Tuesday, November 9, 2010

Great Basin Gold's (GBG) Bonanza Grades - A Closer Look

Great Basin Gold's (GBG) Bonanza Grades - A Closer Look
November 9th, 2010

Great Basin announced the highest "Bonanza Grades" of Gold found, 2560 ounces per ton,  that the author has ever encountered this morning:
VANCOUVER, Nov. 9 /CNW/ - Great Basin Gold Ltd. ("Great Basin" or the "Company"), (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces that trial mining in the Blanket Zone above the Main Clementine vein (number sign)18 at its Hollister project in Nevada has encountered bonanza grades of gold and silver. The Company cautions investors and readers that we are making this announcement out of an abundance of concern over interpretation of this information and, as the information may be known locally in the region of the mine site, the Company felt obligated to make it public.
Channel sampling carried out in conjunction with trial mining in the Blanket Zone has encountered the bonanza grades over a strike distance of 170 feet (57 meters).Channel samples taken every 10 feet (3 meters) gave values ranging from a low of 1.5 oz/ton(52.0g/t) Au and 3.2 oz/ton(111.9 g/t) Ag to a high of 2,560.4 oz/ton (88,845.9 g/t) Au and 1,829.8 oz/ton (63,494.1 g/t) Ag over channel widths from 0.3 to 2 feet wide. The current stope is continuously mineralized along its 180-foot (60-meter) length. Diluted over 3.5 feet (the width of the stope development), the average sample values were 66.4 oz/ton (2,404 g/t) Au and 78.5oz/ton (2,723.9 g/t) Ag. Muck piles have also been sampled; grabs are taken over the pile to collect as representative a sample as possible (between 10-15 lb. are collected every 10 feet). The fully diluted value of the muck samples taken from the stope to date averages 22.3 oz/t (773.8 g/t) Au and 23.4 oz/ton (811.9 g/t) Ag.
The Blanket style mineralization at Hollister is typified by very fine grained disseminated gold hosted by tuffaceous horizons in the Tertiary (10-15 million years old) volcanics that lie unconformably on the basement Ordovician (~430 million year old) metasediments. These zones of mineralization are thought to be "mineralization plumes" directly related to the activity of fluid which has focused in structures that control the underlying epithermal quartz - adularia veins, and propagated into the Tertiary volcanic pile.
Blanket mineralization was previously exploited by opencast methods during 1990-1992 by the Touchstone - Galactic Joint Venture. According to historic records, 115,000 ounces of gold were produced by a heap leach operation that treated low grade ore (~0.003 oz/ton or 1 g/t Au). Great Basin modeled all 46 drill intersections above the Tertiary unconformity, and +1 g/t grade shells generally locate above known mineralized quartz - adularia veins. In general, this style has been located in the first ~30 feet (10 meters) above the unconformity, and may have dimensions in excess of 150 feet (50 meters) long and 60 feet (20 meters) wide. Grades from these 46 drill intersections average 0.45 oz/ton Au (15.4 g/t) and 1.7 oz/ton Ag (59 g/t).
Extrapolation of stope 3000N 1E to surface (approximately 200 feet or 67 meters vertically above), places this zone 300 feet (100 meters) west of the historical Clementine mercury mine. It supports the near surface working metal zonation and gold deposition model for the Hollister mine, and indicates additional exploration potential.
Ferdi Dippenaar, President and CEO, commented: "In the past, we have identified the Blanket Zone as a target area worth exploring, and trial mining at the top of vein (number sign)18 has turned out to be a great way to test the prospective nature of this style of mineralization. Although we have encountered a limited amount of this high grade material through trial stoping, drilling is underway to determine the full extent of mineralization. More information will be made available as and when it becomes available. Based on our experience in the Main Clementine vein (number sign)18, we are evaluating the possibility of returning to previously stoped out areas above the Gwenivere high grade veins."
Great Basin Gold's Hollister Mine in Nevada is already one of the highest grade Gold producing mines in the world, with 1.64 million ounces of Gold estimated at an average grade of measured and indicated resources at 1.3 ounces of Gold per ton.   This morning's news of such bonanza grades certainly bears some examination.
From previous background knowledge and from researching the terms within the news release, the author pieces together what this is may mean.  For help in understanding the basic geology, the author had his assistant "My Right Hand With Mouse" put together a rough diagram displayed following:
Figure 1:  Model of Great Basin Gold's bonanza gold grades found above their Clementine Vein.
With reference to the above diagram, Great Basin's Hollister mine is constructed to mine the underground Gold veins.  These veins are in the basement sedimentary rocks, which refers to the lower layer of rock geology, the "Ordovician" which are 439 million years old.  This basement is covered with a more recent geological layer of volcanic rocks named the "Tertiary", which are only 10 - 15 million years old.  The meeting point of these two rock layers is termed the "Unconformity", or joining between the two rock types. 
The Gold veins that Great Basin are mining are formed from magmatic fluids that originated deep in the Earth's crust and flowed through faults and fissures in the basement rocks coming up to the surface.  There are two main types of deposits formed from these magma fluids, high sulphidation and low sulphidation deposits. 
Great Basin's geologists believe that Hollister is an example of low sulphidation deposits.  As the fluids left the Unconformity and entered the Tertiary volcanics, the fluids encountered groundwater.  The magma fluids then interacted with the ground water causing violent boiling and depositing of the metals and minerals.  The act of depositing minerals seals off the fault and so the magma fluids seek another way to surface.  Again, more groundwater is encountered and more furious boiling occurs.  The boiling drops the minerals and seals the fissure again.  These cycles of furious action results in more and more of the minerals being deposited in the fissures within this area of volcanics above the Unconformity. 
Eventually the magmatic fluids reach near surface and dissipates and mixes thoroughly with the surface rocks.  This results in a broad disseminated layer of mineral deposits that is termed the "Blanket Zone" at Great Basin's Hollister mine.
In this style of low sulphidation depositing at Hollister, the minerals deposited by the repeated action of the magma encountering ground water has resulted in very high Bonanza grades of Gold and Silver that Great Basin has just announced.  These high grades appear to be concentrated above the existing Hollister Gold veins, between the existing mine tunnels and the surface Blanket Zone.  These high grades positioned where they are gives Great Basin a large amount of  bonanza mineralization in a location where it will be easy to mine. 

Another way of looking at this is the average grade of their "muck".  Muck is the broken rock ore, that will be refined in the mill circuit.  Their average muck grade is spectacular at:
The fully diluted value of the muck samples taken from the stope to date averages 22.3 oz/t (773.8 g/t) Au and 23.4 oz/ton (811.9 g/t) Ag.
Compare this grade of 22 ounces of Gold per ton with anything else, you read about gold miners anywhere.  Compare this with the grade at their Burnstone mine in South Africa, which has an average grade of 5 grams (.15 oz) Gold per ton, which is considered high grade.  This grade is at least two orders of magnitude or 100 times higher.
Great Basin are understating in saying, that this model, " indicates additional exploration potential".
Disclosure: The author holds shares of Great Basin Gold (GBG).
Important Disclaimer

The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.


  1. Many questions come to mind. August to November Silver and Palladium are up 55%. Some stocks are up 80% This is great if you were there. Current 11/11 indicators show a short term pause in metals prices. I look to this as a bargin hunt. GBG is an exciting flash, and be a new opportunity, but I only see it as a short term. How will GBG be in the future? Commodity, buyout or mine? I guess buyout. I would like to know your opinion on the time and who would buy GBG.

  2. If you have read any of my previous postings on GBG, you will know, that I believe, GBG is sitting on the sweet spot of production startup with major growth ahead.

    This ramp-up will mean company turning into profitability, and start of major cash flow~ $200 million in 2011.

    Against the backdrop of rising gold/silver prices, growing production, and now bonanza grades found...how can you state this is short term???

    As I mention in the article, the way I read this is: GBG may not be acquired, as they may look to be the acquirer, the management and Dippenaar are ambitious.

    Marco G.

  3. Thank you for your response. Yet, If I may ask you to try to give me more insight into the timming of the stock events. My expectations of a 'pause' in the metal price has been confirmed. And so I'm buying more. But I do follow things so closely. Talk of when they start the real work is really interesting.

  4. Wow ! Congradulations to you if you bought, yesterday. Today you will feel rich! If I was only so precise! Well it's nice to be close.

    Well I'm having fun with this. How about you?

  5. Hi, hard to be precise in these markets.

    If one is trying to trade ...well good luck, my experience has not been that good trading.

    However, my analysis of companies and trends has always been spot on. Pats self on back!

    As some wise investor said, the money is made by the holding, not the trading.

    Marco G.

  6. Hey Goombarh

    What is seen as the tonnage potential of that blanket zone?

  7. I don't think we have enough information for any estimates. Listen to their 3rd Qtr conference call as they mention it. As they say, they are performing trial mining on the part they have found.

  8. Goombarh, I read the q3 2010 transcript & fair to say mgmt was excited but didn't want to get too far ahead of themselves until further testing/results come out? On the other hand, possible the bonanza is confined to a small/specific immaterial area?

  9. In the transcript of the conference call, page 14:

    OUNCES PER TON --. 15 -- YES, ONE, FIVE."

    They say 5000 tons of 15 ozs per ton, That is 75k oz of Gold which may be worth $100M, which to my way of thinking is far from immaterial.

    Further, they are exploring the areas above their other main veins, and I believe they should find more.

    Marco Goombarh

  10. Thanks goombarh. Immaterial was the wrong choice of words :). What I meant was am I correct to assume further significant 'bonanza' resources exist in the blanket zone, aside from the 4,500/5000 tons referenced by Oelofse?

  11. Hi all,

    When I interviewed Ferdi, he was very insistent upon exploration first at Holister, even when I was trying to lead him away to Esmeralda or elsewhere. Therefore, I think he knows more, than he is willing to say publicly still.

    Secondly, geology being what it is, if there is one deposit of this super bonanza grade, then there is likely to be more. GBG has said that they will be drilling sideways in the underground accross the vein splay to try and find more.

    By the way, bonanza is usually referenced to gold grades over 1/2 oz per ton. The grades here are unheard of...ever.

    Also Esmeralda, is capable of bonanza grades as well.

    These are some of the reasons, why I am so bullish on GBG.

    Marco Goombarh