When analyzing the data from a single drill hole, there is a limited amount of information that can be ascertained about a resource.If the hole intersects for example, 3 oz per ton of gold over 10 feet, it is very impressive but doesn’t give any idea of the amount of total resource of gold present in the system.Why because the drill cut through the vein and we don’t know the angle of the dip of the vein, which along with the angle of the hole, and the width of the intersection, we can calculate the true width of the vein.Moreover, we have no clue of the horizontal or vertical extent of the vein system.The vein could run for a mile or more horizontally and thousands of feet in depth or the driller could have gotten very lucky and hit a small isolated pod of mineralization.In any case, this one drill intersection, while exciting, does little to give an idea of the size of the deposit.

For this reason companies have to drill many, many holes to start to get an idea of the size of the resource.After extensive geologic mapping has been done to determine the fault zones in the area and the rock types, the geologists site drill holes based on their interpretation of how the mineralizing events and the pre and post-mineralization faulting and movement occurred.If the geologist is good at his interpretation as well as being lucky, some of his holes will intersect mineralization.After having these results in hand the geologist will use them tofine-tune his or her geologic model and site new holes adjacent to the original successful holes searching for more mineralization.The intent of this exercise is to be able to map out zones of mineralization which will eventually become ore reserves that can be mined.The more holes which intersect the mineralization, the clearer the picture becomes to the geologists and engineers analyzing the deposit to determine its size, shape, mineralization type, and mine-ability.

In the case of the hole from xxxxxxx News release, we still only have one drill hole to go on, in the immediate vicinity.What is different about this drill hole that permits us to know more information about the deposit than the single high grade intercept discussed above?It is the enormous length of the hole which gives us a better idea of scale. It does not tell us the ultimate scale by any means, but it does give us an initial glimpse into the potential size of the deposit.I need to go into a discussion of geometry and the math and assumptions behind these calculations to show why I believe this deposit can potentially be enormous.

Let me go into the basic assumptions behind the calculations. If we intersect 100 feet of mineralization in a drill hole, we can assume that the mineralization extends in each direction by a similar amount.Thus a 100 foot intersection indicates a box or cube of mineralization (at the first level approximation as shown in Figure 1) or 100feet x 100feet x 100feet = 1,000,000 cubic feet of mineralized material.We can assume a rock density of somewhere around 10 cubic feet per ton, which means that our 1,000,000 cubic feet of material weighs approximately 100,000 tons.If the hole had intersected 5 grams of gold per ton (~ 0.16 ounces per ton), the resource potential of the mineralized intersection would be 16,000 ounces of gold

Now having seen this simplistic estimate what are some of the pitfalls of this calculation and what improvements can be made?One potential pitfall which is quite rare but actually more likely than it may at first seem, is that the drill hole ran down the vein.In this case the actual width of the vein is quite narrow and the mineralized material much less than our simple calculation would show.This would mean that we were way over estimating the amount of mineralized material.In the case of core drilling this is less likely, because measurement of intersection angles in the core will show if in fact the drill was chasing down a vein.

Some improvements that can be made to this calculation are primarily the following.First if the geologists have other drill holes in the vicinity and thus have an understanding how the mineralization is laying, they can estimate the true width of the hole.This means that they can approximate the actual length of the intersection of the material perpendicular to the bed of the mineralization. This reduces the size of the cube to a more realistic dimension.Secondly if sufficient testing has been done on the recovered core the rock density will be known to within some range of values and this can be used in the calculation rather than the initial guess value of 10 cubic feet per ton.

To summarize the math involved:

1)Start out with the length of the intersection of the mineralization.

2)Determine/guess the percentage of the intersection which is the true width.

3)Cube the true width of the intersection to calculate the estimated mineralized volume.

4)Determine/guess the rock density (normally 10 to 15 cu ft per ton).

5)Multiply the mineralized volume by the rock density to compute estimated tonnage.

6)Finally multiply the tonnage by the grade to determine the estimated resource.

Some useful numbers for performing these calculations :

1 meter = 3.283 feet

1 foot =0.305 meters

1 troy ounce = 31.1 grams

1 gram =0.032 troy ounces

1 cu yd = 27 cu ft

1 cu m = 35.4 cu ft

1 mton (tonne) = 1.1 short tons

So how does this relate to the drill hole from xxxxxxxx March 16th news release.

1)The hole was 169 meters or 554 feet of 2.12 grams per tonne or 0.062 ounces per ton of gold.

2) xxxxxxxxxxx told me that the true width was approximately 80%, and so I used 80% of 554 feet or 444 feet as the edge dimension of my box.

3)Cubing 444 feet results in 87,473,000 cubic feet of material.

4) xxxxxxxxxx told me that the density is roughly 12 cubic feet per tonne.

5)This calculates to 7,289,000 tonnes of material.

6)Finally resulting in 497,000 ounces of gold at the 2.12 grams per tonne grade.