Do Reporting Standards for High-Grade Gold Deposits Need Changing
Lately, I’ve been spending a fair amount of time on a chat site at CHAT.CEO.CA, launched by the folks over at CEO.CA. I really enjoy the conversation on there, plenty of sharp folks and industry experts hang out there, and there are some excellent chats going on about the mining stocks, commodities and the markets.
Pat Bolland and I had Tommy Humphreys, Founder, CEO.CA on a show when CHAT.CEO.CA had just been launched. It is quickly becoming an important tool for how I follow the markets, I’m having a blast as a contributor, and encourage others to check it out.
Earlier today, I had a comment that I wanted to also share with visitors AllanBarryReports.com. As many of my readers and folks at CHAT.CEO.CA know, I’m very bullish on Rubicon Minerals (RMX.T), and I’m also a shareholder of the stock. This comment expresses many of the reasons I’m so bullish on the company and it is my #1 gold stock pick. Brown dot, is the anonymous person I was having a conversation with about Rubicon.
Brown dot, and $RMX has the potential for some very big surprises to the upside. Contrary to what Brent Cook said yesterday when I asked him about the reporting standards that I think are a joke when it comes to trying to come up with a resource on a high-grade gold deposit. Rubicon will prove this out when they ramp up production. The problem is these high-grade deposits are steeply dipping veins and narrow. When it comes to drilling these things off, to meet current reporting standards, requires very tight drilling. Like 10 metre centers. Which isn’t a big deal when something is flat, thick and close to surface, extremely expensive when vertical and narrow with high-grade to bonanza grade. I disagree with Brent when it comes to the reporting standards for high-grade, he thinks they are fine, I think they cause companies to estimate things on a very conservative basis. I agree they can be modeled, but the cost is way too extreme and really not necessary to try to meet the reporting standards in order to put out a resource estimate. If I was advising a company with a high-grade gold deposit, I would tell them not to be in any hurry to produce a resource, just keep drilling the high-grade and make it bigger. Give out the details and the majors can crunch the numbers. After Rubicon and Pretium put out resource estimates, Brent Cook slammed them, and Rubicon is about to prove him wrong, and after he slammed Pretium for the same issues, the stock doubled in a very tough market. Rubicon is about to become a rock-star in the gold business, with their lowest cost production numbers and plenty of high-grade.
Which wasn’t helped by needing to fund the mine construction at valuation that was hammered after the resource came out. The truth machine told everybody the high-grade was there, and that there was lots of it, now the bigger truth machine is about to show the difference between a conservative resource estimate using current reporting standards and reality.
As always, remember, my comments are for information purposes only, it is important for you to do your homework and speak with your financial advisors before making any investment decisions.
All the best,
Allan Barry Laboucan