Editor’s Response

The Northern Miner received the letter from Mr. Sloan of Can-Cal Resources through several channels. Our assistant editor, James Whyte, felt obliged to reply to a number of points in the letter:

Mr. Sloan mentions the tests done at the Canada Centre for Mineral and Energy Technology (CANMET) in June 1999 by Louis Cabri. Dr. Cabri’s electron-microscope and microprobe work is not an outside analysis that independently verifies grades of Pisgah Hill material. It is a micro-analysis of grains from broken material supplied to Canmet by Can-Cal. Neither CANMET nor Dr. Cabri nor Can-Cal released any grades of the Pisgah Hill material from that study; and if we know Dr. Cabri’s work at all, he would be the last to suggest that micro-analyses can be extrapolated to bulk concentrations.

Mr. Sloan says the Cabri study “identified . . . gold and silver.” Dr. Cabri identified precisely one grain of electrum in the four Pisgah samples submitted by Can-Cal. That grain was “liberated” — not in contact with the Pisgah volcanic material, and therefore possibly not part of the rock at all. Moreover, the grain answered, very closely, the description of a typical placer gold grain (250 microns in its long dimension, 200 microns in its shorter, with silver leached from its rims).

The last time we saw a similar description of a gold grain, it was from a sample sent from the Busang property in Indonesia (T.N.M., April 7/97). That description, from a mineralogical report by Roger Townend, was later described by geologist Colin Jones (the supervisor of the due-diligence investigation of Busang for Freeport-McMoRan Copper and Gold) as “possibly the best description of an alluvial gold grain ever written.”

Can-Cal has suggested that this grain’s characteristics reflect supergene processes in place at Pisgah. It should be recognized that there is at least one other explanation for the grain’s size, morphology and compositional zoning: it could be alluvial in origin, and not part of the Pisgah Hill cinder cone at all.

The work by Dr. Jacques Jedwab, mineralogist at the Free University of Brussels, was not released at the time the Query column went to press (Aug. 16). We have examined the release of Aug. 17 and find the study is a similar one to the CANMET study of June 1999: microanalyses of mineral grains, not bulk chemical analyses providing grades.

We also note that Can-Cal says Jedwab’s “observations . . . support the conclusion that precious-metal-bearing minerals are present in the Pisgah Hill volcanic cinders.” We agree that — as long as the samples supplied to Jedwab were not pre-treated in any way — his results support exactly that conclusion, and nothing more.

The results are not evidence for the presence of platinum group metals in potentially economic concentrations in the Pisgah volcanics. Documenting the presence of a mineral is not the same as establishing that it is there in concentrations differing from those in the ordinary person’s back yard.

Mr. Sloan appears to object to our characterization of volcanic cinder cones as poor exploration targets for gold and platinum group metals and mentions the work done at the Tolbachik eruption site in the Russian Far East. We are aware of some of the mineralogical work being done on volcanic eruptive and exhalative material at Tolbachik but were not able to verify the reference. Nevertheless, the Can-Cal news update cited by Mr. Sloan mentions only base metals (copper, zinc, lead, tin, bismuth, iron and aluminum). It does not mention gold or platinum group metals in the Tolbachik basalt-scoria.

Moreover, there is no adequate reason to make the leap from mineral “occurrences,” such as those documented at Tolbachik and in the Virgin Islands, to mineral “prospects,” such as Can-Cal claims to have found. Again, presence is not the same as concentration.

Mr. Sloan asserts that “pre-treatment” has been “a historic necessity” to assay platinum group metals quantitatively. This is not so. Pre-treatment of assay charges is recognized as a necessity for some samples, and largely means selecting the appropriate flux and deciding whether a lead or nickel-sulphide collector should be used. Other samples can be quantitatively assayed without pre-treatment steps. In any event, neutron-activation analysis will give an accurate and total analysis of the palladium content of a rock sample with no chemical pretreatment whatsoever.

We acknowledge that Can-Cal stands by the integrity of its testing programs. In the absence of any contrary evidence, we are ready to take Mr. Sloan’s word that the company’s system of sample custody is intact. What we do not acknowledge is that any sample custody system is foolproof.

We find it puzzling that Can-Cal has not released results of direct fire-assay or neutron-activation analysis on the Pisgah volcanic material. Of the 22 news updates and press releases on the Can-Cal web site, none has reported an actual grade determination on a Pisgah Hill sample.

Our comments on the in-house analyses made on samples from the Owl Canyon property neither implied, nor were meant to imply, that Can-Cal was using unconventional analytical techniques. In our understanding of the Owl Canyon project, which comes entirely from Can-Cal’s press releases and public documents, Can-Cal believes the mineralization at Owl Canyon to be detectable by conventional analyses. We readily acknowledge that Can-Cal has never made the assertion that samples from the property require any unique analytical procedures to recover precious metals.

We would also point out — even though Mr. Sloan’s letter does not — that Owl Canyon does not represent an “unconventional” precious metal target; the geological description that has been released by Can-Cal is consistent with a precious metal target of classical epithermal type.

What we did say in our reply to the query was that in-house laboratories have, in the past, been a warning signal. That analytical data should come from a company’s own in-house lab is not in itself evidence that there is something wrong with the data. It need hardly be said that some salt frauds have been run entirely through external, independent labs, so not having an in-house lab is not an automatic clean bill of health either.

We have had previous bad experiences with in-house labs and companies that have made unscientific claims about precious metals based on in-house results. Can-Cal has made no such claim to date about the Owl Canyon mineralization, and we do not predict it will.

But independent laboratories are widely available, and in the present exploration environment they are not exactly choking on work. So we fail to see why any company would go to the expense of setting up and running its own laboratory, which would almost certainly cost it more than simply sending all its samples out for analysis.

Mr. Sloan says that the editorial staff of The Northern Miner “was given the opportunity for full and frank disclosure discussions” about Can-Cal’s exploration projects. What did happen was that a broker, not a Can-Cal officer or director, approached the Miner’s Vancouver editor some time in June or July with a suggestion that he write a story on the project. There was no other approach that we know of, apart from an anonymous fax sent to three staff writers on July 12. Mr. Sloan’s speculation that discussions with the company would have changed the substance of our reply to the query is speculation and nothing else.

We are not convinced, either, that seeing operations at the Pisgah Hill project in person would make much difference to our views on its merits. Can-Cal has yet to release any evidence that this is a project with economic potential, and until it does, there would appear to be no reason to visit.