Tuesday, June 28, 2016

Orex - Sandra Escobar - Metallurgical Testing

Orex have announced that they will be conducting some Metallurgical testing on the Sandra Escobar project.

Link to the PR here

Some points that I've noticed:
They still go on about it being a flat lying disseminated deposit. I disagree with this, as you have read in early posts, I feel that it is horizontal, low grade disseminated halo around vertical, high grade veins/stock work.

Here is a photo from Sandra Escobar the La Posta Stock work

Not many horizontal veins!

However, in the PR they give us 2 important pieces of information
  1. The different metallurgical sample grades (50, 100, 150, 200, 250g/t Ag)
  2. Different grind sizes (i.e. the sizes of the particles being tested - 75, 106 and 250 micron).

Sample grades

This is good, I explained before that a common trick is to just send high grade ore for testing, and this often skews the results as high grade ore is typically significantly different from low grade ore. Here are some photos from Sandra to demonstrate:

They look different, and they will have different metallurgical properties.

So reading between the lines:

  • 50 g/t Ag - this will probably be the lower cut-off used in the upcoming resource calculations
  • 250 g/t Ag - this material will probably be dominated by veining or disseminated mineralisation very close to the veining, so will have different metallurgical properties.
Orex are essentially testing all logical grades, but the critical results will be from the 50 g/t and 100 g/t samples as these areas will form the bulk (>50%) of the deposit. If they get crap recovery from the low grade zones, then there is no deposit here, time to move on.

Grind sizes.

General rule of thumb:
  • coarse grind (e.g. 150 micron) - poor recovery due to poor liberation (i.e. unable to recover the very fine grains and encapsulated mineralisation).
  • Fine grind - good recovery, but more expensive grinding costs, lower mill throughput
More simply:
From Runge et al (2013).
The finer the grind, the higher the cost

If you look at the sizes selected by Orex (150, 106 and 75 microns) that immediately tells us that the silver cannot be recovered by a heap leaching (particles sizes from 12-100mm), they need to crush and grind the ore to recover the silver.

My guess is:
  • low recoveries (around 55%) from the 50 g/t zone
  • good recoveries (around 75-80%) from the 200 and 250 g/t zones
The results from this study will make or break Sandra Escobar. Will we get some BS with only the most favourable results being released (along with the headline - 80% recovery from Sandra ore), and carefully relegating any poor results to the bottom of the PR?

Time will tell

Tuesday, June 21, 2016

Hot Maden - Turkish delight or terror

Mariana Resources have been announcing some great intercepts from their Hot Maden project in Turkey, so I was intrigued to see a) how good the project really is and; b) what potential is there to expand the resources and c) are there more high grade deposits to be found?

Summary (the TL:DR Version)

  • Initial resources outlined a small, but very high grade deposit
    • Majority (>60%) of the Gold is in a small, ultra-high grade zone.
  • Follow-up drilling appears to have closed off the deposit.
    • Recently announced intercept in hole 053 (40m @ 9g/t Au) needs follow-up
  • Exploration around deposit hints at additional 
  • Drilling has focused in an 800m long core of a 4km regional alteration trend.
    • good potential to find additional deposits
  • Is there a second, unexplored alteration zone cropping out in the NW of the project?

Here are the initial resources (Sept 2015)

If you look at the table, 60% of the gold is in the Main Zone UHG (Ultra High Grade). Accurately defining this zone will be key for the deposit.

The initial resources were defined from just 17 drill-holes, and since then Mariana and their JV partner Lidya. it has a central A-Cu zone with a Zn rich halo.

Gold: Red arrow = trend of high grade zone

Copper: Red Arrow = trend of high grade zone

Zinc: moderate/low grade zone halo around the Cu-Au core

If you want to look at this data in 3D, you can download the Leapfrog viewer files from here (link).

When we bring in all the data from all 53 drill-holes that have been announced:

Comparison of my 1 g/t Au grade shells from all DH (blue) and the first 17 DH (red)

 The majority of the new drilling has focused on:
  • Infill = better defining the high grade zone
  • Resource expansion.
    • Trying to link the 2 resource areas
    • Exploring for the extension of mineralisation along strike and to depth in the main zone
The drilling has been partially successful. The high grade zone is now better defined and from initial review appears to be similar sized or slightly larger than initially calculated. There are several high grade intercepts (e.g. DH 052 and 053) that need followed up.
I would guess that in an updated resource we would see a moderate increase as drilling has essentially defined mineralisation limits, and outside of this most drill-holes have hit narrow zones of moderate grade within a low-grade halo.

Again, you can find all this data in 3D here (link).

But it isn't all doom and gloom, when you take all of the data and put it all together, I pulled all the soil maps from the technical report, the sections and satellite imagery from Google Earth, the project area looks very exciting.

Drilling has focused on exploring the large (900m x 250m) gold, copper and Zinc soil anomalies, and has explored them systematically with great results.

Current resources = black outline; drill-holes = white circles.
The area to the south looks very interesting!

 When we look regionally, we see that drilling (and maybe exploration in general)  has only focused on a small (800m) portion of a much larger alteration zone.

This is understandable, this is where most of the historic mining has occurred, but there may be multiple deposits along this trend and it would be nice to see Mariana/Lidya exploring the rest of this trend. In Google Earth there appears to be a second, smaller alteration zone to the NW of the main trend, could there be anything interesting here?

Looking at the topography, maybe a regional stream sediment sampling program will identify areas of interest for future exploration?

The 3D view of the regional and drilling data can be found here (link)

Saturday, June 11, 2016

Does Columbus know how to use a compass?

I'm working on compiling some data from the Eastside deposit, but I noticed this little howler. So I thought I would share it.

just a small part of the April 29th PR Map

and from the March, 2015 43-101 report:

Just a list of random number
Do you see it?

Here is a little clue.
On the map, the circles are where the drill-holes are located, next to each one is the following info:
  • Hole Name: e.g. ES-22
  • Angle of Dip: e.g. -45 (-90 = a hole drilled vertically down)
  • Azimuth: e.g. E (for east or 090), or because they are Sepos* they use Quadrant Bearings (e.g. S79E which for normal people is 101 - the bearing is 79 degrees from south in an easterly direction)
  • hole depth in feet e.g. 505' ("'" = ft - just ask Spinal Tap (link))
 Look closely at drill holes ES-14, 20, 21 22, and 31. Do you see it?
  • Drill-holes ES-14, ES-21 and ES-22
    • on the map they have been drilled eastwards (090)
    • in the technical report they are listed as being drilled westwards (270)
  •  Drill-holes ES-20, and 31, we have the reverse
    • onm they way the holes have been drilled to the west
    • in the table they are listed as being drilled to the east.
I', hoping that it is a little issue with the map, so, Colombus (thanks Adidas), give your drafts-person (we're PC here) a slap.

If it isn't a simple drafting errors and you've used the wrong values in the technical report, that would be interesting...

 *ask your Aussie friend what it means

Friday, June 10, 2016

Metal Equivalents BS


Companies will calculate the high equivalent grade and resources as possible by:
  • using 100% recovery for everything
  • include as many metals as possible
  • Use favorable metal ratios (e.g. 60:1)
  • Use favorable metal prices (high byproduct prices and low principal metal prices)
 The "geology for investors" website have a Metal Equivalent calculation tool (link)

We read about how companies like to expand their results by mixing high and low grade material together, but why don't we have a look at the world of metal equivalents. This is something I hate in the exploration world, calculating an equivalent grade from every element under the sun to create a resource on steroids.

How do companies do this, well they have several flavors to confuse, over-complicate and BS you into believing their BIG numbers:

Here is TAG's list of Metal Equivalent BS (tm).
  1. They will assume 100% recoveries - no mine anywhere has ever got 100% recovery for any element, EVER! 
  2. They will try and use every element possible to include in the equivalent calculations (Hello Baja Mining and using Mn for your CuEq grades)
  3. They will provide recovery percentages for some but not all of the metals used to calculate the equivalent grades.For the metals without a recovery value, the company will always use 100%.
    • Occasionally companies say they use recoveries when calculating the equivalent resources, but they actually rounds up to 100% doesn't it? Companies will quote metal recoveries, but not actually use them when they calculate their Equivalent grades and values.
  4. They use unrealistic metal ratios - the infamous 60 or 65:1
  5. They use high prices for the byproduct metals and low prices for the metals that they are calculating equivalent values for.
If you have any more, I'll add them.

Why don't we run through an example, I've decided to pick on Southern Silver and their 43-101 resource calculation for Cerro Las Minitas project.

Silver only makes up 23% of the total AgEq resources for this project. Southern Lead-Zinc would be a better name?
But they include 2 conflicting statements, the first:
The 150g/t AgEq cut-off value was calculated using average long-term prices of $15/oz silver, $1,100/oz gold, $2.75/lb Copper, $0.90/lb lead and $0.90/lb zinc and metal recoveries of 82% silver, 86% lead and 80% zinc. All prices are stated in $USD.

OK, so they only use the recovery rates to calculate a 150 g/t AgEq cutoff, but that conflicts with point (4) in the notes below table 2 (link) and in their latest presentation (page 13) where they specifically state:
Mineral Resources were estimated using a long-term prices of prices of $15/oz silver, $1,100/oz gold, $2.75/lb Cu, $0.90/lb lead and $0.90/lb zinc and metal recoveries of 82% silver, 86% lead and 80% zinc. All prices are stated in $USD.

Lets check this statement out a bit more:

  1. Metal recoveries - NO recoveries have been provided for gold (Au) and copper (Cu).
  2. Metal Prices
    • Ag = $15/oz - seems reasonable compared to $17.3/oz quoted today
    • Au = $1100/oz - again, very reasonable compared to $1270/oz it is today
    • Cu = $2.75/lb - this is a lot higher than today's price of $2.04/lb
    • Pb = $0.9/lb - again a lot higher than $0.77/lb quoted today
    • Zn = $0.9/lb - this is close to today's price of $0.94/lb
This gives the following metal ratios:
  • Ag:Au = 73:1
  • Cu:Ag = 5.45:1
  • Pb:Ag = 16.7:1
  • Zn:Ag = 16.7:1
But why don't we use the actual metal prices from the 21st of March as a comparison? They were:
Au = $1244/oz; Ag = $15.8/oz; Cu = $2.30/lb; Pb = $0.82/lb; Zn = $0.84/lb, and we get the following ratios:
  • Ag:Au = 78.7:1
  • Cu:Ag =6.87:1
  • Pb:Ag = 19.25:1
  • Zn:Ag = 18.7:1
This gives a 9% lower AgEq grade (330.79g/t vs 363g/t) and therefore 9% less AgEq ounce.
See the cheat?
The higher the price you use for the byproduct metals (Cu, Pb and Zn), and the lower the price you use for the principal metal (silver), you calculate a higher equivalent grade and therefore more ounces. Very sneaky!

Now lets check these resources in a bit more detail, for this I'll present 3 different options:

Option 1: Recoveries: Ag = 82%, Pb = 86%, Zn = 82%, and 0% for Au and Cu
oh no, we've only decreased AgEq resources by 25% (numbers in RED)
Option 2: Recoveries: Ag = 82%, Pb = 86%, Zn = 82%, and 100% for Au and Cu
a bit better, we've only rescued the resources by 16%
Option 3: Using 100% recovery for Ag, Pb, Zn, Au and Cu.
at last, our number match
So Southern Silver actually used 100% recoveries for all metals to calculate the AgEq grades and resources, but they explicitly told us in the press release and in their presentation that:
Mineral Resources were estimated using a long-term prices of prices of $15/oz silver, $1,100/oz gold, $2.75/lb Cu, $0.90/lb lead and $0.90/lb zinc and metal recoveries of 82% silver, 86% lead and 80% zinc. All prices are stated in $USD.

This is NOT true, Why can't they just state that they used 100% recovery rates for all metals and be done with it?

Why do they have to (in my opinion) mislead everyone into believing that their project is better than it really is.

(Edit: I am naive - but they could just have put "assumed a 100% recovery for all metals" at the end of the table and be done with it, as this is 'normal' for junior companies. Southern seems to go for that special 'out of their way' BS to hide the fact that their project doesn't really have enough Silver (or lead or zinc) to be interesting.

Quick question - apart from La Negra (not Aurcana resources - they lost it back in Jan) - How many active operations are mining those sorts of grades and making money?)

So Southern has ticked all the points on TAG's list of Metal Equivalent BS, that's a 100% failure (or is it a success for their IR team?) rate.

We aren't stupid, we know that the real reason that no recovery percentages were reported for gold and copper is for the simple reason that there is very small amount of either at project they they won't be recovered or if they are, they are in such small amounts that their value is less than the costs/charges levied by the smelter to recover them. Smelters aren't charities after all.

I hate this sort of BS, there is no reason to do it, companies just need to be open and honest.

Just a note to everyone, I'm compiling data on several projects, It is taking a bit longer that I expected but as I'm trawling through press releases to find as much data as I can.

Here is the spreadsheet I created - link so you can check the number and play with the metal price ratios

Thank you, and I'm hoping that England don't lose tomorrow!

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.