Deciphering drill hole results from news releases is not always as straightforward as it should be. Even for those of us within the minerals exploration industry the promotion of drill holes by marketers can make the interpretation tricky. The odds are slanted against the non-technical speculator. Even the brightest laypersons have a hard time appreciating the subtle aspects of drill results and their implications for finding and defining an economic ore body. However, there are a few tricks that can give you a decided advantage.

There is virtually universal agreement among the exploration elites that the best way to "trash and burn” a perfectly good exploration property is to drill it (that's why it's usually better to let some other company pay for the drilling costs). Of course, drilling is the inevitable test of an exploration concept and the reason we get such wild share price swings when drill results are released.

Now, the actual process behind selecting drill targets goes something like this: First all the available scientific data (geologic, geochemical and geophysical) is meticulously considered and judged by the geologist on the ground. His or her well reasoned opinion, steeped in sound scientific analysis and grog, is then hurried off to the head office. Here the high paid executives, who have generally never set foot on the mineral property, put the final "this is the place to drill” on a map. From there on the drilling and speculating begin. In due course, the drill hole assays come in, and the much anticipated news release comes out in which we gamblers hear of the "spectacular" drill holes measuring x grams of gold over y meters and so on.

With news release in hand it then falls to us, the gamblers, to make a "thumbs up or down” call on what amounts to very limited information. What we hope to do is get a first pass sense as to the ultimate economics of a mineral system. We need to do this long before the engineers and bankers have a chance to plug the numbers into their spreadsheets. To get there, we need to evaluate all the available data ("all" being the operative word here). Drill holes provide the first look into what lies below the earth's surface. This all-important third dimension (depth) of a mineralized system is where the tonnes and value lies.

Reputedly, a collection of spectacular holes will eventually make an economic deposit, or at least suggest to someone, somewhere, somehow, that one is in the making. But how can the average person, sitting at the exploration roulette table, know the difference between a good hole and a bad hole? All grams per tonne over some number of meters are not equivalent. Although size and grade do matter in evaluating drill holes, context is ultimately the critical factor. Geologic and mineral context is the hardest piece of data to obtain from a news release, particularly for a non-technical person hoping to gain a strategic investment advantage. Compounding this inherent handicap, and as unbelievable as it may seem, the objective of a news release may not be to actually inform and enlighten, but to baffle and bamboozle, or, at a minimum, put the results in the best possible light.

Fortunately, there are a number of analytical filters investors can use as a first pass discriminator when investigating a news release. First and foremost: Is data missing or ignored?

All previous sample and drill information should be available, or at a minimum referenced, with the appropriate Canadian National Instrument 43-101 disclaimer. Quite often a company will go back onto a property and slightly offset a previous spectacular hole to "confirm" the spectacular results that may have been "confirmed" at least twice before (with very vague reference, if any, to previous holes). Now maybe I'm missing something here—and please help me if I am—but quite often the problem in earlier rounds of drilling wasn't the spectacular holes, but all the other dead holes. Wouldn't it make more sense to re-drill the dead holes in the hope of being surprised by spectacular results? Regardless, aren't the previous drill holes germane to our evaluation?

Don't forget, it is your money they are asking you to invest in their company. Call and ask the company: "How many times has this particular property been cycled through the Vancouver hype machine?" Don't rely on the young and (oftentimes) underpaid investor relations person to know all the answers either. Get the company President or Vice President of Exploration on the line if need be. If the company is legitimate they should be more than happy to talk to someone interested in their activities.

How does the company present the project results?

Poor or incomplete presentation and interpretation of the results generally doesn't bode well for a project or company. If a company is particularly proud of a property there should be ample information on their website and in press releases to show off tables, maps, sections with drill intercepts, and interpretations. Each news release should contain enough information in the form of maps, sample locations, and some interpretation to get you going in the evaluation process. Again, we are all too often presented with "significant" results from a few holes without mention of the other holes, which presumably missed. You have to wonder if hole number 3 and hole number 17 were spectacular, what happened to the rest? Worse, without a location map and sections, we have no way of telling if the holes are meters or hundreds of meters apart. There is no excuse for not having this basic information available. A company geologist, forlornly sitting the drill-rig in the cold and dark, generally has plenty of time to plot drill progress and plan his next move whilst the driller is committing blasphemy and throwing tools at his dog (or at our much maligned geologist).

Obviously this first-pass screen isn't foolproof and there will be numerous legitimate reasons why certain data isn't presented or referenced, and within that void some good "buys" may exist. There are also many other factors that bring context to drill hole interpretations (e.g. grade, thickness, depth, nugget effect, metallurgy, location, strip ratio, infrastructure, etc.) that render blanket generalizations dubious and risky.

However, I guarantee you that, on the whole, missing or poorly presented data augur ill for the prospect and company. Always look for context and supporting data. If it's clear that the company is competent and quite proud of its results, there should be ample documentation. If, however, the data is incomplete, missing information, or very generalized, you have to wonder why. Not that said company is hiding anything, but how are you expected to know the difference without the facts? After all, it's in their best interest to convince you to buy, right?

No mining or exploration company ever makes into our Exploration Insights select portfolio without me thoroughly reviewing and evaluating the drill results. I go through the drill assays, cross sections, and, more often than not, visit the property before constructing an economic mine model. Recognizing the eventual economic viability of an exploration property long before the crowd is our goal.

That's the way I see it.

Brent Cook
explorationinsights.com