Mr. Metals, Somehow I get the feeling that, either you know nothing about exploration, or you're a shorter, or worse yet...you think buying a mining stock is like ordering a sandwich in a restaurant, and it should be served up immediately.
In the first place, if the majors threw in the towel on the first 8 holes of every drilling program, I doubt there would be any mines coming on stream. For an opening drill program, the results were not all that bad. The widths were pretty good and the grades, although they didn't make your heart stop, at least came up with some results. Have you any idea how many properties are drilled every day, with no results at all? At least there was gold there, and if they didn't hit the mother lode on the first drills, it doesn't surprise me.
Most mines are discovered by a great deal of drilling....200 holes or more, and most are not spectacular grades. The criteria for a mine is not based solely on rich grades, but on ounces in the ground, costs, ie: open pit or underground, heap leach etc. If a company can mine it at a relatively cheap cost and the proven and probable gold in the ground warrants it, and they can make a good profit....then they will build a mine. But before you get to those decisions there is lot of drilling to prove up an economic deposit, even before metallurgical tests and feasibility studies.There is nothing complicated about the decision to mine. Very few of them are Argentina Gold's. Those are very rare.
And if the grade isn't good enough for you, then perhaps it would help you to know that the mighty Pierina's average grade is .064 oz. per ton or 1.81 g/t Although on first sight this would not make your heart stop, remember that they have, as of Dec.'97, 7,191 ounces and they are still drilling over two years after they bought the property from Arequipa, who had themselves drilled over 60 holes, before selling to Barrick at $30.00 per share. I believe their reserve picture now is closing on 8,000 ounces. They have drilled well in excess of 300 holes.
If that isn't enough proof for you, then take the Pascua, which has over 13 million ounces to date and has an overall average grade of .058 ounces or 1.64 g/t. These are not spectacular grades but the economics are there. Again, the amount of drilling that has gone into it has been enormous. I don't have the exact amount of drill holes at my fingertips, but it is also huge.
The bottom line here is that it will take some time to see if it is a discovery or not. In the meantime, there is Uchumuchay and Guinozola to think about. I don't know about you, but I'm in no hurry to come to any hasty conclusion about the merits of Pico Machay just yet.
Cheers
Shirley |
