Tuesday, December 20, 2016

Alexco - some BS drilling

Wow, Alexco, some amazing results from Bermingham (link)

  • 11.1m @ 6,477 g/t Ag
  • 16.95m @ 4,375 g/t Ag
  • 24.98m @ 835 g/t Ag
Those results should give you some nice reading to help to the silver bugs to battle the purple-headed yogurt slinger, or date Rosie Palm and her five sisters.

Hey, wait a sec, those intercepts are a bit wide for a district well-known for narrow vein silver mineralization. Lets look at the true widths.
  • 11.1m 3.98m @ 6,477 g/t Ag
  • 16.95m 7.16m @ 4,375 g/t Ag
  • 24.98m 6.89m @ 835 g/t Ag
Darn, that's a bit of a diet, what the heck has happened here? I mean, there have been 1 or 2 holes (OK, 176) drilled into Bermingham. To the 3-D machine (link)!
Red spots = DH data from the Dec 06 release, black = early drilling
Let us filter out the old crap and just look at the new data, We can see that most the holes go from left to right (direction), but why are those in the middle doing int the opposite direction, parallel to the veins? Seasonal variation?

green lines = hole traces, grey solids = modeled veins.
It is a bit easier to see on some sections

No BS drill-holes (red = Bermingham veins, cyan = Bear vein, Blue = Aho vein)
See that the drill holes intersect the vein at an almost perpendicular (90 degrees) angle.

Here is a section with those 'special' holes

These very high grade holes have orientated to drilled straight down the middle of the Bermingham and bear veins. We can also see that adjacent holes, did hit some good grades, but are much narrower. 

Alexco have known since 2011 that the veins all dip to the southeast, so why were these holes (approx. 950m) in the opposite direction to all previous holes? 

I'm guessing that Alexco couldn't wait until April 1st to pull such a good wheeze on their share-holders or maybe it was a generous Christmas gift to give them a nice festive cheer with some obscenely high-grade intercepts that do absolutely nothing to the deposit, they don't increase the tonnage as they have just been drilled through areas that have already been drilled before.

This is BS, Alexco, why waste everyone's time and your money with these joke drill-holes?

Friday, December 16, 2016

Defiance Silver - San Acacio project

San Acacio is one of those projects that keep floating around and like one of those irritating dumps you have at your girlfriend's house that keeps bobbing up to surface to rear its ugly head.


Just avoid it.

  • Defiance can't afford the property
  • They can't raise funds to explore the property properly (just some token drilling in 2014/15)
  • The resources are small (15Moz Ag) and low grade (182 g/t Ag).
However, I can't find anything except a summary assay table for the 2014 and 2015 drilling results, so here is a message for Defiance:

FFS, forget the YouTube channel, we're not interested in seeing old dudes pointing to churches or expansive panoramas of Rick Tschauder, what we want are some (any!) maps, like:
  • A surface geology map - simple ones with big red lines saying "vein here"
  • A map (or two) of where your holes are located
  • Some geology sections - the Silver Standard sections are now nearly 20 years old
Even the most retarded junior exploco can give us a fecking map, so why can't you?

Technical stuff

Let us look at how the project has evolved over the years:
  • Silver Standard (1996) Inferred Resources - 2.5Mt @ 182.4 g/t Ag = 14.5Moz Ag
  • Defiance Silver (2015) Inferred Resources - 2.9Mt @ 181.9 g/t Ag = 16.9Moz Ag
Not much for nearly 2 decades of work for a 'high-grade' deposit located in a world-class silver district!

I've ignored the 'gold' credit as it is essentially nothing and will be lost either in processing or to the smelter.

I was surprised amused to read several PRs telling us how Defiance have been 'great' at reducing the property payments (2014 (link) and 2016 (link)). by pushing them all (almost $6M) back to 2018. I hope nothing happens to silver prices that could make it difficult to raise funds...

I've broken the technical part into 2 sections

1. The Rocky Bit

I've brought the Silver Standard data (DH, trench and UG samples) into 3D (link) to see if there is anything interesting, but as Defiance have kindly included absolutely nothing of any geological value in their press releases (not even a gaudy vein photo). so I can't tell you anything about the drilling from 2014 and 2015 except that a couple of holes hit some intersecting grades and the rest were crap.

The San Acacio project covers a big chunk of the Veta Grande (Big Vein) vein, one of the principal veins in the Zacatecas Mining District (historic production estimate >900Moz Ag and >9Moz Au).

white spots = drill-holes and tranches; red lines = veins
I've drawn on various veins and you can see that the majority of the drilling has focused on the NW corner of the property and only on the Veta Grande vein. A few holes were drilled to the SE, but they were crap (<50 g/t Ag).

We can plot a long section of the drilling data:

I've included some buffers around the historic drilling to show where there is not data - this is a useful tool for me to see where I can drill to get some decent results quickly

This is what we see:

  • Silver is restricted to a narrow, near surface zone and:
  • Deeper drilling below historic workings hit minor mineralization
  • Drilling along strike to the southeast didn't hit anything
  • The splay veins (Veta B and C) are small and low grade
So where are Defiance going to define more silver resources?
  • Does the silver zone have a dip to the SE and that the drilling in this area didn't go deep enough?
  • Are the other veins that cross the property any good? Some basic sampling/trenching would answer this.

2. The Money Bit

I normally calculate a quick $/tonne value for a project's resources to see how they compare against operating mines in the same country. This allows me to quickly see if the grades are good enough to support a profitable operation.

For this section I'm making the following assumptions:
  • Silver recoveries will be 76% (San Acacio 2014 technical report)
  • No credits from other metals (all the gold will be lost during processing or treatment)
  • Mining costs will be~$80/tonne (at a hypothetical 1000 tpd), based on costs from:
    • San Jose mine (2000 tpd) = $85.76/tonne (2015)
    • Bolanitos Mine (1500 tpd) = $71.97/tonne (2015)
    • Guanacevi Mine (1200 tpd) = $88.04/tonne
So how do the numbers stack up?

To calculate the value we do this:

(resource grade/31.1) x recovery % = recoverable silver grade in ounces/tonne
  • ((181.9/31.1) x 0.76) = 4.44oz/t (recoverable silver grade)
Ore value = recoverable silver grade x $17.5 (a average silver price)
  • 4.44 x 17.5 = $77.8/tonne 
So, if the mine was operating now, it would be losing a bit of money, but this estimate doesn't include Capex, development costs, sustaining capital etc.

From this you can do 2 things:
  1. Calculate a break even grade for a project - calculate a grade where ore value = mining costs
    • $80/$17.5 = 4.57 oz/t
    • 4.57 * 31.1 = 142.2 g/t Ag (the break even grade at US$17.5/oz silver)
  2. Or calculate a break even silver price for a project
    • 80/4.44 = $18.01/oz
So at last month;s silver prices (thanks Janet), San Acacio would have been break-even at best.

Putting everything together, San Acacio has:
  • A small low grade resource
  • Low-moderate exploration upside
  • A company with limited ability to raise funds
  • Large property payment (~$6m) due in next 24 months
I can't see where Defiance can add significant resources, to get it to ~50M oz Ag, which will make it attractive to companies like Endeavour Silver or Santa Cruz that have recently acquired projects in the district.

If you want to invest in a junior silver exploration company. there are others that are better than Defiance.

Orex - Sandra Silver recoveries

Today we received the long awaited metallurgical results from Sandra Escobar and it a nutshell, they are worse than crap they are abysmal.

What does Orex's president, Gary Cope, have to say "While the preliminary metallurgical results are not idea for the Boleras Main Zone, the comparisons between Sandra Escobar geology and that of the neighboring La Pitarrilla project are encouraging"

So how bad is it?

Single word - Extremely, but let us be a bit more scientific. Here are the preliminary results:

The deposit has an average grade of 106 g/t Ag
They've given us some nice charts to show us visually how crap the recovery is. I've added a couple of notes to show you the recovery for average grade ore.

wow, that is pathetic
So at the average grade of the deposit less than 20% of the silver can be recovered.

Basically it means for every tonne they mine only 19 grams gets recovered and just 87 grams goes to make the richest silver tailings in Mexico.

Or, they can only recover 6.7Moz of the 33.3Moz Ag resource they've defined.


But, I hear you telling me, they get some decent recoveries for the high grade ore!!!

But they have no high grade ore..

What a heap of crap, but it was nice to know that Orex waited for the results from the metallurgical studies before commiting more money to the project (link and link.

Ohh, they drilled an additional 3,000 meters and committed to drill another 4,000 more. Well I'm sure that Orex's shareholders will be very happy that you've spent another couple of million bucks on an uneconomic silver project.

The frustrating thing is - poor metallurgical recoveries are a common feature for many disseminated silver deposits.

Congratulations, I hope you have a plan B, especially as you didn't take an opportunity to raise money back when your share price was touching $1.40.

just a quick update, this is how Proactive Investors UK reported the data from Sandra
I guess it is how you phrase it...

Saturday, December 3, 2016

Las Chispas - You're only given a little spark of madness. You mustn't lose it.

Silver Crest have been releasing some interesting results from Las Chispas, we've been getting a steady stream of results from the 1st phase of drilling and underground sampling programs, which has propelled them to current market cap of ~90M and they have raised $10M recently (link) to fund future exploration programs.

For comparison - Regulus Resources, with Anta Kori (just containing 3.4Moz Au, 3 billion pounds of copper) have a market cap of 'only' $68M. So is Las Chispas any good?

The very short answer - no, not really


Everything that Silver Crest are telling us about Las Chispas is that:

  • Gold and silver found in a number of narrow (~1m wide) veins.
    • dilution will be an issue.
  • High grade (read economic) zones exist but are found as very small, discrete shoots.
    • hard to define significant resources
    • have the old workings sterilized large portions of the veins?
      • may be impossible (or at least very expensive) to remove residual blocks.

Exploration upside

  • Mapping, drilling and sampling has identified multiple high-grade, narrow gold-silver veins.
  • They have only been partially explored/exploited
  • There is an unexplored area to the NW of the Las Chispas Mine (series of shafts and dumps). I haven't found any info on this area in any of the reports/presentations or press releases.
I was going to say something clever about drill-holes LC16-05 and 08, as the grade and thickness of the Las Chispas vein appear to be getting thicker where the splay vein (unnamed vein) joins to eh main vein, but then I realized that that is where the majority of the historic workings are located. So it probably was good, but no is only useful for bats.

Question - Why appear to be assaying the entire length of each drill-hole, Why? Is it because the mineralization is hard to see and they HAVE to assay everything? This could be a major issue when they come to mining (or taking a 100,000 tonne bulk sample).

You can download the 3D model here (link) and I've also included a Google Earth file with the property boundary, veins, faults and the surface workings with the 3D model as well.

Note: to view the 3D model you'll have to download the latest Leapfrog Viewer - 4.7 from here (link)

Problem 1 - Narrow veins

Here are some photos of the Las Chispas veins. 

Varela Vein - narrow
Las Chispas Vein - narrow
William Tell vein - narrow. Can you mine the stock-work zone?

Why is this a problem:

You need a lot of drilling to define significant resources, and if I was looking to invest in a silver exploration company, I want to see that there is a potential to define >50Moz of AgEq resources.

For mining, thin veins means that there will be a lot of dilution, you can do a quick check to see how robust the grades are over a proper mining width - 1.25m for selective mining and 2.5m for mechanized mining.

I've also included my excel file as well so you can play around with the numbers.
You can see that when we apply these mining widths (and assuming that the country rock is unmineralized) that a large number of the reported samples fall below 300 g/t AgEq that is a convenient cut-off grade for small scale underground mining (or bulk sampling).

Problem 2 - small ore shoots

Here is a long section of the Las Chispas Vein.

Red lines - areas where samples grades >400 g/t AgEq. Note the first number is the strike length (the length of the line)
here's another from William Tell.

Add caption
We've been told that Silver Crest have the taken in excess of 5,000 samples from Las Chispas, that basically means that they are sampling everything. We are also told that they have results from 2055 samples, but only 301 (15%) gave assays of >150 g/t AgEq. That means on the sections, the ONLY areas of reasonable assays are those area underlined by a red line.

Challenge - join the red lines together to form the ore-shoots!

Here is an annotated version of the Las Chispas Section

dark grey = areas mined historically
I've made it a bit easier to see where the historic mining was on the Las Chispas vein. It appears they mined some very small, erratic ore-shoots. Was this because:

  • The economic gold-silver mineralization is restricted to small, erratic shoots
  • They were focused on mining the highest grade areas (i.e. the high grade core)

Look where the 'good' samples that Silver Crest have taken have come from.

dark grey = mined areas, red bars = areas of good samples
It looks like all of the decent samples came from within (remnant blocks) or immediately adjacent to those historic stopes. Basically where there isn't a red line means that samples contained less than 150 g/t AgEq!

What is the problem with this? Well, it makes it hard to define nice big resource blocks. You can see the issue, to define a large amount of resources you need lots of thin veins (at Curraghinalt has at least 16 separate veins) to have a large resource.

Problem 3 - Is the mineralization is hard to see?

When I read the technical report I was stunned to see that Silver Crest submitted 4332 samples from the phase 1 drill program. They only drilled 6558.1m in 22 holes. That means that each sample assayed 1.5m of core, so it looks like they are sampling the entire drill-hole. For vein deposits this is overkill, why are they doing this? could it be:

  1. They are going to use the assay data to map out alteration and mineralization zonation?
  2. Checking to see if there is bulk tonnage disseminated halo around the veins
    • Normally you sample the entire length of 1 drill-hole see what you get and if there is no evidence for a disseminated halo you assay 5-10m either side of veins, faults, structures etc. 
  3. It is damn hard to see where the mineralization is - i.e. no obvious mineralized structures

Fortunately, we have a few photos of the gold-silver zones
this assayed 4.6 g/t Au and 621 g/t Ag
I can't see an obvious vein, do you? I'm guessing it is the lighter grey rocks.

A bit more veining, but nothing you would say is impressive -  this ran 2.4 g/t Au and 311 g/t Ag
wow, a 1 cm whopper
You can see that there is a bit of veining, but nothing that jumps out and rapes your eyeballs and screams this vein is going to give you a silver enema.

Now the silver lining

It is early days, the first phase of drilling got decent results on the 2 main veins, may have found a a decent grade block on the extension of the William Tell veins and also discovered a few more veins, splays with some decent gold and silver grades.

I also check the area on Google Earth to see what 'culture' you can see at surface.

There are a load of dumps and shafts to the NW of the Las Chispas and William Tell vein systems. When I check the technical report and all the info on the website I can't find anything mentioned about this area, but it hints that there are other vein systems that are still waiting for the Silver Crest geologists to get to them.

The results from Las Chispas have been interesting, but we are still early in its story, but I haven't seen anything that screams "big mineralized system with big potential". My feels for SC's market cap is that people are buying into the management team and hope that they can deliver another success.