A mineral occurrence is any locality where a useful mineral or material is found. Resource evaluation is undertaken to quantify the grade and tonnage of a mineral occurrence. This is achieved primarily by drilling to sample the prospective horizon, lode or strata where the minerals of interest occur. Reserve definition is undertaken to convert a mineral resource into an ore reserve, which is an economic asset. The process is similar to resource evaluation, except more intensive and technical, aimed at statistically quantifying the grade continuity and mass of ore. Reserve definition also takes into account the milling and extractability characteristics of the ore, and generates bulk samples for metallurgical test work, involving crushability, floatability and other ore recovery parameters. Reserve definition includes geotechnical assessment and engineering studies of the rocks within and surrounding the deposit to determine the potential instabilities of proposed open pit or underground mining methods. This process may involve drilling diamond core samples to derive structural information on weaknesses within the rock mass such as faults, foliations, joints and shearing. At the end of this process, a feasibility study is published, and the ore deposit may be either deemed uneconomic or economic (Adapted from Botin, 2009 and Tien, 2011).
The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC) defines Mineral Resource and Ore Reserve as following:
A ‘Mineral Resource’ is a concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.
An ‘Ore Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves.
Several standards, such as the JORC Code (Australasia), SAMREC Code (South Africa), PERC Reporting Standard (Europe), CIM Guidelines (Canada), SME Guide (USA) and Certification Code (Chile) define the rules and guidelines for reporting information relating to a mineral property. Although these codes are compatible, there are significant differences that must be considered when comparing technical or financial reports. Moreover, the usage of specific terms, criteria and definitions.
The international initiative to standardize market-related reporting definitions for mineral resources and mineral reserves had its start at the 15th CMMI Congress at Sun City, South Africa in 1994. The mineral definitions working group (later called CRIRSCO) was formed after a meeting at that Congress with the primary objective of developing a set of international standard definitions for the reporting of mineral resources and mineral reserves.
Mineral Resource Classification (CRIRSCO)
Mineral resources is a concentration of naturally occurring solid, liquid, or gaseous material in or on the Earth’s crust in such form and amount that economic extraction of a commodity from the concentration is currently or potentially feasible.
Inferred Mineral Resource
An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
Indicated Mineral Resource
An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.
Measured Mineral Resource
A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proved Mineral Reserve or to a Probable Mineral Reserve.
Mineral (Ore) Reserve Classification (CRIRSCO)
The reference point at which Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported.
Probable Mineral Reserve
A Probable Mineral Reserve is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proved Mineral Reserve.
Proved Mineral Reserve
A Proved Mineral Reserve is the economically mineable part of a Measured Mineral Resource. A Proved Mineral Reserve implies a high degree of confidence in the Modifying Factors.
The International Reporting Template can be found at the link http://www.crirsco.com/template.asp
In a recent development, U.S. Securities and Exchange Commission is proposing changes on its disclosure requirements for SEC-registered companies engaged in mining activities. According to Grabar (2016), the proposal would introduce disclosure requirements aligned with the international standards developed under the aegis of the Committee for Mineral Reserves International Reporting Standards (CRIRSCO).
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JORC “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves – The JORC”, The Australasian Institute of Mining and Metallurgy, Astralian Institute of Geoscientists and Minerals Council of Australia. (March, 2004).
Grabar, N. et al. “SEC and Mining Disclosures”, Cleary Gottlieb Steen & Hamilton LLP, Harvard Law School Forum on Corporate Governance and Financial Regulation. (June, 2016). Last accessed on 07/01/2016 at https://corpgov.law.harvard.edu/2016/06/26/sec-and-mining-disclosures/
Tien, C. T., “Notes on Advanced Aggregate and Quarrying (Mi Eng 304)”, Missouri University of Science and Technology, Rolla, MO, USA. (March, 2011).
CIM Standing Committee on Reserve Definitions “CIM DEFINITION STANDARDS – For Mineral Resources and Mineral Reserves” Canadian Institute of Mining, Metallurgy, and Petroleum (November, 2010). Last accessed on 07/01/2016 at http://web.cim.org/UserFiles/File/CIM_DEFINITON_STANDARDS_Nov_2010.pdf
CRIRSCO, “Responsible reporting of mineral assets”, Committee For Mineral Reserves International Reporting Standards (April, 2013). Last accessed on 07/01/2016 at http://www.crirsco.com/InBrief_responsible_reporting_mineral_assets.pdf
Botin, J. A., “Sustainable Management of Mining Operations”, Society for Mining, Metallurgy, and Exploration, Inc. (SME). (November, 2009).