The problem with the grades has to do with the dilution not just the recovery and this is the main factor to bring down the grade in narrow vein mines like Cascavel, and probably that's the case here. A quick example, if the vein is about 10cm width with 40g/t grade and the minimum mining width, is about 90cm (you will hardly find mining width smaller than that as you need to fit the driller in and also some sort of ground support), in this case lets consider that the ore density is very similar to the host rock, so the 40 g/t now becomes something around 4 g/t grade and IMO this is the issue ongoing with OGX, they are releasing IN SITU grades to the market and not talking about DILUTION, but the final numbers never lie and the results seem to point towards that direction.
As far as I remember I read somewhere that the average vein width in Cascavel was about 5cm to 10cm and also that they were extracting the ore not by blasting but with hydraulic rock breakers to minimize dilution. The tricky bit is that you need to find a balance between excessive dilution with high tonnage production or selective mining with low production, you cannot achieve both at low cost, it is just impossible.
For that reason, I believe that they require a new plan going forward, not just considering Cascavel but all the assets.
Just to be clear the above is my Opnion.
OGX Price at posting:
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