The vast majority of Medinah’s expenditures to date have been concentrated at their “Gordon Pipe” discovery on the plateau at the Alto de Lipangue just outside of Santiago, Chile. The “in situ” (in the ground) value of the 180 million pounds of copper, 722,000 ounces of gold and 6.5 million ounces of silver “blocked out” to date at the “top of the Gordon Pipe” is $2.23 billion today 2/28/12. About 60% of that value is from the gold, 30% from copper and 10% from silver. This represents 1.72 million “gold equivalent” ounces within 5.3 million tonnes of ore. Depending upon the author, a “world class” deposit’s minimum threshold is either 5 or 6 million ounces of “gold equivalent”. Once the drilling is completed at the Gordon Pipe perhaps it will put the ADL deposit half way or maybe three fourths of the way toward “world class” stature just in this relatively tiny portion of the ADL property complex.
At the Gordon Pipe, the IP/IR study revealed mineralization extending 400 meters wide in an east-west direction and 200 meter in a north-south direction. Almost all of Medinah’s drilling to date was within a 100 meter section of that 400 meter width and was centered on Line “E” of the geophysical grid. Below the approximately 400 meter depth that Medinah drilled to in holes #15 and #18 the pipe “dips” further to the south and east. Of the 2 porphyries at the ADL (Alto de Lipangue) property it was the northwestern most “copper-gold” porphyry that served as the progenitor for both the Gordon Pipe and the LDM shear zone and LDM skarn/manto deposits.
For the newcomers without a background in geology that are trying in vain to get their arms around the ADL deposit, I think the best “at a glance” summary view is represented in the “Valuation considerations” report on the Medinah website under “Projects”. Figure 5b on the very last page might be the best educational resource as it was drawn to scale and reveals just how tiny the Gordon Pipe deposit is relative to the entire ADL property complex. The little tiny rectangle labeled “Gordon Pipe” serves as the best valuation “benchmark” we have because of the 18 holes drilled there to date.
We know a heck of a lot about the Gordon Pipe and we know a heck of a lot about “classical Sillitoe type copper porphyry deposits” and how homogenous they are. Within a certain tough to define level of statistical certainty, one can use the findings at the Gordon Pipe and the “copper porphyry deposit models” elucidated by Sillitoe, Singer and Cox to mentally attempt to drill out the rest of the deposit via simple extrapolation. Of the “about a dozen” intrusives as well as the two porphyry bodies proper identified on the hyper spectral satellite imaging study the Gordon Pipe is far and away the best studied surface outcropping found at the ADL.
As noted, the Gordon Pipe “rectangle” represents 5.3 million tonnes of ore worth about $2.23 billion on an “in situ” (in ground) basis. To gain a sense of the scale of the Gordon Pipe’s contribution to the overall deposit keep in mind that the average-sized copper-gold and copper-moly porphyries weigh in right at 500 million tonnes of ore when combined in a twin porphyry complex or almost 100 “top of the Gordon Pipe equivalents”. The analogy of a straw sticking out of an orange is often made as to the relative size of breccias pipes emanating out of porphyries. The Gordon Pipe is merely the first surface outcropping (straw) that Medinah chose to explore in depth. The Gordon Pipe is only 80 meters in width and its surface “footprint” on the plateau is only about 100 meters by 150 meters.
By contrast, Medinah’s “copper-moly breccia pipe” located southeast of the Gordon Pipe is 800 meters wide and wraps around the mountain for at least 2 kilometers. Medinah simply didn’t have the budget to tackle this monster. Its surface “footprint” dwarfs that of the Gordon Pipe by about a factor of 100-to-1 but this doesn’t necessarily equate to a 100-to-1 ratio of contained tonnes of ore as the geometry of this deposit has yet to be defined. This area includes 3 past producing moly mines namely the Andocollo, the Carizo and the Concordia. This “copper-moly breccia pipe” may actually represent a lobe of the copper-moly porphyry that underwent erosion such that the porphyry now sits at the surface.
In relation to other porphyry deposits in Chile I think the two factors that stand out the most about the ADL twin porphyry deposit is the favorable infrastructure present (low elevation, proximity to Santiago and available of electricity)and the potential size and therefore mine life that might be involved. The regular spacing of the various surface outcroppings over a 12,000 hectare region implies (but does not necessarily confirm) significant size even for a twin porphyry deposit. The biggest limiting factor in nearly all Chilean porphyry deposits which usually happen to be located high in the Andes is the lack of WATER. Being located in the Chilean Coast Range at a low elevation with much better water resources and electricity already in place might represent a huge advantage for the developers of this property as well as their ability to work year round due to the lower elevation.
By far and away the most highly sought after mining deposits in the world right now are the copper/gold/moly/silver porphyry deposits. A premium is being paid for those discovered in geopolitically safe countries as these deposits unfortunately happen to be not only scarce but residing in areas of the world with marked geopolitical “issues”. With the notable exception of the ADL twin porphyry discovery most of the “low hanging fruit” in the porphyry world had been thought to have already been picked. For many years, the mining majors have been forced by necessity to go after porphyry deposits of lower and lower grade at deeper and deeper depths in geopolitically unsafe regions of the world. The mining majors for the most part no longer fund their own exploration activities. They now replace the depleting assets on their balance sheets by acquiring properties discovered by the junior mineral explorers.
Rather than their shareholders taking the ultra-high risks in this sector the majors would rather have the shareholders of the junior explorers take the ultra-high risks and then grow their own reserve base via acquiring the deposits of the juniors fortunate enough to have made a large discovery. Due to the 11 year bull market in the prices of the metals being sought after the major miners have never had more cash in their coffers dedicated to growth by acquisition at a time when truly world class discoveries were relatively rare because of the previous picking of this “low hanging fruit”.
DISCLAIMER: Do not treat this as a solicitation to buy or sell the securities of any issuer cited.
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