A must read, from Barn Breath Hello, everyone. It's been a while since I've posted, because as the old saying goes, "if you don't have anything nice to say, then don't say it at all." Suffice it to say, I have NOT been impressed with our share price performance as of late. Oh well... we've all been kicked in the family jewels, so I am not going to lament.
That said, our dear friend, Barn Breath, who is still on the side lines with Stockhouse, was kind enough to email me and provide some extremely valuable perspective, insight and hypothecation regarding the upcoming 43-101. He was also gracious enough to allow me to post his thoughts on the board for you all, as I thought you, too, would like to read what he wrote.
Below please find Barn's email. I strongly encourage you all to read it slowly and take it in, because what he says just makes too much sense to ignore, whether you agree with him or not.
Happy New Year,
Barisian
Good Morning,
Not being a guru Geologist, here is my warped thinking regarding the ounces TBA in the next NI 43-101.
Trying to think logically, and NOT overly optimistically, which can be difficult at times,here we go----briefly:
Facts---at least some facts---
We already have done a NI 43-101 for Springpole.Here are the results:
7,100 ounces (of Gold, no silver) MEASURED
38,400 ounces of Gold INDICATED
197,100 ounces of Gold INFERRED
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242,600 Total Ounces of Gold
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I THINK, people forget a FEW FACTS about this figure.
First of all, the NI 43-101 was done ONLY on the "CORE" Area. IE. NO Portage Zone (back then) and NO Eastern Extension either.
Second----The NI 43-101 was a rather 'new' instrument.
Third-----This first NI 43-101 was actually donea way back, and released on Nov. 20, in the year of our Lord 2006. That was over 5 YEARS AGO!!! A lot more drilling and work has been done since then, and a lot more experience has been learned regarding doing a NI 43-101.
Alas, I am getting ahead of myself.
What is very important to remember about back then IS--- The number of ounces of gold reported was severely affected by, most importantly, the Price of Gold BACK THEN!!! I think it was about $ 300 or so per ounce!!! (I should have checked beforehand for an EXACT number,but regardless---) The POG right now is roughly $ 1,500 per ounce. Conservatively, let's say that the POG has increased by over FIVE Hundred Percent---IE. the POG now is 5 TIMES HIGHER, per ounce!!!!
So what, one may say?!! It doesn't really matter! After all, the NI 43-101 is all about the number of ounces, and hence the actual price of Gold really has NOTHING to do with the number, and category, of the number of ounces of Gold reported therein.
I BEG to DIFFER, because of ONE BIG REASON. Because the POG has increased dramatically by SO MUCH, the cut-off grades of gold assayed have also been changed for as what can be counted as ounces and what can't be counted and included in a NI 43-101 NOW. The "high grade" stuff cutoff remains UNCHANGED. It isn't allowed to be included, and, in layman's terms,is disregarded and in essence, "thrown out".
HOWEVER----
The massive increase in the POG, has had a REAL IMPACTon the CUT-OFF grade for the "lower grade" stuff. The cut-off grade for this has been lowered significantly! What does this mean? Well, if the first (Nov. 2006) NI 43-101 were to be done NOW (Jan. 2012) a whole LOT MORE ounces of Gold would be reported in the NI 43-101----BECAUSE----much more of the 'lower grade' stuff would NOW make the cut-off number, which has been lowered, and thus be NOW included in the number of ounces to be reported!!!
HOW MUCH MORE???
I am not a Geologist, whatless a QUALIFIED Geologist as per the definitions of such by the regulative
authorities. Hence I can only speculate, BUT, take my word on this---the number of ounces would be much
higher if the NI-43-101 was released NOW.
O.K. I will guess at it. To be conservative, IMHO, let's just say---DOUBLE the amount. Not 5 times the amount. Is that fair?
For round figures, let's say 500,000 ounces.
ALSO Remember that NOW, this time, the number of ounces to be included and reported for the "CORE" Area should be HIGHER as WELL. My reasoning for this is fairly simplistic. CONSIDER--
First, more drilling has been done in this area over the last FIVE years, with very good results.
Second, the first time it was done, a lot of the 'old historic' drill holes (and there were 'tons' of them drilled--look at the map, it looks like "swiss cheese") couldn't be included in the calculations, because of the rules of the instrument. Now, with the additional drilling, a lot more of the old historic holes CAN be used and included.
ALSO, the newer holes drilled (to confirm the 'old') showed even better and much higher assay grades---a
real bonus! This is, in a large part, due to GCU drilling with double the diameter drill bits, and drilling more slowly---hence better recovery of the drill bits and a resultant better grades over-all.
For all of these reasons above, I THINK my number of 500,000 ounces (instead of 242,000) is VERY
REALISTIC.
ON TOP of ALL THAT----and really important to REMEMBER---
Now we have the PORTAGE ZONE, which we DIDN'T have back in 2006. Let's face it---this is where the VAST MAJORITY of the drilling and work has been done. This is the MOST exciting stuff and development---the REAL reason the NEW NI 43-101is being done and updated now!!!
It is, IMHO, SUPER IMPORTANT to remember THAT----Fraser MacKenzie and GMP Securities have followed this Portage Zone Drilling VERY, VERY Carefully and CLOSELY. They, with their first class staffs of EXPERTS, have ESTIMATED that SpringPole has 7.1 to 7.5 MILLION Ounces of Gold, and they clearly state that their estimates are very CONSERVATIVE.
Think back---check it out if you don't believe me---it's all there in print-----that these TWO estimates are SOLELY based on the recent drill results of The PORTAGE ZONE, and the PORTAGE ZONE ONLY!!! They readily admit that they are including NO OUNCES, NONE at ALL, for the Core, Main, and Camp ZONES----
AND FurthermoreNO ounces for the Gold and drill results there-on for theEASTERN EXTENSION ZONE either!!! A lot of great work, and results, have been done there and reported by GCU.
ALSO the estimating GURUs also CLEARLY admit that they have given absolutely NO value or number---no consideration AT ALL, for ANY SILVER content---which we know, by GCU's News Releases to be
comparatively SUBSTANTIAL.
I could go on and on about this, but I think I have covered the main points of my tree top extrapolation.
So Barn Breath, YOU IDIOT, what does this all mean?
No GUARANTEES whatsoever, BUT, here is my reasoning and conclusion:
If the New NI 43-101 includes only 2 million ounces of Gold, then since, as I have gone to great lenghts to point out, ( 2,000,000 less 500,000 ) = ONLY 1.5 Million ounces have basically been proven up since the 2006 NI 43-101 was released!!! With all of the work and drilling that has been done since that time
and the GREAT Results, this figure is FAR TOO LOW.
NOW, it is true that Fraser MacKenzie's and GMP's estimates (for ThePortage Zone) are just that, Estimates, and that the actual number that will be reported in January's New NI 43-101 will, OF COURSE,
be much LOWER---BUT---HOW much lower? Let's see now----
Say what? 40 % lower? ( 60 % of 7,300,000 ounces is) 4,380,000 ounces.
AND let's assign 500,000 ounces for the "CORE Area" = 4,830,000 ounces.
THEN lets add at least some more for the EASTERN EXTENSION, other areas, the Silver Content, and perhaps some more ounces because since the two companies gave their estimates, quite some time ago,
a lot more drilling work (especially the INFILL drilling results)has been done, and reported in News Releases by GCU. This HAS to have added more ounces into the mix!! Does it not?
SO let's add what? Say in total, 670,000 Ounces of Gold (and 'Gold Equivalent' for the Silver content). Lo and Behold----I get a total of 5,500,000 ounces---forget the damn categories here, because I just ain't that good!
That's right, don't let the number of zeroes confuse you!!! That's a total of 5.5 million ounces!!!!
I have often said that a NI 43-101 is ultra conservative, and I along with Inti, my MTGA, may tend to be a 'tad optimistic', BUT we don't think so. Therefore, so that IF we ERR, we'd like to do so on the side of caution. CLUMPHEAD & ASSOCIATE say that the NI 43-101 in January 2012 will report between 4.5 to 5 MILLION OUNCES.
O.K. let's EVEN "split the difference" and go on record as saying 4.75 MILLION OUNCES of GOLD.
AND
Anything LESS than that----we will be most DISAPPOINTED!!!!
Especially INTI.
Yours truly, FWIW,
Barn Breath
P.S. I also think that Quinton a VERY smart man and a GREAT Geologist. It is MY unesteemed opinion, that he loves to SURPRISE and IMPRESS others with his work, wisdom, abilities, and accomplishments.