As an outsider looking in to the DCN debacle, I would be questioning the use of company CP's for reserves (2018), as it looks like they were not asking the hard questions of the resource estimations and interrogating them thoroughly before estimating reserves. Any engineer worth his salt will step through the interp(s), model(s), assumptions, extrapolations and the drilling with the resource geo, before starting work on the reserve estimation. Not only is this a second pair of eyes on the resource estimation process (in the absence of an independent resource audit), but allows the engineer more comfort that the main basis for their reserves is sound.
I'm glad to see that Optiro was involved in 2019 in reviewing the resource estimation and that AMC reviewed the reserves. Independent reviews are good practice and should have been included in the 2018 work.
The practice of limiting open cut resources to an optimal pit shell has been around for over 10years. It became more accepted when the JORC Code 2012 was introduced, as companies were required to report only those resources that could be exploited within a reasonable time frame. Restricting resources to an optimal pit puts some maths behind it (but not always successfully) and eliminates the side and deeper modelled material that would never be exploited as it is uneconomic at the assumptions used (metal price, recovery, slopes, mining and milling costs etc).
Indicated category for an underground operation, in gold, is not usually accepted to a spacing of 80m. That's more like Inferred. Depends of course on grade continuity and geometry and confidence in the model, but it's not something many would sign off for gold. Potentially that was a corporate decision to get more resources into the reserves, maybe overriding the CP. Staff CP's are stuck between a rock and a hard place, as often the corporate bullies dictate to them what the classification of resources will be, what the cut-off grade will be and so on. It's hard for them to buck against management in fear of keeping their jobs. It happens, and more often than you'd like to think.
DCN Price at posting:
$1.40 Sentiment: None Disclosure: Not Held
