered portion of the offering for gross proceeds of approximately $1.44 million consisting of 15,994,445 Units at the Offering Price, for aggregate gross proceeds to the Company of $5 million.
Dec. 1 - Appoints New Vice President of Exploration: Mr. Dale Brittliffe, P.Geo, to the position of VP Exploration. Mr. Brittliffe is an accomplished geologist with over 25 years experience in exploration for precious and base metals deposits in Canada, Mexico and Australia. He has extensive experience in early-stage to late-stage precious and base metals exploration in a variety of geological settings. Mr Brittliffe will be directly involved in the advancement of Kootenay's Mexican projects, most notably the Columba Silver Project in Chihuahua, Mexico.
Summary
Other than the four main properties (Columba, Copalto, Promontorio & La Cigarra), Kootenay Silver (KTN.V) also has four other properties that are referred to as Prospect Generator (i.e. Cervantes, La Mina, Male and Mecatona).
Most of the activity in the last period centered around Cervantes (Prospect Generator) and Columba (High Grade).
Cervantes
Results were reported in March, April, May and June 2022. July 2022, KTN sold its portion of the JV (35%) to Aztec.
“We believe this agreement is a win-win deal and that the best way to move Cervantes forward is with consolidated ownership of the project. Becoming Aztec’s largest shareholder and retaining an NSR provides Kootenay Silver the upside in the project, and allows Kootenay to monetize on one of its many assets.” - CEO of Kootenay Silver.
Aztec issued 10M shares at C$0.25 per share, and Kootenay retained a 0.5% Net Smelter Return Royalty (“NSR”).
The transaction was finalized in August 2022.
Following the closing of the Transaction, Kootenay owns a total of 10,680,000 Aztec Shares. Kootenay's ownership of Aztec Shares represents approximately 11.85% of the issued and outstanding Aztec Shares on an undiluted basis
As for La Mina, the only other prospect generator with a JV (Capstone Mining). Q3 2022 MD&A stated:
La Mina Project, Sonora State, Mexico
(100% Kootenay owned and optioned to Capstone Mining Corp.)
Company has been informed that Capstone is reviewing exploration of its Amapa target which contains the La Mina project. The Company continues to review and investigate the progression of its generative portfolio of properties.
Columba
The property consist of six primary veins: J&Z, I, F & Hanging Wall ,E, D, B. The 15,000 drill program for FY 2022 started in May 2022 but was subsequently paused due to a delay in assay results. Nonetheless, highlights are below:
D Vein; CDH-22-115; averaging 449 gpt silver over 11.3M from 81.1M downhole;
CDH-22-119; 1,395 gpt silver over 1.5M within 416 gpt silver over 7.74M.
F Vein; CDH-22-118; 107 gpt silver over 7.0M
D Vein: CDH-22-122: Interval from 194.1M down hole averages 574 gpt silver with 0.19% Pb and 0.66% zn over 3.9M.
F Vein: CDH-22-121: High grade of 2,330 gpt silver, 0.06% lead and 0.80% zinc across drill length of 1.63M;
September 8, 2022 (D Vein)
CDH-22-125: i) 34.45M of 540 gpt silver with 0.26 gpt gold, 0.37% lead and 1.56% zinc
CDH-22-128: 2.0M of 520 gpt silver within 20M of 136 gpt silver.
CDH-22-131: 4.86M of 311 gpt Silver within 150 gpt silver over 16M.
FY2022 drill results builds on three previous years of successful exploration.
'Drilling since 2019 has returned high grade silver hits over excellent widths from veins across the property and we are eager to further advance the project with an aggressively expanded drilling program in the near future. Having traced the vein system over an area of three-by-four kilometers and seeing continuity of high grades and widths in areas like the D Vein underscore for us the potential for 100 plus million ounces of silver" - KTN.V CEO
As for its other high grade property (Copalito), Q3 2022 MD&A stated:
During the three months ended September 30, 2022, the Company terminated the option agreement to acquire the Copalito project and recorded an impairment cost related to the carrying value of $3,980,948.
Finally, regarding Promontorio and La Cigarra, Q3 MD&A stated:
The Company has pursued the advancement of its Promontorio and La Cigarra Projects as well as establishing Generative Exploration Teams in Northwest Mexico. The Company continues to seek joint venture partners to option its generative exploration projects to conduct exploration and make option payments to the Company to obtain a right to an earn-in interest in the project.
Financing
March 2022, a $6.25M financing was closed; $4.78M was brokered and $1.47M was non-brokered. Terms were at $0.16 cents; warrants $0.22 cents. In October 2022, a second financing was announced initially for 4M ($0.10 cents; warrant $0.15 cents) which was amended ($0.09 cents; warrant $0.135 cents) and increased to 4.4M. The financing closed oversubscribed at $5M; $3.5M was brokered + $1.5M was non-brokered.
Kootenay raised more than $11M in the past year.
In short
In the last nine months, KTN.V has traded between $0.235 cents and $0.085 cents (52 week Low). Of late valuation has reverted from another financing driven mostly by an increase in silver prices from November 2022.
The sales of the JV portion of Cervantes to Aztec Minerals, as well as, the termination of the option agreement to acquire Copalito builds on the previous spin off of 80% of the exploration assets in Canada.
Clearly, Kootenay has re-evaluated its portfolio of properties and has chosen to start to monetize some assets. Furthermore, terminating the option agreement for Copalito project allows a further focus on Columba.
However, raising over $11M in FY2022 had an impact on the warrant profile. As of November 14 2022, more than 144M warrants were outstanding between $0.09 cents and $0.22 cents. As such, resistance is expected going forward.
The upcoming drill campaign results at Columba along with the ability to further monetize its other assets (Promontorio, La Cigarra) could be catalyst for Kootenay Silver in 2023. However, the level at which further financing take place is a consideration. The number of outstanding warrants is significant relative to the overall share count.
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