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Friday, October 21, 2016

Sol Gold - Cascabel Exploration Potential

I bought shares in Sol Gold because I think that there is good potential to find additional deposits like Alpala, but without all of that irritating, unmineralised crap that sits on top of it. I want to see some drilling at Aguinaga, where he have been given a teaser on its potential.

So why does Aguinaga make my rocks hard? Apart from being a perverted geologist  and attracted to shiny things (we are closely related to Magpies), I think that it has good odds of being the Jose Mourinho of targets at Cascabel (i.e. the special one).

The short version

  • They have found rocks at surface at Aguinaga that are very similar to what has been drilled at Alpala.
  • What would happen to Sol Gold if they found an Alpala-sized deposit at surface? 

The longer, boring version 

As a pseudo-scientist I have to provide some support for my ideas. This is what I think we have at Cascabel.

What is the evidence for this, well we need to acquaint ourselves with the parts of a porphyry deposit. They can be zoned, with discrete sulphide minerals found in the core and periphery.

High Cu-Au mineralisation is associated with bornite mineralisation (Wafi-Golpu - image above, Ridgeway, Mt. Polley etc.). Why don't we look at some photos of Alpala drill core.

What the feck are B-veins, well these little suckers are found proximal to the high grade core in many porphyry deposits. Here is the distribution of B-veins at Alpala,

More B-veins means higher grades.
So in the high grade part of the Alpala deposit we have a crap-load of B-veins and bornite, which is exactly what you see at surface at Aguinaga!

When you combine that with the geophysics you can see that Aguinaga is a very interesting target.

badly drawn red lines are my guesstimate location of porphyry deposits
The data shows that there is porphyry copper mineralisation at surface at Aguinaga. We don't have enough data to say how big it will be and what grades it will run. We need a truth machine (drill-rig) to tell us that!

My thinking was that there is a good chance that Sol Gold could fine an Alpala-sized deposit at surface at Aguinaga. If they do that, there we be lots of companies sniffing around to get a slice of the action before it becomes even more.

SolGold - Has Eldorado been found in Ecuador?

DISCLOSURE - I am a shareholder of SolGold. I bought a few shares (not enough unfortunately) after my original post as I though this project was very interesting, and that there was a lot of potential to find more deposits. 

In my original post I asked why no major companies had got involved in the Cascabel project. Fast forward a few months later and there have been press release after press release about:
  1. BHP wanting to invest in the company (link)
  2. Newcrest.Maxit mining investing in $44M in Sol Gold (link)
    • we got an update PR today announcing funding for Cascabel
I've also brought in all of the newly released drill-hole data so that I could see what had changed. For selfish reasons (I want to make money), I wanted to know why suddenly SolGold and Cascabel had become the flavour of the month for large Australia-based mining companies?


  • New results are more of the same, good grades, but deep - Alpala won't be a surface mine.
  • Newcrest involvement - miner with experience of operating large, low grade underground copper-gold mines - is a good sign
  • Indirect investment opportunity through Cornerstone (CGP.V)
The new data is just expanding what we already know, at Alpala they have a decent porphyry system with good grades, but it is deep. Not quite Resolution deep (link) but well beyond the limits of an open pit mine. This deposit if it gets mined, will be mined from underground via a block cave. 

Fortunately, their new partner, Newcrest has a lot of experience in operating large, low-grade underground mine (Cadia, NSW, Australia - reserves 1.5BT @ 0.47 g/t Au and 0.27% Cu - link), so Alpala should be a doddle for them.

In their presentations they give us a teaser on what they think the Alpala depoist will contain:
2.56Mt Cu and 7.4M oz AU
This is just using Leapfrog to give you an idea of what a deposit may contain. This is what I have done with other projects, so I tried to replicate these numbers, to see how close I can get! This is what I came up with:

  • 451 Mt @ 0.54% Cu and 0.56 g/t Au
  • Contained metal
    • Copper: 2.4Mt
    • Gold: 7.5Moz Au
For the geologists out there, I used a 300m search radius to create the grade shells, which appears to be very similar to what SolGold are doing. However, if I reduce the search ellipse to:

200m: the >0.3% Cu grade shell contains:
  • 331 Mt @ 0.53% Cu and 0.55 g/t Au
  • Contained metal
    • Copper: 1.7Mt
    • Gold: 5.4Moz Au
100m, the >0.3% Cu grade shell contains:
  • 123.8 Mt @ 0.49% Cu and 0.55 g/t Au
  • Contained metal
    • Copper: 0.6Mt
    • Gold: 5.4Moz Au
This is what it looks like, and you can these in a Leapfrog Viewer file from here (link).


looks fairly close to the SolGold model in their Sept 2016 Presentation


They have a little bit of gold close to surface, with more drilling could this be better defined?

You can quickly see that the size of the 'resources' quickly diminish the smaller the search ellipse we use. I feel that the 450Mt number will be close to the inferred resources for Alpala, and maybe they will have ~200Mt of Indicated resources.

Thursday, October 20, 2016

Bermingham - the skank of Keno Hill or the Milton Keynes of Canadian Silver Mines?

Note for Americans and other aliens: Milton Keynes is a new-ish city approximately halfway between London and Birmingham. It was built to be modern, efficient, healthy, and, all in all, a pleasant place to live. Many Britons find this amusing. (Neil Gaiman).

TL:DR version

  • Decent drill results, defined a small (6Moz) silver resource resource with a high grade core.
  • Good potential to expand known resources but upside is limited at ~15Moz silver.
  • good base metal credits, but minimal gold values.
I feel that the Bermingham vein has potential to contain up to 15 Moz of silver based on the current data, which is't huge, but I'm guessing this is the 'typical' size of the veins mined historically at Keno Hill. There will be 2-3 very large veins (>50Moz) and a multitude of smaller veins like Bermingham that were mined and processed through a central mill.

Putting it in perspective - most decent sizes mines producer 4-5Moz Ag a year, and so the current resources = 14 months production. Useful, but not something you'll take to the bank and build a mine on!

The geocrap bit.

Alexco have announced that they will be returning to drill more holes at Bermingham (link) where they intersected some spectacular silver grades in late 2015 (link).

In April 2015, an initial resource was calculated for the Bermingham vein (among other) that showed that they had defined a small, medium grade resource (link).

Not huge, but decent grades and a nice base metal kick
I took as much information that I could find from the technical reports and created a quick geology model to see what the potential was to expand these resources.

Here is the quick and dirty model of just the Bermingham vein, and it looks a big of a dogs dinner, with bulges and troughs, we know that the deposits is cut by several post-mineral (i.e. the faults moved after the veins were formed).

Just a case of joining the dots....
The Bermingham vein - the bulges and troughs are due to faults offsetting the vein.
So I built a new model and included the faults, which looks much nicer!

A couple of fault offsetting the 3-4 veins at Bermingham
One of the nice features of Leapfrog is that it can automatically calculate the true width of the vein from the various intercepts and we can apply a heat map to show where the vein is thick (red) or thin (blue).
That red blob forms a distinct trend (red >3m, green = 2m, blue <1m)
We can also model the metal distribution in the veins to see if there are any distinct trends or areas where the limits of mineralisation isn't well defined.

Silver - does it have a similar trend as the vein thickness figure above - thicker vein = more silver?
not much gold here....
Lead - similar to silver
Zinc - same as above
We can see this trend again (except for gold as there isn't much), there is a distinct trend in the grades, and we can use this to identify areas for follow-up exploration as we want to drill the good areas not the bad ones!

We can also see where there are areas that haven't been drilled.

Red polygons = undrilled targets
We can see that there is good potential to add to the current resources, but we can also quickly see that this won't grow into something huge, just a incremental increase in resources, and I feel that the upper limit for Bermingham is ~15Moz Ag at similar grades.

You can get the 3D model from here (link) have have a look for yourself.

Tuesday, October 11, 2016

Rear entry into Sol Gold

Here is an interesting question, SolGold only own 85% of the project, the remaining 15% is owned by Cornerstone Capital Resources Inc. (CGP.V - link)

They also trade on the Pink Sheets - OTC:CTNFX (link)

Let us compare their Market Caps (dated 10th Oct 2016)
  • SolGold = £194M pounds (CND$315M - using a 1.63:1 ratio)
  • Cornerstone = CND$34.2M.
So Cornerstone is valued at just 11% of SolGold, but they own 15% of Cascabel as well as additional projects in Ecuador and a large chunk of desert in Chile. This suggests that the enterprise of their shares should be ~CND$0.18/share (a 50% premium on today's price) just for Cascabel and they have the potential value for their projects.

This suggests that Cornerstone could be a potential rear entry into Cascabel or maybe they will be a  hemorrhoid and SolGold will be looking to buy them out (especially at these prices) so that they can consolidate ownership over this very interesting project?

UPDATE - damn my laziness, if only I had posted this yesterday, I could have called myself a geni-arse.

UPDATE 2: Exupery left a comment that a company called DGR Global own 17% of Solgold, they are listed on the ASX (symbol DGR). They have a market cap of ~US$30.5M, so that is a big discount compared to SolGold suggesting a 60% upside potential.

Friday, October 7, 2016

The lowest grade mines in the world - Silver

This is part 2, focusing on silver projects. Silver is typically a nuisance by-product from mines producing important metals like copper, lead and zinc or valuable metals like gold. There are relatively few primary silver mines (even the Fresnillo mine has significant gold, lead and zinc credits). I've tried to focus on mines that have >50% of their production value or resource value in silver.

Again, this is a guide so that you can check you favourite silver project against the list to see how they compare, and remember, with operating mines, what they are mining now is NOT the same grade as when the mine started.

Open Pit

These are probably all the open pit silver mines in the world! Rochester - WTF, why are you still operating? It is because it squeaks out a small profit (or doesn't lose too much) but accounts for 30% of Coeur's silver production.


Impact has been successfully losing money at Zacualpan since 2015 2014 2013 2012! They had an unfashionable case of profitability in Q4, 2015, but fortunately they are back to losing money again!
Avino - best word is - Breakeven.

Development Projects

These are all proposed to be open pit operations.

Care and Maintenance

Both these mines were underground operations and close because they couldn't meet their base metal streaming agreements.

Here are a couple of open pit examples

I'll try and make this list dynamic, so if you have any suggestions, I'll try and include them.

It was interesting looking through all this data. I was amazed at how many silver mining companies are:

  1. Mainly gold or base metal miners
  2. Very good at losing money - several haven't been profitable for YEARS
  3. Raised crap loads of money recently to essentially stay afloat
TL:DR version - if you want to invest in mining/exploration companies - go for ones with gold and copper projects!

Wednesday, October 5, 2016

Sandra Escobar - Sept 28th results update


  1. I was wrong and Orex are correct, the silver is horizontal, with an small lower zone of disseminated mineralisation (killing my idea of vertical feeders)
  2. A review of a couple of similar deposit suggest silver recoveries at Sandra in the upcoming metallurgical study will be around 50-60%.
    • Is that too low for it to be mined? 
      • Probably, unless the deposit gets a lot larger (i.e. >100Moz Ag).
      • It will be interesting what cut-off they will used for the resource calculations.
        • 50 g/t lower cut-off to reflect the low recoveries
        • 20 g/t cut-off to maximise the resources
    • If the recoveries are crap, what is plan B for this project?
Orex released some more results from Sandra (link), and here is the updated model (link).
I'm going to revise my earlier idea. Originally I though that there were vertical feeder structures feeding int silver mineralisation into a horizontal porous unit (the rhyolite tuff). However, the new data indicates that it looks like there is a second, deeper silver zone. It is much narrower and lower grade, but Orex was right and I was wrong, the silver is horizontal.

A narrow, lower grade silver zone at depth - hole 19 may not have completely drilled through the silver zone.
Is the silver zone open to the SW beyond hole 16-048?
So where did the silver come from? It would be interesting to see if there is zonation in the other metals, but we'll wait for the technical report if they hint at that.

Basically the results from the 28th are in-line with earlier results, the high grade zones are slightly smaller than I originally thought.

We'll ignore the drilling for now, as I've been think more about the metallurgical study. It has been 3 months since Orex awarded the metallurgical testing contract to SGS Mineral Services, and we should be getting some news in the not too distant future.

However, I couldn't wait, I decided to do some research to see if I could find similar deposits with disseminated silver mineralisation and see what recoveries they got, so I could have a benchmark against which the Sandra results could be compared.

They say that all the best nuts come from California, and that also appears to be true for disseminated native silver deposits. In the foothills of the majestic Calico Mountains (check out the old mining town - link), nestled against the San Andreas Fault (yes that one) are the Waterloo (Pan Am Silver) and Langtry (Athena Silver) silver deposits.

There is SFA on Waterloo, but Athena released a 43-101 report on Langtry (link) outlining ~60Moz Ag, that included a section on the mineralogy (which minerals the silver is in), and results from several metallurgical studies.


I managed to snag this image from a PhD done on the district.

Hmm, microscopic silver in both, what were the recoveries like?

The short answer - Crap - 50%-ish.

The long answer

Metallurgical studies



Their conclusions were:

Remember this data is NOT from Sandra, but from a deposit that appears to be similar. It shows that recovery in disseminated silver deposits can be low, require a lot of study and may need to crush the ore very fine or use relatively specialised/non-standard (i.e. more expensive) processing techniques to increase silver recoveries.

I'll put a mark down and say that Orex will get 55% silver recovery from cyanidation with a fine grind (-325 mesh).

This is just a guide, It will be interested to see how close we get.

For reference this website has some good info on different processing techniques (

Thursday, September 29, 2016

The lowest grade mines in the world - Copper

I've received a lot of requests from people to look at different projects and verify their quality. Some projects are easy (North Bullfrog, San Diego, Cerro Las Minas), they are very low grade, but carefully created equivalents grades calculated from basically any metal content in the rock and assuming 100% recovery.

While I was working on these projects I started to build up a database from actual operations is to try and find the lowest grade mines by:
  1. Commodity
  2. Mine type (open pit vs underground)
This will allow you to quickly check the grade from drill-holes and 43-101 resource calculations from your favorite projects to see how they stack up. However, many of these mines have been in operation for a very long time and originally the operations commenced by mining high grade or leachable ores before transitioning to lower grade ores that they are mining now.

This list will be dynamic and send me some info on other project that you feel should be on this list, please send me some information and I'll update it.

I've also compiled a small list of 'development projects' that include mines currently under construction or being presented a project that could go into production in the not to distant future (i.e. we have a PEA or feasibility study).

Open Pit

  1. Mount Milligan, Canada - Thompson Creek Mining (porphyry deposit operated at 54,000 tpd)
    • Grade* - total mineral reserves from Dec 2015 (link)
      • Cu = 0.196% (note - grade mined in 2015 was 0.38% Cu)
      • Au = 0.349 g/t
      • * - reserves were calculated at $2.95/lb Cu and $1250/oz Au.
    • Basically this is a gold mine with copper credits.
  2. Aitik, Sweden  - Boliden (Porphyry, operating at 36,500 tpd)
    • Grade - 2015 production grades from 2015 annual report (link)
      • Cu = 0.23%; 
      • Au = 0.15 g/t
      • Ag = 0.13 g/t
      • Mo = 0.002%
    • Easily accessible ore (low strip ratio), highly automated and uses large mining equipment that makes the mine most productive open pit copper mine in the world (tonnes of ore produced per employee).  Low treatment charges - concentrate sent to Boliden smelter in Ronnskar (link). Gold an important by-product
  3. Sierrita, AZ, USA - Freeport (porphyry, operated at 102,000 tpd)
    • Grade - reserves (Freeport 2015 10K (link).
      • Cu = 0.24%
      • Ag = 1.42 g/t
      • Mo = 0.03%
    • Operating at reduced capacity (link)
  4. Mount Polley, Canada - Imperial Metals (porphyry deposit operated at 20,000 tpd)
    • Grade* - total mineral reserves from Jan 2014 (link)
      • Cu = 0.295%
      • Au = 0.302 g/t
      • Ag = 0.615 g/t
    • Mine restarted in Aug 2015 after tailings dam failure in Aug 2014.
  5. Constancia, Peru - HudBay (porphyry operated at 81900 tpd)
    • Grade - Jan 2015 reserves (link)
      • Cu = 0.30%
      • Au = 0.054 g/t
      • Ag* = 2.97 g/t
      • Mo = 0.009%
    • *Silver Wheaton acquired life of mine silver production from Constancia in April 2012 (link)
  6. Pinto Valley, AZ, USA - Capstone (porphyry deposit operated at 54,000 tpd)
    • Grade - total mineral reserves from Jan 2016 (link)
      • Cu = 0.31% (note - grade mined in 2015 was 0.38% Cu)
      • Mo = 0.009%
    • Capstone purchased this as an operating mine from BHP for US$650M (link)


  1. Bolivar, Mexico - Sierra Metals (Cu-Zn skarn operated at 2500 tpd)
    • Grade - April 2013 reserves (link)
      • Cu = 0.76%
      • Zn = 0.33%
      • Au = 0.23 g/t
      • Ag = 19.52 g/t
    • Polymetallic mine, with a CuEq grade of 1.04%
  2. Pyhasalmi, Finland - First Quantum (VMS deposit mined at 1000 tpd)
    • Grade - data from FQM website (link)
      • Cu = 0.9%
      • Zn = 1.9%
    • Note: the Pyrite they produce is also sold as a fertiliser.
  3. Surda, India - India Resources (shear hosted copper deposit operating at 2200 tpd)
    • Grade - June 2013 resources (link)
      • Cu = 1.1%
    • I couldn't find much information on this deposit, but this PR (link) suggests that they will be putting the mine on care and maintenance in the near future. No byproduct production, only copper.
  4. Cozamin, Mexico - Capstone (mesothermal Cu-Zn vein operating at 3300 tpd)
    • Grade - Jan 2016 reserves (link)
      • Cu = 1.5%
      • Zn = 0.71%
      • Pb = 0.17%
      • Ag* = 42 g/t
    • *Silver Wheaton purchased the 100% of silver production from Cozamin, but the project is located in one of Mexico's largest and richest silver districts (Zacatecas Mining district with estimated historical production since 1546 of  >1Boz Au and ~10Moz Au) from high grade veins. It will be interesting to see if Capstone start mining high grade silver ores once the royalty agreement expires?

Development projects

  1. Tepal Project, Mexico, Geologix (porphyry copper-gold, 38,700 tpd open pit mine)
    • Grade - Jan 2016 reserves (link)
      • Cu = 0.2%
      • Au* = 0.3 g/t
      • Ag* = 1.54g/t
      • Mo = 0.004%
    • Relatively low strip ratio, good byproduct Au values.A very poor location to have a project as the area is controlled by the Nights Templar Drug gang.
  2. Santo Domingo, Chile - Capstone Resources (porphyry copper, 65000 tpd open pit mine)
    • Grade - Jan 2016 reserves (link)
      • Cu = 0.3%
      • Au = 0.04 g/t
      • Fe = 28.2%
    • Capex = $1.7B
    • How much will the iron contribute to revenues?
  3. Calingiri, Australia - Caravel Minerals (Copper porphyry, 43,000 tpd open pit operation)
    • Grade - April 2016 reserves (link)
      • Cu = 0.34%
      • Au* = 0.02 g/t
      • Ag* = 1.8%
      • Mo = 0.008%
    • Capex = AU$440M
  4. Cobre Panama, Panama - First Quantum Minerals - 80% ownership (porphyry copper, 200-250,000 tpd open pit mine)
    • Grade - Jan 2016 reserves (link)
      • Cu = 0.38%
      • Au* = 0.07 g/t
      • Ag* = 1.3g/t
      • Mo = 0.006%
    • Capex = $5.95B
    • Note: Mining will focus on higher grade core. Precious metal stream sold to Franco Nevada. This project is currently in development.

One of these days i'll calculate the CuEq grades for these projects