re''aftermarket announcement, page-27

The market reaction on Monday for MTN will be of important significance to the resources industry – There is clearly an important role for computer modeling in the definition of resources estimation – it represents potentially significant cost savings being able to utilize old data sets, and provide directional guidance for areas to target for drilling. Up to this point there has not been a test case to determine what represents an acceptable “mix” of “old data”, computer modeling and current drilling samples in inferring a resource estimate.

In this context the JORC code has not been particularly helpful as it has not provided detailed guidelines as to what is methodologically acceptable, essentially taking the easy way out and leaving the bulk of the consideration to what a “competent” person would do in his/her own judgment. In this sense MTN experience will be a watershed, as the market will be the one to make the pronouncement as to what are the acceptable limits, and whether MTN is within those limits.

The MTN response to the ASX query is also important. A case can be made that MTN should have released the detailed description of its modeling techniques together with its headline figures so that the market can make a pronouncement as to its robustness – even going one step further there could be a case that resource companies should make available an interactive version of its model so analysts can “stress test” the resource simulation with varying assumptions and resource grades -

The fact that MTN has had to make a retraction in relation to its publication of Exoil’s pre-JORC data is also important - This is the very data upon which the MTN inferred resource was predicated. Interesting times – looking beyond MTN, the experience will be providing other companies with numerous old data sets guidance as to where the boundaries lie as far as the market is concerned.