Inferred Resource

So they submitted the necessary information and stripped out all the fairy tales about future riches, no environmental problems, etc. They also stripped out all the references to the historical data, that they were perhaps unable to reconcile. But at the end of the day they left the punters with an inferred resource of 30Mt at 25.2% available Al2O3 with 6.9% reactive SiO2. They also stated an exploration target. I'll look at the resource purely from the perspective of grade and sampling density.

The cut-offs

Cut-off grades have economic implications, as they usually coincide where they believe the resource might be break-even under current conditions. In an inferred resource where no feasibility work has been done it is common to look to broader analogues for cut-off grades. The report mentions Darling Ranges bauxites as appropriate analogues for Al2O3. However, Darling Ranges bauxite has very low reactive silica, making it relatively easy for third party refining.

QBL have stipulated a cut-off of 20% available Al2O3, which is low, but we'll accept that based on their points. They have also stipulated a cut-off of 10% for reactive silica. The main reason the Darling Ranges bauxites are prospective despite their low grade, are because of their high Al2O3:Si ratios. There are no JORC compliant resources that I can find that are under 30% available Al2O3 and with a reactive SiO2 ratio of 3.6, such as QBL have reported.

So, testing the sensitivity of the SiO2 cut-off by lowering it 25% from 10% to 7.5%. The number of the 76 samples tested that remain within cut-offs falls from 51 to 31 (i.e. a 40% reduction). I am not going to spend time to do a readjustment on the resource, but I believe that is significant. I personally find no justification in the report for higher reactive silica cut-offs than industry peers. I personally have no confidence in the inferred resource on that basis.

Sampling density

The company justifies the use of very low sampling densities by air core depth testing, due to extrapolation. Principally by continuation of landforms. Whereby the lava plain that is susceptible to bauxitisation was deposited as flat lying basalt and has been subsequently partially eroded. Those areas of interest remain as topographical elevations with flat surfaces. The mapped landform units have been drill tested, often only once, and at a density as low as 1 drill location per 1.8km2. Within the resource there is variability in thickness ranging from 0.5m to 3.0m, and considerable variance around mean Al2O3 and a considerable variance of SiO2 around a very sensitive cut off.

For example the single drill hole that represents an extrapolation over 1.8km2 of resource is designated as 3m thick for 10M t of resource. Yet no other drill hole in the tenement achieved this thickness of above grade bauxite. In my personal opinion there appears to be insufficient uniformity in the grades and thickness over the lateral extent of the resource to justify the sampling density. In my personal opinion there appears to be no statistical work presented on sample representation to give confidence in the inferred resource.

I could go on and on, but IMO, the resource is junk. IMO, the exploration target is out of the question too, for reasons that I'm too time pressured right now to explain. The ASX and ASIC should do something about it, but they won't, and the tables will keep turning at the casino.

GLTA