In the Adelaide Interview, Kevin said that we could do simple maths regarding the new resource estimate for Goldboro. It's tough to come up with something solid as we cannot have the luxury of being able to play with the model, but I will try to do the exercise with the current RE we have and the clues Kevin provided us during the interview. So this is what we have to work with:
- Ore between 0.5 to 2.0 g/t was not considered economically minable in the old model
- Current RE gives 76,5k of gold in open pit categrory
- Main open pit might be 2km instead of 4 metres (5 times bigger)
- Kevin mentions that he thinks the open pit might contain between 400k to 500k with the new parameters being analysed
- Goldboro will be producing between 50k and 70k annualy for the first 8 to 10 years (which will be an open pit)
- The mill they are looking for is a 25tpd instead of a 8tpd, meaning that they will mill 3 times more (but milling more waste too)
- They say that the development of the underground resources might start much later than what was proposed in the last PEA: between years 8 to 10 of the mine.
So, the simple calculation would be to take the current 76,6k open pit minable resource and multiply it by 5. That would give around 380k ounces for a 2km open pit mine. But the pit will go deeper and that is why Kevin is talking about a guesstimate of 400k to 500k. I think this is conservative as it's better to under promise and over deliver but let's take the upper bound of this guesstimate to try to come up with the growth factor given by the 0.5 to 2.0 g/t ore that is find "around" the high-grade veins:
500K - 380K = 120k more ounces with the new model for a 2km open pit
120k / 380k = a ration of around 30% more gold available
So, if we add 30% to the current 1,4M ounces in the last resource estimate, we end up near 2M ounces with 1,82M ounces. Is it what Kevin is talking about by saying that the new resource estimate will provide much more? Is 30% more gold is considered "much more"?
This simple maths exercise does not take the following into consideration:
- At current gold price, the cut of grades might go below 0.5 g/t, thus increasing the resource/reserve
- The property has been drilled with a building a background resource in mind but now that the open pit scenario is considered, other nearby low-grade areas or deposits might add to the resource portefolio
I'm pretty sure GoldNHill could add some complexity to these simple maths but that's what I came up in 30 minutes and the knowledge I have.
Fell free to jump in and plug your numbers!