Fewer Pounds?So, the rumour now is that the new Resource Estimate might actually contain fewer pounds than the 2007 RE (but at a higher grade).
Hmmmm... It's going to take some time for me to get my mind around this new development.
Up till now, I've been counting on that new RE to contain a significant increase in pounds, not a decrease.
Let's consider the history of this matter.
Management first advised us that they would be doing a new RE in their news release of 2010-03-31. Long before Big Red. Long before the acquisitions of Schaft North and Mess Creek. Way long before any plans for an aerial survey. Simply on the basis of the 2007 and 2008 drill results, management felt that an updated RE should be done. The 2010Q1 MDA, released on 2010-03-31 stated:
Cambria Geosciences Limited compiled all geological and analytical information collected prior to 2006 and during the 2007 and 2008 field seasons and is incorporating this into an updated geological model. The geological model will be used by AMEC Americas Limited to complete an updated mineral resource estimate for the Schaft Creek deposit. The mineral resource estimate used in the Pre-feasibility Study had an effective date of June 27, 2007 and included all diamond drilling results to December 31, 2006. The updated mineral resource estimate along with current metallurgical test work results will be used to prepare an updated mineral reserve estimate.
In the News Release about the 2010 Q1 results, also released on 2010-03-31, management advised:
Additional metallurgical test work was completed to optimize recovery of the copper-gold-molybdenum-silver at Schaft Creek. The results of this test work when received will be incorporated into the feasibility study.
So there we begin. Would management have announced, on 2010-03-31 that a revised RE would be prepared, unless there was a reasonable expectation that the 2007 and 2008 drill results and the subsequent metallurgical analysis would show a significant increase in the pounds or ounces? That wouldn't make any sense to me.
Now let's jump forward to management's news release of 2010-06-01. Here, they advise that their new geological model indicates that the Paramount and West Breccia areas, which in 2007 were considered to be two separate zones, are now considered to be one single zone. They also report that newly combined Paramount-West Breccia zone is deeper, and has a higher grade than the deposit average. A few days later, in the MDA released on 2010-06-11, management stated that "a higher-grade zone of copper-gold-molybdenum-silver mineralization previously referred to as the West Breccia has been extended over a distance of 2,500 metres (“m”) and is open to the north, south and at depth".
Now you may be getting impatient with me. Oh yes, you might say, of course Imerc we've heard it all before many times -- of course the resource is a lot bigger -- the 2010 drill results and the Titan24 survey showed us all that, we've seen the pictures of "Big Red" yadda yadda yadda. But remember my friends that I'm quoting from management's statements which were released before the 2010 drilling results and before the Titan 24 results. So what's the point here? My point is simply to say that by May 2010, the company already had evidence (presumably from the 2007 & 2008 drill results, and the metallurgical studies) that the deposit was significantly larger and/or richer than was indicated in the 2007 RE.
Let's return to our historical survey. The next NR we should consider was issued on 2010-11-04. Management had mentioned several times that they were resampling old drill holes, but here we were given a more detailed explanation:
Copper Fox has commenced the re-sampling of 40 historical diamond drill holes (completed between 1960 and 1985) to check the previously reported copper-gold-molybdenum-silver content. The samples from these holes were not systematically assayed for gold possibly due to the low value of gold at that time. The historical analytical results for these holes contain high grade copper mineralization which shows a positive correlation with gold content.
Once again, I'm assuming that management was proceeding very rationally. Resampling 40 drill holes costs time and money, so I assume that management wouldn't do it unless there was a reasonable expectation that gold would be found in these historical holes. I'm going to bet that the resampling process did in fact find gold in those old drill holes, and that the new RE will therefore reflect a significant increase in the gold ounces in the original Main-Laird and West Breccia-Paramount zones.
Finally, then we come to the blockbuster news releases issued during the last 6 months. I won't go over them, as they have been amply discussed on this forum. Clearly, there is are significant new resource areas to the east of the traditional resource zones. Most likely, the 2010 drill holes only scratched one edge of the new "Root Zone" under Mt Lacasse, and we can legitimately expect to hear exciting results from the 2011 drill program. Nevertheless, we did at least scratch that edge, and since management delayed the release of the revised RE to incorporate the 2010 drill results, I'm going to assume that a significant amount of minerals can be measured, indicated or inferred, even from those preliminary and rather widely spaced 2010 holes.
So. Time to wrap up these lengthy thoughts and pull it all together.
Clearly, some of us have had unrealistic expectations about the new RE. Personally, I'm embarrassed by my own hasty thoughts on that subject which I published on this board on April 11.
Nevertheless, the more careful research which I've now done, had persuaded me -- until yesterday --- that the new Spring 2011 RE would contain at least 20% - 50% more pounds & ounces than the 2007 RE.
But that was always assuming that the grade remains the same.
What if management decides to sacrifice pounds & ounces to improve the grade? Well, I guess if they do that, then all bets are off, as to what the final numbers will be.
One thing I've learned however, is that CUU's management is very shrewd and subtle. I've come to trust their judgment. They've done the road shows, they've met with the boys on Bay Street, and they know what the institutional investors need to hear before they will start aggressively buying, and if a higher grade is necessary, then bring it on, I say.
Good luck to all! I agree that we have good things in store for us in May.