Thoughts - Drill Results and Copper Price/VMS properties A) Drill Results
These are nice drill results. Some highlights:
1) The results are consistent with the other transformation work and provides added support for the new model. This hole at Orenada 4 was intended to be a confirmation hole – of the stacked high-grade veins in this particular cross section. It provided the necessary data (drilled from the south) to cross reference with past holes (drilled from the north), which will be used to fully map out the veins.
2) The next 4 drill holes at Orenada 4 will be step out holes.
3) The Orenada 4 hole hit essentially 11 quartz veins (you can call it 9, if you want to merge the 3 side by side ones into 1).
4) The quartz veins will be fattened up. This is a bulk tonnage (disseminated) deposit with widespread mineralization within the envelopes. The 2015 studies showed that many of the quartz veins are surrounded by 1.00 – 2.00 g/t lower grade gold. It will likely be no different with the quartz veins identified within the drill holes today, especially since since the drill hole hit wide zones. For example. .9m over 8.01 g/t gold vein will likely be bulked up to, say, 5.0m depth thickness, 25 – 40m southnorth length and 2.5 – 3.0 g/t gold grade – the .9m over 8.01 g/t being at the core. All of the other 10 veins will likely be bulked up in a similar manner also. This cross section will likely end up looking somewhat similar to the cross section on pg 9 of the Corp Presentation. In addition, this potential 25 – 40m quartz vein could end up having a partner vein located at the same level, if the second Orenada 4 horizon runs (upwards) parallel to the main horizon. In such a scenario, you could see, for example, a 15 – 20m horizontal quartz vein residing in this sub-zone, (parallel) at the same level as the potential 25 – 40m vein located in the main Orenada 4 zone. I discuss this second Orenada 4 horizon below.
5) The Orenada 4 drill hole hit two horizons – first hit was 52.9m and second was 25.8m. This is new to me. I new that Orenada 2 had one main zone and 2 sub-zones. I didn`t know that Orenada 4 had a main zone and a sub-zone. I thought it only had one zone. Even the technical report talked about Orenada as being one zone deposit. As such, I`m not sure what to think about this second horizon. It could be that the envelop splits off temporarily in this one cross section – for about 10 to 15m (true width, not drilled width) - and joins back up in the next cross section. Something for us to keep our eyes on as the step out drill results (to the east) come in – to see if the second Orenada 4 horizon continues along this 1,000m length to the east and connects up with the north sub-horizon (sub-zone) of Orenada 2 (I think the distance is 1,000m between today`s Zone 4 hole vs today`s Zone 2 hole, but it is far less between today`s Zone 4 hole and the start of the Zone 2 deposit).
6) This was the first drilling at Orenada 2 for the new model. It was successful in hitting both the main Orenada 2 zone and the north sub-zone. It also connected to some high-grade veins, thus confirming that the new model applies to Orenada 2 as well.
B) Copper price and our Manitoba VMS properties
Poster ``dollarnsense16`` hinted about copper price. The copper price is now US $2.53 per lb – up from about US $2.10 recently. Inflation is likely one of the key drivers. We could be moving more heavily into the (already existing) stagflation environment – low growth and high inflation.
Alexandria has 2 separate VMS deposits in Manitoba, with the primary medals being copper and gold, but there is also good amounts of zinc, and also some silver
In my view, both deposits have excellent exploration potential to grow the resource. They both have the grades for trucking and are both within trucking distance to Hudbay`s processing facilities, including the zinc recovery plant. Hudbay is the natural join venture partner to enable Alexandria to increase the resources further and eventually get some production out of these 2 deposits (for Alexandria shareholders). I haven`t looked at Hudbay`s situation lately. They were having some challenges a little while ago. They might be on better footing now.
The increases copper prices could make these VMS assets attractive, especially for joint venture purposes. I believe Alexandria`s focused is entirely on the Cadillac Break in Quebec and would like to bring in joint venture partners to advance not only the Manitoba VMS properties but also the Red Lake property.