K2 Gold (TSX-V: KTO) CEO Stephen Swatton on Discovery of New Gold Targets at Flume, Storck, and Ladue Properties & Expansion of the Flagship Wels Property

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of K2 Gold (TSX-V: KTO)(OTC: KTGDF), Mr. Stephen Swatton. Steve, how are you this morning?

Stephen Swatton: Very good, very good. It's good to be back on your program again. Thank you.

Gerardo Del Real: I appreciate your time, Stephen. It's been a busy couple of months for you behind the scenes. We're in the midst of tax loss selling season. I thought it really presented a good opportunity for people that may be new to the K2 story. You have an excellent team. You're in an area that frankly has been very good to you in the way of discovering new mineralized zones. There's been a lot, a lot of success behind the scenes that I don't think has been fully appreciated. I wanted to touch on that just a bit.

You discovered a new mineralized zone at the flagship Wels property. You've also identified new gold targets at three of your other properties. If we could, I'd love to go in order. Can you share the details of the latest exploration results at Wels, which again, as I mentioned a second ago, is the flagship.

Stephen Swatton: Yeah, thanks. At Wels, what we started at was the Saddle Zone. If you remember, one of the previous interviews we said, was found on a couple of very, very low grade ppb soil anomalies. They discovered 10 gram plus material in rock samples.

What we did, is we've now stepped out to the south one kilometer. There was one area that we just briefly scratched upon in a previous soil and we came out with an interesting anomaly. Literally the guys had to dig down about a meter, a meter and a half, and discovered what was gabbro, which is almost the opposite of what we found at the Saddle Zone, which had heads scratching a little bit. It came with 10 gram material. It was obviously mineralized, but we didn't quite know what the significance of this was. We extended that zone of mineralization, what we did is we walked out from that zone of mineralization towards the east. Lo and behold, when we actually looked further to the east, we then came into a sandstone.

If you look at here, Gerardo, we have an intrusive which is what we started on and we concentrated the work at Saddle. Then we went down what was called the Southwest zone and discovered a gabbro, which is a basic rock which is a completely different rock type. And now we’re in a sandstone. All three of them are carrying gold, all three of them had gold in soils and also in rocks.

The unfortunate thing for us is, and like it says in the quote in the last news release of mine which is actually true, is I think we’re just scratching the service of something that could be quite significant. But the actual significance of it, you won't actually fully appreciate until we've scraped off the surface, until we got underneath and had a good look at it, or poked a few holes.

So at the moment we’re designing our program for next year in the area. But the interesting thing is, is that the Chai zone, which is the latest one that was the emphasis of the last news release, is 1.6 kilometers long. That far exceeds Victoria Gold’s resource where they have at Dublin Gulch, but were not even sure what the geology is telling us right now. So it's a "Good news, bad news." The good news is we seem to have gold in every rock type, the bad news is we can't quite get down into it right now with the restrictions we have with the work program each year to see exactly what it is.

The nice thing is though, it's open ended in every direction and everywhere we're looking we’re finding gold. So we will look upon it as a good news story. You touched on something earlier, sorry I'm just going on a little bit, about we're caught between a rock and a hard place. Here we are at the end of the season without a drill program. When we started getting the soil results back it's very unfortunate that we didn't have enough time to actually go back in because I would have dearly loved to have gone back in and tested these two new zones.

Gerardo Del Real: Well, let's talk about what you have done. You've brought in Jo Price. She was recently appointed VP of Exploration and obviously you're optimistic about figuring the system out because you wouldn't be bringing in a new VP or Exploration if you didn't plan for an aggressive 2018 field season. Let's talk a little bit about the gold targets at some of your other properties and then we can circle back to Wels here.

Stephen Swatton: Sure, what we did is we were fortunate because our properties are, relatively speaking, close to each other. We operated out of Wels and we went to the Flume property and did an anticipated soil program. But what was quite exciting about it was that the southern end of it is actually fairly easy to access, so that's where all the previous work had been done. So what we basically did, is we took the cross section of the drill intersection, they had a very narrow drill intersection several years ago. We projected it to the surface, and lo and behold, when we did a little bit of trenching, we found that expression of the mineralization at surface.

Then, also at the same time we did some work on the northern end of the property which wasn't sufficiently looked at in the past, and we didn't know it but on the boundary of our property a company called Kestrel Gold were also working, and they've announced some pretty positive results. I was speaking some of the senior executives last week, they haven't still published all their drill results, and we found some significant anomalies right on the boundary with the Kestrel property which is encouraging for us.

It's a little more difficult, challenging I should say for us to put a drill rig down there, but it's certainly possible, and we will do it obviously if Kestrel has some joy on their property. We were on the Flume property, we were having results of up to 4.7 grams from the southern end of it and at the northern end of it, where we took 398 soil samples, 15% of soil samples were better than 25 ppb. This is very significant for this part of the woods, so we’re going to get back in there and take a look.

The adjacent property, which we have 100% of is called the Storck. We did what's called ridge and spur sampling which is running along the tops of the hills. Again, we came up with some interesting soil anomalies, 144 ppb gold. These sort of size anomalies have got to be followed up. So this is what we’re planning to do next year, and our third property, our Ladue one, had a lesser anomaly, but we didn't expect it because we know that this property is probably more similar to the surface expression at the Coffee deposit which Kaminak had. So it's very subtle, but we did have 63 ppb gold.

Now these all sound pretty low but you just can't ignore some of these because going back to my opening statement, I mean we've discovered significant gold mineralization at Wels, based on 33 and 53. So when you get anything above 50 ppb or even above 25 it's got to be followed up. So I'm pleased that we have anomalies on all of our properties now. Which we will go back to next year, and just one further note on the Ladue property, we’re talking to a couple of the neighboring companies in that area and we’re thinking about maybe some sort of coordination, some sort of arrangement that it cuts with the others so we can actually do more cost-effective exploration of a wider area, between two or three different companies.

Gerardo Del Real: I think that would be fantastic, again I mentioned that Wels is the flagship and the team obviously believes in the potential so much so that you actually expanded the claims by approximately 10%, I believe. This just happened last week, can we talk a bit about the additional claims at Wels?

Stephen Swatton: Yeah, what we found is that when we did some soil sampling, and if you recall last time we spoke we had a marshy area to the west which we can't actually actively explore because we feel it's impossible to take a meaningful soil sample. But we were getting some slight anomalies around the edge, which leads us to believe, well maybe there is something in that marsh area. So we staked to the northwest, and then lo and behold when we got the results of the Chai, that was 1.6 kilometers, it was abutting the eastern boundary a little too close. So we went in, I think it was just last week actually, or the week before last, and staked another kilometer, just to be on the safe side. But yeah, everything looks to be going east-west and so we think we’re pretty well covered now, Gerardo.

Gerardo Del Real: Excellent. Now lastly, Steven, I know we had spoke before and you mentioned that you were looking to become a year-round explorer. I had the pleasure of speaking with the Chairman of K2 Gold, Mr. John Robins, a few months back and he had mentioned, of course, that he was excited about several projects that he was looking at and potentially bringing them into the fold of the K2 banner. Is that still an active strategy for K2?

Stephen Swatton: Absolutely, absolutely it is. And we got two projects that we’re reviewing right now in Nevada. And unfortunately the one that he was alluding to last time, it's like anything in exploration, it isn't one of the highest risk industries for nothing. I mean we looked a bit and in the end it fell short of our expectations. So we are looking at two and we're looking at one in Mexico at the moment as well. So yes, it definitely is the plan for the company to do year-round exploration but strange enough, because we've got some sort of momentum going in Yukon, we've also been shown a lot of very interesting other properties up in Yukon. I'm going to be talking to some of the executives this weekend at the conference. So watch the space. We may well picking up another in Yukon as well as, hopefully, Nevada. But hopefully by the next time I speak to you I have got something down in US or in Mexico.

Gerardo Del Real: Well, I know you and John Robins have a special fondness, of course, for the Yukon. You're headed to the conference, tell me a bit about the conference, if somebody is nearby, how can they say hi to you, Steve?

Stephen Swatton: Yeah, we've got a booth there on the Saturday and Sunday and we're giving a short presentation. It's one of those smaller conferences, Gerardo, where you rub shoulders with sort of everybody, and everybody kind of knows everyone. So if you come up to the K2 booth either myself or Jo, who is an absolute gold mine by the way, excuse the pun, she'll be there too, and I'm happy to answer any questions. Like a couple of people have said, maybe I'm a bit too honest about some of what we have on the ground there but what we see is what we get with myself. I'm not going to sugarcoat it. We have a fantastic opportunity but we still need to do more work on it for next year.

Gerardo Del Real: Well, the honesty is refreshing in this business and it's definitely appreciated, Steve, so I think you deserve a thank you and your team deserves a thank you for shooting straight at all times. I'd like to remind everybody the company has got a market cap currently of approximately $5-6 million Canadian. This is a team that’s got a serious track record of success, again the Chairman being John Robins, yourself, Gary Freeman's involved, you just brought Jo on, you got Craig Roberts. I encourage everybody to go to the K2 website, which is K2gold.com. Get familiar with the team, get familiar with the area that they’re exploring in and get ready for what sounds like a very busy 2018. Steve, is there anything else that you'd like to add?

Stephen Swatton: No, that's everything and thanks very much for listening to me and I look forward to speaking to you again, Gerardo.

Gerardo Del Real: Thank you, Steve.

Stephen Swatton: Cheers.