VANCOUVER — The British Columbia Securities Commission (BCSC) has raised numerous concerns about a 10.6-million-oz.-gold resource Barkerville Gold Mines (BGM-V) released on June 28.
The concerns, based on a draft technical report supplied to the BCSC, cover the methods, parameters and assumptions used to establish the apparent 62.6 million indicated tonnes grading 5.28 grams gold per tonne at the company’s Cow Mountain project in central British Columbia.
Barkerville has disclosed these concerns in a press release clarifying its technical disclosure. The company states that the BCSC is concerned the resource, as well as the 65 to 90 million oz. in geological potential, is “inadequately supported in the draft technical report and estimated in a manner that appears contrary to normal industry practice and therefore could be construed as misleading.” In light of the concerns, Barkerville has cautioned investors not to rely on either estimate until the ongoing technical disclosure review is resolved.
Issues raised by the BCSC about the resource estimate include, according to the release: (i) the drill-hole assays were not composited before estimating resource grade; (ii) the estimates do not apply grade capping, despite most of the gold in the reported 2011 drill intersections being in thin high-grade intersections; (iii) the resource appears to be unconstrained by the geological model of the gold hosting structures; (iv) failure to cap and use of an unconstrained bulk-tonnage resource model is likely to have resulted in material overestimation of grade and tonnage of the resource; and (v) no external cut-off grade.
As to the geological potential, issues raised include: (i) using the indicated resource as a basis for the quantity and grade of potential exploration targets in other locations along strike; (ii) grade ranges of estimates of potential set an apparent arbitrary +/- 15% above and below average grade of the resource; and (iii) tonnage ranges apparently arbitrary based on percentages above and below the resource tonnage.
Barkerville stated it will complete a draft NI 43-101 compliant technical report as soon as possible to respond to the BCSC’s specific concerns, and is working with Peter George, author of the draft report, to achieve that. The company went on to state that it “is confident that the supporting appendices to [Peter George’s] draft technical report; which had not been completed and provided to the BCSC in the first instance; will adequately address the recent comments from the BCSC.”
On news of the clarification Barkerville’s share price dropped 21¢ or 23.3% to end at 69¢ with 3 million shares traded. The company closed at 81¢ the day before the resource estimate was originally released, after which its share price peaked at $1.67 with 107.3 million shares outstanding.
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