Hermosa - (lack of) Talent Section

Metallurgy and ore zones

I'm always suspicious of metallurgical data. Junior companies like to skew the results for Maximum Impact (tm) by sampling the best and highest grade material (to steal a yank term - the 'winningest' ore) to maximize recoveries. As we saw with Sandra Escobar, often (i.e. always) the high-grade material is very different (in form and style) to the majority of the material that forms a 'deposit', and there can be drastic differences in recoveries for low, average and high grade material.

Fortunately, AZ keep us calm with this from the latest technical report:

all is good

At Taylor we can see that AZ sent a single, 139lb, representative (for a 100Mt deposit - or just 0.0000000063% of it) for metallurgical testing. It was a composite made from 18 separate samples.



You can see that the grade of the met sample is twice that of the resources (not exactly representative), and we can see in the table above that there are huge range in grades from the individual 18 samples making the composite (I've included my spreadsheet with the 3D model (link).

• Lead: 7.99% vs 4.4% (range - 1.17% to 28.43%)
• Zinc: 7.98% vs 4.7% (range - 1.11% to 22.8%)
• Silver: 3.53 oz/t vs 1.8 oz/t (range 0.53 to 14 oz/t)
• Copper: 0.28% vs 0.1% (range 0 to 1.32%)
• Manganese: 1.32% (range 0.68% to 10%) - we have no 'official' Mn numbers in the resources

So it isn't a representative sample. As a prelim study it shows that you get very good recoveries for Pb, Zn and Ag from high grade ores, but will we see similar recoveries for average and low grade material that makes up the majority of the deposit?

My gut feel is yes, but i'm going to estimate that it will be a few percent lower (i.e. high 80s for Pb and Zn), but it would have been nice that AZ used these recovery values for the ZnEq calculation!

I also found these sections interesting. You can see that the Hermosa Central oxide zone extends down into and separates the upper and lower sulfide zones. Is this contact sharp or do we have a more complicated zonation from oxide through a mixed zones (with both oxide and sulfide minerals) into the sulfide zones?

Some rusty stuff in the middle like jam in a black forest gateau

This is important as each zone will have different characteristics (for mining, treatment) and  recoveries for each metal. We know the Central deposit contains significant manganese (it was being promoted as an Ag-Mn deposit), is the manganese evenly distributed throughout Central-Taylor or restricted to specific areas?

Would we also see a corresponding drop in Mn values in the concentrates? I was intrigued, so I went a bit further and brought in the location of the samples that were collected for the metallurgical sample to check that the samples were not just taken from a single hole but were spread throughout the deposit.

That manto is a bit of a prick

Ohh, we can see that the samples were collected throughout the deposit. However, a few appear to have been collected within or very close to the manto oxide zone, and they appear to contain a lot more Mn (>5%) than the samples taken from the deeper sulfide zone (<2%).

If you take away the samples containing more than 5% Mn, the grade of the composite drops from 3.42% Mn to 1.79% Mn, and if we use bad maths:

• Original met composite grade = 3.42% Mn gave a concentrate grade of 1.33% Mn
• TAG's composite grade = 1.79% Mn - would this give a concentrate grade of 0.7% Mn?
• I have no idea if this is good or bad, but it may be more manageable than 1.36%

It looks like AZ were focusing on maximizing the Pb and Zn recoveries (from their representative metallurgical sample), and have appeared to have FUBAR-ed the deposit by carelessly including a few samples with a metric F*ck-tonne (I'm using official SI units here) of manganese.

Imagine if AZ had been clever and had known that Mn was an issue in Zn concentrates (I admit that I didn't). They could have trawled through their assay database and picked good samples with low Mn values for the metallurgical sample and no-one would have known.

oops

You missed a trick, now you get to have nice awkward interviews on BNN, every investor, newsletter writer and awesome mining blog dudes irritating the shit out of you by asking....