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halcroon Jan 11, 2016 9:09pm
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RE:Ashes to ashes
RE:Ashes to asheshttps://business.financialpost.com/news/mining/in-mining-sector-projects-live-or-die-on-word-of-independent-geologists
Peter Koven | July 20, 2012 3:19 PM ET
In mining sector, projects live or die on word of independent geologists
When Barkerville Gold Mines Ltd. told investors a few weeks ago that its British Columbia-based project held the potential to cough up 90 million ounces of gold, the first reaction from industry insiders was disbelief. After all, the legendary Timmins gold camp has produced about 70 million ounces, and less than 100 million ounces are produced globally each year.
Their second reaction was more of a question: Who the heck calculated those numbers?
It turned out they were derived by Peter George, a veteran geologist with Geoex Ltd. The British Columbia Securities Commission (BCSC) has since intervened with many concerns about his work on Barkervilles Cow Mountain project, and the company remains a penny stock as investors have little confidence in its stated resources. The stock spiked from 81 to as high as $1.67 after the report came out, but has since dropped to 77.
Aside from providing yet another reminder about the perils of investing in junior miners especially when metal prices are floundering Barkerville has turned the spotlight on the independent geologists who are hired by miners to analyze drilling results and confirm the metal content of their deposits. These individuals, called Qualified Persons or QPs, have little to no contact with investors, but have an enormous impact on whether mining projects get developed and how they are perceived in the market. They also have a lot of leeway in how they interpret data, which can sometimes lead to projections that are far too enthusiastic or less often too cautious...
This is not the first time Mr. George has been in the spotlight. In 2010, he worked on a resource estimate for Rubicon Minerals Corp. that was restated lower after regulators intervened. He also provided a bullish assessment of the Bruce Channel deposit in Ontario, which Goldcorp Inc. eventually acquired for $1.5-billion.