Continuities of Gold Importance and Sources

In the second of a series of articles discussing best practice, we focus on the importance of continuity within a mineral resource. The first article covered the classification of resources. Continuity lies at the heart of that discussion and, from Micon's point of view, is one of the most important but one of the most frequently overlooked issues when conducting mineral resource estimates.

The Merriam-Webster online simple definition of continuity, as it applies to our discussion, is: a) the quality of something that does not stop or change as time passes: a continuous quality or b) something that is the same or similar in two or more things and provides a connection between them.

Both the previous and the current (2014) Canadian Institute of Mining Metallurgy and Petroleum (CIM) Definition Standards make a point of including continuity in the definitions for both a mineral resource, as well as the various classifications for mineral resources. The previous and current (2012) Australasian Joint Ore Reserves Committee (JORC) Code also makes this point in its definition of mineral resource.

Both the latest CIM and JORC definitions include the following in their respective definitions;

• Mineral Resources: "The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling."
• Inferred Resources: "Geological evidence is sufficient to imply but not verify geological and grade or quality continuity."
• Indicated Resources: "Geological evidence is derived …… and is sufficient to assume geological and grade (or quality) continuity between points of observation……."
• Measured Resources: "Geological evidence is derived …… and is sufficient to confirm geological and grade or quality continuity between points of observation……."

However, it has ultimately been left to a Qualified Person (QP), who is required to have the necessary experience relevant to the subject matter, to determine the continuity of the geology and quality or grade of the mineralization in a deposit based upon the information available.

In reviewing and auditing a large number of resource estimates over the years, it has become apparent to Micon, that despite the definitions, the continuity of geology, quality and grade is not always reasonably or sufficiently implied, assumed or confirmed when conducting the estimation process. While geological continuity is important when constructing a mineral deposit model, in most cases it is the continuity of the grade of the mineralization that will determine the economic nature of a deposit. In fact, continuity and quality of mineralization and/or geology ultimately permit mineral deposits to be exploited.

However, under pressure to bring new projects to an advanced state of exploration, or into production, it often appears that good old-fashioned common sense regarding geological or grade continuity has been replaced by the drive to use sophisticated computer techniques to interpret the geology, quality and grade of a deposit and, indeed, the classification of mineral resources, before sufficient work is conducted in the field.

In addition to those cases which Micon has reviewed, there have been instances in which an inadequate attention to the continuity of geology or, more particularly grade when conducting mineral resource estimates has caused projects to be suspended while the data is reviewed by third parties or to be severely compromised (or fail) once infill drilling or mine development work has commenced.

Examples of some of the questionable practices relating to geological, quality and grade continuity having been applied to mineral resource estimates and classifications include in the following situations:

• Use of single drill holes to determine resources. This is seen most commonly in determining Inferred resources on sections, especially where historical drilling may be involved. However, there have been cases where higher classifications have been based upon a single drill hole. These usually occur when generating computer models without applying secondary checks to determine if the classification is warranted based on geological and grade continuity.
• The common practice of using higher grade intersections to carry lower grade intersections to enable the issuer to report larger or wider intervals of mineralization, albeit at reduced average grade.
• Estimates prepared using poor variography or based upon variography without regard to geological or grade continuity, trends and other supporting information. This also applies to resource estimates based solely upon geostatistical parameters, where the estimate is based upon confidence limits or distance to samples.
• Resources estimated where drilling recovery is poor or questionable (i.e. less than 70% core recovery) or where there is selective (biased) sample recovery due to water issues. This also applies to incomplete or missing Quality Assurance/Quality Control (QA/QC) parameters for historical data (sampling, drilling, trenching etc.).
• Disregarding geological features, trends or structures when conducting a mineral resource estimate.
• Use of widely spaced drilling to support a mineral resource estimate.

The first point appears to be a fairly common practice, wherein a circle or elipse is drawn around a single drill hole on a cross-section, the radius (or radii) being determined by the QP based on his or her view of the distance to which the geology or mineralization can be extrapolated. However, Micon would contend that unless continuity is demonstrated on adjacent sections, a solitary intersection does not meet the definition of "geological evidence … sufficient to imply but not verify geological and grade or quality continuity" .

A mineral deposit and its resource estimate are three dimensional objects. Thus the data need to account for the strike length, width and depth of its geological structures and mineralization. For example, trenching may determine strike length and width but not depth, whereas a single drill hole will provide the width and depth but not the strike length, only the possible strike direction. In Micon's opinion, any mineral resource based upon one drill hole should be discounted until such time that there is a second or third intercept upon which to extrapolate geological and mineralogical information between the points, to at least reasonably imply geological and grade or quality continuity.

Micon has also reviewed a number of projects in which, during the estimation process, a single drill hole has carried material which was assigned a higher classification simply because search parameters found enough data surrounding that hole to satisfy the criteria for the higher classification. In some cases, the opposite occurs: because there is a larger drilling gap, the search parameters automatically assigned a lower classification. In either case, there was no regard for continuity of geology or grade. The computer model was simply extrapolating data according to pre-set input parameters. These issues are generally easy to identify when a secondary review of the blocks or data is conducted to ensure that the question of continuity is addressed, ideally prior to issuing the statement of resources.

The demonstration of continuity can be particularly stretched or outright fail when using higher grade intersections to carry lower grade intervals, a practice particularly common among deposits that consist of parallel stringers or zones of mineralization ,since it enables the interpretation of one or more broader mineralized zones when reporting mineral resources. There is nothing inherently wrong with this practice if used to reflect the selectivity of its eventual extractiion as is common in many mining operations, there is a tendency to abuse the original intent of this practice. Inferring or assuming that continuity actually exists between sparse high grade assays gives executives and promoters licence to talk about larger, lower grade intersections and, therefore, more ounces or pounds of metal. High grade intersections are smeared across areas of very low, or no, grade to link up to the next high grade intersection, in order to support a wider and larger zone of lower grade mineralization. Micon has seen this practice in numerous projects that have been reviewed. Frequently, the geological continuity has been very good while the grade continuity has been extremely poor. In one instance, Micon reviewed a gold project in South America where the company had used this method to report resources internally. Micon was engaged to conduct an audit of the internal estimate and write an NI 43-101 report on the property for a listing. Micon's audit indicated that the resource contained only half the gold content that the company had estimated. It was demonstrated quite clearly that, in its internal estimate, the higher grades were smeared into large areas with little or no mineralization. This became evident when a visual review of the block model was conducted: zones containing medium to high grades were found to have drill holes through them with little or no grade. In this case, the high grades, while present, were sporadic in nature and did not carry the low grade areas.

In another case in North America, Micon conducted a review of a project where the company had used this method to report its results to the public and to draw a mineralized envelope around the mineralization. However, in this case, while the geological continuity was good, the mineralization exhibited extreme variations in grade over short (less than 2 metres) to very short (less than 1 metre) intervals in all directions within the mineralization envelope. Although, some of the mineralization was continuous over longer intervals, it was clear that more detailed interpretation was required in numerous areas where the grade continuity was questionable.

Micon has also encountered other cases in which companies used high grade assays to maximize the volume of the potential resources; in most cases, these projects have yet to be transformed into operating mines. This method has been used primarily on deposits with multiple narrow veins or a series of sheeted veins, in an attempt to demonstrate that they can support a large, low-grade open pit or bulk-tonnage underground operation. Although the continuity of the geology and mineralization might support bulk mining, that is not always the case and such projects need to be carefully reviewed to ensure continuity.

Micon has also encountered a number of resource estimates that used poor variography or which were based upon variography without a detailed analysis of geological or mineralogical continuity and other supporting information. In some cases, large distances between data points lead to a false sense of geological and grade continuity. Large gaps between data points are no guarantee of continuity in geology or grade.

Micon audited a certain mineral resource estimate in which the QP had built a model based on the local information and then, based on the deposit type, extrapolated the data to account for large distances between the drill holes both within and around the edges of the deposit. Subsequent drilling to fill in these gaps disproved both their geological and grade continuity. The mineral resources were significantly reduced as a result of infill confirmation drilling. Unfortunately, a large portion of the lost mineral resources had been classified as Measured or Indicated. defined using parameters that were too loose, and that were based upon poorly understood, or misinterpreted, geological and grade continuity.

Another practice seen in resource estimation bases the estimate solely upon geostatistical parameters, such as confidence limits or distance to samples. The use of this methodology generally does not consider continuity of the geological or mineralogical trends within the deposit. This is also true in cases where variography is used to determine the classification of mineral resources, based upon the sequence of interpolation passes in which individual blocks in the model are assigned a grade. Mineral resources estimates that are based solely on geostatistical parameters can potentially be invalidated by new information, unless continuity is firmly determined from the outset.

Continuity within a mineral resource estimate should also be questioned when the information is based on drilling where recovery is poor (i.e., less than 70% core recovery) or where there has been selective recovery of chips or mineralization due to water issues. While a mineral resource can be estimated using this data, uncertainty regarding its continuity necessitates a classification of the resources into the lowest possible category. This also applies to cases where QA/QC information is missing or incomplete as low confidence in the data should lead one to question the continuity even if other factors may indicate the opposite. In these types of situations, newer drilling with a higher core recovery or a complete set of QA/QC data should replace the lower confidence data sources in any resource estimate.

The single most important factor in a mineral resource estimate is verification of the geology and, more importantly, the continuity of grade within a deposit. Unfortunately, in the last upward mining cycle, the drive to promote projects to the advanced exploration stage, to increase the resources contained in existing or historical deposits and, thereby to increase perceived value for the shareholders, appears to have led some company executives and promoters to push the interpretation and classification of mineral resources beyond reasonable limits regarding geological and grade continuity support in the data. Some of this was due to inappropriate use or lack of understanding of the geostatistical methods employed in their estimation, some was due to the lack of geological information to support the estimate, and some was due to preconceived notions of what the data should be indicating.

In most project failures in which resource estimates were the root cause, the failure can be traced to overly optimistic interpretations of mineralization, grade or geology. Therefore, it should be the QP's ultimate responsibility to reasonably evaluate the continuity of the geology and grade of the deposit prior to estimating a mineral resource and subsequently classifying it.

It is the responsibility of company management and promoters to question the information they receive and to understand the potential risks involved in not adequately evaluating the geological and grade continuity of their deposit. It is also the responsibility of management to retain competent and adequately experienced personnel.

A simple method to use in order to test the continuity of the mineralization within a deposit is to identify a few areas in the deposit which are representative of the deposit as a whole. These areas can then be closely drilled to say, 12.5 m centres over, say, a 100 by 100 m or 200 by 200 m grid. The resource model then can be run for these areas. The infill holes drilled at 12.5 m centres can then be removed selectively, leaving a model based on 25 m centres on which the resources would then be re-estimated. The tonnage and grade within the blocks as predicted by the two drill patterns, can then be compared. If they are nominally within 10%, then the continuity can be adequately predicted using 25-m centred drilling. This process can be continued until the blocks are based upon the widest useful spacing of drill holes. The advantage of using this method is that the limits over which continuity can be reasonably assumed are rapidly established. It is also suggested that, where two resource estimates conducted at different drill spacings differ by more than, say, 10% in tonnage and grade, there is evidence to support a break-point in the classification of those resources.

The above method will not work in all cases, especially in bonanza type deposits where there can be extreme local swings in grade. However, even in this type of deposit there should be a better indication as to whether or not the high grade assays actually form a continuous zone or if they are sporadic.

Closer attention to the continuity of geology, and quality of mineralization within a deposit will lead to better and more robust mineral resource estimates. The alternative is to see the continued destruction of confidence in our industry, when the news is filled with the another project failure based upon an inadequate understanding of the true distribution of the mineralization or geology within the deposit.

Micon welcomes your comments and feedback related to this topic. Please continue to watch this site for more articles highlighting best practice in other topics in the coming weeks.

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Source: https://www.micon-international.com/continuity-mineral-resource-estimation/

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