The Significant Intersect
A significant intersect is a sampling interval of gold grade reported by a company. The term ‘intersect’ is used because it represents sampling through a gold mineralised rock body. And ‘significant’ because it is above a chosen minimum gold grade.
The announcement of a positive significant intersect potentially indicates the discovery of a new gold deposit and, ultimately, a gold mine. Because of this the share price of junior gold explorers can rise rapidly if an announcement of strong gold grade and width is made. It is important then that we understand how companies report these and how they should be interpreted. How are the significant intersects interpreted? – Compositing Rules A significant intersect consists of a length and an average of the resulst walong that sampling length. The average grade however must be calculated according to some rules called compositing rules. The compositing used to calculate any significant intersect should be listed in the announcement. Composite rules will include the following components: Cutoff grade: This is the minimum average grade of an intersect reported. In most cases this will be around 0.5g/t Au because below this is uneconomic even in the most optimistic mining scenarios. Having the cutoff of 0.5 g/t Au is not to say that an intersect won’t include lower values, but that on average across all intervals included, the grade will be greater than 0.5 g/t Au. How many intervals below the cutoff are included within a significant must also be reported as ‘internal waste’. Internal waste: Internal waste describes the intervals below the cutoff grade that included in a significant intersect. This is done because what we are interested in the overall intersect length rather than a list of short interval assay results that are to all practical purposed part of the same body. For example in the below table assays have been composited into a significant intersect based on the rules of a minimum cutoff grade of 0.5 g/t Au and maximum internal waste of 4 consecutive meters. This gived 24m at 6.10 g/t Au. Some of the intervals within this 24m are less than 0.5 g/t Au, but they are included because they are no more than 4m consecutively. This is reasonable, as the alternative would be to instead report. Problems arise when companies include large intervals of waste. Thin intervals of very high grades may enable the average grade to be maintained over large waste intervals, giving the impression that there is a consistently mineralised gold body where in fact there is small nuggety gold veins dispersed over distances that would be very hard to estimate an accurate resource with and hard to mine economically. For example in the below table if the compositing rules were a cutoff of 0.5 g/t Au and a maximum internal waste of 14 consecutive meters then the same significant intercept as the previous example could be reported. This is an extreme example but illustrates of looking into how results are calculated. How are the significant intersects interpreted? – Depth from Surface If a significant intersect is reported from a depth of 3m, it will be much more promising than one of equivalent grade and length reported at 420m, simply because to mine the deep body would be expensive and require relatively high grade. How are the significant intersects interpreted? – Is the composite ‘true width’? Sampling width is the actual distance intersected by the drill, trench or cut. True width is the calculated width based on the orientation of the intersected body in the ground. It is important to note the true width as this is the real size of the gold body and can be much smaller than the sampling width. For example, our 24m at 6.10 g/t is a sampling width. The true width would be calculated with help from other intersects nearby and the geology of the area. As shown in the below figure, the true width would be _ _ _ _ _ . It is possible for the sampling and true width to be vastly different. For example in the figure below. This maybe due to poor interpretation by the exploration geologists or in some cases deliberate planning -‘Director’s hole’ - in order to release a spectacular result. With the tightening of reporting rules this should be less likely occurrence. How are the significant intersects interpreted? – Is the composite ‘open’? Being open means that the gold body can be interpreted to extend without being constrained by null results or geology. A body can be open in all to one directions. How are the significant intersects interpreted? – What is the oretype? While this may not be mentioned in the announcement, knowing the ore type of the gold body adds to the ability to interpret the result. For example it may indicate what type of gold deposit model exists, and so the potential size and grade of a future resource. If the ore is described as oxide or sulphide, this give some indication of the likely processing type. |