Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Yamana Resources INC. T- YRI -- Ignore unavailable to you. Want to Upgrade?

To: Herb Duncan who wrote (1196)	4/20/1998 11:34:00 AM
From: Greg W. Taylor	Read Replies (4) \| Respond to of 2346

Anyone interested: Dangerous statements. Caveat Emptor. I've been asked by several people over the past month about a resource estimate for the oxidized zone at Lejano and for any other areas in the project. There are strict engineering definitions for these sorts of estimates and we have not yet done enough drilling to make such a guess and we would be wrong to do so. But, after a couple more email and faxed requests, I'll explain for the lay investor how these things are done (apologies to the knowledgeable who, I'm sure, will correct me). All I ask is that you take this in the "for what it's worth" spirit in which it is intended. Simply, you take the volume of the mineralized rock (length times width times depth, in meters, if you're metric), multiply it by the specific gravity of the rock (this may range from less than 2.0 to almost 3.0, the latter being for heavier rock, so roughly 2.4 is okay), and you will have a figure calculated in "tonnes". Thus 100 meters long by 50 meters meters wide by 40 meters deep times SG 2.4 equals 480,000 tonnes of rock. (This is hypothetical. These figures are not connected in any way with this mineralization at Lejano etc.) If the "average" grade is 200 grams per tonne of silver (200 g/t Ag), then you can multiply 480,000 times 200 times .032 (conversion from grams per tonne to ounces), you come up with a figure of 3,072,000 ounces of silver. And if it were that simple, we'd be publishing. But here is a list of some of the problems: 1) Without sufficient drilling, especially infill drilling, you can't confirm continuity of mineralization, and so the dimensions are unreliable. 2) No "ore body" is truly symmetrical. 3)Without knowing more about the rock, the specific gravity estimate is too rough. 4) You need more holes to come up with an accurate "average" grade. 5) Although an inferred resource does not describe mineable reserves, it is easy for the lay investor to jump to a mineable figure from such a resource. The metallurgy / costs / recoveries also must go into the calculation to get an understanding of ounces. In the case of PNG, we have met the requirements -- under Australian rules even -- to come up with an inferred resource, which was first calculated by the Winters Company of Arizona. We have subsequently added to this estimate based on further drilling. In the case of Lejano, we aren't there yet. Yes, it's useful to be able to have a calculation like this insofar as you can begin to think about size. But it is a terrible way to value either a deposit or a company because it is so incredibly inaccurate. My suggestion? Make your calculation, add it to your list of facts on your investment, keep reading / listening and asking questions, and hope to find the truth. I hope this helps and doesn't insult. Greg