Author: Lawrence Williams
Posted: Friday , 25 Oct 2013
LONDON (Mineweb) -
The Canadian resource sector has been abuzz with people taking sides on the Pretium controversy over the Brucejack resource estimation and whether Strathcona, or Snowden, both highly respected engineering companies, are correct in their different handling of samples and results.
Personally, as a mining engineer by background, I suspect with a deposit of this type with a very large number of ultra-high grade gold intersections in its Valley of the Kings section, within a much lower grade more disseminated orebody, that neither will accurately represent ultimate mining grades. There is precedent for this in some of the Red Lake area mines where ultimate grades to the mill from high grade sections of the mines often proved to be in excess of those suggested by sampling or drilling. Thus if, and when, a mine is developed at Brucejack, selective mining methods could well enable the orebody to be mined to a far higher grade than the bulk sampling would suggest, should economics suggest that is the most profitable long term route for shareholders.
For previous Mineweb coverage on the Pretium bulk sample estimates see: Caught between disagreeing resource auditors, Pretium says as shares tumble and Details on consulting controversy in Pretium bulk sample
Do I have an interest in Pretium? From a technical point of view perhaps yes – it looks to be one of the most exciting recent gold discoveries in Canada. From a personal financial point of view, No. I do not hold stock in Pretium, or in any other mining company for that matter. Here in the UK it is considered a conflict of interest to write about anything one has a financial stake in.
Is Pretium paying me to write this? Categorically no.
Do I know any of the people involved. Yes. I do know Pretium CEO Bob Quartermain and consider him to be one of the straightest arrows in the whole mining community, as any of North America’s senior
Do I know any of the people involved. Yes. I do know Pretium CEO Bob Quartermain and consider him to be one of the straightest arrows in the whole mining community, as any of North America’s senior mining executives will probably confirm.
The problem here is how do you assess a resource which has seen a consistent slew of ultra high grade, but relatively narrow, gold intersections – some of which run to kilograms per tonne - in amongst a huge low grade gold bearing matrix?
I have seen some of the cores – the gold is definitely there. Indeed, in some of the initial cores on the project the amount of visible gold was so high that some of the geologists thought it couldn’t be for real – until it was assayed. And, since then, Pretium has continued to pull many more equally high grade, and even better, intersections as well.
As I understand it, under standard Canadian resource assessment practice, much of these high grades should be discarded as being anomalous – but, in Pretium’s almost unique case, they have been shown to be consistent – and without taking them fully into account, any overall resource assessment, and subsequent mining reserve, would be horrendously weighted downwards – indeed Strathcona’s position was that their results were insufficiently positive to enable a mining reserve to be calculated.
Now, there is plenty of low grade material at Brucejack – millions of tonnes of it – but without the ultra-high grades being taken into full account it would probably be virtually impossible to present an economic case for development in the current climate. In this case, lead consultant Snowden’s position is thus that Strathcona’s sampling methodology may not have been appropriate for the type of deposit. And this led to the latter’s resignation – and a very public spat.
With the higher grades included – and with the prospect of perhaps being able to mine to higher grades still than even the higher Snowden assessment, which takes in a much
With the higher grades included – and with the prospect of perhaps being able to mine to higher grades still than even the higher Snowden assessment, which takes in a much bigger mined bulk sample rather than much smaller sections of it and that could miss some of the high grades altogether, the case for development takes on a very different picture.
Brucejack is not a homogeneous deposit, so the problems of estimation should perhaps be in some ways more analogous to trying to assess a resource for a high grade narrow vein deposit running through a host rock which is otherwise devoid of significant mineralisation. In the Brucejack case the host rock carries reasonable low grade gold values and this muddies the waters in terms of overall resource and reserve evaluation, but should improve the economics when it comes to mining.
In my personal view, the market has over-reacted, largely because investors, and unfortunately some institutions, perhaps just don’t understand the problems inherent in accurately assessing a major resource of this type within Canadian standard assessment parameters and normal sampling methodology. They just see the disagreement as promoting uncertainty and want out – and always have an underlying worry about the wicked, lying entrepreneurial mining scammer in the backs of their minds, of which, admittedly, the industry has had its fair share. But I firmly believe, Bob Quartermain and Pretium are not of this ilk.
Meanwhile, Pretium and Snowden are going ahead with testing the whole 10,000 tonne bulk sample which has been taken and will base a new resource assessment on a combination of this, the extensive drilling results from the past and recent drilling activity (which has also intersected more ultra high grades). In its latest statement Pretium notes that an updated Mineral Resource estimate for the Valley of the Kings incorporating all 2013 underground and surface drilling and milling results from the 10,000-tonne bulk sample