VANCOUVER — Strathcona Mineral Services’ resignation from the Brucejack gold project in early October dealt a huge blow to project owner Pretium Resources (TSX: PVG; NYSE: PVG). Upon its departure, Strathcona raised serious concerns about the project in northwest B.C., which lowered Pretium’s stock price. This month, the explorer regained some of its momentum after announcing its 10,000-tonne bulk sample yielded more than the expected 4,000 oz. gold. (See “Pretium surges as bulk sample beats gold target” on Page 1 of this issue.) Strathcona founder and president Graham Farquharson spoke with The Northern Miner to explain why the company walked away from Brucejack.
The Northern Miner: To start, do you have any comments about the bulk-sample results?
Graham Farquharson: Those results were what we were anticipating: 4,000 oz. gold production from the bulk sample, based on the tower sampling results. It’s not any surprise. All the sample rounds that we took out of the development workings and so on — those were up to the grades that would work out to in excess of 4,000 oz. in the bulk sample.
TNM: If you were in agreement on that, why did you leave the project?
GF: We gave a lengthy letter to Pretium with our reasons for withdrawing. I think some of the lines from that letter were made public. But the main item was that we found the bulk-sample program, which was composed of [underground drilling, underground geological mapping and the results of the sample tower]. The main objective of all that was validation of the resource model that Snowden had prepared in November 2012.
That was the basis for the feasibility study that Pretium did in June of this year, which suggested it was going to be a big mine producing 425,000 oz. gold a year for the next 10 years, within a 22-year mine life. All that was based on the Snowden model, which had 16 million tonnes with a grade of 16 grams per tonne in the indicated category and a further quantity in the inferred category — and we didn’t find that.
And Pretium didn’t find that — when they did all the underground drilling and geological mapping and the results from the sample tower, and so on — so we told them on several occasions that they should be alerting the world that the resource model was not panning out. The whole objective of the bulk-sample program was to confirm whether or not the resource model was valid, and we said it wasn’t.
TNM: If the resource model had been valid, how many ounces should there have been in the bulk sample? Is it correct to say you believed 4,000 oz. was a low number?
GF: Not quite, because what did happen in the bulk-sample program is that a new vein was discovered called the “Cleopatra” vein. It’s a narrow vein but high grade, and a different geological occurrence than what was anticipated. The Cleopatra vein is not something that would be mined using bulk-mining methods, at 2,700 tonnes a day and so on. It’s high-grade material, but it’s a narrow vein that you could only mine at a slow rate.
The good grades in that vein do not substantiate or corroborate the initial resource model, which was based on big dimensions, big stopes and the grade of 16 grams per tonne.
TNM: So you don’t think there are enough veins similar to Cleopatra to make what happened in the bulk sample normal in terms of a mine at Brucejack?
GF: No, because they planned for 16 million tonnes, which is a lot of tonnes at that high grade of 16 grams per tonne in the indicated category in the resource model. The drilling and the mapping and the bulk sample and so on did not find that.
TNM: Where did the error come from? We know that this is a very heterolithic deposit with lots of nugget effect — do you have an idea of how Snowden came up with those numbers that you think are so incorrect? Is it the nature of the deposit? Is it the methodology that they’re using?
GF: It’s the methodology, and we pointed that out. It’s the interpolation method that they use, and of course they disagree with us. The big challenge with that project has always been: How far do you extract the latent values from the high-grade assays that are scattered throughout the deposit? It’s a difficult assignment, knowing how far to extrapolate those spectacular assay results.
We told Pretium that, from all the drilling they’ve done — and it’s a heck of a lot of drilling — and with the sample-tower results and so on, none of those come anywhere close to finding a grade of 16 grams per tonne, which is what allows bulk-mining methods.
TNM: One would assume that the overall grade of a bulk sample would be a more comprehensive test than a sample tower, but what you’re saying is that the bulk sample happened in this instance to get skewed by the presence of the Cleopatra vein.
GF: The [sample tower and bulk sample] will agree in the end, and they will agree with the underground drilling that they did and that we agreed on. But it is not representative of the rest.
TNM: If you were suddenly in charge of the project, what would you think is the correct path forward from here? It’s obviously an interesting gold occurrence.
GF: Yes, and we told them that it has an excellent chance of being a small-tonnage, high-grade mine in the Cleopatra vein, and a couple of other similar occurrences that they found in the last drilling program. If they lined all those up, there’s an excellent chance that they could have a small-tonnage, high-grade gold mine. But they will not have a mine producing 425,000 oz. a year for the next 20 years, as they have been advertising so far.
We’re not saying there’s no gold there — this is not Bre-X or anything like that. There is gold there, but the project needs a much different geological model now, based on the work that’s been done and the bulk-sample program being different than what they anticipated before they went underground.
And they’ve been slow to accept that, because it does make a big change from what they’ve been telling the markets. But we’re absolutely convinced that if this is what the results indicate, then you should tell the world.
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