Subsequent to the “boots on the ground” prospecting program, an exploration company will often conduct geochemical and geophysical programs to help delineate exploration targets. In this article I would like to look specifically at the geochemical exploration processes.
Readers may be under the impression that geochemistry is a recent field of study, but some of the basic principles of geochemistry have been on record since the 14th century. What we would call “modern” geochemical prospecting has its roots in the Soviet Union and Scandinavia, where extensive research was conducted in the 1930’s. However, it wasn’t until after World War II that these techniques spread west, and were further developed. While techniques continue to be refined, geochemistry tools have played an integral role in modern geologic exploration since the 1970s. 1
At its most basic level, geochemistry uses chemical information found in rocks and plant life to discern geological information both at the earth’s surface and at depth. The utility of these techniques for providing clues as to composition of geological structures at depth is particularly significant for modern exploration in Canada since so much of the surface and near surface ore bodies have already been exploited. To understand how geochemistry can play such an important role in exploration one must first understand a bit more about how mineral deposits are formed.
Mineral deposits are simply concentrations of specific elements in small geographically defined regions within the earth’s crust. Most deposits have a core zone, where the valuable minerals are found in their greatest concentrations, and a halo zone, where the deposit radiates out from the core zone. In the halo zone, often called the anomaly, the concentration of minerals decreases to parts per million (ppm), or even parts per billion (ppb), but still exceed levels found in the country (surrounding) rocks.
The composition of the core and halo zones, which are generally formed at the same time, depends on the primary method of dispersion during their formation and the geologic structure of the host environment that they are deposited in. An example of this can be found with Volcanogenic Massive Sulphide (VMS) deposits, where deposits are formed on ocean floors near hot, mineral rich, vents. They are formed when fluid from the ocean floor percolates down through rocks, leaching minerals as it travels. When the mineral rich water encounters a zone heated by geothermal activity it is forced to the surface through vents and cracks in the ocean floor and spews mineral rich hydrothermal fluid up into the ocean.
Once the hot hydrothermal fluid enters the ocean environment it cools rapidly and certain minerals settle out closer to the mouth of the vent, while others spread further. The resulting deposit, when first formed, looks somewhat like a fried egg, getting thinner and thinner towards the edges. Over time these deposits are deformed by plate tectonic events that pull them apart or sometimes turn them on-edge.
Because of the dispersal patterns that occur within the deposit, halo the mineralization changes in a very predictable manner. Significantly, as the halo itself is approached, the chemistry of the rock within the deposit can give valuable clues as to its location. This is one of the areas where geochemistry can provide invaluable data to explorers.
I recall spending some time with Dr. George Hudak (http://www.nrri.umn.edu/staff/ghudak.asp) on a field trip and hearing him explain a study he was undertaking in pursuit of a geologic anomaly. A number of deep drill holes had been put in on a property to the east of the famous Kid Creek mine in Ontario, searching for a similar deposit. The holes had failed to hit a halo, and in an effort to determine if the company was on the right track Dr. Hudak was performing a chemical analysis of thin sections from core retrieved from each of the drill holes. His work produced indications that the company was, in fact, heading in the right direction to find a halo. In that situation, unfortunately, the company ran out of money before another drill program could be initiated to follow up on his findings, so Dr. Hudak was unable to confirm his theory.
This deep geochemical analysis is simply one facet of a much larger arsenal the geochemist wields. Where we usually see geochemistry at work is with surface or near surface interpretation of the chemical and physical effects of weathering. As minerals decompose or disintegrate through freezing and thawing, rain and moving water, glacial movement and geologic shifting, the chemical constituents of these minerals are dispersed, sometimes for a considerable distance, into ground water, soils and other debris. Additionally, as geochemists have discovered, when plants absorb nutrients from the soil and rock the chemicals show up in their tissue.
The geochemist will test each of these carriers to see if the chemistry indicates proximity to a halo. Common tools of the trade include: the emission spectrograph, colorimetric reagents, and atomic absorption spectrometry. Some of the newest tools include: computer aided statistical techniques, plasma spectrography and the use of airborne particulate matter as a sample medium. The field is fascinating and new innovations are steadily improving results.
This extremely brief look at geochemistry doesn’t begin to do it justice, but it does serve as a piece of the background to our examination of why an exploration program can seem to take so long.
If a northern property is optioned or staked by a company in the fall, and the services of a geochemist cannot be secured before the ground freezes solid and snow falls, aspects of the geochemist’s work will have to wait until spring breakup. To an investor who expects a drill program to be undertaken immediately upon the acquisition of a property, the wait for geochemistry can seem interminable.
Even in ideal conditions geochemistry is often delayed simply by a dearth of geochemists. Add to that the time it takes to: arrange travel to what are often remote locations, collect samples, prepare samples for submission to a lab, wait for the lab results, analyze the results and then write a report for company management. When all is said and done, months can go by before a company can incorporate geochemistry findings into their exploration and drilling plans.
It is also worthy to note that the entire exploration and drilling process must be well funded, and often times the necessary timing of a fund raising will be at odds with the optimal timing of an exploration program. This can further delay exploration and drilling programs.
In my next article I will address the geophysics component of an exploration plan and examine the time constraints it brings to the whole process.
Kevin Hull
1 R. F. Horsnail, "Geochemical prospecting", in AccessScience@McGraw-Hill,
http://www.accessscience.com, DOI 10.1036/1097-8542.285700, last modified:
March 29, 2001.
Explanation of Exploration Process – Part 3 - Geophysics
In my last article I talked about geochemistry as a mineral exploration tool. Geophysics, today’s topic, like geochemistry, is such a broad topic that I’m afraid I’m barely going to be able to scratch the surface of its function and application. Geophysics is a highly specialized field that has been advanced, largely by Canadian scientists and technicians, because Canada has such a vast amount of highly prospective land covered by overburden that explorers have demanded and developed tools that allow them to cover vast tracks of ground quickly and accurately.
In broad strokes, geophysics, in the exploration industry, is the study and utilization of the physical properties of minerals, such as specific gravity, magnetism, electrical conductivity, seismic reflectivity and radioactivity, to explore for mineralization on and below the earth’s surface. Sensitive instruments have been developed that measure variations in the earth’s physical characteristics to detect valuable minerals in the earth’s crust. These instruments are used to measure either single or compound properties of specific exploration targets, often to follow up on the ground based field work of the prospector/geologist.1
Basically, geophysics works because different rock types have different physical properties that respond uniquely to seismic, magnetic, electric and radiometric stimuli and these responses can be measured and used to determine potential rock mineralization. For example, in an Induced Potential (IP) survey an electrical pulse is sent into the ground and the decay (decline) in the voltage is measured. Geophysicists know the rate of decay for each mineral, and by looking at the contrast between their target and the surrounding rock they are able to map out prospective mineral targets. Incidentally, by using software that inverts the field data from a standard IP survey, 3D IP models have recently been introduced, providing some of the sharpest images ever created in the mineral exploration field. Not every tool is appropriate for every situation; there are situations when an airborne survey is the most effective exploration tool and other situations where ground-based surveys work better. In an overall exploration program a company will find that various combinations of the different geophysical tools are appropriate, and at each stage there is a need to weigh their individual advantages.
When it comes right down to it, geophysics is a study in contrasts. Electrical geophysics tools, as noted above, work on contrasts in electrical resistivity; reflection and refraction seismic methods contrast compressional velocities of different materials; gravity surveys contrast densities and the contrasts in magnetic susceptibilities is what allows magnetic surveying to work.
But, it is the ability of geophysical technicians to cover vast tracts of land with airborne surveys that is the key to the importance and impact of geophysics on the exploration industry. Because many mineral exploration companies have large land claims, and surface discoveries are now an infrequent occurrence, airborne electromagnetic sensors, radiometric detectors and magnetometers are commonly used to narrow down search areas or even pinpoint specific targets.
It is important to remember that geochemistry and geophysics are merely two stages, or tools, in the exploration process. The results of geological surveys that utilize these two tools need to be integrated into an overall model that includes ground work and, ultimately, drill hole data.
For an excellent synopsis of the comparative advantages and disadvantages of airborne versus ground-based geophysical surveys please refer to a website by S. Farooq, of the Aligarh Muslim University, Department of Geology: http://www.angelfire.com/sc3/farooqs/notes/b8-4-3.htm. My thanks to Farooq for teaching me a great deal about geophysics.
In keeping with our examination of the impact that the various exploration phases/tools have on the overall exploration schedule, it is significant to note that weather, snow cover and terrain issues can all delay the geophysical surveys. Additionally, and sometimes even more significantly, as with other professional positions within the mining industry, there is a dearth of qualified geophysicists in Canada, which can cause delays in the execution of programs and the interpretation of the resulting data. Therefore, exploration programs that rely on geophysics as a key tool can face significant delays. When these delays cause a company to miss a drilling window, due, for example, to the onset of winter conditions, drill programs can literally be delayed for months. This is a good thing for impatient shareholders to keep in mind when drill programs suffer delays.
Kevin Hull
1 CliffsNotes.com. Geophysics Defined. 18 Dec 2012
<http://www.cliffsnotes.com/study_guide/topicArticleId-9605,articleId-9552.html>
I left off my last Blog with R.A. Forrest, the Sunridge Mining geologist responsible for the exploration program on the Nivloc property, beginning his second drill hole on Hudson’s decline. I should mention, before we continue, that International Millennium Mining’s interest in this decline is primarily in how it will facilitate any resumption of mining at the Nivloc site. A previous Blog explains how advantageous the decline would prove to be should mining resume: http://www.immc.ca/index.php/blog2/179-the-history-of-hudson-s-decline-significant-advantage-for-nivloc. The exploration targets the Decline may present are certainly over and above the benefits outlined in that previous article.
Though the use of an aggressive mudding program overcame early difficulties in removing cuttings from hole #2, a series of minor incidents hindered progress and by the 29th of February 1976, the crew had only reached the 92 foot level of the hole before a broken pump stopped them again. A replacement for the mud mixing pump was ordered, a new Bean 535 air-motor unit, and the work stoppage proved to be temporary.
After first expressing his frustration during the pump incident, when he states, “I repeat again as in previous reports shoddy equipment and inexperience are taking their toll”, Forrest goes on to sound a more positive note in his April 1st 1976 report. He writes that “the Big Horn Extension decline work has progressed a little better with Glen Phillips giving it almost full time attention.” His new Longyear Drilling pump, new mudding pump and new airline have all been working well and his crew has advanced another 250 feet through well broken, predominantly muscovite alaskite granite gneiss.
In another indication that they did not fully understand the Nivloc structures at that time, they were puzzled by what they thought may be the intersection of Nivloc structure around the 264.5 to 282.0 foot level, when they were expecting to find it at the 450 foot level. The intersection was in a highly leached manganerous oxidized carbonate, which provided poor core recovery. With the work that International Millennium has since carried out on the property, we know that the Nivloc structure is actually comprised of parallel veins (at least two), and as such, one should expect recurrences of intersections that indicate this type of structure.
Although things had improved with the drilling, Forrest still reported that “driller inexperience resulted in numerous plugged core tubes, mudded bits and polished diamonds in these difficult drilling conditions.” He also mentioned that costs had been excessive, but felt they were justified due to the progress now being made.
Of particular significance to International Millennium, Forrest’s historic drill program “succeeded in tracing the Nivloc fault-vein structure another 600 to 800 feet east of the decline works.” Further, he found indications that suggested to him the zone could even extend another 1,000 feet (+/-).
By April 30th Forrest had taken hole #2 down to 455 feet and found nothing more of note. Given the challenges he constantly faced through the drilling of his first two holes Forrest decided not to collar hole #3, as was originally intended. For the next month he remained engaged in removing all the drilling and support equipment.
When all was said and done, Forrest’s ill fated drill program did not turn out as he had hoped. He encountered a constant stream of failures and complications that collectively served to compromise any conclusions he reached.
The final word on this strategic decline is best given by Rand A. Decker in his 1978 Geology/Exploration report to the Sunshine Mining Company on their overall Silver Peak Project. “The Big Horn Extension decline on the Nivloc vein east end area was leased and diamond drilling for an eastern extension of the Nivloc vein was conducted [and]… the lease has been maintained as the decline could provide an access into the old Nivloc workings should the desire exist.” A point that International Millennium Mining supports.
Kevin Hull
Some investors in the mining sector may find the time lapse between a company’s acquisition of exploration property and their launch of a drill program to be nothing short of mystifying. They also might find the lag time between the announcement of a drill program and subsequent news regarding the results to be unpredictable and puzzling.
It is a rather interesting dichotomy with some investors that they have such a love-affair with the mineral exploration industry, and at the same time find it so challenging to understand. I believe there is a fair amount of misunderstanding in the market regarding the actual process of searching for the “next big mine”, the one that all investors dream of having a stake in, and I believe that this misunderstanding often leads to frustration and disenchantment on the part of investors.
Particularly in today’s market place, where risk aversion is strong, I think this causes needless tension between management and stockholders. Perhaps if more investors were knowledgeable regarding the exploration process, realistic expectations could be set, resulting in fewer communications challenges down the road.
While the basic steps involved in exploring a property are often common to all companies and properties, the order and duration may differ widely in each situation. The remoteness of a property, the geographical challenges presented, season and weather, underlying claims, government intervention and finances all exert influence on an exploration program.
Invariably, unless a property is optioned (or a claim staked) based on an area play, prospecting has played some role in influencing the decision. It really is the starting point for any discussion on mineral exploration. In a previous Blog (http://cabodrillingcorp.blogspot.ca/2012/08/cabo-drilling-recognizes-prospectors.html) I examined the role the prospector plays in exploration, so I won’t go into detail here. Suffice it to say that they are underappreciated for their contribution.
After a property has been acquired prospecting is again the first thing that a company will typically undertake. Typically, a prospector/geologist will closely examine the property on foot, looking for indicator rocks or minerals in outcrops or cliff faces. Of course, this phase cannot be carried out with snow on the ground. So, with a property acquired in a winter month, assuming that prospecting was not previously conducted, investors should be aware that nothing is likely to happen on it until after spring breakup.
Once an area of interest has been delineated a company will move on to use geochemical, geophysical and mapping technologies to further refine their search. These tools can also be dependent on snowpack and can also be dependent on availability of expert crews and specialized equipment.
Next week I will go into more detail on these steps that are preliminary to a drill program. Once we have examined them, we will move on to talk about the all the things that need to be put in place before a drill program can commence.
Kevin Hull
As we left things in our last Blog, the rods in Diamond Drill Hole #1 had become stuck just before the drill crew was able to cement the hole. So, we begin this entry with an update from Sunshine Mining’s R. A. Forrest, who was responsible for the drill program in the Hudson’s Decline.
Forrest explains, “After 8 days of trying to free the rods I blasted above the barrel and was able to retrieve 22 of the 23 stuck rods but lost the bit shell and barrel. 50 feet of Lumnite cement was poured in over the barrel in order to deflect a new hole should we desire to continue.” Forrest goes on to report that the Joy 22 Diamond Drill remained disabled, but that the parts required to fix the bevel gear driveline were on order. On a positive note, he explains that the airline & water problems have both been eliminated.
In this report, Forrest returns to his oft repeated lament, “I wish we had a better drill down here with an experienced crew.” He goes on to explain that, on the whole, assay results from Drill Hole #1 have been disappointing, although from the 85.5 foot mark to the 88 foot mark, weathered granite on an extensive erosion plane showed .02 ounces per ton of gold and 1.5 ounces per ton of silver, possibly suggesting disseminated mineralization along that plane. As well, minor values were picked up on scattered CO3 stringers as follows: 236 feet to 247 feet @ .003 ounces gold & 1.16 ounces silver /per ton & 224 feet to 228 feet @ .0005 ounces gold & 1.78 ounces silver /per ton.
Looking back now, we can see that Forrest is frustrated and beginning to lose perspective. In his March 1, 1976 report to Don Long, the Chief Geologist for Sunshine Mining, Forrest repeats himself, saying that the “Big Horn decline work remains depressing.”
It is interesting to see where Forrest’s frustration takes him: after just one hole in a highly prospective exploration target he is already preparing Don Long for a “re-evaluation of the decline’s potential.” However, it is very important to note that Forrest was looking specifically for the “Nivloc Vein”. It is quite possible that the hole intersected the vein zone at a point where both the hangingwall and the footwall, which International Millennium Mining (IMI) began to define during its 2011 drill program, consisted of Paleozoic basement rocks, and there is a strong probability that the hole passed through the Nivloc Structure at a point where it is less well developed. As a general rule, in this type of deposit, the veining pinches and swells both laterally and vertically. IMMC plans to drill deeper holes in this area to test the potential for down dip continuity of the vein. Forrest, lacking this important geologic data, is getting ready to pass judgment on the prospects of Hudson’s Decline after only one incomplete hole out of a three hole program.
He goes on to tell Long that, after abandoning Hole #1, on Long’s orders, the drill crew shifted the drill position to where Diamond Drill Hole #2 was to be collared. He relates that the Joy 22 driveline bevel gear assembly was finally repaired and after several days delay, due to weather and minor equipment and station repairs, Hole #2 was finally collared on February 14th, 1976.
Unfortunately, and predictably by this point, almost immediately upon beginning the Hole difficulty was encountered. In part 5 of this series we will examine Forrest’s experiences with Diamond Drill Hole #2 on Hudson’s Decline.
Kevin Hull
Another month passes in the Hudson’s Decline drill program, which has by now become more of a saga. In his 1975 report for December’s activity Forrest tells us “Decline work continues to be plagued by problems both man-made and natural.” To prove his point he relates that in order for drill hole #1 to be collared, a new chuck jaw had to be manufactured by the mechanic.
The drill hole itself went through the following strata: partial consolidated volcanic tuff, bx & conglomerate (which required cementing), weathered schist, skarn, gneiss & granite, extremely hard quartz lenses (similar to the Mary Mine), and weathered schists & granite cut by altered diabase dykes or minor CO3 unlets. When hole #1 reached the 268 foot mark, on December 19th, the Joy-22 drill blew out its main drive gears and the hole had to be temporarily abandoned under cave-in conditions.
The Joy-22 transmission had to be pulled out, broken down, cleaned and rebuilt. At the writing of his report, December 31st 1975, the drill was still not ready to go and Forrest expressed hope that it would be ready when the crew returned from Christmas vacation.
The problems Forrest’s crew was experiencing were hardly limited to drill failures. A 1,000 gallon air receive tank was installed to combat repeated airline failures and the waterlines were experiencing freezing, necessitating a redesign of the entire system. Additionally, the drill station had to be re-timbered due to poor “I” bolt stability.
Forrest promises “a vigorous attempt” to complete hole #1 upon resumption of work, although he expresses the belief that it will require “additional cementation.” He is within 80 feet of his target depth of 348 feet and is determined to reach it.
However, in his activity report for January, 1976, Forrest is again expressing frustration, “decline work still continues to be plagued by ever-changing problems. Equipment failure and crew inexperience and caving hole conditions resulted in much lost time.” He goes on to explain that the transmission on the Joy-22 drill wasn’t ready until January 8th, and that the drill only performed for one day before a new gear split in half and caused three more days of down-time.
With the drill back up and running by January 14th, hole #1 had advanced an additional 60 feet through numerous barren CO3 stringers in granite gneiss & diorite dyke wall Rx. The hole was now at 326 feet, within about 20 feet of target depth, when the highly fractured rock and squishy clay cause the rods to stick before cementing could be completed. Here again Forrest expresses frustration with the lack of experience his drill crew has: “while attempting to free the rods, the bevel gear was torn off the old main-shaft, buggering up both, and the station timbers slipped requiring additional work.”
In my next installment we will see how Forrest sought to deal with his latest challenge and review his findings from Diamond Drill Hole #1.
Kevin Hull
Unfortunately, the drilling of Hudson’s Decline more closely resembled ‘The Keystone Cops Go Drilling’ than it did a professional modern drill program.
The drilling begins in October of 1975 and in his report dated November 1st Forrest is already stating that the “Big Horn Decline work has been jinxed.” He relates that even the process of getting a drilling station excavated at the 2,100 foot mark was challenging. Two local contractors initially accepted the contract and then backed out before they were scheduled to start. He was left with using a Sunshine Mining employee, Charles Bush, who regrettably lacked proper experience, and renting machines for the job.
Forrest and Bush (no pun intended) rented a John Deere wheeled loader for transportation, purchased a light weight 2-wheel trailer for haulage and rented and purchased a variety of pumps, compressors and miscellaneous other equipment. The problems began very early on, with five machines, including two of the newly rented ones, breaking down within the first couple of weeks. In addition, the pump froze, electrical components on the compressor were defective and, with the station only two thirds completed, Bush came down with a “gut sickness”, which Forrest mused was “probably of Silver Peak”.
With Bush gone, Forrest personally jumped in and worked on the drill station, leveling the backward sloping station and hauling out some of the muck. He also oversaw the building of a gravity waterline, which used the old Nivloc water system, and eliminated the need to pump water from Silver Lake, which caused about 45 minutes of trouble every day. In his October report he also tells management that he has hired Marvin Fanning, a “local kid”, to help out, at $3/hour to do odd jobs such as reroofing the Nivloc core shed and building core racks.
The drill station itself would only prove to be useable in another month, due to lack of manpower and the site conditions. In his December 1st report on November’s activities Forrest says, “Decline work has been progressing slowly. Drill station has been fully excavated, slushed bolted & timbered as of 11-24-75.” He also reports that the 8,000’ Nivloc gravity water line has been completed and is delivering +/- 20 gallons per minute of water to the decline drill station.
He goes on to say that equipment is being moved in to the drill station, but that mechanical breakdowns and flat tires are “still jinxing things.” Forrest believes, in spite of all the problems, the first diamond drill hole, B.H.E. #1, should be collared by 12-2-75.
Forrest finishes his October activity report by telling management that Gary Kimball completed his Nivloc 200’ scale outcrop map and found some interesting subsidiary veins.
Kevin Hull
After looking at the creation of “Hudson’s Decline” in our last entry we are now going to follow some of the exploration on the Big Horn Extension that took place subsequent to the completion of the decline.
As the exploration unfolds we will see how poor planning and execution of a drill program in 1975/76 made it possible for a highly prospective property and very valuable decline, to sit largely idle for 36 years until International Millennium Mining Corp. came on the scene.
With improvements in drilling equipment and techniques, well trained drill crews, proper support systems, a strong management team and with proper funding, it is now possible for International Millennium to conduct the exploration that R.A. Forrest, the project manager in 1975, envisioned when he recommended a drilling program be undertaken.
It is interesting to note that Silver Ridge, under W.T. Hudson was not the only company to plan an exploration program for the decline. In 1968, during the planning of the decline, letters were exchanged between Hudson and Norm Ebbley of the Mid-Continent Mining Company. In the letters Ebbley gives Hudson access to land he needs in order to create the decline and, in exchange, Hudson grants informal permission to Mid-Continent to carry out a drilling program from the planned decline.
However, it is not until 1975 that we see another mention of drilling from the decline. In an April 25, 1975 Red Mountain Silver District study by R.A. Forrest, project manager for Sunshine Mining Company, Forrest says “exploration of the Big Horn property, though not pressed by substantial lease payments, would seem to be one of the more high priority projects for the discovery of economic grade silver mineralization.”
A short while later, on June 30, 1975, Don Long, Chief Geologist for Sunshine Mining, lays out the following budget for a drill program on the Big Horn Extension property:
|
Mobilization and Demobilization |
$1,500 |
|
BX coring 1,500 feet @ $15/ft |
$22,500 |
|
Hole surveying |
$750 |
|
Drilling support services |
$7,500 |
|
Miscellaneous charges (reaming, cement, etc.) |
$1,000 |
|
Total |
$33,250 |
In a subsequent letter, Forrest reports that he had commissioned a surface mapping program at a 1:500 (1 inch = 500 feet) scale across the full extent of the Big Horn Extension claims. He further recommends that three diamond drill holes be drilled underground, from the Hudson’s decline, as early as possible. He believes this drilling would perhaps indicate substantial tonnages of 12 ounce mineralization beneath the leached exposures within the decline. He estimates that this program would require approximately 1400 – 1500 feet of drilling, at an estimated cost of $25,000.
On September 30, 1975, in one of his regular status reports, Forrest updates us on the mapping of the Big Horn Extension, stating: “Kimball started 200’ scale outcrop mapping of Nivloc shaft area and east. Interesting structural patterns, much minor veining. Should be completed this week. I mapped to south of Nivloc parallel structure ¼ mile S.E. of Nivloc extends 3,000’ 0 to 3’ wide but mostly covered may be of significance. Will test further.”
In our next Blog entry we will pick up the story again in Forrest’s October report as he reports that the drilling program is underway.
Kevin Hull
In 1970, Silver Ridge Mining Co., under the direction of W.T. Hudson, drove 415 metres of 2.75 x 2.75 metre decline down to the Nivloc Vein. The decline, constructed on a 10° grade, came to within approximately 265 metres of the 600 level workings at the Nivloc mine's northeast end. Silver Ridge's decline, starting on Sunshine Mining Company’s property, passed through their Big Horn Extension #1 claim back onto Sunshine’s Nivloc ground. The Silver Ridge Mining Company named the decline the “Silver Jack”, but it soon became known simply as “Hudson’s Decline”.
Hudson also constructed a drift into the footwall of the Nivloc Structure for approximately 213 metres. The drift commenced 350 metres from the entrance of the decline and was driven in a southwesterly direction to approximately 52 metres horizontally and 7.6 metres above the 600 level of the eastern end of the old Nivloc workings.
In March of 1974, Richard A. Forrest, Sunshine Mining’s Exploration Geologist, published an exhaustive report entitled Geology & Exploration of the Nivloc Mine, Esmeralda County, Nevada. In the report he refers to the Hudson’s Decline, stating that “the existence of such a well-placed decline on Sunshine's property will greatly facilitate future exploration.” Forrest, in a May 1974 memo to Manning W. Cox, Vice President of Exploration for Sunshine Mining, recommended that discussions be initiated with Hudson with respect to gaining use of the decline.
Hudson, proved to be a practical man, and on June 7, 1974, in a letter to Mr. Don C. Long, Chief Geologist of the Sunshine Mining Company, he said he was willing to enter into an agreement with Sunshine that would give them the use of his decline.
In his letter Hudson made the case for how valuable the decline would prove to be if the Nivloc Mine was brought back into production. He then went on to say that Silver Ridge was willing to enter into a lease agreement which would grant 70% to Sunshine and a 30% carried interest to Silver Ridge, providing Sunshine would start work on the Big Horn Extension property adjacent to the Nivloc within a reasonable time.
Although we do not have the letter from Mr. Long that precipitated Hudson’s response, we can surmise from Hudson’s comments that Long had requested that Sunshine’s exploration and development costs be covered by mining revenues before the 70/30 split came into effect. While saying that he understood the request he reminded Long that Silver Ridge had spent considerable funds 1 on the property over the past several years and counter proposed that Silver Ridge be permitted to share 10% of the cash flow during the period in which Sunshine recouped their costs.
The president of Silver Ridge went on in his letter to make his case for why he thought there should be another ore shoot along the extension of the Nivloc Vein similar to the four main shoots worked in the Nivloc Mine. Under Hudson’s direction, Silver Ridge put in a 26 metre drill hole along the hanging wall westward from the point of intersection of the Nivloc Vein extension (354 metres down the Decline from the portal), taking assays every 1.22 metres. The assays showed gold from 0.02 ounces to 0.055 ounces per ton and silver from 0.50 ounces to 1.15 ounces per ton. Hudson believed this was “an indication that an ore shoot could very well exist nearby.” This was the basis of his second condition of signing a lease agreement with Sunshine Mining for the Big Horn Extension; a work commitment from Sunshine that could lead “toward the possible discovery of another ore shoot.”
Richard. A. Forrest went on, in his May 1974 memo to the VP of Exploration for Sunshine Mining, to make a case for an underground drill program utilizing the Decline. Next week we will look at his rationale for a program and, as he was given the go-ahead for the drill program, the results he obtained.
Kevin Hull
1 The cost of driving the Hudson Decline:
|
Reedy Leasing & Development Company |
$117,689.52 |
|
Supplies |
2,369.81 |
|
Professional Services |
2,614.04 |
|
Telephone |
201.00 |
|
Misc. |
539.05 |
|
Hotel & Food |
1,008.31 |
|
Oil & Gas |
1,912.93 |
|
$122,334.66 |
Cost per foot for the 2,200 feet of Decline: $55.60
When we last looked at the Nivloc Mine it was the summer of 1943 and Desert Silver President Ira B. Joralemon had just announced that the mine would be shut down. As indicated previously, the reason for the shutdown was, essentially, that Joralemon had run out of easy to access ore on the 800 level of the East Orebody and was faced with an estimated 200 feet of drifting to find the continuation of the orebody. With the manpower shortages they were facing due to WWII, and the limited technology of the time, Joralemon determined that the only feasible course of action was to shutdown.
In 1944 a group of investors that included Felix Traynor (former Deputy Mine Inspector for Western Nevada), J.J. Clark, E. Murphy and M. W. Hayward secured a 10 year lease on the Nivloc. The agreement that they had was subsequently modified to allow for the formation of a new company which owned the mine in its entirety, including water rights and tailings. Bralorne, the owners of Desert Silver Inc., retained a 7% ownership of the new company.
The new owners did a small amount of localized mining, and according to Thomas J. Garrity (Chairman of the Board for Mid-Continent Mining) in 1969, Felix Traynor informed him personally that they had even managed to ship a few carloads of ore.
Reading from a 1948 report by James R. Wilson, a geologist working for Anaconda Mining Company, it would appear that the operators at that time were working on a very slim budget. In his words, “...at the time of the examination, the owners were mining on the 700 level using an air tugger to hoist from this to the 600 level. Lack of ladders prevented examination of workings below the 700 level. In general the ground stands well. Inaccessibility of portions of the extensive main levels is due principally to the robbing of chute gates which has allowed the drifts to fill with cave from the stopes, or to timber failure due to dry rot.”
From this report we see that the operators were working in only one small section of the mine and were not investing in remediation work beyond their immediate area of operation. Further, they were compromising other areas of the mine for the sake of what they were mining.
Mr. Wilson goes on, in his report, to offer his opinion regarding the structure of the Nivloc, saying that “If the most favorable horizon for extensive shearing and subsequent ore deposition required an alaskite-sediment contact, or a preponderance of the sedimentary rocks, then a similar relationship must exist at depth in order to anticipate new extensive ore shoots... in view of the observations in accessible workings, an environment of sedimentary rocks is required, then the similarities of the Nivloc geology to that of the adjacent Silver Peak area hold promise of duplicating a favorable rock environment in depth.” What the Anaconda geologist appears to be suggesting is that, based on the structure of the nearby Silver Peak mines, there is the possibility of a structure at depth that could duplicate the mined structure and host “new extensive ore shoots.”
Furthermore, in his summary, James Wilson says the “future of the mine is dependent upon the development of new oreshoots and the extension of known shoots. Too few geological data are at hand to predict conditions at depth, but based on available information, it does not appear unlikely that conditions favorable for the occurrence of other extensive ore shoots exist.” This hypothesis is one that IMMC will need to test by drilling deeper holes in future exploration programs.
It is fascinating that within the same decade that the mine was shutdown the Nivloc sees both limited mining and the continued interest of various parties. The interest we see here will be repeated a number of times before we catch up to what International Millennium Mining Corp is doing in 2012. Next week I will examine what was happening on the Big Horn property that extends the Nivloc property to the east. As it was not always held by the same owners as the Nivloc it has a separate and interesting history.
Kevin Hull
International Millennium Mining Corp. has announced results from its highly anticipated NI 43-101 report. The news release is available on the Company’s website at: http://www.immc.ca/index.php/news/news-2012/173-international-millennium-mining-corp-announces-initial-inferred-mineral-resource-estimate-at-its-nivloc,-nevada-project. By August 31st the report will be posted to both SEDAR (http://sedar.com/search/search_form_pc_en.htm) and the Company web site (www.immc.ca).
Before I press on to discuss the intent and implications of a 43-101 report, I would first like to ensure that investors and interested parties understand what this report actually is. The mining industry, like most others, usually assumes that visitors understand its terminology and underlying technical references just as well as the industry veterans do. I continually come up against terms and references that I’m unfamiliar with, so I tend to be very sympathetic to those trying to make sense of the industry jargon and am happy to provide an explanation.
As described by Wikipedia at http://en.wikipedia.org/wiki/National_Instrument_43-101 a National Instrument 43-101 (the "NI 43-101" or the "NI") is a set of standards used for the public disclosure of information relating to mineral properties in Canada. The NI is a strict guideline for how public companies can disclose scientific and technical information about mineral projects on bourses (exchanges) supervised by the Canadian Securities Administrators. The guidelines include a mineral resource classification scheme that must be used by Canadian listed companies when reporting mineral resources or mineral reserves. For those interested in more late night reading, the Canadian Institute of Mining, Metallurgy and Petroleum’s standards can be found at: http://web.cim.org/UserFiles/File/CIM_Standards_on_Mineral_Resources_Reserves_2000.pdf
There are three classifications of reserves/resources under the NI 43-101 guidelines: Proven & Probable (PP) Mineral Reserves, Measured & Indicated (MI) Mineral Resources, and Inferred (I) Mineral Resources. You will note that only in the Proven & Probable classification do we refer to mineral reserves. A mineral (or ore) reserve is legally, economically and technically feasible to extract, whereas with a mineral resource we say it is potentially valuable and that reasonable prospects exist for eventual economic extraction.
In the case of the news release announcing International Millennium Mining Corp.’s 43-101 mineral resource estimate at its Nivloc, Nevada Project, we are talking about an Inferred Mineral Resource. To bring the resource estimate up to the Measured & Indicated category, the Company is required to complete more drilling with tighter drill spacing (in-fill drilling). There is no specific drill spacing that defines reserves – it depends partly on the geological environment and partly on the physical conditions at the deposit being explored. In this instance, as IMMC’s geologists believe we are looking at something more than a narrow vein system, the report recommends the drilling of no less than an additional 11 holes, to bring the spacing down to 30m (100’). On another property, with a strict vein system, for example, the spacing would need to be much tighter yet.
In addition to the Company’s plan to conduct infill drilling, plans are in place to test the extension of the zone defined by the 2011 drill program with at least 5 holes. As IMMC’s news release indicates, the structure has been traced at surface and in old development drifts for a distance in excess of 2,000 metres and the 5 holes that the Company would like to drill would test to see if the structure continues to host mineralization beyond the currently tested zone.
It is interesting to note that the geologic system at the Nivloc is epithermal in nature. This is intriguing because epithermal systems commonly pinch out and then swell again at depth, usually becoming base metals rich in their lower extremities. Historically, the Nivloc was only worked to a depth of 330m (1,100 feet), so there is potential for more exploration at depth on this property as well.
When considering the potential value of the Nivloc there are two very significant things I would urge you to keep in mind. The first is that the report covers only 365 metres of a structure that has been traced for a distance of 2,000 metres and is still open in both directions. The second is that the Nivloc is in a very advantageous situation in almost every respect pertaining to mining. Electricity, transportation, water, human resources, political stability and existing mine infrastructure (including an almost complete decline) are all ideal if a mining operation was to go forward here.
Please refer to the Corporate Blog (http://www.immc.ca/index.php/blog) for a history of the Nivloc mine beginning in 1937.
Kevin Hull
Looking back through the reports from Desert Silver company President, Ira B. Joralemon, from the last quarter of 1937 to the 2nd quarter of 1943, it is easy to see that the decision to shut-down the Nivloc mine, as detailed in the my previous Blog, while beyond the control of Joralemon, was inevitable.
We saw the mine begin with great promise in 1937 and saw Joralemon’s anticipation of the future success of the mine, when the East orebody was discovered in the first quarter of 1942. However, even as news of the previously unknown orebody was being greeted with excitement the negative impact of WWII was being felt.
We first hear of labour concerns in the 2nd quarter report of 1941, when Joralemon states, “...good miners however, are becoming harder to find because of opportunities to work at high wages in defense industries.” From that point forward we saw the labour situation deteriorate further with every report. With a shortage of workers, particularly experienced ones, and mining technology that limited exploration to very labour intensive and expensive drifting, it was only a matter of time before the combination would prove the Company’s undoing.
With vein mining in fault zones there are invariably times when the vein must be relocated, as shifts in the fault naturally displace the vein. Today, geologists utilize underground drilling and geophysics to ascertain the location of a faulted vein. Having located the vein they can then use modern equipment to drift to the new location at a faster rate and with fewer workers than the Desert Silver Mine could in 1943.
Furthermore, drilling completed by International Millennium Mining (IMMC) in 2011 indicates that the Nivloc Mine is actually a parallel vein structure, as described in IMMC’s February 23, 2012 news release. In Joralemon’s day such a determination could only be made by speculative drifting, something Joralemon simply was not in a position to undertake after losing the East orebody, as indicated in an October 1943 Inferred Resources document penned by Wilson D. Michell, the mine’s Chief Geologist. In his document Michell says “In general, the entire East End of the mine-- i.e., extension of 600 E, 700 E, and 800 E – has the best long-term possibilities. However, 200 ft. or more of drifting in barren material on all these levels [600, 700 and 800] may be necessary before another ore body is encountered.”
Had mine operations not been undermined by the severe labour shortage, the Company may have been able to gamble and push an exploration drift through barren rock while the East orebody was still being exploited and the resultant profits were covering the exploration costs. After all, this was exactly how the East orebody was discovered to begin with: while the West orebody was still being exploited the Company drifted to the east to explore for new ore to exploit. However, circumstances outside of Jeralemon’s control dictated that this plan would not be fulfilled by Desert Silver.
To build on the work completed by Desert Silver, IMMC has focused its efforts on confirming the mineralization outlined in past exploration programs and in delineating mineralized zones in close proximity to the Desert Silver’s historic workings, as summarized in our brochure. The Company’s 2011 drill program tested an area to the west, between two areas mined by Desert Silver and discovered ore in every drill hole but one, again demonstrating that modern drilling technology makes the Nivloc exploration a whole new game. The Company intends to conduct in-fill drilling in 2012 to build on the work of the 2011 drill program.
The history of the Nivloc Mine does not end with the shut-down of 1943. The mine continued to be the subject exploration and preliminary feasibility studies, and even minor ore extraction, from 1947 through to 1984. In the weeks to come I will follow the mine through the years, examining the reasons why so many geologists and companies have come back to this intriguing silver/gold project.
Kevin Hull
The optimism reflected in the previous quarter’s report by Desert Silver President Ira B. Joralemon makes the 2nd quarter report for 1943 even more shocking; he is shutting down the mine! We have seen him come close a number of times in the past year, as his workforce has shrunk and supplies have been increasingly difficult to come by, but now things have reached the breaking point.
Joralemon ended his last report by saying the mine was adding slightly to the labour force, that they were able to source supplies and, referring to the ore body encountered on the 800 level, “this new ore was found just in time to save the Desert Silver enterprise.”
But regrettably, the positive outlook on the labour front was temporary and in this second quarter he finds himself down to just 40 workers in the mine. He also finds that, even though he is now able to source them, the mine and mill supplies are prohibitively expensive. But perhaps more significantly, the diminished workforce has exacerbated another issue; the orebody on the 800 level is fractured by intrusions of alaskite, the material that has formed the footwall for much of the mined veins. Under normal circumstances Joralemon could push his 800 drift through the fractures and extract enough ore to keep the mine going, however he lacks both the workers and the technology to make it economically feasible. Furthermore, because the war has forced him to abandon other development work he does not have a fallback plan to find a new source of ore within the mine. Joralemon reluctantly informs his shareholders that, “after consulting with the Directors and others interested it seems best to shut the mine down as soon as the small remnants of good ore are exhausted...”
Nivloc Mine: First Quarter and Second Quarter of 1943
|
Tonnage Treated |
1st Quarter 1943 |
2nd Quarter 1943 |
|
|
7,341 |
10,379 |
||
|
Grade (oz) |
Silver |
13.49 |
8.50 |
|
Gold |
0.046 |
0.044 |
|
|
Recovery (%) |
Silver |
91.09 |
90.06 |
|
Gold |
93.41 |
93.51 |
|
|
Production (oz) |
Silver |
90,177 |
79,465 |
|
Gold |
312 |
423 |
|
|
Development (ft) |
605 |
432 |
|
|
Operating Profit (Before interest, depr. depl. and amort.) |
$9,376.25 |
$11,418.66 |
|
|
Excess Current Assets over current Liabilities at End (Exclusive of notes and interest) |
$66,241.61 |
$52,265.26 |
|
The loss for the quarter was mitigated by processing some of the lower grade dump ore along with the higher grade 800 level East ore. This explains the increased tonnage and decreased grade for the quarter. Joralemon estimates that 10,000 to 15,000 tons of 13 oz. ore remains in the 800 level, but that it cannot be accessed economically given his current workforce. He also reiterates that 35,000 tons of lower grade 10 oz. ore still remains in the mine, but that it is essentially worthless when the labour situation and price of silver are taken into consideration.
The Company feels that there is a chance that future silver prices may make the remaining ore valuable, and that more ore may be found, but that the cost of maintaining the mine and mill in hopes of such a future development is prohibitive. Joralemon’s plan is to sell all the supplies and equipment while the war continues, as it provides a better market for the assets. He will then liquidate the company, setting a small fund aside for paying out taxes and maintaining the claims until after the war. He hopes that when the war is over he will be able to sell the claims for a nominal amount.
Showing a personal side, the President of Desert Silver negotiates a deal with the Metals Reserve Company, whereby Desert Silver is appointed as their agent in the development of the Hall Molybdenum property, just 24 miles north of Tonopah, Nevada. Since the management fee is very small it appears his motivation for this arrangement is to gain work for key staff members, whom he appreciates for the hard work they put in while the mine operated without a full complement.
In the next Blog posting we will look at Joralemon’s final quarterly report as he informs his shareholders on the details of the mine closing. I will also offer some thoughts as to how the technology of today would have changed the outlook for the Nivloc Mine.
Kevin Hull
Hoping the labour shortage experience in the past few quarters would get no worse, Ira B. Joralemon, President of Desert Silver, was shocked by a dictate from the U.S. Employment Service which ruled that not only would the Company not receive any more workers from them, but the Company was henceforth prohibited from sourcing workers from anywhere else. However, within a few days, as he is still digesting this news, the Employment Service reverses their stance under a new ruling, dated March 16, 1943, which indicated that silver mines have the same priority in obtaining workers as mines which produce copper, zinc or other strategic metals. One can only imagine the duress Joralemon is under during this time as he tells his shareholders that in early March he was almost forced to shut down the mine.
Until this favorable ruling the mine workforce had been shrinking rapidly; however, subsequent to it there is a slight recovery. In this report Joralemon expresses his hope “that there will be no other unfortunate episodes of this sort.”
Also on a positive note, the 1st quarter report informs us that adequate supplies, for the present scale of operation, which is approximately ½ of normal capacity, are now being obtained due to the priority given to silver mines by the War Production Board. As Joralemon says, “it seems that the importance of silver in connection with the war effort is becoming greater.”
At the beginning of this 1st quarter of 1943 the excellent ore on the 600 & 700 levels in the East orebody is down to approximately 10,000 tons. Facing the possibility of running out of economically viable ore entirely, Joralemon decides it is imperative to develop new sources of higher grade ore as quickly as possible. So, given the scarcity of labour, the miners are shifted from production to development as they drift on the 800 level toward the downward extension of the East orebody.
The result of the reallocation of production resources and the corresponding increase in development expense is a production tonnage so small that losses are recorded in both January and March and only a small profit is achieved in February. Joralemon goes further in this report and gives his shareholders a ‘heads up’ warning that April will also see a small loss.
The following table gives production figures, earnings and net working capital for the past two quarters:
Nivloc Mine: Fourth Quarter of 1942 & First Quarter of 1943
|
Tonnage Treated |
4th Quarter 1942 |
1st Quarter 1943 |
|
|
8,953 |
7,341 |
||
|
Grade (oz) |
Silver |
15.30 |
13.49 |
|
Gold |
0.042 |
0.046 |
|
|
Recovery (%) |
Silver |
92.38 |
91.09 |
|
Gold |
92.81 |
93.41 |
|
|
Production (oz) |
Silver |
126,539 |
90,177 |
|
Gold |
347 |
312 |
|
|
Development (ft) |
343 |
605 |
|
|
Operating Profit (Before interest, depr. depl. and amort.) |
$12,139.46 |
$9,376.25 |
|
|
Excess Current Assets over current Liabilities at End (Exclusive of notes and interest) |
$84,991.13 |
$66,241.61 |
|
Fortunately for Desert Silver, the investment in development pays off: the East orebody is encountered on the 800 level by the end of the quarter, a few feet sooner than expected. As a bonus, the grade first encountered is even better than that in the same part of the orebody on the 700 level. Joralemon predicts that the new find, if it continues to develop as it did on the 600 and 700 levels, will supply enough higher grade ore to return a profit for the 11 months following April’s small loss. In fact, he goes on to say “there is every reason to expect that after May 1st Desert Silver can make an operating profit for at least a year, and possibly much more.”
The Company plans to revert back to minimal development while mining the new 800 level, focusing their limited development resources on the 900 level of the East orebody and, subsequently, a search for new orebodies. While Joralemon predicts that that 800 level will be at least as large as the 700 level, he says it is too soon to offer an estimate of reserves from this orebody. He also reminds us that the mine has 35,000 tons of lower grade ore, but reiterates that this ore will only be economical if the mine can return to full production.
Regarding the discovery of ore on the 800 level of the East orebody, in a quote toward the end of his report, the Company President sums up the situation he was facing during this quarter, “this new ore was found just in time to save the Desert Silver enterprise.”
Kevin Hull
When we last heard from the Desert Silver President, Ira B. Joralemon, he had applied to the War Production Board for a ruling as to whether the industry-wide shutdown order the Board had issued should apply to silver producers, and specifically to Desert Silver.
Joralemon begins his 4th quarter report with the news that his challenge to the ruling has been successful! He tells his shareholders that, “after a period of uncertainty following Limitation Order L-208 of the War Production Board, which required the shutdown of gold mines and other mines that do not have Priority Numbers under Order P-56, Desert Silver, Inc., was assigned a number under that order.”
This news means that silver has been accepted as a strategic metal, and specifically, that Desert Silver can continue to operate, purchase supplies and even hire workers through the U.S. Employment Service.
Well, that was the good news. The bad news is that the Priority Number was not given in time and many employees have already left the mine, resulting in a sharp drop in production. Nevertheless, Joralemon tells us that, due to the rich ore they have been mining and curtailment of development, a small profit was made in the quarter.
The following table gives production figures, earnings and net working capital for the past two quarters:
Nivloc Mine: Third Quarter & Fourth Quarter of 1942
|
Tonnage Treated |
3rd Quarter 1942 |
4th Quarter 1942 |
|
|
12,114 |
8,953 |
||
|
Grade (oz) |
Silver |
13.67 |
15.30 |
|
Gold |
0.036 |
0.042 |
|
|
Recovery (%) |
Silver |
91.21 |
92.38 |
|
Gold |
91.57 |
92.81 |
|
|
Production (oz) |
Silver |
151,076 |
126,539 |
|
Gold |
395 |
347 |
|
|
Development (ft) |
216 |
343 |
|
|
Operating Profit (Before interest, depr. depl. and amort.) |
$14,629.27 |
$12,139.46 |
|
|
Excess Current Assets over current Liabilities at End (Exclusive of notes and interest) |
$143,407.14 |
$84,991.13 |
|
At this point in the life of the mine, Desert Silver has built up a considerable cash reserve, and according to Joralemon, the reserve is greater than what is necessary to carry the company through a shutdown. Furthermore, the company was able to pay down outstanding notes in the amount of $69,299.62, leaving only $180,000 in outstanding notes, while the total value of mine supplies, plant and equipment, and cash and bullion in transit is calculated at $120,000. It is telling that Joralemon is stating these things in his report, as it further suggests he has resigned himself to an inevitable shutdown, is calculating the effect of a shutdown on the mine and is preparing company shareholders for such an event.
In this vein he goes on to say that, although he can now draw employees from the U.S. Employment Service, the copper mines take priority, and even they are not able to source all of their labour requirements through the Service. Therefore, Joralemon has to look to those few workers who are not registered with the Employment Service to bolster his labour force. He reports that he has managed to hire a few from this group, but, while he has brought the workforce above the October minimum, the mine still has too few workers to carry on the development necessary to maintain ore reserves at acceptable levels.
Pretty much all the ore mined in this quarter is from the East orebody, which has seen very limited development on the 600 and 700 levels and is, accordingly, being depleted. It is interesting to note that the 600 level has now passed into a new claim group called the Big Horn Extension Group, which is under option by Desert Silver for a whopping $150 per month. In this extension the ore narrows, but in the 50 feet of drift accomplished to this point, the grade remains good.
Due to limited development, reserves of the richer ore have shrunk to approximately 10,000 tons, averaging 14 oz. of silver per ton. It is hoped that when the 800 level reaches the East orebody those reserves will increase. Additionally, there are approximately 35,000 tons of reserves grading 10 oz. per ton, but unfortunately, with the labour shortage it is not possible to mine enough volume to make the low grade profitable.
The company President, looking to the future and factoring the lack of development under the current labour situation, finishes his report with the following statement, “unless the labor shortage becomes less acute, which seems unlikely, even the enthusiastic cooperation of all the staff and employees at Nivloc cannot prevent a shut down.”
Kevin Hull
