There has been a great deal of discussion about the "Nugget" effect found on Orex Exploration's Goldboro property and in the former Boston Richardson mine.

This blog entry is an attempt to capture and summarize the most important details for potential investors.  Warning - be prepared to read a lot of detail - this is a long entry.

What is the Nugget Effect

Courtesy of Groundround:

"The often complex, erratic, and localized nature of gold is a common feature of many vein-style gold deposits. This style of mineralization is often referred to as being nuggety or possessing a high-nugget effect. As a result of these complexities resource estimation is difficult and in general, only Exploration Results can be provided or an Inferred Mineral Resource estimated from surface drilling data alone. Underground development, further drilling, and probably bulk sampling will be required to delineate Indicated and Measured Resources. Tonnages can generally be estimated from diamond drill and development information with a reasonable degree of confidence. Grade is much more difficult to define with confidence because it is commonly highly erratic and discontinuous in nature. The dependency of higher confidence Resource categories on development information may create a Catch 22 situation, with funding for such development often depending on the prior definition of at least Indicated Resources. There are no easy solutions to these challenges posed by high-nugget effect deposits, and it is important when classifying and reporting not to downplay the uncertainties often associated with Mineral Resource and Ore Reserve estimates for such deposits. However, in common with all deposit types, if the principles that underpin the estimation, classification, and reporting procedures are borne in mind and common sense applied, most issues can be satisfactorily resolved. This paper discusses the classification and reporting of Mineral Resources for high-nugget effect gold vein deposits within the framework of the JORC Code (JORC, 1999)."

What is Orex Exploration's Response To this Effect

The following is largely copied verbatim from Orex's own report  (http://www.orexexploration.ca/pdf/goldboro.pdf)

... The major hurdle for Orex [was] to evaluate the gold content of the mineralized belts. The gold distribution is subject to a severe “nugget effect” with a strong segregation component. In the case of Goldboro, gold appears as large nuggets, fine disseminations within or bordering arsenopyrite crystals and fine gold grains associated with carbonaceous material. This particular distribution of gold grains may explain the fact that regular assaying methods (A.A.; F.A; metallics) yield lower gold values than a metallurgical balance from mill-tests.

Because of this problem and the controversy generated by it, an agreement was reached with a senior partner, Minnova Inc. Their objective was twofold, first determine if the high assay results were accurate and, second, find an assay method that would work consistently. To obtain samples, they twinned four holes that had been tested previously plus drilled an angular hole to test low-grade material close to the ramp area, but south of
the apex.

For assaying, it was decided to utilize the CGL (Continuous Grind Leach) method, which consists in leaching the gold while grinding the material in a close circuit. If the results were to be inconclusive or negative, one hole was to be milled in a pilot plant to repeat the exact conditions of Orex’ initial tests.

The CGL assays were low, approximately the same as the AA for FA assays obtained previously. However, Minnova decided not to repeat the procedure utilized by Orex, arguing that they needed accurate results on small intervals if they were to evaluate the area properly and that such results would be needed to guide any future mining. Consequently, Minnova dropped the option. The property remained on care and maintenance until an agreement was reached with Novagold Resources Inc. They were operating a vat-leaching mill in New  Brunswick and the method seemed promising to first test and eventually process ore from the Goldboro property.

Representative samples were taken from a 4,000 tonnes surface stockpile and sent to Halifax for processing at the Technical Institute of Nova Scotia, to determine the possibility of processing this type of ore by vat leaching. The results were extremely encouraging, with recoveries up to 84% in four hours of leaching and grades varying between 4 and 6 g/t. However, due to financial difficulties, Novagold had to drop the option.

In the fall of 1993, Orex decided to get to the bottom of things and determine, once and for all, if high grades were present over large intervals in the central portion of the apex. In order to do so, Orex drilled six more  diamond drill holes. These holes were drilled to provide raw material, in a well-know area, for metallurgical and analytical testing. The material collected was then sent to the CRM, in Québec City, for testing. First, four holes were drilled as close as possible to previously drilled holes, using a drilling method ensuring maximum core recovery. In the first attempt for the two vertical holes, some material was lost and it was decided to drill again to get a better sample of the areas where core was lost. All the holes were described and the rock formations observed were similar to those observed in the past. Sludges were also collected and assayed by the Metallic method.

The whole core was then sent, in one-meter lengths, to Québec City for assaying. The assay method used was similar, up to a certain point, to the CGL method, which had been done on core samples from the same areas, in 1991. First, the one meter samples were split using a carrousel, in four equal lots, after crushing to 100% <10 mesh. Then, one lot out of four was ground in a small ball mill for a period of 24 hours in the presence of high cyanide concentrations. Finally, the liquid and solids were fire assayed and a metallurgical balance calculated to give the head grade.

The grades obtained were lower than expected but similar to those obtained by Minnova, giving an important immediate first conclusion that grade variations were not related to problems with core recovery. However, less than 90% gold dissolution in 78% of the samples led to questioning about the assay method. So, new tests were done and finally the assay program was suspended because, in particular, the four splits of a one-meter
section containing a relatively large gold nugget yielded grades between 1.26 and 1.74 g/t with gold dissolution at approximately 5%. These results were totally incompatible with visual observations, what happened to the nugget observed prior to assaying and to past metallurgical tests, which had showed that gold dissolution above 95%, were easy to obtain in normal conditions. Furthermore, the results from assaying the sludges were much higher than the core assays, and a new assay method had to be designed.

Based on past tests showing that gold dissolution was not a problem and the extremely high cyanide concentration in the new assays, the low dissolution obtained in some samples could only be explained by precipitation of the gold after it had been dissolved. It was then decided to combine one of each split samples for one hole and process the batch in a pilot plant, using a gravity separation followed by cyanidation of the tails. This method had always yielded higher grades even if it did not give an accurate picture of how the gold was distributed in the sequence. At this point (1995), Placer Dome Inc. contacted Orex and asked the permission to sample the 4,000 tonnes stockpile, which had already been sampled by Novagold. At the same time, they asked Orex to stop their current work until they received the results from their sampling. They mentioned that their presence would lend a lot of credibility to the project and that they had the expertise to solve Orex’s analytical problems. They also mentioned that they had encountered relatively similar assay problems elsewhere and could solve them.

It is a well known fact that that high gold grades are normally found within «veins». The «veins» being a mixture of quartz, argillite (slate) and arsenopyrite, often contained visible gold and some galena and are always confined to the slate beds. Three other general types of rock formations can be found in the area of interest, bull quartz (nearly 100% quartz), slate without quartz veinlets and greywacke (with some arsenopyrite but without quartz or pervasive alteration). The generally accepted theory implied that the bull quartz would occasionally contain some gold, while the other two units, slate and greywacke, are almost always barren of gold mineralization.

In order to take their decision, Placer sampled the stockpile in a very particular way. They wanted to know the gold content of each of the four different rock types, as described above. So they took random samples over the whole pile and separated them by rock type. Also, each piece of rock was inspected visually and any piece with visible gold was eliminated from the sample. Those four samples were then sent to Placer laboratory in Vancouver, where they prepared a two kilograms representative portion separated from each of them. Those two kilograms portions were treated by the CIL (Carbon in Leach) method. The results were:

? Greywacke: 1.00 g/t calculated head, 1.00 g/t assayed head;
? Slate (graphitic shale): 2.64 g/t calculated head, 2.82 g/t assayed head;
? Quartz vein: 16.18 g/t calculated head, 6.15 g/t assayed head;
? Vein: 33.62 g/t calculated head, 36.37 assayed head.

The most surprising result was the grade of 1.00 g/t in greywacke. This suggested that the host rock was gold bearing in a very significant way. The other assays confirmed only that the veins were extremely high grade, that there was some gold in the slate and that the bull quartz could contain very coarse gold grain generating a strong nugget effect and good grades occasionally. Placer immediately asked Orex to suspend all their activities and started negotiations that ended in Placer offering to invest C$ 30,000,000 to acquire a 65% interest in Goldboro property.

It was decided to assay all the samples by FA or Metallic and by a method combining gravity extraction and cyanide leaching of the gravity tails. The work was done on remnants of the original budget and the responsibility of the project was transferred from the Val-d’Or office, who had evaluated the project, to the
Vancouver office. For budget reasons, it was decided not to do the special assaying. The adopted assay methods were FA or Metallics and evidently yielded results similar to those obtained before. Placer Dome subsequently dropped their option due to a shift in their exploration towards higher priority projects around mine sites and international ventures, and the Goldboro project was shelved in 1996.