Kimber has been a frustrating stock to hold, at times, but I have continued to hold because I think the deposit is worthy and the management has impeccable integrity. Here is a piece that Kimber included in their latest newsletter to describe what has been involved in advancing the Carmen deposit:
"Why does proving up a mine take such a long time? A long-term shareholder told us that, while he understood the process and the time it takes, he thought that others might appreciate commentary in a newsletter. It does indeed take time. In stark contrast to the oil industry, which knows very soon after a well is sunk, whether it will produce and, if so, how productive it will be, the time between a promising drill hole and a mining operation is years, not months.
In the 1970s the major oil companies, attracted to the mining industry at a time of high metal prices, set up mineral exploration departments and spent a lot of money. It didn't last. They found many aspects of the mineral industry unfamiliar, in particular the multiple years between identification of a mineral deposit and a mining operation.
Mineral deposits take many drill holes and a lot of metallurgical and other studies to prove up. While a bed of coal or potash may extend for miles with minimal change, epithermal gold and silver deposits are at the other end of the spectrum. The types of mineralization within them can vary within very short distances and the shape and continuity of a mineralized zone is rarely defined by just a few holes. Moreover, the continuity of grade from a sample point is usually different for each direction. The net result of such variability is that a lot of drilling and testing is required.
In the case of the Carmen and similar deposits the mineralized body consists of several near-vertical tabular bodies. Each has to be penetrated at points 25 metres apart horizontally and vertically. In some locations a closer interval is required. Because the gold and silver mineralization are controlled, not only by these near-vertical structures, but also by other structures, holes need to be drilled in different directions. It took about 200 holes into the Carmen deposit before the controls were well understood.
Each hole has to be surveyed with a down-hole gyroscopic device to determine where it actually went. Even steel cylinders five inches in diameter bend. On the basis of the down-hole surveys the holes are plotted on section and plan and the location and shapes of mineralized rock defined in three dimensions.
While this is happening, metallurgical testing continues on samples taken from core holes. Not only do gold and silver respond differently to recovery processes, but the recovery percentages of each can vary according to such other variables as grade, location in the deposit or the orientation of the controlling structure. Accordingly, metallurgical samples have to be collected at different locations in the deposit. Each has to be processed to determine the optimum recovery method. Samples from core holes are also used to determine the strength and other mechanical properties of both the ore and adjacent rocks.
All of which is directed at resource estimates which can be relied upon if completed properly and diligently. It is better to take a little longer and get it right, than make haste and get the numbers wrong." |
