Some further thoughts. One of the decisions faced by SIR in a...

Some further thoughts.

One of the decisions faced by SIR in a situation like this is whether to concentrate resources on doing a detailed drilling out of the first discovery to produce a JORC resource or whether to adopt a different strategy.

I always thought that Wayne McCrae made a mistake in focusing so much attention on drilling out a JORC resource. CDU spent a lot of money and market attention on drilling out the resource, and when the numbers came, they were disappointing compared with the expectations that had been created.

In my view, CDU would have done better to do big step out holes to demonstrate the overall scale and extent of the deposit, but also to focus on area exploration.

Maximum value is added for least outlay when a company focuses on outlining the broad extent of mineralisation, and the likelihood that repeat discoveries exist.

If the strategy is to attract the attention of a major, then JORC numbers are not needed. The majors will be doing their own assessments based on drill-hole information. JORC numbers likely will be needed to attract institutional investors, but that will happen downtrack anyhow if success is achieved.

Of course, if the strategy is to reach early production, then use cash flows to do further exploration, then perhaps focusing on JORC numbers can be justified. However, when a company has extensive land holdings in a new area, I seriously suggest that shareholders will benefit more from the company showing that more, and possibly larger, deposits are present than by focussing all resources on the first deposit discovered.

For example, the likelihood that further discoveries will be made is the best counter to arguments that the company is overcapitalised on what has been demonstrated to date.

I could be wrong on all this, though, and acknowledge that other views may trump mine.