Monday, August 15, 2016

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.


  1. Yeah 126.2m of 3.95 g Au/t is an eye opener in anybody's books. I covered GSV.v (again) on their August 9 news. Paper was $ 1.90 before and now tis $ 3.65. Golden news got discounted into SP real pronto no?

  2. I hope you bought some at 2 bucks... I know I didn't!

  3. Nope, sadly. We can't punt on em all. This does illustrate how important your contributions are. Since it passes the AG 'stench test' a body might fairly assume the GSV boys have hit a big un here.

  4. Good review and thanks. The question in my mind is: is the company worth the current US$560mil? Main Dark Star is small and low grade (0.51) but probably works on the 375k oz. Pinion's resource of 1.6mil oz (I&I) @ 0.61 is mostly under fairly deep cover so big pre-strip and questionable economics.
    The most northerly Dark Star section shows the mineralization feathering out and decreasing. N Dark Star also seems to diminish to N but remains open to S for a ways before we have to factor in the results from Main Dark Star.
    Have you estimated a resource at N Dark Star?

    1. Hello Brent,

      The mineralisation at North Dark Star is partially open to the NE, but the drill results exploring the 'gap' between the Dark Star and North Dark Star will be key (holes 01 and 3B). I would also like to see another hole drilled to the west of 08 to see how extensive the mineralisation is in this direction - they have a fault there, I assume based from mapping (or more likely) geophysics), could this be another area with high grade mineralisation, and potentially close to surface?
      In leapfrog I did a
      My back of the envelope guesstimate is:
      ~42Mt @ 1.2 g/t or around 1.5Moz Au (using a 200m range on the interpolant - which is being generous).
      I have some of the Pinion data and the new intercepts are deep and low grade (<1 g/t Au), so nothing special.
      My opinion on the market cap is that a lot of companies (including Gold Standard) are getting close to their maximum market caps (I'll chuck in companies like Orex and Mag Silver into this as well), so it is hard to see the upside and exit strategy. If they define >1Moz at >1 g/t Au - would Newmont acquire them to provide high grade ore to the Emigrant operation?

      Fortunately I leave the stock tips to the pros

  5. Hello,

    Do you mind adding a little color to the news release from GSV today?

    1. Hello Tom,

      I'm working in the field and won't be back to the office until Monday so here is a quick summary.
      The hit was good and it was nice it matched what Leapfrog Geo had calculated (I was just the number entering monkey).
      When you take away the >2 g/t interval the residual grade is ~0.8 pg/t Au which is still good, but the mineralization is starting to be deeper and It will be interesting to see the results from hole 22. Will we see another decrease (~1 g/t over 60-80m at 150m depth?

      Summary - nice intercept, seems to be following the model with gradual decreases in grade as you move away from the source structure.

      Look at my reply to Brent's comment below for some more geo babble

  6. Go for it TAG! Grade down by ~half 100 m away, headed toward the limit of resource at main Dark Star.

    1. I had a nice cool brew to celebrate!

      I've put part of my answer above in replying to Tom's comment, and here is some geo gobbledygook.

      It was interesting to see GSV use the Dark Star Fault as a hard boundary to gold mineralization, with the Au found in the FW. So hole 22 will be interesting to see how much 1g/t rock they have. Unfortunately, if you look at their interp, hole 16-06 looks like it will miss the gold zone, what wasn't this hole drilled to the west? I'm guessing that it was a RC hole.

      What I would like to see is some drilling from east to west to test the western fault, could this also be mineralized?

      What is the control on the gold? Is it the intersection of E-W faults and N-S faults with a favorable sedimentary host? The location of the gold in North Dark Star is found at a different setting, at Dark Star is mainly appears at or close to the FW and HW contact of the conglomerates (but that may be me leaping to a conclusion without much data to work with).

      Summary - I'm sticking to my 4@MT at around 1g/t.