What's Economic?

Posted: Sunday, October 21, 2007 at 11:27:21 AM by sanjosie

The Rule of Three

"A zone or intersection should be economic if the grade times the width (in feet) exceeds the factor of three - e.g 7ft of 0.60 ounces of gold = 4.2."

pg. 65 The Ultimate Gold Stock Trader by Reg Ogden

From the photos on the Kodiak website I've taken the results and applied the rule. Reg cautions that the rule varies by the price level of gold and the type of deposit, but serious mistakes have been made ignoring the rule.

Channel Sample
32.96 g/t Au over 11.6 m

38.06 feet. of 1.06 oz = 40.34

Drill Core Results
134.4 g/t Au(3.92 oz/t Au)
over 0.8 m, including 0.3 m grading 342.2 g/t
Au (9.981 oz/t Au)

2.62 feet. of 3.92 oz = 10.27

0.98 feet. of 9.981 oz = 9.78


Visible gold and sulphides in core -
1.6 m of 38.47 g/t Au in HR07-16

5.25 feet. of 1.24 oz = 6.51

Wilkinson Lake Gold Zone: 15.6 gpt Au
over 9.7 meters true width in hole HR06-03

31.82 feet. of 0.50 oz = 15.91

Visible in core in Hole HR07-31: 1.4 m
grading12.6 g/t Au (0.368 oz/t Au),
including 0.5 m grading 21.6 g/t
Au (0.63 oz/t Au)

4.59 feet. of 0.368 oz = 1.69

1.64 feet. of 0.63 oz = 1.0332

Widths - What's Good?

Posted: Saturday, October 20, 2007 at 7:39:02 AM by sanjosie

Spectacular - that's how the surface showings on the Golden Mile are described. And why not, on the 11.6 meter wide vein a grab sample has tested 7599 g/t, a mind boggling 220.3 oz/t. The grab sample was next to a channel cut grading 32.96 g over the full width of the vein. It's no wonder folks posed for a picture there, truly a fantastic, spectacular find.

Instinctually I struggle with such numbers. I don't subscribe to newsletters or rely on others' advice. I study precious metals explorers. That means I daily read news releases and exploration updates. Grab samples and channel cuts are early steps in the exploration process. Overtime I've become jaded about the results reported for these types of samples. The reason is these usually are surface samples. On the surface, weathering over time erodes the rock, but not the metal. As a result the metal grade is concentrated and won't be representative of the grade of the unweathered mineralization that may be found at depth.

The Hercules veins are not weathered, or at least much less so. They've been unearthed. The overburden, the glacial till and soil, have been stripped away to reveal the veins. As such, the reported grades are more important, more representative of what lies below.

The next question is what widths and depths will be good for this type of deposit. Again I have to fight my instincts. The news flow I see each day is dominated by disseminated gold. These ideally have large widths where low grades of gold exist. For these types of deposits width in the drill intersection is everything.

Hercules can't be judged by those standards. Red Lake and Timmins are the types of deposits that are comparable. Here is a description of the Red Lake Mine mineralization and widths:

The deposit at the Red Lake mine is made up of a number of subparallel groups of linear mineralized zones, hosted by sequences of altered mafic volcanic rocks, which are interpreted to lie along the north and south limbs of a major antiform. Ultramafic rocks, which are rarely host to ore, are spatially related and important in acting as impermeable zones that trapped the gold-rich hydrothermal solutions in fracture systems.

Ore lenses may vary from a few inches to several feet in width and may be from tens of feet to more than 100 feet in length. Overlapping lenses have permitted orebodies to be developed and mined over lengths, in some instances, in excess of 1,000 feet and widths of up to 60 feet.

By the rich, high grade gold vein experience at Red Lake Mine, expect results on Kodiak's Golden Mile of few inches to several feet in width. The maximum width could be up to 60 feet, about 20 meters