Fairmile's exploration record at Buffalo Valley compared with results by others in the industry...
The following posting is from Joe A. Kizis, Jr.,
Fairmile Gold Corporation Vice-President of Exploration and Director.
It will also be posted under the FAQ's on Fairmile's website at
fairmile.com
Question: How does Fairmile's exploration record at Buffalo Valley
compare with results by others in the industry, and are additional
exploration expenditures justified there?
Answer: Several technical papers presented at the recent "Pathways
`98" conference in Vancouver provide some answers to these questions.
Two authors (John Parry - WMC Resources Ltd. and Patrick Redmond -
Stanford University) provide data that show the "average" exploration
company never shows a significant return on their exploration dollars.
This probably explains the shift of exploration away from the majors
to smaller, more entrepreneurial juniors, such as Fairmile. David
Lowell (Lowell Mineral Exploration, previously of Arequipa) argues
that exploration is most efficiently performed by such entrepreneurial
juniors, and that the majors should focus on advancing to production
those promising deposits discovered by juniors. Unfortunately, there
were no cost comparisons provided for junior exploration companies.
However, one major that has been successful at exploration is Newmont,
and John Dow provided information on Newmont's finding cost for the
decade ending in 1996. Newmont's finding cost is approximately US$11
per ounce of gold (reserve plus resource). This compares very
favorably with costs in the range of $35 to $55 per ounce that others
have reported as "average" finding costs, and is largely a result of
their success in Nevada and Peru. Fairmile is proud of our finding
cost of approximately $10 per resource ounce at Buffalo Valley for the
period 1993 through 1997.
John Dow (Newmont) also provided a set of interesting graphs that
shows the number of ounces discovered increases in direct proportion
to the amount of money spent on exploration. The number of ounces
added at Buffalo Valley in 1997 was not as high as in 1996 because the
follow-up portion of the exploration program was not completed prior
to Echo Bay dropping out of the strategic alliance. If Echo Bay had
funded the phase II coarse-delineation drilling on Target L and Target
F, Fairmile believes a significant amount of additional ounces would
have been added to the resource base at low cost.
Several authors, including well-known mining consultant Dick Sillitoe,
argued that established mining trends, and particularly properties
with prior production, hold the highest potential for discovering new
deposits. The data shows that if a property was capable of any past
production, it is a strong candidate for new discoveries. This seems
contrary to common sense because those properties have already been
explored extensively; however, gold deposits are extremely small parts
of much larger systems. Gold deposits can be compared to plums in a
pudding; it is much easier to find those plums sticking out of the top
of the pudding than those hidden beneath the surface, although we know
more plums exist. Persistence and technical advances allow us find
more of the hidden gold deposits. Eilseo Gonzalez-Urien (Placer Dome)
drives home this point by documenting that Placer Dome has discovered
to date, on average, an additional 65% new reserve ounces on their
mine properties by exploration after a production decision was made.
It is Fairmile's opinion that with persistence the Buffalo Valley
project will yield even more mineralized areas than are currently
known, and the number of ounces discovered will continue to increase
substantially.
In conclusion, it appears that Fairmile's exploration record compares
very favorably with others in the industry, and that additional
exploration expenditures at Buffalo Valley are justified. |
