Think that's mostly right...
It does still leave two separate issues to untangle... one in the element of bias... and one in the element of managing the problem of "nugget effect".
NFGC has already pointed out the element in bias is "fixed going forward"... by the combination of applying new tech that obviates the nugget effect... and by using whole core analysis. But, leaves a backlog of errors that need to be defined, and corrections that have to be applied...
Nugget effect, by itself, would tend to average out over time... first as the random element in the law of averages... but then certainly as "value" is considered in context of the transition from "investors gawking at the highlights reported in high grade intersections" and the more relevant "statistical modeling of ore grades in defining resources" and "costing out mine-able units as blocks of ore in mine planning".
The value issue really isn't nearly as much impacted by the error as some will assume... as it is not the shiny lure in high grade intercepts... or even the "average grade reported" that matters in defining value, rather than "total amount of gold versus cost of getting it"... and the focus on high grade, and the impact of the error in result, really isn't even about "average grade".
It's the same thing as I've addressed here recently, re Valentine, in pointing out that investors tend to value reports of very high grades far more than is useful... overly valuing a high grade intersection over 0.5 meters... versus a lesser grade over a wider intersection... when reality, even assuming both have the same mining cost... is that the wider section with lower grade often holds a lot more gold and more value... Narrow intercepts tend to dilute rapidly... And, then, assuming the same mining cost is often wrong...
And, that's true enough in noting that a large intercept at 1 gram per ton from surface... that enables low cost open pit mining and a leach extraction... is a better value than the same quantity of gold in eye popping grades reported in narrow intercepts at depth, that requires much higher cost underground mining to win the same quantity of gold...
Most of what attracts investors to gold mining... isn't overly rational... making it a double edged sword when some incident, like that NFGC has crafted for itself... suddenly sours investors when they begin to see something other than the shiny high grade lure they'd been overly focused on...
For more rational value focused investors, though ?
Will be interesting to see how NFGC manages that element in "focus" from here...
I've been critical of some aspects of that already... even as "moving too fast" advantaging the big investors at smaller investors expense, raising lots more money than really required before proving up the value more definitively... so diluting far more early on while shares are still cheap, diluting more than might be required with a bit more patient approach. Along with that... the overly narrowed exploration focus in massively expanding the the "seeking only high grade" effort... while leaving the lower grades at surface to have the value defined later... when it would make a lot of sense to define that "at surface" value in parallel... planning to mine it first... using it to fund the costs of mine development... rather than selling more shares or using only debt to fund development. But, leaving it out... is also understating the values known to be present in "each spot" they're poking at... when that value is the least expensive to prove... and the highest value in being at surface, with the lowest mining costs...
I have noted before... there are a couple of guys using low cost near surface sampling using power augurs, which gives far more information than just 'soil samples" taken in grids. The nature of the deposits seems to lend itself to defining near surface values in that way, at very low cost... at a much higher resolution with lower cost than is possible using other tools...
NFGC can certainly afford to do the inexpensive work required to quickly define those values... and, perhaps now, taking that short cut to expand the perception of value rapidly in that way... might be made necessary to compensate for value now being lost to their having been caught speeding into... blundering into... their "all airspeed, no direction" approach thus far ?
For now, wondering how many "value flags" we might see popping up... in the lawyers advertisements that we might expect to begin popping up on the Yahoo page on Monday... ? |
