Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

August 29, 2018 | It’s All About Plumbing…

Lobo Tiggre, aka Louis James, is the founder and CEO of Louis James LLC, and the principal analyst and editor of the Independent Speculator. He researched and recommended speculative opportunities in Casey Research publications from 2004 to 2018, writing under the name “Louis James.” While with Casey Research, he learned the ins and outs of resource speculation from the legendary speculator Doug Casey. Although frequently mistaken for one, Mr. Tiggre is not a professional geologist. However, his long tutelage under world-class geologists, writers, and investors resulted in an exceptional track record. The average of the yearly gains published for the flagship Casey publication, the International Speculator, was 18.5% per year during Tiggre’s time with the publication. A fully transparent, documented, and verifiable track record is a central feature of IndependentSpeculator.com services going forward. Another key feature is that Mr. Tiggre will put his own money into the speculations he writes about, so his readers will always know he has “skin in the game” with them

I may be about to anger a bunch of geologists, but I’m going to try to boil all of economic geology down to a few critical points. The goal is to help non-geologists sort through the geo-jargon so they can have a clearer idea of what’s being said.

Even a basic grasp of how deposits are formed can help investors spot… shall we say, unlikely claims. It can also help them see when a story makes sense and the results are genuinely great.

I hope my geologist friends will forgive me for simplifying.

Ready?

There’s one central idea that helps understand everything else: plumbing.

Mineral deposits are formed by fluids moving through the earth’s crust, driven by a heat source below. Given how common sulfur is in the earth’s crust, these fluids often become natural sulfuric acid. The fluids dissolve metals and other minerals as they travel through large volumes of rock. When they meet physical or chemical conditions that cause those minerals to drop out of solution, they form deposits. For that to happen, you need weaknesses in the rock that allow the fluids to move: plumbing.

That can take the form of:

  • Faults. These are cracks in the crust formed when immense forces break it, and the rock on each side moves in different directions. These can be huge, extending many miles and going deep into the earth’s crust.
  • Joints. These are cracks in rock, but with no movement. Joints tend to be smaller, cracks in local rock that broke, but stayed put.
  • Contacts. This is when one type of rock is deposited on or meets another type. For example, when a lava flow covers a sedimentary rock, the boundary between them would be the contact.
  • Porous rocks. These are permeable rocks like sandstone, through which fluids can flow.
  • Magmatic intrusions. Picture lava forcing its way up through the crust. Sometimes this is the heat source that drives fluids through other types of plumbing, as mentioned above. Sometimes the fluids travel along the margins of the magma itself. Whether the magma breaks the surface and forms a volcano (leaving extrusive rock), or stops before reaching the surface (leaving intrusive rock) doesn’t change its possible roles in the geological plumbing system.

Conditions that cause minerals to drop out of solution can be:

  • Pressure changes. Picture hot fluids under great pressure moving up a fault and encountering an open void. They would boil in a flash, depositing the minerals they carry. The same thing can happen simply as the fluids come closer to surface. This is the genesis of “epithermal” deposits, so called because they form closer to surface. The boiling zone tends to be limited to 200–300 meters. Sometimes there’s more than one such mineralizing event over millions of years, and the boiling zones occur higher or lower along the fault, resulting in overlapping layers of deposition. Otherwise, you know your deposit is likely to be limited to roughly this vertical extent.
  • Temperature changes. Imagine superhot fluids moving up along the margins of a magma pipe and then traveling away along a fault or through a porous layer of rock. Their temperature drops as they get farther from the heat source, and minerals that require high temperatures to stay in solution start dropping out.
  • Chemical changes. Now picture mineralized fluids moving up through whatever plumbing is carrying them until they hit a different rock type. Its different chemical composition reacts with the fluids, causing them to deposit the minerals they carry.

Understanding which combination of these things we’re dealing with helps us understand and predict where to look for (more) pay dirt.

“Pay dirt,” by the way, often takes the form of metal sulfides. That’s no surprise, given the sulfuric acid that liberates metals from their source rock and carries them to where they’re deposited. Subsequent events often oxidize (rust) these sulfides, resulting in mineralization from which it’s easier and less expensive to extract metals.

No two mineral deposits are completely alike, but they do tend to come in a few broad categories:

  • Veins. Common minerals that drop out of solution when fluids flow through open spaces along faults or similar planar weaknesses in the crust include quartz and calcite. Sometimes these bear valuable metal sulfides, sometimes not. Just finding a vein doesn’t mean anything valuable has been discovered. Even when the vein does have metals, they aren’t evenly distributed. It usually takes a lot of drilling to figure out where the bits worth mining are. Depending on how rich the mineralizing fluid that forms the vein is, a vein can be barren, low grade, high grade, or extremely high (bonanza) grade. Under rare conditions, veinlets of pure metal can form.
  • VMS lenses. These are formed on the bottom of oceans when hot sulfuric fluids rising along a magmatic pipe of some sort escape the rock and mix with cold, non-acidic seawater, causing minerals to drop out of solution. Such plumes deposit sulfur and metal sulfides, often forming quite large (and heavy) crystals, called massive sulfides. Hence the name “volcanogenic massive sulfide” or VMS. Since the ocean floor isn’t flat, the deposits tend to form in troughs and depressions around the plume. This is why, when we find them after being covered with ocean sediments for millions of years and then brought closer to surface by tectonic action, VMS lenses tend to occur in clusters. Because VMS lenses form from massive sulfides dropped directly onto the ocean floor near their source, they are often quite high grade.
  • Porphyries. These are magmatic intrusions of a particular chemical composition, which solidify before reaching the surface. Some of them are mineralized, some are not. In mineralized porphyries, most of the valuable minerals tend to occur in tiny veinlets, sometimes throughout the porphyry and sometimes on its margins. Sometimes a mineralized porphyry is the source of fluids that travel up nearby plumbing to form vein or other deposit types around the porphyry. Even a well-mineralized porphyry is rarely very high grade—but it’s big. It’s a volume of intrusive rock, rather than a narrow vein formed in a crack somewhere. Many of the biggest copper and gold deposits in the world are porphyries.
  • Shear zones. These are areas where prolonged movement along a fault results in not just a crack in the earth’s crust, but a wide volume of ground-up rock. Deposits in shear zones can be quite large, since the zones are usually much wider than veins are. But because the fluids have so much more volume to flood, the grades of the deposits tend not to be as high as in veins.
  • Stockworks. This occurs when mineralizing fluids flood a volume of busted-up rock, forming not just a vein or two, but a mesh of crisscrossing veins and veinlets. A stockwork can be much wider than a simple vein, like a shear zone, but it’s not a result of grinding. Stockworks can also make for larger deposits, but rarely as high grade as simpler vein deposits.
  • Carbonate replacement. This type of deposit is formed when mineralizing fluids meet a specific type of rock, and the resulting chemistry replaces the original rock with mineralized rock, usually with high base metal content. These areas can be quite high grade, and they tend to come in bunches, but their shapes and distribution tend to be irregular. That can make them hard to find and define.
  • Other Disseminated. Mineralizing fluids rising up through different layers of rock can come to a permeable sandstone or porous tuff (rock made of volcanic ash) and spread through this layer as through a sponge, depositing minerals as they go. Sometimes a previous flow of acidic fluids can chew up what would normally be impermeable rock, leaving little holes (called vugs) in which minerals can be deposited. There are other scenarios. The point is that under certain conditions, an entire layer of a certain rock gets flooded with mineralizing fluid and becomes potential ore. Such deposits tend to be lower grade, but very large.

Other factors to keep in mind:

  1. Alteration. Hot mineralizing fluids moving up through the earth’s crust are often acidic and they react with the rocks they encounter, altering them. There are characteristic patterns of alteration. These can tell us when we’re getting closer to the plumbing that brought the fluids up from the heat source—and where they may have deposited more minerals.
  2. Zonation. Some minerals tend to drop out of solution before others—those that require higher pressures or temperatures, for example. In many epithermal deposits, base metals tend to drop out first, and then precious metals. Thus we often see a zonation of copper, lead, and/or zinc lower down, changing to include more gold and silver higher up, and ending with mostly silver-gold toward the top.
  3. Dilation. The earth’s crust is not a homogenous crystal that cracks in nice straight lines or planes. If the faults formed as perfect planes, the rock on either side would suffer little damage as it moved, and would leave no open spaces. But reality is messy. Faults often kink and change directions. So as the rocks move, the kinks often result in openings, called dilation zones. These can run very deep and can be large volumes of lower pressure and temperature that drop valuable minerals out of solution. In fact, we rarely find deposits in major faults, but in splays and subsidiary faults, where more dilation zones tend to form.
  4. Textures. An epithermal boiling zone leaves typical textures in the crystals formed. A porphyry also has typical textures in the rock crystals as they form when the magma cools. These and other rock textures can tell us where we are in a mineralized system, and hence where the pay dirt is likely to be.
  5. Plate tectonics. Mineral-bearing fluids generally move up through plumbing in the earth’s crust, migrating from higher pressure zones deeper down to lower pressure areas near surface. But the tectonic plates of Earth’s crust are constantly moving. They rip some rocks apart, crush others together, thrust some up into mountain ranges, push others down into the mantle, accordion others into sawtooth patterns, and even turn whole layers of rock completely upside down. I’ve been to places where you can walk along rock exposed on the surface—flat as an ironing board—and see the zonation in the minerals under your feet as you go. There are places where the minerals you would expect at the top of a boiling zone are found beneath those formed lower down. So it’s important to understand not only how minerals were deposited, but what happened to them between deposition and the present.

I don’t have any own cartoon showing all these plumbing systems, but if you’re curious, you can see one on this geology page.

All of this may seem confusing. Truth is, it’s rarely easy to figure out what’s going on in any rocks in the ground. This is true even for the best geologists in the world. That’s why exploration takes years—and often ends in failure. Solving the earth’s jigsaw puzzles requires careful examination of all the clues. Some of the pieces are hundreds of miles long, and others take a microscope to see. Usually, we don’t get all the pieces, and we have to fill in the gaps with guesses.

But if it were easy, there would be no risk. And without risk, there would be nothing to speculate on.

It’s the very difficulty of the task that makes it so profitable when it’s done right.

Add it all up, and that’s why it’s so exciting when the pieces and guesses fall together and a valuable discovery is made.

Well… that and the impact on the share price of the company making then discovery, of course.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

August 29th, 2018

Posted In: Louis James

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.