Reading drill results: what lies behind announcements from resource explorers

In brief

The three figures and how they relate

A typical announcement reports an interval such as “X metres at Y grams per tonne from Z metres depth”. All three are needed.

Grade says how much of the valuable metal sits in a tonne of rock. What counts as a good grade depends entirely on the commodity and the mining method — figures from different projects are not readily comparable.

Thickness says over what distance that grade persists. A high grade over a few centimetres is usually economically meaningless.

Depth drives the cost of extraction. What lies near surface can be mined in an open pit; what lies hundreds of metres down requires underground mining and an entirely different cost base.

Drilled length and true thickness

A drill hole rarely meets an ore structure at a right angle. If the hole runs obliquely to the structure, the length measured in the core is greater than the actual thickness. Serious announcements therefore state whether a figure is drilled length or estimated true thickness.

Its absence is not proof of intent — but it is the first question worth asking.

How a mediocre result becomes a good one

The most common device is the choice of the interval reported. From a hundred metres at a low average grade, a two-metre section at a very high grade can be cut out and placed in the headline. Both are true; only one tells the story of the project.

The remedy is simple: look in the announcement for the full table of all intervals, not only those named in the headline. If it is missing, that is information in itself.

Equally common are equivalent figures, where several metals are combined into one number using price assumptions. That is permitted and often sensible, but the result depends on the assumed prices, which sit in the footnote.

From a drill result to a mine is a long way

The sequence is long and most projects never reach the end: first drilling, then a resource classified to a standard, then economic studies at several levels of precision, then permits, then financing for construction — which for a mid-sized project quickly runs into hundreds of millions.

Each of those stages is a hurdle at which a project can fail, and each takes years. Anyone reading a drill announcement should know where along that path the company currently stands.

Frequently asked questions

What is a good grade?

That can only be answered by comparison within the same commodity and mining method. The useful comparisons are with grades at producing mines of the same type, and with the assumptions the company itself uses in its studies.

Why does the price sometimes not rise despite good drill results?

Because the market expected the result, because the financing position overshadows the outlook, or because one good hole does not change the overall assessment of the project. Good news only works when it is new.

Can a non-specialist assess drill results at all?

Not fully — that requires geology. But anyone can check whether the announcement contains the necessary figures, whether the full table is provided, whether true thicknesses are given and whether a qualified person signs off. That alone separates a good deal of the chaff from the wheat.