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clock Created with Sketch. 30/11/16
11:07
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Originally posted by Io
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From Figure 3 in the announcement AVQ has drilled an area 550m north-south by 100-150m east-west. Within that area the average grade is 1.15% Ni and the average thickness is 7.5m. Previous work on San Jorge showed that the average density in the saprolite was 1.8. Therefore, the maximum mineral resource AVQ can get out of the drilling will be approx. 1.1Mt. However, I doubt that a JORC competent person will sign off on including all the holes in the resource as some of the holes are outliers. Its probable that only the central part of the drill pattern will get included in a resource which is an area 150m x 250m which will be about half a million tonnes. It is interesting that the average grade from this drilling is substantially less than the historical resource which graded 1.4% Ni. To get a resource which will justify a mining operation AVQ are going to have to do a lot more drilling, as in probably hundreds of holes and much more closely spaced than what they have drilled to date. If those 31 holes cost around $2M to drill that gives an idea of how much it is going to cost to drill out a resource on San Jorge that will be big enough to sustain the required capital investment for even a simple dig and delivery mining operation. AVQ will also need to find higher grade material as if the average grade remains around 1.1-1.2% Ni a direct ship operation to China will not make money at those grades. The thing that is surprising to me is the grade is lower than I was expecting given the historical drill results. Keep on drilling guys and get some better grade and thicker grade material.
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