o3 BLOG |
Gold Mining Stocks — What Drill Results Mean for Investors
There is probably no news more exciting for junior mining companies in the exploration phase than discovering new high-grade drill results. Last month, O3 Mining announced a new set of positive drill results from its Bulldog deposit in Val-d’Or, Quebec, expanding the mineralization at the Alpha property. But what makes drilling results “high-grade,” and what does this mean for investors? What determines an exemplary assay, and what are some key things that investors should look out for?
Drill results are crucial indicators for gold mining and exploration companies as well as shareholders and potential investors. If planning on investing in gold mining stocks, the grade of the drilling results is always a significant factor in determining the resource potential. However, you should pay attention to the depth of the mineralization, the length/thickness of the intercept, the number of drill holes, and how close the holes are to each other. For gold exploration companies, high-grade mineralization is relative to the depth and size of the drilling intersection. Over the last decade, advances in mining technology have allowed us to scale mining operations with large pits, equipment capable of processing large volumes of ore at an extraction site.
Understanding drill results can be confusing for non-technical people or just about anyone who isn’t in the precious metals or mining sectors. High-grade drill intersections represent the potential of a mineral deposit. It is important to consider other factors, such as the width of ore interval(s) intersected by the drill hole. Drill holes with wider intervals of mineralized material grades can benefit the mining company as they better represent the extent and continuity of an ore body. Wide intervals are favourable over narrow intervals because they are more cost-effective and easier to exploit. A high-grade result combined with a wide drill intersect can be a powerful tool in determining the quality and size of the deposit.
What defines a high-grade result and interval length when it comes to drilling results?
If possible, compare results from other drill holes within proximity. If other holes in the area are returning 2.0-8.0 g/t Au, you would consider the grade significant. Gold drilling results are reported in grams per tonne (g/t), and anything over 2 grams gold/tonne is deemed to be good. Recently, O3 Mining reported excellent drill results that included 2.6 grams per ton (g/t) gold over 14.1 metres (m), including 5.5 g/t gold over 6.2m, only 65m below the surface on the deposit. Other intercepts include 9.5 g/t gold over 4.8m at a vertical depth of 340m and 7.1 g/t gold over 5.6m, including 26.5 g/t gold over 1.3m at a vertical depth of 150m on the Kappa zone.
Exploration drill holes aren’t always vertical and can run at any angle, leading to varying size and shape deposits. Consider a worst-case scenario, where a nearly vertical drill hole intersects an almost vertical ore body, or a nearly horizontal hole intersects another horizontal ore body (usually when exploration holes drilled from underground workings). In this case, you would measure the width of an ore interval along a drill hole (apparent width). The most reliable way to only reliable way to delineate ore bodies and calculate resources is to use the true width, or the real thickness of an ore body.
Depth of intersection
The economic feasibility of a mining project relies heavily on the grade of mineralization relative to the depth of the ore interval and the size of the ore body. For example, an ore body with 1 g/t average gold grade could be economically viable to exploit utilizing open-pit mining method down to a 200m depth. The intersection of the same grade uncovered at depths below 200m would be costly, making it not economically feasible.
As a rule of thumb, one ounce, or roughly 30 grams/tonne, is high-grade and, in most cases, can make a significant impact on the market. Several ounces of gold per tonne are considered high-grade for underground mining, although 5 grams gold/tonne is usually economically viable.
The bottom line
- Gold and other precious metals are graded by the amount of metal within the ore.
- A higher grade result means that it will take less effort to recover the metal from the ground
- The World Gold Council rates gold based on ore density measured by grams per tonne, or g/t.5
- O3 Mining’s project sites are located in and around the Abitbi Greenstone Belt, an area rich in minerals, with over 100 mines that have produced over 200 million ounces of gold since the early 1900s, and accounted for 75% of Canada’s gold production in 2020.
O3 Mining is a Canadian Junior Mining company that delivers superior returns to its shareholders and long-term benefits to its stakeholders. To learn more about our ongoing projects and investment opportunities, book an appointment with our executive team today.
To learn how O3 Mining can add long-term value to your portfolio, contact us today.
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