Drill results have been spewing from Sol Gold this year and I've been too lazy to bother updating my model, but as people have been irritating me, I've decided to undertake the herculean task of bring in more than 135Km of DH data into some sort of semblance.
I've probably failed, but the 3D model looks pretty (link), and that is the only thing that is important.
Cop-out section: A lot of drill hole information (e.g. final hole lengths etc.) wasn't included in the press releases and on the maps accompanying the recent press releases there are so many holes.
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| like a orgy of rabid worms |
You can see that there are holes over holes over holes, to such an extent that even Sol Gold aren't able to accurately label them!
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| The deposit with 2 holes with the same name |
Basically, what I'm trying to say is, take my results with a pinch of salt, I've tried to do the best I can, but I don't know how accurate my model is, so beware.
Before I started compiling the data, I was concerned that the majority of the drilling was focusing on the high-grade core initially defined in 2017 and that all Sol Gold will have done is simply moved a chunk of the Inferred Resources into the Indicated category, which would be regarded as a bit of a failure after drilling so many holes and spending so much money.
In addition, when you pull apart the assays, we see time and time again, that in reality the >1% CuEq mineralization is restricted to quite narrow zones, surrounded by sub-economic (<1%CuEq) mineralization.
Back in January (link) I updated my original model to try and replicate the official SRK resources, and here is my latest version that (tries and probably fails) incorporates as much of the data as possible.
I've been a bit handicapped by the fact that Sol Gold haven't released assays for every hole drilled, just summary results from the best ones.
Here it is:
Table from January 2018 post
The changes are moderate:
- Specific Gravity - 2.77, taken from the technical report -
- Global resources (>0.3% CuEQ) increased by ~37%
- High-grade resources (>0.9% CuEq) increased by just 12%
Overall, a bit disappointing.
Just a quick question for people in the mining bizz, this paragraph caught my eye in the Alpala technical report
US$5M is a lot for a PEA, isn't it?
Extremely long drill holes...up to 2.2 km. Hole deviation seems to be excessive.
ReplyDeleteI briefly looked at the MRE by SRK. I'm familiar with and respect the Vancouver office but this one was done by the London office, who I don't know at all. The statistics look good although there appear to be two separate copper populations just to complicate things.
It looks to be a potential underground mining operation...probably block cave due to grades. Lots of up front capital with long lead times to production. This is hurtful to NPV.
Remember, they are using directional drilling. The difficulty I have is that without the final hole lengths, I have to guess the changes in orientation downhole.
DeleteIf they did include the final hole length, with basic trig, you can work out the average inclination for the holes.
Hence the reason for the disclaimer
Hole descriptions, including final length are in the MRE.
Delete$5 million is a lot for a PEA under normal circumstances. Based on what I saw in the MRE there has been very little met work done to date, and the drilling for met studies would be significant on this deposit due to the hole length. Some geotech drilling might also be done to determine if block cave is a workable mining method. SRK are very good in my experience but they are not cheap!
DeleteSRK Cardiff (not London) have some exceptionally capable people that do mineral deposit statistics. Two populations in copper deposits are not unusual. Veins within porphyry maybe.
DeleteThe cost of the PEA is because they are working to BHP standards.
The elephant in the room is the fiscal and political regime in Ecuador.
Interesting tidbit...the MRE uses a cutoff of 0.3% CuEq, which at 90% recovery (optimistic) would provide about $16 to $18 per tonne in revenue. Assuming 25% of revenue for transportation and TC/RC it leaves about $12 to $13 for site costs. That likely isn't enough to pay the bills. A higher cutoff of say 0.5% would provide around $22 for site costs, which is probably still on the optimistic side for a block cave operation.
DeleteThank you for the correction Martin. Is there a reason for using BHP standards? Is this a stage gate standard?
DeleteMost greenfield block cave operations have a resource that is higher grade (e.g. Golpu - 820Mt @ 1% Cu and 0.7 g/t Au; Los Sulfatos - 1.2Bt @ 1.46% Cu) and significantly larger than Alpala in its current iteration (even using the 0.9% CuEq cutoff).
DeleteThe MRE has the lengths and starting dip/azi (so no numbers for downhole deviation etc).for the first 38 drill-holes (or just 53,616m). For the additional drilling since then, not all of this information is included.
So I used as much of the MRE info as possible, but for the drilling since dec 2017, it is a bit of a crap shoot
PEA costs - it looks to be a relatively standard porphyry. I'm sure that they could make enough met samples (for a variety of grades, especially around the economic cut-off) from the half-core left on-site.
DeleteSolgold were good, they did a prelim met study back in 2014 to make sure that there were no surprises. The studies reported 80-90% recovery for Au and Cu
One of the big risk issues for the concentrator is crushing/grinding. What is the SAG mill size and power? DD rejects are not good enough for SAG testing. Larger core is required.
DeleteIf they did met testing back in '14 they would not have had a very good distribution over the entire potential mineable area. Economic studies nowadays want to know minerology parameters for each block in the resource model, although perhaps not at PEA level.
BHP recently acquired a 6.08% interest in Solgold, which I assume is not just for investment purposes.
DeleteAt GGI they are having problems with magnetic deflection of drill holes. It is being speculated by the world's top nickel experts that the more drilling misses the massive sulfides, the more likely that the ore bodies are bigger and bigger. In fact, they are currently building a reverse correlation model that will build tonnage based on holes that have missed the ore body. Entirely novel, first of its kind in the industry.
ReplyDeleteor it could be like herding sheep. They drill around the deposit to scare all of the Nickel into the middle. Really helps with mining at a later date to have everything in one place....
Deleteor are you saying that the entire deposit is made from Alnico and that they are going to sell it at a premium to make magnets?
DeleteI worked in Sudbury for a couple of years. At that time we were drilling 5,000 ft holes from the 5,000 foot elevation to explore the Onaping Depth deposit. (currently under development) The only deflection I recall was when the drillers tried to explain why they could only get 5 ft per shift.
DeleteNews is out read it and pontificate.
DeleteOne would expect the first holes to be 18-1, 18-2, 18-3,.....not 18-16, 18-19 & 18-20. Where are the assays from the first 15 holes?
DeleteTomSzabo, I heard that you were undergoing serious surgical intervention to correct your recto-cranial inversion syndrome. It's so very sad to see that the treatment has failed. A difficult case?
DeleteI guess your NLW career is inversely correlated to your posting on this website. Maybe the reverse correlation would
be particularly novel.
A believer, who obviously still has his head up his ass.
DeleteHello Bill,
Deletethe holes are in order, they just have a year prefix identifying which holes were drilled in which year
e.g. EL-18-22 - the 22nd hole drilled on the property, that was drilled in 2018 and so on.
No conspiracy here, but with 3 rigs turning, I would have expected more core.
The bigger question is, if they have drilled 20 holes (they say that hole 36 is in progress), why have we only got the results from 7? Maybe they started drilling out the known pods, and the holes drilled away from this area were shite?
Hello AG. I understand how the holes are labelled. My post was intended to raise the question of why no results on any of the first 15.
DeleteGGI down 7.6% this morning - don't think much pontification is needed.
ReplyDeleteor now 20% at close of play
DeleteMany good takes in here. I think that's a little bit too pricey for a PEA which is usually based on inferred and has very little engineering work done. Or metallurgy - they won't be doing any met domains definition. Hence its accuracy in the 30-50% range. At 50% you can flip a coin and be as accurate as the PEA w/o having to spend $5M. A good point was that the grades are a little bit too low for an U/G block caving mining operation. There are many mining (not geological) factors that could influence the outcome (orebody depth, geometry, etc). Still one of the most important is almost never mentioned. Geotechnics. The CEO, VP, geologists they all go 'oh, it will be an U/G block caving op'. Nope. Not every porphyry deposit is amenable to this high productivity low cost mining method. One of the reasons is that the rock won't break (into small blocks) and fall on the floor of the cave by itself (due to gravity). You have to be pretty sure about that early in the game if you are to make the right exploration and development decisions. But this is only one aspect. There are many more things to consider when thinking in doing any kind of U/G bulk mining. Cheers. @dankogaion
ReplyDeleteHow dare you undermine the centuries-old geological skill-set of arm-waving and expressing an opinion on subjects that we have absolutely no knowledge of.
DeleteI feel terrible being criticized by people with actual knowledge. Have they no shame!!
http://uncyclopedia.wikia.com/wiki/Geologist
That probably means they've figured out how to deal with their current debt problem.
ReplyDeletelet me guess - pump out lots and lots of shiny new shares
ReplyDeleteWhy not? Share price has rebounded from early this year. They could also roll over some of their debt but that would mean ongoing interest and repayment obligations.
ReplyDelete