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Here are some geological "tricks" that investors should be wary of when examining exploration results in ASX announcements.
The ASX (Australian Securities Exchange) has strict guidelines for the reporting of exploration results, primarily under the JORC (Joint Ore Reserves Committee) code. However, companies may still attempt to present their results in the most favourable light, or in some cases, use tactics that could mislead investors from poor results.
Selective Reporting: Companies often promote their best drill holes front and centre in the highlight page of their announcement, often leaving fewer promising results in the shadows. It's essential to dig into the detail, especially the Drill Result Table, this is where all the assayed drill holes will be reported and where you will get the full colour of the results, there is lots of clues in here which we discuss further down. Be cautious of omitted negative drill results, a red flag for potential bias.
Here are some geological "tricks" that investors should be wary of when examining exploration results in ASX announcements.
The ASX (Australian Securities Exchange) has strict guidelines for the reporting of exploration results, primarily under the JORC (Joint Ore Reserves Committee) code. However, companies may still attempt to present their results in the most favourable light, or in some cases, use tactics that could mislead investors from poor results.
Selective Reporting: Companies often promote their best drill holes front and centre in the highlight page of their announcement, often leaving fewer promising results in the shadows. It's essential to dig into the detail, especially the Drill Result Table, this is where all the assayed drill holes will be reported and where you will get the full colour of the results, there is lots of clues in here which we discuss further down. Be cautious of omitted negative drill results, a red flag for potential bias.
2/7
Always look at reported assays in their surrounding context
It’s important to look at the context of the promoted drill results. Always look at the cross sections or long sections for this to better put the interval in context, if there is no cross section or long section provided then this is a big red flag.
Company XYZ hits 30m @ 6g/t Au, sounds great, but what are the drill holes around it saying?
You need to look at the drill holes above, below and along strike from the reported high-grade interval, this will put the results the company is promoting in better context. Does the mineralisation grade and width continue down dip (below) or does it get thinner and/or drop off in grade, this is important to understand as it would indicate that the excellent grade & width doesn’t continue or may just be a small high grade pod or they’ve struck it on a sub optimal angle which has skewed the results.
High grade hits should always be taken with a high degree of caution, because the reality is homogenous deposits are rare and its far easier to mislead an investor than to find an outstanding mineral body.
Always look at reported assays in their surrounding context
It’s important to look at the context of the promoted drill results. Always look at the cross sections or long sections for this to better put the interval in context, if there is no cross section or long section provided then this is a big red flag.
Company XYZ hits 30m @ 6g/t Au, sounds great, but what are the drill holes around it saying?
You need to look at the drill holes above, below and along strike from the reported high-grade interval, this will put the results the company is promoting in better context. Does the mineralisation grade and width continue down dip (below) or does it get thinner and/or drop off in grade, this is important to understand as it would indicate that the excellent grade & width doesn’t continue or may just be a small high grade pod or they’ve struck it on a sub optimal angle which has skewed the results.
High grade hits should always be taken with a high degree of caution, because the reality is homogenous deposits are rare and its far easier to mislead an investor than to find an outstanding mineral body.
3/7
Take care when reviewing maps and Cross/Long sections.
Maps and sections can be manipulated to create a skewed perception of mineralization. Ensure you scrutinize visuals to see if they represent the entire mineralized zone accurately. Pay attention to colour scales; they can exaggerate the extent and grade of mineralization.
Is the picture telling you what the words are saying or are they trying to mislead your eyes? You can see if the mineralisation “hangs together” meaning it connects homogenously from one intersection to another. In the below example you can see a very thick yellow outline which is the “Projected Pegmatite Shape,” but the actual mineralisation is much narrower within the pegmatite, if your remove the pegmatite shadow the portrayed thickness of the mineralised body would look vastly different, this can be misleading for the eyes. Always look at the cross section in the detail and read the correspond texts.
Take care when reviewing maps and Cross/Long sections.
Maps and sections can be manipulated to create a skewed perception of mineralization. Ensure you scrutinize visuals to see if they represent the entire mineralized zone accurately. Pay attention to colour scales; they can exaggerate the extent and grade of mineralization.
Is the picture telling you what the words are saying or are they trying to mislead your eyes? You can see if the mineralisation “hangs together” meaning it connects homogenously from one intersection to another. In the below example you can see a very thick yellow outline which is the “Projected Pegmatite Shape,” but the actual mineralisation is much narrower within the pegmatite, if your remove the pegmatite shadow the portrayed thickness of the mineralised body would look vastly different, this can be misleading for the eyes. Always look at the cross section in the detail and read the correspond texts.
Be Careful of High-Grade Extrapolation
Announcing isolated high-grade intersections without giving context on the broader mineralized zone. A narrow high-grade interval might not be economically viable if it's not representative of a larger area.
In some cases, high-grade results might be spread over larger sampled intervals to increase the apparent size of mineralization. Check the width and depth of high-grade intervals compared to the entire drilled interval. Check reporting of results “within” results or as is commonly put: “including…”
Downplaying Uncertainties: Exploration results are inherently uncertain. Companies might downplay this fact. It's crucial to acknowledge and thoroughly evaluate these uncertainties. Understand the level of confidence in the reported data.
Announcing isolated high-grade intersections without giving context on the broader mineralized zone. A narrow high-grade interval might not be economically viable if it's not representative of a larger area.
In some cases, high-grade results might be spread over larger sampled intervals to increase the apparent size of mineralization. Check the width and depth of high-grade intervals compared to the entire drilled interval. Check reporting of results “within” results or as is commonly put: “including…”
Downplaying Uncertainties: Exploration results are inherently uncertain. Companies might downplay this fact. It's crucial to acknowledge and thoroughly evaluate these uncertainties. Understand the level of confidence in the reported data.
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Be careful of preliminary results, their rarely indicative of what’s below.
Preliminary tests, like surface samples or trenching, can be misleading if presented without context or used to infer large-scale mineralization. Visual results can also be misleading and should be viewed / interpreted carefully.
Inconsistent Reporting Metrics: Changing the metric of reporting (like grams per tonne versus percentage) without clearly stating so can confuse and mislead investors. Announcements might also emphasize the value of by-products without making clear that these are not the primary resource being mined, potentially giving a misleading impression of profitability. Use of metal “equivalents” can be misleading.
Be careful of preliminary results, their rarely indicative of what’s below.
Preliminary tests, like surface samples or trenching, can be misleading if presented without context or used to infer large-scale mineralization. Visual results can also be misleading and should be viewed / interpreted carefully.
Inconsistent Reporting Metrics: Changing the metric of reporting (like grams per tonne versus percentage) without clearly stating so can confuse and mislead investors. Announcements might also emphasize the value of by-products without making clear that these are not the primary resource being mined, potentially giving a misleading impression of profitability. Use of metal “equivalents” can be misleading.
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Conclusion
It's crucial for investors to develop a sound understanding of geological reporting or seek guidance from experts in the field. Being critical and inquisitive about exploration results, and looking for third-party validation or expert commentary, can be valuable strategies to avoid being misled.
What are some of the things you look out for in announcements which can mislead investors?
Conclusion
It's crucial for investors to develop a sound understanding of geological reporting or seek guidance from experts in the field. Being critical and inquisitive about exploration results, and looking for third-party validation or expert commentary, can be valuable strategies to avoid being misled.
What are some of the things you look out for in announcements which can mislead investors?
7/7
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Thank you, from the Discovery Alert Team!
If you found these insights on exploration announcements helpful, give us a like and hit that retweet button at the start of the thread! Let's spread knowledge and help investors make more informed decisions to become better resource investors.
Follow us for more insights on mineral exploration, rules of thumb and to learn more about what to look out for in ASX announcements, and don’t forget to sign up to our Free discovery service 👇
We look forward to delivering our subscribers the next big, small cap discovery!
Thank you, from the Discovery Alert Team!
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