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Overview

The Kilgore Project consists of 488 federal lode mining claims and one Idaho State Land Permit totaling 9,080 acres (36.7 km2) located on US Forest Service land in southeastern Idaho within Clark County, 60 miles north of Idaho Falls. The project is accessible by road approximately 32 miles northeast of the town of Dubois and Interstate Highway 15.

The project targets a volcanic hosted epithermal hot spring type deposit with a current NI 43-101 compliant resource of 520,000 ounces of drill-indicated gold (27.3 million tons @ 0.59 gpt Au, 0.24 gpt Au cutoff) and 300,000 ounces of inferred gold (20.2 million tons @ 0.46 gpt Au, 0.24 gpt Au cutoff).

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Resource Category
Tonnes (MM)
Grade Au (gpt)
Contained Ounces Au
Indicated
27.3
0.59
520,000
Inferred
20.2
0.46
300,000

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Ownership

Otis Gold Corp. (“Otis” or the “Company”) maintains a 100% ownership interest in the Kilgore Project. The project is not subject to any royalties, back-in rights, payments or other agreements and encumbrances. No environmental liabilities are currently known to exist.

Property Background

Major gold mining companies spent more than $8 million for property acquisition, drilling (197 holes drilled totaling 38,531.9 metres), geophysical and geochemical surveying and metallurgical testing on the project from 1983 to 1998. The last exploration conducted on the property by a major company was 1996. Late in the season of that year, a major geochemical soil anomaly was identified and an extensive airborne geophysical survey was completed in the fall of 1996. The survey identified a number of strong anomalies which are coincident with the large geochemical soil anomaly.

In the fall of 2003, Kilgore Minerals carried out a program of geologic mapping, surface sampling and structural interpretation on the property. This field work resulted in the development of a more comprehensive understanding of the structural fabric and controls of the gold mineralization on a property-wide scale than were previously understood. As a result, a number of highly attractive new targets for drill testing were developed.

In 2004, Kilgore Minerals carried out a diamond drill program of six holes totaling 1,621.2 metres (m). The drill program discovered a 10-foot high-grade gold section of 14.5 g/t Au within a 170-foot zone of low-grade gold mineralization (1.25 g/t Au). Subsequently, Kilgore Minerals (which also controlled a range of uranium assets in the USA) was acquired by Bayswater Uranium Corp. ("Bayswater"). Otis acquired the property from Bayswater in 2008.

Geology

The project is a volcanic hosted epithermal gold deposit related to a zoned epithermal hot-spring system in volcanic rocks of Miocene age. Gold mineralization appears to be localized by west-, northwest-, and northeast-trending structure. The deposit is hosted within sericitized, silicified and quartz-stockwork veined lithic tuff, dike and silicified clastic sedimentary rocks.

2012 Kilgore NI 43-101 Technical Report dated July 31, 2012

Exploration Summary

Otis has been active on the property continuously since 2008. As part of its 2008 work program, Otis permitted 20 drill sites under Plan of Operations with the US Forest Service and completed 4 core holes totaling 635 metres (m) at the Mine Ridge. All of the drill holes were found to be mineralized. In 2009, the Company completed 12 core holes totaling 3,100 m at Mine Ridge and conducted an 8.5 line km CSAMT geophysical survey at Dog Bone Ridge.

Otis's 2010 Work Program, consisted of approximately 6,300 m of drilling using two drill rigs to test and expand the Kilgore Deposit in the Mine Ridge area. The Company also completed an Environmental Scoping Study, which indicated there are no impediments to permitting an open-pit heap leach operation.

In 2011, Otis drilled 9,320 m at the Kilgore Deposit area. Highlights include intercepts of 114.3 m @ 0.89 grams per tonne gold (g/t Au), that includes 80.8 m @ 1.10 g/t Au in hole 11 OKC-258, 118.8 m @ 0.89 g/t Au, that includes 36.5 m @ 1.65 g/t Au in hole 11 OKC-259, 48.8 m of 1.05 g/t Au, along with an additional 15.2 m of 1.39 g/t Au in hole 11 OKC-265, located on the southern margin of the deposit, and additional intercepts of 39.6 m of 0.70 g/t Au in hole 11 OKC-281 and 30.5 m of 0.68 g/t Au in hole 11 OKC-280, both located in the deposit’s newly discovered, open-ended northwest extension where ore-grade intercepts in excess of 100-m thick were discovered.

As well, in 2011 Otis announced the results of 681 soil samples collected from two grids (the "North Soil Grid" and the "South Soil Grid") situated along the strike projection of the Northwest Fault, known to be the feeder to the Kilgore Deposit. Sampling of the North Soil Grid was performed in order to extend the strike length of the Mine Ridge Deposit northward of the +100 metre thick intercepts that were recently discovered on the northern edge of the 2011 drill pattern (see news releases dated November 1, 2011 and October 6, 2011). The results from the North Soil Grid display strong linear gold-in-soil anomalies that trace the extension of the Northwest Fault for a minimum of 400 metres to the northwest and represent the surface manifestation of feeder faults that supplied the gold-rich hydrothermal fluids into the deposit’s host rocks.

Sampling of the South Soil Grid was performed in order to better define drill targets in the Prospect Ridge target area, located immediately to the southeast of the Mine Ridge deposit. Results from the South Soil Grid identify a large and previously untested, anomalous area in the Prospect Ridge target area.

The North Soil Grid comprises 266 samples collected on a 30-metre x 30-metre spacing in an untested area northwestward beyond the northern limit of the current Mine Ridge Deposit. The data collected and contoured display a strong and significant linear gold-in-soil anomaly that very closely lines up with the trace of the Northwest Feeder Fault that controls the overall northwest trend of the deposit. The anomaly extends the target a minimum of 400 metres in the northwest direction and is shown on the following map http://www.otisgold.com/_resources/kilgore/20120131_Soil_Survey_Results.pdf. These trends, as well as several additional linear anomalies, are collectively considered to be high-priority drill targets that could extend and expand the existing deposit by more than 30%. There are also a number of corresponding trace element anomalies that have a high correlation to the gold suggesting geochemistry characteristics of a typical epithermal gold system.

The South Soil Grid comprises 415 samples collected on a 30-metre x 60-metre grid that displays a very strong and coherent gold-in-soil anomaly that covers approximately 15,000 sq. metres in the Prospect Ridge target area. This anomaly overlies a section of lithic tuff that is identical to rock that hosts the bulk of the Mine Ridge deposit. This portion of the property package has not been drill tested.

Metallurgy

A significant amount of metallurgical testing has been completed and the Deposit's metallurgy is considered excellent. In 1995 and 1996, bottle roll and column leach tests were performed 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.

In 2010, Otis reported the receipt of additional positive gold recoveries from column leach tests performed on bulk samples. These results, in conjunction with historic column leach testing from the deposit, provided continuing support that the deposit is readily amenable to standard heap-leach process technology.

Otis Gold Column Leach Data

The column leach tests were run by McClelland Laboratories, Inc. of Sparks, Nevada, on composites of the three main host rock types collected throughout the deposit area. Column percolation tests demonstrate that three composites are amenable to simulated heap-leach cyanidation treatment at the 80% -1/2 inch feed size. The bulk of the Mine Ridge mineralization occurs in two rock types, felsic dikes and lithic tuff, which together comprise an estimated 93% of the deposit and exhibit column leach recoveries of 85.3% and 81.0% respectively. The tests performed indicate that up to 77% of the gold was recovered within 30 days.

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Table 1. Results from Otis Gold's 2010 Column Leach Tests on ½ inch crushed material.


ROCK
TYPE
% Gold
Recovery
Rock Type as
Percentage of Mine
Ridge Deposit
CN
Consumption1
(lbs/ton ore)
Lime
Consumption
(lbs./ton ore)
Felsic Dike
85.3%
28%
3.15
3.00
Lithic Tuff
81.0%
65%
3.36
3.36
Aspen Fm.
69.8%
7%
3.91
3.91

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Note 1: Commercial CN consumption in heaps is generally 25%-33% of NaCN consumption achieved from laboratory tests.

Tests were conducted on between 93 and 123 kg composite samples from a variety of drill holes scattered throughout the deposit from split HQ-3 drill core. Each composite was stage crushed in its entirety to 80% -1/2" in size. Crushed composites were each thoroughly blended and split to obtain approximately 68 kg for a column leach test and each sample was blended and split to obtain 1 kg for triplicate head assays. Column tests were not optimized for sodium cyanide ("NaCN") consumption and used 3.1 to 3.9 lbs NaCN; however, projected NaCN consumption in production heaps is typically 25 to 33% of the NaCN consumption achieved in laboratory testing. McClelland reports, "Column test cyanide consumptions encountered during commercial production would probably not exceed 1.3 lbs NaCN/ton of ore." Lime additions of 2.0 to 4.5 lbs/ton were sufficient for maintaining protective alkalinity during leaching.

In 2011, the Company announced the receipt of additional positive column leach gold recoveries from coarse-crush bulk samples. These results provided continuing evidence that the Kilgore Mine Ridge deposit is readily amenable to standard heap-leach process technology and suggest that the gold ore is not particularly sensitive to crush size.

Otis Gold Column Leach Profiles

The column leach tests were performed by McClelland Labs of Reno, Nevada on three samples comprising oxidized and non-oxidized dike (both thought to be responsible for the mineralizing hydrothermal fluids supplying gold to the host rock) and oxidized lithic tuff (the dominant host rock at Kilgore). Both dike samples and the lithic tuff samples were composited from drilled PQ-diameter core (85 mm) that was stage crushed to a nominal 80% passing a 38 mm (1.5 inch) screen. Each sample was divided and one split was further crushed to 80% -12.5 mm (0.5 inch) to directly compare the difference in gold recovery between the two crush sizes.

Column leach tests show that the three samples are amenable to simulated heap leach cyanidation treatment. Further, there was not a substantial decrease of gold recovery in the coarser crush material suggesting that the ore may not require processing by a tertiary crusher. The tests further imply that yet coarser crush material should be tested to determine if part of the deposit might be processed by run-of-mine material that would result in a great cost savings for Otis.

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Table 2: Results from Otis Gold’s 2011 Column Leach Tests on 38 mm (1.5”) and 12.5 mm (0.5”) crushed material


Rock Type
Crush Size
Leach Time
% Au Recovery
CN Consumption (lbs/ton)
Lime Consumption (lbs/ton)
Oxidized Felsic Dike
12.5 mm/0.5”
78 days
83.3 %
0.76
1.0
38.0 mm/1.5”
78 days
71.2%
0.69
1.0
Unoxidized Felsic Dike
12.5 mm/0.5”
91 days
74.5%
0.82
1.8
38.0 mm/1.5”
91 days
78.5%
1.00
1.1
Oxidized Lithic Tuff
12.5 mm/0.5”
91 days
85.5%
0.87
1.8
38.0 mm/1.5”
91 days
84.9%
0.60
1.8

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Overall, the tests revealed that the gold came out quickly in all samples from both size fractions, with 85 to 90% of the recovered gold leaching in just 30 days. Both cyanide and lime consumption were relatively low and the ore charges did not require agglomeration pretreatment.

The results show that the unoxidized felsic dike and the oxidized tuff leach at about the same rate for 80% -12.5 mm and 80% -38 mm. The tuff, which makes up an estimated 65% of the deposit by volume, leaches at the same rate for both crush sizes as the tuff is poorly welded, lightly compacted and has very good porosity and permeability characteristics. Likely the cyanide solutions had excellent percolation and residence rates throughout the sample and the gold was recovered from both sample-sizes with about an 85% recovery rate. The unoxidized dike showed a similar recovery rate of approximately 75% with the coarser crushed material having an even better recovery at 78%. Only the oxidized dike showed feed size sensitivity in regard to gold recovery in column leach tests possibly due to the shorter residence time of 78 days. However, the oxidized dike represents only an estimated 14% of the deposit by volume.

During the tests, the Company conducted tail screen analysis on both crush sizes for the three samples. Residual gold values were generally evenly distributed throughout the various size fractions and it is doubtful, considering the low grade nature of the samples tested, that any improvement in recovery obtained by finer grinding would be sufficient to offset the associated higher processing costs.

2017 Kilgore Drill Program


Past Kilgore Photos