RE: 3.81 g/t Au over 121 mYou are kidding, right? Have you looked at the cross sections and assay details? The reported interval of 285.9 gpt gold over 0.4 meters accounts for over 20% of the gold in the PEM hole! Moreover, the cross sections make it clear that there are several other grade spikes over ultra-short intervals (conveniently not reported by PEM) that must account for the vast majority of the gold, probably over 80%. I think it is ridiculous that they reported the assays with neither a grade cut-off nor a cap. Had they done either, this hole would not seem nearly as spectacular. To their credit at least they are making the cross-sections available so sophisticated investors can make heads or tails about the results but I think the company could do more for the average hapless PEM shareholder. Alas, PEM simply makes this CYA disclosure:
"The gold grade calculation is a weighted mean with no top cut, and no bottom cut. The grade calculation includes internal waste and low grade sections."
Now to be completely fair it is almost impossible to avoid misleading amateur investors when reporting drill results and I'm afraid this has happened with EAS as well to a very minor extent because if you look at the internals of at least 5 holes (2, 12A, 13, 14, 15) you will find that the higher grade section carries the vast majority of the gold value and the rest of the hole being reported upon grades on average something like 0.3 (Hole 15) to 0.6 (Hole 14) grams per tonne. This is okay as long as the company does not already have a good idea roughly where the economic cut-off might be but of course it is always preferable to have some solid disclosure. In the case of Miwah there is no reason to believe at this point that 0.3 gpt gold would be so far below the economic cutoff that the hole should be reported as separate intervals instead of one continuous zone with internal waste.
Here is Brent Cook on the same topic for reference (https://www.stocksandspeculations.com/i/pdf/245b_Jul16_Brent_Cook_ATC.pdf):
"Much has been made of the June 15 news release by Appleton in which they
announced a drill hole containing 192 grams per tonne gold (6.17 ounces) over 10
meters, from the Manalo project in Mali. The company pointed out that the 10-
meter interval included one 3-meter interval grading 640 grams per tonne gold.
They also stated that the intersection appeared to be a new structure to the east of
previously drilled veins.
Not a lot of information to go on but apparently enough to generate about C$18
million in trading volume on ~36 million shares over two days (Fig. 1 below). This,
for a company with 33 million shares outstanding and a market capitalization of
~C$6.6 million prior to the news release. Eight business days later the company laid
out the mathematical details of how the assays were calculated. The explanation
basically reiterated the original report citing that the 3-meter interval carried
virtually all the gold (640 g/t Au as reported): specifically 1-meter grading 1,895 g/t
Au; 1-meter grading 0.47 g/t Au; and 1-meter grading 25.1 g/t Au. In the
intervening period between the two news releases Appleton board member Karl
Kottmeier apparently saw the share price increase as a golden opportunity to offload
his stock and resign from the board. His actions have upset quite a few people,
possibly including those on the Ontario Securities Commission (OSC).
So who is at fault here?
Compositing the grades over a 10-meter interval (192 g/t Au over 10m) was clearly
misleading but nothing out of the ordinary based on the thousands of releases I
review. Ideally you (the potential investor) need to break the mineralized interval
into the probable mining width to understand the significance. In this case three
meters represents a reasonable underground sample; if we are modeling for an open
pit the 10-meter composite may have been more appropriate. The critical factor in
interpreting the results is of course putting the drill hole into context. Clearly the
suckers that failed to do so and took AEX from C
.16 to C
.63 deserve what they
got. The information was available to everyone with a computer as I briefly lay out
next.
Figure 2 above is readily available on the company website
(https://www.appletonexploration.com/index.php/projects/manalo/113.html) and is
all anyone needed to know about the Manalo property. DL-09-056 (192m @ 192g/t
Au) is one of a cluster of three holes within a few tens of meters of each other that
produced high-grade gold assays. Nearby drill holes, as well as every other hole,
along this ~700 meter long trend returned low grades. The geologic setting laid out
in the puff-piece NI 43-101 report does manage to make it clear that the
mineralization occurs in two veins and is structurally controlled within the veins (ore
shoots). As the drilling indicates, the shoots are very limited indeed and in reality
this project never stood a chance of ever becoming a significant economic deposit.
Karl Kottmeier, who vended the property to AEX, apparently recognized this and
acted accordingly.
ATAC Resources intersects 24g/t Au over 28 meters
First, the conclusion: I really wanted to add ATAC to the EI portfolio- this is a good
group. I like the overall exploration potential of the property but feel the near term
risk to reward does not warrant adding it at this time. We now have a good
understanding of the geologic setting and mineralization with which to assess future
results. We will keep it on the watch list and monitor events. For those of you with
the patience and time please read on. I think this is a very good example of how
important context is to interpreting drill holes: there is more to 24 g/t Au over 28
meters than 24 g/t Au over 28 meters.
ATAC Resources (ATC) is a technically competent company associated with Archer,
Cathro & Associates- a group focused on exploring Northwestern Canada. I spent a
good deal of time talking to President Rob Carne and CEO Graham Downs and came
away with even more respect for their no BS style of exploration and their geologic
ability. They did not sell shares into the stock price increase (as our previous
example did) and have in fact been putting money in through warrants and options.
The company has 46 million shares outstanding and 56 million fully diluted. Cash
stands at ~C$4 million and there are 10 million warrants at C
.50, many of which
are being exercised. The current fully diluted market capitalization is ~C$33 million.
This week ATAC announced assays from drill hole DH09-19 on the Rau property,
Yukon. The stock jumped from C
.44 to a high of C
.72 before settling out
around the current C
.60 level. The mineralized interval consisted of 28 meters
grading 24 grams per tonne gold or, 28 meters grading 10.3 grams per tonne gold
(g/t Au) when the highest grades were capped at 34 grams per tonne. Capping the
maximum grade at 34 grams per tonne means any assay interval greater than 34 g/t
was assigned a value of 34 g/t in the calculation. Capping is probably appropriate
for the 28 meter interval, given there was a 2.9 meter sample grading 162 grams
per tonne gold that is responsible for much of the grade in the uncapped calculation
of 24 g/t Au.
First a word about grade capping
[True grade capping is a statistical treatment of assays usually used in resource
calculations to constrain the effect of outlier high-grades. It requires a sufficiently
large database to allow the determination of what is out of the ordinary within the
overall grade population. The objective is to not let high-grade samples overly
influence the estimate and produce an inaccurate and overly optimistic result. In the
case of ATAC and Appleton, neither has sufficient data to accurately select a capping
grade, however in both cases it is clear that ATAC’s 162 g/t Au assay and the 1,895
g/t Au sample from Appleton were unique. ATAC’s selection of a 34 g/t Au cap was
reasonable; Appleton’s failure to apply a cap was not.]"