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When all you have is one isolated drill hole, it’s difficult to develop any meaningful valuation of results. This said, as you consider across holes, and across companies, every bit of comparison information you can muster has the potential to add value.
Recognizing this cubing technique as preliminary and rough (it’s not something you can take to the bank), I am confident in its usefulness on a comparative level across companies. I’ve used it to successfully identify a number of exit opportunities on investments just in time to beat the market to the door. My suspicion is that some people are skeptical of ‘cubing’ because they paint all ore bodies with the same broad brush. Epithermal veins, for example are not so conducive to the cubing method of estimation, given their sporadic, streaky manifestation. Porphyries, however, are essentially blobs… and what’s more, blobs that often reside near other such blobs. Predictable in formation, porphyries lend themselves much better to early estimates than do veins. I’m not saying that cubing replaces mine modeling software or infill drilling… it doesn’t… not by a long stretch. At the same time, even novices can use this tool to make ballpark estimates of what one might find, after only a small number of holes have been drilled.
Be careful to exercise caution in the interpretation of this technique for multiple holes on a site. If the cubes of different holes overlap, the overlap must be reduced from the sum of the estimates across holes. In other words, in the event of overlap, results are not additive.
Be careful also not to jump to conclusions as to the ‘cube’ when the Company has already found shorter intercepts running across the angle of the hole in question. They may be doing no more than ‘threading the needle’. Don’t fall victim to this one.
To use this tool, just key the respective grades and lengths of intercepts in the pale blue cells, and whatever metal prices you would like to use. For example, you can use current metal prices, available via the Kitco links at the bottom of the page, or you can imagine what will happen to the share value with gold at $2,500. This will provide a ‘cubed’ valuation of the ore body. Add the fully diluted number of shares, total depth from the surface of mineralized ore, along with the current share price and exchange rate for the USD/CAD, and values will calculate automatically. Click here for a tutorial.
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