Geology and Mining 101, RAY.v, NAG.v, SLT.v, potash, coal, and thoughts

When an investor reads a press release from their favorite exploration company - it's often in this format.

ABC-Gold-Company's regional exploration efforts has identified a coincident gold, copper, and moly anomaly that extends for five (5) kilometers.

Surprisingly, you don't need a lengthy Ph.D to figure much of this out. Let's see what anomaly means:

a·nom·a·ly (-nm-l)n. pl. a·nom·a·lies

1. Deviation or departure from the normal or common order, form, or rule.

So basically even in Geological considerations - anomalies refer to something out of the ordinary -such as a break in a typical sediment layer, a concentrated area of magnetism, radioactivity and other geophysical mechanisms.

The anomaly results usually mention size and magnitude of deviation - for example - a typical basalt rock would have only about 1-3 parts per billion (ppb) gold. This traslates to one microgram (ug) of gold per one kilogram (kg)of earth/rock dug up. An anomaly or "alteration zone", so to speak, would stand out with 100 ppb, and in a mineralized zone it could be as high as 5,000 ppb. Typically though, there is alot of "background" value that is not significant enough to be of interest.

A result is called statistically significant if it is unlikely to have occurred by chance. "A statistically significant difference" simply means there is statistical evidence that there is a difference; it does not mean the difference is necessarily large, important, or significant in the common meaning of the word.

So what does it mean when news releases mention things like "presence of pyrite and chalcopyrite"?

Geologists will often get excited at the presence of pyrite and mineralization. Keep in mind most are very conservative! Like Chartered Accountants - using Lower Cost of Market ensures a conservative outlook on Balance Sheet - lowers risk for their P.Geo status! The reason is large deposits have been discovered with only an initial hint of pyrite and chalcopyrite - evidence that plate tectonic may have moved gold mineralization over years ago.

Gold-silver and silver-gold veins, stockworks, lodes, mineralized pipes and irregular silicified bodies in fractures, faults, shear zones, sheeted zones and breccia zones essentially in volcanic terrains

Representatives of this type of deposit are widespread throughout the folded and relatively flat-lying volcanic terrains of the earth. The deposits occur in rocks of all ages, but the largest numbers occur in those of Precambrian and Tertiary age.
The favourable host rocks are commonly basalts, andesites, latites, trachytes, and rhyolites. In Precambrian rocks, such assemblages are usually referred to as greenstones. Many deposits of Precambrian age occur in tuffs, agglomerates, and sediments interbedded with the volcanic flows, particularly in banded ironformations. In the older terrains, the rocks are generally regionally metamorphosed and have the characteristic regional metamorphic facies outward from igneous or granitized centres. The younger rocks generally show the effects of chloritization, carbonatization, hydration, and pyritization (propylitization) over broad zones, but locally some of the andesites and rhyolites may be relatively fresh.

Hope that helps clear up some investor's mind about very technical news releases that no one understands!

______________________

Flavor of the Month - Coal and Potash

By now the intelligent investors have no doubt caught on the potash and coal bandwagon and hopefully have made a quick buck with what essentially is momentum investing.


Raytec Metals (RAY.v) was a mist-spraying system company, turned iron ore, turned potash play. Overnight - the application and contemplation of going "potash" in Saskatchewan has spiked the share price from $0.15 to nearly $2.00 in the last little while.

RAYTEC ACQUIRES NEW POTASH CLAIMS

Raytec Metals Corp., subject to regulatory approval, has signed an agreement to purchase a 100-per-cent interest in exploration permit application area KP452, located in Saskatchewan.

EPAA KP452 covers an area of approximately 92,160 acres in south-central Saskatchewan. The newly acquired EPAA is in the southeastern portion of the evaporite formation, located approximately 380 kilometres southeast of the company's EPAA KP441. The new EPAA lies approximately 42 kilometres southwest of the Mosaic Company-Compass Mineral Group's K-1 and K-2 potash-salt mines, and 53 kilometres west of Potash Corp. of Saskatchewan's Rocanville potash-salt mine.

The company now has a total of 290,880 acres of prospective potash ground under permit application within the extensive Middle Devonian Prairie evaporite formation of south-central Saskatchewan.

Saskatchewan Ministry of Energy and Resources data indicate that EPAA KP452 is underlain by both the Belle plain and the Esterhazy potash members. Exploratory drilling has been conducted on the newly acquired ground in the past. This historic information will be reported once the company has reviewed all pertinent data.

Currently there is no NI 43-101 report on this property, nor are there proven, indicated or inferred resources. Readers are cautioned that the presence of the Belle plain and the Esterhazy potash members does not guarantee the presence of economic quantities of potash.

Compared to a metals mining / exploration company such as Minera Andes or SanGold which trades anywhere from $1.30 to $2.00 - this is the range of stock price at which you expect a mature property with almost resource estimate + production (ie. pouring gold/silver and has profit from selling the precious metals already).

North American Gem (NAG.v) is a coal play near the GXS Gold Source explosion story (from $0.30 to $18). They have been in gold, moly, uranium in Alberta, and latest is coal play with marketing focused towards being close to GoldSource's original find.

Recently GoldSource Mines Inc. (Public, CVE:GXS) stumbled upon coal while drilling for kimberlite in Saskatchewan, Canada. The drill holes were 1.6 Km apart and it appears that the speculators are betting on that the two coal seams are contiguous judging by the stock price performance. GXS was trading around the 20cents range earlier in 2008 and when they hit pay dirt approximately 6 weeks ago, the stock took off like a rocket.

With recent food price spikes coinciding with energy (oil/gas) spike - coal and potash is attracting new investors to the market like never before despite the overall depressed market.

Keep in mind though - these are the companies for daytraders with more tools at their disposals than the averge joe with an E-Trade account. I think the market is starting to get saturated with Potash and Coal plays - next months will see a fallout of the hype plays - when the actual lands are awarded - keep in mind many of these are just permits (not approved by government yet)

As always, buyer beware. Volume for the two above is sometimes nearly 1/4 of their shares outstanding trading per day - big difference from the tiny 10,000 share volume days before.

I hope you will agree with me that Strong management, solid fundamentals, industry experience, and a big portfolio of projects will prevail over time.