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The appraisal of a mineral exploration venture in the Sandon Mining Camp, British Columbia Graham, John Donald 1964

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THE APPRAISAL OF A MINERAL EXPLORATION VENTURE IN THE SANDON MINING CAMP, BRITISH COLUMBIA by JOHN DONALD GRAHAM B. A . S c , The U n i v e r s i t y o f B r i t i s h Columbia, 1962 A THESIS SUBMITTED IN PARTIAL FULFILMENT OP THE REQUIREMENTS FOR THE DEGREE OF MASTER OF APPLIED SCIENCE i n the Department o f M i n i n g and G e o l o g i c a l E n g i n e e r i n g We ac c e p t t h i s t h e s i s as conforming to the r e q u i r e d s t a n d a r d . THE TTNI¥ERSITY OF BRITISH COLUMBIA A p r i l , 1964 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t of the requirements f o r an advanced degree at the U n i v e r s i t y of • B r i t i s h Columbia,T agree that the L i b r a r y s h a l l make i t " f r e e l y a v a i l a b l e f o r reference and study. I f u r t h e r agree that per-m i s s i o n f o r extensive copying- of t h i s t h e s i s f o r s c h o l a r l y purposes may be granted by the Head of my Department or by h i s r e p r e s e n t a t i v e s . I t i s understood t h a t : c o p y i n g or p u b l i -c a t i o n of t h i s t h e s i s f o r f i n a n c i a l gain s h a l l not be allowed without my w r i t t e n permission*. Department of fyf^^^y ^Jf*J^L^J^J < ^ y . The U n i v e r s i t y of B r i t i s h Columbia, Vancouver 8 , Canada Date ABSTRACT An approach pioneered by M. A l l a i s i n h i s e v a l u a t i o n o f the e x p l o r a t i o n p o t e n t i a l o f the A l g e r i a n Sahara has been a p p l i e d to the e v a l u a t i o n o f a very much s m a l l e r r e g i o n . The r e g i o n i n v e s t i g a t e d i s a two square m i l e area, termed the. " e x p l o r a t i o n area", s i t u a t e d i n the s i l v e r - l e a d - z i n c Sandon mining camp, Slocan Mining D i v i s i o n , B r i t i s h Columbia. Although v i r t u a l l y unprospected because of overburden cover, the e x p l o r a t i o n a r e a appears to be as f a v o u r a b l e to ore ^  d e p o s i t i o n as the adjacent p a r t s o f the camp. In o r d e r to estimate the m i n e r a l d e p o s i t d i s t r i b u t i o n i n the a r e a a count o f m i n e r a l d e p o s i t s i n adjacent p a r t s o f the camp has been undertaken. The m i n e r a l d e p o s i t s i n these p a r t s were counted from an examination o f g e o l o g i c a l maps. The counted d i s t r i b u t i o n may be regarded as a sample o f the d e p o s i t d i s t r i b u t i o n i n the Sandon eamp, i n c l u d i n g the e x p l o r -a t i o n a r e a . The t r u e d i s t r i b u t i o n i n the camp may be assumed w i t h a h i g h degree of p r o b a b i l i t y to l i e w i t h i n the 95 per cent c o n f i d e n c e i n t e r v a l o f a P o i s s o n d i s t r i b u t i o n r e p r e s e n t i n g the sample d i s t r i b u t i o n . The observed d i s t r i b u t i o n and the upper and lower confidence l i m i t s d e f i n e t h r e e estimates o f the number o f d e p o s i t s e x i s t i n g i n the e x p l o r a t i o n a r e a . These estimates may t h e r e f o r e be s a i d to r e p r e s e n t t h r e e approximations o f the s i t u a t i o n i n the e x p l o r a t i o n a r e a . These approximations have "been termed the mean, low and h i g h models, r e s p e c t i v e l y . Value of the mines l i k e l y to e x i s t has been obtained from a study o f the frequency d i s t r i b u t i o n of 14 Slocan mines. The g r o s s v a l u e o f r e c o v e r a b l e metal content ( r e f e r r e d to as g r o s s v a l u e ) f o r the median mine i n t h i s d i s t r i b u t i o n was taken to r e p r e s e n t the most probable gross v a l u e o f a d i s c o v e r e d mine. R e s u l t a n t d i s c o v e r y p r o b a b i l i t y f o r the mines, important p r o s p e c t s , p r o s p e c t s , and showings p o s t u l a t e d to e x i s t i n the e x p l o r a t i o n area has been estimated a t 0.45, 0.45> 0.35 and 0.3 > r e s p e c t i v e l y . . The e f f e c t o f v a r i a t i o n s i n these estimates has been i n v e s t i g a t e d . The cost o f e x p l o r a t i o n has been c a l c u l a t e d f o r each model, e n v i s i o n i n g a program to e x p l o r e the a r e a i n s t a g e s . Costs are l a r g e l y a f u n c t i o n of the number o f d e p o s i t s e x i s t i n g , uncovered and examined. The m e r i t s o f the e x p l o r a t i o n venture~have been measured f o r each model by comparing e x p l o r a t i o n costs w i t h the expect-a t i o n (present v a l u e of a l l mines i n a model m u l t i p l i e d by the p r o b a b i l i t y of f i n d i n g them). Using the assumed v a l u e o f both mines and r e s u l t a n t d i s c o v e r y p r o b a b i l i t y , the venture appeared m a r g i n a l when measured a g a i n s t a minimum a c c e p t a b l e r e t u r n o f 150 per cent. Comparison of c o s t v s . e x p e c t a t i o n u s i n g lower estimates o f these two parameters i n d i c a t e d t h a t the venture i s not economic. However, c o n s i d e r i n g the e s s e n t i a l l y marginal n a t u r e of the venture a $6,500 expenditure to g a t h e r more d e t a i l e d i n f o r m a t i o n f o r a r e v a l u a t i o n i s warranted. Thus A l l a i s ' s approach to e v a l u a t i o n has been found to g i v e a r e a l i s t i c and u s e f u l q u a n t i t a t i v e a p p r a i s a l o f the e x p l o r a t i o n a r e a . ACKNOWLEDGEMENT The w r i t e r wishes to acknowledge the a s s i s t a n c e r e c e i v e d from P r o f e s s o r L. G. R. Crouch, Department of Mining and G e o l o g i c a l E n g i n e e r i n g , U n i v e r s i t y o f B r i t i s h Columbia. P r o f e s s o r Crouch's guidance, suggestions and encouragement were g r e a t l y a p p r e c i a t e d . TABLE OF CONTENTS page Chapter I Introduction 1 Chapter II Geology of the Sandon Camp and Surrounding Slocan Mining D i v i s i o n 3 Regional Geology . 4 Geology of the Sandon Camp.. 5 Structural Geology 7 Orebodies.... 13 Chapter III Mineral Exploration at Sandon Past and Future.. 15 History 15 The Search For Ore 16 Chapter IV Postulating Mineral D i s t r i b u t i o n i n Covered Areas 18 Introductory Considerations. 18 F i e l d Situation.... 21 D i s t r i b u t i o n of Deposits i n the Sample Areas . 24 Results of the Deposit D i s t r i b u t i o n Count.30 Chapter V Probable D i s t r i b u t i o n of Deposits i n the Exploration Area... .. 37 V a l i d i t y of the Postulated Deposit D i s t r i b u t i o n . . . . 40 Chapter VI Value of Deposits i n the Exploration Area.. 42 Gross Value of Deposits 42 Tonnage Determination 44 Present Value of Production 45 Chapter VII Discovery P r o b a b i l i t y i n the Search f o r New Deposits i n the Exploration Area... 47 Exploration Techniques 47 Discovery P r o b a b i l i t y 50 page Chapter V I I I E x p l o r a t i o n Costs 53 P r e l i m i n a r y Survey 54 The E x p l o r a t i o n Program. 54 Primary Stage 56 Secondary Stage....... 57 j?urther Stages o f E x p l o r a t i o n 60 O p t i m i z i n g the R e l a t i o n Between Costs and E x p e c t a t i o n 63 Chapter IX Economic E x p e c t a t i o n o f the E x p l o r a t i o n Area ' 65 E f f e c t o f V a r i a t i o n s i n D i s c o v e r y P r o b a b i l i t y 67 Changes i n Gross Value o f Deposits 71 V a r i a t i o n s i n E x p l o r a t i o n Costs 75 Summary 75 Chapter X Conclusions 76 TABLES Number ?age 1 CLASSES OF MINERAL DEPOSITS 24 2 LIMITS FOR MINERAL DEPOSIT CLASSES IN THE AINSWORTH COUNT 33 3 MINE DENSITY 34 4 IMPORTANT PROSPECT DENSITY 35 5 PROSPECT DENSITY • 35 6 SHOWING DENSITY 35 7 AVERAGE DEPOSIT DENSITIES 36 8 CLASSES OF DEPOSITS AND CORRESPONDING 95 PER CENT CONFIDENCE LIMITS 39 9 DEPOSIT DISTRIBUTION POSTULATED FOR THE THREE MODELS 40 10 INITIAL DISCOVERY PROBABILITY FOR EACH CLASS OF DEPOSIT 51 11 DISCOVERY PROBABILITIES FOR EACH CLASS OF DEPOSIT 52 12 EXPLORATION STAGES 55 13 COST OF PRIMARY EXPLORATION SURVEY 57 14 NUMBER OF DEPOSITS IN EACH CLASS LIKELY TO BE DISCOVERED BY THE PRIMARY STAGE 58 15 NUMBER OF DEPOSITS IN EACH REMAINING CLASS LIKELY TO BE DISCOVERED BY THE SECONDARY STAGE 61 16 EXPLORATION SCHEDULE 63 17 THE THREE EVALUATION PARAMETERS FOR EACH MODEL. 65 18 PER CENT RETURN FOR EACH EXPLORATION MODEL 66 19 VARIATION RANGE OF RESULTANT DISCOVERY PROBABILITY FOR EACH MODEL 67 20 HIGH DISCOVERY PROBABILITY: THE THREE EVALUATION PARAMETERS AND PER CENT RETURN FOR EACH MODEL 68 Number 21 LOW DISCOVERY PROBABILITY: THE THREE EVALUATION PARAMETERS AND PER CENT RETURN FOR EACH MODEL FIGURES Number Page 1 The C e n t r a l P o r t i o n o f the Slocan Mining D i v i s i o n Near Sandon, B r i t i s h Columbia 2 2 S e c t i o n A-A*:' S i m p l i f i e d Shape o f the Slocan F o l d 7 3 S t r u c t u r a l Trends i n the Sandon Mining Camp ( a f t e r Hedley, 1952) 8 4 An I d e a l i z e d View Through a T a n g e n t i a l Fault.... 1 G 5 Lodes, the S i l v e r Ridge Sample Area and the E x p l o r a t i o n Area a t Sandon. 12 6 The Gross Value Frequency D i s t r i b u t i o n o f 14 Slocan Mines 43 7 V a r i a t i o n s i n Per Cent Return A c c o r d i n g to D i s c o v e r y P r o b a b i l i t y 69 CHAPTER I INTRODUCTION Recent improvements i n l e a d and z i n c markets together w i t h a marked improvement i n the o u t l o o k f o r s i l v e r have r e v i v e d i n t e r e s t i n the e x p l o r a t i o n o f areas f a v o u r a b l e to l e a d , z i n c and e s p e c i a l l y s i l v e r m i n e r a l i z a t i o n . One such a r e a i s the Sandon mining camp s i t u a t e d i n the c e n t r a l p o r t i o n o f the Slocan Mining D i v i s i o n near Sandon, B r i t i s h Columbia. T&e l o c a t i o n of t h i s camp i s shown i n F i g u r e 1. I n the e a r l y decades o f t h i s century the camp was w e l l known f o r i t s h i g h grade s i l v e r - l e a d - z i n c o r e b o d i e s . I t seems l i k e l y t h a t s i m i l a r orebodies remain u n d i s c o v e r e d , p a r t i c u l a r l y i n l o c a l i t i e s where overburden i s r e l a t i v e l y deep. A p r e s e n t widespread p r a c t i c e i n the mining i n d u s t r y i s to base e x p l o r a t i o n d e c i s i o n s on r a t h e r q u a l i t a t i v e d a t a . A d e c i s i o n t o e x p l o r e an a r e a such as the Sandon camp i s u s u a l l y based e n t i r e l y on a s u b j e c t i v e o p i n i o n o f i t s f a v o u r a b i l i t y and an i m p l i e d i n t u i t i v e a p p r a i s a l o f p o t e n t i a l monetary r e t u r n . However i t seems e v i d e n t t h a t the decision-making process would be f a c i l i t a t e d i f a more e x p l i c i t c r i t e r i o n , such as a f i g u r e o f m e r i t , were a v a i l a b l e . 2 1 200 m i l e s F i g u r e 1 C e n t r a l P o r t i o n o f the S l o c a n Mining D i v i s i o n Hear Sandon, B r i t i s h Columbia A l l a i s (1957) has pioneered an approach of t h i s k i n d i n h i s economic a p p r a i s a l o f a l a r g e p a r t o f the A l g e r i a n Sahara. Per-haps a s i m i l a r approach might be a p p l i e d w i t h u s e f u l r e s u l t s to a much s m a l l e r area, such as the Sandon Camp. CHAPTER I I GEOLOGY OP THE SANDON CAMP AND'SUIffiOUNDING SLOCAN MINING DIVISION The Sandon camp l i e s w i t h i n the Slo c a n Range, a d i v i s i o n o f the S e l k i r k Mountains. Maximum r e l i e f i n the range can be measured from Kootenay Lake, e l e v a t i o n 1,741 f e e t or Slocan Lake, e l e v a t i o n 1,756 f e e t , to Kokanee Peak a t an e l e v a t i o n o f 9»400 f e e t . Numerous creeks and r i v e r s d i s e c t the range, g i v i n g r i s e to youth-f u l mountain streams and r i v e r s c o u r s i n g i n V-shaped v a l l e y s . Seaton Creek and E a s l o R i v e r formed two such v a l l e y s which were the main r o u t e to the Sandon camp. Prom Idaho Peak, S i l v e r Ridge extends i n a southeast d i r e c t i o n f o r approximately e i g h t m i l e s . S i l v e r Ridge f a l l s o f f to the southwest i n t o S i l v e r t o n Creek and to the n o r t h e a s t i n t o Carpenter Creek. To the n o r t h e a s t o f the settlement o f Sandon l i e s Mount Payne and Reco Mountain connected by Payne Ridge. R e l i e f i n the ar e a i s approximately 4,000 f e e t as Sandon l i e s a t 3,400 f e e t , S i l v e r Ridge a t t a i n s 7,000 f e e t a t v a r i o u s p l a c e s , and Mt. Payne and Reco Mountain are 7,500 and 8,200 f e e t above sea l e v e l , r e s p e c t i v e l y . The combination of p r e c i p i t o u s s l o p e s and heavy s n o w f a l l i n the Sandon camp has made snowslides a t h r e a t to mining o p e r a t i o n s . 4 R e g i o n a l Geology The c e n t r a l p o r t i o n o f the Slocan Mining D i v i s i o n i s under-l a i n by a n o r t h to n o r t h w e s t - s t r i k i n g assemblage o f rock u n i t s which has been i n t r u d e d by the Nelson b a t h o l i t h and a s s o c i a t e d minor i n t r u s i o n s . The Nelson b a t h o l i t h l i e s west o f Ainsworth and south o f a l i n e drawn between Kasl o and New Denver (See F i g u r e I ) . Exposed on the east shore o f Kootenay Lake, a l t e r e d w e s t e r l y d i p p i n g sediments o f the Lardeau group o v e r l i e the Lower Cambrian Badshot f o r m a t i o n (age from F y l e s and Eastwood, 1962, p. 15). The M i l f o r d group, dated as Upper Ca r b o n i f e r o u s and T r i a s s i c ( C a i r n e s , 1934, p. 43), u n d e r l i e s the T r i a s s i c ( C a i r n e s , 1934, p. 61) Kaslo group. Both o f these, groups c o n t a i n abundant s c h i s t , but the l a t t e r i s noted f o r i t s v o l c a n i c greenstone members. The sedimentary S l o c a n group o f T r i a s s i c age ( C a i r n e s , 1934, p. 61), i s the c o n t a c t member between t h i s assemblage of groups and the Nelson b a t h o l i t h . L i t t l e (1960, p. 86), p l a c e s the age o f the Nelson b a t h o l i t h between upper J u r r a s s i c and perhaps middle Lower Cretaceous. D e s c r i b i n g the n o r t h e r n p o r t i o n s o f the b a t h o l i t h a d j a c e n t to i t s c o n t a c t w i t h the Slocan group Cairnes (1934, p. 61), r e c o g n i z e d two component phases, the Nelson g n e i s s and the Nelson g r a n i t e . Contacts between the components are g r a d a t i o n a l . The Nelson g n e i s s i s ". . . d i s t i n g u i s h e d by banded s t r u c t u r e s r e s u l t i n g from g r a n i t i c i n v a s i o n i n o l d e r bedded f o r m a t i o n s . " The g n e i s s passes i n t o the crushed and f o l i a t e d zone o f the Nelson g r a n i t e i n a g r a d a t i o n a l b e l t a few hundreds o f yards wide. Cairnes (1934, p. 61) s t a t e s , "Within a width o f , perhaps, s e v e r a l hundred f e e t t h i s f o l i a t e d g r a n i t e passes 5 i n t o the massive, p o r p h y r i t i c member o f the Nelson g r a n i t e . " The p r o p h y r i t i c g r a n i t e t h e r m a l l y metamorphosed the Slocan group i n a zone 1,000 to 2,000 f e e t wide al o n g the c o n t a c t . I t i s thought t h a t the Nelson b a t h o l i t h i s the source of m i n e r a l i z a t i o n i n the Sandon and Ainsworth areas ( C a i r n e s , 1934, p. 68). Geology o f the Sandon Camp Only, those f e a t u r e s o f the Sandon geology having d i r e c t b e a r i n g on ore c o n t r o l s w i l l be d i s c u s s e d . For a more d e t a i l e d account, upon which t h i s d i s c u s s i o n i s main l y based, Hedley's work on the a r e a (Hedley, 1952) should be c o n s u l t e d . The Sandon a r e a i s u n d e r l a i n by the S l o c a n group. S t r u c t u r a l complexity, s i l i c i f i c a t i o n and i n t e r g r a d i n g o f r o c k types w i t h i n t h i s group renders c o r r e l a t i o n and mapping d i f f i c u l t . Rocks o f the Slo c a n group i n c l u d e , a c c o r d i n g to Hedley (1952, p. 18), " a r g i l l i t e s , q u a r t z i t e s , l i m e s t o n e s , and every admixture o f these as w e l l as some t u f f . " A r g i l l i t e i s u s u a l l y massive and f i n e g r a i n e d . I t may be f i n e l y bedded but bedding does not as a r u l e p r o v i d e cleavage p l a n e s . Q u a r t z i t e may be impure o r pure. The impure v a r i e t i e s are as a r u l e a r g i l l a c e o u s . Hedley (1952, p. 20), suspected v a r i o u s f a c i e s a l o n g q u a r t z i t e h o r i z o n s which a f f e c t e d both t h e i r t h i c k n e s s and c h a r a c t e r , l i m e s t o n e occurs i n beds up to 100 f e e t t h i c k , commonly in t e r b e d d e d w i t h q u a r t z i t e and a r g i l l i t e . A pparently the r e l a t i o n between these two ro c k types and lime s t o n e i s c l o s e because a r g i l l i t e and q u a r t z i t e o f t e n grade i n t o l i m e s t o n e . Some q u a r t z i t e i s thought 6 t o be s i l i c i f i e d limestone. Sequences of these g r a d a t i o n a l a r g i l l i t e s , q u a r t z i t e s and limestones have "been mapped as mixed, banded rocks. Rocks of a s i m i l a r g r a d a t i o n a l and interbedded nature but c o n t a i n i n g l e s s CaCOj have been termed interbedded a r g i l l i t e s and q u a r t z i t e s . Dykes, s i l l s and stocks r e l a t e d to the Nelson b a t h o l i t h are common i n the Slocan group (Cairnes, 1934, p. 69). The stocks are commonly g r a n i t e , g r a n o d i o r i t e and may be p o r p h y r i t i c . Cairnes c l a s s e s the numerous dykes and s i l l s as s a l i c or mafic. The s a l i c i n t r u s i v e s , o f t e n g r a n i t i c to g r a n o d i o r i t i c , tend to f o l l o w the s t r i k e and other planar f e a t u r e s of the host sediments. The mafic dykes may grade i n t o s a l i c dykes or may be of a d i s t i n c t lampro-p h y r i c nature. Hedley (1952J p. 2 5 ) , s t a t e s that the s i l l s are deformed by f o l d i n g of the Slocan group. He deduces t h a t they were probably t h e r e f o r e i n t r u d e d d u r i n g the l a s t stages of f o l d i n g . A l l dykes are p r e m i n e r a l . Metamorphic e f f e c t s are widespread i n the Sandon area. Zones of f r a c t u r e and flowage can be conspicuous, e s p e c i a l l y i n a r g i l l i t e , due to the development of now-rusted p y r i t e . Thermal metamorphism i s not i n t e n s e and i s seen only c l o s e to i n t r u s i v e bodies. Hedley (1952, pp. 28 - 2 9 ) , discusses s i l i c i f i c a t i o n i n some d e t a i l . Widespread l o c a l s i l i c i f i c a t i o n has a l t e r e d the country r o c k s , e s p e c i a l l y limestone, making c o r r e l a t i o n d i f f i c u l t . I n places s i l i c i f i e d rocks grade i n t o igneous i n t r u s i v e s . Hedley i s c e r t a i n t h a t s i l i c i f i c a t i o n took place before m i n e r a l i z a t i o n , i n f a c t there seems to be no r e l a t i o n between lodes ( m i n e r a l i z e d f i s s u r e s or f a u l t s ) and s i l i c i f i c a t i o n . Structural Geology 7 Major Structural Features As the r e s u l t of extensive f i e l d work i n the Sandon area Hedley (1952, pp. 30-50), shows the existence of a "gigantic drag-f o l d i n which the higher, overriding s t r a t a moved r e l a t i v e l y north-eastward, supposedly i n response to tangential earth stresses." The f o l d extends from the Kaslo group to the Nelson granite. As seen i n Figure 2, the upper arc has been eroded and the lower arc i s thought to l i e i n the Sandon area, generally below Carpenter Creek. (Figure 5 shows the l o c a t i o n of section A-A f). .  j ; . 1 mile Figure 2 Section A-A' ; Simplified shape of the Slocan f o l d 8 The S l o c a n f o l d i s complicated by i t s r e l a t i o n s w i t h the Nelson b a t h o l i t h as shown by the s t r u c t u r a l t r e n d l i n e s i n F i g u r e 3. A p p a r e n t l y the beds were downbuckled and curved i n the h o r i z o n t a l plane near t h e i r c o n t a c t w i t h the g r a n i t e . I t i s not known whether t h i s deformation was due to the emplacement o f the g r a n i t e o r whether the g r a n i t e a c t e d as a b u t t r e s s a g a i n s t which the beds were f o l d e d . The curvature i s b e l i e v e d to have o c c u r r e d d u r i n g the l a s t stages of the Slocan f o l d ' s f o r m a t i o n . ~1 F i g u r e 3 S t r u c t u r a l , t r e n d s i n the Sandon mining, camp ( a f t e r Hedley, 1952) The southwest p o r t i o n of the Sandon area i s u n d e r l a i n by the n o r t h e a s t e r l y overturned limb o f the n o r t h e a s t - d i p p i n g panel o f the S l o c a n f o l d (See F i g u r e 2 ) . T h i s panel passes through Idaho Peak and S i l v e r Ridge, r o l l i n g under a t a c r e s t a l zone which 9 r o u g h l y p a r a l l e l s Carpenter Creek from Sandon down stream. The p a n e l i s marked by numerous p l e a t s or d r a g f o l d s as w e l l as zones o f repeated r e v e r s a l s i n d i p . The plunge of these f o l d s i s g e n e r a l l y northwest t o the northwest o f the zone o f no plunge (See on F i g u r e 3 ) . South o f the zone o f no plunge, i n the v i c i n i t y o f the Mammoth mine, the f o l d s plunge s o u t h e r l y . Again south of t h i s zone, but f u r t h e r to the n o r t h e a s t i n the v i c i n i t y o f Sandon, these f o l d s v a r y g r e a t l y i n s c a l e and form. Along a s e c t i o n p e r p e n d i c u l a r to the tr e n d o f the Slocan f o l d the d r a g f o l d i n g i s seen to be n e a r l y i s o c l i n a l a t Idaho Peak but more open to the n o r t h e a s t , near Sandon. The amplitude i s i n the o r d e r o f 2,500 f e e t or more on the southwest to 100 f e e t and l e s s on the n o r t h -e a s t . V a r i a t i o n s i n s i z e and form a l s o occur along the plunge, due i n p a r t to v a r i o u s f a c i e s and changing s t r e s s d i s t r i b u t i o n . F a u l t s and Lodes T a n g e n t i a l and c r o s s c u t t i n g f a u l t s are the two main f a u l t types r e c o g n i z e d . T a n g e n t i a l f a u l t s f o l l o w the f o r m a t i o n a l s t r i k e . These normal f a u l t s , formed d u r i n g the l a s t stages of f o l d i n g , are due t o the i n a b i l i t y o f rocks to e n t i r e l y r e l i e v e the compressive f o r c e s by f o l d i n g . The c r o s s c u t t i n g f a u l t s , so named because o f t h e i r r e l a t i o n t o the s t r u c t u r a l t r e n d , s t r i k e n o r t h e a s t and, "with r a r e e x c e p t i o n d i p southeast" (Hedley, 1952, p. 46). These are normal f a u l t s w i t h maximum l a t e r a l movements i n the p o s s i b l e o r d e r o f s e v e r a l hundred f e e t . They occur i n a t l e a s t t h r e e zones which extend a c r o s s 10 •Figure 4. An I d e a l i z e d View through a T a n g e n t i a l F a u l t S i l v e r Ridge, the l o n g e s t zone h e i n g s i x m i l e s l o n g . There are a l s o s m a l l e r c r o s s c u t t i n g f a u l t s w i t h n e i t h e r the displacement or l e n g t h of the l a r g e r f a u l t s . Hedley (1952, p. 49), suggests t h a t the c r o s s c u t t i n g f a u l t s may have s t a r t e d as bedded shears i n the n o r t h e a s t s t r i k i n g sediments c l o s e to the b a t h o l i t h . On p a s s i n g i n t o the northwest s t r i k i n g sediments these shears become c r o s s -c u t t i n g . Mutual d i s e c t i o n of. t a n g e n t i a l and c r o s s c u t t i n g f a u l t s suggests t h a t they are contemporaneous. Lodes are those c r o s s c u t t i n g f a u l t s t h a t are m i n e r a l i z e d . Hedley (1952, p. 47), s t a t e s : M i n e r a l i z a t i o n i s not continuous i n them but i s l o c a l i z e d i n f a v o u r a b l e s i t u a t i o n s a l o n g the zone o f f a u l t i n g , from w a l l to w a l l i n some i n s t a n c e s i n s m a l l e r f a u l t s and a c r o s s p a r t o f the width i n the l a r g e r f a u l t s . The l o d e s are r e c o g n i z e d as channelways f o r m i n e r a l - b e a r i n g s o l u t i o n s ; when c o n d i t i o n s were f a v o u r a b l e ore was d e p o s i t e d . 11 Large lodes are zones of f r a c t u r i n g and shearing 50 feet or more wide which often extend r e l a t i v e l y free from o f f s e t f o r a mile or more. These lodes are noted f o r t h e i r branching character and often merge to form lode systems. The longest such system i s the Standard-Silversmith, s i x miles long. (See Figure 5). In a lode generally only one major break accompanied by several subsidiary breaks i s noted. However, changes i n width and number of f i s s u r e s along with the degree of rock shattering between f i s s u r e s as i t passes from one rock type to another, are noted. The bedding attitude influences lode attitude and where the angle between these planar features i s small the lode may pass into bedding. Small lodes are seldom deflected by bedding and follow r e l a t i v e l y s t r a i g h t courses. They are believed to be related to crosscutting lodes. Hedley (1952, p. 55), found that ore occurs i n those parts •of the lode that are shattered rather than sheared. He outlined the following r e l a t i o n s that are apt to produce shattering: (1) Intersection of f i s s u r e s ; (2) Bedded lode jumping across f i s s u r e s ; (3) Lode cutting rock of favourable competency; (4) A r o l l i n g or bending lode passing from so f t e r to harder rocks; (5) Lode crossing bedding at a large angle with d i r e c t i o n of movement across rather than with the bedding; (6) Component of tension i n lode movement. F i g u r e 5 Lodes, the S i l v e r Ridge Sample Area and the E x p l o r a t i o n Area a t Sandon Orebodies 13 The Silversmith orebody, containing approximately 200,000 tons averaging 16 ounces of s i l v e r per ton, 6 per cent lead, and 3 per cent zinc i s the largest orebody i n the Sandon camp. Ore grade i n the smaller mines (20,000 tons or l e s s ) was higher. Stoping was carried out f o r a length of 700 feet and a v e r t i c a l distance of 625 feet on the Silversmith orebody. Ore i n t h i s deposit and i n others seldom extended across the f u l l width of the lode but occurred i n lenses or mineralized f i s s u r e s . These features were usually several feet wide and at times attained a width of some tens of feet. The Standard orebody, while not geographically within the Sandon camp, represents some of the maximum ore widths discovered i n the lode type s i l v e r - l e a d - z i n c deposits. Describing t h i s orebody Cairnes (1934, p. 83) states, "The main or foot-wall section attained a width of 40 feet, about h a l f of i t s o l i d or nearly s o l i d galena and the remainder ore of m i l l i n g grade." While orebodies vary i n si z e and s t r u c t u r a l r e l a t i o n s , they have certa i n mineralogical features i n common. The Sandon ores are the t y p i c a l "wet ores" of the Slocan. Galena and sphalerite are the prominent ore minerals and they are associated with c a l c i t e s i d e r i t e and quartz (Cairnes, 1934). In most mines s i l v e r has yielded the largest returns. S i l v e r assays as high as 250 ounces per ton were encountered i n some hand sorted ores. Although s i l v e r i s closely associated with galena i t i s probably contained i n tetrahedrite and i n small amounts of other silver-bearing minerals admixed with galena. (Hedley, 1952, p. 59). Tetrahe-d r i t e i s more conspicuous i n the higher grade ore. 14 Many Slocan ore bodies were observed to grade from s i l v e r -bearing galena to sphalerite. This feature i s seen i n ore bodies throughout the d i s t r i c t , regardless of t h e i r elevation. Cairnes (1934J PP. 110-111), a f t e r a careful study of the d i s t r i c t , suggested that t h i s phenomenon was due to thermal zoning during ore emplacement. Those deposits above a c e r t a i n isothermal sur-face would be characterized by s i l v e r - l e a d mineralization and those below that surface by zinc . The shape of the isothermal surfaces would be dependent at l e a s t i n part on the shape of the Nelson batholith*s contact with the Slocan group. The apparent p a r a l l e l i s m of these surfaces to the present topography was deemed accid e n t a l . This theory did l i t t l e to encourage exploration below zinc-bottomed deposits. Hedley (1952, p. 60), on the other hand saw "no evidence f o r a temperature control of mineral deposition, but abundant evidence f o r s t r u c t u r a l control." He regarded the ore deposits as i n d i v i d u a l s occurring i n response to c e r t a i n s t r u c t u r a l con-di t i o n s which may occur at various depths i n a lode. These con-diti o n s have been previously mentioned. Furthermore, he found that the orebodies were generally composite; the centers were r e l a t i v e l y r i c h i n galena and the peripheries r e l a t i v e l y r i c h i n s p h a l e r i t e . Thus ore shoots became more "zincy" i n any d i r e c t i o n as they were mined out. Hedley*s views on ore control and metal d i s t r i b u t i o n were endorsed by Ambrose (1957, p. 95), as a r e s u l t of his study of the Violamac mine. CHAPTER I I I 15 MINERAL EXPLORATION AT SANDON, PAST AND FUTURE H i s t o r y o f the Camp c D i s c o v e r y of m i n e r a l d e p o s i t s i n the Sandon (Camp was preceded by p r o s p e c t i n g on the shore o f Kootenay Lake. In 1891 two pr o s p e c t o r s r e t u r n i n g to Ainsworth a f t e r e x p l o r i n g the then v i r g i n Sandon a r e a are r e p o r t e d to have climbed Mt. Payne i n hopes o f obse r v i n g a d i r e c t route home ( C a i r n e s , 1934, p. 4 ) . Here they d i s c o v e r e d an outcrop o f s i l v e r ore r i c h e r than ore found i n the Kootenay Lake r e g i o n . T h e i r d i s c o v e r y became the Payne mine. This f i n d t r i g g e r e d the boom t h a t made the Slocan, and the Sandon camp i n p a r t i c u l a r , famous as a s i l v e r mining d i s t r i c t . K a s l o became the supply and a d m i n i s t r a t i o n center f o r the S l o c a n . Prom one or two i n 1891, the p o p u l a t i o n o f Kaslo grew to between 4,000 and 5,000 i n 1892. By 1895, 35 p r o p e r t i e s had shipped crude ore and a r a i l w a y had been b u i l t from Kaslo to Sandon. At t h i s time the Slocan was f i r s t among B r i t i s h Columbia's mining d i s t r i c t s i n v a l u e o f s i l v e r produced. The f o r t u n e s o f the d i s t r i c t were v o l a t i l e however. Prom an a l l - t i m e peak i n 1917 of 230,000 tons o f ore, p r o d u c t i o n dwindled, but o c c a s i o n a l l y surged i n response to metal p r i c e s , e s p e c i a l l y the s i l v e r p r i c e . Pew new d i s c o v e r i e s were made a f t e r 1892, and the developed d e p o s i t s were i n g e n e r a l not noted f o r c o n t i n u i t y . Ore bodies bottomed o r became z i n c y w i t h depth, the l a t t e r b e i n g a d e t r i m e n t a l develop-ment, f o r d u r i n g the e a r l y years o f the camp z i n c y ores c o u l d n ot 16 be p r o f i t a b l y treated. Cairnes (1932, p. 6) spates, ... the p r e v a i l i n g impression was that the ores of the Slocan 'did hot go down,' and mine operators hesitated to venture the p r o f i t s r e a l i z e d from the production of t h e i r outcropping ore-bodies on under-takings designed to prove t h e i r properties at depth. As ore deposits became mined out at the p r e v a i l i n g economic conditions, or as metal p r i c e plunges i n 1923 and 1930 reduced some ore to waste overnight, a c t i v i t y waned. Since then an occasional new discovery, advances i n metallurgy and m i l l i n g c practice, along with periods of higher metal prices have a l l served to revive i n t e r e s t i n the Sandon camp from time to time. The Search f o r Ore I n i t i a l prospecting i n the Sandon camp took the form of searching the surface f o r mineral outcrops. As the r e l a t i o n s h i p between lodes and orebodies was immediately evident, many lodes were examined by adits and p i t s i n the hope that ore would be encountered at depth. Following galena f l o a t t r a i n s and ground s l u i c i n g accounted f o r the discovery of a number of orebodies, including the V i c t o r . The Sandon camp was intensely prospected by experienced men. Hedley (1952, p. 12) states, I t i s a tri b u t e to the early prospectors to record that i n the general v i c i n i t y of Sandon most of the productive lodes were discovered before the end of 1892, and that r e l a t i v e l y few discoveries have been made i n the succeeding years. It i s i n t e r e s t i n g to note that apart from the discovery of new orebodies associated with ex i s t i n g mines, discovery of new mines i n t h i s century has been due primarily to exploration beneath the overburden. 17 It i s therefore thought that the greatest chance of future exploration success i n the camp l i e s i n inve s t i g a t i n g those portions of the camp covered by overburden. Those overburden-covered portions l y i n g on or near the possible extension of known lodes would seem to o f f e r the most promise. One such area l i e s along Carpenter Creek; i t has been outlined i n blue i n Figure 5. This area, termed the exploration area, contains only a few scattered outcrops and creek-bed exposures (Hedley, 1952, p. 19!' and personal correspondence). The great majority of the rock surface i n t h i s area may therefore be said to be unexplored f o r mineral deposits. As the geological factors i n the choice of th i s area w i l l be discussed i n d e t a i l l a t e r , i t i s s u f f i c i e n t to state at t h i s point that the area i s well placed with respect to the l o c a t i o n of known lodes. An attempt w i l l be made to appraise the outcome of a systematic prospecting venture carried out i n th i s area. 18 CHAPTER IV POSTULATING MINERAL DISTRIBUTION IN COVERED AREAS I n t r o d u c t o r y C o n s i d e r a t i o n s A l l a i s ' s Work The problem of p o s t u l a t i n g the economic outcome o f e x p l o r -a t i o n i n a covered p a r t o f the Sandon camp appears to be s i m i l a r i n g e n e r a l nature to the problem of e v a l u a t i n g e x p l o r a t i o n success i n the A l g e r i a n Sahara as undertaken by A l l a i s (1957). A l l a i s reasoned t h a t m i n e r a l d e p o s i t s o c c u r r e d i n response to the i n f l u e n c e o f many f a c t o r s and t h a t number and s i z e o f orebodies to be found i n any l a r g e area were l i k e l y to approximate one o r ot h e r o f the w e l l known s t a t i s t i c a l models. Furthermore, i n re g i o n s e q u a l l y s u i t a b l e f o r ore d e p o s i t s the parameters of the d i s t r i b u t i o n should be comparable. Therefore i f parameters of d i s t r i b u t i o n could be obtained f o r known r e g i o n s , the same parameters could be used to g a i n an estimate o f d i s t r i b u t i o n i n unknown r e g i o n s . I n p o s t u l a t i n g the number o f ore d e p o s i t s l i k e -l y to be pr e s e n t i n the A l g e r i a n Sahara A l l a i s gathered data on mine d i s t r i b u t i o n from c e r t a i n l a r g e areas o f the world. These areas, i n France, the Un i t e d S t a t e s , and oth e r p a r t s o f the world, were thought to be b r o a d l y s i m i l a r g e o l o g i c a l l y to the f a v o u r a b l e areas o f the Sahara, i . e., they were u n d e r l a i n f o r the most p a r t by igneous-sedimentary-metamorphic assembleges i n which ore d e p o s i t s c o u l d be expected to oc c u r . He p o s t u l a t e d t h a t the miner-19 a l d i s t r i b u t i o n i n the Sahara l a y somewhere w i t h i n the v a r i a t i o n s shown by the d i s t r i b u t i o n i n these b e t t e r known a r e a s . At f i r s t s i g h t such p o s t u l a t i o n s may seem u n j u s t i f i e d i n view of the d i f f e r e n c e s i n g e o l o g i c a l make-up between the Sahara and the s t a t i s t i c a l source a r e a s . However these l a r g e areas (approximately -400,000 square m i l e s each) were predominately u n d e r l a i n by geology f a v o u r i n g ore d e p o s i t i o n . T h i s g e n e r a l o r d e r o f f a v o u r a b i l i t y i s a l l t h a t i s necessary f o r A l l a i s ' s purposes f o r he s t a t e s (p. 316) , "...the impact of the g e o l o g i c a l s t r u c t u r e i s f a r l e s s important than we would have expected a p r i o r i . " P o s t u l a t i n g M i n e r a l Deposit D i s t r i b u t i o n i n Mining Camps A study of A l l a i s ' s work suggests t h a t a s i m i l a r method of g a t h e r i n g i n f o r m a t i o n from one area and a p p l y i n g i t to another might be used i n c o n s i d e r a t i o n s o f much s m a l l e r r e g i o n s , i . e . , mining camps of 5 or 10 square m i l e s i n a r e a . With the r e d u c t i o n o f area s i z e , broad g e o l o g i c a l g e n e r a l i z a t i o n s are not adequate. C o m p a r a b i l i t y must be s u b s t a n t i a t e d i n much more s p e c i f i c terms i n s m a l l e r a r e a s . The o n l y d a t a on m i n e r a l d e p o s i t d i s t r i b u t i o n r e a d i l y a v a i l -a b l e i n a mining camp such as Sandon, c h a r a c t e r i z e d by s m a l l s t e e p l y d i p p i n g ore bodies, i s the d i s t r i b u t i o n o f m i n e r a l o c c u r -ences t h a t apex a t the rock s u r f a c e . These occurrences are found i n outcrop a r e a s . In those p a r t s of the camp where e x t e n s i v e underground work has been undertaken, a d d i t i o n a l i n f o r m a t i o n may 20 be a v a i l a b l e on the d i s t r i b u t i o n o f non-apexing o r e b o d i e s . However, these p a r t s are r e l a t i v e l y s m a l l as compared to the camp as a whole and such i n f o r m a t i o n i s t h e r e f o r e meager. To g e n e r a l i z e , d i s t r i b u t i o n o f apexing d e p o s i t s i s shown i n out-crops but l i t t l e i s known o f d i s t r i b u t i o n a t depth. T h e r e f o r e , p a r t i c u l a r l y i f the mode of se a r c h f o r new d e p o s i t s i n v o l v e s o n l y s h a l l o w depth p e n e t r a t i o n , i t i s p e r t i n e n t to c o n s i d e r the d i s t r i b u t i o n o f the apexing m i n e r a l d e p o s i t s o n l y . Outcrop areas and t h e i r contained m i n e r a l occurrences might be s a i d to r e p r e s e n t a sample of apexing m i n e r a l d i s t r i b u t i o n i n the camp. A summation o f the number o f occurrences found, d i v i d e d by the t o t a l a r e a o f outcrop s u r f a c e sampled would y i e l d the occurrence o r m i n e r a l d e p o s i t d e n s i t y . T h i s d e n s i t y could then be a p p l i e d t o overburden-covered p o r t i o n s of the camp where g e o l o g i c a l circumstances were g o u a l l y f a v o u r a b l e f o r m i n e r a l i z a t i o n . The r e l i a b i l i t y of such a d e n s i t y estimate and the areas to which i t can be a p p l i e d depends p r i m a r i l y on the geology o f the camp. Data gathered i n one g e o l o g i c a l environment can o n l y be a p p l i e d to a s i m i l a r environment; the degree of s i m i l a r i t y between areas governs the confidence o f the es t i m a t e . Thus the b a s i c approach suggested i n e s t i m a t i n g apexing ore d e p o s i t e x i s t e n c e i n covered areas i s to ana l y s e the d i s t r i b u t i o n o f ore d e p o s i t s i n an exposed area and apply the r e s u l t s to the unexposed a r e a . These two areas may be termed the sample and e x p l o r a t i o n a r e a s , r e s p e c t i v e l y . The next c o n s i d e r a t i o n i s whether or not the Sandon ar e a i s s u i t a b l e f o r such an a n a l y s i s . 21 F i e l d S i t u a t i o n Two sample areas were s e l e c t e d . That p a r t o f S i l v e r Ridge o u t l i n e d i n red i n F i g u r e 5 was s e l e c t e d a p r i n c i p a l sample a r e a . P r i m a r i l y because o f topography, bedrock i s more exposed i n t h i s a r e a than i n the e x p l o r a t i o n a r e a . The same g e n e r a l i z a t i o n h o l d s t r u e f o r Payne Ridge, the second sample a r e a . I n d i c a t i o n s are t h a t the e x p l o r a t i o n area enjoys the same g e n e r a l o r d e r o f f a v o u r a b i l i t y as the Sandon a r e a as a whole (Hedley, p e r s o n a l correspondence). The Queen Bess-Idaho and Alamo-Conductor l o d e systems, as seen i n the more exposed p a r t s , appear to s t r i k e i n t o t h i s a r e a (See F i g u r e 5). The Yakima l o d e and the m i n e r a l - b e a r i n g f i s s u r e s at the head o f Shea Creek a l s o extend towards the e x p l o r a t i o n a r e a . Furthermore, the presence i n the e x p l o r a t i o n area o f the Wonderful and New S p r i n g f i e l d l o d e s i n d i c a t e s t h a t the area i s f a v o u r a b l e f o r lode f o r m a t i o n . The presence o f m i n e r a l i z e d f i s s u r e s i n the northwest p o r t i o n o f the e x p l o r a t i o n a r e a , which have not y i e l d e d ore t o n -nages, may i n d i c a t e unfavourable c h a r a c t e r i s t i c s o f the e x p l o r a -t i o n a r e a . I t c o u l d be suggested t h a t the country rock here does n o t support l o d e s . However a t the northwest end of the area the V i c t o r mine i s i n a l o d e , as are the Ruth-Hope d e p o s i t s a t the southeast end, i l l u s t r a t i n g t h a t no t r e n d from l o d e s to f i s s u r e s e x i s t s from southeast to northwest i n the Sandon a r e a . I t i s thought t h a t the s t r u c t u r e u n d e r l y i n g the e x p l o r a t i o n a r e a might d i f f e r from t h a t seen i n o t h e r p a r t s of the camp. Many v a r i a t i o n s i n s t r u c t u r e are to be expected i n the Sandon camp, 22 mainly as a r e s u l t of d r a g f o l d i n g . The S i l v e r Ridge e s s e n t i a l -l y l i e s i n the n o r t h e a s t - d i p p i n g , overturned p a n e l o f the S l o c a n f o l d . In c o n t r a s t , the d i p s i n the e x p l o r a t i o n area are thought t o be g e n e r a l l y s t e e p e r , perhaps due to the t u r n i n g under of beds i n the S l o c a n f o l d ' s c r e s t a l zone (See F i g u r e 2 ) . This s t e e p e n i n g i s p o s s i b l y l o c a l , being due to d r a g f o l d i n g . What-ever the cause, t h i s s t r u c t u r e i s c e r t a i n l y not unfavourable as witnessed by the V i c t o r and Ruth-Hope mines, both i n the s t r u c t -u r e a t each end o f the e x p l o r a t i o n a r e a . In f a c t , c o n s i d e r i n g the presence o f these mines and the nearby S i l v e r s m i t h - S l o c a n S t a r orebodies, s t r e s s c o n d i t i o n s were perhaps more f a v o u r a b l e i n the c r e s t a l zone than i n the Sandon camp as a whole. As mentioned i n the d i s c u s s i o n of f a u l t s and l o d e s , beds d i p p i n g southwest cut by l o d e s along which movement was p e r p e n d i c u l a r t o the bedding, so as to "open up" the bedding o r produce areas of low p r e s s u r e , are considered f a v o u r a b l e . Complexity i n the c r e s t a l zone could produce more o f these f a v o u r -a b l e s t r u c t u r a l s i t u a t i o n s than were produced by d r a g f o l d i n g i n the overturned p a n e l . However, i t should be remembered t h a t t h i s s t r u c t u r a l c o n d i t i o n i s o n l y one o f s i x g i v e n by Hedley as g e n e r a l circumstances l i k e l y to "make" ore. I t i s d i f f i c u l t then to say j u s t how much more f a v o u r a b l e , i f any, the covered r e g i o n i s . V a r i a t i o n i n rock type i s l e s s i n the s m a l l e r e x p l o r a t i o n a r e a than on S i l v e r Ridge. Rocks i n the e x p l o r a t i o n a r e a are c h i e f l y a mixture o f moderate to thin-bedded a r g i l l i t e s and q u a r t z i t e as seen i n the V i c t o r , Wonderful and Ruth-Hope p r o -p e r t i e s . On S i l v e r Ridge these rock types p l u s l i m e s t o n e , more massive a r g i l l i t e and l a r g e r amounts o f q u a r t z i t e and l i m y 23 q u a r t z i t e have been mapped. A mixture of a r g i l l i t e s and q u a r t z i t e s i s more common i n the Carpenter Creek v a l l e y , which embraces the e x p l o r a t i o n a r e a , t h a n i n the Sandon ar e a as a whole. Ore d e p o s i t s are not a f u n c t i o n o f r o c k type alone, but Hedley (1952, p. 54) s t a t e s , "....much ore has been found i n the common rock o f the d i s t r i c t , a mixture o f a r g i l l i t e s and q u a r t z i t e s o f wide range.of p u r i t y . . " T h i s r e l a t i o n s h i p between ore and ro c k type, coupled w i t h the p o t e n t i a l f o r f a v o u r a b l e lode-bedding r e l a t i o n s h i p s may e x p l a i n the a p p a r e n t l y h i g h e r c o n c e n t r a t i o n o f mines along the southeast s i d e o f Carpenter Creek v a l l e y . In summary, th e r e appears to be a reasonable degree o f g e o l o g i c a l s i m i l a r i t y between the sample and e x p l o r a t i o n a r e a s . Payne Ridge was s e l e c t e d f o r a second sample a r e a because o f i t s g e o l o g i c a l s i m i l a r i t y and p r o x i m i t y to both S i l v e r Ridge and the e x p l o r a t i o n a r e a . D e p o s i t s on Payne Ridge o c c u r i n the Sl o c a n group a p p a r e n t l y i n response to the same g e n e r a l ore con-t r o l s found to the southwest on S i l v e r Ridge. There i s a c l o s e m i n e r a l o g i c a l resemblance between d e p o s i t s i n the two ar e a s . Thus s i m i l a r i t y between Payne Ridge and the e x p l o r a t i o n a r e a i s i n d i c a t e d . A m i n e r a l d i s t r i b u t i o n count was taken i n a t h i r d area, the Ainsworth camp. While the host rock types i n the Ainsworth camp d i f f e r from those found at Sandon, i t was proposed to compare t h i s count from the g r e a t e r Slocan w i t h the d i s t r i b u t i o n p o s t u l a t e d f o r the e x p l o r a t i o n a r e a . D i s t r i b u t i o n o f Deposits i n the Sample Areas 2 4 C a t e g o r i z a t i o n o f Sandon Deposits E s t i m a t i o n o f both e x p l o r a t i o n expense and p r o b a b i l i t y o f f i n d i n g d e p o s i t s i n the e x p l o r a t i o n a r e a can be f a c i l i t a t e d by d i v i d i n g the m i n e r a l occurrences l i k e l y to be found i n t o c l a s s e s a c c o r d i n g to t h e i r s i z e . The f o u r c l a s s e s e s t a b l i s h e d were show-i n g s , p r o s p e c t s , important p r o s p e c t s and mines. Deposits have been c l a s s i f i e d a c c o r d i n g to the tonnage they have produced. The tonnage t h a t d e f i n e s each c l a s s i s shown i n Table 1. TABLE 1 CLASSES OP MINERAL DEPOSITS C l a s s Tonnage Range of Glass General Type o f E x p l o r a t i o n Work Required Showings 0 - 100 tons p r o s p e c t i n g , t r e n c h i n g , mapping and s h o r t d r i l l h o l e s , d e t a i l e d geochemistry and geophysics P r o s p e c t s 101 - 5,000 tons Trenching, d r i l l i n g , mapping Important p r o s p e c t s 5,001 - 20,000 tens underground openings, s u r f a c e and underground d r i l l i n g , mapping and e x t e n s i v e sampling Mines 20,000 tons p l u s e x p l o r a t i o n i n an e f f o r t to m a i n t a i n ore r e s e r v e s These tonnages, although somewhat a r b i t r a r y , were s e l e c t e d i n an attempt to e s t a b l i s h s i z e s o f d e p o s i t s such t h a t each s i z e would 25 r e q u i r e a c e r t a i n amount o f e x p l o r a t i o n work f o r d e l i m i t a t i o n . Thus, w i t h r e f e r e n c e to the r i g h t hand column i n Table 1, primary-surveys are r e q u i r e d to d e l i m i t the tonnage i n a showing. T h i s work p l u s t r e n c h i n g , d r i l l i n g and' mapping would, be r e q u i r e d t o explore a p r o s p e c t . A l l the work l i s t e d i n the column would be nece s s a r y t o prove a mine. The s o r t o f work nec e s s a r y to d e l i m i t each c l a s s w i l l c e r t a i n l y v a r y between d e p o s i t s . However, the l i s t i s r e p r e s e n t a t i v e o f the work r e q u i r e d f o r the e x p l o r a t i o n o f a t y p i c a l Sandon d e p o s i t . I t w i l l be noted t h a t 20,000 tons o f ore has been s e t as the minimum tonnage r e q u i r e d f o r p r o f i t a b l e mines. F o r a mining company, seeking p r o f i t s from r e t u r n s on c a p i t a l i n v e s t e d i n a mine, th e r e i s a minimum a t t r a c t i v e s i z e o f o p e r a t i o n . T h i s s i z e i s governed to a l a r g e extent by what economists term economies o f s c a l e . That i s , a g i v e n ore tonnage w i l l y i e l d a h i g h e r r e t u r n i f i t i s concentrated i n one d e p o s i t r a t h e r than d i s t r i b u t e d among s e v e r a l s c a t t e r e d d e p o s i t s , each one r e q u i r i n g i t s own p l a n t . When the ore i s concentrated i n one d e p o s i t , c o s t o f equipment, s u p e r v i s i o n , haulageways, e t c . can be spread o v e r l a r g e r tonnages hence p r o f i t s per t o n are h i g h e r . I t should not be i n t e r p r e t e d t h a t a l l d e p o s i t s s m a l l e r than 20,000 tons are u n p r o f i t a b l e ; l e a s e r s and some companies have made p r o f i t s from some such d e p o s i t s . However, the l a r g e r companies, those a b l e to c a r r y out the complete e x p l o r a t i o n program, y e t to be o u t l i n e d , r e q u i r e o p p o r t u n i t i e s to i n v e s t r e l a t i v e l y l a r g e sums and are a b l e to choose those developments which o f f e r the advantages of economies o f s c a l e . Apart 26 perhaps from economies of s c a l e , s h o r t term investments r e q u i r -i n g f r e q u e n t reinvestment of c a p i t a l , i d l e c a p i t a l and key-p e r s o n n e l l a y o f f s between p r o j e c t s are not g e n e r a l l y a t t r a c t i v e t o the l a r g e r companies. A thorough i n v e s t i g a t i o n o f the economies o f mining the s m a l l h i g h grade d e p o s i t s o f the Slocan would be i n t e r e s t i n g , but such an i n v e s t i g a t i o n i s u n f o r t u n a t e l y beyond the scope o f t h i s t h e s i s . A d e p o s i t c o n t a i n i n g 20,000 tons o f ore having a r e c o v e r a b l e metal content worth $100 per t o n would appear to be an a c c e p t a b l e minimum s i z e i n view o f the w r i t e r ' s p r e l i m i n a r y c a l c u l a t i o n s and the above d i s c u s s i o n . Sources o f I n f o r m a t i o n r F i v e major sources of i n f o r m a t i o n were used i n e s t i m a t i n g d i s t r i b u t i o n o f d e p o s i t s i n the sample a r e a s . Maps on a s c a l e o f 1 i n c h to 100 f e e t compiled by Kelowna E x p l o r a t i o n Company L i m i t e d , a f i r m t h a t e x t e n s i v e l y mapped p a r t s o f the Sandon camp i n the l a t e 1940's, gave the most d e t a i l e d i n f o r m a t i o n o f m i n e r a l d i s t r i b u t i o n and per cent of rock exposure. Hedley's work ( B u l l e t i n No. 29, 1952) was the b a s i c source o f i n f o r m a t i o n . Apart from the g e o l o g i c a l i n f o r m a t i o n on which t h i s t h e s i s has drawn i n the e a r l i e r s e c t i o n s , B u l l e t i n No. 29 gave p r o d u c t i o n f i g u r e s , which, when brought up to date, were the b a s i s f o r c l a s s i f y i n g d e p o s i t s i n the sample a r e a . Hedley's g e o l o g i c a l map of the Sandon area ( B u l l e t i n No. 29, F i g u r e 2) on a s c a l e o f 1 i n c h to 800 f e e t was used to o b t a i n the m i n e r a l d i s t r i b u t i o n and per cent of r o c k exposure i n those areas not covered by the Kelowna Exploration maps. Geological Survey of Canada memoirs 173 and 184 (Cairnes, 1934 and 1935) gave useful detailed geo-l o g i c a l and s t a t i s t i c a l information about certain properties i n the Sandon camp. Map 273A (Cairnes, 1934), on a scale of 1 inch to 4,000 feet was used to estimate the mineral d i s t r i b u t -i o n on Payne Ridge. Unfortunately t h i s map does not indicate outcrop density. Dr. J . T. Fyles of the B r i t i s h Columbia Department of Mines and Petroleum Resources kindly made a v a i l -able his and E. P. Eastwood's geological maps of the Ainsworth camp plus production s t a t i s t i c s f o r the camp. These maps were on a seale of 1 inch to 200 feet and 1 inch to 500 feet, respect-i v e l y . Mechanics of Counting D i s t r i b u t i o n of Deposits Data c o l l e c t i o n was f a c i l i t a t e d by d i v i d i n g the sample area i n t o a number of sub-areas or areal u n i t s . The number of mineral deposits occurring i n each unit was counted and these figures were added to obtain the t o t a l number of deposits within a sample area. The amount of rock surface exposed i n each u n i t was also noted and expressed as a per cent of the t o t a l u n i t area. This percentage may be termed the per cent exposure. The t o t a l area of rock exposed i n each sample area, a figure needed f o r mineral deposit density calculations, was derived from the average per cent exposure i n each area. An areal u n i t measuring 400 meters square was most suitable. Accordingly, grids were constructed on tracing paper with l i n e s a t 400 meter i n t e r v a l s at scales to f i t the data maps. The a p p r o p r i a t e g r i d was pl a c e d on a map and the m i n e r a l d i s t r i b u t i o n and per cent outcrop i n each a r e a l u n i t was noted. Any showings grouped so c l o s e l y t h a t they t o g e t h e r v/ould l i k e l y y i e l d one geochemical o r g e o p h y s i c a l anomaly were counted as one d e p o s i t . Only those d e p o s i t s thought to have apexed were counted. T h i s d i s t i n c t i o n was not d i f f i c u l t to make when d e a l i n g w i t h l a r g e r d e p o s i t s d e s c r i b e d i n the l i t e r a t u r e . I n d e a l i n g w i t h s m a l l e r d e p o s i t s t h e presence o f an a d i t o r t r e n c h marked on the map i s not evidence o f apexing m i n e r a l i z a t i o n as many work- . i n g s were d r i v e n on lode s i n hopes o f encountering b u r i e d o r e -b o d i e s . On a p a r t i c u l a r p r o p e r t y o f t e n only the uppermost o f s e v e r a l a d i t s p r e s e n t was d r i v e n on an outcrop o f m i n e r a l i z -a t i o n . Furthermore, on other p r o p e r t i e s the d i s c o v e r y has been made by t r a c i n g f l o a t and ground s l u i c i n g . Perhaps examination o f the s m a l l e r p r o p e r t i e s f o r evidence o f o r i g i n a l o u t c r o p p i n g m i n e r a l i z a t i o n would improve the count but such work would be d i f f i c u l t as mining d e s t r o y s the evidence sought. P r e f e r e n t i a l exposure i s another source of count e r r o r . By n o t i n g the m i n e r a l d i s t r i b u t i o n , and the area o f rock outcrop t h i s d i s t r i b u t i o n r e p r e s e n t s , the m i n e r a l occurrence d e n s i t y can be o b t a i n e d . However, i f m i n e r a l occurrences were e i t h e r p r e f e r -e n t i a l l y exposed i n areas o f overburden, or p r e f e r e n t i a l l y weath-ered and concealed i n areas o f outcrop t h i s d e n s i t y would be e i t h e r above or below the t r u e d e n s i t y . The t r u e d e n s i t y i s the m i n e r a l occurrence d e n s i t y as would be found i f the e n t i r e r o c k 20; s u r f a c e were exposed i n an unweathered c o n d i t i o n . In j u d g ing the r e l i a b i l i t y o f the sample count w i t h r e s -p e c t to p r e f e r e n t i a l sampling we must f i r s t c o n s i d e r i f any rock type i s p r e f e r e n t i a l l y b u r i e d o r exposed, and then e s t a b l i s h the r e l a t i o n s h i p between t h i s r o c k type and m i n e r a l i z a t i o n . Hedley (1953) does not d i s c u s s d i f f e r e n t i a l weathering except to men-t i o n t h a t a r g i l l i t e tends t o form b l u f f s . Although i t i s not p o s s i b l e to comment a t l e n g t h on the extent o f d i f f e r e n t i a l weathering i t i s noted that i t s e f f e c t i s o f f s e t by the f a c t t h a t much ore occurs i n the common rock o f the d i s t r i c t (Hedley, 1952, p. 54). I f ore was c o n f i n e d to a rock which e i t h e r seldom o r f r e q u e n t l y cropped out, a s e r i o u s sample count b i a s c o u l d r e s u l t . We must c o n s i d e r secondly the weathering c h a r a c t e r i s t i c s o f the ore m i n e r a l s . Galena a p p a r e n t l y tends to be w e l l exposed i n outcrop f o r Hedley (1952, p. 69) mentions galena r i b s . T h i s c h a r a c t e r i s t i c t o g e t h e r w i t h the presence o f conspicuous l i m o n i t e gangue i n d i c a t e s t h a t ore i n an outcrop i s not l i k e l y to be missed. To summarize the p o s s i b l e counting e r r o r s , i t i s d i f f i c u l t to o b t a i n an ac c u r a t e count o f s m a l l e r d e p o s i t s from p u b l i s h e d maps and l i t e r a t u r e . The e f f e c t o f p r e f e r e n t i a l weathering i s b e l i e v e d to be s l i g h t . Determining Percentage of Rock Expo stir e 3 0 Area o f rock s u r f a c e exposed was d i f f i c u l t to e s t i m a t e . Accuracy w i t h which maps d i s p l a y e d rock outcrops d i d not j u s t i f y the use o f a p l a n i m e t e r t h e r e f o r e per cent exposure was obtained by i n s p e c t i o n . The Kelowna E x p l o r a t i o n maps, c o n t a i n i n g out-l i n e s o f rock outcrop, gave the most a c c u r a t e e s t i m a t e s . In B u l l e t i n Ho. 2 9 , F i g u r e 2 , d e n s i t y of a t t i t u d e symbols, c e r t a i n -t y w i t h which g e o l o g i c a l c o n t a c t s were i n d i c a t e d , and i n d i c a t e d overburden areas, were the o n l y i n d i c a t i o n o f per cent exposure. A rough c o r r e l a t i o n between these i n d i c a t i o n s and the " a c t u a l " p e r cent of r o c k exposed was o b t a i n e d by comparing an a r e a on t h i s map w i t h the same area on the Kelowna E x p l o r a t i o n maps. R e s u l t s o f the Deposit D i s t r i b u t i o n Count S i l v e r Ridge The f o l l o w i n g m i n e r a l d i s t r i b u t i o n was obtained from the sample area on S i l v e r Ridge, Sandon camp. mines 3 important p r o s p e c t s 5 p r o s p e c t s 5 showings 62 t o t a l number of m i n e r a l occurrences 75 T h i s d i s t r i b u t i o n was obtained from 106 a r e a l u n i t s each 160,000 square meters i n a r e a . 31 The average bedrock exposure was estimated a t 8 per cent w i t h p o s s i b l e range between 5 and 15 per cent. With 8 per cent out-crop exposure approximately 1,500,000 square meters of rock, s u r f a c e i s exposed i n the sample a r e a . Payne Ridge. Being of s m a l l s c a l e , map 273A (Ca i r n e s , 1934) d i d not p r o v i d e d e t a i l e d i n f o r m a t i o n of s m a l l e r m i n e r a l occurrences (showings) or an i n d i c a t i o n o f the outcrop d e n s i t y on Payne Ridge. Judging from the topography, outcrop d e n s i t y should approach t h a t found on S i l v e r Ridge, i . e . , approximately 8 per c e n t . D i v i d e d i n t o 106 a r e a l u n i t s o f 160,000 s^quare meters, the p l a n a r e a contained the f o l l o w i n g d i s t r i b u t i o n . mines 3 important p r o s p e c t s 4 p r o s p e c t s 19 showings 28 t o t a l number of m i n e r a l occurrences 54 Ainsworth Count < As mentioned e a r l i e r , the Ainsworth camp was s e l e c t e d f o r a comparative count. This camp has been w e l l mapped t h e r e f o r e i n f o r m a t i o n on both m i n e r a l d i s t r i b u t i o n and outcrop d e n s i t y i s a v a i l a b l e . There are s i m i l a r i t i e s and divergences between the Sandon and Ainsworth camps. Both are noted f o r s i l v e r - l e a d - z i n c m i n e r a l i z a t i o n o c c u r r i n g along shears or f i s s u r e s . The m i n e r a l i z a t i o n i n "both camps may he a t t r i b u t e d to the Nelson b a t h o l i t h . However, the Sandon o r e s , being much r i c h e r i n s i l v e r , have on the average a gross v a l u e three times g r e a t e r than Ainsworth o r e s . At Ainsworth ore i s found i n bedded as w e l l as c r o s s c u t t i n g shears and may even occur as a limestone replacement. Ore i s not c o n f i n e d t o the Slocan group but i s found a l s o i n metamorphosed members o f the Lardeau, M i l f o r d and K a s l o groups. Thus a c l o s e degree o f c o r r e l a t i o n i n m i n e r a l d e n s i t y between the Ainsworth and the Sandon camps i s not to be expected. The d i v i s i o n s between the v a r i o u s c l a s s e s o f m i n e r a l d e p o s i t s were a d j u s t e d f o r the Ainsworth camp because of the L;Of. recoverable metal d i v e r g e n c e i n gross v a l u e A p e r t o n o f ore mined a t Sandon and Ainsworth. Using metal p r i c e s as o f February 1964, the average g r o s s v a l u e of r e c o v e r a b l e metal per ton f o r ore shipped from a l l s i z e s o f p r o p e r t i e s was approximately $75 f o r Sandon ore and $25 f o r Ainsworth o r e . The adjustments seen i n Table 2 were t h e r e f o r e made f o r the Ainsworth count. 33 TABLE 2 LIMITS, .FOR MINERAL DEPOSIT CLASSES IN THE AINSWORTH COUNT Cla s s Tonnage range a t , Sandon Tonnage range a t Ainsworth showing 0 - 100 tons 0 - 300 tons / $75/ton\x 100 tons = 300 \$25/ton] tons p r o s p e c t 101 - 5,000 tons 301 - 15,000 tons p r o p e r t y 5,001 - 20,000 tons 15,001 - 60,000 tons mines 20,000 tons p l u s 60,000 tons o r more The f o l l o w i n g r e s u l t s were ob t a i n e d from a count of 145 a r e a u n i t s , each 160,000 square meters i n area, i n the Ainsworth camp. mines 3 important p r o s p e c t s 1 p r o s p e c t s 19 showings 27 t o t a l number of m i n e r a l occurrences 50 The per cent outcrop exposure was estimated a t 20 per cent, thus 4,500y'000 square meters o f r o c k outcrop was exposed. D e n s i t y o f Deposits As mentioned on page 20 the d e n s i t y o f m i n e r a l d e p o s i t s i s a summation o f the number o f occurrences found, d i v i d e d by the t o t a l a r e a o f outcrop s u r f a c e sampled. When m u l t i p l i e d by the s u r f a c e area of the e x p l o r a t i o n a r e a t h i s d e n s i t y y i e l d s an estimate o f the number of e x i s t i n g o c c u r r e n c e s . Thus the d e n s i t y o f each c l a s s o f d e p o s i t i n the two sample areas must be determined f o r p o s t u l a t i o n o f the d e p o s i t i n number o f A e a c h c l a s s o c c u r r i n g i n the e x p l o r a t i o n a r e a . In a d d i t i o n , the d e p o s i t d e n s i t i e s f o r Ainsworth w i l l be c a l c u l a t e d to f a c i l i t a t e a l a t e r comparison w i t h d e n s i t y i n t h i s camp and the e x p l o r a t i o n a r e a . Tables 3» 4, 5 and 6 l i s t the mine, important p r o s p e c t , p r o s p e c t and showing d e n s i t i e s , r e s p e c t i v e l y , as c a l c u l a t e d f o r the two sample areas and Ainsworth. The s u r f a c e a r e a o f outcrop i n the two sample areas was taken to be 1,500,000 square meters, the Ainsworth outcrop a r e a i s 4,500,000 square meters. TABLE 3 MINE DENSITY Area ! Number o f mines D e n s i t y (mines per 10° square ,meters) S i l v e r Ridge 3 2 Payne Ridge 3 2 Ainsworth 3 0.7 35 TABLE 4 IMPORTANT PROSPECT DENSITY Area Number of important prospects Density (imp. prospects per 10° square meters) S i l v e r Ridge 5 3.3 Payne Ridge 4 2.7 Ainsworth 1 0.2 TABLE 5 PROSPECT DENSITY Area Number of prospects Density fi (prospects per 10 square meters) S i l v e r Ridge 5 3.3 Payne Ridge 20 13 Ainsworth 19 4.2 TABLE 6 SHOWING DENSITY Area. Number of showings Density -(showings per 10° square meters) S i l v e r Ridge 62 41 Payne Ridge 28 19 Ainsworth 27 6 36' The average density of each class of deposit, as shown i n Table 7, i s obtained by averaging the S i l v e r Ridge and Payne Ridge d e n s i t i e s . The number of deposits existing i n the explor-a t i o n area w i l l be postulated from these averages. Ainsworth densities were not used i n the c a l c u l a t i o n of the averages because they are drawn from a geological s i t u a t i o n d i f f e r i n g from that found i n the Sandon camp. A comparison of Ainsworth and Sandon densities seen i n Tables 3, 4, 5, and 6 r e f l e c t s t h i s difference. The Ainsworth densities would a l t e r the average, rendering i t less representative of the Sandon camp i n which the exploration area i s located. TABLE 7 AVERAGE DEPOSIT DENSITIES Class Average density mines 2 important prospects 3 prospects 8 showings 30 37 CHAPTER V PROBABLE DISTRIBUTION OF DEPOSITS IN THE EXPLORATION AREA Confidence L i m i t s The average m i n e r a l d e p o s i t d e n s i t i e s observed i n the sample areas y i e l d s the bes t estimate o f the number o f d e p o s i t s l i k e l y to be d i s c o v e r e d i n the e x p l o r a t i o n a r e a . T h i s r e l a t -i o n s h i p between the observed and p o s t u l a t e d number o f d e p o s i t s e x i s t s because the e x p l o r a t i o n and sample areas may be assumed to be e q u a l l y f a v o u r a b l e f o r ore d e p o s i t i o n . (The b a s i s f o r t h i s assumption has been p r e v i o u s l y d i s c u s s e d ) . However, these averages are d e r i v e d from h i g h l y v a r i a b l e d a t a . An estimate o f the confidence l i m i t s a s s o c i a t e d w i t h these averages i s t h e r e f o r e r e q u i r e d i n order to examine the economic e f f e c t o f v a r i a t i o n s i n the number of d e p o s i t s e x i s t -i n g . I n the s t a t i s t i c a l examination o f d i s t r i b u t i o n s the 95 pe r cent confidence l i m i t s are c a l c u l a t e d to i n d i c a t e the range w i t h i n which the v a r i a b l e s t u d i e d i s l i k e l y to l i e . In the s i t u a t i o n under c o n s i d e r a t i o n confidence l i m i t s can not be p r e c i s e l y c a l c u l a t e d because of the v a r i a b l e d a t a and because the t r u e d e p o s i t d i s t r i b u t i o n i s unknown. The t r u e d e p o s i t d i s t r i b u t i o n i s onl y sampled by the two sample areas and 38 knowledge o f i t i s t h e r e f o r e l i m i t e d f o r p r e c i s e c a l c u l a t i o n s . However, approximate confidence l i m i t s can he s e t "by assum-i n g t h a t the d i s t r i b u t i o n o f d e p o s i t s i s o f a P o i s s o n type. A l l a i s (1957) has made a s i m i l a r assumption. I n a d d i t i o n , d e p o s i t d i s t r i b u t i o n a t Sandon, as analysed by computer t e c h -niques, was found to approximate a P o i s s o n d i s t r i b u t i o n . Appendix A, Graph 1, g r a p h i c a l l y shows t h i s r e l a t i o n . I t should be noted t h a t o t h e r models of d e p o s i t d i s t r i b u t i o n have been p r o -posed ( S l i c h t e r , I960) but t h a t the P o i s s o n i s s t i l l regarded as an a c c e p t a b l e approximation (de Guenin, 1962). Approximate confidence l i m i t s f o r the P o i s s o n can be d e r i v e d from p r o p e r t i e s o f the Normal d i s t r i b u t i o n which the P o i s s o n approximates f o r n^S, n being the number o f d e p o s i t s . Confidence l i m i t s are t h e r e f o r e d e f i n e d by - 2v/n. T h i s i s e s s e n t i a l l y the procedure used by A l l a i s (1957) i n h i s a n a l y s i s o f the Sahara. This procedure i s a l s o used i n e s t i m a t i n g the c o n f i d e n c e l i m i t s f o r the d e p o s i t d i s t r i b u t i o n i n the e x p l o r a t i o n a r e a . The b e s t estimate of the e x i s t i n g d i s t r i b u t i o n i s f i r s t o b t a i n e d by m u l t i p l y i n g the average d e p o s i t d e n s i t i e s i n Table 7 by the s i z e of the e x p l o r a t i o n area, 3 x 10^ square meters. The product, n, y i e l d s the 95 per cent confidence l i m i t s by the method d e s c r i b e d above. The l i m i t s are seen i n Table 8. 39/ TABLE 8 CLASSES OF DEPOSITS AND CORRESPONDING 95 PER CENT CONFIDENCE LIMITS C l a s s n Confidence l i m i t s mines 6 2 - 1 3 important p r o s p e c t s 9 3 - 1 5 p r o s p e c t s 24 14 - 34 showings 90 71 - 90 The upper and lower confidence l i m i t s and the observed d e p o s i t d i s t r i b u t i o n form t h r e e estimates of m i n e r a l ' d i s t r i -b u t i o n e x i s t i n g i n the e x p l o r a t i o n a r e a . A l l a i s termed these estimates models o f the e x i s t i n g d i s t r i b u t i o n . A c c o r d i n g l y , these estimates may be s a i d to d e f i n e low, mean and h i g h models o f p o s t u l a t e d d e p o s i t d i s t r i b u t i o n i n the e x p l o r a t i o n a r e a . The d e p o s i t s p o s t u l a t e d f o r each model can t h e r e f o r e be determined from Table 8 and are l i s t e d i n Table 9. 40 TABLE 9 DEPOSIT DISTRIBUTION POSTULATED POR THE THREE MODELS Model No. of mines No. of imp. prospects No. of prospects No. of showings M L 2 3 14 71 M M 6 9 24 90 M H 13 15 34 109 V a l i d i t y of the Postulated Deposit D i s t r i b u t i o n In the analysis of exploration p o t e n t i a l , which up to t h i s point has been concerned with postulating the d i s t r i b u t i o n of mineral deposits i n the exploration area, c e r t a i n assumptions have been made. These assumptions w i l l now be examined to see i f v ariations therein have been accommodated i n the models. The most important consideration i s whether the postulated number of mines i s consistent with the geology of the exploration area. The number of mines rather than the number of other classes of deposits i s the important consideration,for the l a r g e r deposits w i l l absorb the bulk of the exploration expenditures, and w i l l y i e l d a l l the revenue. As discussed e a r l i e r , there are no large sub-areas i n the exploration area unfavourable to ore deposition. The area appears to o f f e r ore controls necessary f o r the s i l v e r - l e a d - z i n c deposits of the Slocan. The range of mines postulated f o r the exploration area, 2 to 13, was derived from and brackets the s i x mines indicated by the count i n two Sloean 41-a r e a s , the sample a r e a s . The number of mines i n d i c a t e d i n the e x p l o r a t i o n a r e a by the Ainsworth count, 2, i s a l s o accommodated by the p o s t u l a t e d range. I n view o f these comparisons the mine d i s t r i b u t i o n p o s t u l a t e d f o r the models, appears r e a l i s t i c . S i m i l a r l y , the number of important p r o s p e c t s p o s t u l a t e d f o r the models agrees w i t h the S i l v e r Ridge and Payne Ridge samples o f d e p o s i t d i s t r i b u t i o n i n the Sandon camp. Thus the number of important p r o s p e c t s p o s t u l a t e d i s a l s o r e a l i s t i c . As w i l l be i l l u s t r a t e d i n the d i s c u s s i o n of e x p l o r a t i o n c o s t s , the number o f p r o s p e c t s and showings p o s t u l a t e d could be i n c r e a s e d o r decreased by one h a l f without a p p r e c i a b l y a f f e c t i n g e x p l o r a t i o n c o s t s . The p o s t u l a t e d s m a l l e r d e p o s i t d i s t r i b u t i o n s t h e r e f o r e appear to approximate, the e x i s t i n g d i s t r i b u t i o n to a s u f f i c i e n t o r d e r . I t i s i n t e r e s t i n g to note the e f f e c t o f outcrop d e n s i t y e s t i m a t i o n . As mentioned p r e v i o u s l y , outcrop d e n s i t y i n the sample areas was taken at 8 per cent w i t h p o s s i b l e v a r i a t i o n between 5 and 15 per cent. Taking outcrop d e n s i t y a t 5 per cent, 850,000 square meters o f rock s u r f a c e would have been sampled i n the S i l v e r Ridge a r e a . Mine d e n s i t y would then be 3/0.85. Remembering t h a t the e x p l o r a t i o n a r e a i s 3 x 106 square meters, 3/0.85 x 3 = 10.6, i . e . , 11 mines co u l d then be expected. With ou t c r o p d e n s i t y a t 15 per cent, 2,500,000 square meters of rock s u r f a c e would have been sampled and 3/2.5 x 3 = 3.6, i . e . , 4 mines could be expected. Both o f these e x p e c t a t i o n s f a l l w i t h i n the range o f the models. CHAPTER VI VALUE GP DEPOSITS IN THE EXPLORATION AREA In o r d e r to evaluate the outcome o f the proposed e x p l o r a t i o n program i t i s necessary to estimate the value o f d e p o s i t s l i k e l y to he found. T h i s estimate may he ob t a i n e d by f i r s t determining the v a l u e o f the d e p o s i t s l i k e l y to occur i n the e x p l o r a t i o n a r e a , and then m u l t i p l y i n g t h i s v a l u e times the p r o b a b i l i t y o f d i s c o v e r i n g these d e p o s i t s . The r e s u l t i n g value i s known as the e x p e c t a t i o n . T h i s chapter i s concerned w i t h determining the va l u e o f the d e p o s i t s l i k e l y to occur and the f o l l o w i n g chapter d e a l s w i t h d i s c o v e r y p r o b a b i l i t y . The v a l u e o f d e p o s i t s i s a f u n c t i o n o f the number o f p r o f i t a b l e d e p o s i t s (mines) l i k e l y to e x i s t , and of the t o t a l v a l u e o f r e c o v e r a b l e metals i n each d e p o s i t . The number o f d e p o s i t s l i k e l y to e x i s t has been determined i n the p r e v i o u s c h a p t e r . An estimate o f the gross v a l u e o f r e c o v e r a b l e metal i n these d e p o s i t s must t h e r e f o r e be made. (Gross v a l u e of" r e c o v e r -a b l e metal i s h e r e a f t e r r e f e r r e d to as gross v a l u e . ) . Gross Value o f De p o s i t s Gross value o f the d e p o s i t s i n a model can be estimated from the number o f d e p o s i t s i n the model and the gross v a l u e o f an average d e p o s i t . An a p p r o p r i a t e average or measure of c e n t r a l tendency can be ob t a i n e d from the study o f the frequency 43 d i s t r i b u t i o n o f m i n e s d i s c o v e r e d i n o r n e a r t h e S a n d o n c a m p . A l l a i s (1957, p . 294)', f o l l o w i n g e x a m i n a t i o n o f d a t a f r o m a n u m b e r o f m i n i n g a r e a s , c o n c l u d e d t h a t t h e g r o s s v a l u e s o f d e p o s i t s a r e d i s t r i b u t e d l o g - n o r m a l l y . H H o w e v e r , o n l y 14 s i l v e r - l e a d - z i n c m i n e s h a v e b e e n f o u n d i n t h e S a n d o n camp a n d s u r r o u n d i n g S l o c a n D i s t r i c t , a n u m b e r t o o l o w t o y i e l d a n i d e n t i f i a b l e f r e q u e n c y d i s t r i b u t i o n c u r v e . A f r e q u e n c y h i s t o g r a m f o r t h e s e 14 m i n e s i s shown i n F i g u r e 6. T h e h i s t o g r a m i s a t l e a s t n o t i n c o n s i s t e n t w i t h a l o g n o r m a l d i s t r i b u t i o n . d H Ki . > m m o U M uo to Ki Xi r H +•-> o • H > -d o a d S - H o d •rl rH r - l fl d 1 - 4 8 12 ' 16 20 24 28 32 36 (Values given i n m i l l i o n s of d o l l a r s , u s i n g metal p r i c e s as of February, 1964) Figure 6 The Gross Value Frequency D i s t r i b u t i o n of 14 Slocan Mines 44 As the e x p l o r a t i o n a r e a i s c o n s i d e r e d to be e q u a l l y f a v o u r -a b l e f o r the occurrence o f ore bodies as the Sandon camp i t i s l o g i c a l to expect t h a t the s i z e d i s t r i b u t i o n o f d e p o s i t s e x i s t i n g i n the e x p l o r a t i o n area w i l l be r e p r e s e n t e d by t h i s h i s t o g r a m . Hedley's o b s e r v a t i o n s support t h i s view, as he s t a t e s (Hedley, 1952, p. 61), New orebodies w i l l be found, i t i s to be hoped, and th e r e seems no reason why o t h e r environments e q u a l l y f a v o u r a b l e to ore d e p o s i t i o n do not e x i s t , both l a t e r a l l y and at depth from those known a t p r e s e n t . There seems no v a l i d reason why these p o s t u l a t e d orebodies should d i f f e r a p p r e c i a b l y i n ten o r o f metals from those a l r e a d y mined. The l i m i t e d data and skewed frequency d i s t r i b u t i o n i n F i g u r e 6 i n d i c a t e s t h a t the median, r a t h e r than the a r i t h m e t i c mean would be the bes t measure of gross v a l u e c e n t r a l tendency. The median gross v a l u e f o r the mines i n the i l l u s t r a t e d d i s -t r i b u t i o n i s approximately $4,000,000. Tonnage Determination Having e s t a b l i s h e d gross v a l u e o f the average e x i s t i n g d e p o s i t , the corresponding tonnage o f ore i n the d e p o s i t can be d e r i v e d f o r a knowledge of gross v a l u e p e r ton. The V i c t o r and the Ruth-Hope, two p r o p e r t i e s f l a n k i n g the e x p l o r a t i o n area, have-a weighted gross v a l u e o f approximately $100 per t o n {See Appendix B). While the average gross v a l u e o f a l l the mines i n the camp might be used, the p r o x i m i t y o f these two mines to the e x p l o r a t i o n a r e a may render t h e i r grades a b e t t e r estimate o f gros s v a l u e . Of g r e a t e r importance, the gross v a l u e o f ore 45 ' shipped from the V i c t o r i s more a p p l i c a b l e to t h i s study than f i g u r e s from other p r o p e r t i e s . Metals recovered and the r e c o v e r i e s obtained a t the V i c t o r , one o f the few Sandon p r o -p e r t i e s operated i n the l a s t f i v e y e a r s , are more r e p r e s e n t a t i v e o f a p r e s e n t day o p e r a t i o n . To be s p e c i f i c , the metal.contents r e c o r d e d by mines o p e r a t i n g i n the l a t e n i n e t e e n t h and e a r l y t w e n t i e t h c e n t u r i e s would be h i g h e r i f the ore were mined today. Not o n l y i s the z i n c content of the ore now a source of revenue r a t h e r than a p e n a l t y , but metal r e c o v e r y from ores i s now h i g h e r and modern m i l l i n g techniques a l l o w the economic t r e a t -ment of lower grade o r e s . U s i n g a gross value of $100 per ton, the tonnage. : o f the d e p o s i t s l i k e l y to e x i s t i n the e x p l o r a t i o n area i s there< f o r e estimated at 40,000 tons. Present Value o f P r o d u c t i o n Present v a l u e of p r o d u c t i o n f o r the average mine must next be obtained. Using o p e r a t i n g s t a t i s t i c s from the V i c t o r mine, the mine's monthly cash f l o w has f i r s t been c a l c u l a t e d . R e n t a l o f major equipment and custom m i l l i n g o f ore have been assumed to s i m p l i f y c a l c u l a t i o n s . These assumptions are not unreason-able, i n view of the mine s i z e . At a p r o d u c t i o n r a t e of 75 tons per day and a 30 day m i l l i n g month the d e p o s i t w i l l be mined out b e f o r e the end o f the 3 y e a r t a x - f r e e p e r i o d . Cash f l o w has been converted to a present v a l u e o f $1,270,000 at the time the e x p l o r a t i o n program t e r m i n a t e s . The Hoskold formula a t 10 and 3 per cent i n t e r e s t r a t e s was used i n the p r e s e n t v a l u e d e t e r m i n a t i o n . 'The gross v a l u e of p r o d u c t i o n estimated f o r each model i s ob t a i n e d by m u l t i p l y i n g the number o f mines p o s t u l a t e d i n each model by $1,2 70,000. This procedure assumes t h a t a l l mines d i s c o v e r e d w i l l be worked si m u l t a n e o u s l y , w i t h i n the t a x - f r e e p e r i o d . The gross value a s s i g n e d t o i s $2,580,000, to M M, $7,740,000, and to M H $16,800,000. CHAPTER VI I DISCOVERY PROBABILITY IN THE SEARCH FOR NEW DEPOSITS IN THE EXPLORATION AREA While complete removal o f overburden from the e x p l o r a t i o n a r e a would r e v e a l a l l the p o s t u l a t e d apexing m i n e r a l d e p o s i t s , the c o s t would be p r o h i b i t i v e . I n order to evaluate the f e a s i b i l i t y o f e x p l o r a t i o n a t Sandon the p r o b a b i l i t y o f d i s -c o v e r i n g the p o s t u l a t e d mines must be determined. P r o b a b i l i t y estimates are d i f f i c u l t to make but are f a c i l i t a t e d by p r e l i m -i n a r y t e s t work over known d e p o s i t s and by s t u d i e s of ore d e p o s i t geology. V a r i a t i o n s i n estimated p r o b a b i l i t y are to be expected and the e f f e c t o f these v a r i a t i o n s w i l l be d i s c u s s e d i n Chapter IX. E x p l o r a t i o n Techniques O r d i n a r i l y a f i e l d study o f the e x p l o r a t i o n area, n o t i n g depth, d i s t r i b u t i o n and type of cover and response of v a r i o u s geochemical and g e o p h y s i c a l p r o s p e c t i n g techniques of known d e p o s i t s would be conducted be f o r e e x p l o r a t i o n techniques were s e l e c t e d or b e f o r e the r e s o l v i n g power of these techniques c o u l d be judged. However, i n the s o l u t i o n o f the problem posed i n t h i s t h e s i s , a p r e l i m i n a r y f i e l d study i s not p o s s i b l e . N e v e r t h e l e s s , a program must be proposed as a b a s i s f o r e s t i m -a t i n g d i s c o v e r y p r o b a b i l i t y and e x p l o r a t i o n c o s t s . The program w i l l be based on a g e n e r a l knowledge o f the area, and the 48 c a p a b i l i t i e s of the t e c h n i q u e s , supplemented by the o p i n i o n of engineers and g e o p h y s i c i s t s f a m i l i a r w i t h the use o f these t e c h n i q u e s . I t i s proposed t h a t the e x p l o r a t i o n a r e a be s y s t e m a t i c a l l y searched, u s i n g geochemical and g e o p h y s i c a l methods, and t h a t the anomalies found be explored by the u s u a l stages o f e x p l o r a t i o n . Geochemical surveys i n c l u d e stream-water and sediment sampling, v e g e t a t i o n sampling and most r e c e n t l y , mercury vapor d e t e c t i o n . As m i n e r a l d e p o s i t d e n s i t y i s h i g h i n the Sandon camp and because the e x p l o r a t i o n a r e a i s s m a l l (approximately two square m i l e s ) , stream-water and sediment sampling, l a r g e l y p r e l i m i n a r y o r " a r e a - s e l e c t i o n " methods, would not see g e n e r a l use. S o i l or v e g e t a t i o n sampling, w i t h samples taken a t c l o s e i n t e r v a l s a l o n g l i n e s run p e r p e n d i c u l a r to l o d e s t r i k e should prove u s e f u l . In r e g i o n s o v e r l a i n by deep g l a c i a l overburden, geochemical sampling of d r i l l c u t t i n g s , s i m i l a r to the work being c a r r i e d out a t Keno H i l l , Yukon T e r r i t o r i e s * might be more p r a c t i c a l than s o i l samples. A r e l a t i v e l y new technique, mercury vapor d e t e c t i o n , seems e s p e c i a l l y s u i t e d to the s e a r c h f o r a r g e n t i f e r o u s l e a d - z i n c d e p o s i t s (Hawkes, 1962); however, the r e s o l u t i o n power of t h i s method has not been demonstrated under Sl o c a n c o n d i t i o n s . G e o p h y s i c a l e x p l o r a t i o n methods t h a t seem to be a p p l i c a b l e to the s i t u a t i o n are magnetic, e l e c t r o m a g n e t i c , r e s i s t i v i t y ^ s e l f - p o t e n t i a l , induced p o l a r i z a t i o n and s e i s m i c . Seismic surveys would not be used d i r e c t l y i n the d e t e c t i o n o f m i n e r a l -i z a t i o n "but would "be a r e l a t i v e l y i n e x p e n s i v e means of d e t e r -mining over-burden depth, u s e f u l i n f o r m a t i o n f o r geochemical and some g e o p h y s i c a l techniques. S i m i l a r l y , a magnetic survey c o u l d n o t be used to d e t e c t m i n e r a l i z a t i o n because t h e r e are no mag-n e t i c m i n e r a l s a s s o c i a t e d w i t h the ore; but i t can i n d i c a t e , o f f -s e t s of r o c k u n i t s c o n t a i n i n g a magnetic s u i t e . The low c o s t o f a magnetometer survey, along with t h i s a b i l i t y to d e t e c t f a u l t s r enders i t a l o g i c a l c h o i c e . T h i s survey would be c a r r i e d out i n an e f f o r t to l o c a t e l o d e s as evidenced by f a u l t e d d i k e s . Dr. D. W. S m e l l i e * ( p e r s o n a l communication), who has had experience w i t h g e o p h y s i c a l e x p l o r a t i o n i n the Sandon camp, suggested t h a t i n a d d i t i o n to magnetic and geochemical work am:. e l e c t r o m a g n e t i c survey would round out the primary search e f f o r t . An e l e c t r o -magnetic survey i s recommended because galena, when i n s u f f i c i e n t c o n c e n t r a t i o n s to c o n s t i t u t e ore, forms a good conductor. He a d v i s e s a g a i n s t the more expensive induced p o l a r i z a t i o n methods i n the search f o r Sandon-type o r e b o d i e s . S e l f - p o t e n t i a l t e c h -niques may be u s e f u l , but r e s i s t i v i t y equipment has a r e l a t i v e l y low r e s o l v i n g power f o r the i n v e s t i g a t i o n contemplated. The f o r e g o i n g d i s c u s s i o n o f e x p l o r a t i o n techniques suggests a combination o f geochemistry and geophysics f o r the primary e x p l o r a t i o n stage. The f o l l o w i n g primary program i s proposed: 1. Systematic geochemical sampling; s o i l and v e g e t a t i o n samples taken a t predetermined l o c a t i o n s along cut l i n e s and i n topographic d e p r e s s i o n s , 2. Magnetometer survey, ^ C o n s u l t i n g G e o p h y s i c i s t 50' 3. ELeetromagnetic survey. I t i s unnecessary to d e s c r i b e i n d e t a i l the conduct o f these s u r v e y s . I t i s s u f f i c i e n t to say t h a t g r i d - l i n e s would be cut through the bush p e r p e n d i c u l a r to the g e n e r a l s t r i k e o f the l o d e s and t h a t a l l three surveys would be run along these l i n e s . D i s c o v e r y P r o b a b i l i t y As p r e v i o u s l y mentioned, i t i s q u i t e l i k e l y t h a t n o t - . a l l the d e p o s i t s t h a t are presumed to occur w i t h i n the e x p l o r a t i o n a r e a w i l l be d e t e c t e d . Thus a p r o b a b i l i t y of d i s c o v e r y must be i n c o r p o r a t e d i n the estimates o f v a l u e o f mineable d e p o s i t s . D i s c o v e r y p r o b a b i l i t y , P, i s composed o f two p r o b a b i l i t i e s : the i n i t i a l d i s c o v e r y p r o b a b i l i t y , P^, a s s o c i a t e d w i t h the primary e x p l o r a t i o n stage or the search f o r anomalies•,' and the secondary d i s c o v e r y p r o b a b i l i t y , P 2, a s s o c i a t e d with the secondary stage, which i s d e f i n e d as s t a r t i n g w i t h examination of anomalies and ending w i t h e i t h e r the o u t l i n i n g of 500 tons or the r e j e c t i o n o f the d e p o s i t . A more d e t a i l e d account o f the e x p l o r a t i o n stages i s g i v e n i n the f o l l o w i n g chapter. The p r o b a b i l i t i e s g i v e n i n Tables 10 and 11 are perhaps a r b i t r a r y but are reasonable, h a v i n g been based on A l l a i s (1957) approach and on d i s c u s s i o n s w i t h Dr. S m e l l i e . R e f e r r i n g to T a b l e 10, i t w i l l be noted t h a t a h i g h e r d i s c o v e r y p r o b a b i l i t y has been a l l o c a t e d to the l a r g e r d e p o s i t s because they g e n e r a l l y p r e s e n t a l a r g e r t a r g e t than do the s m a l l e r o c c u r r e n c e s . The e f f e c t of v a r i a t i o n s i n d i s c o v e r y p r o b a b i l i t y i s d i s c u s s e d i n Chapter IX. Table 10 i m p l i e s t h a t , f o r example, out of every 10 e x i s t i n g s m a l l occurrences 3 are l i k e l y to be expressed as anomalies judged worthy o f f u r t h e r i n v e s t i g a t i o n . TABLE 10 INITIAL DISCOVERY PROBABILITY PGR EACH CLASS OF DEPOSIT Deposit c l a s s Mine Important . pr o s p e c t P rospect Showing Prob. o f i n i t i a l d i s c o v e r y 0.6 0.6 0.5 0.3 F o l l o w i n g examination, some of the anomalies w i l l be s e l e c t e d f o r f u r t h e r work. I t would be extremely u n l i k e l y t h a t a l l anomalies a s s o c i a t e d w i t h the l a r g e r c l a s s e s o f d e p o s i t s w i l l be chosen. In o t h e r words, w h i l e some d e p o s i t s w i l l not be de t e c t e d by the primary survey, o t h e r s , once d e t e c t e d , w i l l be examined o r r e v e a l e d i n such a manner t h a t t h e i r t r u e m e r i t s w i l l not be r e c o g n i z e d . This e v e n t u a l i t y i s o f t e n no f a u l t o f the g e o l o g i s t but i s the r e s u l t o f "skimming", as A l l a i s (1957) c a l l s i t , done to o p t i m i z e the r e t u r n from e x p l o r a t i o n e x p e n d i t u r e s . Optimum e x p l o r a t i o n i s achieved by c o n c e n t r a t i n g work on the more pro-m i s i n g s i t e s i n o r d e r to maximize r e t u r n s on the e x p l o r a t i o n investment. Because judgements are d i f f i c u l t i n the i n i t i a l s t a g e s when l i t t l e i s known about a d e p o s i t , i t i s u n l i k e l y t h a t a l l the po t e n t i a l mines w i l l be recognized. Optimized explor-a t i o n i s opposed to maximized exploration, finding the maximum number of mines through examination of a maximum number of s i t e s (Preston, 1962, p. 72). It has been assumed, again a r b i t r a r i l y , that 70 per cent of a l l prospects detected w i l l be selected for further examin-a t i o n i n the secondary stage of exploration. In recognition of the p r i n c i p l e that l a r g e r deposits w i l l more l i k e l y give good ind i c a t i o n s of t h e i r merit, i t has been further assumed that 75 per cent of a l l important prospects and mines w i l l be selected f o r further work. Table 11 shows discovery p r o b a b i l i t i e s f o r each class i n the i n i t i a l and secondary stages of exploration. No secondary discovery p r o b a b i l i t y , P2, i s given f o r the showings because i n the secondary stage only higher classes w i l l be examined. TABLE.11 DISCOVERY PROBABILITIES FOR EACH CLASS OF DEPOSIT Deposit s i z e Mine Important prospect Prospect Showing Primary discovery p r o b a b i l i t y , P-j_ 0.6 0.6 0.5 0.3 Secondary discovery p r o b a b i l i t y , P 2 0.75 0.75 0.7 —-. Resultant discovery p r o b a b i l i t y , ,. P•:• ~: r v-; ; 0.45 0.45 0.35 0.3 53T CHAPTER V I I I EXPLORATION COSTS Before d e a l i n g w i t h the e s t i m a t i o n o f e x p l o r a t i o n c o s t s a s h o r t summary of progress to t h i s p o i n t w i l l p l a c e c o s t s i n t h e i r proper context. Three models o f m i n e r a l d i s t r i b u t i o n s have been p o s t u l a t e d f o r the e x p l o r a t i o n a r e a . Then the p r e s e n t v a l u e o f p r o f i t s l i k e l y to be won from the mines contained i n these d i s t r i b u t i o n s has been estimated. F i n a l l y , the p r o b a b i l i t y o f f i n d i n g these mines and s m a l l e r d e p o s i t s has been determined. The d i s c o v e r y p r o b a b i l i t y has been determined on the b a s i s o f a f e a s i b l e , c o n v e n t i o n a l e x p l o r a t i o n p l a n . In o r d e r to complete the a n a l y s i s o f e x p l o r a t i o n a t Sandon the c o s t o f the e x p l o r a t i o n p l a n must be d i s c u s s e d . Three f a c t o r s l a r g e l y govern e x p l o r a t i o n expense: 1. t n e number o f anomalies, p r o s p e c t s or p r o p e r t i e s to be examined; 2. the type and amount o f work to be done i n each examin-a t i o n ; 3. the c o s t o f each survey o r job undertaken i n each examination. The f i r s t f a c t o r , c a n be d e r i v e d from the p o s t u l a t e d m i n e r a l d i s t r i b u t i o n and the d i s c o v e r y p r o b a b i l i t y . The second and t h i r d f a c t o r s have been determined from t h r e e sources: the a u thor's e x p l o r a t i o n experience, c o n s u l t a t i o n s w i t h engineers and g e o p h y s i c i s t s a s s o c i a t e d w i t h e x p l o r a t i o n , and from 54 p u b l i s h e d eost d a t a . P r e l i m i n a r y Survey As a f i r s t s tep toward e x p l o r a t i o n a company may wish to improve i t s knowledge o f m i n e r a l d e p o s i t d i s t r i b u t i o n i n the sample areas, thereby r e f i n i n g the d e p o s i t d i s t r i b u t i o n e s t i -mates. I n a d d i t i o n , g e o l o g i c a l mapping should be undertaken i n the e x p l o r a t i o n a r e a . Thus the p r e l i m i n a r y survey would e n t a i l mapping w i t h the a i d of a plane t a b l e s or a e r i a l photographs. Such a p r e l i m i n a r y survey v/ould c o s t approximately $6,500 (See Appendix D). The E x p l o r a t i o n Program A s y s t e m a t i c e x p l o r a t i o n program envisaged would be c a r r i e d out i n stages (See Table 12). A f t e r the primary stage, the s e a r c h f o r anomalies, a l l anomalies w i l l r e c e i v e a more or l e s s equal amount o f a t t e n t i o n , c a l l e d the secondary stage. When r e s u l t s o f t h i s stage are e v a l u a t e d promising occurrences w i l l be s e l e c t e d f o r y e t another stage o f examination. More work w i l l be done, stage by stage, u n t i l a l l d i s c o v e r e d d e p o s i t s are e i t h e r abandoned or proven to c o n t a i n mineable tonnages. P a r a l l e l i n g the tonnage c l a s s i f i c a t i o n o f d e p o s i t s s e t f o r t h i n Chapter IV, the e x p l o r a t i o n stages can be d e f i n e d a r b i t r a r i l y i n terms o f the same tonnage t a r g e t s . Thus, f o r convenience i n r e l a t i n g e x p l o r a t i o n costs to the s e v e r a l c a t e g o r i e s of d e p o s i t s , 55 TABLE 12 EXPLORATION STAGES E x p l o r a t i o n stage Type o f examination Target o f the stage Term a p p l i e d to u n d e l i m i t e d de-p o s i t s a t i s f y i n g t a r g e t primary search f o r anomalies anomalous c o n d i t i o n s worthy of f u r t h e r i n v e s t i g a t i o n anomaly (or showing) secondary examination of anomalies establishment o f 500 tons o f ore grade m i n e r a l i z a t i o n p r o spect t e r t i a r y examination of p r o s p e c t s establishment o f 5,000 tons important prospect quaternary examination of important p r o s p e c t s establishment o f 20,000 tons mine 56" stages w i l l "be d e f i n e d "by the establishment of 100 tons, 500 t o n s , 5»000 tons and 20,000 tons o f ore-grade m i n e r a l i z a t i o n . Primary Stage A cost estimate f o r the primary stage o f e x p l o r a t i o n has been c a l c u l a t e d based on the f o l l o w i n g program. L i n e s , 200 f e e t a p a r t , v/ould be cut through the bush f o r the l e n g t h of the e x p l o r -a t i o n a r e a to f a c i l i t a t e the geochemical and g e o p h y s i c a l surveys. The c o s t of the necessary 30 m i l e s o f l i n e c u t t i n g i s estimated a t $2,500. S o i l samples would be taken every 50 f e e t and veget-a t i o n samples every 100 f e e t along these l i n e s . A d d i t i o n a l samples would be taken i n topographic d e p r e s s i o n s , b r i n g i n g the t o t a l number of samples to approximately 10,000. At an approx-imate c o s t of $3.00 per sample f o r t a k i n g the samples, p l u s $1.50 per s o i l sample and $5.00 per v e g e t a t i o n sample.for a n a l y s i s (Dr. H. V. Warren, p e r s o n a l communication), the c o s t of geochemistry i n the primary program would be $57,000. Magnetometer and e l e c t r o m a g n e t i c survey c o s t s i n the Sandon camp are quoted a t $75 and $85 per l i n e m i l e , r e s p e c t i v e l y (Dr. S m e l l i e , p e r s o n a l communication). Ge o p h y s i c a l c o s t s f o r the 30 l i n e m i l e s would then be $4,800. Overhead and s u p e r v i s i o n are c a l c u l a t e d f o r 4 months a t $1,000 per month. T o t a l c o s t s f o r the primary stage are l i s t e d i n Table 13. TABLE 13 COST OF THE PRIMARY EXPLORATION STAGE Item Cost Line cutting $2,500 Geochemistry $57,000 Geophysics $ 4,800 Supervision and overhead $ 4,000 Total $68,300 Secondary Stage In order to a r r i v e at the cost of examining anomalies found i n the primary stage i t i s necessary to f i r s t estimate how many may he found. There would not he a one-for-one r e l a t i o n s h i p between the number of deposits detected and the number of true anomalies because the primary survey would detect a cert a i n number of f a l s e anomalies. Electromagnetic methods w i l l detect conducting shear zones, and geochemistry w i l l i n some circumstances detect several anomalies due to one deposit. Thus of the anomalies detected only a f r a c t i o n would represent mineralization. Experience i n the Sandon camp i n d i c -ates that of two anomalies investigated one i s l i k e l y to be due to mineralization (Dr. Smellie, personal communication); thus f o r every mineral deposit detected two anomalies must be invest igated. The question of how many deposits w i l l be found i n the p r i mary survey remains. This can be estimated from Table 9, l i s t -i n g number of d e p o s i t s p o s t u l a t e d , and Table 11, g i v i n g primary-d i s c o v e r y p r o b a b i l i t i e s . The number of d e p o s i t s l i k e l y to o c c u r m u l t i p l i e d by the p r o b a b i l i t y o f f i n d i n g them g i v e s the number o f d e p o s i t s l i k e l y to be det e c t e d (See Table 14). TABLE 14 NUMBER OP DEPOSITS IN EACH CLASS LIKELY TO BE DISCOVERED BY THE PRIMARY STAGE Model Mines Important p r o s p e c t s Prospects Showings TN* 0.6 0.6 0.5 0.3 No. p o s t u l a t e d to e x i s t 2 3 14 71 No. d i s c o v e r e d 1 2 7 21 31 hi No. p o s t u l a t e d to e x i s t 6 9 24 90 No. d i s c o v e r e d 4 5 12 27 48 «H No. p o s t u l a t e d to e x i s t 13 15 34 109 No. d i s c o v e r e d 8 9 17 33 67 * T o t a l number o f m i n e r a l d e p o s i t s l i k e l y to be d i s c o v e r e d by primary stage As summed i n Table 14, the t o t a l number o f m i n e r a l d e p o s i t s l i k e l y to be detected i n the primary survey i s 31 f o r the low model, 48 f o r the mean model and 67 f o r the h i g h model. The number of anomalies to be expected would t h e r e f o r e be 62, 96, and 134 f o r the s e v e r a l models. I n the secondary o r a n o m a l y - i n v e s t i g a t i o n stage of e x p l o r -a t i o n each anomaly would r e c e i v e a c e r t a i n amount o f a t t e n t i o n . I f a f t e r t h i s work the anomaly i s shown to he due to a s m a l l d e p o s i t i n an environment unfavourable f o r d e p o s i t extensions the s i t e would be abandoned. In keeping w i t h the d e p o s i t c l a s s l i m i t s e s t a b l i s h e d i n an e a r l i e r chapter, the c u t o f f s i z e would be approximately 5.00 tons o f ore grade m a t e r i a l . I f upon examination the anomaly i s shown to be due to a t l e a s t 500 tons i n a s i t u a t i o n f a v o u r a b l e f o r tonnage e x t e n s i o n the occurrence would be designated as a p r o s p e c t , to r e c e i v e f u r t h e r a t t e n t i o n i n the secondary stage of e x p l o r a t i o n . The cost o f i n v e s t i g a t i n g an anomaly to t h i s d e c i s i o n p o i n t would, of course, v a r y w i t h each anomaly. Some anomalies would r e q u i r e a l l the money a l l o t t e d f o r t h e i r i n v e s t i g a t i o n and perhaps more before a d e c i s i o n could be made. The d e c i s i o n on o t h e r s may be obvious a f t e r a few shallow trenches have been dug. The f o l l o w i n g i s suggested as being r e p r e s e n t a t i v e o f the maximum amount of work necessary to i n v e s t i g a t e an average anomaly i n the e x p l o r a t i o n a r e a . The work should i n c l u d e f o l l o w - u p geochemistry and geo-p h y s i c s , g e o l o g i c a l mapping and b u l l d o z e r t r e n c h i n g . Small amounts o f diamond d r i l l i n g may be undertaken i n l i e u o f o r to accompany some o f t h i s work. As c a l c u l a t e d i n Appendix D, the t o t a l c o s t would approach $2,000 per anomaly. 60 ' F u r t h e r Stages of E x p l o r a t i o n Once c l a s s e d as a prospect the d e p o s i t would warrant f u r t h e r work. The t a r g e t a t t h i s stage would he the e s t a b l i s h -ment o f approximately 5,000 tons of o r e . I f t h i s tonnage were e s t a b l i s h e d , with i n d i c a t i o n s o f more, the occurrence i s termed an important prospect and s e t a s i d e f o r f u r t h e r work i n the next stage o f e x p l o r a t i o n ; i f t h i s g o a l were not a t t a i n e d and i f i t seemed apparent that i t would not be met w i t h s l i g h t a d d i t i o n a l expenditure, the occurrence would be abandoned. The expenditure thought necessary to i n v e s t i g a t e each p r o s p e c t i s approximately S3,000. As l i s t e d i n Appendix D, t h i s amount would pay f o r b u l l d o z e r t r e n c h i n g , rock t r e n c h i n g , sampling, diamond d r i l l i n g , core l o g g i n g and t r e n c h examination, s u p e r v i s i o n and overhead. J u s t as i n the case o f the anomalies, the number of p r o s -p e c t s must be determined before the t o t a l c o s t o f t h e i r examin-a t i o n could be determined. The r e s u l t a n t d i s c o v e r y p r o b a b i l i t y , P, m u l t i p l i e d by the number o f prospects expected to occur, when summed, would y i e l d the t o t a l number of pr o s p e c t s l i k e l y to be d i s c o v e r e d . This o p e r a t i o n has been c a r r i e d out i n Table 15J 61-TABLE 15 NUMBER OP DEPOSITS IN EACH REMAINING CIASS LIKELY TO BE DISCOVERED BY THE SECONDARY STAGE Model Mines Important prospects Prospects TN* P 0.45 0.45 0.35 M L No. postulated to exist 2 3 14 No. discovered (secondary st.) 1 1 5 7 % No. postulated to exist 6 9 24 No. discovered (secondary st.) 3 4 8 15 M H No. postulated to exist 13 15 34 No. discovered (secondary st.) 6 7 12 25 *Total number of deposits l i k e l y to be discovered by secondary stage Deposits containing 5,000 tons would be classed as important prospects and would be explored i n t e n s i v e l y to determine i f they were economically mineable. Deeper surface d r i l l i n g would be necessary to prove mineral extensions at depth, but because of the l e n t i c u l a r , i r r e g u l a r nature of the Sandon deposits under-ground work would be required f o r the establishment of proved ore reserves. Underground openings would expose mineralization f o r sampling across mining widths, would provide material f o r metallurgical tests, and could be used f o r diamond d r i l l i n g s t a t i o n s . Underground d r i l l i n g , devoid of overburden problems 62 and o f t e n w i t h s h o r t e r d i s t a n c e s to t a r g e t s would of course be cheaper than s u r f a c e d r i l l i n g . In a d d i t i o n , underground mapping can p r o v i d e s t r u c t u r a l d e t a i l s , e s p e c i a l l y v i t a l i n t h i s camp, but unobtainable from s u r f a c e o b s e r v a t i o n s . These s t r u c t u r a l d e t a i l s may serve as c l u e s f o r the l o c a t i o n o f ore extensions o r a d d i t i o n a l d e p o s i t s . Assuming t h a t approximately 2,000 f e e t o f s u r f a c e d r i l l i n g , 2,000 f e e t o f e x p l o r a t o r y a d i t , 200 f e e t o f r a i s e s , 3,000 f e e t o f underground d r i l l i n g , amd mapping, l o g g i n g and sampling would be r e q u i r e d , the cost i n the f i n a l o r quaternary stage o f prov-i n g up a median s i z e d mineable d e p o s i t would be $223,000. A breakdown o f t h i s f i g u r e i s g i v e n i n Appendix D. The number o f important prospects i n v e s t i g a t e d can be obtained from Table 15. As t o t a l c ost o f the e x p l o r a t i o n a l s o depends on the i n t e r e s t charges on funds used to c a r r y out the program, a schedule i s g i v e n i n Table 16. I n t e r e s t w i l l be taken a t the r i s k r a t e of°10 per cent and charged from the begi n n i n g o f the y e a r i n which the expenditure was made u n t i l the end o f the program. 63 TABLE 16 EXPLORATION SCHEDULE one f i e l d season Year 1 l i n e cutting, geochemistry, one f i e l d season 2 i n v e s t i g a t i o n of anomalies one f i e l d season 3 one year 4 The t o t a l estimated cost f o r each model i s summed i n Table 1, Appendix D. This table indicates that $850,000 would be spent i n the low model, $2,300,000 i n the mean model and $4,090,000 i n the high model. Optimizing the Relation Between Costs and Expectations Before leaving the discussion of costs i t i s pertinent to again mention optimum prospecting plans, a f a c i t of exploration discussed by S l i c h t e r (1955 and I960). S l i c h t e r ' s discussions are along a s l i g h t l y d i f f e r e n t theme than the skimming optimizing previously mentioned (Preston, I960). By analysing both d r i l l hole spacing i n the b l i n d search f o r ore, and geophysical f l i g h t patterns, S l i c h t e r i l l u s t r a t e s the technique of obtaining the optimum balance between economic expectations and exploration outlay. However, as S l i c h t e r mentions (1955, p. 905), most explor-ation problems are f a r more complicated than h i s s i m p l i f i e d 64 i l l u s t r a t i v e d r i l l i n g model. On the o t h e r hand, h i s treatment o f optimumization o f g e o p h y s i c a l l i n e spacings i s r a t h e r complex f o r the Sandon e x p l o r a t i o n program, f o r he examines p r o b a b i l i t y o f d i s c o v e r y f o r randomly o r i e n t e d ^orebodies. In the S l o c a n i n g e n e r a l , however, orebodies have a p r e f e r r e d o r i e n t a t i o n , as p o i n t e d out by Cairnes (1934, p. 97) i n h i s statement, A l l the p r o d u c t i v e l o d e s i n the Slocan s e r i e s t h a t have produced ore to the v a l u e o f $100,000 or more have s t r i k e s l y i n g i n the n o r t h east quadrant and n e a r l y 60 per cent o f these s t r i k e between n o r t h 30 degrees east and n o r t h 60 degrees e a s t . Thus g e o p h y s i c a l readings taken along l i n e s s t r i k i n g southeast w i l l o f f e r the best chance o f d e t e c t i n g Sandon o r e b o d i e s . The l e n g t h s o f the three apexing orebodies d e t e c t e d i n the S i l v e r Ridge count and f o u r other " b l i n d " orebodies o c c u r r i n g i n the Sandon area average 275 f e e t , the s h o r t e s t orebody being approx-i m a t e l y 200 f e e t . The orebodies sought should t h e r e f o r e be s l i g h t l y over 200 f e e t l o n g . L i n e s p a c i n g o f 200 f e e t i s t h e r e -f o r e r easonable. CHAPTER IX ECONOMIC EXPECTATION OP THE EXPLORATION AREA Economic e x p e c t a t i o n i s d e f i n e d as the product o f the r e s u l t a n t d i s c o v e r y p r o b a b i l i t y , P, and the present v a l u e o f mines l i k e l y to occur, V. I f the co s t i s g r e a t e r than expect-a t i o n s , e x p l o r a t i o n i s economically u n a t t r a c t i v e . These t h r e e parameters, as d e r i v e d i n the pr e v i o u s chapters, are shown i n Table 17. TABLE 17 THE THREE EVALUATION PARAMETERS FOR EACH MODEL Model T o t a l cost of e x p l o r a t i o n , E R e s u l t a n t d i s c o v e r y prob., P Present v a l u e o f p o s t u l a t e d mines, V % $ 850,000 0.45 $ 2,580,000 % $2,300,000 0.45 $ 7,740,000 % $4,090,000 0.45 $16,800,000 The comparison between c o s t s and e x p e c t a t i o n i s convenient l y shown by e x p r e s s i n g e x p e c t a t i o n as a percentage of c o s t s . T h i s percentage, termed the per cent r e t u r n , i s g i v e n i n Table 18. 66 TABLE 18 PER CENT RETURN FOR EACH EXPLORATION MODEL Model Per cent r e t u r n % 136 % 151 % 185 In or d e r to use the data l i s t e d i n Table 18 to evaluate the e x p l o r a t i o n venture the minimum per cent r e t u r n d e s i r e d must be e s t a b l i s h e d . E x p e c t a t i o n equals c o s t s a t a 100 per cent r e t u r n . However, i n view of the u n c e r t a i n t i e s of e x p l o r a t i o n and the d i f f i c u l t y o f a c c u r a t e l y e s t i m a t i n g the economic p a r a -meters, 150 per cent r e t u r n would be a more r e a l i s t i c minimum. A minimum r e t u r n o f the same o r d e r would be r e a l i z e d by the use o f a h i g h e r d i s c o u n t r a t e i n the pr e s e n t v a l u e c a l c u l a t i o n s . A 10 per cent d i s c o u n t r a t e was used because o f i t s wide a d o p t i o n i n the mining i n d u s t r y . When judged a g a i n s t the minimum r e t u r n o f 150 r e t u r n o f expenses, the venture appears to be m a r g i n a l . However, i n order to judge the p o t e n t i a l o f the venture the e f f e c t of p o s s i b l e v a r i a t i o n s i n the estimates must be examined. The fundamental estimate, the p o s t u l a t i o n o f three m i n e r a l d i s t r i b u t i o n s f o r the e x p l o r a t i o n area, has a l r e a d y been d i s c u s s e d i n connection w i t h the establishment o f the low, mean and h i g h models (M^, Mjyj and Mg). The e f f e c t s o f v a r i a t i o n s i n d i s c o v e r y p r o b a b i l i t y (perhaps the most a r b i t r a r y o f the e s t i m a t e s ) , the g r o s s value o f mines found, and e x p l o r a t i o n c o s t s must now be examined. E f f e c t of Variations i n Discovery P r o b a b i l i t y Obviously, the number of deposits found not only a f f e c t s the returns to the mining company, but also influences the cost of exploration. l i s t e d i n Table 19 are the primary, P-p secondary, P2 and resultant discovery p r o b a b i l i t i e s assumed i n a previous chapter, as well as the range over which these might vary. The p r o b a b i l i t i e s previously assumed are termed the mean p r o b a b i l i t i e s . TABLE 19 VARIATION RANGE OF DISCOVERY PROBABILITIES FOR EACH MODEL Mine Important prospect Prospect Showing 0.6 0.6 0.5 0.3 Variation range 0.3-0.9 0.3-0.9 0.2-0.8 0.1-0.7 0.75 0.75 0.7 —-Variation range 0.4-0.95 0.4-0.95 0.35-0.9 P i x P 2 0.45 0.45 0.35 0.3 Variation range 0.1-0.85 0.1-0.85 0.1-0.7 0.1-0.7 If the exploration cost i s recalculated using f i r s t the upper l i m i t f o r discovery p r o b a b i l i t y , then the lower l i m i t , the effect of variations i n discovery p r o b a b i l i t y w i l l be i l l u s t r a t e d . Such calculations have been made i n Appendices E and F. In the high p r o b a b i l i t y case, f o r the low, mean and high models, 66, 95 and 129 deposits are l i k e l y to be detected i n the primary stage, therefore 132, 190 and 258 anomalies; then 15, 30 / 68 and 48 p r o s p e c t s , and 5, 13 and 24 important p r o s p e c t s are l i k e l y to be examined i n Mj,, and MJJ, r e s p e c t i v e l y . The estimated e x p l o r a t i o n expenditures, along w i t h the assumed p r o b a b i l i t i e s and p r e s e n t v a l u e s are shown i n Table 2G. I t w i l l be noted t h a t s i n c e changes i n d i s c o v e r y p r o b a b i l i t y would not e f f e c t the expected number o f e x i s t i n g d e p o s i t s , the presen t v a l u e , V, would remain unchanged i n each model. The l a s t column i n Table 20 l i s t s the per cent r e t u r n f o r each model. TABLE 20 HIGH DISCOVERY PROBABILITY: THE THREE EVALUATION PARAMETERS AND PER CENT RETURN FOR EACH MODEL Model E P V Per cent r e t u r n % $1,870,000 0.85 $ 2,580,000 117 % $3,970,000 0.85 $ 7,740,000 166 % $7,470,000 0.85 $16,800,000 191 Appendix F, which dea l s w i t h the lower d i s c o v e r y probab-i l i t y assumption, y i e l d s the i n f o r m a t i o n l i s t e d i n Table 21. TABLE 21 LOW DISCOVERY PROBABILITY: THE THREE EVALUATION PARAMETERS AND PER CENT RETURN FOR EACH MODEL Model E P V Per cent r e t u r n M L $ 460,000 0.1 $ 2,580,000 56 % $ 770,000 0.1 $ 7,740,000 100 % $1,090,000 0.1 $16,800,000 154 Comparison o f per cent r e t u r n f o r a l l three models i n the low, mean and h i g h p r o b a b i l i t y eases i s i n t e r e s t i n g (See F i g u r e 7 ) . The behavior o f per cent r e t u r n f o r seems to be r a t h e r 200 150 a u t 100 -p a a u D 5 0 x mee» 111 _ low model - ^ / / O' / / x -o ---trend line, adjusted trend l i n e 0.1 0.1+5 0 - 8 5 resultant discovery p r o b a b i l i t y F i g u r e 7 V a r i a t i o n s i n Per Cent Return A c c o r d i n g to Di s c o v e r y P r o b a b i l i t y e r r a t i c . As the r e s u l t a n t d i s c o v e r y p r o b a b i l i t y i s i n c r e a s e d from 0.1 to 0.45, per cent r e t u r n i n c r e a s e s r a t h e r s h a r p l y . 7 G ' Witht f u r t h e r i n c r e a s e i n r e s u l t a n t d i s c o v e r y p r o b a b i l i t y per cent r e t u r n drops, r a t h e r a c u r i o u s r e s u l t . T h i s behavior i s a con-sequence of rounding o f f products to the n e a r e s t i n t e g e r . I n the mean p r o b a b i l i t y case 0.45 x 2 or 0.85 mines and 0.45 x 3 o r 1.35 important p r o s p e c t s would be found. Thus 0.85 + 1.35 o r 2.2 important prospects would be i n v e s t i g a t e d . In the c o s t c a l c u l a t i o n s t h i s f i g u r e has been rounded o f f to 2 because d e p o s i t s can be expressed o n l y as i n t e g e r s . The r e s u l t i n g e x p l o r a t i o n c o s t i s $850,000. I f 2.2 were used E would be $900,000 and per cent r e t u r n would be 129 per cent. I n the low and h i g h p r o b a b i l i t y cases rounding has r e s u l t e d i n an i n c r e a s e i n E. Thus per cent r e t u r n s c a l c u l a t e d without rounding are 81 and 139 per cent i n the low and h i g h p r o b a b i l i t y cases, r e s p e c t -i v e l y . These "non-rounded" r e s u l t s are shown p l o t t e d i n F i g u r e 7 as c i r c l e s and are j o i n e d by a d o t t e d t r e n d l i n e . With these adjustments the t r e n d l i n e f o r has a shape s i m i l a r to the l i n e s f o r MJJ and MJJ. The rounding o f products has not a l a r g e e f f e c t i n and Mg f o r i n these models a l a r g e r number o f im-p o r t a n t prospects are p o s t u l a t e d . Thus rounding r e s u l t s i n a s m a l l e r percentage change i n E. The e f f e c t o f v a r i a t i o n i n r e s u l t a n t d i s c o v e r y p r o b a b i l i t y , P, depends on the peroe:ent r e t u r n s e l e c t e d as the minimum to commend e x p l o r a t i o n . Again u s i n g 150 per cent r e t u r n as the minimum, a study of F i g u r e 7 shows t h a t an i n c r e a s e i n P to 0.85 b r i n g s per cent r e t u r n i n Mfj above the minimum. With % and 1% commending e x p l o r a t i o n there might be s a i d to be approximately a 66 per cent chance of a t t a i n i n g t h i s minimum per cent r e t u r n 71 i f the program were c a r r i e d out. On the o t h e r hand, i f P stood a t 0.1, the venture would not y i e l d the r e q u i r e d r e t u r n . Increases i n Number o f Mines A v a i l a b l e f o r D i s c o v e r y By u s i n g g e o p h y s i c a l e x p l o r a t i o n t o o l s there i s a chance t h a t non-apexing d e p o s i t s would be::discovered. Assuming t h a t orebodies could be d e t e c t e d to a depth o f 100 f e e t , the expected number of occurrences would be i n e f f e c t i n c r e a s e d . The e f f e c t would be analogous to i n c r e a s i n g the d i s c o v e r y p r o b a b i l i t y ; E as w e l l as V would i n c r e a s e . The r e l a t i v e change i n each p a r a -meter i s i m p o s s i b l e to a s s e s s , but, by comparison w i t h an i n c r e a s e i n P, which d i d not g r e a t l y i n f l u e n c e e x p l o r a t i o n d e c i s i o n , i t would seem t h a t d i s c o v e r i e s a t depth would not have an important e f f e c t on the d e c i s i o n to e x p l o r e t h i s a r e a . Changes i n Gross Value of Deposits E f f e c t of Higher Gross Value of Deposits The e f f e c t o f changes i n V, v a l u e of mines l i k e l y to be found, must be examined. Value o f mines found could be i n c r e a s e d by l a r g e r than a n t i c i p a t e d tonnages o r by h i g h e r than a n t i c i p a t e d grades. I f , i n the low model, V were to be i n c r e a s e d due to a doubled tonnage, the quaternary stage of e x p l o r a t i o n would c o s t 72' $1,390,000. By comparison, the present value o f mines would be approximately doubled to $5,160,000, r e s u l t i n g i n a per cent r e t u r n o f 167 per cent, compared w i t h 136 per cent p r e v i o u s l y o b t a i n e d . Thus a doubled tonnage would improve the outlook of the most unfavourable model, M^. I f , on the o t h e r hand, the gross v a l u e s o f d e p o s i t s were to be above those a n t i c i p a t e d , the per cent r e t u r n c o u l d r i s e s i g -n i f i c a n t l y above 100 per cent. C o n s i d e r i n g a d o u b l i n g of gross v a l u e due to h i g h e r than p r e d i c t e d grades, E would remain con-s t a n t but the e x p e c t a t i o n would r i s e to twice 136 per cent o r to 272 per cent of E. Thus the e x p l o r a t i o n venture would be c o n s i d -ered s u c c e s s f u l . N e v e r t h e l e s s , c o n s i d e r i n g t h a t no Sandon depos-i t o f 40,000 tons o r more has averaged $200 per ton, i t i s un-l i k e l y t h a t t h i s grade would be a t t a i n e d . The E f f e c t of a Lowered Gross Value o f Deposits The p o s t u l a t e d gross value per ton o f ore was $100, d e r i v e d from the Ruth-Hope and V i c t o r mines which f l a n k the e x p l o r a t i o n a r e a . The e f f e c t o f a lower gross v a l u e can be demonstrated by u s i n g a lower value to r e c a l c u l a t e V. The weighted average v a l u e o f metals recovered a t February 1964 metal p r i c e s , from the s i x d e p o s i t s c l a s s e d as mines i n the S i l v e r Ridge and Payne Ridge counts i s $88 per ton o f ore. T h i s gross v a l u e has been used i n a r e c a l c u l a t i o n o f V, (See Appendix G). Present value o f the median mine i s r e c a l c u l a t e d to be $1,030,000. The r e s u l t -7 3 i n g per cent r e t u r n s f o r Mj,, MM and Mg are 109, 1 2 1 , and 147 per cent, r e s p e c t i v e l y . S i l v e r , l e a d and Zin c P r i c e s A b r i e f d i s c u s s i o n of f u t u r e s i l v e r , l e a d and z i n c p r i c e s w i l l h e lp to evaluate the p r o b a b i l i t y of p r i c e changes a f f e c t i n g the e x p l o r a t i o n d e c i s i o n . P r e d i c t i o n o f f u t u r e s i l v e r p r i c e s i s somewhat complicated by s i l v e r ' s use i n coinage and by the IT. S. Treasury h o l d i n g s . P r i o r to 1959 the world s i l v e r p r i c e was below the o f f i c i a l U. S. Treasury s e l l i n g p r i c e of 90.5 c e n t s . I n d u s t r i a l u s ers i n the U n i t e d States t h e r e f o r e bought s i l v e r from the U. S. Treasury a t t h i s c e i l i n g p r i c e . I n November, 1961, w i t h stocks d r a i n i n g r a p i d l y because o f a growing gap between s i l v e r p r o d u c t i o n and consumption, the U. S. Treasury withdrew from the s i l v e r market. S i l v e r p r i c e s rose to 11.29 U. S., the p r i c e above which U. S. s i l v e r d o l l a r s are i n danger of the m e l t i n g pot. To p r e s e r v e i t s coinage the U. S. Treasury implemented another s i l v e r p r i c e c e i l i n g , t h i s time at $1 .29 U. S. (approximately $1.40 Canadian). I n 1963 the U. S. Treasury s o l d 23 m i l l i o n ounces o f s i l v e r to m a i n t a i n t h i s c e i l i n g . S i l v e r p r o d u c t i o n has not r i s e n much i n response to the h i g h e r p r i c e s because two t h i r d s o f the f r e e world's p r o d u c t i o n comes from base metal o r e s . As the gap between consumption and p r o d u c t i o n continues to widen t h e r e i s s p e c u l a t i o n as to whether 74 or not the U. S. Treasury can continue to f i l l i t , because at the present rate of consumption the U. S. Treasury stocks w i l l be depleted i n approximately 10 years. Wemple (1964, p. 96) suggests that the U. S. Treasury remove s i l v e r from i t s sub-siduary coinage, thereby vastly increasing i t s stocks and enabling i t to hold the price of s i l v e r at $1 .29 U. S. On the other hand there i s a p o s s i b i l i t y , although presently remote, that s i l v e r substitutes may be developed, thereby easing the p r i c e of s i l v e r . For the time period envisioned i n t h i s thesis ( s i x years: four years exploration and two years production) i t appears that s i l v e r i s l i k e l y to remain near i t s present p r i c e l e v e l . The future prices of lead and zinc can be estimated p r i -marily by projections of world and United States production and consumption trends. These trends have been disrupted by a period of over-production i n the 1950*s but future markets fo r . lead and especially zinc seem strong (Dunn, 1963, pp. 441-443). Shea (1957, p. 75 and 1961, p. 98), by considering r i s i n g world consumption of lead and zinc together with the production costs of major producers, predicts an average price of 140 U. S. per pound of lead and zinc over a period including the next seven years. In conclusion, i t seems u n l i k e l y that the prices of s i l v e r , lead and zinc w i l l change during the next ten years to such an extent as to af f e c t the appraisal of the Sandon Camp's explor-a t i o n p o t e n t i a l . V a r i a t i o n s i n E x p l o r a t i o n Costs 75 While the estimated e x p l o r a t i o n c o s t s are o f the c o r r e c t c order, no doubt companies contemplating e x p l o r a t i o n i n the Sandon camp would wish to r e f i n e them. The e f f e c t o f c o s t v a r i a t i o n i s e a s i l y demonstrated. A $500,000 i n c r e a s e i n ex-p l o r a t i o n c o s t s , perhaps due to unforeseen s h a f t s i n k i n g , overburden d r i l l i n g o r a combination o f unforeseen c o s t l y oper-a t i o n s , would reduce per cent r e t u r n i n from 151 to 123 per cent. This r e d u c t i o n i l l u s t r a t e s the need f o r a s a f e t y margin i n e s t a b l i s h i n g a minimum per cent r e t u r n . Summary I f a minimum a c c e p t a b l e r e t u r n of 150 per cent o f e x p l o r -a t i o n expenditure be r e q u i r e d , the c o s t v s . e x p e c t a t i o n com-p a r i s o n made u s i n g the parameters c a l c u l a t e d i n p r e v i o u s chap-t e r s shows the e x p l o r a t i o n venture to be m a r g i n a l . I n v e s t -i g a t i o n o f v a r i a t i o n s i n these parameters i n d i c a t e s t h a t lower p e r cent r e t u r n s are p o s s i b l e i n a l l models. Thus the measures o f the e x p l o r a t i o n area's economic p o t e n t i a l , when compared to a minimum ac c e p t a b l e ^return o f 150 per cent, i n d i c a t e t h a t an economically s u c c e s s f u l venture i s not a ssured. The venture would be s p e c u l a t i v e , undertaken i n the hope o f f i n d i n g more ore o r ore of h i g h e r u n i t value than could be normally a n t i c i p a t e d . 76 CHAPTER X CONCLUSIONS While some aspects o f the problem i n v e s t i g a t e d i n t h i s t h e s i s could have been examined more r i g o r o u s l y , i t has been shown t h a t an a p p l i c a t i o n o f A l l a i s ' s approach to the e v a l u -a t i o n o f the economic p o t e n t i a l o f a sm a l l area has y i e l d e d r e a l i s t i c and u s e f u l r e s u l t s . The e v a l u a t i o n appears to be r e a l i s t i c because i t s v a r i o u s v a l u e s o f per cent r e t u r n bear out an i n t u i t i v e e v a l u a t i o n o f e x p l o r a t i o n p o t e n t i a l a t Sandon. That i s , the approach g i v e s an i n d i c a t i o n i n f i g u r e s t h a t e x p l o r a t i o n here i s n e i t h e r extremely a t t r a c t i v e o r so uneconomic as to be beyond c o n s i d e r a t i o n , i.e.,a marginal chance of e x p l o r -a t i o n success i s i n d i c a t e d . N e v e r t h e l e s s , t h e r e i s no s h o r t -coming i n the approach which would prevent i t from g i v i n g a d e f i n i t e p o s i t i v e o r n e g a t i v e e v a l u a t i o n o f the venture, had i t so warranted one. The u s e f u l n e s s o f the approach i s i n f e r r e d above, i n t h a t i n s t e a d o f a q u a l i t a t i v e e v a l u a t i o n , the approach y i e l d s f i g u r e s on which to base d e c i s i o n s . V a r i a t i o n s i n these f i g u r e s a r i s i n g from v a r i o u s p o s s i b l e v a l u e s o f the estimates pose no g r e a t problem i n t h a t a minimum a c c e p t a b l e per cent r e t u r n can be s e t to compensate f o r these v a r i a t i o n s . The primary aim of the approach i s to i n d i c a t e i f e x p l o r -a t i o n should be i n i t i a t e d , but i t can a l s o show i f the g a t h e r i n g 77 of more accurate data i s warranted. Thus i n the venture i n v e s t i -gated the re s u l t , a marginal chance of success, demonstrates the need f o r the 16,500 preliminary survey mentioned i n connection with the exploration program. This survey would provide data f o r a reassessment of the s i t u a t i o n i n the exploration area. I f on the other hand the approach gave a lower evaluation of the venture the expense would not he j u s t i f i e d . In addition, i f exploration i s i n i t i a t e d the approach can he used to constantly reassess the program i n the l i g h t of new data. 78 BIBLIOGRAPHY A l l a i s , M. (1957) "Method of Appraising Economic Prospects of Mining Exploration Over Large T e r r i t o r i e s . " Management  Science, v o l . 3, pp. 285-374. Ambrose, J . W. (1957) "Violamac Mine, Slocan D i s t r i c t , B.C." Structural Geology of Canadian Ore Deposits, v o l . 2, pp. 88-95. Montreal, Canadian In s t i t u t e of Mining and Metallurgy. Callaway, H. M. (1954) "Expense of Exploration." Economic  Geology, v o l . 49, pp. 328-330. Caimes, C.E. (1934) Slocan Mining Camp, B r i t i s h Columbia. Ottawa, Geological Survey of Canada, Mem&iLr 173. (1935) Descriptions of Properties, Slocan Mining Camp, B r i t i s h Columbia" Ottawa, Geological Survey of Canada, Memo&r 184. Dunn, J . A. (1963) "The Future of Lead and Zinc." Mining Journal, v o l . 261, pp. 441-443. Fyles, J . T. and Eastwood, G.E.P. (1962) Geology of the Ferguson Area, Lardeau D i s t r i c t , B r i t i s h Columbia, V i c t o r i a , B r i t i s h Columbia Department of Mines and Petroleum Resources, B u l l e t i n No. 45 de Guenin, J . (1962) "Exploration and Search Theory." Computer  Short Course and Symposium on Mathematical Techniques and  Computer Applications i n Mining and Exploration, v o l . 1, pp. F l - F 19. College of Mines, The University of Arizona. Hawkes, H. E. and W i l l i s t o n , S. H. (1962) "Mercury Vapour as a Guide to Lead-Zinc-Silver Deposits." Mining Congress Journal, v o l . 48, no. 12, pp. 30-32. and Webb, J.S. (1962) Geochemistry i n Mineral Exploration. New York, Harper and Row. Hedley, M. S. (1945) Geology of the Whitewater and Lucky Jim  Mine Areas. V i c t o r i a , B r i t i s h Columbia Department of Mines, B u l l e t i n No. 22. . (1952) Geology and Ore Deposits of the Sandon Area, Slocan Mining Camp, B r i t i s h Columbia. V i c t o r i a , B r i t i s h Columbia Department of Mines, B u l l e t i n No. 29. . Letter to the writer. February 16, 1964. 79 Hirseh,W. Z. (1957) Introduction to Modern S t a t i s t i c s . New York, MacMillan. "How Geophysical Techniques Save Exploration D o l l a r s . " Engineering and Mining Journal, v o l . 157, no. 6a, 1956, pp. 32-38. ~ Irwin, A. B. (1952) "Mapping Complex Folds i n the Slocan Series, B r i t i s h Columbia." Transactions of the Canadian I n s t i t u t e of  Mining and Metallurgy, v o l . 54, pp. 494-501. Khoerr, A. W. and Petersen, M. L . (1963) "High S i l v e r Prices Spark Revival i n U.S. and Canadian Mining Camps." Engineering and Mining Journal, v o l . 164, no. 9, p. 74. Lacy, W. C. (1961) "Use of Computers i n Exploration Projects." Short Course on Computers and Computer Applications i n the  Mineral Industry, v o l % 2, pp. N1-N8. College of Mines, University of Arizona. L i t t l e , H. V/. .(.I960) Nelson Map-Area, West Half, B r i t i s h Columbia. Ottawa, Geological Survey of Canada, Memoir 308. Nolan, T. B. (1950) "The Search f o r New Mining D i s t r i c t s . " Economic Geology, v o l . 45, pp. 601-608. Parks, R. D. ( 1957) Examination and Valuation of Mineral Property. Reading, Mass., Addison-Wesley. Pearson, E.S. and Hartley, H.O. ( 1954) Biometrica Tables f o r S t a t i s t i c i a n s , v o l . 1 Cambridge, The Syndics of the Cambridge University Press Preston, L. E. (i960) Exploration f o r Non-Ferrous Metals. Washington, Resources for the Future, Inc. Shea, W. P. (1957) "One Hundred Years of Zinc". Engineering  and Mining Journal, v o l . 158, no. 11, pp. 75-78. (1961) "The Price of Lead, 1961-1975" Engineering and Mining""Journal, v o l . 162, no. 9, pp. 98-102. Rice, H. M. (1941) Nelson Map-Area, East Half, B r i t i s h Columbia. Ottawa, Geological Survey of Canada, Memjbdr 228. (1944) Geology and Mineral Deposits at Ainsworth, B r i t i s h Columbia. Ottawa,' Geological Survey of Canada, Paper 44-13. Schofield, S.J. (1920) Geology and Ore Deposits of Ainsworth Mining Camp, B r i t i s h Columbia. Ottawa, Geological Survey of Canada, Memoir 117. 8 0 S l i c h t e r , I. B. (1955) "Geophysics Applied.to Prospecting f o r Ore." Economic Geology, F i f t i e t h Anniversary Volume, Part I I , pp. 885-969. (I960) "The Need of a New Philosophy of Prospecting. r" The Canadian Mining Manual, pp. 11-21. Gardenvale, Quebec, National Business Publications Ltd. Smellie, D. ¥. Interview with the writer. February, 1964. Warren, H. V. and Delavault, R.E. (1950) "Gold and S i l v e r Content of Some Trees and Horsetails of B r i t i s h Columbia." B u l l e t i n of the Geological Society of America, v o l . 61, pp. 123-128. Interview with the writer. February, 1964. Wemple, F. H. (1964) " S i l v e r " Engineering and Mining Journal, v o l . 156, no. 2, pp. 96-97. 81 APPENDIX A 8 2 F r e q u e n c y D i s t r i b u t i o n o f M i n e r a l D e p o s i t s i n the S a n d o n Camp T a b l e 1 l i s t s t h e f r a c t i o n o f t h e a r e a l o m i t s c o n t a i n i n g M o r more d e p o s i t s ; t h e s e f i g u r e s a r e p l o t t e d i n G r a p h 1 a l o n g w i t h t h e c o r r e s p o n d i n g t h e o r e t i c a l P o i s s o n d i s t r i b u t i o n . T A B L E 1 MINERAL D I S T R I B U T I O N IN THE SANDON CAMP AND THE T H E O R E T I C A L ACCUMULATIVE POISSON D I S T R I B U T I O N T h e o r e t i c a l O b s e r v e d d a t a P o i s s o n d i s t r i b u t i o n M U E F P r o b . F r e q . F P 0 7 8 1 3 6 1 . 0 0 . 4 8 5 66 1 . 0 0 1 3 3 5 8 0 . 4 3 . 3 5 0 4 8 0 . 5 1 2 16 25 0 . 1 8 . 1 2 6 1 7 0 . 1 6 3 4 9 0 . 0 6 6 . 0 3 0 4 0 . 0 3 7 4 4 5 0 . 0 3 7 . 0 0 5 . 1 0 . 0 0 7 5 1 1 0 . 0 0 7 5 . 0 0 0 8 6 0 0 M i s the a r e a l d e n s i t y o f d e p o s i t s p e r 4 0 0 x 4 0 0 m e t e r u n i t . U i s t h e number o f u n i t s c o n t a i n i n g M d e p o s i t s . E i s the number o f u n i t s c o n t a i n i n g M o r more d e p o s i t s . F a i s t h a t f r a c t i o n o f t h e u n i t s c o n t a i n i n g M o r more d e p o s i t s , a c c o r d i n g to t h e S a n d o n d i s t r i b u t i o n . P r o b . i s t h e t h e o r e t i c a l P o i s s o n p r o b a b i l i t y o f f i n d i n g M d e p o s i t s p e r u n i t ( P ( M ) = Z M e ~ z / M1 , Z = 0 . 7 2 ) . F r e q . i s P r o b . x the t o t a l number o f u n i t s . Fp i s t h a t f r a c t i o n o f the u n i t s c o n t a i n i n g M or more d e p o s i t s , a c c o r d i n g to the t h e o r e t i c a l P o i s s o n d i s t r i b u t i o n . 84 A r e a l density of deposits per k-00 x kOO meter unit 0 1 2 3 k 5 6 Mineral deposit d i s t r i b u t i o n . . . X T h e o r e t i c a l Poisson d i s t r i b u t i o n . . . : o Graph 1 C o m p a r i s o n of i n the Sandon Observed M i n e r a l D e p o s i t D i s t r i b u t i o n Camp Wi t h a P o i s s o n D i s t r i b u t i o n 85 APPENDIX B Average G r o s s V a l u e o f M e t a l E x t r a c t e d p er t o n o f Ore from the V i c t o r and Ruth-Hope Mines The f o l l o w i n g p r i c e s , q u o t e d i n F e b r u a r y , 1 9 6 4 , i n the N o r t h e r n M i n e r i n C a n a d i a n f u n d s : Au : $ 37.80 / o z . Ag : 1.40 / o z . Pb : . 1 3 / l b . Zn : . 1 3 / l b . Cd : 3 . 2 5 / l b . These p r i c e s have been u s e d i n - c a l c u l a t i n g g r o s s v a l u e s (a) and ( b ) : (a) Ruth-Hope Mine - a p p r o x i m a t e l y 5 1 , 7 0 0 t o n s M e t a l ^ P r o d u c t i o n to end 1 9 6 2 Au 140 oz. A g 2 , 6 4 9 , 5 0 0 oz. P-b 2 2 , 3 8 2 , 0 0 0 l b s . Z n 2 , 9 5 5 , 5 0 0 l b s . * * V a l u e $ 5,000 3,700,000 2,900,000 384,000 $ 6,989,000 Gross v a l u e per t o n $6,989,000 •* 51,700 = $135 / t o n = 135 / t o n * A p p r o x i m a t e amount o f m e t a l e x t r a c t e d ** P r i c e s a r e t h o s e g i v e n above ( F e b r u a r y ; 1964). 87 (b) V i c t o r Mine - 160,377 to n s M e t a l - ^ P r o d u c t i o n to end 1962 * * V a l u e A u 2,338 oz. $ 88,376 A g 3,812,765 oz. 5,337,871 P b 46,805,360 l b . 6,084,697 Z n 30,540,963 l b . 3,970,325 C d 179,382 l b . 582,992 $16,064,261 Gross v a l u e p e r t o n $16,064,261 •» 160,377 = 1100 / t o n * m e t a l e x t r a c t e d . ,** p r i c e s a r e t h o s e g i v e n a b o v e . ( F e b r u a r y ; 1 9 6 4 ) ( c ) W e i g h t i n g the g r o s s v a l u e $ 1 0 0 /T x 1 6 0 , 0 0 0 T = $ 1 6 , 0 0 0 , 0 0 0 135 /T x 5 2 , 0 0 0 T = 7 , 0 2 0 , 0 0 0 212,000 T = $ 23,020,000 $23,020,000 / 212,000 T = $ 109 /T $ 100 /T 88 APPENDIX C Monthly Cash Flow for Median Mine 89 Revenue gross metal recovery 2 , 2 5 0 @ $100/T $ 2 2 5 , 0 0 0 (Feb,, lj6k metal prices) Operating expenses equipment rental $ 7 , 0 0 0 . transportation and treatment 1 7 , 1 0 0 mining 3 3 , 8 0 0 m i l l i n g 2 0 , 3 0 0 general expenses 7 , 9 0 0 admini st rat ion 1 1 , 5 0 0 $ 9 7 , 6 0 0 I 9 7 , 6 0 0 Direct operating p r o f i t $127,^+00 Royalties and interest ^ r o y a l t i e s at 10% of gross-metal recovery $ 2 2 , 5 0 0 interest at 1 0 $ on preproduction expenses 3 0 0 $22,800 $ 22 , 8 0 0 Gross cash flow $10*1 ,600 Enepro.duction;'expense ...write .off \ _ ... $ 1 9 , 5 0 0 Net cash flow $ 8 5 , 1 0 0 ^Payable to present owners of mineral rights*. Present Value Calculations monthly cash flow from the median mine i s converted to a present value at the time the exploration program i s terminated. As planning and development are required "before production can begin, the f i r s t month!s cash flow w i l l be delayed approximately 7 months or 0.58 of a year beyond t h i s date. The mine w i l l produce f o r 18 months, thus income w i l l be received f o r 1.5 years. Present value i s determined using the Hoskold formula with 3 per cent as the safe rate on redemption of c a p t i a l and 10 per cent as the r i s k rate. A monthly cash flow of $85»100 y i e l d s an annuity of $1,021,200. The Hoskold formula f o r the present value of t h i s deferred annuity i s /?"-/ ' J As indicated above, the terms have the following values: r = 0 . 0 3 r'= 0.10 R = 1 .03 r"= 0.10 n = 1.5 m = O . 5 8 PV=1.24 x $1,021,000 = |1,270,000 Notes to Accompany Monthly Cash Flow 91 Monthly equipment rental costs if slushers # 1 ^ 0 0 0 1 mucker 3 0 0 1 0 ore cars 5 0 0 2 locomotives 1 , 0 0 0 5 jacklegs. 5 0 0 5 stopers. 5 0 0 2 compressors ( 5 0 0 c„ f. m.) 1 , 6 0 0 1 e l e c t r i c plant ( 5 0 k. w„) 1 , 0 0 0 20 lamps 2 0 0 2 receivers 1 0 0 k tuggers 3 0 0 I 7 , 0 0 0 Preproduction expenses A e Preproduction planning wages and general expense k months planning Consultant at $1,000 per month $ 4 , 0 0 . 0 h months assembling men and equipment, contract negotiations, etc* 6 , 0 0 0 5 months p r e p r o d u c t i o n s u p e r v i s i o n , d e t a i l e d p l a n r e v i s i o n , s urveying, sampling and g e o l o g i c a l mapping t r a v e l and general expenses B. Development o f orebody 5 0 0 f e e t o f r a i s e s t imbering and e q u i p i n g r a i s e s 50 f e e t o f chute r a i s e s . 5 0 0 f e e t o f d r i f t i n g 4 chutes C, C o n s t r u c t i o n o f f i c e and warehouse assay shack dry generator and compressor house powder house o r e b i n s shop 92 $ 7 , 0 0 0 2 , 0 0 0 ' $19,000 $ 1 5 , 0 0 0 2 , 5 0 0 1 , 0 0 0 2 5 , 0 0 0 5 0 0 $ 4 4 , 0 0 0 $ 4 ,ooo 3 , 0 0 0 4 , 0 0 0 1 , 0 0 0 5 0 0 • 2 , 0 0 0 3 , 0 0 0 H 7 , 5 o o D. M i s c e l l a n e o u s s u p p l i e s $ 8 , 0 0 0 94 road work $ 8 , 0 0 0 c l e a r i n g and l e v e l i n g 3 ? 0 0 0 v e n t i l a t i o n equipment 5 ? 0 0 0 pickup t r u c k 3 , 0 0 0 one-ton t r u c k 3 , 5 0 0 E. Working c a p i t a l o p e r a t i n g expenses f o r 2 months $ 2 0 0 , 0 0 0 F. Contingency $ ^ 5 , 0 0 0 T o t a l p r e p r o d u c t i o n expenses $ 3 5 0 , 0 0 0 94 APPENDIX D Costs f o r Each Stage o f E x p l o r a t i o n 95 P r e l i m i n a r y survey (a) Plane t a b l e mapping. One crew needed, each c o n s i s t i n g o f j u n i o r g e o l o g i s t and a s s i s t a n t , f o r s i x month's f i e l d work.. g e o l o g i s t ' s wages $ ^50/mo. a s s i s t a n t ' s wages 350/mo. l i v i n g expenses & misc c. 200/mo,. $l ,000/mo.. f i e l d work = 6 X #l , 0 0 0/mo. $ 6 , 0 0 0 s u p e r v i s i o n $00 t o t a l c o s t $ 6 , 5 0 0 or (b) Survey u s i n g a e r i a l photographs-c o s t o f photos on s c a l e o f $ 2 , 5 0 0 crew as i n (a) f o r f o u r months ^ , 0 0 0 t o t a l c o s t $ 6 , 5 0 0 Cost o f examining anomalies ( o r showings) (a) S o i l and v e g e t a t i o n samples. Assume an area 400' X 3 0 0 ' to be examined on each ^ anomaly, g i v i n g 1 2 6 samples,, c o l l e c t i o n c o s t $ 5 X 1 2 6 = $ 6 3 0 a n a l y s i s c o s t ( $ 1 . 5 0 + ^ 5 . 0 0 ) X 1 2 6 = 8 2 0 $ 1 , 4 5 0 $ 1 , ^ 5 0 (b) D e t a i l e d e l e c t r o m a g n e t i c work.. nine l i n e s 3 0 0 ' long = 2 , 7 0 0 ' estimated c o s t $ 5 0 $ 5'0 (c) G e o l o g i c a l mappings 2 days @ $ 2 5/day I 5 0 $ 5 0 (d) B u l l d o z e r trenching,, moving time $ 50 t r e n c h i n g : 1 , 0 0 0 c u b i c yards @ 10^/yd.- 1 0 0 . $ 1 5 0 $ 1 5 0 (e) Overhead and s u p e r v i s i o n , £ o f a month, overhead $ 500/mo«. s u p e r v i s i o n 550/mo,, expenses 150/mo., $ 1 , 2 0 0 X i =- $ 3 0 0 . $ 3 0 0 97 ( f ) T o t a l cost per anomaly. $ 2 , 0 0 0 3 . Cost o f examing a prospect (a) B u l l d o z e r t r e n c h i n g and road work., moving c o s t s t r e n c h i n g : 1 , 0 0 0 yd. @ 1 0 0/yd. 3 days road work © $ 5 0/day $ 50 1 0 0 1 5 0 $ 3 0 0 $ 3 0 0 (b) Rock t r e n c h i n g * h man-days p l u s s u p p l i e s $ 1 0 0 $ 1 0 0 (c) Diamond d r i l l i n g . , 5 h o l e s , 7 5 ' deep equals 3 7 5 ' o f d r i l l i n g d r i l l i n g c o s t @ $ 5 / f t - $ 1 , 8 7 5 equipment l e f t i n h o l e s 2 0 0 moving 200.' $ 2 , 2 7 5 $ 2 , 2 7 5 (d) Core l o g g i n g , sampling and t r e n c h mapping. g e o l o g i s t 7 days @ $ 2 5/day $ 1 7 5 assays 2 0 samples © $ 5/ea. 1 0 0 $ 2 7 5 $ 2 7 5 (e) S u p e r v i s i o n and overhead.. overhead $ 5 0 0 s u p e r v i s i o n 5 5 0 expenses 1 5 0 98 $ 1 , 2 0 0 X 1/8 = $ 1 5 0 $ 1 5 0 $ 3 , 1 0 0 T o t a l approximate c o s t per prospect , $ 3 , 0 0 0 lf... Cost o f examing an important prospect (a) Surface d r i l l i n g - 2 , 0 0 0 f e e t -moving $ 2 0 0 . d r i l l i n g @ $ 5 / f o o t 1 0 , 0 0 0 equipment l e f t i n h o l e s 2 , 0 0 0 $ 1 2 , 2 0 0 $ 1 2 , 2 0 0 (b) Underground openings., 2 , 0 0 0 f e e t o f a d i t c o n t r a c t e d @ $ 8 5 / f o o t $ 1 7 0 , 0 0 0 2 0 0 f e e t o f r a i s e s c o n t r a c t e d @ $ 5 0 / f o o t 1 0 , 0 0 0 s u p e r v i s i o n , mapping and s u r v e y i n g k , 8 0 0 ) a s s a y i n g and sampling $ 2,000 99 $186,800 $186,800 (c) Underground d r i l l i n g - 3,000 feet., d r i l l i n g @ $ 3 /foot $ 9,000 s u p e r v i s i o n , l o g g i n g and sampling 3,000 overhead 1,000 $ 13,000 $ 13,000 (d) M e t a l l u r g i c a l t e s t s . $ 7,000 (e) A d d i t i o n a l s u r f a c e d r i l l i n g expenses. l o g g i n g , s u p e r v i s i o n and overhead $ ^,050 assays 250 $ if,300j $ ^, 300 ( f ) The approximate t o t a l c o s t per p r o p e r t y $223,300 $223,000 Note: Development work necessary to b l o c k out 22,000 tons at the V i c t o r mine averaged $1^7,000 i n 1955 & 195^.. Table 1 E x p l o r a t i o n Costs f o r Each Model 100 Item Low model Mean model High model Year 1 P r e l i m i n a r y sur» $6,500/ $6,500 $6,500 Year 2 Primary stage $68,300; $68,300 $68,300; Year 3 Secondary stage T e r t i a r y stage 62 @ $2,000. 7 @ $3,000 $145,000 96 @ $2,000 15 @ $3,000 $222,000. 13^ @ $2,000 25 @ $3,000. $3^3,000; Year 4 Quaternary stage 2 @ $223,000 $446,000, 7 @ $223,000 $1,561,000 14 @ $223,000 $2,899,00.0. I n t e r e s t p l u s p r i n c i p a l (rounded) Year 1 Year 2 Year 3 Year 4 T o t a l $ 10,000 90,000 180,000 490,000 $770,000 $ 10,000 90,000 270,000 1,720,,000 $2,090,000 $ 10,000 90,000 420,000. 3,190,000 $3,720,000. 10$ Contingency $80,000 $210,000 $370,000 Estimated e x p l o r a t i o n c o s t $850,000 $2,300,000 $4,090,000 101 APPENDIX E 1 TABLE 1 NUMBER OF DEPOSITS IN EACH CLASS LIKELY TO BE DISCOVERED BY THE PRIMARY STAGE -- HIGH DISCOVERY PROBABILITY Model Mines Important prospects Prospects Showings TN* \ P l 0.9 0.9 0.8 0.7 66 No. postulated to e x i s t 2 3 14 71 No. discovered 2 3 11 50 MM No. postulated to e x i s t 6 9 24 90 95 No. discovered 5 8 19 63 M H No. postulated to e x i s t 13 15 34 109 129 No. discovered 12 14 27 76 * Total number of deposits discovered by the primary stage. 103 TABLE 2 NUMBER OF DEPOSITS IN EACH REMAINING CLASS LIKELY TO BE DISCOVERED BY THE SECONDARY STAGE -- HIGH DISCOVERY PROBABILITY Model Mines Important Prospects TN* P 0.85 0.85 0.7 \ No. postulated to e x i s t 2 3 14 No. discovered (secondary st.) 2 3 10 15 \ No. postulated to e x i s t 6 9 24 No. discovered (secondary st.) 5 8 17 30 M H No. postulated to e x i s t 13 15 34 No. discovered (secondary st.) 11 13 24 48 * Total number of deposits discovered by secondary stage. TABLE 3 104 EXPLORATION COSTS FOR EACH MODEL --HIGH PROBABILITY Item Low Model Mean Model High Model Year 1 Preliminary Survey $6,500 $6,500 $6,500 Year 2 Preliminary Stage $68,300 $68,300 $68,300 Year 3 Secondary Stage 132(@ $2,000 190 @ $2,000 258 @ $2,000 T e r t i a r y Stage 15 @ $3,000 30 @ $3,000 48 @ $3,000 $309,000 $470,000 $650,000 Year 4 Quaternary Stage 5 @ $223,000 12 @ $223,000 24 @ $223,000 $1,115,000 $2,676,000 $5,352,000 Interest plus p r i n c i p a l (roun-ded) Year 1 Year 2 Year 3 Year 4 $10,000 $90,000 $370,000 $1,230, 000 $10,000 $90,000 $570,000 $2,940,000 $10,000 $90,000 $790,000 $5,900,000 Total $1,700,000 $3,610,000 $6,796,000 10% contingency $170,000 $360,000 $680,000 Estimated explora-t i o n cost $1,870,000 $3,976,000 $7,470,000 105 APPENDIX F 106 TABLE 1 NUMBER OF DEPOSITS IN EACH CLASS LIKELY TO BE DISCOVERED BY THE PRIMARY STAGE -- LOW DISCOVERY PROBABILITY Model Mines Important prospects Prospects Showings TN* P l 0.3 0.3 0.2 0.1 M L No. postulated to e x i s t 2 3 14 71 No. discovered 1 1 3 7 12 No. postulated to e x i s t 6 9 24 90 \ No. discovered 2 3 5 9 19 M H No. postulated to e x i s t 13 15 34 109 No. discovered 4 4 7 11 26 * Total number of deposits discovered by primary, stage. 107 • TABLE 2 NUMBER OF DEPOSITS IN EACH REMAINING CLASS LIKELY TO BE DISCOVERED BY THE SECONDARY STAGE -- LOW DISCOVERY Model Mines Important Prospects TN* P 0.1 0.1 0.1 M L No. postulated to e x i s t 2 3 14 No. discovered (secondary st.) 0.2 0.3 1 2** M H No. postulated to e x i s t 6 9 24 No. discovered (secondary st.) 1 1 2 . 4 M No. postulated to e x i s t 13 15 34 H No. discovered (secondary st.) 1 2 3 6 * Total number of deposits discovered by secondary stage. ** According to the c a l c u l a t i o n s , 0.2 mines and 0.3 important prospects w i l l be discovered. As mineral deposits are integers, perhaps these figures should be rounded-off to 0. However, as revenue from one mine i s included i n the expectations, the expectation vs. cost comparison would be meaningless i f the cost of examining one 'important prospect ' . i (a step i n discovering a mine) were not considered. Thus one important prospect which would prove to be a mine must be assumed to be found. This deposit and the prospect are the two deposits assumed discovered. 108 TABLE 3 EXPLORATION COSTS FOR EACH MODEL 'I LOW PROBABILITY CASE Item Low Model Mean Model High Model Year 1 Preliminary Survey $6,50.0 $6,500 $6,500 Year 2 Primary Stage : $68,300 $68,300 $68,300 Year 3 Secondary Stage 24 @ $2,000 38-@ $2,000 '52 @ $2,000 T e r t i a r y Stage 2.'@ $3,000 4 @ $3,000 6 @ $3,000 $54,000 $88,000 $122,000 Year 4 Quaternary Stage .1 @ $223,000 2 @ $223,000 3 @ $223,000 $223,000 $446,000 $669,000 Interest plus p r i n c i p a l (rounded) Year 1 Year 2 Year 3 Year 4 $10,000 $90,000 $70,000 $250,000 $10,000 $90,000 $110,000 $490,000 $10,000 $90,000 $150,000 ; $740,000 Total ii • $420,000 $700,000 $990,000 10% Contingency $40,000 $70,000 $100,000 Estimated explora-t i o n cost . I $460,000 $770,000 $1,090,000 109 i APPENDIX G 110 MONTHLY CASH FLOW FOR A MINE CONTAINING ORE WITH A GROSS VALUE OF $88 PER TON Revenue Gross metal•recovery 2250 tons @ $88/T $198,000 Operating Expenses Equipment r e n t a l $7,000 Transportation and treatment $.17,000 Mining , . 33,800 . M i l l i n g 20,300 General Expenses 7,900 Administration 11,500 $97,600 - $97,600 Dire c t operating p r o f i t $100,400 Royalties and i n t e r e s t Royalties. @ 10% of gross metal recovery $19,800 Interest 300 $20,100 - $20,100 Gross Cash flow $80,300 F r e p r o d u c t i o n expense... w r i t e • o f f •,-, $19,500 Net cash flow $60,800 I l l PRESENT VALUE OF CASH FLOW Income: $ 6 0 , 8 0 0 for 2 0 months. 1 . Income a f t e r one year: 4 x $ 6 0 , 8 0 0 = $ 2 4 3 , 0 0 0 2 . Income assumed for second year: 1 6 x $ 6 0 , 8 0 0 = $ 9 7 3 , 0 0 0 Hoskold rates: 37=, and 107c 1 . PV = $ 2 4 3 , 0 0 0 x 0 . 9 0 9 = $ 2 2 1 , 0 0 0 2 . PV = $ 9 7 3 , 0 0 0 x 0 . 9 0 9 -1 1 . 1 = $ 8 0 5 , 0 0 0 $ 1 , 0 2 6 , 0 0 0 Present value of mine i s approx. $ 1 , 0 3 0 , 0 0 0 i 112 TABLE 1 PER CENT RETURN FOR $88 ORE Model E P V Per cent return M L 850,000 0.45 $2,060,000 109 *M 2,300,000 0.45 $6,180,000 121 M H 4,090,000 0.45 $13,400,000 147 

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