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Should Gold Mining Investors Consider Kilgore Minerals

Kilgore's Idaho gold property has been explored since the 1930s when a gold discovery was made by the Blue Ledge Co. Nearly 50 claims were staked in 1982 and leased to a Kennecott subsidiary in the mid-1980s. Seven holes were drilled. By 1990, Placer Dome acquired the property and drilled 39 holes, more than 21,000 feet of drilling.

A Pegasus joint venture drilled another 23 holes, nearly 10,000 feet of drilling, by 1994. Echo Bay earned majority interest in the property, by 1996, after having spent $3.5 million drilling 122 holes for more than 82,000 feet.

In 1997, with the falling price of gold and troubles in the clean mining sector brought on by the Indonesia stock fraud, Bre-X Minerals, Echo Bay dropped its exploration ambitions on Kilgore – and shelved all of its exploration projects.

In 1998, Latitude Minerals continued a modest exploration of a little more than 4,000 feet. Near the bottom of the gold bear market, Kilgore Gold (a wholly-owned subsidiary of Kilgore Minerals) acquired 100 percent ownership of the property. A new round of preliminary exploration identified new gold targets.

By 2004, Kilgore Gold expanded the company's property holdings to 3,000 acres. Has this property been drilled like Swiss cheese or does Norman Burmeister know what he is doing? It's had nearly 200 diamond and reverse circulation drill holes, totaling more than 126,000 feet of drilling.

In an earlier interview with Burmeister, he told us, "I'm very excited about this project. It was a property that was very high on Echo Bay's list." Major companies have expended more than $8 million to define a modest, and possibly economic, resource. At least three different entities have established resource estimates on the Kilgore gold property.

In 1996, Placer Dome reported 14.1 million tons, grading 0.04 ounces/ton and with a cut-off grade of 0.015, for a deposit of 561,000 ounces of gold. A year later, Echo Bay released a sectional estimate report showing 18.7 million tons, grading 0.029, for a total of 534,959 ounces of gold.

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.