Montello Resources Ltd - Yorkton says buy
Montello Resources Ltd
MEO
Shares issued 35719337
1998-02-16 close $0.56
Tuesday Feb 17 1998
Art Ettlinger and Douglas Leishman say why
By staking lands immediately after Ashton announced a $5.5 million option agreement with "a large Alberta energy company" Montello has acquired a key prospect southeast of Ashton's kimberlite discoveries. The 600,000 acre Jazz prospect is currently being drilled, with 18 geophysical targets initially being tested. Montello is using an interesting and innovative geologic model to develop its drill targets. A potential hurdle the company faces however lies in the actual thickness of glacial till underlying this part of Alberta. Till deposits are characteristically highly variable in thickness and extreme local variations from non-existent to greater than 150m in thickness are not uncommon.
Montello geologists have identified a west-northwesterly structure of
regional extent cutting through the east half of the Jazz property. This structure roughly coincides with a subtle magnetic linear present on composite aeromagnetic maps of the province and with a channel of
thicker glacial till, lines of evidence that a major structure is present. Cutting this structure on Montello's property is a series of northwesterly and northeasterly striking features, similar to fault structures found elsewhere within the Peace River Arch. These fault intersections are correlative with airborne magnetic anomalies and with the margins of broad topographic highs identified using digital topography. This combination of geologic elements presents a reasonably convincing argument that buried intrusive rocks, potentially of kimberlitic composition, underlie this property.
Ground geophysical surveys to refine additional airborne targets on the Jazz prospect are continuing. Elsewhere in northern Alberta, Montello has a continuing program of airborne magnetic surveys to cover over three million acres of land within and surrounding the BHT. The company is in a better position than most to evaluate this data because of its previous diamond exploration experience in the Hinton area, where it is in a joint venture with New Claymore and Troymin.
Montello has financed its current work program through an alliance with Redwood Resources Ltd (RDW ASK). To date, Redwood has paid to
Montello $2.5 million by acquiring 2,000,000 common shares through a private placement and an option on Montello's BHT properties. This gives Redwood a 30% interest in all of Montello's lands within the Buffalo Head Terrane (approximately 4,000,000 acres), with further payments to increase this interest to 50%.
We recommend Montello as a speculative investment leased on its land
position, management's previous Alberta diamond experience and its geological abilities in generating kimberlite drill targets.
(c) Copyright 1997 Canjex Publishing Ltd.
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