Exploration Targets Always Start Out Big Then Get Smaller With Drilling - Mines Get Better And Better As More Drilling Is Done

Whenever I do interviews or write reports, I try my best to translate geospeak into more investor-friendly terms. I’m fortunate to have plenty of mining company executives and geologists that read my reports and watch my interviews. But, I’m always mindful that the vast majority of my audience are not geologists or mining company executives and focus on presenting technical information for them as well.

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Spotlight On A Sponsor

Welcome to the new section of the written reports where we highlight sponsors and picks.

Vizsla Silver has a unique project with a base case internal rate of return (IRR) of 86% in its preliminary economic assessment (PEA). Using current prices of silver and gold pushes the IRR well into the triple digits. There are very few silver-gold development projects (or any other metals for that matter) with such remarkably high IRRs.

Equally as impressive is that their Panuco project in Mexico, has a capex estimate of $224 million which is well within the reach of what a junior like Vizsla Silver can put into production. They currently have nearly half the capex in cash and their valuation is approximately three times higher than the capex. Plus, the payback of the capex is estimated to be 9 months using the base case IRR.

They have tapped into a silver-gold rich epithermal vein cluster that only uses a few of the veins in the PEA. The rest of the veins, and the known veins remain wide open for exploration. They also have the potential for pleasant surprises of finding more blind veins like their spectacular Copala vein.

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One of my daily tasks is reviewing news releases of current picks, sponsors and potential picks. I’ve been doing this since I first got into the business as a consultant to public companies in 1993. Over that time, I’ve read thousands of news releases and been part of writing hundreds of them as well. I consider myself somewhat of a connoisseur of news releases and investors in the sector would be well served to strive for the same.

A lot of public mining companies are run by geologists, the ones that are not run by geologists rely on geologists to write the technical portions of news releases. Geologists tend to be focused on rocks and are so excited by what they see that their main focus is describing the results in geological terms without breaking it down for investors.

Not a lot of public mining companies are great at presenting geological information in ways that are focused on describing things in an investor-friendly way. I love it when it all comes together so that geologists and investors reading news releases are well informed.

I’m an exploration junkie, I love the process of searching for buried treasures using the drill rig (Truth Machine) for treasure hunting. 

I think it is awesome when explorers bring their shareholders and potential shareholders into the process of treasure hunting. This is accomplished by keeping their audience well informed throughout the process. Such as in news releases when drilling begins explaining what they are drilling, why they are drilling where they are and what they are drilling to find, and of course what they have hit with their drilling.

Geophysics can be a great way to find buried treasures and when the right geophysical survey is used and confirmed with the Truth Machine, it can be magical. My mentor in geophysics used to say to me that sometimes the magic works and sometimes it doesn’t. 

One of the first things to be determined is whether or not the geophysical anomalies and drilling results are in agreement or are they just pretty colours on a map. Communicating this information is also crucial for an exploration company to bring their audience into the treasure hunting process.

Geochemistry is another important tool in an explorer’s toolbox. I spent a lot of my career in diamond exploration and even in a high-grade diamond deposit the diamonds are minimal in abundance. Diamond indicator minerals are much more abundant and are first used to follow along the surface like breadcrumbs to find the deposit that they came from. 

Then when a diamond bearing deposit is found, the chemistry of the indicator minerals are helpful in determining the diamond prospectivity of a diamond deposit. I had a wonderful mentor in geochemistry that did the pre-discovery indicator mineral analysis at the spectacular Diavik diamond mine in Canada and after it was discovered. 

He is a brilliant geologist and researcher who helped me tremendously to understand diamonds, diamond indicator mineral chemistry and diamond exploration. Many of the same principles of diamond exploration also apply to exploration for metals and he gave me a tremendous education in all of these topics. Geochemistry is crucial for the exploration of buried treasures and I am always impressed when an exploration company does an excellent job of explaining the geochemical results from their projects.

Geology is the study of rocks, how they got where they are and the process of how metals made their way from deep in the earth's crust closer to the surface where they can be mined. When I look at rocks and their horizons, it reminds me a lot of the rings of a tree. 

An exploration geologist is trying to determine how the rocks were laid down and how structures (or cracks in the rocks) acted as a conduit to bring the metals bearing fluids from deep in the earth's crust and then made their way into the rocks to form deposits that can be mined. This information can be presented as very complex or in ways that investors that are not technical can understand. 

During my career in mineral exploration, I was fortunate to work with brilliant geologists. A common denominator for them was that they could speak in highly technical terms or break that information down in ways that everybody could get excited about.

I learned great lessons from my mentors in geology, one of them was Bob Darney (sadly he is no longer with us) who taught me what I call the Bob Darney Trend. He said that all exploration targets start out very big and then get smaller as you drill them and apply more science to them. 

But, mines are different, they get better and better the more science and drilling you throw at them. Another aspect of the Bob Darney Trend is that mines have a way of coming up with wonderfully pleasant surprises along the way of exploring and advancing them.

Of course exploration for buried treasures can have twists and turns along the way, old Mother Nature can throw explorers many curve balls. But, I have never forgotten the Bob Darney Trend because it has proven accurate many times over the history of mineral exploration and mining.

Another mentor of mine in geology was Scott Weakes (sadly he is no longer with us), Bob Darney was his mentor as well and we all worked together for many years. One day we were standing at the coffee machine and he said something that I always keep in mind. He told me that we are in the business of making projects live or killing them.

Many geologists fall in love with their projects and are afraid to kill them. They will focus on where they are highly confident they will hit based on past drilling or past mining, instead of going after the guts of the system. When I look at a project and read the news releases, corporate presentations and scientific papers, I try to get a sense of whether or not an explorer is going for the gusto by chasing after the guts of the system.

What’s out on the periphery isn’t going anywhere, but what is more exciting and has the potential to be transformative is going for the guts of the system. Goldcorp is a perfect example, it was a small struggling gold miner for many years, then they drilled deeper to find the bonanza-grade portion of the system. It started at around 1000 metres below the surface, and when they mined it, they increased their production by ten times and the cost of mining the high-grade was so low that it was a free cash flow machine. 

It made them famous, and although they got bought out years ago, they are still one of the most famous gold mining stories in Canadian gold mining history. They were a cash machine because they mined extremely high-grade gold with low costs of production that made them one of the best performing gold mining companies in the entire industry during their hay days. Going for the guts of their system was transformative and made them a revered success story in gold mining to this day.

To wrap it all up, all of these scientific tools are crucial for geologists, explorers, mine developers and miners. But, I strongly believe that how a public company uses and explains what they are doing is how investors can be brought into the process of treasure hunting with the Truth Machine to find buried treasures.

Exploration can be tremendously exciting as it is treasure hunting and I love it when companies explain it that way and also bring the audience of investors following them into the process. Even better is when they go after what can be transformative and hit what they are searching for.

It can be a wealth building situation for investors when a project hits the marks in the Bob Darney Trend. What he taught me are things I watch for all the time, looking for explorers that have projects that are  getting better and better with more drilling and also coming up with pleasant surprises along the way.

Keep it simple stupid. Go for the gusto. Do everything possible to bring investors into the treasure hunting process. Don’t be afraid to kill a project because that is often what leads to transformative discoveries that make investors fortunes.

All the best,

Allan Barry Laboucan

Disclosure

Vizsla Silver is a sponsor of Rocks And Stocks News, content creation about them is for the benefit of the company. Sponsors also benefit readers and viewers of the reports as it makes content creation possible for no charge to the Rocks And Stocks News audience. 

Rocks And Stocks News does not make buying or selling recommendations. The reports are for information purposes only. Sponsors pay a fee to Rocks And Stocks News for content creation. The business model of Rocks And Stocks News is to fund research and reporting on the sector, picks and sponsors through corporate sponsorship. We are thankful to sponsors for enabling commentary free of charge to readers and viewers of the reports. When reporting on sponsors it is on behalf of the sponsors discussed in the portion of the report mentioning the sponsor. Before making any investment decision it is important for you to speak with your financial advisors to consider your risk profile. It is also important to do your homework. To help in that process, Rocks And Stocks News means to be a gateway by doing reports and interviews of management of sponsors and picks. The reports and interviews should not be considered investment advice. Allan Barry Laboucan is the founder and owner of Rocks And Stocks News, he has worked in the mining sector since 1993 and has been reporting on the sector since 2005. He has worked with and been mentored by very talented geoscientists in geology, geochemistry and geophysics. He uses the skills he has picked up during his career to assess sponsors and picks in the reports. Whether a company is a pick or a sponsor they go through the same filter and are reported on when important news is made that Allan Barry Laboucan wants to discuss on the Rocks And Stocks News platform. He may own shares in sponsors and picks for investment purposes which he discloses when discussing them in the reports.