RE: Huge!! HRA about Aurelian: 10 mln ounce The vertical extent of the deposit
between the two faults
roughly averages 150 metres,
or about half the
“model” potential for this
type of deposit. Combining
this with the 150 distance
between the faults, a 600
metre strike length, and a
bulk average grade of about
8 g/t gold, equates to an 8 to
10 million gold oz envelope.
And there is at least another
100-200 metres of trend, so
even though that 8 g/t number
uses a 0.5 g/t cut-off
grade and no cut-back grade
we consider that a reasonable
base for assessing the
project to this point.
A “cut-off grade” is the minimum
assay result allowed in
the averaging. The 0.5 g/t is
a carry-on from pittable calculations
done for the BLP
deposit. Since the working
assumption is a bulk underground
resource, a higher
cut-off, perhaps in the 2 to 3
g/t range, would have to
used that better represents
underground mining costs.
This would reduce the total
number of oz, but would also
bring the average resource
grade up.
A “cut-back grade” is the
maximum allowable figure
used in a calculation — with a cut-back of 30 g/t, results
of 31, 48 or 148 g/t would all
show in the calculation as
30. This generates both
lower grade average and total
gold content then using
the actual assays. This is
done to eliminate spurious
highs that can over estimate
some deposit types. We
think in this case that is
likely to be a limited concern.
Even with the relatively
broad 100 metre spacing between
drill sections it is obvious
that the deposit can be
segregated into to three discrete
sub-zones. The central
and most important of these
is the “vein” sub-zone that
carries the bulk (though not
all) of the systems very high
grades. This is the area
where rising fluids boiled and
roiled to drop out much of
the gold, with in this case
single results of +2000 g/t
(60 oz/ton), but also many
100 to 400 g/t assays.
This discrete population of
very high grade results that
carry from section to section
should make it possible to
establish a high cut-off grade
for this part of the deposit.
So more of the gold would
make it into a reserve calculations
then would be the
case for a single deposit wide
cut-off.
Also of note is that even
though there are a great
many sections with relatively
course visible gold, the bulk
of the check samples to date
correlated quite closely with
the original assays. Check
samples are done to both
check that field sampling and
laboratory assaying are representative.
In a system
with a high “nugget effect” in
which essentially all of the
gold is in course lumps, the
individual checks can vary by
over 50% from original assays
but still be acceptable if
the average variance is reasonable.
For the most part the individual
check assays at FDN
have been close to the originals.
This implies that even
though there is a significant
visible gold component, most
of the deposit’s gold is still
fine grained and/or evenly
distributed.
The other importance of the
vein subzone
is that
this establishes
a large
zone of highgrade
with
which to repay
capital.
Though it is
still too early
to properly
assess this,
we also suspect
this
core highgrade
section
will allow for
a mine plan
that requires
limited loss
of gold in
material that
must be kept
in place to
support
workings.
The site visit
also confirmed the results of
a “scissors hole” that tested
the deposit from the opposite
direction of all the other drill
holes. ARU has been drilling
at an angle from east to
west, with the bulk of the
veins and silica filled fractures
crossing the core near
right angles. Since quite a
few fractures run along the
core in that single scissors
hole, it confirmed that the
drilling has been as fair a
representation of tonnage
potential and of grade as can
be expected.
In a nutshell, with the above
considerations added to the
current 10 million oz envelope
that is still very much
open to expansion, we think there is both considerable
upside and a strong potential
to see a buy now become a
substantially below-market
ownership of one of the larger
gold producers. How
much upside will depend on
the next four to six months
of drill results.