Rupert Resources (RUP.TO) has provided an updated resource calculation on its flagship Ikkari gold project in Finland. The updated resource now contains 4.09 million ounces of gold in the indicated resource category with an additional 136,000 ounces of gold in the inferred category. The indicated resource contains about 2.65 million ounces in an open pit at an average grade of 2.21 g/t gold while the remaining 1.44 million ounces would have to be mined using underground mining techniques.
While the company didn’t disclose the anticipated strip ratio, it is referring to a low strip ratio thanks to the average yield of 8,000 ounces of gold per vertical meter. Additionally, the open pit resource remains open towards the west and the company plans to drill more holes in that direction in the 2023/2024 exploration program.
The open pit resource uses a cutoff grade of 0.40 g/t, and this is based on an open pit mining cost of US$2.9/t and a processing cost of $11.3/t. The underground mining cost used in the resource calculation was just $29/t which explains why the company was able to use a cutoff grade of just 0.9 g/t for its underground resources.
That appears to be fine. As the table above shows, thanks to the consistency and continuity of the gold mineralization, the sensitivity analysis indicates that using a substantially higher cutoff grade would have very little impact on the total gold content of the resource. Increasing the open pit cutoff grade by 25% to 0.50 g/t would result in ‘losing’ just 19,000 ounces of gold (less than 1%) while boosting the underground cutoff grade by a third to 1.20 g/t, the underground resource would ‘lose’ just 165,000 ounces (around 11% of the total underground resource).
Disclosure: The author has no position in Rupert Resources. Please read the disclaimer.
