LETTER TO THE EDITOR — Resource reporting should be clarified from the top

This is the time of year when executives and boards present their annual reports to shareholders. This year’s reports will be the first drafted since the Bre-X Minerals bubble burst.

How will companies respond to events of the past year? Will they put a spin on their performance, and allude that they are more effective than companies like Bre-X? Or will mining companies seek alternatives to effectively demonstrate the validity and credibility of their estimates against data.

It has been trendy, in recent years, for companies to draft a “mission” or “vision” statement. Most companies state that they are oriented to maximizing the company’s value for shareholders. It is time that companies demonstrated that they are achieving these goals through quantitative, but objective, means.

Further, companies should demonstrate in annual reports that they are as interested in presenting trends of overall resource and reserve reporting as they are in reporting past production trends.

Commodity prices are volatile, and companies could better serve their shareholders by reporting reserve estimates based on more than just one cutoff grade. This should occur at all new and mature operations.

The future of exploration and mining companies is linked to the mineral resources those companies have identified. Boards need to demonstrate that they are using shareholders’ funds effectively. There is much to suggest that there is room for improvement in this area of reporting. While it is important to shareholders, in light of incidents such as the Busang scandal, that this type of disclosure occurs in the public domain, it will only occur when a company uses such reporting internally.

Internal annual resource estimate reports will benefit shareholders more when such reporting includes graphics that objectively demonstrate the following:

* the similarity of the grade trend of different sampling processes, each of which contributes to the overall resource estimates of a geological domain; * the similarity of the grade trend between various drilling phases within a geological domain; and

* that the mineral resource estimate of a geological domain is a mere image of the data on which it is based.

To the significant benefit of shareholders, such reporting, when used internally, will trickle down to the public disclosure process.

It remains to be seen whether companies will set new trends this year in mineral resource reporting that simply and effectively demonstrate, to shareholders and the market, that they are presenting an objective assessment based on collected data.

Terry Lee

Moriah Mining Consultants,

Hornsby, New South Wales,

Australia