yesterday both silver standard and esperanza silver issued news releases about their san luis joint venture project. while san luis is vital to epz as it is their most advanced project, it is also important to sso.

the gist of the news release is that both epz and sso are not satisfied with the resource estimate issued for san luis on november 15. both companies believe it understates the resource, and it lists kenneth mcnaughton as the qualified person responsible for san luis.

i found that confusing as he is a geologist and vp of silver standard, but i got some clarification from investor relations. while mcnaughton is the qualified person, sso hired an independent consultant to do the resource estimate, in accordance with national instrument 43-101, which states that the estimate has to be done independently.

since both companies believe the estimate was insufficient, it will be redone, and this will probably take a few months. the drilling is already starting and the tunnelling should begin soon. they are not disclosing which technical details they have taken issue with, but i would not be surprised if next resource estimate is higher. for one thing, there will be more drill holes to consider, and the underground work should give them a better understanding of the geology.

this helps to clear up, at least for me, esperanza's recent poor performance. since that estimate came out in november ("only" 400,000 oz. gold) epz stock has fallen sharply, losing more than 50% of its value. it seems everyone was disappointed with that resource estimate, and a lot of things would fall into place if it turns out the november estimate was way off.

i don't make any preductions on what the new estimate will be, except that it will be larger. if you feel lucky, epz looks very cheap, but as always, the drill will tell the story.