Visual estimates in drilling announcements: what "visible sulphides" really tell you

A visual estimate is a geologist's description of minerals seen in drill core or chips before the samples have been assayed, such as "5-15% chalcopyrite over 40m". It is not a grade. ASX's published guidance discourages reporting estimates based only on visual inspection because they can give a misleading impression of how much metal is there, and assays sometimes tell a very different story.

What ASX's guidance says

ASX has addressed visual estimates in its Compliance Updates (notably in 2023) and Guidance Note 31. In summary, ASX's position is that:

• It does not encourage reporting estimates of mineralisation based only on visual observation, because information derived solely from visual inspection of a sample before it has been assayed could give a misleading impression.
• If a company does report visual estimates, the announcement must still comply with the Listing Rules and the JORC Code, including JORC Table 1.
• The announcement should state when assay results are expected.
• It should include a cautionary statement that visual estimates should never be considered a proxy or substitute for laboratory analysis where grade is the factor of principal economic interest.

Most visual-estimate announcements now carry that cautionary wording. When you see it, take it literally.

Why companies report visuals at all

There are legitimate reasons. Under ASX continuous disclosure rules, a company that becomes aware of information a reasonable person would expect to have a material effect on its share price must generally disclose it. Assays can take weeks or months, and if a striking intersection is known to the company (and perhaps to drillers and contractors on site), waiting for the lab can create its own disclosure problems. Visual logging is also genuinely useful: geologists use it to decide where to drill next.

The difficulty is that the information is uncertain, and the market often prices it as if it were an assay.

What visual sulphide percentages mean

A visual estimate typically describes the percentage of the rock's volume, as seen on the core surface, made up of particular minerals. Some points to keep in mind:

• Not all sulphides contain the metal you want. Pyrite (iron sulphide) and pyrrhotite are common and contain no copper or nickel. To an untrained eye, and sometimes in poor light, pyrite can look similar to chalcopyrite. "15% total sulphides" can be mostly pyrite.
• The mineral's metal content matters. Chalcopyrite is about 35% copper by weight; bornite and chalcocite contain much more. The same visual percentage of different minerals implies very different copper grades.
• Volume is not weight. Sulphides are denser than typical host rock, so a volume percentage does not convert neatly to a weight percentage.
• Distribution is patchy. A geologist estimates across a length of core. Veins and blebs are uneven; one metre with 20% and the next with 1% can be logged as "5-10%".
• Gold is usually invisible. Most gold is too fine to see. "Visible gold" is noteworthy but cannot be converted into a grade, and its absence does not mean no gold.

The gap between visuals and assays

A rough, illustrative calculation shows why the gap can be wide. Suppose a hypothetical explorer logs "2% chalcopyrite" over a long interval. Even if every sulphide grain really is chalcopyrite, 2% chalcopyrite by weight would be about 0.7% copper. If half of what was logged is actually pyrite, it falls to about 0.35% copper. A porphyry-style interval at 0.35% Cu can be meaningful at large scale, but it is a long way from the "high-grade copper" impression a striking core photo can create.

Case-style illustrations of how this plays out (hypothetical, not any real company):

Illustration 1: the strong photo

An explorer releases core photos showing massive sulphides over 12m and a visual estimate of 30-50% sulphides. The shares rise sharply. Six weeks later, assays confirm the interval but it is largely pyrite and pyrrhotite, grading 0.6% Cu. The price falls back below where it started. Nothing in either announcement was inaccurate; the market read too much into the first one.

Illustration 2: the understated visual

Another explorer logs "weak disseminated sulphides" in a hole, but assays return 85m at 0.9g/t gold, with gold finely disseminated and invisible to the eye. Visuals can understate as well as overstate.

Illustration 3: portable XRF readings

Some companies report handheld or portable XRF readings taken on core. These measure a small spot on the surface and need calibration; they are useful for logging but are not a substitute for laboratory assays of the full sample. JORC Table 1 expects the instrument, calibration and limitations to be described.

How to read a visual-estimate announcement

1. Find the minerals, not just "sulphides". Which minerals, in what proportions? Total sulphides alone says very little.
2. Check the cautionary statement and the assay timeline. Mark the expected date; the assay announcement is the one that counts.
3. Look for consistency with geology. Is the visual consistent with the deposit style the company describes?
4. Do not calculate gram-metres or %-metres from visuals. There is no grade to multiply.
5. Watch the price reaction. Big moves on visuals mean expectations are now high. When assays arrive, the market compares them with those expectations, not with zero. The guide to how share prices react to drill results covers this.

How DrillScore treats visuals

DrillScore does not rate visual estimates as intercepts, because there is no grade to rate. Announcements based on visuals are flagged as such on the announcements page, and where the expected cautionary statement or assay timing is missing, the gap is noted on red flags. When assays follow, they are rated like any other result; see the methodology. For the broader disclosure framework, see JORC Table 1 explained. This is general information only, not advice about any company or security.

The short version

• Visual estimates are observations of minerals before assay, not grades.
• ASX's published guidance discourages them and expects a cautionary statement and an assay timeline when they are used.
• "Sulphides" can be mostly pyrite with no copper; visible percentages do not convert neatly to grade.
• Visuals can overstate or understate; the assay announcement is the one that counts.
• A large price move on visuals raises the bar the assays then have to clear.