April 18, 2014

Interpreting Drill Results

Interpreting Drill Results

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Are you looking for hidden gems, those stocks that have enormous potential but nobody’s discovered them yet?

Or has a stock that you own moved on drill results, and you’d like to know why?

We are Junior Gold wanted to give you something to help you decipher those news releases and drill result tables into something you can understand. It’s an expanded and updated version of chapter 2, “Exploration” from our book “The Investor’s Guide to Junior Gold.” From now on, you won’t be looking at bulletin boards and forums to see what others are saying about the drill results. You’ll have your own opinion because you’ll know before the results come out what constitutes the good, the bad, and the ugly.

The ebook covers the following topics:

  • Drill result reporting.
  • The Comprehensive Method.
  • The Junior Gold “Simplified Method” of interpreting drill results. A quick formula that you can compute mentally to give you a rough idea of economic feasibility from drill results.
  • A listing of the factors that influence the economic feasibility of a gold deposit and what effect they tend to have on stocks when drill results are released.
    • Depth
    • Remoteness of deposit
    • Political factors
    • Environmental issues
  • General rules of thumb.
  • The context of drill results.
  • Surface exploration.
  • A quick summary of the gold-equivalent calculation.

When I was 25, I invested in a stock called Northern Dynasty Minerals (NDM-X). I bought it at $1.17, and six months later the stock peaked at over $11 when they announced a new resource estimate for their Pebble project in Alaska: 23 million ounces of gold. The only thing was, the deposit had already contained 13 million ounces, and mining giant Teck (Teck Cominco at the time) had given it up to NDM for a song a few years earlier. Sure the deposit size doubled, but 13 million ounces is already gigantic. And nobody noticed the actual drill results, they only noticed the resource estimate. Why was it worth that big of a move?

In 2010, Kinross Gold purchased Underworld Resources for $139.2 million. The BEST drill result ever pulled from their Golden Saddle deposit was 5.6 g/t over 21.6 m. Many juniors have drill results like this nowadays, so why aren’t majors lining up to purchase them?

The answer lies in the context of the drill results, and in this e-book, Bernie shows you how to look critically at the deposit and what new drill results mean to its overall value.

This e-book will pay for itself many times over. At only $19.95 it’s a must-have for any investor that invests in exploration on any level.

Learn from an engineer! Bernie Roseke, P.Eng., PMP is a civil engineer and junior gold blogger (www.junior-gold.com) who has invested in junior mining since 2001, when he first purchased Glamis Gold (GLG-T) for $3.90, at the age of 24. After several profitable intermediate trades he sold his position 3 years later for $19.53. Other successes since then include Northern Dynasty Minerals (bought at $1.17, sold at $11.95, held for 4 years), Bema Gold (bought at $1.90, sold at $7.32), Silver Wheaton Warrants (bought at $0.37, sold at $1.90), and Copper Fox Metals (bought at $0.10, sold at $2.05). His current account value is about 8 times his initial investment, even though more money has been withdrawn over the years than the initial investment.

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