A LITTLE LESS GOLDEN
Barkerville’s mountain of gold turns out to be a molehill.
Frank Callaghan admits it: telling investors his company held 10.6 million ounces of contained gold last year was a big mistake.
“I’ve learned that lesson. Not a nice way to learn it by the way, but I did,” the chief executive of Barkerville Gold Mines Ltd. said.
Almost a year ago, Barkerville, a small junior mining company, stunned the mining community by stating its Cow Mountain project in British Columbia had an indicated resource of 10.6 million ounces of gold, and could hold up to 90 million ounces. Barkerville shares soared, even though numerous experts thought the numbers were too good to be true.
One of the biggest skeptics was the British Columbia Securities Commission (BCSC). The regulator promptly cease traded the stock and voiced many concerns about how the data were compiled.
That put pressure on both Barkerville and Peter George, the independent geologist who calculated the resource. To address the BCSC’s concerns, Barkerville hired two consulting firms (Snowden Mining Industry Consultants and Apex Geoscience) to work with Mr. George on an updated resource estimate.
It took a long time, but they have finally finished their work. The new numbers are significantly lower, but in Mr. Callaghan’s view they prove Mr. George was on the right track.
One of the BCSC’s biggest problems with the stated 10.6 million ounces was that it was an “unconstrained” resource, meaning it incorporated drill holes well outside of the core deposit.
That is not the accepted way to report a mineral resource estimate in Canada, and Mr. Callaghan acknowledged the error.
Snowden and Apex calculated Barkerville’s resource in a “constrained” model and came up with an indicated re- source of one million ounces of gold, along with an inferred resource of four million ounces.
Mr. George’s original report also included a “constrained” resource; in that scenario, he added up 4.2 million indicated ounces and 3.2 million inferred ounces.
One obvious difference in those totals is that Snowden and Apex moved many ounces from the “indicated” category to the less certain “inferred” category.
They took a more cautious approach than Mr. George and decided there was not enough quality assurance on holes drilled before 2009 to include them. That led to a lower overall ounce total as well.
Mr. Callaghan said the numbers are not that different in the two “constrained” estimates, and those differences can be explained by the approaches of the different geologists.
He is confident the Snowden and Apex numbers still prove Cow Mountain could become a great gold mine, and hopes the BCSC will lift the long-standing cease trade order in the next day or two.
He also maintained Mr. George did a good job — but acknowledged he probably could have done a better one.
“There’s some exciting news that will keep coming out here.
“And I believe, when all’s said and done, that Peter George’s original numbers will get vindicated one day. Because he’s probably right,” Mr. Callaghan said.