I have been trying to work out why CTO's market cap is so low in...

I have been trying to work out why CTO's market cap is so low in view of CTO's 10 million JORC ounces of gold. Firstly here are CTO's resources, as stated from p11 of CTO's 2010 Annual Report.

Inferred Mineral Resources 23,000,000 tonnes @ 14 gramms per tonne gold
Contained ounces 10,000,000

Indicated Mineral Resources
(includes Probable Ore Reserve)
740,000 tonnes @ 15 grams per tonne gold
Contained ounces 370,000

Probable Ore Reserves
(derived from and contained within Indicated Mineral Resource)
800,000 tonnes @ 13 grams per tonne gold
Contained ounces 330,000

Now as we all know CTO has an underground mining operation which has been operating for a number of years with gold production consistently falling well short of Management's quarterly and annual estimates. This general statement of mine can be verified by a search of CTO's ASX releases. I believe future gold production estimates are no longer provided by CTO. The ASX has in the past queried CTO about the significant difference between actual gold production and the gold production estimate.

In the recently released September quarter the CTO told us that gold production was 2,531 ounces.

CTO's 10 million ounces of JORC gold is valued by the market at just $96.45 million dollars based on CTO's closing price of 10 cents today. That is at just $9.65 an ounce!

I saw the following opinion about underground gold resources on the internet today:

"Proven and probable are the only reserve calculations of any real value in underground situations, while indicated and inferred numbers are generally overly optimistic.*

*Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic studies.

Source: CIM Definition Standards, November 22, 2005"

The above was part of an article "Lessons from the 1970s" at http://www.gata.org/files/PollittMarketLetter-10-27-2010.pdf

Whether the above has any relevance to an investment decision in CTO is up to any investor who reads it to decide.

It should be noted that CTO have provided a very detailed 100 page technical report titled "Report on the Inferred Mineral Resources for the Charters Towers Gold Project" at http://www.citigold.com/downloadablefiles/05-05-24_Inferred_MineralResources_May_2005_FINAL.pdf

Ultimately the proof will be in the pudding, so to speak. "Our plan is to build up to a mining rate of 300,000 ozs a year. A mining rate of 500,000 ozs a year would be required to mine the same number of ounces in a 15 year period."
At http://www.citigold.com/newsstory.asp?storynumber=7