I have been watching CNJ and GSR since GAL's Callisto discovery...

I have been watching CNJ and GSR since GAL's Callisto discovery and have noticed that the cut-off grade (COG) chosen by CNJ/GSR as the basis for the grades and intercepts announced to the market, is anomalously low..

They have chosen an average 3E grade greater or equal to 0.1 g/t as the COG, where 3E is the sum of the individual Pd, Pt and Au g/t grades within the intercept.

As COG is reduced. grade drops but intercept length (and hence potential size) increases proportionately more. The rate of change in grade and intercept length with COG change, is unique to each deposit. Companies tend to set the COG as low as reasonable so as to maximise the potential size of any deposit and hence potential contained metals. The question is how low is reasonable. At early stage drilling, the COG should probably be related to the guiding exploration model, targeted metals and proposed depth of drilling. It is obviously an imprecise choice.

The table below identifies the COGs for the cobalt intercepts listed in Table 1 of the announcement plus the corresponding calculated US$/t value for each case. Data for GAL's Callisto and the existing Mt Thirsty PFS is also included. The COGs are identified from the ASX announcements included as references for Table 1.The data show that the chosen 0.1 g/t 3E COG is low in comparison to the others. Perhaps a more realistic higher COG closer to the 0.06% Co used in the Mt Thirsty PFS would have been more appropriate, perhaps increasing at greater depths where low cost open pit mining would obviously not be an option and higher cost underground mining would be needed.



If what I have written above is correct and a higher COG would have been more appropriate, the impact of such a change on likely parts of interest would be:

1. the CNJ/GSR result in Table 1 would move well down the list, perhaps off.

2. the 15.0, 21.8 and 9.0m intercepts mentioned above Table 1 would be very significantly lower, though associated grades would be higher but with the increase being proportionately less than the intercept decrease.

To make valid comparisons you need to be compare apples with apples.