Alchemy

Hey Guys

The deck of cards analogy is valid. The gold ore body RED has now is the same as the one in 2014. With one additional drill hole the ore body has not transformed into something else or shifted in location. RED have not reported an extension to the ore body or else they would be happy to do so! A reinterpretation does not alter the underlying data (the drill holes from which an estimate is derived) and from a confidence point of view there has been no new data to support a higher level of confidence (there has been no infill drilling for example).

If a higher level of confidence is now derived from the same data then there would be no need to do infill drilling in the future…. But I bet you RED will need to complete substantial infill drilling before they proceed to UG production.
If the interpretation is a little out in an OP (Open Pit; say 10-20m) no problems… you get the ore during the grade control process. If you tunnel towards an ore body and it’s not there (because it’s 10-20m away) then it’s a disaster. You don’t have the luxury of the OP.

What has changed is that rather than planning to mine down to a certain depth in the OP and then transitioning into UG mining RED must begin UG mining at a higher level than previously planned. Rates of mining, production profiles, and economics aside (which are probably all lower) the reason is Innocent Mistake #2 (IM#2).

Taking the card analogy further RED are forced to cut the cards higher in the deck. And by doing so the Indicated Resource in the lower levels of the old OP plan is now substantially in the upper levels of the UG (the card switch). With some losses of Resources & Reserves in the walls of the OP (due to IM#2) and some ‘reinterpretation’ you get an Indicated Resource that is substantially the same as in 2014.

If you believe otherwise you need to explain how a total UG Resource of 2.0Mt at 7.4g/t gold in 2014 suddenly becomes a 3.8Mt at 5.8g/t gold Resource at present:

Substantial drilling programme discovering new Resources? No. (1 additional hole)
A ‘reinterpretation’ causing an almost doubling of the UG Resource? No. (Unbelievable)
Alchemy? No. (Don’t believe in it)