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cont-
Comments/Queries:
1) I do not understand the reference to “on a head-grade basis” for production. What does it mean and why not using declared production?
METHODOLOGY
- Having chosen the criteria for discoveries, which put a peg in the ground, MinEx has to take account of the growth in resources after the discovery hole. It has used for this the resource history of 60 major discoveries (defined as exceeding 1 Moz {I presume ultimate size}) found in the period 1980-1996, covering a range of deposit types.
Comments/Queries:
1) Given your definition of discovery date how can you have resources as from year 0? After a discovery holes substantial additional drilling is required to be in a position to define mineral resources even at only an inferred category.
2) Figure 14 does not make sense with the independent axis being “years after discovery”, but the legend showing “year that a resource was first published”. The two time frames do not reconcile with the graph implying a resource published at discovery.
3) The diagram assumes that deposit type has no impact on growth in resources, lumping all together. This ignores the fact that for open pit mines a company attempts to define all resources up-front to facilitate optimal pit design, whereas for underground deposits this is impractical and expensive with the objective being to define enough high-confidence resources for a planning horizon of 3-5 years with sufficient indication of continuity to have confidence this portion of the deposit will be drilled out during operations. It would be interesting to draw up the same graph for orogenic deposits (mined underground) and porphyry deposits (mined by open pit).
- An algorithm has been derived which forecast the growth in resources of new discoveries over 15 years with the effect of a drop in cut-off grade over time stripped out (estimated to be responsible for half the growth in resource ounces). The results is implying that at ‘discovery date” 40% of the mineral resources proven up by year 15 from further exploration have been found.
Cont-
Subsequent to that presentation SNL/MEG now incorporate their own estimates of the unreported discoveries in their analyses.
That’s plenty of reading material to start you off. I will answer your other questions & concerns once I get your feedback on the above.
Reply-
Having carefully gone through your presentations and reports. All very interesting with some great pearls of information (e.g. 2% of gold deposits contain more than half the gold ounces in resources; relationship between exploration spent and commodity prices).
I now understand from your 2011 and 2013 notes the methodology and sources of data. I will summarise this for you to determine if I did not get my wires crossed and follow this with comments and queries:
DATABASE
- exploration expenditure come from a number of agencies, but mostly from Metal Economic Group’s (“MEG”) annual survey, which started in 1992.
Comments/Queries:
1) having to rely on data from others without exactly understanding how these were compiled always carries some risk. For example, are only outlays included that have been booked as “capital expenditure” or does it also include outlays that have been expensed?
2) if this relies on response to a “survey” it carries even more risk and one should be knowledgeable how this survey is conducted, the response rate, etc. Why are the audited annual financial statements not the best source for this information?
- all expenditure was adjusted for inflation using the US CPI index.
Comments/Queries:
1) how do you treat expenditure numbers provided in currencies different from the US$?
- the deposit database has been generated by MinEx Consulting itself. The included deposit sizes go down to containing only 10,000 ozs. From the first sentence on page 123 of the 2013 report it appears that deposits above 0.1 million ounces (“Moz”) are used for the analyses. The database had in 2013 information on 4,206 such deposits with discovery dates for 3,153 deposits.
- the discovery date is defined as the date at which the deposit has been recognised as having significant value.
Comments/Queries:
1) the criterion is rather vague and ambiguous, also evident from the phrasing “usually set as the date of the first economic drill intersection", which itself is a very subjective measure depending on the prospective mining methods and process routes, which should in many cases be uncertain. And if the “usual” does not apply, what other criterion has been used? Does this refer to "the step change in known endowment”?
2) the fact that the same deposit can have several “discovery” dates points to the number of discovery numbers exceeding discovered deposits.
- Ounces discovered refer to pre-mine resources, being ounces in all resource categories + historical production.
Cont-
Cont-
Most companies have modest exploration budgets (of ~$3 to 5 m pa) the odds of a company finding a significant new gold deposit in a given year are very low/modest. In summary, to be a successful gold explorer you need to be much better than average!
Peters initial reply
Thanks for your interest in my 2021 gold presentation to PDAC.
There are a LOT of questions there to unpack! The most central one is the logic & methodology used to estimate the number of unreported discovered deposits and the amount of metal contained in them.
The driver for factoring in my estimates of the these undiscovered deposits comes from work that I had done over several years – when looking back at my old analyses I noticed that the identified reported resource (found in a given year) had grown … which led to the observation that it takes time for companies to report their discoveries. This was especially so for the Majors (a couple of which I used to work for at the time) . Furthermore, the published maiden resource often grew over time as companies did more drilling / developed a better understanding of the structural controls.
Back in 201 I did a study for a private client to quantify the typical “blue sky potential” of a recent discovery (it varies by deposit type, whether it is open pit or underground and geological complexity). Some of the key results were written up and published in a presentation I gave at the 2011 NewGenGold Conference. You can download the slides and supporting text from my website at ….
https://minexconsulting.com/recent-trends-in-gold-discovery/
The key charts to look at are slides 39 and 43. Which show how the reported ounces “grew” over time. From this I came up with an algorithm to adjust the current reported number of deposits / ounces to capture the (as yet) unreported deposits. The multiplier starts off large in the most recent years and tapers off over time ….. I have arbitrarily stopped it at 10 years.
The above analysis also takes into account changes in cut-off grade (generally brought about by changes in assumptions over the gold price) .. which can grow the overall notional size of the deposit. This can be seen in Slide 40.
This gets discussed in further detail in a follow-up presentation I gave at the 2013 NewGenGold Conference. You can download the slides and supporting text from my website at ….
https://minexconsulting.com/the-impact-of-changes-in-the-gold-price-on-exploration-activities-and-strategies/
The strategic error of leaving out the unreported discoveries (and only counting those discoveries with a published tonnes & grade resource .. which what MEG was doing at the time) is highlighted in slides 14 to 17 the following presentation I gave at PDAC in 2017
https://minexconsulting.com/recent-trends-and-outlook-for-global-exploration/
Cont-
The following presentation looks at the global trends in exploration for gold. It also introduces a number of new metrics (associated with drilling and the number of companies) for assessing exploration performance.
Key observations were:
• Exploration expenditures are extremely volatile – with boom/busts of +/-70% not uncommon.
• The overall level of exploration spend is mainly driven by changes in the gold price.
• The impact of COVID-19 on the level of exploration activity is complex and dynamic. On the negative- side, office closures and travel-restrictions and have made it difficult for geologists and drillers to work on projects in remote areas. On the positive-side, market uncertainties, coupled with low interest rates has caused the price of gold to go up (from US$1420 in 2019 to $1771/oz in 2020) – thereby encouraging to be more active in the field. The net effect was a modest increase in the World’s overall spending on gold exploration … up from $4639m in 2019 to $4830m in 2020.
• It is worth noting that the level of activity varied by Region – with expenditures in 2020 up in Canada (by 4%) and Australia (by 15%) and down in Africa (by -6%) and Latin America (by -15%).
• On average around 40-50 significant gold deposits are found in the World each year.
• Over the last decade (2010-19) Canada accounted for 12% of all gold discoveries and Australia 15% by number.
• In terms of ounces over the last decade a total of 628 Moz of gold was found in the World. Ten of these contained more than 10 Moz each. This includes three Cu-Au deposits, where gold is a by-product.
• After adjusting for by-product credits the “average cost per ounce found” rose from $15 in 1980s to $61 in the last decade (all in constant 2020 US Dollars). Part of the reason for the increase was cyclical (associated with higher labour and drilling costs – which have now come back down) and structural (namely the extra cost of exploring under deeper cover and/or in more remote locations).
• In terms of “$ spent per discovery”, unit costs unit costs have risen from $41m in the 1980s to $142m in the last decade.
• In terms of “metres drilled per discovery” the amount of drilling required rose from 336,000 metres in the 1990s to 551,000 metres in the last decade.
• In terms of the “number of holes drilled per discovery”, the amount of drilling required has stayed relatively constant at 6700-6900 holes over the study period (1990 to 2019). The challenge is that the average depth of the hole doubled from 41 metres to 82 metres over this period.
• In terms of the number of “gold discoveries made per Company per year” performance in the Western World over the last two decades has declined from 1-chance-in-25 to 1-in-29.
Most companies have modest exploration budgets (of ~$3 to 5 m pa) the odds of a company finding a significant new gold deposit in a given year are very low/modest. In summary, to be a successful gold explorer you need to be much better than a
Hi Mr Gnome, further to your posting below I forwarded the the report the global trends in exploration for gold to Kees Dekker with your suggestion which he agreed to follow up-
Richard Schodde has made his business around tracking discoveries for 40+ years. He is a keynote speaker at all of the major global exploration conferences (PDAC, New Generation Gold, Diggers and Dealers etc), consultant and govt advisor on all continents. Very well connected, very committed. I think Richard also subscribes to S and P Mining Intelligence, which we set up some decade or 2 ago.
https://www.spglobal.com/marketintelligence/en/campaigns/metals-mining
Kees can contact him at the below link
https://minexconsulting.com/contact-us/
He will learn a few things without doubt
Cont
The 1 m and no effect on SP could be sale between related parties?
Hi Red,
It may have been that they were prone to rheumatism and arthritis, although what they went through can't have helped , what they suffered in military service may have even brought the condition on sooner in life than it would have otherwise occurred if at all.
Whatever they were certainly brave men that had no real support or counseling/de briefing as is provided today after active service in any conflict.
I also have a second cousin who was a commander in the tank regiment, he did three tours of Northern Ireland as a Saracen commander, he had a few stories to tell and the experiences he went through scarred him mentally, he suffered terrible flash backs to incidents of the past for many years afterwards, he remained deeply troubled by the way our military were ordered to behave in Northern Ireland by the political will of the time.
Those that bring about that wars and conflicts never have to endure them , possibly a discussion for a week end though?
Thanks Aoife ,they took the profit.
Hi Mr Tibbles
I think the noise in those tanks must have been terrible.
My paternal great grandfather served in the British Army during WW1 and fought on the Somme. My dad used to say that he always complained of rheumatism and arthritis in his legs because of standing constantly in water and mud for days on end in the trenches. My father was in the Navy, and he also had arthritis in his hips and knees - so I think it was hereditary. I never knew any of my grandparents - they had all died before I was born. My maternal great grandfather was posted to Palestine during WW1, so probably in part of today's Israel. I had an uncle in the 8th Army during WWII - he had so many amazing stories. You couldn't tell him much about life and death.
I really must look into my ancestoral past. A retirement project, I think.
It looks like WorldQuant have been adding some shorts lately, but no one else for the moment. I noticed the other day that someone bought well over 1 million, so swings and roundabouts.
https://shorttracker.co.uk/company/JE00B5TT1872/
At 16.01 a 1 M Sell ord trade, but did not touch the SP.
What's that all about ?
Hi Red,
Thank you for the post, I saved the pic!
I won't go on for too long being a week day!
When I was very young I spent lots of time with my grandfather (Pap) who spoke very little about his time in WW1 to anyone other than myself as a young boy, he made me promise that I would never go to war because he said the ordinary people on both sides always lose so much!
My Pap due to being in the home guard ( supplemented his income as a "Clicker" with £6 per year)got sent out to Belgium with a "Pals unit" at the start of WW1, he lost most of his close friends in action and suffered injury several times, although he never received a medal because e he was shot by friendly (British Lewis guns) whilst he was advancing in no mans land.
Anyway after returning from behind the lines hospital his commanding officer volunteered Pap for duty as a gun loader in one of our tanks, after 3 days training his tank went into action and as soon two shots were fired from their tank the interior filled up with smoke because the tanks extractors had been put out of action by sniper fire. the steersman was forced to open his viewing slot and got blinded by shrapnel so lost control and the tank got stick in a hug shell hole.
So Pap and the rest of the crew bailed out and made a run back to their trenches, several days later the same tank crewed by ( Jerry) attacked our lines, although it got stuck in the mud and the crew bailed out and ran back to German lines, and so it went on!
https://www.youtube.com/watch?v=ESKxi4EEDUQ
https://www.youtube.com/watch?v=2MCmKrf91o4
Hi Mr Tibbles
On the subject of tanks, I visited the Queensland Museum in Brisbane a few years ago. They have the only surviving example of a German WW1 tank, dug out of the mud in No Man's Land somewhere in France. Usually, this tank is displayed in a see-through cover, but when I was there, the cover had been removed for some work to be carried out. The lady curator said that she'd worked at the museum for many years and it was the first time she had seen the tank without the cover. And it was only coming off for a couple of days.
It was perfect timing by me. I took some photos of it because of the rarity of the situation, but it was frankly wasted on me. It's a pity I can't load up the photos on this board for any tank enthusiasts. I took 3 photos which are OK - I'm not an expert. There is a photo on Wiki:
https://upload.wikimedia.org/wikipedia/commons/4/4b/Captured_A7V_Tank.png
Shares on major European markets were mostly lower during premarket trading on Monday. Traders were awaiting the Markit services PMI reports for Germany, the euro area and the United Kingdom, while also keeping an eye on coronavirus-related developments.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies referred to as OPEC+ were set to continue discussions on extending production cuts. Markets in the United States were closed for the Fourth of July holiday.
The DAX fell 0.11%, while the CAC 40 lost 0.20% at 8:00 am CET. At the same time, the FTSE 100 was up 0.05%.
Breaking the News / JC
*no currency data
Well thought out Goldgnome.
Wise words.
Dobel -I would look at last yrs charts and you will see a trend for the next three to five weeks of rapid increase annually in the shares mentioned above up and until the financials are released for all three. Good luck with you decision making but the three mentioned are all cyclical. Price of Gold and Silver for that matter are both on an upward charge at the moment.
Thanks Don
The shareholders of CEY have invested, via the board, about $100m in the Batie Project in Burkina Faso. There has been very little information released to share holders on this, and one would suspect that part of this investment would have been directed at resource expansion. Part of course, was for the Doropo Project which came with the Ampella acquisition, but what about the prime target? Given the geographic and geological proximity, CEY has a foothold on 7 million ounces resource, and should have a good handle on cotrnol of mineralisationint his area. What does gold potential of the area look like? What new targets can be derived, what new ground can be acquired?
Given that divestment is now the preferred option for Burkina Faso, because of a PFS or alike, which has not been released to the funding shareholders, it would be interesting to know what we are selling. Of course the market (one would not hope friends of past "players") will determine the value, but it is a good policy, to build sustainable trust and a sustainable company to let the shareholders know what is going on.
To continue the policies of the past "management" with regard to this asset is not a good look in my view.
best
the Gnome
Not sure which one to pick as one of holdings. Any idea?
Would any santion on Russia affect POLY?
Thanks
why POG is being shorted?
Wall St may be closed but dumps come when PPT say so like middle of the night.
Blame the Russians or Chinese maybe.
I studied Economic History and found it very useful and interesting, along with Maths and some geology later.
Hi Red,
Your nephew is indeed fortunate, another example of how much we have al lost in the UK due to Brexit, the Brexiteers thought they were gaining so much, the reality is quite the reverse as unfortunately due to their stupidity or ignorance!
I feel as though I have been made a prisoner and lost so much freedom, yet I am innocent of any crime!
No change there, then. We may not get a contract dump if gold threatens to cross the $1800 line. I hope we can get through that level on the next try or the one after. Sooner the better.
Hi Mr Tibbles
Well, there is a different interpretation to being free in the US if you are black. There are lots of NAZIs there.
I've just found out that my nephew is going to study for a Master's Degree in economics at Munich University this autumn. His father is Irish, from Dublin, and his mother is English, but it has meant that my nephew has an Irish passport, even though he was born in England. Because Ireland is in the EU, he can go to study in Germany for free. He has to pay for his keep, of course, but there are no course fees.
I didn't like to say it, of course, but I wish he was studying something useful! He likes economic history, so I suppose he ought to read something he's interested in. I'm not sure if he could do this on a British passport now we are not an EU member.
Still, we'll soon be able to get some cheap, chlorinated chicken from the US, so that's OK.
May show abnormal gold price.
Just sayin../
Hi Red,
Very interesting read, thank you!
Amazing isn't it how the US can claim to be a guardian of democracy and freedom and yet it felt it did the US ban civilian ownership of gold ,
Although the US were desperate to knock the United Kingdom’s Pound Sterling off it's pediastal as the worlds reserve currency they planned to invade Canada and then take control of the UK in alliance with Germany the UK.
https://aangirfan.blogspot.com/2013/12/the-fourth-reich-bis-donald-maclaren.html
https://nationalinterest.org/feature/revealed-americas-secret-war-plan-invade-canada-15359
As it was WW2 came along and the Yanks were able to bankrupt the UK selling it seaworthy ships and overpriced military junk including "Tommy Cooker tanks which were were unfit for purpose!
https://www.youtube.com/watch?v=_50EGgz5_Xk
https://forum.axishistory.com/viewtopic.php?t=217773
After WW2 the US remained in occupation of the UK to form a buffer zone in order to be able to carry out war with the Eastern bloc if need , this would ensure that our people suffered retaliation before America.
All the US military personal were exempt from paying any UK taxes, even their ow n personal vehicle could be driven on UK roads without the need for insurance , road tax and MOT, of course all their petrol was bought on the airbase so that was also tax exempt!
US base personal who committed crime or broke the law off base could also claim diplomatic immunity and still do!
https://yorkshirecnd.org.uk/us-military-bases-in-the-uk/
https://www.thesun.co.uk/news/10075756/woman-fled-britain-diplomatic-immunity-death-wife-american-spy/
https://abcnews.go.com/International/us-uk-end-anomaly-allowing-diplomatic-immunity-american/story?id=71916844
The "Brexiteers" claim that the UK was under the influence of the EU and they were claiming back freedom , what freedom , don't they realise the UK is still occupied by more American military personnel than it was during the Norman occupation!