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Wednesday, June 1, 2016

Pretivm - Bulla Crustulum or Raptus regaliter?

Pretivm released a new set of drill results from the Valley of the Kings yesterday. It had the typical mix of spectacular grades and so on...
"R" one of IKN's readers pointed made this comment:
"To your point -- the most telling excerpt from the PR: "True thickness to be determined."
Good to know you don't know true width of the infill drilling on the years 1-3 planned stope areas?"
and if you go back to Pretium's and go to the Brucejack project page (link), they state the objectives of 2015/16 infill drill program, which is:

"The planned drill program has been expanded to include extensions of Domain 20 which are adjacent to areas being mined in the early years of the 2014 Feasibility Mine Plan. Definition drilling from five underground drill stations is in progress and is expected to be completed in the second quarter of 2016. When completed, roughly 200 vertical meters over a strike length of 250 meters will have been drilled at 7.5 to 10-meter centers.

This means they have drilled >200 holes into an area that measures 200m x 250m, with a drill-holes every 2-3 car lengths, and with all that data they do not have enough confidence in their own data to estimate the true widths of the veins/gold bearing structures.  Just a couple of questions:
  • Just how complicated is this deposit? 
  • If they can't calculate the true widths of the veins, how will they mine them?

Grade control is going to be a bitch!

They allude to this in the various maps that accompany the May 31 PR.

Plan Map
each of those grey lines is a drill hole.
When you look at the sections (I've included a couple below, but please download the pdf''s that accompany the PR's for higher quality images). You can see the issues facing Pretium. There is an extreme nugget effect, the structures are not to to follow in adjacent (i.e. 5-10m apart) drill-holes. I haven't visited the project and looked at the drill-core so it may be easy with very clear veins, or it could be more complicated.

Note: the spacing between the horizontal lines (50m apart) are much (40%) larger than the spacing of the vertical lines (also 50m apart). I assume this is to make the section easier to read,
And we see the same on every section. A few narrow super grade intervals with a wide zone of up to 1g/t Au. Try and join up the narrow high grade zones (in red). Here are a couple of my attempts.
Obviously veins dipping steeply to the north
Definitely vertical veins

Let's have some fun and mess around with the assays:
VU-696 - 17m @ 50.31 g/t Au
  • 1st vein: 0.5m @ 183 g/t Au
  • 2nd vein: 0.5m @ 1510 g/t Au
  • The rest: 16m @ 0.5g/t
VU-708 - 16.5m @ 15.2 g/t Au
  • 1st vein: 0.5m @ 42 g/t Au
  • 2nd vein: 0.5m @ 412 g/t Au
  • The rest: 15.5m @ 1.5 g/t Au
VU-723 - 14.04m @ 14.84 g/t Au

  • 1st vein: 0.5m @ 125 g/t Au
  • 2nd vein: 0.5m @ 271 g/t Au
  • The rest: 15.5m @ 0.8 g/t Au
This is repeated time and time again. Hopefully the narrow high grade structures are close enough together and contain sufficient grade that when they are mined at 2-3m width (taking 0.5m of vein and 1.5-2.5m of barren country rock) there is enough gold to cover costs.

I get the feeling that this could be a project with issues.







15 comments:

  1. Have you ever wondered, that all the high grade intercepts from Pretium are exactly 50 cm wide?

    There is never a single intercept only 10 cm wider.

    Therefore I conclude, that Pretium releases all data at least in 50 cm intercepts. My suspicion is, the nugget effect is even bigger, maybe the intercepts are only 10 or 20 cm long, maybe there is no veign structure at all, maybe Pretium will have to try to find these numerous needles in the haystack of barren rock.
    I concede that there might be some statistical evidence that the gold is somewhere in them far hills but they don't know where exactly it is.

    ReplyDelete
    Replies
    1. I believe 50cm is a minimum length for QA?QC reporting standards. You can sample any length you want, but to be consistent within a minimum length, 50cm is used.

      Delete
    2. Hi Mr. Angry,
      Pretium spent a lot of money to protect themselves from a hostile takeover. They are supremely confident of the validity of the deposit and are not looking to be taken over, on the contrary. As far a a "major" being involved,
      surely you are aware that Zijin Mining, the largest gold miner in China, has a large position in the company and recently elected to maintain their proportion undiluted in the face of a capital raise. So I suggest that there is already a "major" involved.

      You could be correct, the deposit may disappoint. But the
      actions and commitments of the involved parties have been pretty consistent since the Strathcona fiasco. And as far as I can tell, FNV has not dumped its position in PVG.

      And SSRI surely has geologists on board as well. SSRI has a major position and will benefit from the large amounts of silver that are in VOK. Long PVG.

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    3. It is not Pretium's fault that the deposit does not conform neatly to methods which are easy to calculate. However consider that when the 10,000 ton bulk sample was processed, over one half an ounce of gold per ton was recovered from the bulk sample. This is off the charts compared to uniform but low-grade deposits that are easy to calculate. So I concede some uncertainty based on the nature of the deposit, but the odds seem to be in favor of this mine becoming legendary.

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    4. Hi Mr. Angry,
      Pretium spent a lot of money to protect themselves from a hostile takeover. They are supremely confident of the validity of the deposit and are not looking to be taken over, on the contrary. As far a a "major" being involved,
      surely you are aware that Zijin Mining, the largest gold miner in China, has a large position in the company and recently elected to maintain their proportion undiluted in the face of a capital raise. So I suggest that there is already a "major" involved.

      You could be correct, the deposit may disappoint. But the
      actions and commitments of the involved parties have been pretty consistent since the Strathcona fiasco. And as far as I can tell, FNV has not dumped its position in PVG.

      And SSRI surely has geologists on board as well. SSRI has a major position and will benefit from the large amounts of silver that are in VOK. Long PVG.

      Delete
  2. PVM is highly advanced and has a very large resource. I doubt highly a body will be able to find the needle that will break this large haystack. http://canadastockjournal.blogspot.ca/2013/10/pretium-resources-inc-pvgt.html

    As an aside to our rock dog guru I would suggest highly you apply for 'adsense' Once approved you can run their display ads and get dough dropped into your bank account. It won't make you rich (by a long shot) but it will compensate you slightly for your too valuable efforts. I think you need a minimum of 50 posts or somesuch. Worth looking into, certainly.

    ReplyDelete
    Replies
    1. Hello Ace, I'm going to spend some more days working through the data. I plan to compare azimuth against grade to see if that gives me an idea of the orientation of the gold veins (as well as the info in the 2014 technical report), but (and I concede that I have only looked at a small portion of the data), I get this nagging doubt when I look at the various maps that the high grade zones don't link up between drill-holes (this could be due to the extreme nugget effect), the gold appears to be found predominantly in very narrow bonanza zones, and the well publicized issue back in Oct 2013 when Graham Farquharson of Strathcona Mineral Services said "there’s an excellent chance that they could have a small tonnage, high grade gold mine. But they will not have a mine producing 425,000 ounces a year for the next 20 years as they have been advertising so far.", and from what I have seen, I think he's correct.

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    2. Interesting article thanks for writing it

      Delete
  3. I was going to make a sarcastic comment that all of the VoK veins are exactly 50cm wide.
    I put it down to the fact that they sample on 1m intervals and 50cm on veins, rather than adopting a more standard practice of 1-2m intervals and also use litho and structural contacts to guide spacing so you don't have samples assayed 2 different rock types etc.

    I agree with you, there have been a lot of questions raised about the ability to mine at a large scale, narrow high grade veins.

    Once you push past the promotional spin you quickly find that a large portion (i was going to say virtually all, but I need to do through them to see if that is the case) of the big, wide high grade intercepts are really narrow zones of extremely high grades with a minor mineralisation around them.

    Could there be a parallel with Rubicon, and once mining starts the inconvenient truth comes out in the form of missed production schedules, and general under performance?

    I may over the next few days pick apart a press release and bring their drill-hole data into 3D (they nicely include a whole load of DH data on their website) to see how it stacks up.

    ReplyDelete
  4. Very interesting and helpful post - thank you. This helps confirm my suspicions that VoK would be a very challenging deposit to mine, as evidenced by both the "chatter" and the lack of a takeover of Pretivm by a major despite the spectacular grade hits. I have stayed away from it.

    ReplyDelete
    Replies
    1. I'm going to spend a bit more time of VoK to try and understand it a bit better. Pretium have been good with releasing a lot of data on their website that I can dissect

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  5. I don't understand the focus in this discussion on veins. I thought Pretium intend to mine it as bulk; i.e. not going to try and mine veins. They say they have raisins scattered in a lower grade cake and are going to just chomp the whole thing and get an average 15g/t. What am I missing ?

    ReplyDelete
    Replies
    1. Hello Basin, the issue appear to be that the majority of the gold appears to be in very narrow veins and the surrounding material (that is planned to be bulk mined) contains very little gold, here is a link below to an interview with Strathcona.
      (http://investorshub.advfn.com/boards/read_msg.aspx?message_id=94441145).

      I think DJS444 hits the nail on the head, if we look at a combariable-ish deposits (i.e. an underground gold mine aiming to produce >200Koz Au)
      1. Cerro Negro - initial resources in 2007, taken over at the end of 2010.
      2. Fruta del Norte - lower grade and smaller than VoK - first resources released in 2007, taken over in 2008 by Kinross.

      If VoK is as excellent as advertised (and as a geologist I hope it is), you would think that the majors would be all over it like a cheap hooker. the fact that they aren't is interesting, and I bet a few have reviewing the project data, and maybe seen something that we haven't?



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    2. Hi TAG..

      Two points come to mind. First off that PVG recently strengthened shareholder protections to prevent a third party from snatching the rug out under existing owners - in other words like what happened recently to longstanding Kaminak shareholders who justifiably might have hoped to hold on for a 5- to 10-bagger outcome, and instead are getting crappy Goldcorp shares.

      Secondly that Strathcona interview is from 2013. Strathcona were proved to be wrong by the bulk sample which yielded substantially more gold than expected.

      AND in an interesting twist of irony the guy running Strathcona is also on the board at Franco, despite which Franco put up a large pile of cash to help PVG go build a mine. Franco Nevada is nobody's fool, they have expert geologists who must have also taken a good hard look at the data before they put their money on the table.

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    3. Thanks Basil, they are great observations.
      Franco Nevada have a great team, but they aren't perfect, they did acquire a royalty on the Phoenix deposit so occasionally they do have misses.

      From my understanding, which is limited, the bulk sample was successful (and had higher grades than predicted), but from what I understand this was due to them discovering the previously unknown Cleopatra vein.

      I really hope that the project work well and makes a lot of money for everyone and particularly people in the local area.

      If you look at at the Kaminak deal, it is a great project and hopefully Goldcorp got it for a song, which is much more beneficial to their shareholder's!

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