Tuesday, January 30, 2018

Pretium - an admission of failure?

As Otto mentioned (link) the grades 'that should not be mentioned' mined during Q4 at the Valley of the Kings Wangs* was a lot lower than planned - 8.4 g/t vs 15.4 g/t, a 45% difference.

*I'm pandering to my Chinese overlords

The market didn't go yippee!

down 35%

Fortunately, the Brucejack web-page (link) contains all the answers to those irritating questions about grade, production and so on.....

I was interested that they included a set of guidance figures for H1, 2018.

Steady state - like Brownian motion and the infinite probability drive. The last sentence is very intriguing...

A 50K or 33% (or 25%  if you are using the upper end of the prediction) swing is massive, that equates to a variance of up to 8,333 ounces per month.

However, this isn't too surprising if you are mining a highly variable deposit with many erratic, inconsistent ultra high-grade veins in a low grade host rock. So, why don't we have some fun, and interrogate the information that we've been given.

I want to calculate the planned head-grades for H1, 2018 to see how they compare to the 2016 reserves (link).

  • Recovery =  95% - slightly below average recovery for 2017
  • Mill Throughput = 2850 tonnes per day - slightly less than average throughput in 2017
  • Mill utilization = 100% or 181 days
  • Production - Pretium PR
    • Top end = 200,000 ounces
    • Bottom end = 150,000 ounces
Step 1 - Recovery
I'm going to apply the recovery, 95%, to the production. This will tell us how much gold they'll mine before the 5% is lost through the milling process.
  • Bottom end = 150,000 / 0.95 =  157,894.74 ounces mined
  • Top end = 200,000 / 0.95 = 210,526.32 ounces mined

Step 2 - calculating the tonnage
  • 2850 x 181 =  515,850 tonnes milled
Step 3 - Back calculating the head grade
  • Bottom end
    • 157,874.74 / 515,850 = 0.306 oz/t
    • 0.306 oz/t = 9.52 g/t Au
  • Top End
    • 210,526.32 / 515,850 =  0.408 oz t
    • 0.408 oz/t = 12.69 g/t Au

Even if Pretium meet the top end of their guidance, the planned head-grade at Brucejack will be >20% lower than expected, which poses some interesting questions:
  • Are Pretium deliberately aiming low so that so that they don't over promise and under deliver?
  • Are we seeing and indirect acknowledging that there is a problem with the deposit?
  • Whoever designed the mill did a great job - it is over-performing, both with throughput and recovery!
However, there is no cause for alarm, Pretium are telling us that everything is going so well (ignoring teething problems like mining lower grade rock and producing less gold - nothing important), they've decided to make the mill bigger (link). We all know that bigger is better, but is this quick 'paper over the cracks' fix to bring short-term production up to levels stated in the feasibility study?

They admit to albeit indirectly, in the PR with the new grade control drilling and poor reconciliation,   is it wise to increase the mill capacity if they still don't fully understand the gold distribution?

They may find themselves in a position where they have a hungry hungry mill that they'll either start to shove any ol' crap through it (i.e. low grade development rock) or use bulk mining techniques (excessive dilution) to keep it fed.

Often this starts the death spiral for an operation, with decreasing head grades leading to decreasing production, lower revenues and so on. 

2018 is going to be an interesting year...

Monday, January 29, 2018

Garibaldi - the final cut

I'm so disappointed with Garibaldi. After 3 months of hibernation, they rudely awoke the market with the final drill-hole assays just in time to show some core at the Roundup Core-shack (link), and avoid some embarrassing questions...

Let's start with the good news:
  • We got a plan map!!!!
  • We got some geofizz polygons - rectangle marks the spot!!!
Errr, that's it...

And now with the bad less good news:

This is what our chum, Dr. Lightfoot has to say about the results:

On the surface Hole 10 look good, but when you see that it is just of twin (i.e. drilled right next to it) of hole 09, things fall apart. Leapfrog viewer file here (link)

UPDATE: Here is a updated LF viewer file with the topography, geology plan and section (link)

Visually, this is how far apart the 2 holes are:

2 sexy ass widths
Over 60 cm, the upper zone, at ~150m depth, decides to go on holiday. How sad is that, here is a company deliberately targeting known mineralization by twinning a good hole and one of the massive sulfide zones 'evaporates'.

Here it is visually

Sorry the bars are so small, it is the only way I could actually show the assays from both holes.

I'm sure this is what Senor Lightfoot is referring to the mineralization being 'entirely open', two words that you can't say about the GGI management team.

Hole EL-17-11

Drilled to explore for the continuation of the mineralization hit in holes EL-17-08 and the old holes (DDH_02 and 03).

Make sure you check the scale on any map!, In this hole we can see that it is only ~25m from previous drilling. The thick, low-grade mineralization surrounding the high-grade zones in hole EL-17-08 has appears to have disappeared and all that is reported in EL-17-11 is a narrow, albeit, high-grade massive sulfide lens.

Hole EL-17-12

Vertical hole exploring the down-dip extensions of the NW massive sulfides zones hit in holes EL-17-03, 06, 07 and 08. It hit an 18m zone of >1% Ni and >1% Cu, but no massive sulfides, even though holes EL-17-03 and EL-17-08 are only 18m and 26m away respectively.

I'm guessing hole 12 was designed to herd the Nickel closer to surface

Hole EL-17-13

This was drilled in the wide-blue yonder, and just clipped the edge of the MASSIVE geofizzical target and hit nothing.

It was a shame that we couldn't have seen these target anomalies on a section and maybe see how they relate to the Q, but, we got a plan map (or should I say, GGI got someone to draw the original Silver Standard Map from the 70s), asking for a section wold have seriously taxed the highly professional geological team at GGI 


We see significant decrease in thicknesses and grades of the mineralization over very short distances, which is a bit of an Achilles heel if you are trying to give the impression that the mineralization is part of a big deposit, and before anyone sends me comments with Latin phrases, just spend a few moment looking at hole 10. It demonstrates the depths that GGI will go to get a 'good result' for a press release .

Nickel Mountain, futue te ipsi, es mundus excrementi!

Saturday, January 20, 2018

El Cobre - easy exploration

The hardest thing in exploration is finding mineralization, once you've found it, that is the hard part done and all you have to do is keep drilling to find how big it is, by drilling a little further away from the "discovery hole" with each drill-hole.

However, there is the another approach. Once you've found the mineralization, just keep drilling the same area time and time again. I'm going to call this the "Poliquin" method after the stunning drilling program at El Cobre.

Let's look at the drilling over time....

Jan 2017

Some great results....
Efficient planning, lots of holes from the same platform
from the same areas they were drilling in 2016

May 2017

More great results....
Not much different....
In exactly the same place. maybe they should move the rig?

July, 2017

Seasonal variation, drilling from south to north. Why didn't I think of that!

August, 2017

Yawn, different month, same shit

heck, can you fit any more hole in there

But look, that section looks virginal.
Like Stormy Daniels...
I'm guessing it would have been hard to get all the drill-holes on it.

September, 2017

At fecking last, a hole drilled 45m away from another on!!!!!

A massive 45m...

Keep it easy, drill the same stuff twice

So all we are missing are the holes that will be drilled from East to West and from West to East, like this....

Yellow -  Hilary and Trinity drilling; Cyan - Wold cup disappointment and Michaelmas drilling
I wonder if I have ruined Almadex's 2018 El Cobre drill program?

Other targets

Why break a winning formula, Almadex is doing the same elsewhere - here is El Porvenir.

Hey, they hit some stuff between other holes with stuff in them. Amazing!

and Raya Tembrillo

It's almost art, the beautiful symmetry

It is so nice that Almadex are minimizing the surface impact from drilling by carefully recycling their drill-pads. Personally, I'm going to vote for them in the "most holes from a single platform" award category at the PDAC this year, and as a show of solidarity,  I'm going to show my support by using less toilet paper to wipe my arse.

Why is this a problem? Almadex can keep pumping out great press releases every month, but like the boy who cried wolf, they'll eventually have to do a resource calculation that will show that El Cobre is a Wonderbra project, where lots and lots of well-(metal) endowed drill-holes will produce a resource that is a lot smaller than expected.

Wednesday, January 17, 2018

SolGold - A resource Review

DISCLOSURE: I own shares in SolGold.

A few days late, but we got the initial resource calculations for Alpala (link), in summary:

So we should see the report released around mid-February. I'm sorry I haven't posted an article sooner, I've been rebuilding the drill-hole database and being a bit I'm lazy.

You can get the model from here (link).

Back in November I put on this blog a 'guesstimate' resource outline, which is below:

Compared to the office resources, I can say is:

Yup, I was terrible! This level of incompetence is normally only seen in British politics, and as I can't accept that I'm truly incompetent (just partially, when among friends), I wanted to see why I was so shite (excluding the obvious disabilities).

Resource review

Go to the end of this section to see numbers and the like.

For the basis of my incorrect November guesstimate I didn't use a bias when making the grade shells in Leapfrog.  I simply told it to look equally all directions (by 200m) equally when joining the data from adjacent drill-hole together. for a range of 200m. I though that this was reasonable, but totally wrong!

Fortunately, I can use my stoat-like intelligence and use the plan maps and sections provided and show that there is a strong trend both the geology and mineralization.

Alpala Trends - Plan view

Alpala Trends - Sections

You can see that the highest grades are related to the certain rock types (D10, QD10 and QD15), these units are generally quite thin, but appear to be quite continuous along strike.

So, I've used this info to update the model, and for the geologists among you, I got:

For the range (highlighted), I measured the distance (radius) from the drill-holes to the inferred resource limit outlines, and doubled it to get the base range.

You plug those numbers into leapfrog and you get:

That's more like it! Now, I'm not a resource geologist, but is a 300m base range reasonable for a porphyry deposit?

For reference:

  • Vizcachitas (Los Andes): base range = 400m
  • Constancia = 100-300m (depending on the direction)
  • Rio Grade (Regulus) = 120m

So, it looks to be quite generous, you get the impression that SolGold wanted a billions tonnes of resource come hell or high water.

Comments and observations

Why don't we look at the data in a bit more detail.

The mineralization is deep, the high-grade core starts at ~800m depth and it is surrounded by a large low-grade halo with several small, isolated high-grade zones, which are often defined by a single hole.

left = TAG CuEq grade shells; right = SolGold grade shells; white polygons = >1% CuEq grade shells

So, off the bat, if it is ever mined, it will be from underground, but is it good enough? Let's plot Alpala's resources on Macquarie's ore value chart.

Yellow star = global resources; Magenta = high-grade core
Only the high-grade mineralization is good enough for an underground mine, the rest is crap.

I want to see if there is any upside, but virtually all of the holes passed through mineralization and stopped in barren rock on the other side.

At the edges of the deposit, drilling only cut a couple of narrow, inconsistent high-grade zones. So the upside appears to be limited.

These resources are a start, a good foundation, but I was disappointed that SolGold insisted in calculating as large a resource as possible when it was obvious that the vast majority would be uneconomic.

I'm also disappointed that they are going to drill a metric-fuck-tonne of holes at Alpala this year. I think the story at Alpala is done, the upside seems to be small, with no obvious areas to  expand the high-grade zones.

We've seen press releases on some fecking rock samples from other prospects, but where are any announcements on planned drill programs for some of the other targets, if they could find a second deposit, close to surface at the same grades as the Alpala global resource (>0.5% Cu), then someone will look very closely at acquiring SolGold.