Otis Capital Signs Joint Venture Agreement on Kilgore Gold Project and Related Assets
June 10, 2008
VANCOUVER, B.C. - Otis Capital Corp. (“Otis” or the “Company”) is pleased to announce that it has entered into an agreement in principle dated June 4th, 2008 to earn up to a 75% joint venture interest in the Kilgore Gold Project, Clark County, Idaho, and two additional gold properties, Hai and Gold Bug located in Lemhi Counties, Idaho (the “Properties”), from Bayswater Uranium Corporation (“Bayswater”). The Kilgore land position is covered by 150 federal lode mining claims, Hai is covered by 7 claims, and Gold Bug is covered by 9 claims.
Kilgore comprises a large, 5 square mile, volcanic-hosted disseminated epithermal hot-spring gold system situated on the northern margin of the eastern Snake River Plain. Mineralization is of Pliocene age and is hosted within Miocene age lithic and crystal tuff on the margin of a caldera setting. Mineralization style and setting, host rock type and thickness, and overall size of the mineralizing system are analogous to those characterizing the Round Mountain, Nevada and McDonald Meadows, Montana multi-million ounce volcanic-hosted disseminated gold deposits.
Between 1983 and 1996, a total of 122,257 feet of drilling in 191 holes was conducted on the Kilgore deposit by Bear Creek, Placer Dome US, Pegasus Gold and Echo Bay Mines. The majority of this drilling, 82,897 feet in 122 holes, was performed by Echo Bay between 1994 and 1996. In 1996, Echo Bay completed a NI 43-101 non-compliant cross-sectional global resource estimate for the Kilgore deposit. This estimate comprises 706,000 ounces of gold in 22.582MM tons of material at an average grade of 0.031 opt Au (0.010 opt Au cutoff). Also in 1996, Placer Dome US, Echo Bay’s minorityposition joint venture partner on the property, estimated a NI 43-101 non-compliant resource of 561,000 ounces of gold contained in 14.112MM tons at an average grade of 0.040 opt Au (0.015 opt Au cutoff). These estimates, which are based on the above noted historic drilling, are mentioned for historic information and reference purposes only. A Qualified Person has not done sufficient work to classify the historical estimates as current mineral resources, the issuer is not treating the historical estimates as current mineral resources and the historical estimates should not be relied upon.
Within the Kilgore deposit is a higher-grade core comprising a series or set of northwest-trending structurally controlled bonanza-style feeder quartz vein zones that have only partially been drill tested. Some of the better drill intercepts associated with these zones include 90′ @ 1.091 opt Au (hole PK-56, 370′ - 460′), 75′ @ 0.222 opt Au (hole 94 EKR-89, 95′ - 175′), 45′ @ 0.331 opt Au (hole EKM-5, 267′ - 312′), and 65′ @ 0.243 opt Au (hole 94 EKR-86, 250’ - 315’). These zones represent a high priority exploration target for Otis. Deposit metallurgy is considered excellent based on favorable results of bottle roll and column leach tests performed in 1995 and 1996 by Hazen Research, Inc, Golden, Colorado on Echo Bay drill core and RC cuttings. All bottle roll tests resulted in greater than 90% gold extractability and showed that the mineralization is not refractory. Column leach tests indicate 94.3% recovery on oxidized material (-1/2″ crush size) and 86.9% on mixed/partially oxidized material (-1″ crush size), material types which together comprise over 85% of the deposit. As noted in a 2002 Rayner and Associates and Van Brunt NI 43-101 compliant report on the property, the extraction of 86.9% gold on mixed material after 75 days of leach time is excellent and suggests that even coarser crush sizes may also lend themselves to favorable extractability, thus enhancing deposit economics.
John R. Carden, Ph.D., P. Geo., a Qualified Person as defined by National Instrument Policy 43-101, is responsible for the technical information contained in this news release.
Otis can earn-in an initial 50% joint venture interest in the Properties as follows:
Payment of US$100,000 in cash and the issuance of 500,000 common shares upon receipt of TSX Venture Exchange approval of the transaction;
Payment of US$100,000 in cash, issuance of 400,000 common shares and incurring US$250,000 in exploration expenditures in Year One;
Issuance of 400,000 common shares and incurring US$350,000 in exploration expenditures in Year Two;
Issuance of 400,000 common shares and incurring US$500,000 in exploration expenditures inYear Three;
Issuance of 400,000 common shares and incurring US$900,000 in exploration expenditures inYear Four; and
Issuance of 400,000 common shares and incurring US$1,000,000 in exploration expenditures in Year Five.
Otis can increase its interest to 75% by issuing an additional 1,000,000 common shares and by completing an independent pre-feasibility study on the Kilgore Gold Project (one of the three projects being joint-ventured). In the event Otis does not exercise its right to earn the additional 25% interest, for a total of 75%, Bayswater then may elect to earn back a 10% interest, for a total interest of 60%, by expending $600,000 within the year following its election to exercise.
A 2.0% net smelter royalty (“NSR”) will be paid to Bayswater on production of gold from the Property. At any time, Otis will have right to purchase each one-fourth of the NSR for the sum of $500,000, up to a maximum of three-fourths (3/4), following which Bayswater would hold a 0.5% NSR.
Completion of the transaction is subject to TSX Venture Exchange acceptance and the approval of the Qualifying Transaction announced on April 22, 2008. There can be no assurance that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
ON BEHALF OF THE BOARD
“Craig T. Lindsay”
For additional information please contact:
Tel: 604.683.2507 Fax: 604.683.2506
# 350-409 Granville St., Vancouver, BC, V6C 1T2 T. 604.683.2507 F: 604.683.2506
THE TSX VENTURE EXCHANGE HAS NEITHER APPROVED OR DISSAPROVED OF THE CONTENTS HEREIN.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of 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.
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