Please answer this question. Snowden seems to use a "novel" approach to get a model that is nearer to mined grades using MIK etc. Pretium states that other methodologies using a top-cut "seem not to work", i.e. understate resources. So if we compare figures with Red Lake we would not get much more grade in the VOK than estimated while Red Lake showed often nearly double the grade from estimate. That seems to be the situation for VOK.
But what about the West Zone? I haven't done any research on that one, but I read they used 5mx5m grid spacing, so these reserves are old reserves calculated to my understanding using the "traditional" approach where Strathcona would have no objection.
But doesn't that mean if PVG were to mine the West Zone the nugget effect would once again apply there as well and the recovered grades should be more like 8-10 g/t instead of the reserve figures at 5.x g/t? That means way above 1 mio ozs instead of 0.7 mio ozs AND lower cash costs than estimated.
Could that be the key to unlocking the VOK deposit? First Cleo, then West Zone, then VOK? Or is it just a pipe dream?
As to the West Zone, I have no idea what the coefficient of variance was on that drilling. But, because it was lower grade it is in all likelihood much, much lower than VOK. So, no I wouldn't expect the nugget effect to be very large there.
Well, I do think one of the possible advantages of MIK is the possibility of getting predicted grades closer to actual grade in deposits with a very high coefficient of variance in the drilling. But, there are so many modeling processes (running variograms on the drilling data, etc.) that go into setting the MIK approach up that I would think there are many things that could go astray. As far as I know, Snowden has more experience with this kind of deposit than any other consulting firm does so one would expect them to know what they are doing and do it the right way.
But, I think there simply isn't any substitute for either bulk sampling or production to validate whether or not the assumptions used in the MIK approach were the right assumptions to use.
That's why I'm waiting on the results of the bulk sample. VOK really is an extreme deposit. I can only really recall one other that approached the extremes of VOK and that was a deposit in Wales.
In reality, there probably isn't much effective difference between 10 X 10 on center drilling and 5 x 5 on center drilling in a deposit as extreme as VOK. I think either is fine once the model has been validated by bulk sampling. 5 x 5 on center will break the bank pretty quickly for what might be only marginally more reliable data.
Please do not understand me wrong, you write about VOK again and while I think we have looked at the VOK situation from all angles I think there is not much to be said on VOK any more. I certainly cannot add anything, I have tried to bring anything on the table that could be a negative factor. Devil's advocate. But I think if Strathcona was involved in the resource model creation for VOK the most likely grade would be in the 5-7 g/t range just losing a lot of gold that is there. And that figure is suspiciously close to the grades from the West Zone.
If I am right for the West Zone it is a huge bullish factor. The bad thing is not that Strathcona could be right. If they are right it would "only" mean less ore, lower grades. But still a viable mine in the end. The bad thing is that PVG would have to drill for more data, start from square one to calculate a resource. Reality would surprise to the upside, but only when the mine is already producing. Bulk sampling is not possible anymore as the 10000t limit is reached.
For the West Zone the situation seems to be reversed: we have the "traditional" drilling, resource model, reserves etc. at lower grades. Perhaps Snowden could apply the approach used in the VOK for the West Zone, calculate a higher reserve. The capex spending could be justified by the more conservative current reserves. The upside surprise would validate the Snowden model (in conjunction for VOK too) and finance capex for VOK.
No question the grade is lower in the West Zone. And if they already used MIK in the reserve calculation there my idea is bogus. I will read the technical reports again if I have the time.