GMV - Wild West - Never trust anyone in a Mexican Hat

Companies like GMV are a joke, and if I was Dr. D.R. Webb PhD, P.Geol, P.Eng I would be embarrassed to even call myself a profession geologist, I wouldn't even use this PR to wipe a flatulent hippo's arse.

Here is the headline.

Nothing special

So why don't we look at the accompanying table of results:

OMG!!!

Where the heck is that intercept? I see a 27.4m @ 0.2 g/t Au for hole 2016-07 but nothing for hole 2016-08, where is the 2-3m wide high-grade zone surrounded a load of stuff grading 0.1 g/t Au?

Ohhhhh, they've done a Arizona Mining, but forgot the work CUMULATIVE. So in reality we have 27.4m @ 0.87 g/t Au in 6 separate, narrow (widest is only 6.1m wide) gold bearing zones over a total length of 125m.

Here is the table with the missing intervals inserted

I've used some technical terms here....

And this is what it looks like visually

red is good

I'm feeling poetic at the moment, and as the internet is a wonderful place, I decided that a video is worth a thousands words. Here is subtle metaphor for GMV and the Mexican Hat project.

Ian Klassen starts talking at 0:19

I think the hippo is called Eric....

The flying shit is what I think of this project and company.

Solgold - Hole 19

DISCLOSURE: I own shares in SolGold

We got partial assays from hole 19 at Alpala, let us see what that it shows and does to the official bad (tm) resource calculations.

Summary

• My predictions were very average
• My officially bad resources have gone up
• Copper 15% to 320Mt @ 0.54% Cu or 6.4Blbs contained copper
• Gold 10% to 299Mt @ 0.56 g/t Au or 5.3Moz Au
• 
  

In an earlier post I made some predictions about future drill results, for hole 19 they were:

• 0.5% Cu and 0.6 g/t Au from 325.6 to 1161.5m
• including ~0.6-0.8% Cu and ~1 g/t Au from 850 to 1161.5m
• 325.6 to 850 will run around 0.4% Cu and 0.35 g/t Au

What was reported was:



And this is what it looks like in technicolor

Zoomed in - Cu (right) - green zone starts at 572m depth

So they actually hit economic mineralization from 572m depth. I'm ignoring the stuff higher up as it is only grading 0.18% Cu and 0.09 g/t Au, which isn't what you would call well mineralized! We can also see that and even though the assays at depth are pending, the hole seems leave mineralization at 1374m.

However, you can clearly see the very high grade zones (>1% Cu and >1g/t Au) hit in adjacent holes doesn't seem to occur in hole 19. We have 2 options here:

1. The zone does exist in hole 19, but is much narrower and hasn't been separated in the summary assay table
2. The very high grade mineralization is small, and restricted to specific zones.

So my prediction was wrong, which sucks, and mineralization appears to be ~200m deeper than originally thought, but i did do a better job at guessing estimating (that sounds more professional) the  higher grade zone - I got the start depth correct, but it is ~200m thicker than I thought. I'm also going to give myself some marks for getting the copper grades correct, but I over estimated the gold content.

I'm going to give myself a 4/10. Must try harder....

So what does it do to the resources? Here are the updated numbers.

Copper

Gold

Another 10-15% increase in contained copper and gold, and it seems that we have squeezed over the magical 5 Moz contained gold, which is very nice.

 For this I've used the following parameters:

• Specific Gravity = 2.7
• A NW-SE trend on mineralization - this appears to be similar to that being used by SolGold in their presentation.
• 200m search (i.e. Leapfrog connects intervals that are within 200m from one another)
• this is comfortable for an 'inferred' resource.

You can download the leapfrog model and spreadsheet from here (link)

Exploration upside

I've decided to have a closer look at the data to see what upside there is at Alpala. 

red dashed line = my estimate to the limits of mineralization - think of it as a >0.5% CuEq grade shell

We can see that hole 13-003 was drilled over the main mineralized zone, and hole 19 is extending this zone (albeit in small systematic steps) to the SE. We can also see that the grade drops off to depth. This is suggesting the holes are entering the high temperature core of the system, where it is too hot to precipitate copper minerals.

Here is an annotated version of figure 4 that accompanied the latest PR (link).

cyan - where I think the holes being drilled will go; green - holes I would like to see SolGold drill

As Solgold are drilling some very deep drill-holes, we can see that they are not following the planned direction (this is called deviation and is caused by a number of factors - long holes deviate more than short holes). What it seems to show that the 2 holes being drilled at the moment (20, and 21) won't hit their planned targets and:

• Hole 20 - will probably hit the high grade zones intercepted by holes 08, 14, and 18 - it will give good numbers but not significantly change the size of the deposit
• Hole 21 - that will intersect the same zone hit by hole 19, just 30-50m south of it.

I've drawn a number of green lines on the figure above, these are hypothetical holes that I would like to see drilled (but then again, drawing lines on a map in an air-conditioned office is easy), but it would test some areas where the mineralization is open (especially the zones hit by hole 07 and 17), and change Alpala from a large into a very large deposit. 

Cordoba - San Matias

Disclosure: I also hold shares in Cordoba, I feel that Alacran is a good exploration stage project. Cordoba have found a decent, at the moment small (~50Mt), well mineralized deposit. I am hoping that this will be the first of many similar deposits found around their property.

We see the share price surge after Cordoba released assay data from a spectacular drill-hole at San Matias (link).

I've annotated so it is simpler to understand

I was a bit disappointed they didn't include a map showing where the hole was located, so that we could relate it to earlier drilling.

The initial resource was a good start (link), I was surprised that they didn't wait until they had a larger resources (say >100Mt), but I assume that they felt it was important to release an initial resource and build on that.

What I have done is take the data from the recently released DH data to see how much more mineralization they have potentially drilled at Alacran. Here is the official resource:



Since the initial resource calculation, Cordoba have released the data from an additional 14 holes (link). Unfortunately, Cordoba don't give any decent plan maps to accompany the press releases, the ones they do release as missing grid coordinates and they don't label all of the holes which means I have to guess which hole is which (I'll let you make various innuendos).

UPDATE: I've had some feedback, and the reason that Cordoba don't release the drill-hole coordinates isn't just to piss me off, it is to prevent the informal/artisanal/illegal (select as appropriate) miners from knowing exactly where Cordoba have been drilling and going to those places and start to mine. In many countries in S. America dealing with informal miners can be very difficult and I can understand CDB taking measures to prevent this.

Some holes are labelled, but the other holes listed in the PR are the black colored ones. Nice and easy!!

Here is my 3D model (link), and you can see like the cross sections that Cordoba show on their website, you can see that the mineralization is restricted to specific rock units.



You can see that we have gaps in mineralization, these are unmineralized areas and are fairly common in porphyry systems. Typically they are caused by later, unmineralized intrusives (dykes - Panoro's Cotabambas project is a good example of this) cutting through the mineralization. Here they appear be caused by maybe less reactive or more competent units within the siltstones. It isn't clear.

Here are my officially bad (tm) resource calculations. For this I've used the following parameters:

• Specific Gravity = 2.8
• A trend on mineralization that follows the sediments
• 200m search (i.e. Leapfrog connects intervals that are within 200m from one another)

red line = trend for grade shells

Here are my estimations with all the recent drilling:






So we see he have had a nearly 20Mt increase in resources and we haven't seen a drop off in grade, which is nice.

In the leapfrog model I've also included a few historic holes drilled at Montiel East.

Nice thick copper zones, starting at surface!

They got some very good intercepts including ~100m (from surface) @ 1% Cu and 0.65 g/t Au which is very nice! Some impressive grades, and I would be interested to see some more holes drilled in this area sometime in the future.

Hermosa update and corrections

In my original post I had this section.

Arizona mining did want to drill in the public land, but unfortunately their recent application for 8 holes was cancelled (link), and they have another permit for 5-6 exploration holes that are on-hold.

You can download the entire permit application and maps from here (link).

Correction: the permit for the 5-6 exploration holes that are on hold are actually for Regal Resources' Sunnyside project. 

I incorrectly assumed that Arizona still had an option on these concessions. I apologize for that, and thank you to LM for correcting me, and I've also copied his excellent comment, who is following Arizona mining much more closely than I am able to do.

The drilling application was actually cancelled by the company itself, because the Forest Service indicated they would require at minimum an Environmental Assessment which is like an 18 month process. And in the end apparently the application had already been downsized to just 2 drill platforms totaling less than an acre of disturbance, which is tiny in the scheme of exploration on forest land. So instead, the company withdrew the application and is now supposedly planning a much larger drill program on the public land to be announced sometime in 2017, hoping I guess that under Trump the Forest Service will ignore the established molasses-pace process and fast-track approve the new drilling to commence shortly over the objections of the local majority. In the meanwhile, said locals continue coming up with new material to defeat mining in this area including the recent appearance of several jaguars including possibly a female, which are the first ones to have been observed in the U.S. in decades. So best case is still about 10 years for permitting. A good example might be the Montenore and Rock Creek projects in Montana (both now owned by Hecla) which are about 15 years into the process. Of course the most direct comparable is Rosemont which has dragged along in final permitting purgatory for a staggering 6 years. 

Here is the webpage for Patagonia Area Resource Alliance (PARA) - link

I would recommend you to read their summary on the permitting process at Taylor/Hermosa. It has a very pro-environment stance (i.e. very anti-mining), but the important thing to note their passion and desire to fight to stop any mining (or activities related to mining) in the area. Unfortunately, in mining we can't copy what Disaster Area's management did - you'll have to look up that reference yourselves.

What do Arizona Mining say in their presentation about permitting at Taylor?

Mining Friendly

So, they can only explore 2% of the property, and have a organisation fighting to prevent any mining in the Patagonia area. Fortunately, several more advanced projects (Resolution, Rosemont) in the state have spent several years in permitting purgatory, but screw permitting, let us get back to geology, let us have a look at the Sweet, Juicy Taylor D(eep) zone. Here it is in its magnificence.

This is the map in the press release

red is good!

This map shows where the drill-holes have hit the Taylor deep zone, which sits 950-1450m below surface. This is what it looks like in 3D.



We can see that the Deep zone is very deep, 1000-1450m below surface, there was some mention in the PR that it could come closer to surface, but unfortunately drill-hole 352 doesn't appeared to hit any mineralization where the TDS continues to the SE.

Let us take a close look:

Nothing very special, some scatty high-grade zones

We see again that the high grade zinc zones are actually quite narrow (3-5m), and a bit scatty, but as they say - all news is good news.

Updated model here (link)

SolGold - Hole 18

Damn, damn, damn, damn, damn why didn't I buy more shares. Cock!

Ok, SolGold have released the best of hole 18 last week, I was playing doing fieldwork and missed it, and the share price went up a little bit today.

This is what the hole 18 looks like.

I've doodled on what I think the mineralization looks like at Alpala

It was drilled approx. 90m away from hole CSD-14-008, and we can see its impact on my official bad (tm) resource calculations:

Copper

A nice 14% or 8% bump depending on the cut-off

Gold

A sweet 15% bump

This is what I think the outline of mineralization looks like at Alpala

If drill-holes 21 and 22 get some decent hits, we could see a nice bump up in resources, and I would like to see some drilling from the rig 4 site (to the west of hole 2), to see if the high grade zone continues to the SW?

Again, you can download the model and updated spreadsheet from here (link)

Hermosa - drilling update and geology review

We've got another batch of drill results from Hermosa (link and link).

Summary

• Majority of the new assay data is from infill holes (7 of 10 holes) that intersected similar grades to surrounding holes
• We see a lot of grade inflation - thick zones are in reality a much narrower high-grade zone, surrounded by low grade rocks (e.g. hole 403)
• NW DH looking for the continuation of Taylor weren't anything special:
• Deep, narrow, low grade CRD mineralization - it looks like the system is dying out in this direction
• Shallow, high-grade vein mineralization - maybe this should be their focus for future drilling in this area?
• Permitting - Arizona Mining are pushing shit uphill with this project, mate.

Technical junk

Here is the accompanying map for the first release, with my annotations to help you understand the maps a bit better.

Taylor deposit drilling - Jan 17th PR (Source: Arizona Mining website)

Here is a another version showing the location of the private (patented) mineral concessions and public (unpatented - i.e. where AZ can't drill) land.

Red hatched areas = can't drill here

and looking regionally

Green shaded areas = public land, unshaded areas are private land. Taylor deposit is at the bottom of the image.

Not many places for picking and poking with drilling

Arizona mining did want to drill in the public land, but unfortunately their recent application for 8 holes was cancelled (link), and they have another permit for 5-6 exploration holes that are on-hold.

You can download the enture permit application and maps from here (link).

A big thanks to LM for that info.

The Question is this:

Do Arizona management need to inform their shareholders and the market that their permits to explore on public land have been cancelled? Is this of material importance to the project?

I feel it is, but then again, I'm a geologist and know nothing

As I have mentioned before, if they cannot get a permit to drill on public land, how can they believe that they can obtain the numerous permits to build and operate a mine, where potentially a large portion of the infrastructure, tailings and mine dumps will probably be (like for the Central Deposit) on public land? 

This is going to make the PFS study very interesting. Will they:

1. Do a cop out - not have any plans for the surface infrastructure
2. Do a Central - have plans for the surface infrastructure in the optimal locations (i.e. a large portion on public land) where you know they can't do anything
3. Try and squeeze everything into the private

I'm 50:50 between (2) and (3).

Geology Crap

Here is a long section through an idealized CRD deposit (source - Pasinex Adana deposit (link) and Dr. Peter Megaw)



and here is an annotated long section through Taylor



It looks very similar to Peter's model, which is good, and you can see that there are 3 distinct styles of mineralization:

1. CRD horizons - black dashed lines - these are dipping to the left (NW), and individual horizons are very extensive and have been drilled over lengths of >1km with relatively consistent mineralization. These are a nice steak.
2. Chimneys - mineralization restricted to narrow (100m x 200m) vertical zones, with sharp grade contacts (i.e. outside of the chimney grade is very low). Think of these as a bottle of wine - all the good stuff is inside. 
3. Veins - narrow, very high grade vertical structures. Think of these are those thin sheets of chocolate that you get stuck in desserts in fancy restaurants. They are great, but there is never quite enough.

Thee zones are very different (grade, style, orientation) and if you use a 'generic' control (i.e. assume that all the mineralization is horizontal), you may be over or underestimating the amount of mineralization in chimney zones. This is where infill drilling really helps to define the extents to mineralization.

• Ante Mineralum

• Post Mineralum

Source (link) - Photo of Fault with Fault Breccia by James S. John - I know it is the wrong rock type (Taylor is in limestone), but it was such a good photo showing bedding and faulting.

The Press Releases

This is where the holes were drilled

Blue = Jan 17th PR holes; red = Jan 26th PR holes

19th Jan - assays released from 7 drill-holes.

• 4 holes (HDS-388, 397, 398 and 400) were drilling into the core of the Taylor deposit 
• These are infill holes (i.e. drilling between earlier holes that hit mineralization)
• Low risk drill-holes as the earlier holes surrounding them give you a good idea of what you will hit.
• 3 holes (HDS-384, 390 and 392) looking for the NW continuation of the Taylor horizons. 
• These are (relatively) high-risk holes, as the main Taylor horizon is very deep (>1000m) here.
• Deep = expensive drilling.
• Results were poor, the CRD zones are thin and low-grade. However, the holes did hit some shallow, high-grade vein mineralization.

26th Jan - assays from 3 drill-holes.

• All holes were infill holes designed to better understand the Taylor deposit mineralization and to convert inferred into indicated resources. They won't have much impact on the overall tonnage of the deposit.
• Holes intersected narrow high-grade zones, surrounded by lower grade mineralization - this could have an impact on reducing the overall grade and tonnes of the deposit.

NW Holes

Here is a section through the deposit. I've added scale bars so you can see how deep AZ are drilling.
Holes 390 and 392 hit mineralization at ~1100-1200m depth (it is probably costing them at least $200K/hole to drill to that depth).

CRD zones = red lines.

We can Also see that the 2 main Taylor CRD zones stop between holes 401 and 392. So it looks like resource expansion to the NW is limited as best. I can;t see them drilling more holes in this area, unless they are going to focus on the shallow, high grade veins.

Central Zone

Here we see the chimney effect, in the chimneys we get much thicker and higher grade material, and when you look at the results in more detail, we actually see that these thick zones are really several, narrower high grade (>5% Pb) zones surrounded by marginal grade rocks.

Please note - I've used lead to highlight the high-grade zones

Here we see the grade in the BEST HOLE EVER - look at how the upper high grade zone is essentially gone in the holes that are only 70m away. You can also see how there is drastic grade changes between holes as well - the narrow (10m wide) high grade zones appear to continue some distance (these are probably representing replacement of specific beds in the limestone - see images above) but the thick zones don't. So what do you do in this type of situation? You have 2 options:

1. Cram as many holes into that area as possible that may significantly reduce change the size of this high grade zone, but would give some spiffy PR headlines
2. Treat this area as a "Zone of Avoidance" - if we don't touch it, we won't break it approach - this leaves a nice chunk of inferred resources but preserves its virtue and make sure it stays nice and large (and relatively undrilled).

So, for me, I think Hermosa is a large base metal resource, but no more. The local communities have successfully prevented any mining or exploration activities from being conducted on public land (not just for Arizona Mining but for several other companies as well), and I can guarantee that the PFS and FS due in Q1 and the end of 2017, will show how robust the economics of the project are, but if you can't get permits, the zinc, lead and silver are going to stay in the ground.

3D model can be found here (link)

Lies, damn lies and metallurgical studies - part 2

We all like a great drill intercept, and we are blessed that exploration companies pander to our needs and desires, and as a result. we the investors, have built a symbiotic relationship with them. It goes something like this:

Junior company releases a hot drill-hole, we jump in and buy, 'cuz the project is good the management beautiful and honest. 

Deep down, we know that they are good, hard working folks, busy polluting lakes and rivers, pissing off and killing locals, just to satisfy the needs and desires of the retail investor to allow us to flick through a copy of the Robb Report and pick out our next car, house or spouse. God Bless 'em.

However, sometimes we get a few baddies, those companies that like to cheat a bit and rather than industriously explore the frontier exploration areas (deepest darkest Peru, the 'stans, or Ontario), they miraculously find a well drilled project, it is easiest and stick a few holes into the best bits, like our friends at First Mining Finance's Stripper-pole deposit project lake.

yellow > 0.4 g/t Au, orange > 0.8 g/t Au, red >1.2 g/t Au

I know they are metallurgical holes, and really important to do on a project that has already had 4 previous metallurgical studies done on it (1989, 2011, 2012 and 2013), but maybe they could have done a better job, I mean - WWAD?*

*WWAD = What would Avrupa do?

It is Exploration equivalent of Ice Ice Baby. Shamelessly ripping of a good song and producing something worse.....

And talking about lakes, only 75% of the deposit is underwater.

I've added some traditional Canadian fishes to make this image more sexy.

Fortunately, the Australians have Aquatic mining equipment

submersible drill-rigs (they never lose circulation)

aquatic loaders

Underwater dragline

submersible dump trucks

What First Mining are doing is outlined in the last technical report, they needed to take some more, representative samples so that they could better understand the nature of mineralization and hot to maximize recoveries, but as I've mentioned before, if a company ONLY focuses on the high-grade mineralization, which is often very different from the run of mine muck, it can distort the recovery assumptions, for example:

• High grade ore may contain more free milling gold and require the plant to build a gravity circuit, or coarse gold that could be recovered by leaching
• low grade ore may be refractory (i.e. encapsulated in other minerals) and may not be recovered through a gravity or leach circuit and require a finer grind.

This could lead to a mine building a plant that can only process material from a small proportion of the deposit and require may require 'upgrading' if the plant (increases CAPEX, mine down-time etc.) to process the ore that makes up the bulk of the deposit. All FMF had to do was drill a couple of short holes into the yellow zones so that they could conduct metallurgical studies on all the different ore-types and mineralization styles. They would have got the hot holes the market loves and adequately sampled the deposit.