i was wrong about the jorc, page-26

Hexham

In admitting that I got it wrong I find myself in very good company. Among the 'no nothings' were:

many respected posters on these threads

Several brokers who have provided research on the stock (ie MPS, Fosters, Strachan etc)

Mining Professionals up at Rocklands itself, and

Some very switched on investors around the country.

But the bottom line is this. Miscalling the actual JORC is really no big deal as I firmly believe that the JORC has undervalued the Rocklands asset and that only mining will reveal the true grades because of the extreme complexity of the Rocklands orebody.

By the way, you will notice that no-one refuted my post on what a JORC might look like either.

The JORC code is what it is and essentially it is a detailed 'recipe' for calculating a resource, with a rigor and discipline that appears to be extremely inflexible and designed to produce results that investors can regard with a high degree of confidence - especially when stated in the measured and indicated status like Rocklands has been. But at the end of the day it is only a theoretical model and as it happens it is a model particularly suited to uniform or homogenous ore bodies.

Speaking of the aims of the JORC code, it is rather ironic that the resource update under the jurisdiction of professionals enforcing the JORC guidelines, has done the exact opposite to what it is designed for. It has actually resulted in destroying confidence yet the company in question now has legitimate claims to 1 million tonnes of contained copper up at Rocklands which is more than any of its peers that are enjoying market favouritism.

If it was designed specifically for resources like Rocklands, I am sure we would see a different set of provisions in the code entirely. I'm thinking that the guidelines would take fully into account a complex set of circumstances peculiar only to Rocklands itself and the subject of a paper by Simon Beams that has been presented around Australia precisely because of its uniqueness.

I am not overly concerned about the mismatch between the company's internal data for the modeling of the resource and the result returned by consultants, as the final arbiter as to who 'owns' the correct call, will be known beyond all doubt when mining commences.

The main consideration now is that although beneath the expectation of 'retail nuffers' like me and so called experts in the industry like the brokers who have put forward their own estimates, the JORC even as presented still points to very significant value for the company.

IMHO, clues that something is NQR about the jorc result as stated by the consultants at least for the bonanza zone of Las Minerale, are as follows:

CLUE 1: the average grades of holes drilled both vertically through the Las Minerale orebody and along the 800 metre strike of the bonanza zone, and

CLUE 2: the average grades achieved when drilling longitudinally through the orebody, and

CLUE 3: the average grades returned from tonnes of diamond core material sent to WA for trial mining/metallurgical investigations, which incidentally returned very successful results.

CLARIFICATION of the above points:

Firstly, in regard to the average grades of vertical holes for the bonanza zone I previously drew the attention of the forum to the following.

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GUESS 1 - Clues from Vertical Drilling

Possibly the best guide as to what the grade might be (as volunteered by the company itself) is with the vertical drilling intersections published in recent months. After all, in the June 23, 2010 Announcement, the company stated the following

The vertical holes are useful in determining likely grade control expectations for the process design and to confirm data from angle drilling.

Grade control implies a need to know what sort of dirt is going to be processed as then it can be incorporated into the design requirements for a mining plant. Following the company's lead, the drilling results for vertical holes in recent company releases are summarized below.

LMRC200 - 166m @ 1.32% Cu Eq (4-170m)
LMRC201 - 146m @ 6.99% Cu Eq (3-149m)
LMRC202 - 103m @ 2.21% Cu Eq (3-106m)
LMRC203 - 152m @ 1.35% Cu Eq (4-156m)
LMRC205 - 137m @ 2.90% Cu Eq (4-141m)
LMRC206 - 137m @ 5.46% Cu Eq (0-137m)
LMRC207 - 164m @ 3.96% Cu Eq (3-167m)
LMRC208 - 153m @ 2.72% Cu Eq (3-156m)
LMRC209 - 134m @ 1.60% Cu Eq (4-138m)
LMRC215 - 140m @ 2.02% Cu Eq (11-151m)
LMRC218 - 181m @ 1.97% Cu Eq (3-184m)
LMRC220 - 118m @ 5.76% Cu Eq (3-121m)
LMRC221 - 166m @ 1.33% Cu Eq (4-170m)
LMRC223 - 92m @ 4.58% Cu Eq (2-94m)
LMRC224 - 172m @ 1.90% Cu Eq (1-173m)
LMRC226 - 144m @ 1.48% Cu Eq (11-155m)
LMRC227 - 136m @ 1.47% Cu Eq (3-139m)
LMRC228 - 115m @ 3.27% Cu Eq (3-118m)
LMRC229 - 147m @ 1.58% Cu Eq (3-150m)
LMRC231 - 186m @ 1.56% Cu Eq (1-187m)
LMRC235 - 100m @ 2.01% Cu Eq (1-101m)
LMRC241 - 116m @ 2.79% Cu Eq (0-116m)
LMRC245 - 115m @ 1.81% Cu Eq (0-115m)
LMRC248 - 95m @ 2.03% Cu Eq (0-95m)
LMRC263 - 46m @ 1.55% Cu Eq (0-116m)
LMRC266 - 121m @ 2.16% Cu Eq (12-133m)
LMRC267 - 168m @ 2.06% Cu Eq (41-209m)
LMRC270 - 124m @ 1.63% Cu Eq (3-127m
LMRC271- 198m @ 1.59% Cu Eq (0-198m)
LMRC278- 105m @ 2.39% Cu Eq (55-160m)

The intersections quoted in red are for drill holes that were reported in the June 23 announcement which are located along strike for 800 metres of the main Las Minerale Zone as shown below. (the graphic is from Page 16 of the June 23 report). These holes are spread out along the main zone of interest and provide a snapshot as to the consistency of the ore body longitudinally.



The 800 metre section of Las Minerale is where the richest copper loads are located although the Las Minerale trend under consideration for a measured resource extends to 1100 metres plus.

We can get a simplistic idea as to the grade of the 800m Las Minerale resource by averaging the vertical holes along its length.

The weighted average of the 11 holes denoted in red above, and along strike at Las Minerale, comes to 3.1% Cu equiv.

When all vertical holes that have been listed by the company are taken into account, the weighted average comes to 2.47% Cu equiv

We also need to consider the extremities of Las Minerale since 1100m of Las Minerale is being assessed, together with 500 metres of strike at Southern Rocklands. All up a conservative estimate of 2% Cu equiv at least appears reasonable for a grade for the measured resource.

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Keep in mind also that there are strong arguments that the Rotary Percussion (RC) holes drilling into the chunks of native copper tend to understate grades compared to when diamond drilling is done on the exact same location. So the above averages may also be understating the true average grades

Secondly, in regard to drilling longitudinally there is diamond hole DODH069 to consider, which provides us with a clue and was reported in the Dec 2009 Quarterly as 203m @ 2.03% Cu equiv. It was a hole designed to test a structure but it traversed quite a distance through the Las Minerale orebody providing a snapshot of the average grade while doing so.

And thirdly, the metallurgical testing of tons of diamond core material drilled slap bang in the middle of Las Minerale over say 100 metres of strike have produced extremely healthy copper grades and have encouraged management to have the confidence to have mine engineering plans drawn up. The company's undiminished confidence in what they are dealing with is telling us something.

For what it is worth, the Native Copper section of the orebody extends for about 800 metres and 800m of strike * 35m of width * 250m of depth * SG of 3 equates to 21 mt of ore that would have to be very high grade judging by all of the drilling that has been done along this section. It wouldn't take much to pick up another 9 mt at lower grade to provide a very respectable overall average grade close to 2% Cu equiv.

So just concentrating on Las Minerale and the first years of mining, my assessment is that any surprises will definitely be on the upside to what has been suggested in the report prepared by the company's consultants.

And yes, the share price is telling us something else. And it is ugly. I am wondering if the share register is looking ugly as well, or if new substantial holders are making their way into the Top End of the register?

We should know soon enough!

Cheers
nev