So, a bit unusual for my blog, but I had a couple of queries (on Twitter) regarding the dewatering of the underground workings at our Wingdam underground placer recovery project. And…with the investing public (largely without underground mining experience) potentially having misconceptions on how things work and operate; and not wanting any of my words taken out of context (especially with limited characters on Twitter) if not taken in its entirety, I wrote this short, but hopefully succinct reply and am sharing it here with you.
So, off the bat, I understand some investors’s impatience – believe me when I say that I understand. We have been waiting 8 years for the right circumstances to get back and continue where we left off on this project (both the underground and exploration sides). We are more enthused about the project than ever before on both sides. In short:
• Underground (placer) – although delayed, the gold that is down there isn’t going anywhere.
• The econometrics for liberating that placer has not changed (other than the price of gold has increased)
• Why focus on exploration – BGM has just upped the ante, by announcing 180,000 m of exploration drilling from now to summer 2021.
Underground dewatering:
We commissioned a 3rd party dewatering company and a 3rd party hydrogeological engineering firm to pump test the dewatering of our underground workings and are awaiting the processed data. (2 data loggers went down with the pump that take measurements every 15 sec)
Among the things tested is the natural ground water recharge rate vs the workings that we are dewatering.
The pump test is NOT a pass or fail (as some non-professional commentary recently suggests). A grout plug placed last year was set in order to reduce the inflow from other workings and thus reduce the main working dewatering time. Relative to the natural inflow of water we will see what volume and the time that it will take to dewater and discharge our main underground workings. The extent that the temporary grout plug will reduce the inflow of water (other than the natural ground water inflow) may range from 0-100%, likely somewhere in between, equating to what we estimate to be 3 months – 3 week time frames. To be clear, when we did the 2012 crosscut, we did not have this grout plug nor the crosscut itself which also reduces water inflow.
Why does this matter? We could use (I am going to exaggerate) a million gal/min pump or a 500 gal/min pump. We will pump the optimum amount for speed, cost, and importantly the environment. We will always remain within regulatory standards that we are permitted to do (in layperson’s terms, we will not flood the already historically high water levels).
Why were we delayed? Freshet and rain brought water levels all over BC (Cariboo, Chilcotin, Kooteneys, Shuswap, etc.) to record levels (flood warnings) throughout spring and summer this year, we will not, and it makes no sense to “flood a flooded region”. To reiterate, the gold that is down there is still there, the method and technology to get it remains the same.
Regardless, the next step after reviewing the processed data will be to restart pumping while at the same time rehabilitating the decline following the water level as it goes down – including inspecting/cleaning/repairing walls and floor as needed, re-setting ventilation, power and freeze lines, etc. Once down to the main workings, the grout plug will be permanently set and the area inspected for other possible repairs or plugs to install.
Why exploration financing? (placer project is already financed):
As mentioned before, the proceeds from the current financing will be used to accelerate and expand the exploration and drilling program for lode gold. Things are heating up next door at BGM as they have started a 180,000 m exploration drill program running from now through to summer 2021 – the momentum created has certainly been a factor in the equity interest in the stock.
To put things into perspective, I would guess that this BGM program will cost them around $50 million. BGM’s stated finding costs are $19/ounce which we hope to attain as well. In order for us to find a multimillion ounce deposit(s) as BGM has, we will have lots of drilling ahead of us. So while the proceeds of the underground operations can offset/add to the exploration and drilling costs substantially, those proceeds don’t come all at once and we definitely don’t want to wait until we have enough “saved” to undertake a full, ongoing drill program (ie drilling is not effective in fits and starts).