Junior miners love trumpeting drill results. They show funders' work is being done, and can also trigger massive share price appreciation.
But they can be a foreign language for generalist shareholders. What does 100 grams per tonne (g/t) of gold mean when it is across 0.1 metres versus 1 metre? Should you be worried if someone accuses your favourite gold explorer of just drilling right down the vein? We’ll come to those specific points, but to put it clearly: drill results are hugely important for junior miners, and understanding them is crucial for investors.
Investors’ Chronicle small-cap expert Simon Thompson notes that positive drill results “materially mitigate the investment risk” and can narrow the valuation gap between a junior miner’s market capitalisation and the estimated net present value (NPV) – the sum of the estimated cash from future output valued in today’s money – of the mine it is developing. “Drilling results can be a real game changer in this regard,” he adds.