Understanding Drill Results and What They Mean for Investors
When a mining or exploration company releases drill results, they might be hard to decipher or understand. However, drill results are crucial for investors, especially those who want to make a significant return on their investment. Interpreting drill results isn’t easy, and even experienced retail investors who aren’t heavily involved in precious metals struggle. However, drill results can be crucial indicators for investors who are interested in obtaining long-term value from their silver stocks. If you’re planning to invest in silver mining stocks, drilling results determine the deposit grade, which is a significant factor in determining the resource potential.
When prospecting any precious metal, analysing the depth of the mineralization and the length/thickness of the intercept are just a few of the metrics to which to pay attention. It’s also important to know the number of drill holes and how close they are to each other. This guide will walk you through key terms you’ll come across in drilling release results and why they’re significant for you to know.
What to look for
As technology continually advances, so too have the data that returns from preliminary economic assessments and feasibility studies. The same can be said for drilling results. Investors can get specific data about progress and production through digitization and mining software, blasting optimization, and other mining tools. Moreover, advances in mining technology have allowed us to scale mining operations with large pits, using equipment capable of processing volumes of ore en masse at an extraction site.
That’s why factors such as the width of the ore interval(s) intersected by the drill hole are so important. This is due to the fact that narrow intervals are more cost-effective and easier to exploit. A high-grade result combined with a broad drill intersect can be a powerful tool in determining the deposit’s quality and size.
Infill vs. Step-out drilling
Once you know the categories that resources are classified into — measured, indicated, and inferred — you can begin to assess the company’s drilling program. Drilling programs are often divided into a step-out drilling program and an infill drilling program. A step-out drilling is usually performed to add to the current resource model. In contrast, mining companies perform infill drilling to convert existing resources from the ‘inferred’ to ‘measured’ and ‘indicated’ categories. It’s important to note the difference. Step-out drilling programs have a fixed starting point to expand the mineralization zone if a deposit is deemed worthy. Meanwhile, infill drilling programs are used to confirm the presence of mineralization between the step-out drill holes. In most cases, a company selects a few targets in which they believe the mineralization has the most expansion potential.
How do drilling results impact a stock?
The findings will be reported in terms of interval length (in metres) and mineralization grade. If possible, compare results from other nearby drill holes. The grade is considered significant if other areas return 2.0-8.0 g/t Ag. The importance of a drill intercept is directly related to the interval length, not just the quality. That is why it is critical to understand the distinction between infill and step-out drilling.
Infill drill holes have a much higher chance of hitting mineralization. Successful infill drills will have less impact than a successful step-out drill hit. Assume that an infill drill hole does not return mineralization (highly unlikely). In that case, the stock will suffer significantly, implying that previously ‘inferred’ resources do not exist. Step-out drill results usually impact share price more than infill drill results.
Mining technology today allows for large open pits and massive 200-tonne mining trucks capable of processing large volumes of ore at a low cost. Investors need to study drilling results to get a good sense of whether it will lift the share price or not. While it’s true that reports and opinion pieces can be a source of information for investors, a public news release with drilling results will give you an accurate picture of what stage a mining company is at in its drilling process. And those results will also help you make sound investment decisions when investing in silver mines.