Monday, December 21, 2009

Matrix report worth its weight in gold

Same time thirteen years ago some of Bre-X’s test results for gold landed on my desk. I had not asked for Bre-X’s data. But I had agreed to and signed a three-year confidentiality agreement with Barrick Gold Corporation. I did so on December 16, 1996. It was the very same confidentiality agreement that Barrick Gold Corporation and Bre-X Minerals had signed a few days earlier. The first set of Bre-X data were transmitted by facsimile on December 17, 1996. I didn’t know then that my life would never be the same. Bre-X‘s infamous phantom gold resource is but part of a tangled tale with as many twists and turns as Matheron took to create his new science of geostatistics. It’s a tale that taught me a lot more about the mining industry than I cared to know.
I sorted out the Bre-X fraud faster than Bre-X’s salting squad took to cook it up. I think Barrick liked what I did. At least Barrick did when I applied statistics to prove that Bre-X was a salting scam. So much so that I signed on July 4, 1997 a Consulting Services Agreement with Barrick Goldstrike Mines Inc. I submitted on August 18, 1997 my report on Statistical Quality and Grade Control . Geostatisticians on Barrick’s staff didn’t think much of it. I had applied Fisher’s F-test to verify spatial dependence between gold grades of ordered core sections from a single borehole by applyingit to the variance of the set and the first variance term of the ordered set. I had done the same thing with Bre-X’s salted boreholes. Stanford’s Journel would have assumed rather than verified spatial dependence. But then, Matheron’s most gifted disciple never signed a Consulting Services Agreement with Barrick Goldstrike Mines Inc.
When I was working with Bre-X’s test results my closest contact was a staff mining engineer at Barrick Gold Corporation in Toronto. We got along great because he knew plenty about sampling and assaying. So, he knew why Bre-X’s bogus grades and Busang’s barren rock added up to a geostatistically engineered gold resource. He also knew how to test for spatial dependence, and why geostatistics should not be applied in reserve and resource estimation. And he asked me whether I wanted to take a look at a large set of borehole data for a real gold deposit. Guess what? So, I did agree to and signed on October 22, 1997 a confidentiality agreement with Barrick Gold Corporation. I submitted my report on Confidence Limits for Gold Contents and Grades on February 9, 1998. When I called my contact to find out what he thought of my report, he said, “It’s worth its weight in gold”. I didn’t ask him to put it in writing. His word was good enough for me!

Worth its Weight in Gold

Geologists, mining engineers and mineral process engineers rarely agree on metal grades of in-situ ores, mined ores and mill feed. I witnessed many such rituals. Top brass wants high mineral inventories in glossy annual report and geostatisticians always deliver. Barrick’s geologists may find confidence limits for gold contents and grades of mineral inventories a bit much of a commitment. Shareholders do want a measure for risk.
Another year passed by, Christmas 1999 came along, and the Confidentiality Agreement between Barrick Gold Corporation and Bre-X Minerals expired. I liked to talk about the Bre-X fraud. Barrick engaged lawyers who wanted to come to Vancouver and tell me not to talk. I called on a friend and the visit to Vancouver was cancelled. All I have done since Christmas 1996 is show why geostatistics is a scientific fraud.
What Barrick asked me ten year later blew my mind. Barrick wanted consulting services. I’m not about to describe the required services but it had nothing to do with confidence limits for gold contents and grades of in-situ ore. I agreed to and signed on March 20, 2007 a Consulting Services Agreement for services to be provided at Barrick Technology Centre, Vancouver, BC. My contact had a lot of practical experience but stood to gain from a touch of real statistics. Before we could get going he was needed at Barrick’s Bulyanhulu gold mine in northwest Tanzania. Long before Barrick acquired Placer-Dome and its former Bulyanhulu gold deposit I knew Placer-Dome had born geostatisticians on board.
A Munk Debates on scientific fraud makes no sense whatsoever. Who would dare make a case for scientific fraud? Yet, a scientific fraud underpins the geostatistical practice of reserve and resource estimation all over the world. Blatantly biased, shameless self-serving peer review is all it took. But that’s another story. I have called it Behind Bre-X, The Whistleblower’s Story.

Sunday, December 13, 2009

Who wants more Munk Debates

Who wouldn’t! Debates beat apathy. The Munk Debates is cool. The more so since climate change was the theme for the Fourth Munk Debates. Climate change, just like continental drift, has been around for a few billion years. It took geologists from 1915 to 1950 to slow down to continental drift and call it plate tectonics. So, it’s about time to debate climate change. And why not call it weather dynamics? I work with metrology, the science of measurement. I took a crack at testing whether or not annual temperatures at several locations in Canada have changed significantly as a function of time. The average temperature of 6.57 centigrade in 2007 at Ottawa International Airport was significantly higher than the average temperature of 4.79 centigrade in 1939. Similarly, the average temperature of 8.30 centigrade in 2007 at Toronto International Airport was significantly higher than the average temperature of 6.04 centigrade in 1939. Average temperatures didn't change at international airports in Calgary, Vancouver and Victoria. Neither did the average temperatures in Coral Harbour and Iqaluit change significantly during the test period under examination.

Some grasp of statistics is required to apply Fisher’s F-test and verify spatial dependence between annual temperatures in ordered sets. Weather dynamics do change from day to day, from week to week, and from month to month. Such short-term changes in temperatures do not merit a Munk Debates. What does merit a Munk Debates is the question whether or not geostatistics is a scientific fraud.
Here’s in a nutshell my take on the Fourth Munk Debates. Elizabeth May is Leader of the Green Party of Canada. She is a gifted and confident speaker. She knows a lot of environmental stuff. She doesn’t know much about temperatures recorded by Environment Canada. Given that the Leader of the Green Party does speak a lot in public, she should know where temperatures went up or down, since when, and by how much.
George Monbiot was her partner in the Fourth Munk Debates. He is a superb scribe with the Guardian newspaper where his penchant for hyperboles runs rampant. How to measure climate change as a function of space and time is far beyond his grasp. Monbiot says cool things such as, “Canada is a cultured, peaceful nation, which every so often allows a band of Neanderthals to trample over it.” He doesn’t know Sir Ronald A Fisher ‘s work is trampled over by a tribe of statistically dysfunctional geoscientists bred in France, Great Britain, and elsewhere on this planet. The May/Monbiot side debated The Case For Climate Change.
Lord Nigel Lawson and Bjorn Lomborg debated The Case Against Climate Change. Lord Lawson is in a class apart when it comes to a life of public service in the United Kingdom of Great Britain. His work has done much to cool down global warming to climate change. He is the author of An Appeal to Reason, A Cool Look at Global Warming. He is the Chairman of Oxford Investment Partners, and of Central Europe Trust. As such, he knows all about mining conglomerates and mineral inventories in annual reports. He is bound to remember the Bre-X fraud. He may be unaware that geostatistical software converted Bre-X’s bogus grades and Busang’s barren rock into a huge phantom gold resource. Neither may Lord Lawson remember the cast of characters behind the Bre-X fraud.
Bjorn Lomborg’s claim to fame is based on The Skeptical Environmentalist and on Cool It. He is adjunct professor at the Copenhagen Business School. He also set up the Copenhagen Consensus Center to bring together those who set priorities for the world. I had brought to his attention in August 2008 that junk statistics underpins Matheron’s new science of geostatistics. I wanted to know whether he applies geostatistical data analysis. Environment Canada points to geostatistical data analysis in its handbook for inspectors. The skeptical environmentalist did not respond to my message.
The Merks and Merks team wants to debate The Case Against Geostatistics. Dr Frits P Agterberg, Emeritus Scientist with Natural Resources Canada, and Dr Roussos Dimitrakopoulos, Professor with McGill University, are highly qualified to debate The Case For Geostatistics. Both are serving in key positions with IAMG (International Association for Mathematical Geosciences). Once upon a time, IAMG stood for International Association for Mathematical Geology. Nowadays, our world needs more mathematical statistics.