http://de_de.www.smallcapnetwork.com/Charlatan-Exposed-Cubing-the-Hole/s/via/2077/article/view/p/mid/1/id/1/

Originally Published on June 9, 2010 at www.metalaugmentor.com/eforum

Run! Don’t walk! Run away from the advice of those who suggest drill results can be evaluated by simply “cubing” a drill intercept in order to arrive at a rough estimate of deposit size. Cubing a hole involves taking a single dimension — the mineralized intercept along the drill hole trace — and duplicating it in all three dimensions. You must avoid doing this at all costs. Very few deposits have a consistent grade in all three dimensions for more than a short distance. In fact, the longer a drill interval, the less likely that cubing a hole will bear any resemblance to reality.

One of the most notorious proponents of cubing the drill hole is Bob Moriarty, the well-traveled proprietor of 321gold.com who sometimes displays about as much sense as I have dollars left after a weekend in Las Vegas. The guy has been to hundreds of projects but sometimes he still can’t seem to figure out what is obvious to us sitting on the couch at home.

Moriarty has cubed the hole in the past with telling results for his followers: in 2007 he cubed Southern Arc Mineral’s Hole MB001 at its Selodong project in Indonesia, claiming that it looked like another Batu Hijau (a big Newmont copper-gold mine also in Indonesia). Subsequent holes showed that Selodong is a complex porphyry system that has weak lateral continuity and a marginal grade core. Nevertheless, shareholders continued to cube holes all the while the stock price sank. And sank. True enough that the “cubing frenzy” had earlier driven the share price near $2 for an almost-500% gain, but it was actually possible to determine after the fifth or sixth set of assays that Selodong was going to be nowhere close to another Batu Hijau. Figuring this out required some basic modeling in three dimensions but unfortunately most shareholders continued to cube the holes in blind deference to Moriarty’s foolishness. They ended up fooling themselves while others who did not follow Moriarty over the edge of the cliff were able to sell their shares for a nice gain of several hundred percent.

Alas, Moriarty is at it again. He recently visited the Friday-Petsite project of Premium Exploration (TSX-V:PEM) in Idaho. We’ve reviewed some of the drilling results at this project in the recent past, noting that the long intervals of seemingly continuous high grade mineralization were more hype than reality. In essence, a few bonanza grade sections totaling 25 meters or less account for a large portion of the gold carried in holes that are being represented as well-mineralized over a hundred or more meters. Reporting these holes as long intervals of continuous mineralization is deceptive although it falls short of constituting dirty tricks. Regardless, we were flabbergasted to read in Moriarty’s writeup on Premium yesterday that he is back to cubing holes, this time using the very same Premium assay results that we had warned our subscribers about just a few months ago! Here is Moriarty at his worst:

Very long intercepts can be quite important. 2.66 g/t is nice $106 rock and 198.4 meters is over 600 feet of mineralization. If you cube the hole, you come up with 1.7 million ounces of gold. With another hole showing 2.94 grams of gold over 73.5 meters, the 43-101 resource is going to grow in a hurry.

Those holes are not incorporated into the current 43-101 for Friday-Petsite. An updated resource will not be released until the fall but a few more holes like that and the market will wake up and bark.

The problem with the above is that they have never been able to extend the mineralization in the Orogrande Shear Zone for an appreciable distance in one direction, much less three. Moreover, a shear zone can sometimes be a capricious host structure for gold by its very nature. Continuity and consistent grade distribution can be major challenges due simply to the complexity and variability of shear zone geology. It’s all fine and well that Moriarty has taken note of the placer mining over almost the entire marathon length of Premium’s shear zone, but that could just mean there is gold all over the place yet nowhere in sufficient quantity and concentration to be economically mined as a large scale lode operation. And even if it turns out that enough gold can be found in one place to mine on a large scale, the location of the shear zone in a valley would make it difficult to design and operate an open pit mine. Underground mining would not pose a similar topographical problem and in fact those important drill intercepts mentioned by Moriarty are pointing to an underground mine anyway.

None of the above should be taken as a suggestion that Premium’s Orogrande projects do not represent attractive exploration potential that could eventually amount to a million ounces of gold or more. We are suggesting only that Moriarty’s promotional cheerleading involving the cubing of a deceptive hole is nothing but propaganda. Personally we see average odds of Premium turning into a “major junior” in the near term as predicted by Moriarty. They’ll probably have some additional head-turning assays to report and we expect Moriarty will attempt to cube those as well, and the share price is probably going to go higher from here as a result mostly of promotion (cynical speculators might even do well riding the promotional wave), but it will mean little until a meaningful extension of the mineralization is encountered in at least one dimensions at Orogrande. If that happens, we’ll take another look at the project. In the meantime, you should run, not walk, from Moriarty and his cubing nonsense.

Disclaimer: We do not own any company mentioned in this commentary and we have not been compensated for writing it by any party. This is not investment advice, which you should seek from a licensed broker or advisor. It should be noted that past personal interaction with Bob Moriarty by the writer of this commentary, Tom Szabo, has often been unpleasant, with Moriarty calling the writer a fool on a number of occasions. So it is with pleasure that the favor is being returned on such a deserving occasion.