The Riva story was a carefully crafted from the start. The vendors and the key stakeholders believe they have made all the necessary disclosures and forward looking statements that if they are challenged in court it will be a buyer beware defence where they will point out these disclosures.
However it could be argued that their reporting is not to the standards required of the Professional Body that represents the Competent Person (a Competent Person is the appropriately qualified individual belonging to a professional body that signs off on the technical material in a ASX report. The Competent Person is responsible for the accurate reporting of this information).
Let me explain:
Where there is no obvious signs of the target mineralisation in a drill hole they completed a company will often carry out composite sampling (that is sampling at much longer intervals then what would be considered appropriate to carry out resource calculations for the target commodity). The reasons are that it is saves a lot a time and money on laboratory, labour and transport costs while making sure that there is no unidentified mineralisation that has been missed by the logging. If there are any anomalism in the composites the company will go back and resample those drill holes at an appropriate interval that can be used for resource calculations.
As composites are really just a quick and dirty check to make sure there is no unforeseen mineralisation they are not collected using the same quality assurance (QAQC) as a sample intended to be used in resource calculations.
So where a company gets good results in a composite it will go back and resample at the proper interval for a resource calculation using full QAQC procedures and these samples are then also considered JORC compliant because the QAQC procedures have been applied (the original composite samples are not JORC compliant). A Competent Person would then consider the 1 m samples as having precedence over the composites. This is also consistent with the JORC code where the resample intervals have precedence over the composite samples when calculating a resource.
Consider this example:
Company A has a gold project and goes out and drills some RC holes. As the Company is unsure where and how the gold maybe forming it decides to initially carry out 5 m composite samples down hole (a small sample is taken from each 1 m interval and composited into 1 sample that represents a 5 m interval down hole).
The Company then receives the results and there is an interval of 20 m @ 4.5 g/t gold (4 consecutive 5 m samples down hole have assayed for significant gold) and they go back and resample at 1 m interval using proper QAQC procedures so that they can be used in future resource calculations (and also so they can be reported as JORC compliant assays). The 1 m samples comeback with 2 m @ 6 g/t gold because there was some cross contamination between samples when the compositing was being conducted (not an unusual occurrence). While technically it is still a good intersection is not as "market worthy" as the 20 m @ 4.5 g/t gold composite assay.
Now what if Company A needed to carry out a capital raising and knows that the composite interval will have far more interest than the 1 m samples. The Company then makes the decision to only quote the composite interval in all its promotional material and bury the 1 m sampling in the back. This is exactly what Riva did.
Normally in this situation Company A would not find a Competent Person prepared to sign off on such reporting because it does not meet the reporting standards of the JORC code and/or their professional body, not to mention the morality of deliberate obfuscation of the results.
Most Competent Persons would not even allow the mention of the composite samples under any circumstances where there has been resampling completed and would not sign off if they were mentioned. However for some Competent Persons it would still be reasonable to mention them as part of a "theory" but only if it was reported clearly and only if the 1m samples have been given first and greater emphasis. How much money or share price gain do you think Riva would have got if they had instead used the more accurate technical reporting of:
"Historical drilling at Tabac did not intersect any cobalt or gold, however, the Company believes there could be cobalt because of the discrepancy between the original 10 m composite results and the subsequent 1m follow-up results for the following reasons:"
This is correctly giving the 1m results the first and most emphasis at all times.
The reasons why Competent Person should not report it that way is obvious, what stops any company claiming that they have theory based on some spurious assays in an earlier drilling programme where there was more accurate work completed later that showed otherwise and then not clearly articulating that work first and foremost every time they talk about that project. Investors rely on the Competent Person to provide a technically balanced opinion in all announcements and clearly that is not .
Constantly headlining the composite results (not at least without qualification statements everytime) as Riva done would not be considered balanced technical reporting by the vast majority of Competent Persons. In fact a fully informed Competent Person may consider it misleading. If instead they highlighted the geology setting or some other technical aspect of the project that didn't include the use of the composite assay results that would be different. But then they would not have got the same share price appreciation or interest in capital raisings.
If a complaint is made to the ASX in writing they will follow-up it up by making some initial checks. They may not take it any further but there is enough obfuscation of the historical results for them to probably seek further clarification. The most likely outcome though is that they change the way they do things in the future rather than hold anyone at Riva accountable.
The second action would be to check who the Competent Person is and find out which professional body they are a member of (either AuSIMM or AIG) and submit in writing a complaint and they will review the reporting as well. However the only action they can take is only with the Competent Person directly but if they do take action then that could help the ASX to take action as well.
RIR Price at posting:
0.5¢ Sentiment: None Disclosure: Not Held
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