Ana Paula - Cuida su salud... y belleza

Ana Paula, Wow. This is what an exploration geologists is looking for.

This is what a junior exploration company IR representative looks like in the wild

Not the girl, you perverts, the rocks she is sitting on, some nice alteration in the background.....

Great grades and cheap to build, surely the perfect deposit?

I'm going to do 2 posts on Ana Paula, one on the geology and a second on the numbers in the PEA.

We'll gloss over the security issues (you can read them here, here and here - just some friendly kidnapping, robberies and disappearances from the area, nothing to worry about), and just focus on the geology.

Summary:

• Ana Paula is small - only 2.25 Moz gold, but:
• In the PEA, they say they will only mine 0.96 Moz, just 43% of the deposit via an open pit
• So the remaining 57% will not be mined - unless gold prices go way higher
• Short mine life - just 8 years - major companies want 15+ year mine lives. 
• Metallurgical complexities - Gold is associated with arsenopyrite (contains arsenic) and pyrite
• Great recovery with flotation (94% for Au and 87% for Ag) but produces a crap concentrate with >10% As.
• However, if you do a leach on the concentrates you can get recoveries of 80% Au and ~50% Ag.
• Blue sky potential - good property with lots of potential to find more deposits, but there are major security issues in Guerrero at the moment.

The most interesting things about Ana Paula is her enormous grade and IRR (link). It has everything, including underground potential. Here is a section showing the grade blocks in the deposit. 

The dashed lines are proposed pits

Wow, it looks great, but why don't the pits go deeper? There is gold everywhere, with a bigger pit you'll mine more gold and have a nice long mine life? This confused me (which isn't too hard).

So I compiled the data, brought it into 3D tand had a look. You see is that most of the gold is found in a vertical pipe in the middle of the deposit. The rocks surround it look relatively unmineralized.

TAG's official "badly drawn pit" in grey.

At Ana Paula, accoridng to the PEA Timmins will be mining 2.6 tonnes of waste for every tonne of ore (this is the strip ratio). Waste costs money to mine (unless you are Corvus with you magical self-mining ore), and you want to keep this ratio as low as possible.

I've created a few sections below, one long section (basically a N-S slice through the deposit) and 3 cross sections (E-W slices) that are 100m apart to show you how small the Ana Paula deposit is. You'll also see that a common theme is for companies to pick the 'best' section to show off their deposit.

Long section (basically my version of the fancy one above)

We can see this narrow high-grade pipe continuing to depth

Cross section 1 - 8000N - through the core of the deposit - what a stunna - this will stay in the investor presentations forever.

lots of lovely gold - do you like the promo hole going down the guts of the high grade zone.

Cross section 2: 8100N - this is 100m south of the section above - what do you notice?

Not much gold here!

Not very obvious? Where is the pink stuff? All the high grade has gone!

Cross section 3: 7900N - this is 100m to the south of Croiss Section 1 - what do you see?

Some high grade at depth, but not much close to surface.

We have more gold, but the good stuff is deep, and you only have a narrow sliver of low grade near surface.

These 3 cross sections are just 100m apart (1 football field, or 1.5 hockey rinks), and we can see that we go from lots of gold to not much over a very short distance. How many of the 'crap' sections can you find in the IR material? This is the only image that shows the size and shape of the mineralization.

AP circled in red - check out page 9-4 in the 2016 PEA for the original version

Did you notice the black "U" shaped line on the sections? This is the outline of my badly drawn pit (TM), which is a simplified version of Timmins' $1400/oz Au pit limits.

• Above the line - what Timmins says they will mine in the open pit (if gold prices are $1400/oz)
• Below the line - what they won't mine - this is the "underground potential"

You can see that there is a lot of gold below this line. How much are the leaving in the ground?

It's a tiddler!

So AP contains 2.25 Moz Au, but if we look at life of Mine (LOM) summary, we see this:

circled in red

So they are only going to mine 957,000 oz Au, but they have 2.25 million ounces, so that is only 43% of the gold in the deposit, the remaining 57% is just going to sit in the ground.

OK, I understand, the property hasn't been fully explored, they focused on the high grade zone to fully understand it blah blah blah.
There must be lots of potential to find more and make the deposit much bigger?

nope...

Just a quick guide to help you understand the map above.
The colored blobs are my gold grade shells, and the big blob in the middle is the Ana Paula deposit
The black lines are the drill-hole traces.

You can see that there is 230 holes that have basically drilled everything around the main deposit,and they haven't much more, just some bits and bobs. This has been a well drilled deposit. There probably isn't much more to be found here.

OK, we've established that it is small, there is little potential to expand the known resources, but everything else if fine?

Sorry guys, when you look at the metallurgical results, and read the text, Timmins repeatably state that the gold is found in/with pyrite and arsenopyrite (an iron arsenic sulfide). Here is a photo.

Au = gold; ap = arsenopyrite (an iron-arsenic sulfide)

With flotation you basically recover the sulfide minerals as well as the gold and silver. At AP with flotation they get recoveries of 94% for gold and 87% for silver. This is good. Unfortunately, the concentrates contain >10% arsenic, this is bad. I'm not sure how many smelters would process this, but if they did the penalty charges would be huge. Fortunately, Timmins' have done leaching work on the concentrates - doing flotation followed by leaching on the concentrates they can recover 80% of the gold and 50% of the silver.

So, double processing, and you loose 50% of the silver and 20% of the gold, but you produce dore, which is nice and cheap to refine.

phew...

Look at the leapfrog model (here) and spin it around and make your own opinion.

Dark Star - Redux

This is just a quick update, I made the last post a bit too technical, and here is a simplified version.

Drill-holes 16-03B shows the zone of good (>1 g/t) gold mineralization has been extended by another 100m to the south of drill-hole 16-08. This zone is now 350m long.

Unfortunately, drill-hole 16-01 may suggest that the gold zone at North Dark Star is very narrow, maybe only 100m wide. This is not good,

Originally I thought that at North Dark Star there is a high grade core grading >1 g/t Au (this is a good open pit grade), and the gold grades gradually decreasing as you move to the south and west. This is similar to what you see at the main Dark Star and Pinion deposits.

Red = high grade; yellow = low grade. Blue = Dark Star Fault

My back of the envelope guesstimate was that we had a gold zone that was:

• 400m long, 250m wide by 150m vertically.
• I used a specific gravity of 2.8 tonnes/m³ 
• 42 Mt @ ~0.75 g/t Au or just over 1M oz Au - this is similar to the other deposits scattered around the project

But, drill-hole 16-01 seems to show this:

red = high grade; yellow = low grade

A very small high grade zone, with a small low grade halo. This reduces my guesstimate potential to be:

• 350m x 150m x 100m using an SG of 2.8 = 14.7Mt @ 0.75 g/t Au
• or a potential for ~350,000 oz Au - a 65% reduction. 

So in summary, if hole 16-01 is correct, North Dark Star is very small, and we are getting a repeat of what has happened at the other deposits GSV has drilled - a few good holes and then nothing. Let;s move on the the next target...

They see to have done this time and time again - at North Bullion, Pinion, Central etc etc.

How have they managed to be so lucky and get such great drill-holes from what have turned out to be some very average deposits?

Let us look at their proposed holes for the Main Dark start deposit - drill-holes DS16-17, -18 and 20.

Proposed drill-holes - main Dark Star deposit.

All three are planned to be drilled into the highest grade part of the already defined gold mineralization within the deposit. It guarantees some great assays but all they are doing is duplicating the historic drilling, and when they do a new resource calculation, you'll probably find (unless SRK are involved) that not much will have changed.

A nice little example of Promo exploration.

Dark Star - an Update

Last week Gold Standard Ventures released some new assay results from Dark Star (link), and by some fluke I managed to be correct with my predicted grades for hole 16-03B. Here is a plan map with the new results.

New results highlighted

The Good - Drill-hole 16-03B - intersected 101.2m @ 1.5 g/t Au.

The results from 16-03B came in very close to what was predicted (I was lucky), and extends Au mineralization to the south by ~100 m. We have a high grade core (32.3m @ 2.87 g/t Au) surrounded by low grade mineralization (~0.8 g/t Au). This is OK, and is similar to what we have seen from the drilling at the other deposits.

Nice assays and not too deep.

Here is a long section down the axis of the deposit.

We can see that the gold grades are gradually dropping off from the high grade core (hole 16-08) out into a medium to low grade halo, and some narrow zones of gold occuring along the Dark Star fault.

but...

The Bad - Hole 16-01 was a disaster!

Oh dear, Hole 16-01 was a disaster, all it hit was a few narrow, low grade zones. It was drilled just 60m from hole DS15-10 (149.4m at 1.38 g/t Au (link) and I was hoping that we would see something similar to the main Dark Star deposit, a gradual decrease in grade. In reality we have done from lots of gold to zero, nada, zilch!

This is what I had before:

Yeah, gold going on forever!

and now....

ohh, crap, that wasn't meant to happen!

Where did all the gold go?

It is amazing what a single hole can do! If hole 16-01 is correct, then it appears to show the gold is restricted to a narrow corridor (~150m wide) running from hole 15-10 to 16-03B (and a bit beyond). 

GSV will need to drill some holes to the west of 16-08 and 16-03B to make sure that the results from drill-hole 16-01 were a fluke. If not, it means that North Dark Star is very small, and if DS16-022 and 023 don;t hit anything good, then the party is over!

This is my very generous gold grade shells.

What I would like to see Gold Standard do is:

• Drill a couple of holes to the west of holes 16-03B and 08 to hopefully show that the results from hole 16-01 was a fluke (see map above).
• More holes between 03B and DS16-06, 08 and 22 as you have a 200m x 200m zone with a couple of vertical holes that may miss the high grade zone.
• More angle core holes! Stop with the vertical RC holes. I know they are quick and cheap, but you want as much, high quality data as you can get.

I've put the new results into my model to see what is going on (link). You you can have a look at the results.

It is amazing what a single hole can do!

San Diego - a whole lota crap

Wow, San Diego you cured a king, had a US city named after you, what a guy....

Sorry, I apologize, I got confused with my google search. I should have been looking for the silver-base metal project in Mexico owned by Golden Tag resources.

oh, wow, maybe I'm biased, look at all that silver:

115.4 million ounces 

or

>$2 billion contained silver

must be crap as it doesn't have any chromite....

This project has everything

• gold, silver, lead and zinc
• high grade veins
• bulk tonnage deposit

So Golden Tag now own 100% of a project that has more silver in it than MAG's interest in Juanacipio (115.4 Moz Ag compared to 99.4 Moz Ag).

And if we compare market cap?

• GOG = ~$10M
• MAG = ~ $1.8B

Why, well that is easy to answer when we look at the grades of the 2 deposits:

• San Diego = 61.2 g/t Ag or 112.3 g/t AgEq (all zones)
• Juanacipio = 574 g/t Ag or 923 g/t AgEq

So Golden Tag has more silver at a much lower grade, but as its market cap is only 0.55% of MAG's, is this the deal of the century?

No, No, NO

Summary

• Not all resources are equal - look beyond the total number of ounces
• Grade is king - San Diego = very low grade (including the AgEq BS grades)
• High grade oxide veins are interesting but small, and probably have high As which was a problem in the adjacent Velardena mine.
• Small (90 Ha) project = low exploration potential. Basically, everything has been drilled
• Bulk tonnage zone is deep - ask BHP and Rio at Resolution how much it costs to sink a 1000m shaft.
• No work has been done on the project for several years = low interest, low potential

The share price for Golden Tag will rise and fall with the silver price, but that is all. Looking at the PRs they raised $900K recently - $500K to buy the 50% of the project they did not own and the rest will basically cover costs for a bit of time.



Sometimes I love my job, you get to look at some project that are so obviously awful and some resource calculations (thank you SGS) that are so bad that you have got to have some fun with them.

Lets look at those resources:

oh dear..

Do you like the metal prices they used? I mentioned earlier when looking at Southern Silver's project - Cerro Las Minitas that grade is king. You can have a massive mathematical resource, you can BS people with equivalence grades that use a 100% recovery, but all you are doing is papering over crap.

So lets look at the property:

Wow that's small, basically 1km by 1km

and the drilling

They have pretty much drilled everything, so no real upside, no expansion potential.

So we have a small project, minimal expansion potential and low grades. Not a winner.

But, I hear you yell, they have a bulk tonnage deposit:

oh look, a dingleberry

Oh, it is starts at 450m depth and runs a massive 51 g/t Ag, 0.65% Pb, and 1.17 % Zn. Let's start sinking a shaft and mine that bad boy....

Those grades are about 5 times lower than most underground base metal mines (that work). Lets compare that with Otto's fav - Tinka Resources:

higher grade and close to surface

They get bonus points for this:

yum

I suppose I should look a bit more at the data, just for chuckles to see really how bad it really is, and oh boy, SGS have really done a bad job. I assume that it was done very quickly as it is very shoddy - not as bad as the historical resources done by Micon (I keep these as examples of some of the worse I've ever seen).

These figure come form the SGS Technical report, by highly qualified, professional geologists. I recommend that you download the report (link) and have a look yourself.

 
Look at the top figure, you see these weird circular features - the bottom drill-hole is the best. Basically, you have a series of circles centered on each drill-hole and they produce these weird shapes where the circles overlap.
Why is this a problem? For me it shows that:

1. The person doesn't really know what they are doing
2. They don't know how to use the program they are using to calculate the resource correctly
3. They are doing a quick and dirty calculation and aren't spending any time on it.

I feel that it is number 3, this is a small project for SGS and they just simply did a quick calculation, which led to this PR - 28th of May 2015. 

A very good indication that there is something not quite right, but lets look at some sections.I've zoomed in to the grade map to point out some 'features' that show the lack of quality in the resource calculation.

Grade on the top, resource categories below

oh so pretty

I've zoomed into the top figure - the Ag grade distribution, I've highlight the drill-holes so you can see them easier. Notice that where there is no drilling SGS have been kindly used a default grade of >125 g/t Ag. This is because in Spanish, the work for vein is "veta" and is female, and we all know that they look better in pink! However, if you look to the left, where there is lots of drilling, the grades are a lot lower. Damn that truth machine....

I've marked out some features for you:

A = we have 2 drill-holes very close together. One hole has no grade and the other a few meters away has good grades. SGS have carefully restricted the low grade zone to just ~25m around the hole filled in the rest with high grades for 200+ meters.
B =  what's that weird red banana below the drill-hole? Again, the holes was slightly lower grade (~100 g/t = red), but we'll ignore that (ok, we'll have a 10m zone around the DH) and use >125 g/t Ag, because it looks prettier
C = Same again, we have an intercept between 80-100 g/t (orange), but look how the high grade mineralisation bows up into that nasty low grade zone.


SGS are repeatedly reducing the importance of the low grade intercepts, and therefore their impact on the overall grade of the resources. You see it on section after section after section. Each drill-hole needs to be treated equally. This is either:

• A Peter George (TM) - SGS trying to 'create' a big a resource as possible as bigger is always better.
• Consultants may do this to get a reputation of being 'good' to create business for themselves either:
• Directly - more resource calculations, overseeing exploration programs etc.
• Indirectly - We do great resource calculations, why don't you use some of out other great services.
• Golden Tag putting pressure on SGS to maximize the resources to make their project as good as possible as this is all that they have got and no-one want to have spent a bucket-load of cash on a crap project.
• often the hardest thing to do in exploration is walk away and write off your expenses, especially when it is the only project you have.

So it is important not just to look at the total contained metal, these are often inflated using a variety of tricks but check:

• Grade
• overall average of the deposit - compare it against other deposits and even better - operating mines.
• How much of the resource is low, medium and high grade (a good resource report should include a summary table).
• having lots of low grade doesn't mean you have a lot of high grade ore.
• are they reporting an equivalent grade resource?
•  Metal price
• Are they much higher than today's prices - a health discount is nice.

I'll be expanding on the things you need to look for in a 43-101 to make sure that you are being misled.

I haven't brought the San Diego data into 3D as this project obviously isn't very good. If you would like me to do so, send me a message and I'll spend a couple of days on it.

How to break bad news...

What happens if you are a mining company (I use this term loosely) and you loose your only producing mine, do you:

1. Inform your shareholders and the exchange where you are listed that you are having issues and request a trading halt
2. Don't say anything

If you went for (2) then you will love this gem from Aurcana informing the world that they lost their only producing mine, La Negra to Orion Mine Finance.

How did they show this

The PR from the January 5th, 2015 (link) had this at the end:

About Aurcana Corporation
Aurcana Corporation is a primary silver producing company with two properties: the La Negra Mine in Mexico and the Shafter Silver Project in Texas, US. The latter was put on care and maintenance in December 2013, in part due to depressed silver prices.

and from the PR dated 7th Jan - yes, 48 hours later (link), the about section was:
About Aurcana Corporation
Aurcana Corporation owns the Shafter Silver Project in Texas, US. The Shafter Silver Project was put on care and maintenance in December 2013, in part due to depressed silver prices.

They were so transparent about announcing the bad news I had to call them up to confirm that they were no longer operating (or owning) the La Negra mine.

Can we call that burying some bad news.

I'm learning some really good tricks here.....

You may be wondering why I'm putting out this post - and it is basically a quick ask for help, but I'm building up a database (that will be in future post) of the lowest grade mines in the world to basically give you a guide to quickly see how the resources for your favorite project compare against operating mines.

I'm not sure if I should include La Negra as the mine is closed.

This is what I have so far:

Gold Silver - Open Pit

• Rochester Mine, NV - Coeur Mines - 0.093 g/t Au, 16.5 g/t Ag

Copper - Open Pit

• Aitik, Sweden, Boliden Mines - 0.15 g/t Au, 1.3 g/t AG, 0.23 % Cu
• Sierrita, AZ, USA - Freeport - 0.24% Cu,1.4 g/ Ag, 0.03% Mo

Base Metal

• La Negra, Mexico, Aurcana - 55 g/t Ag, 0.24% Pb, 0.98% Zn - closed, lost to Orion Mine Finance
• San Jose, Mexico, Arian Silver - 119 g/t Ag, 0.38% Pb, 0.85% Zn - closed, lost to Quintana Resources

If you can help and send me info on crap mines (that are currently operating) that would be greatly appreciated.

I know that mining depends not just on grade, but also costs and recovery rates. For the post I just want to keep it simple.

Why does drill direction and dip matter?

A big thanks to Darryl Lindsay for prompting me to expand on a point I made in the Cascabel post summary but didn't explain it any further, and to Exupery for asking for some clarification.

Imagine you are a long suffering director of a junior exploration company. Those damn geologists want to spend money drilling a gold project whereas you just want to stake some Lithium prospects in Nevada/Chile/Argentina etc, and live the good life in Vancouver/Toronto/London etc.

Junior companies don't have massive piles of cash and drilling is expensive (this varies by country - but diamond drilling will be around $200-300/m), but you relent and allow them to drill a few holes (1500-3000m) costing around ~$0.5 to 1 million (or more).

You an see the costs add up quickly, so it is key not to waste money (remember every dollar put into the ground is a dollar less for your expenses) by drilling holes with low potential to get a good intercept that you can use to generate news and interest and provide an opportunity to raise money.

Some company's go to the 100% total BS end of the scale to maximize either the thickness or grade from a drill-hole, and the prize for this goes to Avrupa Minerals for their Slivovo project in Kosovo.

I have to admit, I didn't think drilling companies allowed you to drill holes at such a shallow angle.

Even the well known exploration companies can get on the bandwagon - here is some drilling from their Kipushi project in the DR of Congo, but as this is at 1000m depth, there are few areas where holes can be drilled from.

Hole 3 - bit of a promo hole, but still a great deposit.

In other cases it is accidental, the company doesn't know what the controls are on mineralisation and a few of the early holes have been drilled down the middle of a vein/high grade zone of high grade, or it has been assumed that the mineralisation is 'disseminated' and can be explored with vertical holes - this is a very common, but bad practice.

What should you look out for?

• The company is drilling vertical (-90 degrees) or nearly vertical (>-85 degrees) holes
• This is OK if the mineralisation is horizontal (e.g. sediment hosted copper, mantos etc..) - again you can check this by looking at any sections the company has included in the press release or on their website.
• If you are drilling very deep deposits, a vertical holes is the quickest (and therefore cheapest) way to get there.
• Large changes in grade between drill-holes that are very close to one another
• In gold deposits this is harder to see due to the nugget effect.

Here is an example from a Cu-Au project in Peru.

This can cause major issues for mining

Let us zoom in a bit where we have 1 hole that hasn't been drilled vertically.

So we go from gold to no gold over 45m....

What is happening? Basically you have a strong vertical control on mineralisation, i.e. the gold is found in narrow, near vertical zones and when a hole hits the middle of that zone you gets lots of gold, and when it misses, you get no gold.

I've put on some hypothetical drill-holes (black lines) that target the good gold zones, and we know that no exploration company would ever try and abuse the situation to maximize their results....

A more extreme example

All that glitters is gold

This is from a gold project in Canada - but you can see that the Au vein is only a very small portion of the rock, and if the holes had been drilled at a different angle you would have drilled much less vein and much more barren rock.


We also see this to some degree at Cascabel. It is a porphyry deposit the copper and gold are not evenly distributed but is found in veinlets and fractures.

This is typical porphyry mineralisation

What does this mean when we look at the drill results?

I've included a couple of sections to illustrate:

Drill-hole 15-012 - is a near vertical hole (drilled at -87 - so 3 degrees off vertical), it intersected:

• 58m @ 0.15 g/t Au and 0.47% Cu from 186m
• 38m @ 0.171% Cu
• 52m @ 0.127 g/t Au and 0.41% Cu.

Drill-hole 13-004 intersected 158.3m @ 0.05 g/t Au, 0.11% Cu - or using a technical term "Crap".


lets look a bit closer

These holes are 2.5m apart where they cross, yet the grade is very different.

This hole came within 2.5m (a car length) of hole 012 (they cross over in the low grade zone). They essentially drilled the same piece of rock, but one holes (the vertical one) hit lots (relatively speaking) of gold and copper and the inclined hole hit nothing.

How can 1 hole (012) hits lots of copper and gold and another hole (13-004), exploring virtually the same area hit nothing? If the mineralisation was disseminated we would expect to see both holes returning grades that are very similar.

This means there is a strong vertical control on the veins (therefore the grade) at Cascabel, which is normal for a porphyry deposit. Here is the section where I have (crudely) drawn some >1% Cu zones.

Steep holes = great intercepts, angle holes = low grade intercepts. Just imaging the grade of a holes drilled down the guts of a high grade zone - 800m @ >2% CuEq? What would that do to their share price?

I'm not accusing Sol Gold of misleading people, I'm just using their data illustrate a point. As the mineralization at Alpala is deep, they simply can't afford to drill 1.5-2km deep holes to cut the mineralisation at a shallower angle. I just want people to think about what they are seeing and to spend a bit of time looking at data.

Download the Leapfrog viewer file here (link) - it is the same as the one in the previous post on Cascabel, and spin around the data ans use the ruler tool to measure the distance between drill-holes.

Gold Standard Ventures - Amazing Dark Star?

Wow, Gold Standard Ventures have just announced some spectacular results from their North Dark Star project in Nevada. They have been announcing some excellent results for several months, and I promised that I would look at their data and see if it is the real deal or not.

Summary and Questions

• High grade near surface (70m depth) mineralisation drilled to the north of a small (<0.4Moz), low-moderate grade (0.5 g/t Au) deposit.
• Potential to increase resources by 0.5-1Moz - there isn't room between 2 deposits for a massive deposit.
• Mineralization is open to depth and along strike (minor drilling to North).
• Results from drill-holes 16-03B and 23 will be key to see the extents of the >1g/t zone.
• Have the results been received from these holes
• There is a 5% underlying NSR on Dark star, which is
• This is high - 2.5% would be more normal, and could it restrict future development?
• Investment from Goldcorp and OceanaGold probably means no.

Dark Star isn't a new project, it was discovered in 1984 and over a 100 holes (or ~59,000 meters) have been drilled, and GSV released a small resource in 2015.

meh - small and low grade

Nothing special here, most people would have ignore it as too small and too low grade, but it has a great post code. It is smack in the middle of the Carlin Trend and right next door to a major deposit.

Middle of a big gold trend, with some decent deposits (Emigrant and Rain) immediately to the north.

So you have a great story, big land holding, next to a major mine and some old, small deposits but with some good, thick >1 g/t Au historic intercepts - an intriguing story.

lots of holes, yellow - low Au intercepts, red = good Au intercepts.

You can see that most of the historic drilling has focused on the Dark Star deposit with a few scattered around returning generally low gold values. The exception is a single hole at North Dark Star. This is fairly common, exploration companies are very conservative and explore the low risk targets (i.e. where gold has already been drilled).


This is systematic exploration - no-one wants to drill 200+m of nothing, so they reduce the risk by drilling 50m or 100m beyond the known gold zones to see if they hit some more, and GSV have done the same and focused on expanding the known gold zones and drilling the gap between Dark Star and North Dark Star which has yielded some great results.

Let's look at those in detail. I've only been able to find the data for the 2015 and 2016 drill programs, as the only data from the historic drilling is a summary assay table in the 43-101 reports. There was no maps showing where the old holes were drilled, so I wasn't able to show them in 3D.

this is all you get - red = outline of Dark Star deposit.

If we look at the latest PR, GSV released some excellent results from holes DS16-02, 05 and 08, but where are the results from holes 01, 02, 04, 06, and 07 as drilling is normally done in sequence.
We can tell from the presentation - slide 12 - that they have 2 rigs drilling at Dark Star and they are drilling holes DH16-21 and 23, so potentially we are missing the assays for 18 completed drill-holes. Possible scenarios:

• Were the holes drilled out of order?
• Holes 02, 05 and 08 were the highest priority holes and were drilled first, and therefore they are the first holes sampled and therefore the first holes from which data has been released.
• The samples for all the holes have been sent to the lab and we are waiting for the results?
• Were the samples from holes 02, 05 and 08 rushed (i.e. a premium is paid so that the assay lab processes these samples ASAP)?
• This would mean that these 3 holes contained the 'best' mineralisation/strongest alteration, suggesting the other holes may not be as well mineralized?
•  GSV have the results from these holes, but the grades were poor and they decided not to release the results?
• This is fairly common with holes that didn't return significant values only reported in the 'end of program' summary press release.

I'm going for the 1st scenario, GSV drilled the first holes in the 'best' area of the deposit, and wanted to better understand the high grade zones hit by hole DS15-13 (97, at 1.6 g/t Au). I just posed this question to make you think not just about the data that was released, but to think about what data was not released.

Here is where the gold is found in the main deposit from the historic drilling.

Section from 43-101 report through the Dark Start deposit

It is in the conglomerates, so when we look at the recent results, we see a similar pattern, just more gold.

North Dark Star section

However, there is one big difference, in the main deposit the mineralisation is found along the contact of the conglomerates and overlying siltstones, whereas in the north we can see that the gold is in the same place, but there is a lot more faulting. In many Carlin-type deposits these faults are often the conduits for Au fluids, and it is likely that the recent drill-holes are good is because they were drilled close to these source structures.

Are the faults before or after gold was emplaced?

I'm really interested in the results from hole 16-01. Will it show us that the high grade zone continuing to depth or show that the left hand fault (or west fault) also was a source for gold mineralisation and potentially expand this high grade zone to the west where favorable rocks (the brown units) are close to surface?


I and can't wait to see the results from holes 16-03B and 23 - they have been drilled about 120m south of hole 16-08, and it will be great to see if this high grade zone continues.Again, please refer to the questions above - these assays may have been received by GSV, but not 'good enough' to be released.

Long Section (looking W) - North Dark Star drilling and grade interpolants.

I'm predicting that it will and that hole 3B should hit ~100m grading >1 g/t Au starting from 100-120m depth, and hole 23 some similar mineralisation and shallower grades, if the gold distribution is relatively uniform.



I also expect holes 16-07 and 19 to hit the continuation of the gold zones hit in hole DS15-06, but my estimate is that they will be at ~250m depth, and approx. 0.5-1 g/t - a bit deep and low grade.

Grades appear to be getting better with depth, but 0.5-1g/t Au @ 200m depth is too little, too deep.

In summary, some very good, near surface gold assays, but the results from holes 16-01, 3B and 23 will be key to see if the mineralisation is:

• Small, 10-15 million tonnes zone at ~ 0.75 g/t Au = ~0.4 Moz contained gold
• Medium with upside - >40 million tonnes at 0.75 g/t Au for  >1Moz Au.

I went through the technical reports to see if there was anything negative.

Metallurgical test work was conducted in 1991 and gave an average recovery of 82% (ranging from 75% to 91%) from 8 composite samples assaying 0.38 g/t to 1.5 g/t Au - this covers low, medium and high grade mineralisation. Nothing to worry about here. You can see the summary data in Section 13 in the April 2015 technical report.

However, when I was checking the ownership information as Nevada is a checkerboard of private (patented), and public (state and federal) ownership, I found this - figure 4.2 in the April 2015 technical report.

Dark Star deposit outline in red, GSV 2015/16 drilling = black circles.

For the Dark Star deposit there is an underlying 5% Net Smelter Return (NSR), and where the recent high grade hits have come from has a 3-4% NSR. This is high, compare them to the NSRs that Franco Nevada have on exploration projects (link) in the US, and most are between 1.5-3%. Could this be a burden that would prevent the project from being developed?
There are similar royalties at the other deposits and it hasn't prevented Goldcorp and OceanaGold from investing.

I like this project, the team at GSV have manged to consolidate a large land position in one of the world's premier gold districts and are getting some great results (hence their recent share price surge). At Dark Star there is good potential to expand the recent high grade zones and if they do, they have a great opportunity to significantly increase resources find more

Again, all of this is available in a leapfrog viewer file (link), so you can spin the data around and form your own opinion.