Exceptional FIRST Resource ReportThe results posted as the FIRST indicated resource report are actually better than what I expected. So, I bought more stock today to average up – again.
I have commented in the past that MAG needs to find more silver and this report states that they have done that extremely well. The report states that the previous inferred classification estimate was 7.3 million tones - which has been increased to 12.12 million tonnes, all of which are now classified as I&I. resources. Of the 12.12 million tonne resource, there has been enough infill drilling completed to date to allow the consultant to move that mineralization zone into the inferred model classification for 3.88 tonnes with an exceptionally high grade of 972 g/t silver. This is extremely impressive, considering an initial grade estimate based on the primary drill-hole spacing was 1011 g/t. Once MAG undertakes enough infill drilling on the remaining mineralization zones that are represented by the 8.24 million tonnes, then the consultants will be able to include the newly qualifying data within their indicated resource model. The 549 g/t silver grade that have been reported as an inferred resource classification – (which is very rich on its own) could actually increase - depending on the density of the infill drilling, depending on the characteristics of the drill-hole mineralization, and particularly the consistency and continuity of the grades over length and between holes. (It could also go down but none of us are betting on that to occur and it is nice to be starting from such rich grade levels). The indicated numbers look to be so good and encouraging that I wouldn’t be surprised to see the inferred grade actually go up once reclassified. Years ago when Goldcorp was drilling Red Lake Mine the consensus for gold grades (used by analysts and financings in valuations) was around 1.0 to 1.25 ounces/t - even though the drilling was showing higher grades than these exceptionally rich grades. Well guess what, Red Lake is/was producing in the 2 to 2.75 ounces/t range (haven’t checked in quite some time if this has continued).
The other very encouraging detail provided is the very attractive NSR values for the resource at this stage in exploration. If you do the math using the information provided - the resource is now worth more than it was before the release of our FIRST indicated resource report.
Hopefully the relationship between MAG and Fresnillo doesn’t deteriorate too much further, for it is not going to help any stakeholder whether they be shareholder, partner, or potential partner. However, based on recent events I am not holding my breath.