Understanding Drill Assays

Keith M. Barron Ph.D.

Pretty much every week I get shown some assays and asked on the spot if they are "any good". Is there a quickie way of telling? Is there a "Drill Core Assays for Dummies" Handbook?

The short answer is "No". It can be very hard to interpret drill hole results outside of any context - even for a career geologist.

So, how would an investor who is not a geologist or a geological engineer be able to tell if results are any good….is it a "buy" signal? A "sell"? A "hold"? Suppose it is the only information out there? Such things can be tough to decide, but I've boiled it down to a few guidelines.

Firstly, something that may sound rather obvious - if you aren't already fully comfortable with the metric system, take time to learn it. If you don't know what a metre is you're setting yourself up for disaster. Any dictionary or encyclopedia should be able to give you conversion tables for weights and measures. The overwhelming majority of mining and exploration companies listed on the ASX, JSE, TSX, or AIM give assay values in grams per tonne and measure drill core lengths in metres.

Continuity and Geological Models

To make sense of press releases you have to navigate your way around the jargon we geologists use. Before any drilling takes place the geologist should always have an idea of which way the mineralization is trending. Geologists will often refer to the "strike" of the mineralized rock (you can think of it as "direction trend"), and the "dip" (which way the mineralization is tilted or inclined). As important as the metal content or "grade"; is demonstrating continuity - does the mineralization extend to depth and along the strike? You can't "build tonnage" (incrementally increase the size of the mineralization through discovery) if you don't have continuity. So the geologist will try to hit the buried mineralization with drill holes both along the trend, and at increasingly deeper levels. Sometimes geologists will use early information to drill "step out" holes, to test for continuity some distance away from earlier drill holes. They're called step-out holes because they step away or jump some distance from the known to the unknown (sometimes these step-outs are a very real "leap of faith"!). A positive result from a step out hole will often make the share price rapidly move because it's a way to quickly demonstrate size potential. If a step-out hole is successful, the geologist might want to track back in the opposite direction with "in-fill" holes. The geologist will also want to know how thick the mineralization is, and the best way to do that is to try to intersect it underground at right angles in drilling. A perfect right angle intersection will give you a "true thickness". If you hit it at any other angle the mineralization will appear wider in the drill hole than it actually is in nature. This is a function of geometry. With a couple of drill holes at different inclinations you can use trigonometry and figure out the thickness (yes, High School Trig is important…tell your kids!) What any competent geologist will try to avoid is "drilling down the dip". You can think of it this way: take any hardbound book and pretend that the closed book is an ore-bearing geological unit. Prop up one end so that the cover is inclined. Now take a pencil and rest the tip on the inclined cover. Orient the pencil so that it sticks straight up out of the cover at an angle of 90 degrees. That's the best angle you should use if you were going to "drill" your book. A hole at this orientation is going to give you an accurate representation of the book thickness. However if you drilled through and down the spine of the book between the covers that's like drilling down dip and will give you a false impression of thickness. Sometimes it can be tricky to figure the dip of mineralization, and it can often take a couple of cracks at it, drilling from different angles, to begin to sort it out. If a Company has been drilling narrow high grade veins and suddenly comes up with an extremely wide vein intersection, always be a bit skeptical and ask yourself if they may have drilled "down the dip".

The geologist should also have a fair idea of a geological model. He may not have it completely understood at first pass but he or she should have it down to a few possibilities. This is one of the most important considerations in whether or not mineralization has the potential to eventually be "proved up" into an economic orebody. Let's say that we're drilling a gold-bearing quartz vein, which is "shallow" (near the surface). It might be possible to eventually mine that vein with a small open pit from surface. If it's rich enough, it might pay you to afterwards go underground and sink a shaft to mine it from the subsurface. But if the vein is narrow and low grade, and only starts a couple of hundred metres down and not from surface, mining it will probably never be a paying proposition. Some quartz veins however can be very rich, and will support economic mining to very great depths. Let's say you have a second orebody which is a vuggy silica unit (vuggy silica is very hard and porous quartz which has formed by replacing pre-existing rock, often by very acidic hotspring waters). The vuggy silica may be low grade, say 1 or 2 grams/tonne in gold and possibly 50 or even a hundred metres thick. Vuggy silica is usually a shallow mineralization type, and at those grades, if there is a considerable thickness, it can be very lucrative to mine it using open pit methods.

High grade has always moved markets, but today, in 2004, many mining people have noticed a trend in North America towards rewarding companies that come up with high grade numbers and paying less attention to anything else. My own personal "take" on this is that investors have been spoiled by the grades that have come out of Goldcorp's Red Lake Mine. Many of the investors who were around in the early 1990's during the last junior mining boom were permanently shaken out by the triple whammy of the Bre-X scandal, low gold prices, and expansion of the internet bubble which siphoned away venture capital (much of which historically went into junior mining). Over the last several years Bob McEwen has done a splendid job of promotion, giving the Red Lake Mine a high profile (even advertising on the radio!) so that many of the new crop of investors around today may falsely believe that all profitable gold mines have to have super high grade. The Red Lake mine has so much gold in some areas that visible gold can actually be mapped underground! You can draw a chalk line around the visible gold and enclose a sizable area. Proven and probable resources as of Dec 31, 2003 were 3.178 million tons at a grade of 1.23 oz/ton [42.17 g/t] gold for 4.939 million contained ounces. I was underground in 1987 when the mine was called the Dickinson, and was privileged to see such extreme high grade, which the miners explained to me they got into only twice or so a year. The miners call such places "jewel boxes". I saw a drill bit clogged with gold, and two muckers horsing around trying to kick a piece of high grade down the drift (tunnel) with their steel-toed boots that was so heavy with gold it was reluctant to easily budge. Unless I get invited to go underground there again I don't expect to see such high grade gold soon, if ever. I want to stress again, grades like these are pretty rare and the new discoveries over the next few years are not going to look like this.

You have to realize that the majority of highly profitable mining operations mine much lower average grades, and that many operating mines don't have any "bonanza" grades like the example above. In fact, there are a number of senior mining companies that shy away altogether from high grade vein deposits. They may represent highly profitable low cost ounces but they typically represent a small number of contained ounces, say less than 1 million gold ounces - Red Lake is highly unusual. Many of the big Senior Gold Producers are trying to grow their reserves and want to do it in one foul swoop through finding a low grade but high tonnage and high number contained ounces deposit - like Barrick Gold has done with Pascua Lama (almost 300 million tons containing 16.862 million proven & probable gold ounces at a grade of 0.057 oz/ton [1.95 g/t], as of December 31, 2003). Exploration success doesn't come easily and so most Senior Companies can only grow or even keep their reserve numbers level through mergers and acquisitions - witness the Harmony - Norilsk - Gold Fields - IAMGOLD bun fight currently in progress. High grade vein deposits are also very drill intensive (need to be very intensively [and expensively] drilled to accurately forecast the grade and tonnage), and the grade in veins can be erratic and veins themselves difficult to follow underground. Many Senior Miners want deposits that their engineers can plan for 5, 10 or even 20 years production, and they want to boast to fund managers that their reserve profile has been boosted by 3 or 5 million ounces. These big senior producers are looking to grow their ounces and are looking 5 or 10 years outboard. Meridian Gold took it on the chin recently from investors who didn't like how much money was being spent on exploration, but if you're going to find those low cost ounces, as Meridian has a track-record of doing - it gets pretty spendy.

Low grade big tonnage versus high grade low tonnage - both are important and both potentially highly valuable. As a rule-of-thumb many geos look at gram-metres as to whether or not a drill result is interesting. Simply put, this is the grade multiplied by the width. A vein that is 5 metres wide and averages 60 g/t will represent 300 gram-metres, but so will a zone that is of lower grade, say 100 metres wide, grading 3 g/t. It of course would depend on the geological context as to which is the more interesting drill hole, but any exploration manager would be ecstatic to receive either result! An intersection of 10 gram-metres may or may not make it. An intersection of 50 gram-metres is pretty good; of 100 or 200 gram-metres is pretty gosh darn good, and anything higher becomes exceptional.