Adds fuel to assaying controversy — Gold values elusive at

A resource equivalent to 11 million oz. gold is bound to attract attention. And when word began circulating here that Mindoro Mining had a deposit estimated to be of this magnitude on its property in southwestern Oregon, mining groups began seeking information.

Ronald Markham, president of the private company, was known in mining circles for his role in financing the Cyprus-Anvil base metal mine in the Yukon in the late 1960s. More recently, he raised money privately to finance drilling on the Mindoro property and results were extraordinary. A consulting geologist prepared a report indicating the property did indeed have multi-million-oz. potential (26 million tons averaging 0.44 oz. gold per ton, measured and probable), although this was qualified by a statement that assays should be confirmed by a second independent lab.

With a deposit of this size, investors were naturally optimistic. The expectation was that a major mining company would acquire Mindoro by paying cash for shares or exchanging them for shares of a public trading company. But this did not happen. The companies learned that Mindoro’s samples were prepared and assayed by Idaho-based Vortex Industries using bromine leach methods because the gold resource was not considered amenable to fire assaying. Professional mining groups that have been around the block once or twice are extremely wary of any assay results that can not be confirmed by conventional techniques.

Karl Rolke, president of Consolidated Ramrod Gold (TSE), collected samples from the property and had some tested at a certified lab in Vancouver where conventional techniques were used. “All our tests showed that we couldn’t identify any gold,” Rolke told The Northern Miner.

Rolke was not the only skeptic. The consulting geologist, who could not shake his concerns about Vortex’s assays, withdrew his report because the assays from exploration drilling were still not confirmed by another lab. “I informed Mindoro not to use my calculations based on those assays or any resource derived from them,” Andrew Nevin told The Northern Miner. Markham is not fazed by the sudden change in status of his multi-million-oz. gold deposit. “A few people have a vendetta against us,” he said. “We are very happy with Vortex’s assay results and have had them confirmed by other U.S. labs.”

Mindoro does indeed have another set of results, performed by a reputable American metallurgical firm, which Markham showed to The Northern Miner. But they were not fire assay checks of original exploration drilling assay results, but rather head assay results from various cyanide leach tests. Markham says Mindoro is considering going public in order to continue work on the property and develop an “extractive process” for its metallurgically complex “ore.”

As a private company, Mindoro can use any assay lab it chooses. But Canadian exchanges require that public companies reporting assays from non-Canadian labs using any technique other than fire assay also report, “in a timely manner,” results of a fire assay check program by a certified Canadian lab. Regulators view this method as accurate and reliable.

The Vancouver Stock Exchange’s assay disclosure policy was adopted because of concerns “as to the veracity of some assay results” from unknown foreign labs using accepted techniques incorrectly or using secret or unverified techniques. Unqualified staff was also a concern.

Many reputable and highly professional labs operate in the U.S., but some states do not require assayer certification. Those that do, do not impose the education and experience guidelines of Canadian provinces.

In the past year or so, at least three public companies — Noble Group Metals (VSE), Kilo Gold (ASE) and Focal Resources (ASE) — all reported positive values based on assays done by Vortex and other uncertified labs. But only low-grade or negligible values were reported when labs acceptable to the exchanges were asked to confirm these results by fire assaying. Industry sources say one company investigating Mindoro’s project was astounded when Vortex returned high gold values from a blind sample which was slipped into the sample test group without Mindoro’s knowledge. This sample was taken a considerable distance from the Mindoro property and was of a rock type and geologic setting considered unlikely to contain gold. Amazement turned to concern when another sample from this same area was tested at a certified lab by conventional techniques (fire assay and neutron activation analysis) and returned near-zero values.

The Northern Miner asked Vortex how it was able to come up with the positive results, which certified Canadian labs were not able to duplicate. “I can not answer that question really,” said the unflappable Maya Dunkel who, along with Joseph Dunkel, manages Vortex. “We perform the work our clients ask us to perform.”

Vortex offers a variety of assaying techniques, including wet chemical digestion, bromine and chlorine leach tests and fire assays. But Dunkel says the company is now out of the custom-assaying business and works only for one client.

Markham, after spending more than $4 million in the past eight years searching for gold deposits, intends to carry on. He says his efforts culminated between 1987 and 1989 when he participated with geologist Paul Sawyer in the discovery of the Oregon deposit now owned by Mindoro. He will not disclose the exact location of the deposit because “we don’t want to trigger a staking rush and bring in our competition.”

Sawyer’s involvement goes back further, to the early 1980s when Oregon prospector Thomas Webb staked the original claims. Webb is an associate of Markham, and Sawyer was Mindoro’s original geologist (until 1991). “Sawyer is no longer involved,” Markham said. “I bought him out.”

In Vancouver mining circles, Sawyer is known for his involvement in the controversial Moapa Valley mineral sands project in Nevada. He did a report on the project which was later touted by various companies as hosting immense reserves of gold and platinum group metals.

One of the companies involved, Force Resources, was delisted from the VSE in 1989 after continued testing of samples from Moapa Valley by independent labs failed to yield assay results similar to those coming from Force’s on-site assay labs. All three reputable labs were unable to yield assays of any economic significance.

A number of gold companies also looked at the project (T.N.M., Aug. 21/89) and a geologist from a reputable major called Moapa “a joke in the industry,” adding that “we did a lot of sampling and came up with diddly squat.” He also said the original assaying was done by “an unreliable lab which contaminated the samples.” Force opted to de-list when the VSE suspended trading of Force shares pending an independent review.

Sawyer is also known for his controversial report, Assaying in resource evaluation: the need for a clear and open mind, published last year. The paper was aimed at encouraging “an open-minded, critical monitoring of all analytical procedures and a move away from blind acceptance of analytical results purely on the basis of what has become standard practice in the industry.”

Sawyer challenged some of the findings of the 1989 report, Gold analyses — myths, frauds and truths, written by Gordon Bacon, Gary Hawthorn and George Poling. This report, published by the CIM Bulletin after review and approval by its mineral processors division,is based on a view that fire assaying remains the most reliable and respected procedure for analysing precious metal values.

Bacon, Hawthorn and Poling do not mince words when they say recent interest in gold has spawned a sizable group of “incompetent or fraudulent” gold assayers. They investigated more than 30 prospects and as many “assay labs,” in which significant precious metal (gold, silver and platinum group elements) values were reported when, in fact, near-zero values were present. The authors refute myths that “unassayable” gold is the result of complex stable compounds, platinum group metal interference, micrometre gold o
r the “volatilization” of gold compounds.

“There are various other techniques used by fraudulent or incompetent assayers in perpetuating their businesses,” the report continues. “While the names of the techniques they use have legitimacy, the techniques are either misapplied, overly complicated, useless, antiquated or simply not applicable to modern noble metal assaying.”

The authors cite specific techniques used to “assay” for unassayable gold that should alert readers to possible fraudulent or incompetent assays. The list includes wet chemical analyses, electrolysis methods, unusual time, basic or acidic pretreatment of ores prior to fire assay, and methods that prevent “volatilization” of noble metals.

The authors said the paper was written in the hope the industry would learn to recognize and ignore fraudulent assayers. “At present, the prospects of seeing them out of business, or better yet behind bars, seems improbable,” they said.

Wayne Hazen of Hazen Research, a reputable metallurgical firm in Colorado, said he keeps copies of this report to sober up gold-fever-struck mining executives and investors who come through the company’s doors asking about “unassayable” ores. “I always remind them that, if the gold won’t respond to fire assaying and only responds to techniques where you have to close one eye and twist both ears, what kind of mill is going to recover it?”