Almadex - El Cobre

We got some more drill results from El Cobre last week, and I've decided to use this project as the first to do an officially crap (tm) TAG resource guesstimate.

Summary

• Small and low grade
• ~101Ktonnes copper @ 0.19% Cu
• ~640Koz gold @ 0.43 g/t Au

Let us quickly compare the market caps of a few favorite copper-gold exploration companies:

• Almadex = CND$70.7M
• Cordoba = CND$48.92
• Regulus resources = CND$75.58

Regulus and Cordoba have decent project projects with resources:

• Alacran = 53.5 Mt at 0.7% Cu and 0.37 g/t Au
• Anta Kori = 290Mt @ 0.48% Cu and 0.36 g/t Au

The assays from the drilling at El Cobre just show that they have a few moderately wide, average grade zones surrounded by low grade dirt. I thought that I was missing something. So I brought everything into Leapfrog Geo to see how much gold and copper there is.

WARNING

These numbers could cause shock, amazement and cardiac arrest. Please sit down, breathe slowly before calling your broker...



Well, that is deeply unimpressive, but not unexpected.

In general the 'massive' intercepts were nothing special. So here is the latest 3D model (including holes 16 and 17) and the spiffy spreadsheet from here (link), so you can play with the numbers and call me a retard.

So,  Almadex is expensive, Regulus is cheap.

Background rubbish

This is a global 'resource' from all three mineralized areas (Norte, Porvenir and Encinal zones), and I used the 'split assay' data which back calculated the residual grade (i.e. outside of the narrower high grade intervals), to try an give a more accurate value.



Grades are also composited over 5m intervals.

Gold

Copper

I used the following attributes to calculate the resources. the important one for non-technical people is the base range (circled) - 200 - which basically means that Leapfrog Geo uses a 200m search radius to connect the grade shells, which, for a porphyry system, is a good approximation for inferred resources.

I also used a specific gravity of 2.7 tonnes/m3.

If you want the complete LF Geo project - flip me an e-mail (theangrygeologist@gmail.com) and I sent it to you.

Hermosa - more parlor tricks

I don't know how I missed it, we can also see that not just has the recoveries decreased, but the grade of the concentrate has also had a bit of a haircut:

• Lead - original = 79%, new and improved = 75% - a 4% difference
• Zinc - original = 57%, new and improved = 56% - a 1% difference

If you didn't know, just to explain Arizona mining insist on using imperial units (which are fecking retarded) so their resource is in short tons not metric Tonnes.

• 1 ton = 2000 lbs or 907.18kg
• 1 tonne = 1000kg or 2204.6 lbs

So, if they were reporting their resource in metric tonnes it would be:

• Indicated = 28.25 million, beautiful metric tonnes
• Inferred = 75.07 million metric tonnes

A bit different, and I apologize for not seeing it sooner.

Hermosa - a sleight of hand

When you have a project that is suffering from a bit of turbulence, what do you do?

Easy - just remove any misleading statements from your presentation.

We're going to look at AZ's presentations on the Taylor deposit from the 7th December (link) and the 22nd December (link).

• Great concentrate comments - gone (it makes for a less cluttered slide)
• we now have different recoveries for Zinc and Silver

Slide 3 - original



Slide 3 - new and improved presentation

they still have the highly experienced management team

We also have different recoveries now

Slide 6 - original



Slide 14 - new and improved

oh no, the concentrate isn't clean anymore!

So in 2 week the recoveries have changed from:

Zinc Concentrate

• Zn - original = 87%, new and improved = 85.5% - a 1.5% difference
• Ag - 8-15% original, average ~12%, new and improved = 15%, a 3% difference 

Lead Concentrate

• Pb - original 93%; new and improved = 92.9% recovery, no real difference
• Ag - 76-85% recovery of silver, average ~80%; new and improved = 76%, a 4% difference

That is impressive, in 2 weeks with no additional testing AZ have managed to decrease recoveries of Zinc and Silver. Were the values in the earlier presentation wrong?

Alexco - a question

After Alexco released their resources for the Bermingham drilling I decided to go back and see what my Leapfrog Model gave as an officially bad resource.



I used a 300 g/t cut-off (the blue cells) and we came close to the official indicated resource numbers (link).

official!

My question is this - do you want me to include my officially bad calculations in my posts? 

I've been holding back (as I'm mean) as I often want to check them against the official numbers first to check that the assumptions I'm using are close to those being used by the professionals.

Hermosa - Evening Gown

Bulk density.

Exploration is like making love to a beautiful woman. Lots of effort and generally unsuccessful (a jealous look towards southern Peru), and then we quickly move from one to another with high hopes that with 'this one' you'll be successful.

So your porphyries are BBW who can cook, clean and look after you for a long time. High grade gold deposits are amazing, but it is all over to soon. So where does the Beautiful Taylor fit in, is she as flabulous as we are told (remember - like partners, junior companies will never admit that they've got an ugly one....)

To find if you project is any good we (as me are scientists) need to measure her figure (tonnes) and how pretty she is (the grade). To do this you need an incredibly handsome, intelligent, probably bearded exploration geologist to go out there, erect his drill on her and prick her many times.

So in this sense is the beautiful Taylor flabulous or a bit anorexic?
In exploration we're funny, we spend lots of time and money working out how pretty she is (semivariables, geostats, kriging, ID2, 3, 4, 5.....99), 'cus we get to play with spiffy computer programs, use hard to understand words (to sound smarter), because we think it sounds sexy and impress all the girls at the PDAC.

However, to calculate her tonnage it is a bit more boring - it is volume (girth) x bulk density (or specific gravity). The girth comes from all of our hard pricking. The bulk density info generally comes from weighing pieces of core (if you're kinky you can cover them in wax) in water and air and comparing their weights. This is cheap (a few hundred bucks for a decent scale) so you can DIY with checks done by a professional lab to make sure that everything is kosher. Here is a more complete description (link)

Some companies take the holistic approach and take bulk density measurements from everything (e.g. Mag Silver at Cinco de Mayo - they collected >16000 SG measurements, but only 585 were used in the inferred resource calculation).

We've all been reading about all the deep penetration happening at Taylor, but, as I am a sad bastard, I was a little bit concerned that for a >100Mt deposit (including 31 Mt of Indicated resources), AZ had only taken 30 bulk density measurements, they decided it was more fun to use excel!



They tell us their fancy formula is accurate (+/-10% of the measured values, so only so +/- 11 Mt). I have issues with this, as we know that Taylor homogeneous deposit, they have bits that are:

• Sulfide ore - The Pb and Zn are in sulfides (galena and sphalerite) - the calculated bulk density will probably be OK for this zone (even though the calculation ignore pyrite).
• Oxide ore - Pb and Zn will be in oxides and carbonates which have a lower SG than sulfide minerals. Oxidized rock could also have a lot of cavities as soluble minerals will have been removed.
• Mixed Ore - this will be a mixture of oxide and sulfide minerals and its SG will vary by how much of each type is present.

I wanted to see if this calculated SG method was standard practice for manto/CRD deposits, so I checked other deposits to see what SG values they used and how they calculated them:

• La Encantada - SG = 2.5 tonnes per cubic meter (t/m3)
• Platosa (285 measurements) = 3.2 t/m3 (8.3% Pb, 9.88% Zn) - M&I resources
• Ayawilca (106 measurements) - 3.6 t/m3 (5.8% Zn, 0.2% Pb) - inferred resources -Zinc Zone
• Cinco de Mayo (585 measurements) - 3.47 t/m3 (2.9% Pb, 6.47% Zn) - inferred resources
• Accha (50 samples) - 2.5 t/m3 (8.48% Zn, 0.89% Pb) - Indicated resources (Oxide)
• Sierra Mojada (5335 samples) - modeled (i.e. the created a model from the thousands of SG measurement they took)

We can see that the SG varies considerably, with oxide deposits with lower SGs (Accha and Encantada), and sulfide deposits with high SGs. You can also see that none used a calculated SG value, they all took lots of measurements so that they could accurately determine the SG to use in the resource calculations.

Why is this important? Lets work backwards - Hermosa state that the average SG for Hermosa is 3.43 tonnes per cubic meter, and depending on the Lead and Zinc grade this value will vary (so they are using a modeled SG value). 

Source: Oct 2016 Technical report

They have 113.89 million tonnes of resources, so:

• 113.89/3.43 = 33.2 million cubic meters of ore:
• 33.2 x 3.2 (Platosa SG) = 106.2 Mt of resources - you lose 7Mt of ore
• 33.2 x 3.6 (Ayawilca SG) = 119 Mt of resources - you gain 5 Mt of ore

You change the SG value by a little bit and you can make huge changes in the amount of ore you have, and this is where I have an issue. The formula that they are using assumes:

• All the Lead and Zinc is in Galena and sphalerite (sulfide minerals)
• they won't be in the oxide and transitional ore zones as lead and zinc oxides and carbonates have a lower density and oxide ore can be quite vuggy (have a lot of spaces - i.e. areas with no density)
• Why have't they included pyrite in the calculation? Its heavy, 5 t/m3.

AZ have spent massive amounts of money on drilling 1+km deep drill-holes (they are paying $262/meter), but didn't want to spend a few hundred bucks (and a technician) to take systematic density measurements throughout the deposit. What we got instead is a semi-accurate excel formula (the author of the technical report even outlines those flaws).

It looks like AZ has taken the lazy, cheapo option

again..

Hermosa - (lack of) Talent Section

Metallurgy and ore zones

I'm always suspicious of metallurgical data. Junior companies like to skew the results for Maximum Impact (tm) by sampling the best and highest grade material (to steal a yank term - the 'winningest' ore) to maximize recoveries. As we saw with Sandra Escobar, often (i.e. always) the high-grade material is very different (in form and style) to the majority of the material that forms a 'deposit', and there can be drastic differences in recoveries for low, average and high grade material.

Fortunately, AZ keep us calm with this from the latest technical report:

all is good

At Taylor we can see that AZ sent a single, 139lb, representative (for a 100Mt deposit - or just 0.0000000063% of it) for metallurgical testing. It was a composite made from 18 separate samples.



You can see that the grade of the met sample is twice that of the resources (not exactly representative), and we can see in the table above that there are huge range in grades from the individual 18 samples making the composite (I've included my spreadsheet with the 3D model (link).

• Lead: 7.99% vs 4.4% (range - 1.17% to 28.43%)
• Zinc: 7.98% vs 4.7% (range - 1.11% to 22.8%)
• Silver: 3.53 oz/t vs 1.8 oz/t (range 0.53 to 14 oz/t)
• Copper: 0.28% vs 0.1% (range 0 to 1.32%)
• Manganese: 1.32% (range 0.68% to 10%) - we have no 'official' Mn numbers in the resources

So it isn't a representative sample. As a prelim study it shows that you get very good recoveries for Pb, Zn and Ag from high grade ores, but will we see similar recoveries for average and low grade material that makes up the majority of the deposit?

My gut feel is yes, but i'm going to estimate that it will be a few percent lower (i.e. high 80s for Pb and Zn), but it would have been nice that AZ used these recovery values for the ZnEq calculation!

I also found these sections interesting. You can see that the Hermosa Central oxide zone extends down into and separates the upper and lower sulfide zones. Is this contact sharp or do we have a more complicated zonation from oxide through a mixed zones (with both oxide and sulfide minerals) into the sulfide zones?

Some rusty stuff in the middle like jam in a black forest gateau

This is important as each zone will have different characteristics (for mining, treatment) and  recoveries for each metal. We know the Central deposit contains significant manganese (it was being promoted as an Ag-Mn deposit), is the manganese evenly distributed throughout Central-Taylor or restricted to specific areas?

Would we also see a corresponding drop in Mn values in the concentrates? I was intrigued, so I went a bit further and brought in the location of the samples that were collected for the metallurgical sample to check that the samples were not just taken from a single hole but were spread throughout the deposit.

That manto is a bit of a prick

Ohh, we can see that the samples were collected throughout the deposit. However, a few appear to have been collected within or very close to the manto oxide zone, and they appear to contain a lot more Mn (>5%) than the samples taken from the deeper sulfide zone (<2%).

If you take away the samples containing more than 5% Mn, the grade of the composite drops from 3.42% Mn to 1.79% Mn, and if we use bad maths:

• Original met composite grade = 3.42% Mn gave a concentrate grade of 1.33% Mn
• TAG's composite grade = 1.79% Mn - would this give a concentrate grade of 0.7% Mn?
• I have no idea if this is good or bad, but it may be more manageable than 1.36%

It looks like AZ were focusing on maximizing the Pb and Zn recoveries (from their representative metallurgical sample), and have appeared to have FUBAR-ed the deposit by carelessly including a few samples with a metric F*ck-tonne (I'm using official SI units here) of manganese.

Imagine if AZ had been clever and had known that Mn was an issue in Zn concentrates (I admit that I didn't). They could have trawled through their assay database and picked good samples with low Mn values for the metallurgical sample and no-one would have known.

oops

You missed a trick, now you get to have nice awkward interviews on BNN, every investor, newsletter writer and awesome mining blog dudes irritating the shit out of you by asking....

Hermosa Beauty pageant - Swimsuit section

There has been a lot of news about Arizona Mining's Hermosa Central Taylor deposit. The funny thing is, most of it is self-inflicted, if they had spent a bit more time thinking about what they were doing and (the hardest of all) why*.

*Just me making a naive comment - I try to think about the possible end game for a project (sell or develop) whereas most exploration companies are just interested in the short-term gain.

I'm going to take you through the Taylor beauty show, but first my disclaimer.

The 3D model of the drilling data is not very accurate, because:

• Hole locations have been sourced from technical report and also digitized from plan maps provided in press releases (accuracy +/- 30m).
• No dip, dip direction or hole depths have been provided and this has been estimated from plan maps accompanying the press releases.
• No hole deviation - drill-holes bend slightly, the longer the hole the more bent it becomes (deviation). I haven't included hole deviation in the model as it is never included in PRs.
• No hole depths - I've used deepest reported interval +200m 

You can download the 3-D model from here (link).

I've split this post up into several section (I'll publish one per day), so that people aren't overwhelmed by a massive post containing everything.

Geology-wank

The Taylor deposit is continuation of the Hermosa/Central silver-manganese oxide (manto oxide) mineralization to depth. There is no clever exploration here, Arizona Mining just been following the manto down dip to nearly 1 km depths.

Central = pink; Taylor = yellow

So - Taylor and Central are different names for different parts of the same deposit.

Swimsuit section - Recent drill results

There have been a flurry of press releases announcing some fairly spectacular drill-results (link and link).We can see that the majority of the mineralization is in CRD (Carbonate replacement deposits) with a few veins scattered around the project. So the veins intersected by hole 359, 386 and 386 give some nice numbers and are interesting locally, but in the big scheme are irrelevant.

not many veins.. Red = Dec 15 DH, Green = Dec 21 DH

Hole 359 is a classic case of what happens when an almost vertical hole hits a vertical veins - a massive core intercept from a vein that is probably only 1-2m wide. So, the veins are irrelevant (except for PR headlines). If you look more closely at hole 359, you would expect it to hit the main Taylor deposit at around 1,250m depth, so why did they release the assays before the hole got to the main mineralized zone, did something scare them......

There are some very nice hits, but we do see a lot of grade smearing from narrower high grade zones over wider thicknesses, which suggest that only a part of the Taylor zone is strongly mineralized. For example:

• HDS-353 - 9.8m @ 8.19% Pb, 12.21% Zn inc. 5.2m @ 14.75% Pb, 22.04% Zn
• residual grade 4.6m @ 0.77% Pb, 1.1% Zn
• HDS-382 - 27.4m @ 2.07% Pb, 1.06% Zn, inc. 8.2m @ 4.12% Pb, 2.39% Zn
• residual grade = 19.2m @ 1.19% Pb, 0.9% Zn
• HDS-387 - 34.3m @ 9.56% Pb, 5.41% Zn inc. 12.6m @ 21.84% Pb, 11.12% Zn
• residual grade = 21.7m @ 2.43% Pb, 2.1% Zn

We see this repeatedly, is this the same for all the thick intercepts? Is Taylor really just a 5m zone of economic mineralization (albeit at 10+% Pb+Zn) surrounded by sub-economic country rocks? There isn't enough data to say.

Here is a long section through the deposit.

blue line = TAG's BS ore zones.

I've drawn a series of blue lines showing my guesstimate ore horizons. You can see that the mineralization is getting very deep to the left (NW), and there isn't really much point drilling out there, you'll get some reasonable hits, but you'll never mine it, just ask BHP-Rio how much a 1km deep shaft costs to excavate in Arizona....

I've also drawn a couple of red circles around some exceptionally thick intercepts. You can clearly see that they are different, hey are much thicker than the mineralized zones in adjacent holes.

I think that this is an impact of maybe syn or pre-mineral (basically faulting before or at the same time as mineralization occurred) faulting, with the mineralizing fluids using and replacing the fault zone, forming much thicker, but not very wide, vertical pipe(s) of mineralization. If that is the case, you would expect them to be modeled a bit differently in the resource model.

Exploration Upside

Short version - good

There are a few areas where the current resources can be expanded

black line = slide through the main Taylor body

red = 100m radius around dill-holes (indicated resources), blue = 200m radius (approx. limits for inferred resources)

You can see that the depoist is open to the NW (upper right) and also to the NE and SW, and regionally the project that covers a number of historic base metal mines.

red star = old mine

and a number of high-grade veins (map below).

veins, lots of lovely veins

but unfortunately, it looks like every silver lining has a black cloud!


part 2 tomorrow