Kerr Mines set for big drill program at Copperstone

Kerr Mines Inc. [KER-TSX; KERMF-OTC; 7AZ1-FSE] said Thursday October 3 that it is planning for a 10,000-metre resource expansion drilling program at its Copperstone gold project in Arizona.

Set to commence in early 2020, the program marks the second phase of resource expansion drilling and follows a successful 5,000-metre phase one program.

Kerr recently sold its remaining properties in Northern Ontario to Orefinders Resources Inc. [ORX-TSXV; ORFD-ORFD] in a move that will allow Kerr to focus on its Copperstone Project.

The Copperstone Mine produced nearly 500,000 ounces of gold between 1987 and 1993 from an open pit operation. Significant remaining infrastructure from that period includes offices, maintenance shops laboratory building, permitted tailings facility, processing facility and mill.

The mine is located in La Paz County, Western Arizona, within the Walker Lane mineral belt. The property is accessible from Phoenix on Interstate 10 to Quartzsite and from Quartzsite on Route 95.

Gold in the area is commonly associated with hematite, chlorite, quartz, manganese oxide and copper oxide mineralization. In the case of Copperstone, the gold is not encapsulated in sulphides or silica, and the ores do not contain active carbon. This means the ores at Copperstone are not refractory.

Kerr recently announced the results of an independent pre-feasibility study and resource update for the project. The resource update is in compliance with NI 43-101 standards of disclosure.

Highlights from the pre-feasibility study, include average annual sales of 38,347 ounces of gold, initial capital of $22.7 million, and all-in sustaining cost of US$875 per gold ounce. The project hosts 175,093 ounces of contained gold in the proven and probable category.

On Thursday, the company said the second phase of drilling will continue to focus on resource expansion by way of underground core drilling in the D and C zones, and surface reverse circulation drilling in the B, A and Footwall zones.

Recent step-out drilling results as previously reported, including from drill hole 18-21-06 (16.8 metres of 40.0 g/t gold, including 3.0 metres of 98.26 g/t gold), returned significant values and will be followed up, the company said.

It said the next phase of drilling will focus on stepping out along strike and down dip beyond the previously defined mineralized domains. Results will be combined with those from the recently completed first phase to update the current resource estimate. “Based on drill results to date, the updated resource estimate is expected to reflect an increase in overall tonnage and grade,” the company said.

On November 6, 2018, the company said it had received approval for and signed a term sheet for a finance facility with Sprott Resource Lending (Collector) LP for up to US$25 million of senior secured project financing. The first phase of the financing was completed in November 2018, with the company receiving US$2 million under a senior redeemable convertible promissory note.

The company continues in discussions with Sprott regarding the balance of the Sprott project financing package. At the same time, the company said it is considering alternative forms of project financing that could further enhance project economics by reducing the effective cost of capital.

Shares of Kerr Mines eased 15% or $0.03 to 17 cents on Thursday. The 52-week range is 10.5 cents and 27 cents.