Ann: More High-Grade Gold at Trafalgar Prospect, NE Tasmania, page-5

you need to be able to place companies head line grade announcements into context, particularly with companies with a proven history of trying to deceive the market. Companies set there own interval reporting criteria with the only requirement being they need to disclose how they calculate the intervals. This can be found within the JORC table found at the bottom of ASX releases. What is logical is the interval criteria is set in relation to the targeted ore deposit type ie what would be considered economic, though junior companies usually give the criteria a wide range so to make room to manipulate the data to make the interval appear better than what it is. This is what you typically see as head line grade intervals in announcements.

Flynns criteria allow for a lower cut off on only 0.3 g/t and they can select intervals over as narrow as 30cm for sampling. They also say in announcements that they allow 5m of internal dilution. This means, they are allowed to have 5m of barren no gold core to be included in a reported interval if there is grades above 0.3 g/t on either side of it. Obviously it works better for a head line grab if there are high grade intervals either side to make it seem like its a stella interval. They have never reported wide intervals of mineralization but just saying what is allowed / what they can get away with if they want to. The only way to actually know what is happening in reality is to see the assay certificates where every single sample is reported. These can be found within documents of historic drilling results located on the Mineral Resources Tasmania web site for those inclined to doing their own research. There is no way Flynn would ever do that as most companies don't.

What Flynn does do though is make use of the 0.3 g/t cut off to expand the interval length. On every good headline interval Flynn has reported, you can still see that the grade is being carried by narrow <1m high grade spikes. eg 2m 4.88 g/t Au including 0.3m @ 13.47, 12m @16 g/t including 0.7m @ 153 g/t Au, 1.2m @ 69 g/t Au including 0.5m @ 143 g/t Au, 14m @ 5.5 g/t Au including 0.6m @ 109 g/t Au. Simple maths suggests the actual grade of the remainder of the interval outside the "including" the high grade component is very low. Note also the latest results, (which was clearly pure coincidence to have been reported 1/2 hr prior to Niel Marstons talk at RUI last week) of 3.5m @ 8.33 g/t Au including 2m @ 13.75 g/t Au doesn't necessarily mean that they sampled a 2m interval to get that 13.75 g/t Au figure. It might have been, but considering they are allowed to sample as narrow as 30cm and drag the surrounding sample values into it, it might not be as well. Taking the entire 3.5m interval @ 8.33 grams gives an average of around 2.4 g/t Au per metre. When doing resource calculations, most of the very high grades within a data set will be taken out as they will be considered out liers within the data set - its called a top cut. Depending on the grade connectivity between drill holes ect, these higher grade intervals will be assigned a value that is less, usually significantly less than the spike high hits, making the real resource grades significantly less than that reported in the early stage head line grade announcements.

When assessing if something is high grade or not, you must also consider the context of where it is located, the local geography, the geometry of the potential ore body, if that tenor is continuous with adjacent drilling ect. Considering Flynns latest result that actually averages around 2.4 g/t Au per metre over a down hole interval (not true width) of only 3.5m from a down hole depth of 379.5m, you would have to at least question the economic viability of an underground operation that would be profitable at these depths with these kind of grade/ widths. Zero chance of an open pit operation obviously. Flynn disagree and are continuing to drill for extensions both laterally and at depth. Regardless of the real potential, this will keep them employed.

Hopefully this assists readers with their interpretations of what is or isnt high grade. Basically you need to take a dump truck of salt with not only these guys, but all exploration announcements and do / know more than just read the head line.

cheers