Someone on a message board asked how you evaluate gold mining drill results.
Here's my response. Let me know if you'd think my numbers are off or if you have anything to add.
"Judging Au Drill Results
Well, I've been reading a bunch of them for the last year and here's what my faulty brain says:
(a) Make a distinction between open pittable and underground.
(b) Open pittable - make a distinction between oxide (heap leach) and sulfide (needs a mill).
(c) Open pittable heap leach - .5 g/tonne is the lower limit. Higher is better, of course.
(d) Open pittable sulfide - 1.5 g/tonne is the lower limit.
(e) Underground - 3 g/tonne is the lower limit. Anything above 6 g/tonne is quite good.
Of course, there are other issues as well:
(a) Infrastructure - are there roads and power. Is there already a mill (mine reopener). The closer to production with minimal capex the better.
(b) Size - how big is it? The more oz the better. The big boys are looking for 2 million oz or more at this point. This could go down going forward (or if the grades are good).
(c) Strip Ratio (open pit) - I need to learn more here. Any help from the board?
(d) Recovery - 85% seems like "good". Some heap leach operations are in the 60% range (e.g. SMC's nicaragua mine everyone was excited about. They had to switch to a mill).
(e) Management Competence - self explanatory. I consider New Guinea Gold to be competent explorers and incompetent mine developers / operators. First Majestic is clearly competent.
(f) Management Shareholder Friendliness - My opinion of First Majestic has just shifted with this latest dilution. They seem to want to build an empire rather than make money for share holders.
(g) Permits - always a big issue.
(h) Political Risk - will the government put outrageous taxes on it or confiscate it."