Peter George fined and sanctioned for QP work

The Association of Professional Engineers and Geoscientists of British Columbia (APEGBC) has reached a consent order with Peter Thomas George in which he has agreed to pay a $15,000 fine and $20,000 towards APEGBC’s legal costs for a disciplinary proceeding concerning a technical report that he wrote as the designated Qualified Person (QP) in August 2012 about Barkerville Gold Mines’ (TSXV: BGM) Cow Mountain deposit in B.C., and two technical reports he authored in 2011 for Rubicon Minerals (TSX: RMX) about the company’s F2 deposit in Ontario’s Red Lake camp.  

“He’s admitted to all the charges, so we did not need to proceed to a public hearing,” Efrem Swartz, APEGBC’s director of legislation, ethics and compliance, told The Northern Miner by telephone from his office in Vancouver. “George’s licence was not revoked, but he must partner with other professional geoscientists to produce mineral resource or reserve estimates.”

Swartz noted that the British Columbia Securities Commission was the complainant in the case against George and that the QP admitted that not only had he demonstrated unprofessional conduct, incompetence or negligence, but that the Barkerville report and the Rubicon reports fell below the standard expected of a reasonably prudent QP and professional geoscientist in similar circumstances.

“Our role is to protect the public interest,” Swartz said, noting that the non-profit organization regulates the engineering and geoscience professions under the Engineers and Geoscientists Act and investigates complaints against members and licensees for failure to meet their professional and ethical obligations.

Under the Engineers and Geoscientists Act, the maximum fine permitted is $25,000.

“Specific deterrence (i.e., individual punishment) by way of a fine is only one aspect of an appropriate penalty,” Efrem explained in a later email. “The APEGBC discipline committee agreed to the overall consent order and thought that the conditions on his licence, the mandatory education program and the fine was suitable to protect interest.”

Under the consent order, George is prohibited from performing resource or reserve estimates on his own, but can partner with other professional geoscientists with expertise in mineral resource or reserve estimates provided that the other professional geoscientists take responsibility for the estimates. He is also permitted to prepare geological reports that do not involve resource or reserve estimates, but must complete a course on mineral project reporting under National Instrument (NI) 43-101 offered by EduMine. (Glacier Media, the Northern Miner’s parent company, owns half of EduMine.)

In the case of Barkerville, the company announced in June 2012 that its Cow Mountain deposit in southeastern B.C. had an indicated resource of 69 million tonnes grading 5.28 grams gold per tonne for 10.6 million contained oz. gold. This was a 2,400% increase from the previous resource estimate in 2006, which put the deposit’s indicated resources at just 431,000 oz. gold.

George’s resource estimate in 2012 also stated that the 6.4 km long trend had the geological potential to host 405 to 684 million tonnes grading 4.11 to 5.49 grams gold, for a total of 65 to 90 million oz. gold.

In June 2013, Barkerville issued another resource estimate that put indicated resources at 17.7 million tonnes grading 2 grams gold for 1.04 million contained oz. gold, and an inferred resource of 49.2 million tonnes grading 2.74 grams gold for 3.94 million oz. gold. 

In APEGBC’s consent order, the association noted that the August 2012 Barkerville technical report “lacked information required or reasonably expected” for a technical report, including “sufficient information regarding the geological characteristics of the site and their impact on the resource estimation, including the discussion of the presence or absence of geologically distinct domains within the orebody.”

APEGBC also found that the report lacked “sufficient disclosure of data analysis, including: a basic analysis of the distribution of assay and composite values (i.e., statistics and histograms); an explanation of the value assigned to ‘-1’ composite grades and how they were used during the estimation process; [and] a justification of why ‘one-foot’ composites were created.” 

In addition, the technical report lacked “disclosure of plans or sections showing the outline of the mineralized zones, pit outlines and block grade estimates, and representative cross-sections through the deposit showing the location of the mineral resource relative to drill holes, geological units and other important information,” and “an adequate discussion of quality assurance and quality control data, and demonstrable reasons why the data is adequate beyond the author’s bare assurance that the quality of the data is adequate.” This problem, it continued, “relates to the fact that the Barkerville report does not appear to be based on independently verified data, but rather relies on undocumented and/or incomplete data provided by others.”

In terms of George’s resource estimate for Cow Mountain, APEGBC said it was “not adequately modelled or constrained,” and that the report “inappropriately suggests that no capping of high values is warranted.”

APEGBC stated that “the result of capping using the author’s ‘10-5-2 empirical cap’ was significant, indicating the impact that few assay values had on the total resource estimation … this further indicates the need for capping and to have carefully justified the use of the ‘10-5-2’ cap.”

Other criticisms were George’s use of one-foot composites derived from subdividing longer assay intervals, contrary to best practice guidelines and industry standards; the failure to use cut-off grades consistent with guidelines and industry standards; the failure to ensure “that each search sphere contains sufficient data points to ensure each block estimate is an interpolation, and not an extrapolation;” the failure “to justify the use of inverse distance to the second power methodology for block grade interpolation, as opposed to the third power or higher”; and the use of a “uniform average specific gravity value of the orebody throughout the site contrary to industry standard.”

In the case of Rubicon Minerals and its F2 deposit in Red Lake, George was responsible as QP for the company’s first resource estimate on F2 completed in January 2011, and an amended resource estimate in March 2011. (The company later released an updated resource estimate that included an estimate of indicated resources for the first time, as well as a positive preliminary economic assessment — prepared by AMC Mining Consultants in June 2011 — and in June 2013, released an updated resource estimate and PEA prepared by SRK Consulting). 

In George’s initial polygonal inferred resource estimate on Jan. 11, 2011, he outlined an uncapped (zero to 1,500 metres below surface) resource of 6.2 million tonnes grading 20.1 grams gold for 4 million contained oz. gold, and an initial block model uncapped (zero to 1,500 metres below surface) inferred resource of 5.8 million tonnes grading 17.17 grams for 3.2 million oz. gold.

In March 2011, George amended his first resource based on the polygonal model (uncapped and zero to 1,200 metres below surface) to 5.5 million tonnes grading 20.34 grams for 3.6 million contained oz. gold, and an amended block model inferred resource (uncapped zero to 1,200 metres below surface) to 6 million tonnes grading 16.49 grams gold for 3.2 million contained oz. gold.
One difference between the initial and revised resource estimates was the revision to zero to 1,200 metres below surface from the original zero to 1,500 metres below surface.

In the consent order, APEGBC said the Rubicon report in January 2011 was calculated by using an “inappropriate polygonal method,” and having chosen it “with insufficient justification,” used “inappropriately large polygons or ellipses” and both inferred and geologically inferred resource categories, “which is misleading,” and not permitted under NI 43-101 or industry standards.

It noted that the two technical reports “inappropriately suggest that capping is not warranted” and that the result of capping “using the author’s ‘10-5-2’ empirical cap” was significant, indicating the impact that few assay values had on the total resource estimation.

“This further indicates the need for capping and to have carefully justified the use of the ‘10-5-2’ cap … [and provides] an inadequate justification for this cap.”

APEGBC also said the two technical reports did not contain an adequate “application of domain boundaries to control mineralization extrapolation;” and made “inappropriate or insufficiently supported speculation regarding the potential mineralization of the area described in section 17.4.” APEGBC added that the two reports failed to provide sample statistics and adequately detailed information of the validating block model.

APEGBC noted that George had contravened the association’s code of ethics by “accepting responsibility for a professional assignment when you were not sufficiently qualified by training or experience,” and by “failing to keep yourself informed in order to maintain your competence.”

Rubicon recently announced that a revised geological model and updated resource estimate that contained gold ounces in its updated 2016 indicated resource category plunged 91% from the 2013 resource estimate, while contained gold ounces in the inferred category fell 86%, compared with the earlier estimate.

The company started trial mining the F2 deposit on its Phoenix property last year, but the geology was more complex than previously thought, and underground operations stopped in November 2015 so that Rubicon and its independent consultants could analyze geological models.

The revised model and updated resource prepared by SRK Consulting is based on information from recent development, trial stoping, chip sampling, underground structural mapping and 94,600 metres of infill drilling within a concentrated shallow area of the deposit, all of which were not previously available, Rubicon said.

“At current and projected gold prices, there just aren’t enough tonnes and grade above the 305 level to economically support stand-alone trial stoping,” Michael Winship, Rubicon’s interim president and CEO, said on a brief conference call on Jan. 11.

The updated resource estimate puts indicated resources at 492,000 tonnes grading 6.73 grams gold per tonne for 106,000 contained oz. gold, down from the 2013 estimate of 4.12 million tonnes grading 8.52 grams gold for 1.13 million contained oz. gold. The revised numbers were based on a cut-off of 4 gram gold per tonne.

Inferred resources have fallen from 7.5 million tonnes grading 9.26 grams gold for 2.22 million contained oz. gold in 2013 to 1.52 million tonnes at 6.28 grams gold for 307,000 oz. gold.

On Jan. 12, the New York Stock Exchange suspended trading on Rubicon’s shares and began de-listing proceedings.

At press time, Rubicon’s shares on the Toronto Stock Exchange were 2¢ apiece. Over the past year, Rubicon’s shares have traded within a range of 1.5¢ to $1.63 per share.