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Review of Kilgore 2015 - 2016 Aspen Corridor Drill Intercepts; Emerging Zone Potential Host to Significant New Gold Mineralization


February 9, 2017

Vancouver, B.C. – Otis Gold Corp. (“Otis” or the “Company”) is pleased to present an explanation of significant Tertiary sill- and Cretaceous Aspen Formation-hosted gold intercepts drilled during 2015–2016 at its Kilgore Gold Project, Clark County, ID.  These gold intercepts, which have previously been reported, define a significant, previously unrecognized and under-explored target that collectively delineate a broad zone of gold mineralization, now known as the “Aspen Corridor” (see Aspen Corridor map), which underlies the existing Kilgore Deposit.  Dimensions of the corridor, as currently defined by the drill results, are approximately 460-metres-long by 120-metres-wide, and from 60- to 135-metres-thick. Mineralization remains open to the northwest and southeast and at the bottom of many holes. These holes encountered some of the highest gold grades and thickest gold intercepts discovered at Kilgore to date.

The discovery of this new class of mineralization was subsequent to the discovery of the gold within the current resource estimate for the Kilgore Deposit, the bulk of which is hosted in the overlying Tertiary volcanic rocks. In the 2015 and 2016 drill programs, 34 of 37 holes drilled into the target encountered significant gold mineralization for an overall success rate of 92%.  Based upon the results of this drilling, further exploration along the mineralized Aspen Corridor is planned for 2017.

The Aspen Formation sediment-hosted gold mineralization represents a emerging target on the edge of the Kilgore Volcanic Caldera complex similar to the setting for gold mineralization at the Round Mountain Mine located on the edge of another volcanic caldera complex in Nye County, Nevada and which has produced over 16 million ounces of gold to date.  The Aspen mineralization is analogous to Type IV ore at Round Mountain that underlies the caldera-related volcanic pile.  The Tertiary Sill unit directly lies between the overlying volcanic rocks (which host the majority of the existing Kilgore Deposit) and the aforementioned Aspen Formation.

Noteworthy Aspen Corridor intercepts from Otis’ 2015 drilling include:

  • 47.2 m of 2.41 g/t Au in hole 15 OKR-304 (stopped in mineralization)
  • 50.3 m of 4.24 g/t Au in hole 15 OKR-308 (stopped in mineralization)
  • 94.5 m of 4.21 g/t Au in hole 15 OKR-309 (stopped in mineralization)

Noteworthy Aspen Corridor intercepts from Otis’ 2016 drilling include:

  • 30.5 m of 5.37 g/t Au in hole 16 OKR-315 (stopped in mineralization)
  • 120.4 m of 1.55 g/t Au in hole 16 OKR-318
  • 85.4 m of 2.50 g/t Au in hole 16 OKR-338
  • 69.1 m of 2.07 g/t Au in hole 16 OKR-348 (stopped in mineralization)
  • 120.4 m of 1.18 g/t Au in hole 16 OKC-349
  • 128.0 m of 1.79 g/t Au in hole 16 OKC-353
  • 80.8 m of 1.87 g/t Au in hole 16 OKC-354

Detailed information relating to these intercepts can be found in Table 1 below and is further detailed in Otis Gold news releases (see News Release dated January 14, 2016 for all 2015 drill results and News Releases dated September 26, 2016, October 31, 2016, November 29, 2016, and January 19, 2017 for 2016 drill results). Note that Table 1 only presents Tertiary Sill and Aspen Formation intercepts (also referred to as “Sill/Aspen”), however many holes listed also contain gold intercepts in the overlying caldera-related volcanic rocks that comprise the majority of the Kilgore Deposit.

Table 1.  Significant 2015 and 2016 Aspen Corridor Intercepts

Hole Number Hole
Type
TD
(m)
Azimuth/
Angle
From - To
(m)
Intercept
(m)
Au Grade
(g/t)
Primary Host Rock Unit(s)
15 OKR-296 RC 198.1 144˚/-70˚ 16.8 - 117.3
161.5 - 173.7
100.5
12.2
0.60
0.63
Tertiary Sill
Aspen
15 OKR-302 RC 235.6 50˚/-75˚ 161.5 - 231.6 70.1 0.60 Tertiary Sill - Aspen
15 OKR-303 RC 187.3 -/-90˚ 61.0 - 85.3 24.4 1.30 Tertiary Sill
15 OKR-304 RC 222.5 -/-90˚ 166.1 - 213.4 47.2 2.41 Aspen – Tertiary Sill
15 OKR-307 RC 243.8 230˚/-75˚ 167.6 - 195.1 27.4 0.83 Tertiary Sill
15 OKR-308 RC 234.7 -/-90˚ 184.4 - 234.7 50.3 4.241 Aspen – Tertiary Sill
(Bottomed in mineralization)
15 OKR-309 RC 213.4 50˚/-65˚ 118.9 - 213.4 94.5 4.212 Aspen – Sill – Dike
(Bottomed in mineralization)
15 OKR-310 RC 219.5 -/-90˚ 195.1 - 219.5 24.4 0.94 Aspen
(Bottomed in mineralization)
16 OKR-315 RC 126.5 -/-90˚ 96.0 - 126.5 30.5 5.37 3 Tertiary Sill - Aspen
16 OKR-316 RC 182.9 50˚/-77˚ 125.0 - 182.9 57.9 0.85 Aspen                         (Bottomed in mineralization)
16 OKR-317 RC 182.9 50˚/-75˚ 120.4 - 181.4 61.0 1.03 Aspen – Tertiary Sill
(Bottomed in mineralization)
16 OKR-318 RC 228.6 230˚/-80˚ 93.0 - 213.4  120.4 1.554 Tertiary Sill and Aspen
  16 OKR-319 RC 259.0 -/-90˚ 195.1 - 227.1
233.2 - 259.1
32.0
25.9
0.40
0.51
Sill and Aspen
(Bottomed in mineralization)
16 OKR-320 RC 283.5 -/-90˚ 266.7 - 275.8 9.1 0.57 Aspen
  16 OKR-323 RC 173.7 -/-90˚ 74.7 - 85.3
108.2 - 121.9
132.6 - 140.2
10.7
13.7
7.6
1.45
0.53
0.96
All in Aspen
16 OKR-324 RC 182.9 -/-90˚ 93.0 - 158.5
181.4 - 182.9
65.5
1.5
0.69
4.00
All in Aspen                      (Hole ended in 4.00 g/t Au @ 182.9m)
16 OKR-325 RC 219.5 -/-90˚ 96.0 - 117.3
138.7 – 185.9
21.3
47.2
1.27
0.81
All in Aspen
16 OKC-326 Core 331.6 -/-90˚ 89.9 – 105.2
112.8 – 125.0
129.5 – 146.3
160.0 – 198.1
15.2
12.2
16.8
38.1
0.68
0.51
0.53
0.81
All in Aspen
16 OKC-332 Core 335.5 50˚/-70˚ 285.0 – 319.4 34.4 1.28 Aspen
16 OKC-334 Core 260.6 50˚/-70˚     102.1 – 158.0
185.9 – 208.8
55.9
22.9
0.86
3.13
Tertiary Sill
Aspen
16 OKC-335 Core 327.7 50˚/-80˚ 102.1 – 153.9 51.8 0.75 Tertiary Sill - Aspen
16 OKR-338 RC 198.1 50˚/-70˚ 45.7 – 131.1
176.8 – 195.1
85.4
18.3
2.505
0.83
Tertiary Sill and Aspen
Aspen
16 OKR-339 RC 182.9 50˚/-75˚ 96.0-114.3
153.9=158.5
18.3
4.6
0.75
0.95
Tertiary Sill
Aspen
16 OKR-342 RC 213.4 -/-90˚ 189.0 – 205.7 16.7 0.91 Aspen
16 OKC-344 Core 298.7 50˚/-65˚ 108.2 – 171.3 63.1 0.66 Tertiary Sill - Aspen
16 OKC-345 Core 299.6 50˚/-70˚ 93.0 – 157.0
225.6 – 231.6
64.0
6.1
1.08
2.11
Breccia - Aspen
Aspen
16 OKR-346 RC 243.8 230˚/-72˚ 77.7 – 109.7
134.1 – 138.7
172.2 – 189.0
32.0
4.6
16.8
0.89
0.57
0.79
Aspen – Tertiary Sill
Aspen
Aspen
16 OKR-347 RC 222.5 230˚/-61˚ 120.4 – 170.7 50.3 0.97 Aspen
16 OKR-3486 RC 174.3 230˚/-75˚ 80.8 – 97.5
105.2 – 174.3
16.7
69.1
0.43
2.077
Tertiary Sill
Aspen
(Bottomed in mineralization)
16 OKC-349 Core 322.5 50˚/-80˚ 147.8 – 268.2 120.4 1.18 Aspen – Tertiary Sill
16 OKC-350 Core 331.6 50˚/-80˚ 196.6 – 207.3
216.4 – 221.0
245.4 – 263.7
10.7
4.6
18.3
0.54
0.68
0.46
Tertiary Sill -Aspen
Aspen
Aspen
16 OK-352 Core 304.8 50˚/-80˚ 150.9 - 186.8
195.1 – 219.5
225.6 – 300.2
35.9
24.4
74.6
1.12
0.43
1.01
Tertiary Sill - Aspen
Aspen
Aspen
16 ORC-353 Core 304.8 -/-90˚ 164.6 – 292.6 128.0 1.798 Tertiary Sill - Aspen
16 OKC-354 Core 334.7 50˚/-80˚ 175.3 – 202.7
240.8 – 321.6
7.4
80.8
1.19
1.879
Tertiary Sill -  Aspen
Aspen

Notes:

  • Includes 9.1 m @ 12.42 g/t Au
  • Includes 13.7 m @ 13.46 g/t Au
  • Includes 13.7 m @ 8.71 g/t Au.  This hole has been capped at 34.25 g/t Au (1.0 oz/T)
  • Includes 3.0 m @ 19.05 g/t Au
  • Includes 6.1 m  @ 12.63 g/t Au
  • Hole 16 OKR-348 was lost in Aspen Sandstone in rock containing 5.63 g/t Au
  • Includes 3.0 m @ 14.85 g/t Au
  • Includes 7.6 m @ 11.96 g/t Au
  • Includes 7.6 m @ 10.32 g/t Au
  • True widths are estimated at between 80% and 100% of the drilled interval based on their estimated dip, association with diking, orientation of sedimentary bedding and continuity of mineralization between drill holes.

Aspen Corridor Cross Section

A representative cross section (here), the location of which is denoted on the accompanying Aspen Corridor drill hole location map, has been prepared to help the reader better understand the significance of the Aspen Corridor to the Kilgore Deposit and should be reviewed in conjunction with this release.

Highlights of 2015 and 2016 Aspen Corridor Drill Programs

  • For the 2015 drilling, 8 of the 9 holes targeting the Sill/Aspen package intercepted mineralization.
  • For the 2016 drilling, 26 of the 28 holes targeting the Sill/Aspen package intercepted mineralization.
  • For the 2015-2016 combined drilling, 34 of 37 holes drilled into the Sill/Aspen target encountered significant mineralization for an overall success rate of 92%.
  • Results of Otis’ 2015-2016 drill campaigns support the premise that gold mineralization in the Aspen Formation is more extensive than indicated by previous drill testing and appears to lie along a northwesterly-trending belt or corridor in the northern half of the Kilgore Deposit, much of which remains open for further drilling.
  • Results of drill holes targeting the basement Aspen Formation host rocks continue to reveal the presence of significant open-ended mineralization that is typically higher-grade and displays thicker mineralized intercepts than those comprising the current bulk of the Kilgore Deposit in the overlying volcanic host rocks.
  • Reported intercepts in basement Aspen Formation rocks demonstrate that mineralization exists to depths of up to 300-metres below the surface of the Kilgore Deposit, with some still open at depth.
  • The Tertiary intrusive sill, which directly overlies the Aspen Formation and locally intrudes the upper portion of it, is also a host to significant mineralization and the extensive contact between the two rock units is an important site for locating additional mineralization in the basement.  Significant intercepts can and do exist in both the Aspen Formation and the sill, and in many cases straddle the contact between them to occur continuously throughout both units.
  • Most of the sill- and Aspen-hosted mineralization in Table 1 is relatively shallow (115- to 130-metres deep) as it occurs in an up-faulted horst block in the northwest half of the Aspen Corridor and is up-faulted and closer to the surface in the southeastern half of the Corridor.

2015 and 2016 Drill Program Background

In 2015, nine holes were drilled in northern end of the Kilgore Deposit to test for potential mineralization in the sill and Aspen Formation sedimentary rocks underlying the main Tertiary volcanic host rock package (see January 14, 2016 News Release). Eight of the nine holes encountered significant mineralization. In 2016, a 40-hole program was designed to follow-up on the success of the 2015 program. Drill sites were chosen from an updated set of geologic cross sections and long sections containing all historic results through 2015 to further test the target. Based on these sections, drill holes were selected to test mineralization at depth in the Aspen Formation and to infill and define the limits of the current resource. Selected hole locations targeting the Aspen Formation at depth were focused along the Main Road, Segment 1 Road, North Road and “B” Road areas (the location of the previously mentioned drilling completed in 2015).

All analytical work was performed by ALS Chemex Labs located in Reno, Nevada and Vancouver, British Columbia that have quality management system certification and technical capability accreditation. A 50-gram pulp of all samples was assayed for gold by Fire Assay/AA finish methods. Certified reference materials, duplicates, and blanks were inserted into the sample stream for quality control.  Intercepts reported in Table 1 are calculated using a 0.25 g/t Au cutoff grade and may include a few internal waste intervals less than this cutoff. The RC drilling reported in this release was conducted by O’Keefe Drilling, Inc., Butte, Montana, employing a Foremost 650 Reverse Circulation drill rig outfitted with a circulating wet splitter. The core drilling was conducted by Timberline Drilling of Hayden, Idaho employing two rigs, a DE-140 NQ core rig and an LF-90 HQ core rig.  The Qualified Person under National Instrument (NI 43–101) Standards of Disclosure for Mineral Projects for this News Release is Paul D. Gray, P. Geo, who has reviewed and approved its technical content.

About the Kilgore Gold Project

The Kilgore Gold Project contains a current NI 43-101 (dated September 12, 2012) Indicated Resource of 520,000 ounces (oz) Au in 27.4 million tonnes at a grade of 0.59 g/t Au and an Inferred Resource of 300,000 oz Au in 20.2 million tonnes at a grade of 0.46 g/t Au (the “Kilgore Deposit”).  The Kilgore Deposit is part of an extensive low-sulfidation quartz-adularia epithermal hydrothermal system hosted in Tertiary volcanic rocks and Aspen Formation calcareous siltstone, shale, and sandstone of Late Cretaceous age. Gold mineralization is of the disseminated, bulk-tonnage type similar to that comprising the classic volcanic-hosted gold deposits at Round Mountain, Nevada and McDonald Meadows, Montana.  The Kilgore Deposit exhibits attractive metallurgy with excellent gold recovery averaging greater than 80% at 1.5” crush size based on column leach test results (see Otis News Release dated June 5, 2012). A new NI 43-101 compliant resource estimate is planned for this year to include the newly recognized Sill/Aspen mineralization.

About the Company

Otis is a resource company focused on the acquisition, exploration, and development of precious metal deposits in Idaho, USA. Otis is currently developing its flagship property, the Kilgore Gold Project, located in Clark County, Idaho.

ON BEHALF OF THE BOARD

“Craig T. Lindsay”
President and CEO
Tel: 604.683.2507
E-mail: craig@otisgold.com

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The forward-looking information contained in this press release is made as of the date hereof, and Otis undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.  This news release does not constitute an offer to sell or a solicitation of an offer to sell any securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.