So far five of the six samples have come back, and every sample contains gold.
“It’s pretty impressive when you’re getting that amount of visual gold out of samples that are from 27 to 50 kilos,” Max CEO Brett Matich commented on the results, published in a Jan. 30 news release.
“We’re looking at the enormity of scale. If you work out the volume of material in the 8 square kilometers at a 12-meter thickness, it comes out to a substantial amount of material. You’re talking potentially one of the largest hosts of mineralization on the planet. That’s what we’re looking at.” he told Ahead of the Herd in an interview this week.
He noted Max’s bulk sampling technique is similar to what Novo Resources (TSX-V: NVO) did in the West Pilbara; however, the difference between the two, is that the free gold in Choc is much finer. Novo had a problem with the gold at Purdy’s Reward because it had an irregular, patchy distribution. Geologists call this discontinuity “the nugget effect”. It makes delineating a resource extremely difficult.
According to Matich, no such problem exists at Choc. ” We think this area is going to be substantially more uniform than what Novo have,” he said.
If the plan for the bulk sampling program is to 1) substantiate reports of free gold within the hard rock conglomerates and 2) to determine the thickness of the gold conglomerate and how far it extends laterally Max is off to an incredible start.
Max will continue to keep doing bulk sampling in order to demonstrate the substantial size (and confirm gold distribution) of the potential deposit. At that point Max would be open to bringing in a partner, likely a mid-tier or major gold company, and/or an equity financing for what would be an enormous drill program, there is also the potential for a take out of Max.
For now, though, bulk sampling has one big advantage over drilling. While drilling can determine gold grades, fire assays can’t tell anything about how the gold should be processed. A bulk sample can. Max is currently using simple, inexpensive gravity processing to determine how much gold is in each (roughly) 50-kg sample. If a mine could eventually be developed and the ore gravity-processed, it would make for extremely attractive economics.
A bright future
It’s true that Colombia has, in the past, had its difficulties, but things have improved immensely.
Last year a new pro-business president Ivan Duque was elected, who appears friendly to mining. And unlike neighboring Venezuela, which is going off the rails economically, on its way to a failed state, or Bolivia, where President Morales has his finger on the resource nationalism button, in Colombia, the government has never repatriated any mineral titles.
A tax bill introduced in November that includes a 5% corporate tax cut is being lauded by the Colombian Mining Association for helping to make Colombia more competitive with Peru and Chile.
Enormity of Scale
One of the most important factors a mining company looks at, when considering whether to buy out a junior or its property, is scale. The large gold companies are facing the challenge of declining ore grades, depleted mines and a lack of new projects in the pipeline. We agree with many who argue we’re at “peak mined gold”; production is falling, and there is a lack of discoveries to take up the slack.
All the macro factors in place for a big gold run
Max Resources’ Choc Precious Metals Project is on track to having the scale to interest a major. MXR is a first mover in the region, similar to Novo Resources (TSXV: NVO), which made huge stock price gains in Australia a couple of years ago. If they do well, more juniors are sure to follow, trying to replicate their success.
So far, they’re batting a thousand: free gold was found in every test pit so far. And they’ve only just begun: The first six bulk samples were over 8 square kilometers; that leaves nearly 1,750 square kilometers more available for testing! And let’s not forget, the deposits are all near surface.
Conclusion
Free gold means the possibility of low-cost processing: no heap-leach pads, no flotation, just good old-fashioned gravity as the means of separating the gold, not much different from old-school gold panning. We’re talking low-cost.
Combine these factors with the fact that Colombia is open for business with a pro-mining president, and that Max has an excellent team with deep experience including the co-founder geologist of Ivanhoe Mines, and this project begins to look very impressive indeed.
The Spanish never found their El Dorado. Max Resources (TSX.V: MXR) might have found theirs.
“We believe the underlying conglomerates are potentially the source of the historic surface production of 1.5Mozs gold and 1.0Mozs platinum. The historic production may have only been scratching the surface of a significant underlying gold system.” Management, Max Resources
For all of these reasons I have MXR on my radar screen.
Richard (Rick) Mills
aheadoftheherd.com