good press

Wise old owls circle Cloncurry
OPINION
Matthew Stevens
July 12, 2006
IT is a rare relief to see the Australian Stock Exchange so publicly running its very heavy ruler over the latest exploration results of mining's suspended excitement machine, Australian Mining Investments.
As the ASX's review of AMI's latest drilling results goes into its third day, investors, both committed and prospective, should remember a pair of basic rules here.

The first is, as always, buyer beware. The plain fact is that until AMI releases fully distilled, Joint Ore Reserves Committee (JORC) compliant exploration results, the Rockland find remains a high-risk, high-reward proposition.

And really, that sort of formal qualification of AIM's exploration effort is a fair way off.

Remember, for example, it took iron ore's self-proclaimed third force, Fortescue Metals, maybe 30 months to achieve JORC compliance for its Christmas Creek prospects. And yet, throughout, it was publishing exploration results and a moveable feast of ambitious project and production plans.

The second rule is that an extended suspension of AMI is neither unusual nor, by implication, a signal that there is something particularly wrong with what has so far been released by Cloncurry's latest boomer.

The deep analysis of drilling results is an arcane, specialised science at the best of times. There is a rule of thumb in the exploration industry - if you really want to find something, you probably will. The real question is whether what you find is worth anything.

The gaps in the information published so far by AMI are as obvious as they are, arguably, acceptable.

There is, for example, a lack of data about the spacing of its drill tests. That means it is, so far, difficult to draw any conclusions about whether we have a series of intense pods of copper or a contiguous bonanza that would sustain a long-term mining plan.

As well, experienced hands are not too sure what results are from AMI's drilling program and what results are the product of drilling regimes past.

Now The Australian has copped some criticism around the market, and more particularly from the intimate community that is the financial media, for covering the AMI story so aggressively.

But the simple fact is that the results of AMI's startling, if still pubescent and incomplete, drilling program have been, quite correctly, published by the ASX.

Those results had driven a market in AMI shares for several days before The Australian published its first story. The remarkable characters involved here, their stunning claims and the market's Kerching! response was news. And, to paraphrase a favourite Seinfeld phrase, if these results are real, then they are spectacular.

To take a jab at the ASX or The Australian for an initial inability to immediately conduct a definitive review of AMI's claims is silly.

Continuous disclosure rules require AMI to provide market-moving results of drill tests. And initially, it seems, the ASX is obliged to publish those results as delivered.

What is happening now is a sort of stage two in the process of ensuring the market is kept properly informed.

As the market-moving nature of AMI's dispatches became more obvious, the ASX has turned to its informal panel of mining's "wise old owls" to run a cautious eye of the results.

They are in the process of reviewing AMI's next vital batch of drill tests with the aim of providing the market's publisher and regulator with some comfort about the sustainability of the company's claims.

The panel of "owls" is drawn from the the resources sector, people experienced in publishing their exploration results and analysing the missives of others.

This is, in short, a healthy process that has reportedly been welcomed by AMI.

It's understood there was considerably more tension within the Fortescue camp over the potential extension of its recent self-imposed suspension from trading than has been displayed by the AMI camp.

Of course, AMI chairman Wayne McCrae would be a fool not to embrace the process here.

After all, old hand that he is, McCrae knows the potential regulatory risk he has on his hands here.