The most likely reason is the disappointing copper grade found in NCP12 (over the 18m interval of "abundant chalcocite mineralisation") which I estimate at about 0.7% - as shown in this amended extract of Fig. 2 from the announcement:
For comparison, I estimate the average grade from the 6 drillholes to date at about 1.1 - 1.2% with the maximum (NCP08) about 2.0 - 2.1% and the minimum (NCP09) about 0.4%. In my opinion, for the reasons given below, the market was hoping for a grade around 2%, like adjoining NCP08, and to come in at 0.7% is disappointing.
It appears we have a long, thin, very steeply dipping near tabular deposit (like a long very thin mattress turned on its side to near vertical and folded a little) with about 65m depth of cover – a configuration that suits underground mining as opposed to open pit.
IMO the market realises that for the deposit to be economic, we need grade and volume dimensions near those of the UG Zone 5 mine and it's 3 satellite deposits lined up for future UG development. Their key characteristics are good markers for what is economic in the vicinity (see
https://hotcopper.com.au/posts/63429652/single for a referenced summary of those characteristics).
The 4km strike length to date is close to Zone 5’s 4.2km, and as others have mentioned, it is likely the market is taking continuity for granted along the 4km strike. And, 6 out of 6 so far makes this more certain.
The deposit is on the NW limb of one of a series of parallel anticlines and the spacing between the longitudinal axes of the anticlines gives confidence that the deposit will extend to depths similar to Zone 5 and satellites. NCP11B , the step-back at NCP08, has confirmed depth to about 300m vertically below surface – still a way to go, but significant.
This leaves true thickness and grade. NCP12 intersected 18m of abundant chalcocite mineralisation. Based on the angles show in Fig. 4 of the announcement, I estimate the true thickness at about 8.5 - 9m. This is the best estimated true thickness so far and is close to the reported Zone 5 average of 10m. Combined with chalcocite, a sulphide copper ore with a high unit weight of copper, it is an excellent result. It is ironic and unfortunate that it coincides with disappointing grade and the market reaction shows that grade does indeed trump a volume dimension.
There is also another major uncertainty hanging over us, namely, the eventual correlation of properly assayed grade data with the pXRF grade data reported so far. Will the assayed grades be generally higher, lower, or variable? A number of posters have mentioned this uncertainty as negatively impacting the share price, and that is logical.
I took some money off the table on Friday and have changed my sentiment to hold. I have decided to wait for the assayed grade figures and reassess where we are with average grade in comparison to the about 2% that seems to be needed to turn the deposit into a mine. Time will tell whether I have made the right decision.
In the meantime, it seems that more pXRF results from ongoing drilling will arrive before the assays land, and if any allow near 2% pXRF grades to be estimated, decent downhole intersections and more chalcocite, then I expect the response will be positive and significant, but effectively capped until assays arrive.
GLTA and God save the King
