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Defining your reserves is not that scary!
Defining your reserves is not that scary!

Need help defining your reserves?

A month after reviewing an article he wrote nearly two decades ago about the geologist’s role in the valuation of quarry reserves, Bill Langer describes how such reserves should be classified and defined today …

Last month this column reflected on a 20-year-old article about the geologist’s role in estimating reserves. How well you need to understand your reserves depends on factors such as where you are in the planning process, the nature of your operation, if you’re a potential purchaser of an operation, and so forth.

In general, reserves can be lumped into one of three categories: mineral resources (aka inferred reserves), probable reserves and proven reserves.

The least well characterised mineral resources are often based on geoscientific information (eg natural exposures, nearby workings, geomorphology, limited drill holes). Mineral resources represent a low degree of certainty because drill holes and other data are too far apart to assume continuity of the estimates of the overburden, thickness and quality of the deposit between observation points.

Furthermore, mineral resources are often identified with limited consideration of the economics or practical aspects of mining and marketing the product. Simply stated, a mineral resource may (or may not) be economical to mine and process into a marketable product, the tonnes mined would probably be significantly different than predicted, and there may (or may not) be a market for the product. Mineral resources are, however, probably worth further investigation if the situation warrants.

"Mineral reserves are a subset of the mineral resources and are classified as either probable or proven reserves."

Mineral reserves are a subset of the mineral resources and are classified as either probable or proven reserves. They typically require more borehole data than mineral resources and require significant input from disciplines other than geology.

To be classified as probable or proven reserves, the deposit must be very well defined. The quantity and quality of the deposit must be computed from dimensions revealed in outcrops, trenches, workings, or drill holes that are spaced so closely that size, shape, depth and mineral content of reserves are well established, with high enough certainty to assume continuity between points of observation.

For most mineral resource deposits, reserves at the probable or proven classification stage are adequate if thickness, lateral continuity and the character of geologic units are consistent in adjacent boreholes (ie thickness does not vary by >10 per cent). Simply stated, it would be surprising if the reserves mined were not fairly close to what was predicted.

Classification of either probable or proven reserves also requires a robust analysis of factors affecting extraction, such as mining, processing, economic, marketing, legal, environmental, transportation, social and governmental factors. The reserves are the part of the mineral resource that can economically be extracted and processed at the time of the reserve determination using currently available technology.

The difference between probable and proven reserves lies in the confidence of the estimates. A probable mineral reserve has a lower level of confidence than a proven mineral reserve, but is still sufficient to serve as the basis for a decision whether or not to purchase or develop a deposit.

If you want to get into the nitty gritty of classifying reserves, the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“the JORC Code”) has standards for companies or individuals with interests in mineral properties.1

And if this is way more than you want to deal with, a geologist (who, according to the JORC Code, qualifies as “a competent person”) can help you out.

Reference and further reading

1. The JORC Code (2012 Edition). The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Bill Langer
Independent Research Geologist

Bill Langer is a freelance writer and retired Senior Research Geologist for the U.S. Geological Survey. Bill is now an independent researcher specialising in aggregate resources. Click here to email Bill or visit his website.

Thursday, 21 June, 2018 04:51am
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