However, the only resource estimate approved by Canadian regulators (Kilgore trades on the Toronto Venture Exchange) is the Van Brunt/Rayner Technical Report, filed in October 2002, and which is compliant with National Instrument 43-101 (NI 43-101). This report showed about 7 million tons trading 0.031, with a 0.01 cut-off grade, for an indicated resource of 218,000 ounces of gold. The report showed an inferred resource, adding another 269,000 ounces of gold. This is close enough to the Placer Dome and Echo Bay estimates, but it is unlikely to be mineable unless Kilgore finds more gold.

During the 2004 drilling program, Norm Burmeister got the sniff of what might make this an attractive acquisition by a major gold company. “We are looking for a high grade feeder system,” Burmeister told us. In the previous drilling program, Burmeister got and encouraging intercept of 0.465 ounce per ton gold over 10 feet within a broader 170-foot zone of low-grade mineralization at 0.04 ounces per ton. On Tuesday, Kilgore Gold made its announcement it would commence its chase to find out if, indeed, there is an elephant discovery of gold on its property.

In an email to us, Norm Burmeister wrote, “The high-grade zone, called the “Elsa Zone”, was intersected at a core depth of 410 feet. It is important to note that this hole was drilled in an area that had never been drilled some 4650 feet from the resource area.” The Elsa Zone is located within the Dog Bone Ridge target area. Burmeister also pointed out, “There are no known workings in the area, and there is no known gold mineralization at the surface, thus making the Elsa Zone a true ‘blind discovery.’ Kilgore’s blind discovery in the Elsa Zone proves there may be some prospects in the very large Dog Bone Ridge target area.

Rationale

The purpose of the 2006 drilling program, Burmeister told us, is to determine “the true potential of the Dog Bone Ridge area target.” Niel Prenn, a professional engineer with Mine Development Associates of Reno, Nevada, completed a scoping level update of Echo Bay’s 1996 assessment of the project. He wrote, “The project appears to have reasonably attractive economics if the ‘potentially mineable material’ can be doubled at $375/ounce gold price.” Prenn saw the Kilgore project as one with a “large epithermal gold deposit.” This confirmed an earlier geological report by Stanton W. Caddey, who wrote in an October 2003 report, “Exploration potential at the Kilgore property for more than doubling the present gold resource with further exploration drilling is regarded as excellent.”

The encouraging drill hole in 2004 helped move this project to the current drilling program. “We believe the Dog Bone Ridge target area represents the core of the hydrothermal system that has generated the known low grade resource at Kilgore,” Burmeister speculated. That’s why he is drilling the Dog Bone Ridge target area. The first holes will be offsets to the promising 2004 discovery hole. “We don’t know the direction or dipping,” said Burmeister, asking “Which way does it go?” The first hole will help Burmeister orient the direction on the north side of the target. Burmeister told us, “The knowledge we hope to gain from the Elsa Zone offsets will be important in efficiently testing other Elsa ‘look-a-like’ definitive targets within the Dog Bone Ridge target area.”

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