Toss a Pebble in a Pond
April 4, 2008
This report is prompted by recent news, by the reactions of some to that news, and by conversations, this morning with Southern Arc's President, John Proust, and this afternoon with Bob Vidoni, Vice President Project Management.
At some point in your childhood, you may have conducted an experiment with pebbles and a body of water. Toss a pebble into the middle of a pond, and watch the ripples radiate outward in concentric circles. These ripples take a ‘halo’ formation surrounding the ‘core’ of the stone’s path. The bigger the stone, the greater the impact on the pond, both laterally, and vertically.
Here’s another way to consider the image, coming up from the ground, instead of down into water. In geology, involving an igneous intrusive, this phenomenon is called an ‘aura’, or ‘aureole’, or a ‘contact aureole’. See a detailed explanation with a graphic here.
Consider the core ‘finger’ of a mineralized igneous body to be like a hot water pipe, rising vertically through the earth to the surface. The country rock around this body is like an insulating asbestos wrap around that pipe. While that wrap has the effect of containing the heat of the pipe, it will naturally absorb some heat from the igneous rock. In the hydrothermal process by which a porphyry is created, heat and pressure will alter the surrounding rock, cracking and shattering it, creating paths into which liquid mineralized matter can penetrate. Think of this process as one of spillage, or splatter, with much diminished density of mineralization in comparison to the central ore body. This metamorphic process, then, typically results in non-economic mineralization in the halo or aureole, limited to a section nearer to the top of the porphyry. For a brief discussion of the exploration value of this halo, click here and here.
To the point, Southern Arc today released results for four holes.
I’ll focus on just one hole from these results, SLD013. This hole revealed the longest intersection of mineralization to date, at 576.95 metres. Its true vertical depth, at 522 metres, is fully 120 metres deeper in mineralization than any previous hole in this target porphyry. Overall grades were .12% Cu and .25 gpt Au. Mineralization began at the surface and continued almost to the full length of the hole. As I commented to a friend, the overburden is basically the sod on the ground. I later suggested to Bob Vidoni that they’ll need to move the blade on the lawnmower to the lowest level to remove this overburden. His response was, “It better be a titanium blade”.
Here’s what most people didn’t catch from the News Release. These grades, at first blush, don’t seem much to get excited about. Well, let’s have another look. This hole, by my calculation, was drilled entirely outside of the porphyry target. So what? Maybe they just miscalculated where the finger is. Nope! This is the halo/aura/aureole. Though marginal, and not worthy on its own merits, if you’re already mining a viable deposit, this material is economically worthy, at least for stockpiling until times of higher metal prices.
In an open pit mine, to remove ore at depth, the top portion of the pit must be significantly wider than the lower portion, for the integrity of the pit to remain intact. Usually, the volume of rock in the upper, outside portion of the pit is of no value. Not this time. I see reason to think that a pit at Montong Botek, alone, could end up being greater than 750 metres in diameter. There is also a chance that the halo from Montong Botek will reach and overlap with the halo from Blongas II, supporting the mandate for a pit of greater than 2 km. in length from north to south.
Now, here’s the kicker. Remember that pipe with the asbestos wrapping around it? No guarantees, but in formations such as these, the asbestos wrap does not usually extend even close to the bottom of the mineralized core ore body. Perhaps a better image would be that of a beautiful body, wrapped at the neck in a fur collar. Value in the collar suggests potential for greater value in the body which it envelopes. Now consider that fur extending downward, say, to the waistline, or to the knees. Fur collars, alone, are much more common than full length fur coats. I’m no geologist, but it follows in my thinking that the deeper the mineralized aura, and the better the grade of metals in the aura, the greater the hope for both better grades and deeper mineralization in the core. Just as a larger stone makes a bigger splash, a deeper aura, and a passably mineralized aura may reflect the promise for better news to come in the very near future. To wit, Hole SLD013, is highly suggestive that strong mineralization in the core ore body of Montong Botek runs well below a vertical depth of 522 metres. I’m thinking 800+ metres.
As a bonus, SLD015, drilled parallel to SLD013, but 150 metres to the west, shows modest mineralization (.17 gpt Au) to a vertical depth of 537 metres (15 metres deeper than SLD013). If this hole reflects an extension of the same aura, emanating from the Montong Botek porphyry formation, it speaks quietly, but voluminously.
Also at Montong Botek, the deep drill (1100 metres capacity) has progressed to 727 metres, but now faces some mechanical problems, and is consequently advancing more slowly than normal. Parts are awaited, likely coming from Australia. This hole was purposefully collared outside the known margin of the Montong Botek porphyry, to ensure that it would enter the target at some depth. Here’s why. Noting that porphyries are subject to pinching and swelling at various depths, it is desirable to build a three dimensional image of the margins of its shape. I am unable to calculate how much non-mineralized matter it must traverse before connecting with the good stuff, but will not be surprised or concerned if the first 150-300 metres come up empty. In reviewing the workshop image, it would appear to me that this drill hole will conclude well within the core of the target. Whether or not this will yield good grades of mineralization remains to be seen.
This deep drilling rig is planned to be collared in same spot as SLD013, heading due east (rather than north northeast) with an incline in the range of 75 degrees. This appears to me to be largely within the targeted porphyry at Montong Botek. By my rough calculation, it will finish in the lateral vicinity of the end of SLD001, and some distance north and slightly west of the collar of SLD002, again, at much greater depth. Along with SLD017, I expect this to be a boomer hole, based on grades for previous nearby results, coupled with potential new mineralization at a depth twice that of SLD001.
The rig now in Kedaro will soon be carried (by hand) north to Lapangan Geres, where three holes are planned. While yet to be supported by hard evidence, this target may be the sleeper in the grand scheme. From surface testing, this porphyry looks much like Montong Botek, the source of greatest interest and activity for the Company to date. Grades at the surface support further pursuit. For what it’s worth, the surface footprint of Lapangan Geres is more than 2½ times that of Montong Botek.
Rightly or wrongly, I sense a shifting of gears for the Company in both the pace of news and its presentation to the marketplace. I am pleased to see the tenor of the most recent News Release, and suspect that Bob Vidoni’s hand is all over it. If this is indicative of plans for investor relations on a go forward basis, it’s a good sign. The story long awaited by many, I believe, is about to unfold. I anticipate drilling results will come more frequently, and will be pleasing to shareholders, given the targets in their sights. Success in Contract of Work (CoW) negotiations (don’t change that channel) will bring Southern Arc into consideration by an entire new breed of investor. Finally, and with no facts on which to say so, I smell a major entering the picture from behind the curtains within the next six months. All of these activities will bring Southern Arc well along the path in making a name for itself in the marketplace.
I am of a mind to think that a return trip to Indonesia will be in order by June of this year. I have hopes for such a visit, and have said so to the Company. Ideally, I’d like to replicate the one-on-one attention afforded me on my recent visit to the Pediment (PEZ.V) sites in Baja and Sonora, Mexico. Time will tell. Developments are quite fluid, though, so nothing is for certain. This said, we’re now into April, and I’m itching for another look.
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The sole intention of this report is to provide investment-related information and opinions. The writer holds a position in the featured security and may increase or decrease such position without prior notice. All content presented in this report is obtained from sources deemed reliable, but its accuracy is not guaranteed. Use of this information is at the risk of the reader, without responsibility on the part of the writer. The writer is not a licensed investment advisor, nor a geologist and does not offer personalized investment advice. Please do your own due diligence.