PROJECT UPDATE: Barkerville Revises Cow Mountain Resource

The Vancouver-based company announced a revised resource estimate from the Cow Mountain portion of its Cariboo gold project in northern British Columbia, Canada.

Junior gold investors will recall that Barkerville generated considerable excitement back in June 2012, when the company said its Cow Mountain property contained 10.626 million contained ounces of gold in the indicated category. The news doubled Barkerville’s stock price from 81 cents to $1.67, but it wasn’t long before some observers questioned the numbers, since they differed considerably from previous historical drilling estimates.

That caught the attention of the BC Securities Commission, which upon examination of the technical report, “identified a number of disclosure and filing issues.” The commission then issued a cease trade order, to be lifted when the company files an NI-43101 compliant report that is acceptable to the regulator. That cease trade order remains in effect.

In its news release, Barkerville says it retained two consulting firms — APEX and Snowden — along with the original consulting geologist on the project, Peter George of Geoex Limited, to address disclosure issues raised by the BCSC.

Its new resource estimate shows 17.7 million tonnes of gold ore grading 2.00 parts per million (2 grams per tonne), or contained gold of 1.04 million ounces in the measured and indicated categories.

To determine whether the discovery is economic to mine, Barkerville said it engaged Snowden to complete a pit optimization exercise using, among other criteria, a gold price of US$1,520 an ounce and a a cutoff grade of 0.12 oz/tonne. Snowden found that the exercise “has not resulted in an engineered and operational open-pit mine design,” but that “apart from a small portion of the mineralization that falls below the pit shells prepared, the majority of the resource block model reports from within the pit shell.”

Snowden also indicated it it too early to determine whether the deposit is economic, “since the exercise is not at the level of a preliminary economic assessment and does not conform to the studies required for a preliminary economic assessment.”

Barkerville addressed the discrepancies between the earlier resource estimate by Geoex and the new one by Snowden, saying that a review of the appropriateness of the geology and style of modelling found that:

• Attempts at building a constrained geological model were found not to constrain the mineralization appropriately and were discarded in favour of a model based on an estimate of the proportion of mineralized material in each block.
• Sampling of drill intervals that had previously not been sampled indicated gold mineralization in areas that would have previously been considered barren (although these were still dealt with by adding a default grade of 0.003 ppm Au prior to grade estimation).
• Compositing needed to be at a longer interval. Five feet was chosen for the composite length as it represents the median of the sample intervals in the mineralized zone.
• Statistics of the mineralization showed a strongly skewed distribution. In this instance, the use of capping to control high grades using linear methods in grade estimation (such as inverse distance weighting or ordinary kriging) can either over-estimate or under-estimate the grade significantly, with the choice of capping being a relatively arbitrary decision.

Read the full Barkerville press release here

Read Barkerville’s June 2012 press release here

Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article. 

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