Attached is a short primer on the differences between reserves vs resources.

The importance is that when we talk about what a major will pay for a company it is based on reserves and to a lesser extent resources. Reserves command a much larger premium then resources. Raw exploration potential gets a few bucks but that is about it (NO BULL – exploration potential is like the cherry on top of the Ice Cream Sunday – everybody takes it but try to get them to pay extra for it.)

That is the reason for all the infill drilling and the proposed underground working at FDN. Given the consistency of the intra and inter hole comparisons to the model it is very likely that the resources will convert to reserves with time and work. As resources they are not nor will they be worth $300/oz. Hence the industry currently uses $100/oz in valuing resources. Think of it this way. Reserves are 90%+ likely to be there and can be mined at a profit. Resources are 40-60% or so likely to be there as stated and should be able to be mined at a profit but surprises (maybe good, maybe bad) are to be expected.

Majors, bankers, mining engineers etc look at the two categories with very different perspectives.

Normally during a takeover companies would be looking at a normal development cycle with the takeover occurring after a deposit is in production. Our situation is a little different but to get top dollar we need to move our resources into the proven and probable category of reserves. The link to a 2 page primer on reserves and resources is below:

http://www.northern.org/artman/publi...