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Tuesday, November 21, 2017

Pretium - teething problems or are there dark clouds on the horizon?

I took a quick look at Pretium's Q3 financial report (link). They made a small loss (net $7m), but this is because they weren't able to sell all of their gold (produced 82,203 ounces Au, sold 55,413 ounces).

However, I'm more interested in the underlying performance of the mine and how quickly it will ramp up to the production figures outlined in the 2014 Feasibility study.

lots of gold at a good grade as well...

Their annual production breakdown, for head grade by year

They should be mining material grading 13-16 g/t Au
A typical chart - quick ramp up, in the good stuff for the majority of the project life, then a big drop as they run out of reserves.

Before everyone sends me heaps of abuse (feel free to do so), I understand that we are very early in the mine life, and but I want people to look at the underlying performance at Brucejack.

In the Q3 financials

  • Head grade = 10.5 g/t Au
  • Throughput = 2,840 tonnes per day
  • Recovery = 96.5%
In the 2014 Feasibility Study
  • Head grade (life of mine) = 14.1 g/t Au
  • Throughput = 2,700 tonnes per day
  • Life of mine recovery = 94%

Plant ramp up = good
Recoveries = excellent
Head grade = poor - head grade is ~33% lower than planned.

I know this is very boring, for Brucejack has occasionally raised a number of questions regarding the quality of its resources, the geology and its ability to support a large underground operation. I was surprised that the head grade reported in the Q3 financials was so low. There are a number of factors, including:
  1. Still in the ramp up stage and not yet reached the >15 g/t Au areas?
  2. Excessive dilution, mining barren country rock with the gold veins
  3. Inconsistent gold grades (large variability over very short distances)
For me, it will be interesting to see how the head-grade evolves over time. Will Pretium be back on track in the Q4 financials, or is that an indicator for potential problems in the future with the project not quite reaching the production and profitability figures as promised?

Tuesday, November 14, 2017

SolGold Update

DISCLOSURE: I own shares in Sol Gold, and before you ask, I'm irritated that they did a financing at GBP0.25p.

Well we are moving into the home straight, we've been promised a maiden resource by the end of the year (link), so it was nice to get some more drill results to have a look at. You can download my 3D model here (link) and open it in Leapfrog Viewer.

Obviously, we are all waiting for the initial resource calculation that was promised by the end of the year. We've only got a couple of weeks before the Christmas party and tax sell-off season starts, so it will be interesting to see if SolGold can deliver.


  • Infill holes, duplicating and extending to depth known mineralization
  • Is hole CSD-17-028 hinting at a core of a system just to the south (currently being explored by hole 030)?
  • Hole CSD-17-026-D1
    • Similar grades to adjacent hole CSD-14-009
    • high-grade lower zone (from 1150m) looks to be quite consistent
    • upper zone looks to be quite narrow, and may link up with the high-grade zone in hole 14
  • Hole CSD-17-028 - drilled between holes 021 and 022, similar grades and thicknesses

Geology Drivel

Even though these results are groundbreaking, just extending and exploring known zones, they do appear to show that in there could be more than one grade center at Alpala. I also hate that they don't highlight where the holes are located.

I not going to say that there are 2 porphyry centers (I haven't seen the drill-core or any interpretative geological plans for the project), so I've done some doodling on the map that accompanied the PR.

WARNING: Geology doodles by an insane, de-bearded geologist
So I'm quite excited about holes 30 and 30-D1. If they come back with some decent intercepts my stupid idea  alternate interpretation could be correct, it could have a nice positive effect on an undated resource calculation in 2018, as these holes won't have been completed by the time the initial 43-101 resource is published in the next few weeks.

If we look at the holes individually, and again, I only have the data in the press release to work with, so it is incomplete and a best guess.

Hole CSD-17-026-D1

We can see that hole 026-D1 hit a decent zone of material grading >0.7% Au and >0.45 Cu. My feeling on why the Au zone appears thicker is a effect on how the data has been reported, and we would see a >1g/t zone from 1400m to 1550m but it wasn't split out in the PR.

Hole CSD-17-028

Hole CSD-17-028 was drilled between holes CSD-16-021 and 022, so I'm assuming that it was an infill hole to provide more confidence in these intercepts. It returned very similar results to hole 021.


I've hidden this at the bottom of the post. I'm not 100% (or even 50%) confident in my officially bad resource guesswork for Alpala, but I wanted to include the table to see what numbers I come up with to see how SolGold will get to their:

I regard this statement as a BS, the recent drilling didn't do much to their resources, and I don't know why they are mentioning that they want to define a billion tonnes at 0.9% CuEq at a 0.3% CuEq cutoff. That puts it firmly in the uneconomic category for an underground block-cave.

So according to Macquarie, for a 0.9% CuEq block cave to give an IRR of 15%, it will need to have Cu at >US$3.5/lb and Au >$1750/oz.

Personally, I'll be looking at the size and continuity of the >1% CuEq cutoff resources.

So, I'm not sure that they'll get to their billion tonnes, but I'm convinced that my model is under reporting the narrow-high-grade zones.

Wednesday, November 8, 2017

The Valleys are full of crappy copper deposits......

Vizcachitas, the "Largest Independent Copper Project in the Americas" we are told by Los Andes. All that is missing is "undeveloped", to really tell us how great the project is!

All projects are great from afar.....


  • A large, but low grade resource and with a very small 'high-grade' zone. 
  • Good recoveries, but minimal by-product contribution
    • >95% for Copper
    • 55-70% for Mo
  • Expansion of near surface resources looks limited, but hole V2017-10 did intersect some interesting grades at depth.
  • Bad geography, located in the bottom of a relatively steep valley, this could have big implications on strip ratios as minor changes in pit slope angle may mean moving very large amounts of waste rock.
  • 2014 PEA show that a small (40 ktpd) operation is very marginal and that very minor (5%) increases in CAPEX or OPEX will have a major impact on the project economics.
  • So, Vizcachitas is too small, too low grade with marginal economics. As they say, can't make a silk purse out of a sow's ear.
*resources haven't been updated to include the 2015-17 drilling.


DISCLOSURE: I've compiled as much of the information as possible that is in the public domain. However, I've had to estimate the angle of dip, and I'm sure that I've only been able to find summarized assay data for ~65% of the 'deposit'.

You can download the Leapfrog project from here (link)


The first area I wanted to look at is the quality of the resources, especially the tonnage at high, medium and low cut-off grades.

lots of high-grade, just not in the resources....
So we can see that the majority of the deposit is very low grade, and a small part (only 19%) of the indicated resources scraping over 0.5% Cu.

However, the recent drill results have been interesting (link) with some (reported) thick, reasonable grade intercepts, but we need to check where these holes have been drilled (link).

You can quickly see that the majority of the new holes are clustered in areas of known mineralization, with a couple, including hole V2017-10 drilled to the north.

In the image below I have created a >0.4% Cu grade shell for the project using (left) pre-2015 drilling and (right) all drilling. To see how the resource has changed.

changes circled in red
There is a new area to the north, centered on hole V2017-10 and some minor expansion around the edges of the known mineralization. There are no new high -grade zones, and when you look at it, the >0.4% Cu grade shell is quite poddy and doesn't form a nice solid consistent zone with a high-grade core.

Here are some sections, you'll notice that the >0.4% Cu zone doesn't extend to great depths.

Section 2800N

Section 3400N

Section 3900N

These zones aren't very thick, but we can see that the mineralization in Hole V2017-10 is open in several directions, but is deep, all other mineralized zones appear to have been close off or are very narrow, so unfortunately, I can't see much exploration upside.


There are rumors that Los Andes want to re-market Vizcachitas as a small (40,000 tonnes per day), high grade deposit, and we are fortunate that a financial analysis of a 44,000 tpd operation was include in the 2014 PEA.

I mean, I like the fact that they are so modest, a discounted NPV of just US$3 million is quite cute when compared to other large copper projects, and a leisurely payback period of a decade, I mean why make money quickly, when you can make it slowly and savor it.

I mean look at the numbers, all the best projects, like Livengood's epic 2013 PEA, you have a positive IRR and a negative (discounted) NPV.

It is going to be a lot of fun developing such a marginal project, where any minor increase in CAPEX or OPEX with rape you up the ass. Personally, I can't think of any mining project that has every gone over budget or not completed on time.

One the cross sections above I put on the surface trace. It shows that the mineralization is found at the bottom of a steep valley, that Los Andes loves to take photos of:

a river runs through it..

So, it is a bit hilly, has a river than runs through the project (that hopefully isn't a water source for any urban centers), so another factor that will impact the economics of the project is the pit slope angle. Back in 1999, Golder estimated a 42-47 degree angle, and I've doodled it on the best section, along with steeper and gentler angles

You can see how much additional rock (grading less than 0.4% Cu) needs to be moved.
The same will happen if you decide to mine the deeper resources, as you go deeper you needs to move more and more low-grade waste rock on either side of the deposit.

So, after all of this blathering, you can see that the project simply isn't good enough, the economics are crap, and just a minor change in CAPEX, OPEX, metal prices, rock quality and stability can conspire to wreck it. The recent exploration data hasn't shown any upside, just a single hole that hit some medium grade mineralization at depth.

Saturday, October 21, 2017

Interpreting my Bad Resources

In the last post I did a guesstimate calculation for Tinka's South Ayawilca deposit, and I've received a few e-mails about how to interpret this data.

I also have 2 tables.

Occasionally, I make some excel errors, if you find some, please send me some abusive e-mails!

Tinka Update

I'm going to do a different spin on the post, initially focusing on the results and then look at some areas that have been under-drilled to see where Tinka can go to add some tonnes to and/or improve the quality (category) of their resources.


  • Some good infill holes (A17-085 and 096) in the core of the system
  • System is getting weaker to the east (A17-093) and to the SE (A17-094).
  • Narrow, albeit high-grade zones drilled to the east of the West Ayawilca resource (A17-083 and 085)
  • A few holes were drilled in the Chaucha, Zone 3 and Valley targets, but to date, no significant mineralization was discovered. However, early days.... 


We are now looking at a mature exploration project. Tinka are now drilling the periphery of the South Ayawilca system, so the mineralization is now narrow and deep.

Blue = Sept PR; Red = Oct 2nd PR; yellow = result pending

Here are some sections

Hole A17-087 - SW end of the South Ayawilca Deposit
We can see that mineralization is dying out to the SW.

A17-071 (left) SE extent of mineralization

Mineralization dying out to the NE, but there are a few gaps. Hole A15-041 (to the right) hit multiple zones of moderate zinc mineralization.

The effect that this drilling has had on my officially bad resources is:

Full breakdown of ZnEq resources
We actually see just a slight increase in tonnes, but a decrease in grade. This is due to the slightly lower average grade due to all of the different cut-off limits.

This may sound negative, but essentially Tinka have been drilling at South Ayawilca all year, and have defined a new, deposit at Ayawilca. It will be interesting to see when a new technical report is released.


However, I have a question: Where are Tinka going to drill now? The drilling to date seems to have closed off the South Ayawilca deposit, where are they going to generate future intercepts and grow the resource.

There are 3 areas where they can focus:
  1. Infill drilling - designed to increase the confidence of the resource (increase the amount of M&I resources and reduce the amount of Inferred)
  2. Expansion - drill around the edges and between known mineralized zones.
  3. Green-fields - drilling of new targets
Each of these have a different risk vs reward levels, and I've spent a few days compiling as much of the drilling data as possible from technical reports and old press releases.

They have already started drilling some of the pother regional targets, but unfortunately, so far the results haven't been very positive, but we need to remember that they have only drilled 6-7 holes on them, so it is early days.

So, I will focus on the first two. Where are there: 
  • Under-drilled areas
  • Where some intercepts haven't been followed up on.
NOTE: there may be reasons certain areas haven't been explored (e.g. access issues, topography, hydrology etc.). I'm going to ignore these in this post as I'm not intimately familiar with the project.  

Unfortunately, I'm lazy. Fortunately, Leapfrog can all of the hard work for me. I drew a slice through the project, along the main zinc horizon.

I got leapfrog to create 50m and 100m (radii) buffers around each drill-hole.

Pink = under explored areas
I always do this as it shows me very quickly where there are un- and under-explored areas of a project, and as a simple geologist, I like to put holes in areas where they have a good change of getting high-grade zinc mineralization, like here:


That area is ripe for reaming. This is a perfect area for dumb exploration, simply whack a hole between 'em and you have an easy win! The area to the right of hole A12-008 could also do with a few holes as well, you'll get some decent grades for your PRs there.

However, this raises and interesting question for Tinka. Do they focus on drilling the known mineralization or start exploring the property for more deposits?

If they focus on drilling to improve the confidence in future resource calculations or keep looking for new deposits, and maybe even the BMF?

Thursday, October 19, 2017

Solgold Leapfrog project

I've received a few e-mails from people asking for the full Leapfrog project for Cascabel.

To open the project you need to have the saltest version of leapfrog Geo. You can download an evaluation copy from here - link

You can download the full Leapfrog project from here - link (145MB)

You can download the source drill-hole and surface contour data from here - link (10.8Mb)

I've also created a Leapfrog View containing all of the data I used - link (29.8Mb)

The viewer file can be open using the FREE Leapfrog Viewer program that can be downloaded from here - link

For anyone interested in Leapfrog, I'm working on compiling the Paca project data (as it has everything) into a training data set.

Thursday, October 12, 2017

Sol Gold Update - dark clouds on the horizon?

DISCLOSURE: I own shares in Sol Gold.

Sorry, I've been a bit snowed under with work, here is a quick update with the new drill holes released by Sol Gold a couple of weeks ago (link) and last week (link).

I've also done a complete rebuild of the model to make sure that it matches SolGold's maps as accurately as possible.


  1. Lots of grade smearing in latest PR
    • Hole 023R-D1 - 254m @ 1.16% Cu and 1.93 g/t Au, surrounded by material grading less than 1% CuEq
    • Hole 024-D1R - 512.9m @ 0.53% CuEq, in reality is 160.8m @ 1.19% CuEq surrounded by materail grading less than 0.5% CuEq
  2. High-grade (>1% CuEq) mineralization restricted to very narrow zones - SolGold even tell us that these zones are 2-4 times narrower than the reported intervals
  3. Bulk of the rock at Alpala grades <1%CuEq, which is probably uneconomic to mine
  4. I haven't updated my calculations as I don't have sufficient data quality (due to grade smearing) to produce an accurate number.


Just a quick summary on how the model was created and how the data was extracted, I know this is probably repeating a lot of what you already know, but it is important as it shows how results can be skewed.

All data is from the public domain (i.e. SolGold Press releases and presentations).

This means that I have to estimate hole locations (I georeference the plan maps), direction and dips. They are moderately accurate, but not perfect. there is a lot of guess work to make the hole line up as closely as possible.

The assay data comes from the Press releases, and I run it through Corebox's excellent Drill Hole Interval Calculator tool (link) to back calculate the residual grade of the rocks that surround the high-grade intervals. This is done to see how much of the grade is in that narrow high-grade zone, and if the surrounding rocks actually contain enough metals to be mined.

You can download the latest 3D viewer file from here (link), but you'll need to download the latest Leapfrog Viewer program to be able to open it.

When you look at the press releases for the Apala drilling you need to be thinking the following:

  1. How are the results being presented in the best way possible
  2. How will the deposit be mined

To be logical, let us start with point 2 - how are they going to get the crap out of the ground?

Here is a section through Alpala.

Decent mineralization starts at ~700m below surface, so if it gets mined, they will be doing it from underground. If used several images from a report written by Macquarie Research on Block caving (link).

Large scale underground mines have several 'unique characteristics'
  • They require a higher CAPEX than a similar sized open pit operation
  • Have higher operating costs
  • They take longer to develop and ramp up to full production
    • 5 years of underground development
    • 5-7 years to ramp up periods
As a result, they are much more sensitive to changes in metal prices and Capex. However, they can have better returns on invested capital compared to open pits.

However, Alpala is an exploration stage project, we don;t need to get bogged down by all that engineering crap. However, their repot had this figure.

Think of this as a reference diagram, plot on where Alpala should sit along the red lines.

Which line do you choose? Well, look at the assay tables in any of the press releases and you see how SolGold have calculated their CuEq grades

So, draw a line on it for US$1300/oz for Gold and $3/lb for copper, and then a horizontal line back to the Y-axis (CuEq%) to see what grade Macquarie think you need for a viable underground block-cave greenfield project like Alpala.

Here is my version:

So ~1.5% CuEq for Alpala to be a standalone, viable project.

Point 1: The results 

Why don't we now look at the assay table from the latest PR, reporting the mineralized intervals from holes 023R-D1 and 024-D1R.

At first glance, everything looks awesome. Hundreds of meters of decent grade material. I mean EVERYTHING in hole 23R-D1 is ore, hole 024-D1R is less good....

However, there are some clues that not all is as rosy as being presented.

Why are they giving intervals at different cut-off grades?
To me, this mean that that they a narrow very high-grade zone surrounded by low grade crap.

Why don't we back-calculate the residual grade

Hole 023R-D1

They have decent stuff from 958m to 1212m, but the rest is crap.

Hole 024-D1R

Same story here, but then again, they drilled the same zone hit by hole 024

For these 2 holes, only a very small portion (36% for hole 023R-D1, and none of hole 024-D1R are good enough for an underground mine. Most of what they drilled in these 2 holes is mineralized waste.

They even tell us that the mineralization is narrow in the text below the table. it says: 

This means that SolGold's geologist believe that the true with of the intercepts are 2-4 times narrower than the interval length reported in the table, so:
  • 745.1m @ 1.29% CuEq mean that the true width of mineralization is between 186.3 to 372.55m wide.
How does this compare to the rest of the drilling? Do we see similar narrow, very high-grade zones surrounded by mineralized waste?

Very hard to see on the plan map in the press release, but fortunately with the power of Photoshop, we can lighten this image. I've chucked on my interpretations for fun.

The most consistent mineralization is around holes

Here is a zoomed in part of holes 15, 16 and 23 which is where holes 29, 29D1 are all heading, but that zone only has a 200m x 150m horizontal extents. The rest of the high-grade is quite scattered and look to be dikes.

horizontal distance between the 2 lines = 35m

We can see the individual assays, they are a bit blurry as I've zoomed in really close, but you can see the individual assays and you can see how quickly the grade drops off around the high-grade samples.

Look at the plan map, how when you look closely, most of the >1% CuEq mineralization is restricted to narrow zones, that are hard to join together. there doesn't appear to be a solid, high-grade core, just a lot of narrow high-grade dykes surrounded by mineralization that would be marginal if exposed at surface, but at >500m depths, it will never be touched.

I'm a bit disappointed, and gut feel is that the actual resource will be significantly lower than what the market expects, as these high-grade zones aren't consistent and don;t appear to join up.

However, I invested in SolGold for the other targets, I knew that Alpala was deep and probably not good enough as a standalone deposit. I want to see them drill somewhere else.

If you want the full Leapfrog project - e-mail me at and I'll upload it for you