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, Copalito, La Cigarra, Promontorio Mineral Belt).
Coverage was initiated June 2021. Below is an update.
June 24 - Signs Contract with TLASA OBRAS MINERAS to Rehabilitate Underground at Columba: To rehabilitate the workings of the F Vein. Initial work will assess the ability to gain access and begin dewatering the old mine.
Detailed mapping and sampling will occur concurrently with rehabilitation work after safe and secure access to the F Vein is established. This mapping and sampling will aid in accurate modeling and resource work for the F Vein.
Work is expected to take approximately 4 months to complete barring any major obstacles.
July 7 - Appoints Hans Smit, P.Geo. as Technical Advisor to Assist with Economic Evaluations: Working to update the mineral resource estimations and evaluate the potential economics for La Cigarra and La Negra (Promontorio).
Granted stock option to purchase up to 0.65M shares at $0.265 per common share for a period of five years.
July 15 - Hires Blue Coast Research Ltd. for Metallurgical Testing on La Negra Silver Mineralization: The purpose of the metallurgical work (the "Program") is to further investigate the best recovery process for La Negra mineralization.
Previous Metallurgical Testing: The work completed by KCA showed leach recoveries in bottle roll tests ranging from 70 to 90% with an average of 81% testing head grades ranging from 62 to 242 gpt silver. Rougher floatation tests indicated recoveries of 85 to 98% with head grades testing 66 to 143 gpt silver.
Aug. 20 -Announces Spin-Out of Canadian Assets: Announce that its board of directors has unanimously approved a spin-out of 80% of the Company's Canadian exploration assets, to its shareholders by way of a share capital reorganization effected through a statutory plan of arrangement.
Highlights CDH-21-101; 459 gpt silver over 1.6M including 1,190 gpt silver over 0.5M and 127 gpt silver over 1.1M.
Phase 3 drilling is complete with 12 holes from the JZ Trap area, B and D Veins that remain to be reported.
Sep. 20 -Announces Results of Annual and Special Meeting: All resolutions have passed including Spinco.
Oct. 6 - Reports Best Columba Intercept To Date: Notably 2,035 gpt silver over 6 meters within wider intervals of 805 gpt silver over 17 meters and 333 gpt silver over 44 meters featuring a project high 9,840 gpt silver over 0.92 meters.
Results for 6 additional drill holes from the Columba High-Grade Silver Project in Chihuahua State, Mexico. These holes, CDH-21-102 to CDH-21-107, test across the J-Z trap zone some 700 meters east of the F vein
Oct. 14 -Expands Land Position at Columba High-Grade Silver Project, Mexico: The new area of interest will now expand from just under 1,000 hectares to more than 10,000 hectares surrounding the Columba project.
Oct. 27 -Announces Effective Date of Spin-Out Transaction: Intends to make the previously announced spin-out transaction of the Company effective at 12:01 a.m. (Vancouver time) on October 29, 2021 (the "Effective Date").
Pursuant to the Arrangement, the holders of common shares of the Company on October 28, 2021 will receive one new common share of the Company (Kootenay Silver Share) and 0.04 common shares of Spinco (Spinco Share).
Nov. 3 - Reports Second Plus 12,000 Gram-Meter Silver Intercept at Columba High Grade Silver Project: Highlights Include: 453 gpt Silver over 29.9 Meters including 650 gpt Silver over 17.8 Meters and 932 gpt Silver over 6 Meters:
Drill Highlights from holes CDH-21-108 to CDH-21-110 are as follows:
BDH 21-110:453 gpt silver over 29.9 meters; including 650 gpt silver over 17.8 meters; including 932 gpt silver over 6 meters; Intercept includes a high of 1,915 gpt silver over 0.85 meters
BDH 21-109:193 gpt silver over 14.56 meters; including 294 gpt silver over 7.11 meters; including 476 gpt silver over 2.31 meters; Intercept includes a high of 592 gpt silver over 0.75 meters
BDH 21-108: 98 gpt silver over 77 meters; including 328 gpt silver over 11 meters; including 504 gpt silver over 5.9M Intercept includes a high of 1,100 gpt silver over 1.0Mt; All in mineralized zone averaging 57 gpt silver over 166M.
"The large strike continuity of the veins and mineralization indicate to us Copalito has good potential for the discovery of a large resource. Also impressive are the high gold, lead and zinc grades in numerous holes that add to this potential."
- James McDonald, President and CEO remarked
Dec. 16 - Final 2021 Drill Holes On Columba High-Grade Silver Project: Drill results from the final three holes of the 2021 Phase 3 program on the Columba High-Grade Silver Project (the "Property") in Chihuahua State, Mexico.
These last 3 holes tested the B Vein, located in the southwest portion of the Property. Previous results from the B Vein were released on January 20, 2021 (Phase 2 Drill program). The Phase 3 program drilled a total of 5,782 meters.
CDH-21-111; 105 gpt silver over 5.29 meters including;190 gpt silver over 2.15 meters.
CDH-21-112; 219 gpt silver over 29.5 meters including; 434 gpt silver over 13.05 meters
including;1,050 gpt silver over 2 meters within 667 gpt silver over 7.05 meters.
CDH-21-113; 156 gpt silver over 3.5 meters; and 628 gpt silver over 1.1 meters within 393 gpt silver over 2.05 meters.
Jan. 27 - Aztec JV Completes First 14 Holes of Phase 2 Drill Program at the Cervantes Gold-Copper Property: Totaling 2,810.6 metres (m) of the current 5,000 m. Drill samples were shipped to the Bureau Veritas Minerals laboratory in Hermosillo for geochemical analysis and results are anticipated in the next several weeks.
Feb. 9 - $4.0 Million Private Placement Financing of Units: Agreement with Research Capital Corporation, as sole agent and sole bookrunner for private placement at $0.16 per Unit (Warrants $0.22 cents) for up to $4,000,000.
Feb. 16 - Announces Aztec - Kootenay JV results at the Cervantes Property: California Zone Drill Highlights: 1.1 gpt Au over 88.41 m; Including 1.56 gpt Au over 54.9 m with 2.8 gpt Au over 24.4 meter.
"The current drill program on the Cervantes project is off to a great start with the best hole drilled to date. We are looking forward to the remainder of the drill holes results." - James McDonald President and CEO of Kootenay Silver says
Feb. 23 - Reports Aztec - Kootenay JV at Cervantes Project, Sonora, Mexico: The best of three drill holes is CAL22-004 which intercepted: 167.2 meters grading 1.002 gpt gold including 24.4 meters grading 4.247 gpt gold.
The JV has now completed its Phase 2 Reverse circulation (RC) program of 26 holes, totaling 4,649 meters.
Again, 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, Copalito, La Cigarra, Promontorio Mineral Belt).
As a reminder Columba (Silver) and Copalto (Silver-Gold) are considered high grade discoveries while LaCigara and Promonto Mineral belt are considered to be properties with a resources base. Below is an update for each property.
The property consist of six primary veins: J&Z, I, F & Hanging Wall,E, D, B. Overall KTN.V completed three drill program in the past three years. Specifically, 29 holes (>5,000m) in 2021 and 84 holes (>15,900m) in both 2020 & 2019.
June 2021, KTN.V reported initiating the rehabilitation of F Veins providing access to the old mine and dewatering it. In addition, sampling and mapping were planned for modeling and resource work which is expected to take 4 months,
October 2021, Kootenay also expanded its land position to 10,000 hectares surrounding Columba Project
Four sets of results were provided in the last period. Below are the salient holes for each set of results.
CDH-21-101; 459 gpt silver over 1.6M including 1,190 gpt silver over 0.5M and 127 gpt silver over 1.1M.
Hole CDH-21-103; 2,035 gpt silver over 6 meters within wider intervals of 805 gpt silver over 17 meters and 333 gpt silver over 44 meters featuring a project high 9,840 gpt silver over 0.92 meters.
BDH 21-110: 453 gpt silver over 29.9 meters; including 650 gpt silver over 17.8 meters; including 932 gpt silver over 6 meters; Intercept includes a high of 1,915 gpt silver over 0.85 meters
CDH-21-112; 219 gpt silver over 29.5 meters including; 434 gpt silver over 13.05 meters including;1,050 gpt silver over 2 meters within 667 gpt silver over 7.05 meters.
Overall, results continue to show that Columba has excellent grades accross multiple veins.
The property consist of five primary veins: Pilar, Cobriza, Chente, Agua, 5 Senores, La Chiva. Overall KTN.V completed two drill programs in the past two years. Specifically, 40 holes (3,500m) in 2021 and 40 holes (4,000m) in 2020.
One set of results were provided (December 2021) with more results pending. Below are salient holes for each veins.
BDH-20-055; 276 gpt silver Eq. over 23 meters (2 gpt gold, 125 gpt silver and 0.92% lead plus zinc);
CDH-21-80; 422.78 gpt silver. Eq. over 0.43 meters (133 gpt silver, 0.69 gpt gold and 10.63% lead plus zinc)
BDH-20-051; 289.62 gpt silver Eq. over 1.40 meters (2.95 gpt gold and 0.26% lead plus zinc). BDH-20-052; 34.38 gpt silver Eq. over 3.30 meters 116.12 gpt silver Eq. (114.4 gpt silver, 0.02 gpt gold and 0.14% lead plus zinc) over 5.38 meters
BDH-21-057; 118.14 gpt Silver Eq. over 6.33 meters consisting (106.5 gpt silver, 0.059 gpt gold, and 0.33% lead plus zinc).; BDH-21-058; 47.83 gpt silver Eq. over 12 meters (40.8 gpt silver, 0.070 gpt gold, and 0.11% lead plus zinc);
CDH-21-74; 5.3 meters of 172.13 gpt silver Eq. (185 gpt silver, 1.1 gpt gold and 3.57 % lead plus zinc).
CDH-21-79; 4.45 meters of 176.32 gpt silver Eq. (36 gpt silver, 1.05 gpt gold and 3.21% lead plus zinc).
Overall, all veins have exhibited excellent grades and potential for the future including gold, lead and zinc grades.
Working to establish initial mineral resource calculations. Hans Smith was hired to update Mineral Resource Estimation and PEA (La Cigarra and La Negra). Blue Coast Research was hired for Mettallurgical Testing (La Negra).
Has produced over 800M Oz of silver in the past. According to KTN.V, a Geological Modeling is underway.
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).
Each of these are aimed to be options to another partner in the form of a JV. Cervantes (Aztec Minerals) and Lamina (Capstone Mining) already have a Joint Venture (JV) partner. Both Male and Mecatona are available for optioning.
Encompasses a Joint Venturewith Aztec Minerals (65%) / KTN (35%). January 2022, KTN.V reported that Aztec Minerals completed the first 14 holes of Phase 2 Drill Program totaling 2,810.6 metres (m) of the current 5,000 m. February 2022, Results were provided. CAL22-004; 167.2 meters grading 1.002 gpt gold including 24.4 meters grading 4.247 gpt gold.
August 2021, 80% of the Company interest of its exploration assets located in Canada were proposed to be spun off.
"We believe the spin-out of the Canadian Assets will be very beneficial to shareholders. Among other benefits, it will unlock the value of the Canadian Assets by allowing it to be developed separately, by a skilled and experienced management team, and it will allow our shareholders to own shares in two companies." -James McDonald, Kootenay’s President and CEO
The transaction was completed in late October 2021.
Early this month, (February 2022) a $4.0M Private Placement at $0.16 per Unit (Warrants $0.22 cents) was proposed. This was adjusted upward to $5.0M then to $5.4M. This effort is still ongoing.
A total of 0.65M stock options at $0.265 cents were granted in July 2021.
In the last eight months, KTN.V has traded between $0.30 cents and $0.155 cents. Of late valuation has reverted from a 52 week low (financing) while silver prices have been trending up in the past month mostly due to geo-political events.
The Spin off of 80% of the exploration assets in Canada aimed at unlocking value was very much welcomed. However, some may argue that more of this may be needed in future with the Mexico assets.
Kootenay has multiple projects which are at different stages of maturity. This should favor a higher level of valuation given that the likelihood of success with six to ten properties would be higher than one or two, typically.
Columba, Copalito (Discoveries), Promontorio, La Cigarra (Resource), and Cervantes, La Mina, Male and Mecatona (JV).
Overall, the drill results reported at Columba and Copalito show continuity and are promising. Incidentally, KTN.V reports in its investor presentation (s.26) that Columba is its "Primary Focus" for FY 2022 with a 15,000 meter drill program. Otherwise, more geophysical surveys are planned for Copalito to assist in generating further drill targets.
At La Cigarra, KTN.V intends to build a new geological model along with advancing and updates resources. For Promontorio, the initial mineral resource calculations are underway to update existing Resource Estimation and PEA along with metallurgical testing (La Negra). Finally, Cervantes (JV with Aztec Minerals 65%; KTN.V 35%) is set for more drill results. Hence, KTN.V has at least five properties with potential catalyst in FY 2022.
In this context, financing at a near 52 week low ($0.16 cents vs. $0.155 cents) is of poor taste given that KTN.V has been trending down from a peak of $0.25 cents in the last six week prior. Certainly, timing could have been better planned!
KTN.V has over 52% of its share ownership from a select group: Eric Sprott (9%), Condire (9%), Management & Directors (4%) + Institutions (30%). As such, the optics of the last financing reflects badly. It suggests that KTN.V might favor the interests of certain groups vs. all of its shareholders.
Moreover, the warrant of this financing ($0.22 cents) add to an existing 16M that are set to expire in August 2022.
Kootenay continues to be undervalued. However, at this juncture, valuation is very much a function of the terms of financing which is significantly at lower price than most of its peers. In essence, it is very much self-inflicted.
The market will be on watch for strong results from the Columba and Cervantes Drill Programs along with a resource estimate at La Negra in 2022. Hopefully, it will be the year that Kootenay gets back to a fair valuation status.
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