If investors do not know how to interpret technical information, then all the disclosure in the world will not help them. It is important to notice that each mineral project is different, and what is relevant to one project may be of no significance to another. It is also important to realize that mining companies promote their projects by presenting them in the best possible light. As a consequence, investors have to learn to interpret the technical information which is contained in news releases, such as drill results and reserve and resource calculations, for them to fully understand their economic significance.

Drill Results
Drill rigs are not called "truth machines" for nothing. No quantity of promotion or favorable press will prevent companies from being affected by negative assay results when good ones were expected. A selloff takes place immediately, with sophisticated players leading the way. That is why it is important for investors to understand the economic significance of drilling results, relative to the nature of the deposit being explored and where it is located. You do not want to be the one who is buying when others are selling, and vice versa.

The first step to analyzing these results is to understand what grades will be economic in a typical mining operation. In most cases, large deposits capable of being mined by open pit will have lower cutoff grades than will the deposits of the same metal that have to be mined by methods which are underground. For example, the Dome gold mine in northern Ontario operates an open pit with reserves grading 2.3 grams per tonne; its underground reserves grade 4.3 grams.

A30-metre drill intersection grading 1 gram gold per tonne, starting at 5 metres below surface, would be of economic interest if it originated from a road-accessible property in Nevada. The state has a large amount of low-grade deposits mined by less expensive open-pit methods, whose gold is recovered by low-cost heap leaching. However, this same drill intersection would not attract much interest on a property in remote northwestern British Columbia owing to a lack of roads and other infrastructure.

A drill intersection showing 0.4% copper would be exciting in the porphyry-copper district of British Columbia, due to the fact that it approaches the typical grade of the large area of open-pit mines. In the volcanic belts of northern Ontario, where smaller, higher-grade base metal mines are the norm, the same result would only merit more work.

Complex metallurgy deposits will be more expensive to mill, so cutoff grades rise accordingly. Off-site costs such as transportation are a major component of total production expenses. This is especially true for gold and base metal deposits that produce concentrates, which have to be shipped to a smelter for processing. Energy costs have a strong influence on a potential operation's economics, particularly when a mill has to be built. As a general rule, a mineral deposit in an zone where access is poor and costs are high will be less probable to make a mine than an equivalent deposit in a region which is more developed.

The length of drill intersections is also important, since these give an indication of the kind of mineralization present. Low-grade deposits must be sufficiently large for bulk mining. That means low-grade drill intersections must be long – on the order of tens to hundreds of meters — to show economic potential.

On the other hand, narrow intersections must show high grades. The width of an area is of much importance to the feasibility of mining operations, and narrow areas may simply not be economic to mine. A mineralizad area which is only a fraction of a metre wide could not be mined without also extracting large quantities of wall rock, thereby diluting the grade.

Core lengths quoted in press releases can also be misleading. Drill holes that cross an area of mineralization at almost a right angle give a better picture of the true width of an area. Holes that are drilled at angles which are shallower to the mineralized area will produce intersections with much greater lengths than the true width of the mineralization.

Always remember that a hole which is drilled to a great depth from surface will very often be drilled at a very steep angle, such that if it intersects nearly vertical structures at depth, the true width will be much less than the length of the drill intersection.

There is always the possibility that the company has drilled down the dip or plunge of a mineralized area instead of across it. This can occur, on occasion, in the early stages of an exploration project when the structure which is being explored is still poorly understood. A hole drilled in this way will provide no information about the width of the area, but still the mineralized intersections may run to astounding, but meaningless, lengths.

Finally, it is important to take note that narrow areas of high-grade mineralization may "carry" an intersection. An area only a meter wide can show a grade of 15% zinc, but a company may average that one-meter intersection with the almost barren two meters to each side of it, reporting five meters which grade 3% zinc.

In summary, it is important to take both grade and width into consideration when assessing exploration results, and to remember that drill results obtained at one property cannot be compared to the results from another, unless both properties are in the same geological region and have similar geological and metallurgical characteristics. To assess a drill result, consider the typical mining grade of similar deposits in the same location.