12/22/20 9:06 AM | 3 Min Read

What Do You Mean by a Representative Sample? (Part 2)

Posted By
Carl Sorrell
Share
What Do You Mean by a Representative Sample? (Part 2)

The Scandalous World of Drill Borings and Reserves Estimation

(Or: There's a Reason They Call It Fool's Gold)

There was once a Canadian mining company named Bre-X. In the early 1990s, they announced one of the greatest gold deposit discoveries of the modern age in, of all places, Busang, Indonesia. Investors rushed in with gold fever and the stock reached $286 per share almost overnight.

Millionaires were made, assay samples continually showed high levels of gold, and the Toronto Stock Exchange was ecstatic about the activity.

There was only one problem - the man responsible for gathering the assay samples was salting them with filings from his wedding ring.

When the wedding ring ran out, he paid local miners to bring him small bits of gold to continue the fakery.

All involved came to a bad end, especially the geologist. He either jumped or was pushed out of a helicopter at 600 feet. Everyone else lost lots of money.

For this and many other reasons, IntoCeramics is happy that our work is centered on turning minerals into ceramics rather than bullion!

At IntoCeramics, we’ve been playing in the dirt for a long time.

We have taken more than a few projects from testing a bucket sample of minerals to full-on reserve estimation, providing accurate estimates of processing plant capital investment and operating expenses. It’s a serious undertaking - and can be difficult – but, as our President, Bryan Geary, likes to say, “It’s a process.”

These days, public exchanges where mineral exploration companies list and trade their stock have very strict rules in place. We will leave the discussion of those for another day.

In this post, we want to share how IntoCeramics goes about evaluating minerals in the ground.

Step 1: A sample of material – usually provided by the mineral owner - is tested analytically and physically to determine its potential for processing and likely market demand.

Step 2: Information about the general geology of the property is gathered from the owner and public sources. Any drill log samples are analyzed for similarity to the initial sample.

Step 3: If no drill logs are available, IntoCeramics personnel visit the site to recommend and gather additional samples. This may range from simply using a backhoe to dig a trench to calling in a mobile drilling rig. The new samples are then analyzed separately, and the best composition chosen for further study.

Step 4: Together with a qualified geologist, IntoCeramics supervises a more thorough sampling program – almost always requiring drilling - to obtain enough samples and information to establish probable reserves. After processing the samples in our laboratory, we have enough information to prepare CAPEX and OPEX estimates, permitting applications, and identify any environmental concerns.

Each of the four steps is a stage gate. Options are presented to the client at each stage to help them make the most informed go/no-go decision possible.

Some clients are unhappy when we tell them: “No, we don’t think a single six-foot deep hole every 200 acres on a 600-acre property is sufficient to determine reserves and economic potential”. But they would be even unhappier falling out of a helicopter!

Golds Fools - courtesy of Time Magazine

 

Topics: Consulting, Technology, Analysis

Related Posts

Announcing Our New Division

Turning Industrial Waste Minerals Into Valuable Materials for Ceramic Products

OPF Enterprises, Inc.

Read More

What do You Mean by "Representative Sample"?

Part 1 - It's All the Same Stuff!

At the IntoCeramics laboratories, we are extremely careful when...

Read More

Is My Waste Material Worth Anything? Yes. No. Maybe…

Despite 70+ years of ceramics experience, as the principals of IntoCeramics we are often confronted...

Read More