Drill holes sometimes lie

Drilling off reserves of placer gold is widely assumed to be a simple matter compared with the challenges presented by hardrock mining. After all, you’re dealing with gravel. I certainly held this view until I was sent to have a look at a dredging operation near Dawson, Y.T.

Two directors representing the largest shareholder, for whom I also worked, were concerned about the way reserves were being estimated. So off I went up the Alaska Highway in early January in 1960.

There was every evidence of the meticulousness with which the drilling and weighing of recovered gold was being done. The 25-year-old drill logs were carefully filed and the particles of recovered gold kept in little vials. A paper by the engineer who had supervised the work was the standard by which others evaluated placer ground in permafrost. The results from each hole had been summarized in terms of U.S. cents per cubic yard and written in pencil on the back of the log sheet. But the way these numbers were used in estimating reserves had the directors worried.

Each July a consultant would arrive from sunnier climes to spend a month plotting the courses for the next digging season for each of the six dredges. Each dredge dug through about six of the drill holes in the course of a summer season. The consultant worked away with pencil and straight edge as he drew the dredge courses through the holes.

Triangles were drawn joining holes. Then the weighted values of the gold contents were carefully estimated and volumes worked out by lesser mortals, all in classical style. The problem was that in some years the indicated recovery would not pay for dredging and the dredge was obliged to dig the poor ground to reach better stuff. Experience showed that there were usually favourable surprises to be found in digging such ground. The reverse was often the outcome of digging what was expected to be high grade.

Confronted with the problem of justifying digging ground that would not make money, the consultant went into “ponder mode” and came up with what he called a “management factor” that was to be applied to the grade of the reserves. We have all seen factors applied to estimates of gold content in hard rock ore but these multipliers are always below one. In the case of the dredge ground, the consultant would dream up factors as high as two and incorporate them into budgets. In other words, “just double the values indicated by the drill holes” was his advice. What was going on here was the question being asked by company directors.

Over thirty years of operating experience with six dredges had produced piles of statistics. I started my investigation by simply plotting the expected production (before factoring) against what actually happened. Surprise! The dots lay close to a curved line.

An “experience factor” could be read off the graph and would dispense with any need for pondering. We found the explanation for this conclusion when we screened the gold produced by the dredges. There simply were not enough of the coarse particles (which is where the unexpected money is found) for a drill hole to produce a representative sample.

In simplified terms: hit a big nugget with a hole and you overvalue the hole; miss the big nugget and you undervalue the hole. When the consultant saw this, he realized his skill was being challenged. He drew me to one side and said: “I graduated in mining engineering from the ‘X’ School of Mines in 1905 and came to this part of the country to work with the dredges. The procedures I found in place at that time have worked well, and I see no reason to change them.” I realized I was not in the presence of a mentor.

To divert what he saw, probably rightly, as an impending confrontation, the company chairman devised a competition. The consultant and I were invited to apply our respective techniques to an area where mining was being contemplated. I eagerly took up the challenge. To my surprise, the drill results, when used on my graph, showed the area to be a failure.

The consultant held the opposing view but refused to go with me to the site. When I did go, I found evidence of previous mining in the form of an open cut, something the consultant denied existed. Oh, he knew the ground well and could assure me that it didn’t. How could I lose?

My advice was ignored. Mining went ahead and proved to be a huge success. It transpired that the drill holes had all been stopped when they reached bedrock. The bedrock, however, was deeply weathered and contained many cracks. Much of the gold was in these cracks. Mining was taken six feet deeper than planned; the consultant was vindicated. At this point, I chose a turn in my career path.

— The author is a retired geologist who lives in Vineland, Ont.