The farce that is the Junior Explorer Website

I was reviewing a project this week, a Cu-Ni-PGE advanced stage project in North America. On my way to their NI 43-101 technical report I had to wade through what is the usual marsh of marketing rubbish that is known as the “junior explorer website”. I review a lot of early and advanced stage projects and I can count on my one hand websites that I have come across that are actually attempting to present their results in a truthful and conservative (wise) way.

In the mud!

Me, try to get valuable information from a junior explorer website. (Photo: http://www.dailymail.co.uk)

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Breaking down the feasibility process: Should we wait until the final feasibility study to consider business factors?

So far we have looked at the scoping and the pre-feasibility phases of the feasibility process. Of all the possible scenarios considered during the pre-feasibility study, the best scenario is selected and only it is then taken forward as the foundation for the final (a.k.a. definitive) feasibility study. This scenario will include the best understanding of the geological model and the accompanying resource estimation, details around the mining and recovery method, to which then a more accurate costing estimation, market understanding and execution strategy is applied to answer the fundamental question: “What will it be?” What will this resource be? What will this investment be? This question is broad (covering all aspects of the project in as much depth as possible) yet singular in focus (all things considered, including unconsidered things!, is this a feasible investment?).

Sick wave!

It just seemed very feasible to include this awesome photo in this post!

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Breaking down the feasibility process: One simple graph that explains pre-feasibility

The feasibility study process is critical in mineral exploration as it is the best opportunity the project owner will have to define what the project could, should and will be. In my previous post, we looked at the scoping phase of the feasibility process and how it is responsible for answering the question: “What could the project be?”. The next phase of the process is known as the pre-feasibility study and addresses the question: “What should the project be?” This is arguably the most important study in the feasibility process for any organisation. I will explain why I hold this opinion, but let’s first define the practicalities of the pre-feasibility study.

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Breaking down the feasibility process: The Scoping Phase

The feasibility assessment process is important as it is the fundamental way in which project potential, and essentially, value is assessed and further more allows the quantification of risk associated with this value. Importantly, each step of the study process, from scoping and desk study phase through to final bankable feasibility, should incrementally and realistically add value to the project and so secure potential for return on investment. When the process is not well defined, adhered to, or critical decision gates held in low regard, value can either be destroyed or value can be misrepresented (inflated).

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Geological continuity vs. value continuity: Don’t mistake one for the other or assume the one equals the other

Geological continuity in the context of resource modeling and estimation usually refers to the lithological (sometimes structural) features that define the ore zone with a defined consistency. This might be defined, for example, by a particular sandstone unit which consistently hosts uranium mineralization over a certain area, a vein (ore shoot) hosting gold mineralization or even a contact area between to rock types (skarn deposit). Value continuity however, is defined as the degree of consistency with which the value of the mineralization itself is consistent within a particular deposit. This value speaks of grade, thickness and could even be extended to geo-metallurgical consistency (the continuity of similar mineralogy). But why do we need to differentiate between these two concepts as opposed to just pure continuity?

Image of the El Soldado pit from the viewing platform. This image from the mintecminesite blog

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Geology and feasibility: 50/50 or 50% better?

When talking about feasibility studies and more particularly their failures, it is important to define what exactly a failure is. It is important for a number of reason but a particular one that comes to mind is that not knowing about, or not admitting, a problem or failure almost certainly leads to cost escalation later down the road. So how do you know when your feasibility study has failed? I am aware of the fact that in some circumstances it might be difficult to distinguish between feasibility study failure and project implementation failure but often the implementation and execution has its roots in feasibility problems.

The massive landslide at Kennecott Utah Copper's Bingham Canyon Mine occurred on April 11, 2013. Image courtesy of KSL

The massive landslide at Kennecott Utah Copper’s Bingham Canyon Mine occurred on April 11, 2013. Image courtesy of KSL

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How geologists destroy shareholder value

Geologists are responsible for developing the primary assets (resources and reserve) of mining and exploration companies. So, if the fundamental resource is not accurate or if the resource during mining stage is not adequately managed, asset value is damaged and therefore the value a shareholder has in the resource or mine. That value can often not be recovered without spending a whole lot of money, which essentially becomes cash down the toilet. Let me give a couple of brief anonymous examples from a study done by a BHP resource geologist, Chris De-Vitry. These examples illustrate how bad geological practice destroys shareholder value.

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Fire Assay Photo Essay

Most geologists, whether students, in academia or in industry have heard of, or have submitted samples to have precious metal content analysed by lead fire assay. The lead fire assay method is one of a host of metallurgical analysis methods and is also often referred to as the fusion and critical cupellation (high temperature oxidation) step. It always helps to understand the analysis techniques used on samples so you can understand results and data better. Whether you are a geologist or not, I hope this fire assay photo essay will give you at least a basic understanding of the technique used by most precious metal explorers and miners to eventually come to a resource.

Beautiful bone ash crucibles in the muffle furnace (cupellation).

Beautiful bone ash crucibles in the muffle furnace (cupellation).

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You can sink or swim by density alone

A commonly overlooked factor in the resource estimation and eventual mine planning phase during feasibility studies is rock density. Density is most critical in determining the tonnage and contained metal of a resource and therefore translates directly to the financial feasibility of a deposit. In common scientific terms density is defined as mass per unit volume and expressed as g/cc, g/cm3 or t/m3. Tonnage and contained metal are thus calculated by filling a resource model’s volume with density values, interpolated from each sample taken from drill core. Each cubic meter of the resource model will then have an assigned mass and the grade associated with it will give contained metal. From this we see that density estimation is as important as grade estimation. Assumptions regarding density can be as detrimental to a resource model as assumptions regarding grade…

A scale altered to perform the hydrostatic submersion method of density determination. From the Jarman (2011).

A scale altered to perform the hydrostatic submersion method of density determination. From Jarman (2011).

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Logging in a Good Foundation

The corner stone of every feasibility study or mining project is a robust resource model/ estimation and in turn, the foundation of such an estimation is the quality of the primary data that was used as input for the model. As we have all heard, “rubbish in, rubbish out”. This primary data refers to the logs and analytical samples of drill core (or chips). The quality and perspective (oddly enough) with which core logging is completed can have a significant effect on the resource estimation of a deposit. Naturally the further from accurate the quality is, the increasingly devastating it can be. Something that can have a rather unexpected effect on mine planning and later on project execution, is the aforementioned perspective with which logging is done. I will elaborate in a moment.

Some juicy core!

Some juicy core!

Remember, logging and sampling of drill core is at the small end of the “error wedge” ie. a small error at this primary data collection point grows in magnitude further down the value chain of feasibility study. This is due to the incremental accumulation of error through the different activities including human error in logging and data input at any level, analytical error in sampling results,  and then inherent error in the final estimation process. Remember, “all models are wrong, but all are helpful”. So as geologists we cannot compromise on primary data quality and the interpretation of the geology at this level. In terms of geological interpretation and especially deposit scale understanding, by the time you are drilling, you should be relatively far down the line though. Drilling is usually a late activity in even fresh greenfields exploration. Strive to be accurate in your logging and allow it to be reviewed. Scrutinize assay results and chew on them. Don’t compromise on quality.

The archaic beast! Were the sampling "rubber hits the road"

The archaic beast! Were the sampling “rubber hits the road”

Many geologists are excellent when it comes to this primary technical execution. Few however have a perspective which constantly takes the whole mining value chain into consideration. How will the way your record your data now help the resource modeller, the mine planner or the metallurgist? Yes, you can get lost in the detail, even as a geologist, even in the geology and mineralogy. You can even sometimes be counter-intuitive in the pursuit of quality. This is a valuable skill that every industry geologist should pursue. It is a fine line and takes a little work and self-learning.

As a simple example, I worked on a ultramafic deposit which had been severely metamorphosed and altered resulting in tremolite, chlorite, actinolite, serpentinite, phlogopite schists of widely varying mineral proportions and at constantly varying intervals. This gave rise to over 20 different lithological units all originating from the same protolith dunite. Such accurate but unnecessary data would have kept a resource modeller busy for weeks, a waste of time and money. It must be added that the mineralization was not related to the level of alteration.

A piece of serpentinized dunite with large chromite crystals!

A piece of serpentinized dunite with large chromite crystals!

Stratigraphic allocation is another geological piece of information which can greatly assist or inhibit mine planning. If we think even further down the value chain to actual mining it often plays a critical role in grade control ore classification. “Stratigraphy” in this context does not only refer to what is found above or below, but more importantly from a mining perspective, how does lithology and mineralization correlate and how effectively can the former be used to guide mining. How practical can we as geologists make it for the loader operator, crew leader or blasting team?

Approach is key and your perspective determines your approach. As you log core approach it as if the deposit will definitely become a operating mine. Have this approach in the way you sample, how you allocate contacts, assign lithology, and mark out the stratigraphy. This kind of approach puts you in a position to add real, long term value to a project, regardless of the current stage it is in. Keep thinking where this thing is going, and in our industry, that is a mine!

Keep logging!