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DAILY NEWS Nov 13, 2012 8:05 PM - 0 comments

Fronteer gang looks to duplicate success with Pilot

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2012-11-13

With its coffers over-flowing Pilot Gold (PLG-T) is in the unique position amongst juniors of being able to drive heavy exploration programs at two projects, while partaking in the development of a third into a mine.

It's a story that has gained traction amongst investors of all stripes, as institutional, retail and major industry players all piled into a recent equity raise that led to an overallotment of issued shares.

While the bought financing deal was originally for $20.6 million, the number climbed to $25.6 million because of heavy interest from the institutional and retail side. Then Pilot raised another $8.08 million through private placements with Newmont Mining (NMC-T, NEM-N) and Teck Resources (TCK.A-T, TCK.B-T, TCK-N).

Prior to the deal, Newmont had a 16.2% stake in the company, while Teck had a 5.4% interest.

With its cash position now totalling $43 million, Pilot plans to push ahead on aggressive programs at its TV Tower and Kinsley Mountain exploration projects.

TV Tower is a gold and silver property that stretches out over 71-sq.km in central Turkey and Pilot has a joint venture with Teck on the permits with a right to earn a 60% stake.

While two discoveries have been made on the property, KCD and Kayali, it is KCD that has grabbed the most attention thanks to a highlight intercept of 137.1 metres grading 5.94 grams gold, 12.6 grams silver and 0.53% copper. That result was released on Sept. 19 and Pilot said it extended the high-grade breccia zone identified by the discovery hole roughly 50-metres to the south.

The result caught the market's attention as the press release propelled Pilot's shares up 44% to $1.68.

Pilot plans to drill 55 holes for 9,000 metres of step-out and definition drilling at KCD and overall at TV Tower is drilling 16,000 metres. Results from the program are due out shortly.

It's second key exploration project is Kinsley Mountain in northeastern Nevada. The project sits roughly 9- km southeast of Long Canyon, a project that Pilot's management team developed and eventually sold to Newmont.

And the same technical team that molded Long Canyon into a desirable target, is now back at it with Kinsley.

The property hosts a past producing mine that turned out roughly 138,000 oxide ounces at an average head grade of 1.4 grams gold. Historic drill holes, however, only went down to an average depth of 65 metres and 350 holes with grade were left un-mined.

Pilot's value-add at Kinsley has come by way of its drill testing and discovering mineralization to the north and the northeast of the known deposit. The company has a 25,000 metre drill program planned for the area.

Even more cash for exploration could be on the way from its Halilaga project back in Turkey. A preliminary economic assessment at the project outlined a 50,000 tonne per day operation with average grades of 0.28% copper and 0.3 grams gold for average annual production of 92,100 oz. of gold and 89 million lbs of copper. The project generated an after-tax net present value (NPV) of US$474 million using 7% discount rate.

Teck has a 60% stake in the project, so Pilot's share of that NPV would amount to $190 million.

Pilot was formed as a spin-out from Fronteer Gold after that company was acquired by Newmont in 2011 for $2.3 billion. Mark O'Dea, the former CEO of Fronteer now serves as Pilot's Chairman. Matt Lennox-King, who was also a key member of the Fronteer team since the company's start-up, serves as CEO of Pilot.



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