Pilot Gold Inc.
TSX : PLG

Pilot Gold Inc.

January 23, 2014 06:30 ET

Pilot Gold Reports Silver-Rich Maiden Resource Estimate for the KCD Deposit, TV Tower

996,000 Indicated and 351,000 Inferred gold-equivalent ounces support emerging TV Tower district

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 23, 2014) - Pilot Gold Inc. (TSX:PLG) ("Pilot Gold" or the "Company") is pleased to announce an initial independent resource estimate, with an effective date of November 6, 2013, for the Kucukdag (KCD) gold-silver-copper deposit, the first of several targets on the TV Tower property slated for intensive drilling, exploration and resource estimation.

KCD was divided into a lower gold zone and an overlying silver zone for reporting of the resource estimate, as gold and silver are found in largely spatially distinct zones.

"The KCD resource estimate is an important milestone in the evolution of TV Tower, and demonstrates the property's potential to host meaningful precious metals deposits," said Matt Lennox-King, President and CEO, Pilot Gold. "Over the 15 months that Pilot Gold has led TV Tower exploration, KCD has grown from a primarily gold system to a deposit hosting a sizeable silver resource that - on its own - is estimated to be Turkey's third largest silver deposit1. The KCD resource provides a solid foundation on which to advance TV Tower, along with the potentially game-changing copper-gold discovery at the nearby K2 target."

KCD will continue to progress through ongoing metallurgical testing and preliminary engineering. The Silver zone at KCD measures 600 x 600 metres at surface and remains open for expansion to the north and northwest.

Gold Zone Resource:

  • An Indicated Mineral Resource of 11.62 million tonnes at an average grade of 1.22 grams/tonne gold ("g/t Au") containing 456,000 ounces gold ("Au")
  • An Inferred Mineral Resource of 1.70 million tonnes at an average grade of 0.85 g/t Au containing 46,000 ounces gold

Silver Zone Resource:

  • An Indicated Mineral Resource of 11.44 million tonnes at an average grade of 46.7 g/t silver containing 17,182,000 ounces silver ("Ag")
  • An Inferred Mineral Resource of 9.08 million tonnes at an average grade of 52.7 g/t Ag containing 15,367,000 ounces silver

In total on a gold equivalence basis, the KCD resource estimate, effective November 6, 2013, delineates an Indicated Mineral Resource of 996,000 gold equivalent "AuEq" ounces (23.06 Mt at 1.34 g/t AuEq) and an Inferred Mineral Resource of 351,000 AuEq ounces (10.77 Mt at 1.01 g/t AuEq).

The Classified Mineral Resource estimate is quoted at a cut-off grade of 0.50 grams per tonne ("g/t") gold equivalent ("AuEq"). At a 0.50 g/t AuEq cut-off, the strip ratio is 1.47:1. Gold equivalence was calculated using a ratio of Au:Ag of $1200:$20, at 75% recovery and copper ("Cu") at $3/lb at 70% recovery.

At KCD, as is typical in high sulphidation systems, gold grades are highly variable and required careful and pragmatic treatment on interpolation. This estimate was completed by ordinary kriging and high grades were controlled by a combination of assay capping and range restriction above grade thresholds, by rock type. An uncapped estimate yields over 40% more gold than this capped estimate.

Table 2 (below) shows that at higher cut-off grades there is a modest reduction in the number of contained gold ounces while the average gold grade increases significantly. This reflects the high-grade nature of the gold endowment and the spatially discrete zones for gold and silver.

For example, using a 1.0 g/t AuEq cut-off in the Gold Zone, 86% of the gold resource ounces remain and provide:

  • an Indicated inventory of 393,000 ounces at an average grade of 2.03 g/t Au (6.02 million tonnes), and
  • an Inferred inventory of 35,000 ounces at an average grade of 1.45 g/t Au (0.74 million tonnes).

KCD Metallurgy:

Preliminary metallurgical testing by Hazen Research Inc., encompassing leach and concentrate tests of oxide and sulphide material, is still ongoing and very preliminary in nature. To date, this testing shows a wide range of recoveries by material type. Oxide and transition materials are amenable to conventional cyanide leaching. Oxide (sulfide sulfur less than 0.50%) gold resource extraction ranges from 70 to 97 percent and transitional material (sulfide sulfur greater than 0.50% and less than 3.0%) ranges from 40 to 90 percent. Oxide and transition silver resources (sulfide sulfur less than 3.0%) are more refractory than gold and cyanide extraction ranges from 40 to 80 percent. In general, sulphide material would be generally amenable to flotation to produce a rougher concentrate ranging from 80-94 percent recovery for Cu, 55 to 95 percent for Au and 60 to 75 percent for Ag, with an unoptimized range of first cleaner recovery, for the main Gold Zone, ranging from 60-90% for Cu, 60-87% for Au and 30-65% for Ag. Sulfide materials contain elevated levels of some undesirable elements such as arsenic and antimony (As, Sb).

The KCD deposit measures approximately 650 metres by 600 metres. It remains open to the north and northwest with an emerging oxide gold zone located above the silver zone. Located in the heart of the Biga District, the KCD deposit is located close to roads, power and deep-water ports.

For a graphic detailing the KCD block model, please, click:
http://www.pilotgold.com/sites/default/files/KCDResourceSection1405.pdf

Table 1: KCD Resource Summary at 0.5 g/t AuEq cut-off

Tonnes Au Ag Cu AuEq Metal (x103)
(x106) (g/t) (g/t) (%) (g/t) Au
(oz)
Ag
(oz)
Cu
(lb)
Gold Zone Indicated 11.62 1.22 8.8 0.23 1.74 456 3,298 59,470
Inferred 1.70 0.85 8.5 0.15 1.23 46 464 5,591
Silver Zone Indicated 11.44 0.04 46.7 0.08 0.94 14 17,182 19,388
Inferred 9.08 0.02 52.7 0.05 0.97 6 15,367 9,292
Total Indicated 23.06 0.63 27.6 0.16 1.34 470 20,479 78,859
Inferred 10.77 0.15 45.7 0.06 1.01 53 15,831 14,883

Table 2: KCD Gold Zone Mineral Inventory by AuEq Cut-off

INDICATED INFERRED
Cut-off
(g/t AuEq)
Tonnes
(x106)
Au
(g/t)
Metal
(x10
3)
Au(oz)
Tonnes
(x10
6)
Au
(g/t)
Metal
(x10
3)
Au(oz)
0.5 11.62 1.22 456 1.70 0.9 46
1.0 6.02 2.03 393 0.74 1.5 35
1.5 3.84 2.75 340 0.39 2.1 26
2.0 2.68 3.42 295 0.25 2.6 20

ESTIMATION METHODS

The resource estimate was completed by James N. Gray, P.Geo., of Advantage Geoservices Ltd., an Independent Qualified Person as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. Estimation methods are summarized below. Further details of the estimation methods and procedures will be available in a NI 43-101 technical report, to be co-authored and released by SRK Consulting (Canada) Inc. ("SRK"), which will be filed on SEDAR (www.sedar.com), within 45 days from the date of this release.

The resource estimate is based on results from 37,860 metres of drilling in 169 drill holes (160 core and nine reverse circulation). Quality-control data generated during the various drill programs conducted at KCD, were independently verified by SRK, as part of the project review. The resource model consists of a detailed three-dimensional geological model including lithological domains and structural domains derived from 25 metre-spaced sections. These, in turn, were used to constrain the interpolation of gold, silver and copper grades. Block grades were estimated by ordinary kriging. Blocks measure 10 x 10 x 5 metres. A total of 26,173 individual assay intervals averaging 1.4 metres in length were composited into a total of 12,981 composite intervals of 3 metre length. Gold, silver and copper assay data were reviewed statistically to determine appropriate grade capping levels by domain. A total of 71 gold assays, 48 silver assays and 33 copper assays were capped prior to compositing based on the evaluation of probability plots by major rock type. In addition to the capping of assay data, the impact of anomalously high gold values was controlled by restricting their range of influence in the estimation process.

For mineralization in the Gold Zone to be classified as Indicated the following criteria were used: two holes within 25 metres or three holes within 36 m. Indicated classification for the Silver Zone is based on a minimum of two holes within 35 metres or three holes within 50 metres. All other material within the pit shell was classified as Inferred. The mineral resources are confined within a Whittle pit shell generated by SRK to ensure reasonable prospects of economic extraction.

The pit shell was based on the following parameters: Au: $1,335/oz; Ag: $22/oz; Cu: $3.60/lb; Mining: $2.00/t; Milling, General and Administrative and sustaining CapEx: $15/t milled; Recovery: Au and Ag = 75%; Cu = 70%; Overall pit slope: 50°. At a 0.5 g/t AuEq cut-off, the strip ratio is 1.47:1. Tonnage estimates are based on 6,027 density measurements which were used to assign average values to lithologic domains of the block model. Bulk density for the main KCD gold mineralized rock unit averages 2.38 tonnes/m3.

Drill samples were assayed by AcmeLabs in Ankara, Turkey and Vancouver, B.C. for gold by Fire Assay of a 30 gram (1 assay ton) charge with ICP-ES or AAS finish, or if over 5.0 g/t were re-assayed and completed with a gravimetric finish. Metallic screen techniques were employed to assay a 12-metre interval in KCD-50. Approximately 500 grams of coarse reject material are pulverized and screened. Two splits of the fine fraction are assayed, as well as all material that does not pass through the screen (the coarse fraction). The final gold assay reported is a weighted average of the coarse and fine fractions. Ag and Cu were determined by aqua regia ICP-MS, with overlimits (greater than 100 ppm Ag or greater than 10,000 ppm Cu) completed by fire assay with gravimetric finish (Ag) or 4-acid digestion with ICP-ES (Cu). QA/QC included the insertion and continual monitoring of numerous standards and blanks into the sample stream, and the collection of duplicate samples at random intervals within each batch.

ABOUT TV TOWER

TV Tower is a joint venture between Pilot Gold (40%) and Teck Madencilik Sanayi Ticaret A.S. (60%), a Turkish subsidiary of Teck Resources Limited ("Teck"). Pilot Gold is project operator at TV Tower and can increase its interest in the project to 60%, through sole funding of exploration over a three-year period.

TV Tower is comprised of 9 contiguous Exploration-type and Operation-type licenses. The KCD Exploration license is due for conversion to Operation type in 2014, and will require an approved Environmental Impact Assessment ("EIA") as part of that process. The required form and content for an EIA in Turkey is currently evolving, and although the Company expects to submit an EIA in accordance with requirements, the changing process, delays in obtaining governmental approvals and the resolution of any potential claims and challenges to EIAs or other uncertainties may materially affect the potential development of the mineral resources described herein. The Ministry of Forest's approvals process to permit drilling is also evolving in Turkey delaying, in certain cases the receipt of permission to undertake drilling. Although permits are in place to conduct the currently planned 2014 program at the KCD target, permitting delays for new targets may impact additional drilling at KCD.

QUALIFIED PERSONS

James Gray of Advantage Geoservices Limited is the Company's designated Qualified Person for this news release within the meaning of NI 43-101 and has reviewed and validated that the technical, non-metallurgical information contained in the release is accurate. Mr. Gray is independent of Pilot Gold and is a "Qualified Person" as defined by NI 43-101. Moira Smith, Ph.D., P.Geo., Chief Geologist, Pilot Gold, is also the Company's designated Qualified Person for this news release within the meaning of NI 43-101 and has reviewed and verified that the geological and metallurgical information contained in the release is accurate.

Each of Dr. Smith and Mr. Gray has consented to the disclosure of such information and of their names in this release.

CAUTIONARY NOTES

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied. The mineral resource estimates referenced in this press release use the terms "Indicated Mineral Resources" and "Inferred Mineral Resources". While these terms are defined in and required by Canadian regulations (under NI 43-101), these terms are not recognized by the U.S. Securities and Exchange Commission ("SEC"). "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant "reserves" as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. Pilot Gold is not an SEC registered company.

TV Tower is an early stage exploration project and, except for the mineral resources at the KCD deposit, as summarized herein, does not contain any mineral resource estimates as defined by NI 43-101. The potential to define a mineral resource at the copper-gold K2 zone of TV Tower is conceptual in nature and there has been insufficient exploration to define a mineral resource thereat. It is uncertain if further exploration at K2 will yield a mineral resource.

About Pilot Gold:

Pilot Gold is a well-funded gold exploration company led by a proven technical team that continues to discover and define high-quality projects featuring strong grades, meaningful size and mining-friendly addresses. Our three key assets include interests in the TV Tower and Halilaga projects in Turkey, and the Kinsley Mountain project in Nevada, each of which has the ability to become a foundational asset. We also have a pipeline of projects characterized by large land positions and district-wide potential that can meet our growth needs for years to come.

1 Source SNL Metals & Mining

For more information, visit www.pilotgold.com.

Further information is available in the technical report entitled "Updated Technical Report on the TV Tower Exploration Property, Çanakkale, Western Turkey", effective July 15, 2012 and dated August 3, 2012, prepared by Paul Gribble, B.Sc., C.Eng., FIMMM, UK Manager, Geology of Tetra Tech WEI Inc., under Pilot Gold's Issuer Profile on SEDAR (www.sedar.com).

All statements in this press release, other than statements of historical fact, are "forward-looking information" with respect to Pilot Gold within the meaning of applicable securities laws, including statements that address resource potential quantity and/or grade of minerals, potential size of a mineralized zone, potential expansion of mineralization, the timing and results of future resource estmimates, timing of other exploration and development plans at the Company's mineral projects. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "planned", "expect", "project", "predict", "potential", "targeting", "intends", "believe", "potential", and similar expressions, or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "should", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management at the date the statements are made including, among others, assumptions about future prices of gold, copper, silver and other metal prices, currency exchange rates and interest rates, favourable operating conditions, political stability, obtaining governmental approvals and financing on time, obtaining renewals for existing licences and permits and obtaining required licences and permits, labour stability, stability in market conditions, availability of equipment, accuracy of any mineral resources and mineral reserves, successful resolution of disputes and anticipated costs and expenditures. Many assumptions are based on factors and events that are not within the control of Pilot Gold and there is no assurance they will prove to be correct.

Such forward-looking information, including, but not limited to, statements that address reserve or resource potential, potential quantity and/or grade of minerals, potential size of a mineralized zone, potential expansion of mineralization, the timing and results of future resource estimates, proposed timing of exploration and development plans at the Company's mineral projects, and the estimation of mineral reserves and resources involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of Pilot Gold to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information.

Such factors include, among others, risks related to the interpretation of results at certain of our exploration properties, reliance on technical information provided by our joint venture partners or other third parties as related to any of our exploration properties; changes in project parameters as plans continue to be refined; successfully completing the earn-in on the TV Tower project, including the ability to incur the minimum annual Expenditure Requirements to complete the earn-in agreement; current economic conditions; future prices of commodities; possible variations in grade or recovery rates; current and proposed exploration and development; the costs and timing of the development of new deposits; failure of equipment or processes to operate as anticipated; the failure of contracted parties to perform; uses of funds in general including future capital expenditures, exploration expenditures and other expenses for specific operations; the timing and success of exploration activities generally; achievement of identified tangible project milestones at TV Tower; delays in permitting; satisfaction of Turkish requirements relating to the periodic submissions of Environmental Impact Assessments; possible claims against the Company or its joint venture partners; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals, financing or in the completion of exploration as well as those factors discussed in the Annual Information Form for the year ended December 31, 2012, dated March 27, 2013 (the "AIF") in the section entitled "Risk Factors", under Pilot Gold's SEDAR profile at www.sedar.com.

Although Pilot Gold has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Pilot Gold disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. Accordingly, readers should not place undue reliance on forward-looking information. Further details relating to Pilot Gold are also available in our AIF, available under Pilot Gold's SEDAR profile at www.sedar.com.

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