Red flags in exploration reports
The warning signs that an exploration announcement or report is incomplete, selective or promotional, and the questions to ask.
2 min read
Most exploration reports are honest, but the format makes it easy to show the best and leave out the rest. A few warning signs catch most of the problems.
What it is
Exploration reports follow rules, but within those rules companies choose what to emphasise. These tables list the common warning signs, why each matters, and the question to ask.
Technical red flags
Drill results
| Red flag | Why it matters | What to ask |
|---|---|---|
| Only the best intercepts reported | Weak and barren holes are as important as strong ones | Where are the other holes, and what did they hit? |
| No | Intercept length can greatly overstate thickness | What is the estimated true width? |
| Stacked "including" figures | A short rich section can carry a long, low-grade headline | What is the grade outside the rich section? |
| No hole locations, maps or sections | Results cannot be judged without context | Where are the holes relative to each other? |
| No cut-off grade or top cut stated | The headline may depend on generous choices | Which cut-off and top cut were used? |
Sampling
| Red flag | Why it matters | What to ask |
|---|---|---|
| Grab or rock-chip samples presented as typical | Selected samples show the best rock, not the average | Are there channel or drill results? |
| No statement | Grades cannot be trusted without it | Which standards, blanks and duplicates were used? |
| Unknown or unaccredited laboratory | Results may be unreliable | Which laboratory, and which method? |
Resources
| Red flag | Why it matters | What to ask |
|---|---|---|
| No named qualified person | No one has taken responsibility | Who signed the estimate? |
| Historical or non-code estimates presented as resources | They cannot be relied on | Has a qualified person verified it? |
| "Exploration target" ranges treated as resources | These are conceptual ranges, not estimates | What has actually been drilled? |
| Mine plans built mainly on resources | Low confidence carried into economics | What share of the plan is Inferred? |
Presentation and corporate red flags
Language and presentation
- "Nearology": stressing nearby famous mines rather than the project's own results.
- Superlatives without data: "world-class", "company-making", "significant" with no numbers behind them.
- Unrealistic comparisons: comparing contained metal with a producing mine's value.
- Frequent change of story: a new commodity or focus every year.
Corporate signs
- No independent review of technical work.
- Related-party deals for drilling, laboratories or property purchases.
- Large share issues to insiders at low prices.
Ranges are indicative and vary by deposit and region. This is educational material, not investment advice.
Key terms
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Educational material only. Nothing here is investment advice or an offer to buy or sell any security or mineral interest.