Frank Callaghan admits it: telling investors his company held 10.6 million ounces of contained gold last year was a big mistake. “I’ve learned that lesson. Not a nice way to learn it by the way, but I did,” the chief executive of Barkerville Gold Mines Ltd. said.
Almost a year ago, Barkerville, a small junior mining company, stunned the mining community by stating its Cow Mountain project in British Columbia had an indicated resource of 10.6 million ounces of gold, and could hold up to 90 million ounces. Barkerville shares soared even though numerous experts thought the numbers were too good to be true.
One of the biggest skeptics was the British Columbia Securities Commission (BCSC). The regulator promptly cease traded the stock and voiced many concerns about how the data was compiled.
That put pressure on both Barkerville and Peter George, the independent geologist who calculated the resource. To address the BCSC’s concerns, Barkerville hired two consulting firms (Snowden Mining Industry Consultants and Apex Geoscience) to work with Mr. George on an updated resource estimate.
It took a long time, but they have finally finished their work. The new numbers are significantly lower, but in Mr. Callaghan’s view they prove Mr. George was on the right track.
One of the BCSC’s biggest problems with the stated 10.6 million ounces was that it was an “unconstrained” resource, meaning it incorporated drill holes well outside of the core deposit. That is not the accepted way to report a mineral resource estimate in Canada, and Mr. Callaghan acknowledged the error.
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