M3 Mining (ASX: M3M) shares are down 39%. M3M shares are down on the finding that, you know, actually, there’s not that much gold up in them thar’ hills. Or at least, if there is we’ve not found that rich and mineable lode of it. What’s really killing the M3M share price here is that the last set of indications showed there was. Now, looking in more detail, we find out, well, not so much. So there’s more to this than just and absence of gold. There’s also the crushing of hopes than there would be.
The actual announcement: “Follow-up aircore program at El Capitan extends the gold mineralised zone to a minimum length of 400m. Multiple veins open at depth and along strike highlight the potential of the prospect, with top intercepts including;
― 4m at 1.09 g/t Au from 76m (EDJAC240)
― 8m at 0.56 g/t Au from 20m (EDJAC249)
― 4m at 0.53 g/t Au from 20m (EDJAC232)
Reverse circulation (RC) drilling planned to test the depth extent of mineralisation
beneath the previously drilled high-grade zone; ― 10m at 241.2 g/t Au from 27m (EDJAC164)”
To put that into simpler English. We had found very high gold values which is why we were spending the money to drill and explore. But what we’ve found is the right type of rock, the right type of mineralisation, it just doesn’t have much gold in it.
M3 Mining share price from Google Finance
Now, this is not a perfect guide but it is a useful one. 1 part per million, or 1 g per tonne. That’s sorta the minimum we’re looking for of gold in an ore. Less than that and the processing costs are likely high than the revenues. That’s not the end of it. We also need to have a large enough volume of ore to make it worth going through all the capital expense of setting up a mine. So small amounts of high grade (and 240 g Au material) are interesting but only as a guide to what else might be there. There might not be enough to justify a mine. Less than 1 g Au material, well, we’d probably just call that rock rather than gold ore.
And thus the slump in M3M. There were hopes that there could be a substantial opportunity here - those 240 gramme values. Further exploration shows that, well, perhaps not. Or at least, not as far as we’ve found out yet. So, the past share price was buoyed by hope about what might be found - those hopes now dashed for the meantime.
