Ann: TVN SPP Offer Booklet and Letter to Eligible Shareholders, page-87

Rolland Gothard is the author of the below text and well worth a follow on LinkedIn.

This “concentrate grade” furphy has been played before so beware

Pursuit Minerals (ASXSM) released an announcement about their Airijoki Vanadiferous Titanomagnetite (VTM) Project in Sweden where they reported drilling intersections in terms of concentrate grades.

They reported, for example,

Drill hole AIR18-007 produced a vanadium magnetite concentrate over a 178m downhole interval:

• 178.0m @ 1.9% V2O5 (magnetite concentrate) from 12.0m depth, including;
• 122.0m @ 2.2% V2O5 (magnetite concentrate) from 64.0m, and;
• 30.0m @ 2.3% V2O5 (magnetite concentrate) from 150.0m

This is potentially misleading as to the economic viability of the project, and could potentially mislead investors as to the grade of the mineralisation, especially in comparison to its peers and to other deposits within the competitive space.

For example, this is comparable to reporting copper mineralisation as "Drilling intersected 20m @ 27% copper and 15g/t Au in concentrate grade at the Example Deposit from the Hypothetical Project, Swaziland".

Concentrate grades have almost no relationship to the the head grade. In the case of the Airijoki Deposit, the head grade is 0.4% V205 to 0.7% V2O5, which places it in the mid-range of VTM deposits, globally.

True, the concentrate grade is impressive (and tops the stoichiometric limits of magmatic vanadium in magnetite) but the concentrate grade is not the important factor upon which deposits of this type should be compared.

Reporting of concentrate grades is potentially misleading. In my opinion, Pursuit Minerals should be made to restate this announcement in terms of chemical grades of vanadium pentoxide as a head grade, with a separate section on concentrate grades derived from the heads, so as to make it utterly clear to uninformed investors that the concentrate grades are derivative metallurgical information. My reasoning is;

• Concentrates are produced as a derivative of the head grade; they are stated after metallurgical recoveries and, most importantly, metallurgical lossed. Reporting concentrate grades does not inform the investor of those losses.
• No information on the tails vanadium grade or overall recovery of vanadium is given, so this is only partial metallurgical information.
• No Resource has ever been stated in concentrate grades. One cannot derive a contained metal equivalent of concentrate.
• Concentrate is not the primary economic mineral or material upon which Pursuit will be paid or calculate value; vanadium is. Therefore, Pursuit should report the grades of all drilling as vanadium pentoxide in the heads. This is because Pursuit has not defined a flow sheet to be paid upon VTM concentrates alone.
• Pursuit has not undertaken any metallurgical processing in order to define the concentrate as payable (though, obviously, it would be). Therefore, vanadium chemical assays should be reported.
• The reporting mixes derivative metallurgical information with primary exploration information; it is not clear whether this is a metallurgical or exploration report (though, clearly, it is exploration). This is poor disclosure.
• The concentrate is produced from Davis Tube Recovery tests of a single 20g aliquot sourced from pulp. Recoveries via DTR are not a simple off the shelf way of assaying magnetite samples as the grain size of the material strongly affects DTR recoveries; the likelihood is that the concentrate grade produced via an actual plant would vary considerably from that produced from a p80 75 micron pulp.
• The concentrate grade is clearly very sensitive to head grade, as is recovery. This is strongly impacted by grain size; for example two 0.7% V205 head grade intersections report significantly different concentrate grades. Therefore it is impossible to compare like with like. Therefore, concentrate grades are not indicative of anything at this stage.
• Until such times as actual metallurgical testing is completed, testing various grain sizes of materials and recoveries to concentrates, it is inappropriate to report concentrates, as the final concentrate may vary (will vary) from the exploration drilling. The payability of vanadium is also not generally related to concentrate grade, and in any case buyers will pay on the contained vanadium.
• The reporting of concentrate grades will tend to overstate the grade of the deposit. For example, 123m @ 2% V2O5 (in concentrate) looks better than 123m @ 0.4% V2O5, which I suspect is the whole point - to generate a large %V2)5 number (in concentrate).
• It is unknown whether the reporting of intersections as concentrate grade composites versus as composites of head grades would result in different top and bottom cuts or whether internal waste would result in different intersection lengths. For example, as the concentrate grade is heavily affected by grain size, two zones of the same head grade result in different concentrate grades; if this is not defined by the heads alone, it will not be capmaparble. If an intersection is defined by the head grade alone, then the head grade should be stated. Pursuit has happily provided the raw assay data but ain't nobody got time to do the homework on that.

DTR results, and indeed concentrate grades, therefore at least in my opinion, should not substitute for chemical assays and should not be reported in place or in advance of head grades. This would go as far as not being reported in primacy to chemical assays, as DTR results and concentrate grades are secondary assay and beneficiation results susceptible to variations in treatment of the sample material.

Pursuit Minerals is not the only company on the ASX in the VTM market space to report concentrate grade in place of head grade. The style of reporting of others varies subtly, and I have chosen to highlight Pursuit's disclosure at this time as I believe that the JORC Committee and the ASX itself needs to start cracking down on this style of reporting - indeed, if your reporting of assay results can be classed as a 'style' or a 'fashion' then it should not be JORC compliant or ASX compliant, right?

Investors need clear and consistent reporting of results in a style and format that is consistent, relies on comparable information, that can give a reasonable person the ability to compare across the same type of deposit, and which is scientifically rigorous. Reporting of concentrate grades in place or in advance of heads assays is none of these things.