BET YOUR ASSAY - Mining Terms Explained Message Board

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Gold/Mining/Energy : BET YOUR ASSAY - Mining Terms Explained

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To: 1king who wrote (399)	4/19/1998 10:44:00 AM
From: Walt	Read Replies (2) of 463

GOld equivants or value per ton. You raised an interesting point with these terms which should be elaborated on a bit. There are different methods which companies employ when releasing results or doing the "math" on deposits. When a property has several differnt minerals involved there is a temptation to try to simplify things. Rather then reporting x amount of gold, y amount of copper and z amount of zinc some will do the math and report that they have rock running with a gold equivant of X plus Y plus Z or they will use a dollar figure for the total mineral content of the rock. The argument for doing this is that it simplifies things considerably, and that is certainly true however it does have a number of draw backs. The cost of recovery for the various minerals varies considerably and the recover rates also vary considerably. It is a little like comparing apples and oranges. You could have two companiies one reporting a deposit which runs one ounce to the ton gold and the other reporting a gold equivalent of one ounce per ton. The first deposit could be quite profiteable to mine while the second could be subeconomical. When I started working in the buisness the assaying standard was .1 oz per ton gold anything less then that was trace or undetected. Now companies rutinely assay to and report results in parts per million and parts per billion. Its impressive and does have its uses for exploration but what counts is still what is economic to mine. AS a practical example of this I could go to the two local gold mines in town and take a sample of there ore bodies and then get multi element specs down. Lets say they are currently mining 0.3oz per ton gold ore. Now I could report they have x amount of copper, Y amount of zink, z amount cobalt, S amount of sulphur, A amount of arsenic, B amount of antimony, C amount of rare earths etc etc. Add it all up and they have a gold equivalent ore of 1 ounce per ton. You could even go farther and say they have a value of waste rock which they could sell or you could send a sample off to a test lab and report recovery rates for all the different minerals. However it doesnt change the fact that the only thing they can economically mine out of the rock remains that 0.3 oz per ton of gold. The other stuff is there in the ore but it would cost far more to recover then it is worth. The moral of this tale is you have to be very carefull when reading some companies press releases and results and figure out just what they are saying. I am not referring to any particular company here just talking in general terms. Over the years I have read some pretty creative press releases. Imagine a company saying "Ah yes we have a road within ten miles of the site. What they dont tell you is that a major lake or river cuts the direct path off and it would take 50 miles of road building and a major bridge to get to the site. Or there is a hydro electric project within 50 miles. But they fail to say the project is working to capacity and all the power produced is already commited. Why doesnt the stock echange step in and censor some companies over their releases, is a question one would have to ask the securities commision. Regards Walt Humphries

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