Raptor Resources Holdings,Inc. (fka RRHI)

[pitboss22]

I posed the question of Exploration vs Development to the Mining Company Research Board as several of the posters there have long experience with mining and mining stocks. The following is a pretty comprehensive answer by 1manband.....

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They are an exploration stage company. You are correct.

"Exploration" and "Development Stage" are terms with specific legal definitions. Under SEC Industry Guide 7, a "Development Stage" mineral company MUST have PROVEN RESERVES AND be engaged in the preparation of such reserves for extraction. "Proven Reserves" also has a legal definition, which means the legal and economic feasibility of the mineralization has been established. That means one thing and one thing only - a bankable feasibility study prepared by an independent third party (or parties) has been completed.

RRHI has no reserves as defined by the legal definition of reserves. Therefore, they are still at the exploration stage. No doubt about it. Companies without proven reserves can not legally be called "Development Stage".

Now, here is where it gets sticky. Technically, Raptor's non-mineral subsidiary IS at the development stage, as the term has a different meaning for non-resource companies. Therefore, prior to entering the mineral exploration sector, they would have been a development stage company. HOWEVER, Raptor very clearly states in their filings they are not currently funding their dental subsidiary and are now concentrating on their mineral exploration company. Therefore, they can no longer call themselves "Development Stage" as mineral exploration is now their primary business. If they continue to call themselves "Development Stage", the SEC will eventually catch up to them and force them to change it. Assuming their auditor doesn't figure it out first and make them change it.


They clearly do not have "proven reserves" as they have not met the legal requirements for proven reserves.

Let me give you an example of an SEC Comment Letter sent to another non-compliant exploration-stage company that illegally claimed to have "proven reserves".

"We note your consulting geologist provided reserve estimates. Please note that mineral reserves for a mineral property may not be designated unless:

• Competent professional engineers conduct a detailed engineering and economic study, and the “bankable” or “final” feasibility study demonstrates that a mineral deposit can be mined profitably at a commercial rate.
• Historic three-year average commodity price is used in any reserve or cash flow analysis used to designate reserves.
• The company has demonstrated that the mineral property will receive its governmental permits, and the primary environmental document has been filed with the appropriate governmental authorities.

Please revise your disclosure accordingly. In addition, please revise your disclosure throughout this document to ensure you do not prematurely indicate mining operations on mining properties before a proper feasibility study and economic viability determination has been conducted."

A bankable feasibility study is not a minor thing. The size and complexity varies by the size and type of deposit, but typically it requires years of work by numerous experts conducting an enormous amount of work (not only exploration to define the resource and grade, but also metallurgical/processing studies to determine the most efficient and cost-effective mining and processing methods, mine design and related engineering studies, environmental studies, including hydrology and animal studies, reclamation studies and plans, just to name a few). And millions and millions of dollars to pay for all the studies that go into a bankable feasibility. Once all of that is taken into consideration, a final feasibility study is a pretty weighty document - hundreds of pages long.

Needless to say, drilling 5 holes and calling it a "proven reserve" is a bad joke.

>Quote:

Does it impress a prospective investor/sucker more if they appear to be that much closer to production by calling themselves a development company?

Absolutely! Many of the people that are buying these OTC resource companies understand very little about mineral exploration and production. Therefore, many of these companies do everything they can to convince people that production is just around the corner. Which it very rarely is, as the vast majority of these companies have nothing to produce and are performing no legitimate exploration work at all. Their real business seems to be selling stock, not mineral exploration. They give legitimate mineral exploration companies a bad name.

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