Cora Gold Ltd (LON: CORA) has announced its upcoming drilling programme at Sanankoro in Mali. The aim is to see if inferred resources can be moved to indicated, also to see whether further inferred resources can be claimed.
All of which needs a little explanation. In order to go mining, it is necessary to show that there’s something worth mining. That should seem obvious but there are different classifications of what is found. A resource is “we’re reasonably sure there’s something here” and a reserve is “we have proven there is”. An inferred resource is the terrain looks like there should be something here, an indicated one is where there’s a certain level of proof that there is. That’s very much a pencil sketch, there are rigid and accurate legal distinctions but that gives the flavour of what’s going on.
So, to show that there’s something worth mining any particular mineralisation will likely go through the process of inferred resource to indicated, to reserve, as more proof of the size, quality, and volume of the target material in the mineralisation is gained. Much of the work of a junior mining company is in exactly this. In fact, that’s a good description of a junior miner, a company which does this. As Cora Gold is going this then it’s a junior miner – neatly circular logic.
As to where to go mining for gold Mali is likely, geologically speaking, an excellent place. There have been gold mines there for at least a millennium. At one point the richest man in the world was the local king, based on the production of the gold mines. Access to that gold is also why the Portuguese kept trying to sail around Africa rather than awaiting caravans across the Sahara.
Exploration and extraction technologies do advance. So, those old – often alluvial – mines in Mali can be re-examined to see if modern techniques can make them worthwhile mining again. Much of the gold exploration going on in Mali is of exactly this type. Checking known gold mineralisation to see whether they are now, again, economic.
All of this is, on a logical basis, just fine and we’ll have to see what the results are when they come in.
However, it’s rather in the nature of mines that they are embedded in the country surrounding them and we have slight worries about political risk in Mali. As we said about Kodal Minerals, it appears that France is on the verge of pulling all its armed forces out of the country. That is likely to raise the risk – the risk only, nothing is certain – of more fighting from the Islamic State types in that country. That’s a risk that therefore should be monitored over and above the usual junior miner risks over mineralisations that Cobra Gold is subject to.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.