The announcement that the TON deposit at Nicanda Hill has a larger graphite reserve than SYR's Balama deposit has been publicised, and repeated, (naturally!) in many vehicles, both printed and on-line. Equally naturally, many SYR holders are looking over their shoulders, and feeling rather less confident. A major competitor, with similar resource but claimed to be even bigger - shouldn't they be worried? Yet, at the same time, on the the TON thread on HC, people have been bemoaning the fact that announcement of an ostensibly very large JORC resource did not exactly put a rocket under the share price. In fact, it has gone down.
Is there a possible, logical reason for all this? Let's look at a few numbers.
According to the TON JORC report on Nicanda Hill, in their announcement of 21 October, TON have drilled 97 holes, all of which were used in determining the JORC resource, yet only 46 of which have actually been analysed - less than half. So 51 of the holes used in determining the JORC resource had "visual estimates" only. Somebody looked at the drill core, and guessed the graphite content! Hmmm.
Of the 46 holes actually assayed, I located published reports on 40 holes (22 Jan, 23 June, 9 October, 30 October), which is a pretty good sample. And here's an interesting thing:
Those 40 holes totalled 6800 metres, of which 3066 metres were actually reported. The balance, of 3734 metres, were not reported, because they had less than 5% graphite. How much less, we don't know.
So we have data on less than half the holes drilled, and, where we have data, it covers, on average, less than half the drilled length of the hole.
We therefore have a situation where little data has been released, and where the majority of the grades and intersections used in the JORC calculation are based on "visual estimates".
The most generous view we can take is that the whole JORC reserve figure for Nicanda Hill has a high potential for error.
Should SYR holders be worried? Should TON holders be worried? There may well be enough graphite, at a high enough grade, somewhere in Nicanda Hill, to develop a mine. But I don't think it's proven yet, and the market seems to have the same doubts.
Cheers, Prime1
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