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The drilling so far appears to have identified a number of fault-controlled breccias and associated veins, These are primarily steep-dipping linear bodies up to a couple of metres wide or so (don't forget that the drill intercepts are not true widths, but oblique intercepts into sub-vertical bodies - a 3m intercept at -50 is closer to 2.3m true width, etc). In themselves they don't appear to be high enough grade to present a viable mining target, particularly as their geometry mitigates against development by open pitting.
However, the drilling has confirmed the existence of a gold-bearing system and this may simply be a low-grade peripheral zone. It would make sense to analyse core samples for fluid inclusions and to get a handle on fluid chemistry, isotopic make-up and temperature of formation to see if the fluids can be tied to a magmatic (porphyry) source or whether the fluids have travelled from further afield via fault systems with a greater (meteoric) groundwater component. Further north in the Atacama there is a widespread series of gold-bearing veins that post-dates many of the porphyries; they were worked extensively by the Incas and even today are occasionally worked by artisanal miners, but workings are typically very shallow and grades only tend to be high in the weathered zone close to surface.
If the fluids have a magmatic signature then it would be worth drilling deeper holes to look for the source region, but I would wait until a deep geophysical survey had been done (such as a Titan-24 survey) to identify potential porphyry targets and provide vectors for the drills to aim at (otherwise you're just shooting in the dark).
It's still very early days and very little of the plateau has been covered as yet. Rather than carry on with further drilling it would be better to cover the plateau with geophysical and geochemical surveys to identify anomalies at surface and at depth and then investigate those in order of rank.
Rick's post is perfectly correct re grade and tonnage; another major factor is deposit geometry and the continuity of the ore shoots. For deposits that are worked by open pit you require an orebody with its largest dimensions in the horizontal plane so that you can extend your pit laterally, and still be in ore, as the pit gets deeper. Because you are bulk mining you have to take the richer with the poorer material to a certain extent (in some cases you may be able to selectively mine some areas of the orebody and separate others that can be tipped as waste), so you mine to average grades. For many open pit mines 1g/t is actually pretty good and economical to mine (but that case has to be made on a mine by mine basis - one size does not fit all), but it's early days yet to get too excited by numbers.
There's a great deal of work to do yet to formalise a ore resource and once a geological resource is defined that then has to be modelled to create a mining reserve. 3D pit modelling and optimisation inputs every possible variable from the geology, capital equipment costs, down to the fuel consumption and maintenance of the mine vehicles and wages & shift patterns of the workers. Every 1m cubed block of ore is identified and various simulations can tell you on what day/shift that block will be mined. These simulations will give you a production rate in tonnage and contained ounces that define a cost-per-ounce (including royalties and taxes). Factor that against the current gold price and you know how much profit you will make on that ounce on a day-by-day basis. These models are often live in working mines and update daily/hourly to input fluctuations in the gold price, power and fuel costs, etc. It depends on your financial model whether that level of profit is sufficient or not to make the project viable.
For porphyry systems contiguous tonnage is the key; everybody wants the grade to be as high as possible, but would you rather have 100 million tonnes at 1g/t or a billion tonnes at 0.5g/t if all the other factors were equal?
Work on the ADL thus far has defined both linear and cylindrical features, neither of which lend themselves very well to open pitting (due to the amount of waste that has to be stripped to access the ore at even shallow depths), but could be developed underground perhaps by selective extraction, if this was viable. If a porphyry system is intersected this will, of course, change things dramatically.
The assay results from porphyry deposits are never particularly visually impressive - porphyries are low grade, large tonnage deposits that get their value from their volume.
This is the first set of holes to be drilled and they are adding more definition to the Gordon breccia pipe, while hoping to tag the top of an underlying porphyry (though that is not, as yet proven). Once the drilling is complete the holes and the intersected mineralisation can be modelled in 3D to create a wireframe and then 3D solid to give an in-situ resource. Once they have this they can then run a series of simulations and pit optimisations to see if the resource can be mined profitably. Based on these results and how they think the geology will pan out (no pun intended!) they will make a decision on whether to continue the drill programme and step out to expand the area under exploration.
While it's exciting to be finally drilling you need to put all this in perspective - I've just come back from Central Asia where a friend is working on the Bozshakol porphyry project. This is a billion tonne plus deposit, but the average grade is only 0.35% copper, with a little silver, gold and molybdenum. It has been under exploration since the 1950's and has over 1700 drill holes into it and still needs further definition. Even with the apparently low copper grade they are expecting to produce 75,000 tonnes of copper metal a year over a 40 year life of mine.
ADL is just at the beginning of the exploration cycle. There's a long way to go yet.
Apologies - mining terminology can be a bit of a mouthful; I'll endeavour to do better
Mind you, your friend Can_wait has the gist of it quite well!
The announcement on the MDMN web site says the assay is from LDM/NUOCO workings; you're obviously better informed than the guy updating the site.
Experts who say a deposit is open-pittable before a single drill hole has been completed, before the tonnage and grade is known, before the alteration shells and oxide/transition/primary sulphide zones are identified and modelled, before an NI-43-101 is done and before a definitive feasibility study has confirmed the fact and the start up funds are in the bank, are , frankly, no experts.
Even if structures merge and are continuous it doesn't follow that economic grade mirrors those facts. Only by block modelling the deposit and then coming up with a logical block extraction plan can you design a viable pit.
Drilling is expensive; it would be better to map the plateau at a small scale and then complete a geochemical and geophysical program to identify and rank surface and near-surface anomalies so that the best targets are drilled first and you get maximum cost benefit from your drill budget. Just firing holes into the first targets that look good isn't that good an idea.
Nice numbers on the assay results, but without context they are meaningless and any self-respecting mining company would never put out such a pointless update. It is undoubtedly high graded and the relationship between this and the run of mine (R.O.M) grade is completely unknown and completely unexplained. Updates like this are amateurish and do more harm than good as they leave the company open to all the old charges it is trying to shake off.
As for being open-pittable - no is the short answer. LDM is a shear zone, a steeply dipping planar body with a geometry rather like a concrete paving slab stood up on end. All the mineralisation is in the slab, not in the rocks on either side. If you try to open pit this you will have to take rapidly increasing ratios of waste rock every time you bench down to take deeper parts of the slab. In a very short space of time the waste dilution of your mineralisation (still unquantified at this point) will render the whole thing uneconomic. The only way to work LDM is to take out the slab selectively to the exclusion of everything else by sub-level longhole stoping, hoping that the hangingwall and footwall are stable enough (or can be bolted back efficiently) not to run in when the firing starts. Even then you have to have a very good handle on grade control and must ensure all sequential drill rings are viable or you get into the realm of leaving low-grade pillars, which increases blast pattern complexity, slows down the operation and impacts on recovery.
7000 metres of underground exposure is a fantastic laboratory resource which could, with expansion drilling, be developed into a potentially viable resource and then on into a producing mine. However, the grand prize at ADL would be a viable porphyry deposit.
Underground mines are constrained by scale to relatively low production rates; one mine I worked at produced 180,000 tons of ore per year (there wasn't the capacity in the haulage skips through the shaft to increase this further), whereas a large open pit porphyry mine can produce in excess of 100,000 tons per day. The revenues from such a deposit would dwarf those of an underground mine, despite the much lower metal grades likely to be encountered.
I am not discounting the tunnels; it may be that they could be developed in tandem with a porphyry exploration programme and even provide some revenue towards the exploration costs; where to allocate resources would be the decision of the BOD and the exploration manager overseeing the project.
As MedinahMiner indicated, this is the start of a long haul. The last porphyry deposit I worked on was discovered in 1957 and has been in full-time exploration (as opposed to irregular field seasons) since 2000. During my time there the exploration operation was costing $1m per week. Start-up costs now the deposit has passed the feasibility stage are currently slated at $2.63 billion.
Underground exposures, especially in the form of drives/levels, are always better than drill core as you can view the exposures in 3D and conduct far more detailed sampling; however in this instance you have to relate things back to exactly what these exposures represent and where that style of mineralisation fits in with the bigger picture and what the main thrust of your exploration strategy is. Also it is worth noting that those tunnels have furnished no robust sample or geological data to date.
The 'Spanish tunnels', if they are consistent with similar types of workings further north in Chile are levels/openworks driven on narrow gold veins. Some of these working are of Inca origin and were expanded and further developed after the conquest. The workings are often shallow, working the oxidised portion of the veins. The host mineralisation tends to be lamellar (thin sheets within individual crystals) gold within iron pyrite, which in the oxidised zone is broken down to iron hydroxides from which the gold can be easily extracted with the most basic of processing by hand. Once the primary ores were reached the workings were abandoned as the processing technology did not exist at the time.
The tunnels would need to be fully mapped and sampled - possibly every metre - to delineate a potential resource, which is going to be a costly and time-consuming operation. Where this would fit in with a programme that would ideally be directed at discovering a viable porphyry system is difficult to say, which is why as many anomalies from all the available styles of mineralisation have to be identified and ranked first before an exploration strategy is developed. In an ideal world you would have enough cash and manpower to look at both the tunnels and porphyries (and both could yield potential resource/revenue streams), but in the real world there are limited supplies of both and how to cut up the cake and where to allocate resources (high grade/low tonnage target or low grade/high to massive tonnage target) is a decision you can only take when you done the groundwork and have good mapping/geochemical/geophysical data to hand.
if I were a potential suitor, I think I would be very happy with the information I could get from those tunnels.
One thing worth bearing in mind, with this focus on drilling, is that drilling is never the first line of attack in an exploration programme. Drilling is expensive; the last time I worked in Chile we were paying a little over $100 per metre (on a recent job in Europe we were paying $300 per metre) plus rig mobilisation and sundry costs. To drill effectively you need to identify anomalous targets first and design a staged programme around them.
Detailed outcrop mapping (to create a geological drape over a digital terrain model) followed by geochemical sampling and geophysical exploration is required first to identify these anomalies. With something as large as ADL this is likely to take some considerable time to get the blanket coverage (though breaking the plateau down into sequential tiles could see localised drilling take place sooner) you would need in order to rank your anomalies into some form of drilling order in terms of size/grade, etc.
Once a JV is in place and the money is in the bank, don't expect the drills to turn any time soon; there's much work to do before then to create a cost-effective exploration programme.
Having read HR's post, eloquent and well-researched as ever, I have to agree with him 100%. He has set out exactly how sampling should be, and is with reporting companies, undertaken and reported.
It is well within MDMN's capabilities to conform to these standards and they should be adopted as a matter of course; I believe it would raise the company profile significantly.
My opinion is that the 'Glory Hole' is a red herring as far as the likely gold grade is concerned, for a number of reasons.
Firstly, gold is incredibly 'nuggetty' in its distribution and rapidly changes tenor over very small distances. Imagine the original drill hole with a diameter of 4cm or so; the very high grades were only found over a 1 metre sample length within that hole. 450g/t only equates to 450ppm (1% = 10,000 ppm); at these levels analytical certainty drops off quite markedly as most techniques are geared to lower, more common, grades and the potential for sample bias is increased dramatically (gold is very difficult to prepare as analytical samples, due to density issues and the low concentrations involved); ensuring efficient mixing and riffling when you are only going to analyse 30g or less of the original sample is essential.
Secondly, you're dealing with a shear zone. It's difficult enough to extrapolate gold grades in a vein; but in a shear any ore shoots are sliced and dissected so that there is little or no continuity. Admittedly there has not been any information forthcoming from the company as to the orientation, nature or frequency of the shears; but these are very often fractal systems that can be traced at the microscopic level as well as the macro. Hitting that high grade pod was a fluke (the rest of the grades in the hole attest to that) and it is very possible that the drill simply intersected a very rich pod the size of a tennis ball, in a mass of potentially barren material. A shift in the drill hole a few cm in any direction and you would never have seen those grades.
Thirdly, you have to consider what you are trying to achieve. When you have a single drive with a whinze here and there you can pick the rich eyes out of it, but you'll have a very small tonnage of ore to offset against your development costs. Ideally you want to put in further levels and mine out the panels between them, but here high-grade spikes are irrelevant - only the average grade of the material you extract counts and even then you will have to keep it above 10g/t or more to make any money - working underground is expensive - working within a shear zone doubly so in terms of ground support (look at the whinze an the support it needed) and combatting dilution from the wallrocks and low-grade areas.
Any development is useful as it furnishes more information and it is better than drill core because you can stand within the rock mass and see it in three dimensions and take appropriate measurements, etc (it would be nice to see some detail from the geo's working there); but trying to extrapolate within a shear is difficult enough, never mind deeper into the mountain itself. Such assertions have no scientific basis whatsoever, nor do claims based on the idea of 'average porphyries' (the next time I meet up with Richard Sillitoe I'll run that one by him). There is no substitute for diligent fieldwork using all the techniques you have to hand and basing your assumptions on hard data.
Proof, if it was needed, that a little knowledge is a dangerous thing. Talk about the blind leading the blind.......
It's customary to do the mapping, sampling, receive the assays and model the results before rubbing your hands with glee and inviting majors to the party.
How deep below ground are these tunnels (my guess is not much) and in what way can you extrapolate what is happening there (considering they haven't been mapped yet) to a point where you can say they open a window on the 'belly of the beast'?
In the parlance of the trade this is pure geopoetry at best and rockeryf**kery at worst. In this game there is no substitute for the hard graft of proving your deposit and singing its praises afterwards. Get the cart before the horse and you'll not be taken seriously - quite the opposite in fact.
Hi Beth. Underground workings are a great boon to the professional geologist. They show 3D exposure and allow the geologist to get a handle on the shape, complexity and structure (limits, joints, faults and their offsets, etc) of the deposit in question.
Normal practice is to survey the workings first; these days with laser-based systems (such as total station) it's a relatively quick process. Modern TS systems now use rotating lasers to capture the workings in 3D and download the data onto cards that can be read later on a PC for transfer into a mining software package or AutoCAD. Geological information can also be surveyed in at the same time as the drive walls, as much of this is vector-based (vein walls, faults, major joints), which gives pinpoint accuracy. Working with surveyor with a TS I've mapped 250m a day in complex geology, so your 7000m should be do-able by two men in around a month.
Once the drives are surveyed they need to be sampled. It is not clear from any data I have seen how much of the 7000m is 'on structure'. My understanding is that these 'Spanish tunnels' were primarily following gold-bearing structures and as such you would need a dense sampling pattern to build up a statistically viable sample base. I would start with a channel sample at every metre; once you had a thousand or so samples you could run geostats to see how well this fits with your sill value (sphere of influence for each sample - hence sample spacing). This may allow you to extend the spacing a little; it's always more difficult to go back and infill rather than extend.
Once you have all the assays fixed by survey points in your 3D map of the workings this data can then be block modelled to give you orebody shapes, tonnages (worked out from sample density measurements)and grades and then fed into a scheduling system to look at extraction methodologies and sequences.
It is difficult to extrapolate how things are likely to progress with ADL/LDM as the paucity of geological information at present does not give any indication of structural continuity in the 'Spanish tunnels' or how they relate to the LDM; my impression is that you are dealing with two separate entities, one a vein system and one a shear (LDM); neither of which are geologically described in any detail or surveyed at present.
The timing of these works will depend on the manpower used, but you're looking at a couple of months at least to complete a survey and sample programme. How long it would take to get these assays back depends on the lab used (I would use ACME in Vancouver or one of the ALS labs). Cost-wise you would need several thousand assays (contingent on mapping results) and the services of a number of consultants with the requisite surveying equipment and software for data capture and block modelling (mining software is very expensive and complex and requires a great deal of expertise to use). It won't be cheap, that's for certain.
Mike, Of course not. I've worked on a shear-hosted gold deposit (average grade 1.2g/t, though with occasional spikes to over 100g/t) that still carries a large resource.
I'm merely saying that you should disregard the grade spikes, like the 'Glory Hole' as they are nothing more than eye candy to dazzle those prone to gold fever. If you chose to extract this high grade pod alone you may net around 10-15 tons of rock; if, however you concentrate on average grades across the whole shear or large sections of it, then you can extract large tonnages. What's better, 15 tonnes @ 450g/t or 100,000 tonnes @12g/t? There is no contest.
The problem with the sampling done to date is that it is too little and too random to be able to constrain an average grade or to be able to define any ore shoots that may be present, and without that information you cannot formulate a plan of extraction or even know if the future of the operation is viable at this stage.
10g/t is the kind of ball park cut off used between open pit and underground operations (though this will vary with a number of factors including local mining costs, etc); you need to be as certain as possible in you projected head grade before committing yourself to underground operations.
The intersection I'm referring to is what has been dubbed 'The Glory Hole'. A 450g/t spike over 1 metre from and back to a background around 9g/t and from there dropping to 6g/t and lower.
Gold typically shows a very high nugget effect that means that grade continuity in any direction has a very short (often centimetres) range. Compound this with the fact that LDM is a shear zone and you have the added complication that shearing dissects and smears the grades that you do see - step out of the individual shear plane and your grade is gone.
Another thing to consider is what you're analysing for - 450g/t sounds fantastic, but it's only 450 parts per million within the sample. Consider that half of that 1 metre of core weighed in excess of 2kg and would have been crushed, ground and split down to something around 30g prior to the actual analysis and you open all kinds of possibilities for sample bias; that 450ppm could be just one grain of gold that ended up in the sample instead of going to the waste pile.... A company that sees such a spike out of the normal statistical range would run duplicate or triplicate samples to verify the grade and take an average of the results, and also cut the grade back to the limit of the statistical outlier range or variogram sill level to bring the results into a more meaningful range and stop the kind of 'gold fever' that seems to grip some investors.
When you take the likely range of the gold spike (if it is correct) and allow for the potential enclosed volume of rock, the fridge analogy is quite generous.... The rest of the shear zone that you will have to extract lies somewhere between 1g/t and 9g/t based on the assays to date if we accept them as viable (which they are not).
An average of 9g/t is just about at the limits of economic viability for an underground operation these days - mining within a shear zone in such poor ground (witness the bracing in the whinze) makes that extraction problematic when you start large-scale blasting to extract large (say 50m strike and 25m plane of shear) panels via long-holing. The level of ground support will have to be high to maintain the working areas (you'd be amazed how much ground away from the blast point can be shaken up by large blasts) and to prevent collapse and dilution, all of which will push up your costs markedly and could render the whole project uneconomic. If that's the case then this single-level drift is all you will get.
As for big tonnage porphyry bodies; you don't have one yet, it's all just wishful thinking; that may go down a storm on MP, but doesn't even register on the radar of any serious mining company who are only interested in verified tonnage and grade. And as for the photos - blurred, no scale or context (certainly that last batch); they don't do nearly as much for me as they do for you.
At last this company will have something to crow about.
RD759 . what is your take on how the news is being promoted on the mining play website?
The big take away from all of this is that Nuoco may have discovered a near surface high grade section of a massive copper porphyry deposit worth billions of dollars. After reading posts from last evening-it is clear that this news when right over the heads of most shareholders but happily-the major miners will take note of this latest discovery."
Hi Rick; my query over the 'porphyritic' terminology stems from the way it is used in the update. Less well-informed investors may think that a major porphyry system has been intersected rather than dislocated lenses of porphyritic rock within a shear zone looking at the way the update was worded. Without rigorous geological background information it's difficult to interpret the meaning of parts of the update even with a geological background, never mind for the layman.
I seem to recall an earlier update mentioning porphyritic andesite present in the workings; this is quite distinct from the type of porphyry that is typically associated as being the parent magma of porphyry-style mineralisation. The presence of porphyry rock within the shear zone may be due to dissected dykes that cross the shear; there is some possibility that some material could have been brought up from depth in an earlier phase of movement, but most shears work in a sub-horizontal to oblique sense and so it seems more likely that these rocks come from close to the current elevation of the LDM workings. Detailed Normative mineralogy and whole-rock geochemistry would be needed to tie them genetically to other porphyry rocks present on the plateau.
The LDM project isn't so much about the sampling and assays though obviously any geological data is helpful to investors. It is first and foremost about extracting and monetizing ore from the high grade gold zone which based on reports thus far (as vague as they may be) appears to be occurring. CMLDM probably doesn't need a whole battery of assays to monetize the asset...perhaps bulk sampling and grades provided by the mill from the extracted ore will suffice. Though I may be incorrectly over-simplifying the nature of what is involved in assaying for the ore extraction process.
Management of Medinah Minerals, Inc., is pleased to provide the following update received from the LDM/NUOCO managers from Santiago, Chile. The progress of the mining work at the LDM/NUOCO projects has opened up new discoveries which may have significant impact on our understanding of the potential scope of mineralization over the entire Altos de Lipangue claims area.
During the LDM tunnel and exploration work undertaken by the private partners, a significant discovery of copper was made. This copper formation appears to be extensive and competent and is currently being mined for production by the NUOCO crews. The first rounds that blasted into the formation indicated a consistent and strongly mineralized structure. This appears to be porphyritic in origin, associated with the Altos de Lipangue breccia pipes, except that this is not a breccia, but rather a strong and consistent copper rich zone associated with a porphyry intrusive containing malachite, chalcocite, bornite and chalcopyrite. Indications are that the porphyry ore body, with all probability, is very much at a mine-able depth, which should present very large tonnage for capture.
The LDM project designed to intercept the high grade gold zone has succeeded with the addition of another surprising and potentially game changing discovery. The gold that has been encountered appears to be associated with yet another porphyry intrusive separate from the known copper rich porphyry in the Altos de Lipangue breccia area. This contact has revealed a gold rich porphyry/brecciated zone mixed with quartz. We have received initial assays from the 66.5 meter shaft level, approximately 3.5 meters above the high-grade target zone, which contained 6.6 grams of gold per tonne. A second assay taken at the 67 meter level revealed 9.8 grams of gold per tonne. This confirms the assays, at a similar depth, that coincides with the assays received from the DDH-002 drill core samples. We now expect that assays from the downward target zone will confirm assays from the 70 meter section of the drill core.
If you go back through my post history you'll find that I've addressed pretty much all the information you've cited in your post.
The geological summaries put out by the company looks to have been written by someone who has read a dictionary of geology and understood none of it; they're full of extrapolations and 'forward-looking' statements that are not substantiated or verified and would never make it into a modern day report for a listed company. The geology of water/rock interaction, the mechanics of breccia formation, secondary enrichment and porphyry petrogenesis are grossly oversimplified and poorly understood; assumptions about structural/mineralisation continuity are made that are totally unsupported, but paint a picture of a 'World class deposit' to those who don't have any geological background. The text also places undeserved reliance on Perez's satellite study and extrapolates the findings to a point well beyond the limitations of the technique. SI distinguishes rock units on the basis of reflectance and absorbtion at the surface at a variety of spectral levels. It can 'see' some individual rock units (you still have to confirm what they are by taking samples on the ground) and it can identify alteration haloes and other hydrothermal features, but it cannot see mineral grade and tonnages, nor can it detect below the surface. The idea that porphyry bodies, even those with evidence of hydrothermal activity, are routinely mineralised is a fallacy; I have worked extensively on porphyry systems with some of the best internationally regarded men in this field, and can tell you that not all porphyries have the particular chemistry, water/metal budget and stress/potential energy history to develop into mineralised systems of the type that develops into world class deposits.
The bottom line is that the ADL/LDM is an area that is variably mineralised and has in the past supported artisanal surface/near surface mining for gold, copper, molybdenum and iron, just like many areas of Chile. It may have the potential to contain a large porphyry deposit, but this will need to be tested by extensive investigation, including drilling. Artisanal mining is often small-scale, but can be very profitable if the capital outlay (in terms of structural support, pumping costs and mechanisation) is kept to a minimum, but the life-span of such workings is often fairly short and stops once costs begin to rise (many small mines do not proceed below the water table, to avoid pumping costs, power installation, etc), they also typically support only a very small workforce and are highly tied to contract mill costs and the copper price, stopping work immediately if the price dips below a given level.
Just because an area has supported artisanal mining, there is no certainty that a parent WCD will be found; the dispersal of mineralising fluids into the carapace above a porphyry stock is dependent on a variety of factors from the initial water/metal budget to the local stress field, the nature of the cover rocks, proximity to paleosurface, the presence or absence of boron and the internal dynamics/energy of the parent magma. While ADL is within elephant country there is a lot of work ahead to uprate the resource to a point where a serious mining company will take interest.
Your final point regarding the assays - they look good don't they? I could pick up a rock with a millimetre thick covering of secondary copper sulphate and replicate any one of those - it wouldn't mean I had a viable orebody at all, just that I'd picked up a likely looking rock. Assays without geological context, sample methodology and given widths (5% Cu over 0.70m, etc) are meaningless, misleading and ultimately pointless. If you can't locate the sample in 3D space over a given width on a given structure you've wasted your time. You also need a regime of sample standards, blanks and repeats at an ISO-accredited lab to make sure you have a statistically viable and robust sample. The least you should have is good map showing sample widths and locations with geological explanation to put the samples in context.
Hope this helps!
Hello Paddy, I can't comment on information that isn't in the public domain (I am after all, the public ),but the bottom line is dollars, tonnes and grade. Any company wishing to JV will presumably have to sell the idea to their shareholders and justify the likely expenditure and it makes a big difference saying 'we have a verified in-situ resource of x tonnes at x% Cu and x g/t' to saying 'there is anecdotal evidence of a large deposit'. These days it's all about verification, a high level of confidence and accountability; these are what sells a deposit.
The LDM could be a positive cash generator, but to know whether that is the case you'd need to see the requisite data (see my post 62337) and be able to determine its cash flow and profitability. If it did provide a steady cash stream or was able to finance phases of exploration it would certainly be of interest to a JV partner, but I'd have to ask - if you have a good mining contractor and a steady revenue stream, why would you need a JV partner? Simply employ a series of consultants to prove up ADL and sell it to a junior/mid-tier when the resource reaches what you deem a critical size. The contractors do the mining, the consultants firm up the resource, the shareholders reap the reward of a higher SP, etc.
Heart and head - as you and HR point out the kilt remark was not objective. I suppose I was letting cynicism get the better of me. When you've been in this game for a while you get to see a lot of 'sharp practice' and I've even been the victim of it myself once, sent into the mountains on the border with China with fake maps and data (all with official government stamps) to explore for a gold deposit that didn't exist. When we gave up the President's son-in-law (the property owner) merely pumped up the prospect again and sold the exploration rights to another willing bunch of get rich quick dupes and so on and so on...... The lack of transparency around MDMN and the lack of progress over the last decade is not conductive to viewing this prospect in a positive light.
But to return to objectivity and your question - ADL is effectively a blank sheet with very little verifiable information and none that complies with current standards; it is therefore a gamble for any company coming in to a potential JV. Major companies have no interest in deposits at this stage; they require bulk targets (around a billion tonnes plus) that are already at the feasibility stage and are on the ramp up to production. They may sometimes acquire well-documented prospects, but typically farm these out to juniors to bring, over a number of years, to FS stage with a buy-back option should the deposit come up to expectations (if not, you're left holding the baby).
Mid-tier companies, typically with one or more producing mines, may, depending on their individual financial positions, have some money set aside for exploration and acquisitions, but will tend to concentrate on areas close to current operations to feed existing infrastructure. If a deposit is sufficiently interesting they may look at some kind of JV, but I would say the lack of detail about ADL would make it too much of a gamble in these times when every dollar counts.
A junior would be your best bet, but the current financial climate means that most juniors are just clinging to life, unable to raise capital in the markets. Until that changes I think you'll find finding a partner very difficult.
The best option, which I've stated before, would be for MDMN to raise some exploration finance from existing and new shareholders. 2-3 million dollars would give you a budget to map the plateau, complete a thorough geochemical and geophysical survey and undertake some limited drilling on the best identified targets and have the whole project written up into a bankable report. With this in your back pocket you would have data, grades and tonnes on your side and would be able to negotiate a JV with the confidence of having definitive data on your side. Rather than go through an endless string of partners that never seem to deliver, surely it would be better to take the bull by the horns and do the job yourself and become a junior in your own right.
I have done a little research. The ADL claims are located near a small town called Lampa. The ADL claims owned by Medinah Minerals cover a very large area. There has been a small amount of drilling and some expert analysis done on the property. All to the positive. Chile is a mining friendly country, the claims are at an altitude to be mined year round. Again all towards the positive. In addition to the ADL claims they own the LDM group of claims, which, according to company updates they are currently mining but have yet to publish results.
That is entirely up to MDMN or their prospective JV partners. It's something that could have been done at any time since ACA Howe were involved, for a fairly modest cost initially. It's a matter of will and something that would have benefited MDMN enormously (assuming the outcome was positive) had it been done already.
It would be nice to see some resource reporting of a robust nature no matter what the format!
Plenty of London listed companies would disagree.
"The LSE, for instance, accepts CPRs, Qualified Person's Reports (QPRs), and Mineral Resource Statements, compiled using JORC, SAMREC and SAMVAL, or NI 43-101, when accompanied by a NI51-101 Valuation Form."
Certainly most reports filed in Canada have to comply with NI 43-101 (see below), but it has become such a recognised standard that its framework is used overseas. See the two sets of text below.
"The CSA has added the South African Code for Reporting of Mineral Resources and Mineral Reserves ("SAMREC Code") and replaced USGS Circular 831 with SEC Industry Guide 7 as acceptable foreign codes for reporting mineral resources and mineral reserves. As a result, issuers incorporated outside of Canada are able to file a technical report that uses the mineral resource and mineral reserve categories of the JORC Code, the SEC Industry Guide 7, the IMMM System or the SAMREC Code if a reconciliation to the mineral resource and mineral reserve categories set out in NI 43-101 is disclosed in the technical report. Issuers incorporated in Canada but with properties outside of Canada would also be able to report under the JORC Code, the SEC Industry Guide 7, the IMMM System or the SASMREC Code if appropriate reconciliation and disclosure is made.
In the instance where an issuer announces the acquisition or proposed acquisition of property that is not in accordance to the CIM standards or the alternative codes set out above, the issuer may reclassify the resource and reserves according to CIM, disclose it as a target potential, apply to the CSA for an exemption to disclose the foreign estimates as is, or if applicable, for an extension of time for filing a technical report (for example, the Russian and Chinese codes)".
"In many cases, NI 43-101 and JORC Code technical reports are considered inter-changeable and may be accepted by either regulatory body in cases of dual listed entities and, indeed, are accepted as the de facto industry reporting standard by many other jurisdictions which lack similar rigorous reporting standards or internationally recognized industry professional bodies. The LSE, for instance, accepts CPRs, Qualified Person's Reports (QPRs), and Mineral Resource Statements, compiled using JORC, SAMREC and SAMVAL, or NI 43-101, when accompanied by a NI51-101 Valuation Form, for listing on the LSE. Likewise, the Hong Kong Stock Exchange accepts reports prepared in accordance with NI 43-101,SAMREC or JORC".
"Here is where they mentioned the NI 43-101 as a "international standard" canard. NI 43-101 is Canadian law, not some sort of standard any random mining company can comply with".
On the contrary; while NI 43-101 is Canadian and JORC is Australian, these are two internationally recognised standards and mining companies World-wide report their resources to these standards, often because they are listed on the ASX or TSX, but will do so even if listed on the AIM (London) or elsewhere simply because of the rigour and transparency involved. Documents compiled to these standards are accepted everywhere.
Rick, you're right about the timber - on zooming in it is a light beam from a lamp above - time for new specs perhaps! If this is part of the shaft works, then they have come off the shaft and have made a small exploratory level to chase some of the sulphide mineralisation. The level of dust makes it look much older than it may be. Initial blasting does generate a lot of dust, but this is lost when the miners come back in and wash the area down prior to barring down any loose rock to make the workings safe. Dust then accumulates as air passes through the workings and accretes with time - the thicker the coating often the better the ventilation curiously. The thick dust coating suggests that they haven't barred down (the area behind in the shaft is much cleaner by comparison); you would have expected the geologist to wash the area down to see what is going on; he's obviously too busy 'sampling'.
Photo 1 - pyrite/chalcopyrite(?) in country rock. SCALE anybody? Given the shaft dimensions are around 1.5m square, this has to be a bit of a close up.
Photo 2. Sampling new mineralisation in the shaft? Clearly not - this is a drive (horizontal) and not the shaft/whinze (vertical) seen in the earlier shots. This drive (much smaller than those seen in the previous photo set) has been standing for some time - note the dust on the walls - and even has some timber support in the background. The guy is not sampling; he's looking. If he takes anything off that dirt pile it's classed as a 'grab' sample, which is a low-confidence, random method usually reserved for old dirt piles. If he were sampling he'd be taking a channel from the wall in front of him, but for that he'd need a note book, metre rule, SAMPLE BAG, marker pen and rucksack - all of which are presumably just out of shot.......
Hi Stevej,
what you're looking at is a whinze in photo 1 (an internal shaft that doesn't come to surface), serviced by a kibble presumably (a metal bucket for removing broken rock at the base of the whinze and doubling as a 'lift' in and out for the miner and his gear, given the absence of ladders in the picture). The kibble is lowered and raised by an electric whinch (photo 3).
Photos 2 and 5 show the top of the whinze, with shuttering and staging to stop collapse at the collar and act as a platform for swinging the kibble (dumping into a wagon or scooptram). The whinze looks to be braced all the way down.
Photo 4 shows part of a drive with a cuddy (storage area) for drill steels and some coiled hoses; the electric lighting is a nice touch - you don't see that very often!
In terms of looking professional, the whinze certainly does; I don't think I've come across one so well presented before (and I've seen a few). The workings look in good condition and the ground in the pictures is holding up well (note the absence of meshing and roof bolts); however no shiftboss of my acquaintance would ever let them get away with a floor like that in photo 4 - failure to tidy that up would result in terrible punishment usually involving thick detergent-repellent grease, a high degree of nudity and having a ball and chain welded to your ankle. I'll leave the rest to your imagination
That may be a function of the malleability and ductility of gold together with its relative softness (2.5 to 3). Native gold grains coming into contact may be attracted by surface electrical forces, and being rolled in the current may effectively 'snowball' and become compacted as they travel downstream (I have seen some pebbles coated in a sheath of gold on occasion, which suggests this sort of thing does occur). Platinum, on the other hand, is much harder at ~4.5 (Moh's scale is logarithmic) and though still ductile, it doesn't appear to behave in anything like the way gold does, often retaining good crystal form so long as the residence time hasn't been too long or the current too powerful.
Hi Goldstrike, I'm not a expert in bacterial leaching, but I have heard of Delftia acidovorans and Cupriavidus metallidurans. From what I understand these species work by stripping chloride ions off gold atoms, when it is already in solution as gold tetrachloride, and precipitating gold in nugget form.
Gold is notoriously difficult to put into solution in most natural environments and chlorides only tend to be prevalent in super-saline environments like salars or brackish bogs on the margins of saline lakes such as you find in the high Andes. Gold can occur in atomic form within sulphides like pyrite and the decay of this material, especially where you have sulphide-phyllic bacteria like ferroxidans may be one route to getting gold into solution in the first place; however it's difficult to see how these processes would operate in a flowing/fluviatile environment; I think you'd need standing water such as a lake/salar or (even more likely) a tailings pond. This sort of technology seems ideal for treating tailings or remediating very polluted environments.
As regards the placers at the foot of the plateau I would expect them to be sourced locally. Much of the gold I have seen in Chile was derived from lamellar gold within primary sulphides - the sulphides break down to limonite (iron oxide - rust) while the gold remains as very thin flakes rather like gold leaf; when this gets into a stream the limonite breaks apart and the gold appears as 'colours' in the pan. If the locals were recovering nuggets then that suggests a free gold source such as gold within quartz or carbonate veins
"And here's a final thing to chew on - Hypothetically, if I'm a professional geologist with a degree from a reputable geological school, years of hands-on experience in a variety of countries and deposit types, just what is it about Alto de Lipangue that out of the thousands of junior mining companies with allegedly more promising deposits and/or more traditionally documented geological data, brings me and my C.V. to poke around this tiny little company called Medinah Minerals?"
We've covered this ground before Rick. My interest in the ADL stems back to early 2010 in Chile when I was approached to be part of a team undertaking an exploration/drilling programme there. My contact was one of the geologists who had written about ADL previously. As part of my background DD I read up the prospect and was all set to visit, but the project lost momentum over several months and never materialised. I was by this time aware of some of the message boards and could scarcely believe what was passing there as geological/mining commentary and felt inclined to chip in. I'm not a shareholder nor have any interest in being one, but I would like to see some new flesh put on the bones that ACA Howe and others have put to paper and always look in between contracts to see if things have changed or new information has been presented.
I work often with skarns and have been waiting for a report on the geology of the LDM, out of professional interest, to surface for years now; a map, some structural data and interpretation, some decent assays - the sort of thing I knocked out every day at one time and bread and butter to most mining companies who want to publicise their properties. If there are experts on the mountain as you suggest, what do they do all day?
I would be very interested to visit ADL; there is some talk of a potential contract back in Chile this year and I could swing by when in Santiago; I even have an old colleague who lives at the base of the plateau.
MDMN for me is a bit of a soap opera; I check back every so often to see if things have changed, but so far I've been disappointed, particularly as from a presentational/geological point of view it could easily be so much better. It's a salutary lesson for me in how not to communicate with the shareholder base and wider community, especially as juniors can't get good news onto the web fast enough these days.
That all depends on the geology of the relevant claims and how much you are able to extrapolate between the two with any degree of confidence. If you can follow an ore shoot up to your claim boundary, then it's not going to stop for a line on a map it then becomes a matter of how far does it extend?
Coming to a prospect like ADL with limited concrete information is a gamble, but then so is all exploration; it depends on the relevant company and their attitude to risk - obviously positive audited data mitigates against the level of risk and also gives a tentative indication of the minimum potential deposit size (many companies operate a 'cut-off' below which they will not operate depending on their business model).
Historically the area has been subject to artisanal mining for gold and copper in particular which indicates some level of mineralisation; but artisanal miners are able to operate at levels that mechanised mining cannot and to a time scale and work schedule all their own. Artisanal miners in Chile are extremely adept at mining the high-grade 'eyes' out of a manto or breccia or stockwork in often dangerous very confined spaces with a minimum of structural support and mechanised equipment; they are almost always halted by the water table or when their workings are become too structurally unsound. Mechanised miners need to work 24/7, produce bulk tonnages and ensure a consistent feed to the mill, so they need a known resource to base their mine planning on. Coming to something like ADL, which is a pure exploration play isn't something I would expect a mid-tier company to do, rather they would wait for a junior to explore first and firm up a resource before they committed time and money to the project.
The LDM may sound good on paper, but the sampling undertaken there is not fit for purpose and would not stand up to scrutiny. Sampling is a complex method of establishing ore tenor to a high level of confidence based on the structure of the deposit, mineralogy, chemistry and statistical behaviour of the metals involved and works by establishing a sphere of influence for each sample point. Sampling at LDM is very coarse (single samples covering several metres) and carries no geological context or explanation. Carbonate and oxide copper species can carry 60-90% copper. Hit a 20cm pod of cuprite in a 5m sample and you may get an assay grade of around 4% copper back; base your tonnage and grade calculations on this and you will get a very large figure, when in reality almost all the copper was in the little pod and the other 4.8m carries next to nothing. Your tonnage is more like poundage in this case. Refer back to some of my earlier posts regarding gold; correct sampling there is even more critical.
With regard to Perez; he was able to identify two porphyry bodies with some attendant alteration and may have felt able (issues with translation?)to infer a connection with the known inca and artisan-worked mineralisation on the plateau; that isn't something that could be done today without firm evidence. Simply having a porphyry, even one with evidence of hydrothermal activity does not mean you have an ore deposit on your hands. The Sillitoe model is just that - a model which illustrates an ideal situation; reality is often far more complex. In any event there are, as yet, no boreholes into these porphyries to quantify any mineralisation if it is present.
The Perez report is not enough to identify drill targets. Satellite imagery is simply that, an image, without any attendant geochemical data. It can highlight geological structure and alteration haloes, which can be of value in looking for areas of interest, but these sites then need to be investigated directly by physical means to ascertain any metal tenor.
The Perez report is a product of its time and such a report, containing such forward looking statements as 'world class deposit' could not be written today; not without the verified and audited data to back that statement up.
The preferential terms I was referring to reflect the fact that aside from the claims MDMN is bringing a minimal amount of quality data to the table, so a JV partner will be able to use its data acquisition capabilities (surveys, drilling, etc) to maximum effect in negotiating the most favourable terms should anything be found, and to walk away with no liabilities should things not come up to their expectations; indeed they may even retain the data in any eventuality and keep it in-house unless MDMN pays for it.
Normally when you enter into a JV agreement it is done because you've reached a point where the financial (and/or sometimes technical aspects) costs of developing your deposit further are beyond your means. For most juniors this stage is normally reached when they are a number of seasons into their drilling campaign or if they've found a deposit too large for them to handle alone within a reasonable time frame.
To attract a JV partner you need to be able to present a really good economic case backed up with hard data, more often than not set out in an NI-43-101 report with further mineralogical/metallurgical data (ok, you've told me you have x million ounces at 10g/t, but how much is recoverable and what are the likely costs involved?), structural and geological information. After all, if you're going to put up a considerable sum of money and utilise your time and expertise, you want to be sure (or as sure as you can be) that you are doing so with a reasonable chance of making a profit.
With a situation like ADL where there is very limited data (for a very small area of the total claim), backed up with indications of historic artisanal mining, a potential partner would be coming to the table without any real idea of what they were dealing with and would have to undertake MDMN's role in acquiring the preliminary data. They would need to have a good map of the plateau and a method of delineating potential drill targets (core drilling is expensive and needs to be targeted with as much confidence as possible). The cheapest and most rapid method is soil sampling, say on a 25m grid (that can be infilled over anomalies). Mapping would take a couple of geologists a month to six weeks (at a cost of around $100k max) and a geochemical survey would cost say around $150k. Once that information was available they would have to decide whether to proceed to a geophysical survey, with some trenching and RC drilling over anomalous areas. A reasonable budget for this whole phase would be $500K to $750k dependent on coverage. A single season drill campaign would cost potentially double this dependent on the meterage involved (and it would likely take a number of seasons to firm up a decent resource model).
If it were me I would not commit myself beyond this first stage unless the results were good and I would negotiate preferential terms even if I did walk away as I had undertaken/paid for that work to be done. Further work would depend on continuing good results as the project proceeded.
Satellite imagery is a very useful exploration tool, particularly in Chile where extensive areas of land are vegetation poor or free (such as the Atacama). By manipulating the visible spectra you can highlight particular rock types (based on their reflectance characteristics - though this will only tell you that they are different from their neighbours, not what the rock actually is in terms of a definitive classification). What it does particularly well is to pick out alteration zones within and around rock outcrops. This is often related to hydrothermal activity that MAY have an economic component, so as a 'first pass' tool it can highlight particular areas that warrant further investigation on the ground.
What it cannot do is 'see ore' (unless you have a Kiruna-style deposit sitting on the surface) and it certainly can't give you tonnage and grade, so those thinking you can use it to define a 'World Class' deposit as a stand-alone tool should go and sit in the corner with a pointy hat on...
Back in the summer I completed due diligence reports on two historic, mothballed, deposits in Europe; one of these has now gone to a JV and the drills will be turning in the new year to uprate and expand the resource.
The amount of data (verified with full QA/QC) available to me for these projects was very large and diverse; compare that to any potential JV partner on the ADL/LDM and the difference is very stark, just 18 holes in a rather poor, small, breccia pipe and that's about it in terms of quality data that would stand up to 3rd party inspection. Any company coming in would need to map and survey the plateau, complete geochemical/geophysical sweeps to define targets before any drilling takes place, presuming they find something worthwhile. Really all of this should have been done before casting around for a JV partner as it could have been financed by MDMN itself years ago for a modest budget. You have to ask yourself what kind of company would be prepared to take a gamble of this nature; even mid-tier companies normally require a significant bankable tonnage to make their involvement worthwhile. They may expend time and money on this first stage and still not find a viable (one that fits their business model) resource. In the current climate finding such a partner is a big ask.
Those who "know what they own" actually don't; nobody does, yet. Until the groundwork is done, to a reportable standard, the mountain is for all intents and purposes a blank canvas to any potential JV partner and therein lies the rub; the expectation that the mountain hosts billions in metals and is the next Cerro Casale/Candaleria is based on little more than hype, extrapolation and bad science, none of which has a place in properly conducted exploration. It has obviously fooled some of the shareholders, but any company worth its salt would disregard that and tackle the job in logical steps (in the hope of finding billions in metals) providing a resource can be put together.
There may be another Refugio under the plateau, but if there is it will be a story a decade or more in the telling and it will be one that snowballs with the accumulation of data rather than the kaboom (whatever that is) that some people are expecting. Here's to a positive and constructive 2014; good luck!