If a deposit has very poor recoveries, should it still be allowed to state it's resources?
I've only included the Zn recovery as it forms the basis of my question.
We can see that they get very poor recovery (2.2%) from the single metallurgical sample* from the Scherrer zone.
*for the case of semantics I'm going to assume that this single sample is representative for the entire 14.3Mt resource for the Scherrer Zone.
According to the Taylor resources they have calculated that the Scherrer zone contains:
- Indicated Resources = 6.2Mt @ 6.5% Zn, 5.6% Pb, 0.2% Cu and 2.7 oz/t Ag or 14.7% ZnEq
- Inferred Resources = 8.1Mt @ 9.5% Zn, 7,4% Pb, 0.2% Cu, 3.1 oz/t Ag or 19.9% ZnEq
It is (according to table 14.10) the 'best' zone in the entire deposit. However, the zinc recovery in the Scherrer zone is 2.2% (table 13.5 in the PEA), is this zone still good enough to be called 'ore'?
Let us recalcalculate** the ZnEq% for this zone:
- Ind Res = 6.2Mt @
6.5%0.143% Zn, 5.6% Pb, 0.2% Cu and 2.7 oz/t Ag or 8.3% ZnEq
- Inf Res = 8.1Mt @
9.5%0.209% Zn, 7,4% Pb, 0.2% Cu, 3.1 oz/t Ag or 10.6% ZnEq
So this now takes the Scherrer zone from being the best zone to the worst (I'm ignoring the andesites as they are so small) zone. It is still economic to mine, but this is a quick demonstration for why I believe that companies should be using RECOVERABLE metal grades when they calculate equivalent grades.
Or put it another way, imagine that AZ spent ~$400M to build the mine, they are focusing on mining the 'best' ore, which according to the resources is the Scherrer Zone. They start mining, sending ore to the mill and suddenly find that all the zinc is disappearing to the tailings dam, this will cause a few problems like:
- Losing 40% of their revenues
- Possible environmental penalties as there may be quite strict limits on the amounts of lead and zinc that could be discharged to the tailings pond
- those fun, high confidence inducing press releases stating that "the ore is more challenging than expected", "processing difficulties", "additional test-work required" and the like.
It sounds like I'm picking on AZ, I'm not, I just though that this was a nice and easy example of a common practice in the exploration industry, and AZ provided some decent data to show it.