Recent events affecting Solitaire Minerals Corp.’s (TSX: V.SLT, Bullboards) share prices seem, to me, to indicate a lack of proper understanding of exploration risks and normal diligent research by potential investors.
First of all the “due diligence” normally recommended to investors BEFORE investing does NOT guarantee avoiding the pitfalls of mining success. Mining exploration, by its own inherent difficulties, has not yet overcome the variables and multiple obstacles that prevent success. No matter how much effort is made to mitigate these difficulties it is still a matter of fact that exploration drill programs are a “hit and miss” project.
Not only can drilling miss or be inches from a potential economic deposit, false “visual” review of the cores can lead experienced geologists into making false assumptions. These false interpretations are not deliberate attempts to misguide the people involved but honest mistakes in interpretation. To repeat my many-time statement - the ONLY true proof of the potential of a drill core is the lab assay of the core. NO ONE should buy shares based on “visual” information. It is natural for investors to try and get a “jump” on other investors by trying to buy shares before others realize the potential of a play. But more people have been fooled by claims of visuals indicating an economic find.
Many Bullboard posters have claimed this knowledge and hyped the coming assays in order to promote the buying of shares after they have already placed their “bets.” When the assays disprove the economic value, a profound depression translates into a panic selling of shares bought by the disillusioned investors.
In the most recent example regarding the North Red Lake drilling results by Rubicon (TSX: T.RMX, Bullboards) / Solitaire, other factors should be considered by potential investors. Mining programs are a process of first identifying a potential economic property by studying the location of the property, doing land geological investigations, using all known methods of trying to get a “true” picture of the suspected ore body, and then by deliberate and educated guesses, drilling the area. Most such projects take many such drilling maneuvers before an economic zone is delineated. And unfortunately many such efforts do not succeed.
In this particular case, however, the initial first assays have come back without economic potential based on one core that returned minimal gold grades. True, a certain expectation of success was imparted to this core by management’s move to expedite the assay process due to that “visual” increased hope of success. But the reaction to this disappointment was a factor of exaggerated “hyping” by Bullboard posters of the expected success, and the gleeful reactions of those persons who wish to discredit the project in its entirety.
This result was based on a portion of hole #7. More assays are still to be reported from remaining #7 core and also #6 core. As well, drilling of #9 hole has been completed and that core has been sent in for assay. The reported "visual” is said to be the ”best of all,” but I still maintain assays are the only dependable way to calculate a true valuation. I am NOT saying an economic ore body will be located at this site. Only the assays will prove that. What I am trying to say is that this area needs more exploration before the project is abandoned.
Many successful mines have been developed after many drill programs have been done before successful economic structures have been outlined. Many properties have even been abandoned by mining firms only to be resurrected by other companies who have reinterpreted the geological evidence and fount the hidden treasure.
Exploration is a step by step procedure in most cases. The bonanza finds are rarely a one-hole successful find. Eventually a company may come to the conclusion that more efforts will not be effective, but it would appear that Rubicon and Solitaire are signaling that they still expect to continue their efforts as they have not given up on the area.
Drill programs are “hit and miss.” This applies to the drilling program which Solitaire is now pursuing on its wholly-owned Riau property. Intense geophysical and chemical testing, together with airborne surveys, have been used to attempt to delineate a major uranium ore body. Having taken these steps, SLT has now started a limited drill program. This initial drill program will test the geological structures under consideration. It is hoped that the geologists will learn more regarding the geological structures present. Hopefully indicator minerals and “halo” structures will be located. Ideally radioactive indicators will be revealed and a core containing uranium will be obtained. However this first project is being drilled to a lesser depth. Deep drilling on indicated targets will not take place until January and February. I am not pointing this out so as to lower expectations. But failure to retrieve uranium on this first project should not be considered a complete failure and precipitate the sell-off that occurred on the recent North Red Lake results.
The true test of Riou will come in the winter drilling season. Naturally the company would hope for encouraging indicators on this first program.
Mining exploration is part science but is also part art. The knowledge of the geologist depends not just on their mechanics but also on their knowledge of the terrain and complexities of the geology and how they interpret them. SLT geologists have shown their expertise on many projects and we can only hope it leads to success here.
But true investing is weighing all factors and judging whether the variables are manageable and worth the risk. Each investor must make those considerations and not allow “mob instinct” to sway his or her judgment. The markets are illogical beasts which often over- or undervalue projects. Good luck to all.
HHappy is currently long V.SLT. He has no position in T.RMX.
This article was written by a member of the Stockhouse community.