Drilling deep holes from the surface into this type of deposit is not very cost effective. It is what you would initially do to determine if there was gold at depth and where exactly it occurs , but after that it would be a matter of determining a geological model for the mineralisation. Drilling deep holes in a grid approach is Ok for the bulk tonnage low grade deposits of WA but not on this type of deposit.
The most cost effective way forward is select drilling in areas where reefs are encountered and from close proximety. MCO are fortunate to be able to do this because of the existing infrastructure and have done so on Maxwells, Sydney and numerous unamed reefs in the upper gap zone.
Drilling deeper than the water level is also not so cost effective at the moment. They need to get on with some mining first on the many easily accessable reefs to get confidence back into this company. After that they will have the funds to dewatering the rest of the mine and then drill the lower part of the gap zone and lower levels.
There are exploration programs such as detailed mapping and sampling which MCO can do on the other old mines which aren't costly.
As far as the Waverley is concerned, I think they should continue drilling it to come up with a model for it. So far from the announcements and all the whispers I've heard it is extremely promising and sounds more and more like a mini version of the famous Cohen's reef. You don't want to stop exploration on something like that and also its close proximety to MS mine and the talk of connecting drives between the 2 is enough reason to do the modelling so the mine plan is the best possible.
Unfortunately, good and careful planning takes some time. This time they have good professionals working on this front. I'm a long term holder and I'm happy with there logical approach.
MCO Price at posting:
12.5¢ Sentiment: LT Buy Disclosure: Held
