The garimpeiro
miners in Brazil can't spell either. All they know how to do is to mine
at a profit. Unlike professionally run mining companies, they mine until they
fail to make a profit. Then they stop. All garimpeiros mine at a profit. It's
a lesson the professionals should learn.
Over the past 16 years of traveling and looking at mining projects, I
invented my own definition of mining. I like it; it's simple and covers
everything you need to know:
Mining is the art and science of extracting minerals from the ground at
a profit.
What I have observed in visiting hundreds of properties is that (1) the
level of formal education is far higher than in any other field I am familiar
and (2) most geos think that mining is the art and science of spending money.
Rarely does the word profit get mentioned or exist and finally (3) most of
the people in the mining business should have taken a semester off during
their studies to work at a 7-11. It would do wonders for their overall
education if they actually understood how to sell a quart of milk at a
profit.
If the garimpeiro miners from Brazil or any other third world country were
working at Purdy's Reward in Western Australia run by Artemis
Resources Ltd. (ARV:ASX) and Novo Resources
Corp. (NVO:TSX.V; NSRPF:OTCQX), there would be a bunch of big holes in
the ground.
You see, the vast majority of the "experts"
and highly educated professionals in the mining business believe you must
measure gold before you mine it. Sometimes this leads to some giant gaffs such as that from Strathcona Mineral
Services when they said of the Blackjack project owned by Pretium
Resources Inc. (PVG:TSX; PVG:NYSE) "There are no valid gold
mineral resources for the [Valley of the Kings] zone, and without mineral
resources there can be no mineral reserves, and without mineral reserves
there can be no basis for a feasibility study."
Oops.
It's four years later. Pretium has put the mine into production. They are
producing a lot of gold. In short Pretium was right and while technically
correct, Strathcona was both highly professional and had their head up their
ass.
Novo and Artemis in Aussieland demonstrate the fundamental issue
perfectly. Their solution or lack of a solution will dictate the future of
what might be one of the richest gold fields in history.
Novo released assay results from their first trench sample in
early August. We have no idea if this is the highest-grade sample that
will ever be released or the lowest. We just don't know. There have been no
other results released yet. None will be released before January of 2018.
Here's the rub. The sample showed a grade of gold of just over 67 g/t. It
was nearly pure and I'm going to pretend it has a specific gravity of gold,
19.3. Most of it was in nuggets and that's a problem. As Pretium discovered,
the more nugget effect, the harder it is to measure in any professional way.
If you can visualize a cubic meter of rock, it contains about 2.5 tons. If
you have 67-g/t material, therefore you have about 167.5 grams of gold. If it
were in one cubic nugget, it would be about 15 mm or about 0.6 of an inch.
That's small enough to hide in your ear if you don't mind your ear lobes
dragging the ground.
So if you have a cube of pure gold weighing 167.5 grams buried somewhere
in a cubic meter of rock, just how do you measure it in a professional and
duplicable way?
You can't. It's just not possible. So if you are a professional, you pack
up your gear and go on to some other bullshit project that you can measure in
a professional way.
Now on the other hand, if you are in the business of mining for a profit,
you just smash the rock up and figure out an effective way to mill it. When
you run out of ore, you stop. If you really must know what the grade is, ask
the accountant. He is in charge of keeping all those numbers.
Keith Barron just released an excellent article talking
about the Purdy's Reward project. Like David Lenigas, Chairman of Artemis,
before him, Keith gets it. The issue shouldn't be how do you measure the
gold, the issue should be, how do you make a profit? Barron and Lenigas
agree, the road to riches is to mine and mill the material and extract the
gold, at a profit.
Keith and I talk a lot. I encouraged him to visit the project. Before his
trip, he was the king of skeptics. I maintained that it was quite real, quite
different and well worth his time to visit. He did and for most of his
article, the skeptical in Keith came out just as it should and as it did with
Brent Cook. But the visit did convince him that Novo/Artemis have 8 km of
high-grade gold marked by the paw prints of the guys with the metal
detectors. If you can't measure it, you can mine it. And in an act of
brilliance, Lenigas had applied for and just received permission for a
20,000-ton bulk sample.
Keith Barron also happens to be a founder and director of
a uranium company named U3O8 Corp. (UWE:TSX; UWEFF:OTCQX). And he puts his money
where his mouth is. He owns a placer mining operation in Montana with the
largest sapphire mine in the U.S. so he knows what he is talking about. U3O8
has deposits of uranium and vanadium in both Colombia and Argentina.
U3O8's Laguna Salada project in Argentina contains just over ten
million pounds of U3O8 and an additional eighty-four million pounds of
vanadium. Recent shut downs of production capacity by two major uranium
companies has lit a fire under the price of uranium shares with U3O8 going
from $0.25 to $0.58 in the last five weeks.
After a lot of thinking, Keith realized that the figure generated in the
PEA for the Laguna Salada property of $126 million for capex was absurd. The
minerals are attached to gravel in a basin. There is about three meters of
non-mineralized gravel overburden covering about a meter of mineralized
gravel. Keith did some testing and found that if the gravel were turned in a
trommel it would loosen the fine material on the exterior of the gravel. That
fine material, about 8% of the total mass, contains 88% of the
mineralization.
Moving gravel is pretty cheap. And Keith uses a trommel with his sapphire
operation in Montana. It came to him that he could run a very simple and
cheap test to determine just how viable a low cost fast production plan would
work. He believes in it to the point that he has loaned a million dollars to U3O8 to do testing.
The tests anticipate taking the top three meters of overburden off, mining
the one meter of mineralized gravel, feeding it through a trommel to wash off
and break the surface covering. The fine material will be processed with
baking soda and washing soda to extract the U3O8 and Vanadium.
Thirty years ago geologists rarely had access to a computer of their own.
The use of GPS for navigation was rare and cell phones were only a concept
out of the Sunday funny papers. Geologists have far more access to technology
today than ever in history. But in the transition, has the industry forgotten
why they are in business in the first place?
There are probably 1000 "life style" companies in Vancouver and
Toronto today who have no ability or intention to ever put anything into
production. They exist to fleece shareholders in order to provide a nice life
style for management. We all know that. We are in an industry that is
probably 80% fraud at heart. And we wonder just why ordinary people don't see
any reason to invest in resource companies.
I've seen management groups piss away hundreds of millions of dollars, the
hard-earned savings of people who actually work for a living, squandered
chasing a wisp of the willow. After all, in exploration you can never fail.
All you need is another few million to pour down a hole and you might somehow
succeed. It's only when you actually man up and go into production that you
face the real challenge of either putting up or shutting up.
Artemis/Novo have a unique form of nuggety gold in Karratha that cannot be
measured, only mined. U3O8 has an interesting and different form of
mineralization in Argentina that can be mined in the professional manner for
$126 million. Or simply mined for a fraction of that amount.
Keith Barron is in Argentina as I write. We chatted back and forth on
Skype a couple of days ago before his journey. Given his recent advice to
Novo and his intention to put his money where his mouth is with U3O8 I told
him that he and Quinton Hennigh are about to stand the mining industry on its
head with the greatest change in the last fifty years.
Imagine the concept of going into production for pennies in order to make
a profit. What will they think of next?
U3O8 Corporation
UWE-T $.56 (Dec 11, 2017)
UWEFF OTCQX 19.7million shares
U3O8 Corp website
Bob and Barb Moriarty brought 321gold.com
to the Internet almost 16 years ago. They later added 321energy.com to
cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both
sites feature articles, editorial opinions, pricing figures and updates on
current events affecting both sectors. Previously, Moriarty was a Marine F-4B
and O-1 pilot with more than 832 missions in Vietnam. He holds 14
international aviation records.
Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own
shares of the following companies mentioned in this article: Novo Resources
and U3O8. Novo Resources and U3O8 are advertisers on 321 Gold. I determined
which companies would be included in this article based on my research and
understanding of the sector.
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