Are you excited about the updated resource estimate coming soon from Cabral Gold (TSXV:CBR)? 

There is quite a bit of information to consider for careful analysts who are willing to roll up their sleeves and calibrate their expectations as to what would consitute "beating the street". Read on for some of my thoughts on relevant information from Cabral and Eldorado Gold (TSX:ELD).

To start off, consider this map from Cabral Gold released in December, 2017. Which holes were included in the prior resource? Which stand to be used in the updated estimate?

The yellow dots mark holes already included in the estimates for Central and Moreira Gomes. They seem to do a good job defining the heart of those 2 deposits. The red and black dots are generally on the fringes of the clusters of yellow dots, which means the update stands to expand the resource significantly along strike. I wouldn't expect a large shift in ounces from Inferred to Indicated categories based on the update, but I do expect significant growth in the total geological resource at Cuiu Cuiu.

Cabral currently has combined Indicated resources of 0.1Moz (3.4Mt @ 1.0g/t gold) and combined Inferred resources of 1.2Moz (31Mt @ 1.2g/t gold) for Central and Moreira Gomes, which was based on 25,900m of drilling. A further 22,070m was drilled following the resource calculation and may be inlcuded in the update. Will doubling meters included double the estimated gold in situ?

For a comparison, look to Eldorado Gold’s Tocantinzinho project (TZ). There is a 2011 resource estimate here (https://s2.q4cdn.com/536453762/files/doc_downloads/Reports/Tocantinzinho_Technical_Report_-_May_2011.pdf) that is full of good info, such as this info on the amount of drilling at TZ:

"Diamond drill holes are the principal source of geological and grade data for the Tocantinzinho Project. Drilling at Tocantinzinho has been carried out in nine phases. Five phases of drilling were conducted by Brazauro between 2004 and 2008 and four additional phases were drilled by Eldorado between 2008 and 2010. A total of 46,900m in 167 drill holes were drilled for resource definition purposes."

The resource at TZ has 2.4Moz Measured and Indicated (70.2Mt @ 1.06g/t gold) and 0.1Moz Inferred (6.9Mt @0.66g/t gold). Is there a simple statistical relationship between drilling and resource size?

  1. TZ resource has 46,900m across 167 holes.
  2. Cuiu Cuiu initial resource had 25,900m across 104 holes and the update has 22,070m meters in 72 holes.

If you squint, the similarities are striking. Both TZ and Cuiu Cuiu have around 47,000m across 170 holes. That's great because it puts the differences between the 2 projects into clear focus. How were they drilled? What's the geology like? Closest thing I've ever encountered to a "natural experiment" in the mineral exploration industry!

After all the drilling, TZ has 2.5Moz total resource across all categories. After half the drilling, Cuiu Cuiu has a 1.3Moz total resource across all categories. Isn't that just perfect?

Some might say that TZ is the better deposit is the better deposit because the ounces are in higher categories, but I'd say exactly the opposite! The fact that TZ is already into M&I means that the exploration work on that deposit is largely complete, whereas Cuiu Cuiu still has geological upside. It will take more drilling to upgrade the ounces at Cuiu Cuiu into Measured and Indicated, but I would expect the total geological resource to increase as they do so!

The intricacies of geological modelling is above my pay grade, but I've speculated on what I believe could happen at Cuiu Cuiu before and have to back it up with some further explanation. I'm glad that Cabral hasn't published the resource yet, as it's given me some time to do this work and share my thoughts publicly. Please note that I have not discussed any of this with the company yet, but will be keen to do so with additional interviews when possible!

Let's turn to a few relevant images to bring our feet back to the ground.

This map shows all the drill hole locations, artisanal workings, and hot spots on soil surveys at Cuiu Cuiu. It gives me confidence that the holes were collared in good areas -- it's not like a couple dozen of the old holes were completely wasted. You can go into greater detail with information from old news releases and resource estimates to check assays for holes that weren't included in the initial resource, but that largely replicates the work the consultants are going through now. Please do let me know if you have any traction piecing things together there, as I believe there is sufficient information out there on SEDAR to get a bit of an edge. I will be waiting patiently in the meantime.

There's no shortage of things to do while we wait.

For example, look closely at this map from the 2011 report on TZ by Eldorado.

The map shows soil samples and the TZ deposit. If you compare it with the map from Cuiu Cuiu, then you will see several important differences.

For one, the TZ soils are not as hot as Cuiu Cuiu. Just look at the order of magnitude for the gradients. The hot spots on the TZ soils shown are greater than 200 ppb, whereas Cuiu Cuiu is greater than 40 ppm. That is a difference of 200x in the concentrations of gold in soils. 40 ppm is 40 grams per tonne -- am I reading that right?! See it for yourself here.

For another, size of the soil anomaly at Cuiu Cuiu is greater than TZ. If you've read my past interviews with Dr. Alan Carter, CEO of Cabral Gold, then you knew that already. But it is really striking when you look at the 2 maps up against each other.

The plan view and soils are good, but we really need to know how the holes were drilled. These next maps showing the traces of drilling at TZ and Cuiu Cuiu are helpful in that regard.

You can see from the trace map of TZ that they sure put a lot of holes into it! The southeastern corner of Central at Cuiu Cuiu had a bunch of holes, too, but the other targets have much less drilling. Hence my suggestion for greater geological upside at Cuiu Cuiu.

Check out these 3D images of drilling at Central and Moreira Gomes for even greater insight into what I'm talking about here.

And, in passing, note that drill core from the two projects is similar looking.

One final piece of information to consider from TZ is a cross-section of the deposit with a pit plan. I'm sure pleased to see all the red blocks with +2 g/t gold over 2m benches, but it is a fairly big pit going down 350m and that just makes me all the more excited about the high-grade Cabral has seen across Cuiu Cuiu at surface.

With significant cash in the bank and a certain buzz in the air, I'd encourage you to visit the Cabral Gold website and make sure you've signed up for email updates. Take some time to look around the site, too. As Winston Churchill said, “The farther back you can look, the farther forward you are likely to see.”

This is not investment advice. I was compensated to prepare and distribute this article.