Last Change for Cheapies - about to close gap?, page-16

Indicated Resource refers to a lower level of 'confidence' in a resource estimation, not that it below grade, It reflects less drilling information and less certainty that it exists in place and grade as estimated. Of course, Indicated and Inferred Resources tend to exist at the margins (laterally and at depth) to the main deposit because there has been less drilling around the periphery.

Therefore it's a given that Indicated and Inferred Resources are lower grade on the periphery because less drilling is done in areas where the deposit dissipates. However, at depth Indicated and Inferred Resources can be the same or even a higher grade than the Measured Resource over the central deposit because the resource category simply reflects a lower confidence level with less drilling. Resources do not carry any connotation of economics except that the cut-off grade used in estimations are sometimes chosen to reflect economic reality as such.

Reserves by definition reflect only those resources economically extractable at a given price point. Reserves also are not allowed to be reported on Inferred Resources because Reserves reflect a level of certainty that is simply possible on a resource as uncertain as Inferred. This is where common sense is required. Inferred Resources on the low grade periphery are highly unlikely to to ever be mined but high grade Inferred Resources at depth are likely to be upgraded to Indicated and Measured in time with future drilling then ultimately converted in Reserves and finally mined.