Page 66 - Introduction to investing in Gold

The Beginner's Guide to Investing in Gold
the time of writing, of 0.89 g/t). But if it’s less than 1 g/t, I’d still suggest you give it a little more consideration.
When carrying out your research, you will often see a “cut-off grade” in the resource statement. This is the grade of mineralisation that a deposit can be economically mined and dictates which drilling intercepts can and can't be used in a JORC resource (JORC or “JORC Code” refers to the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves).
The cut-off grade is determined by the cost to mine a deposit and the price that a company can sell the underlying commodity for. If there’s been a significant move in the commodity price since the analysis was done, that’s worth bearing in mind. For example, if the price of the commodity has shot up, it may be that they’re able to mine ore at a lower cut-off grade. You need to be careful about what assumptions you make, but it’s certainly worth looking at.
The other thing worth looking at is the depth of the ore. For example, even if the grade is relatively high (say 7 g/t), if it’s from ore at 1.5km down and in narrow veins, then you have to determine whether or not it’s going to be economical to mine. If the grade is lower, say 1.5 g/t, but it’s at or close to the surface, this ore is much easier to extract, so it may be more economical to mine. There’s no hard or fast rule on this, but you do need to bear it in mind when looking at drill results.
Quite often, the market tells you what are considered good or bad results. If the share price goes up significantly, it’s often considered good. Similarly, if nothing happens or the shares tumble, it’s probably not so good, perhaps even bad.
Exploration Potential
There are many aspects you need to look at here, so let me keep it simple and focus on three.
First of all, you need to know how advanced the exploration is. Do they already have a proven resource (perhaps a large deposit) that they are looking to expand, or is it a highly speculative exploration?
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