Estimating Grade Differentials from Drilling Results on New Gold Properties

The problem addressed is that of estimating grade differences between sub- divisions of a new gold mining prospect when only borehole results are available. Such differential grade estimates are required in choosing the best area for initial production, and in defining the grade profile over the mine's life for purposes of feasibility studies. It is also often necessary to differentiate between the grades and hence the values of subareas, owned by separate companies, for the purpose of fixing relative share participation percentages in the new mining company. It is shown that exaggerated grade differentials will be obtained from grade estimates of the subareas based only on boreholes within each such subarea, respectively, and that it would be more realistic to apply some 'smoothing', preferably by kriging. This is feasible because the lognormal-de Wijsian model can be used to give an indication of the spatial structure for the boreholes, even where they are spaced far apart; also the degree of 'smoothing' indicated is shown to be relatively insensitive to inaccurate estimates of the relevant semivariogram parameters.