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Reporting Exploration Results,

Resources and Reserves in Context

Mark Noppe
SRK Consulting
mnoppe@srk.com.au

AIG Seminar, 21 August 2015


Content
Reporting Resources & Reserves and project development how clear are we?
Really?

Introduction
Context is everything
Codes, standards, guidelines and industry practice
Accuracy, confidence and quality
Context project reporting
Conclusions
Introduction
Mining is an inherently risky business

We need transparent, consistent


and balanced views of technical
confidence

Risks and opportunities exist for


advancing an exploration
prospect to a
viable project, and
operating a mine
Xstract, 2014
Context
Why feasibility studies or mine projects fail

Mined ore grade is lower than expected


Processing plant under-performs
Development cannot keep up with planned schedule
Technical factors resulted in feasibility study failure
Geology, resource and reserve estimation: 17%
Geo-technical analysis: 9%
Metallurgical test work, sampling, mineralogy: 15%
Geo-hydrology: 4%
Some 50% of causes relate to geo
Mine design and scheduling: 32% technical data collection and
interpretation
Mining equipment selection: 4%
Process plant design: 12%
How do we convey uncertainty?
Cost estimation: 7%
Context
Importance of Resources & Reserves

Mineral Resources and Ore Reserves underpin


strategic and actual investment and valuations
Valuation buckets

Reserve
(mine schedule)

Residual Exploration
resources potential

Xstract, 2014
Codes
Reporting definitions

What about:
Development stages
Timing
Level of technical- economic
study
Level of confidence in all
relevant factors
Transparent, consistent,
balanced reporting

JORC Code, 2012


Codes Project Criterion
development
Project development stage
stages Exploration areas Mineralisation may or may not be defined, but where a
Mineral Resource has not been identified.

Advanced Considerable exploration has been undertaken and


exploration areas specific targets identified. Sufficient work has been
completed on at least one prospect to provide a good
geological understanding and encouragement that further
work is likely to result in the determination of a Mineral
Resource.

Pre-development / Mineral Resources and/or Ore Reserves were identified


resource and estimated. A positive development decision has not
been made. This includes properties where a
development decision has been negative and properties
are either on care and maintenance or held on retention
titles.

Development Committed to production but not yet commissioned or not


initially operating at design levels.

Operating Mineral properties, in particular mines and processing


plants, which were fully commissioned and are in
production.
VALMIN Code, 2005
Industry practice
Timeline of development stages

Xstract, 2014
Industry guidelines - types of study

After Hatch

M E White & I Harrington, 2014. Feasibility Studies Scope and Accuracy. AusIMM Monograph 30.
Industry practice & guidelines
Measure / Item Scoping Study Pre-feasibility Final Feasibility
Study Study
Technical-economic
study levels Cost accuracy 25%-50% 15-25% 10-15%

Cost contingency 30-50% 15-30% <15%

Accuracy and Proportion of <5% <20% <50%


Engineering
confidence complete

levels not Resource Mostly Inferred Mostly Indicated Measured and


categories Indicated
provided in Reserve None Mostly Probable Proved and
reporting categories Probable
Mining method Assumed General Optimised
Codes
Mine design None or high-level Preliminary mine Detailed mine plan
conceptual plan and schedule and schedule
Scheduling Annual 3-monthly to Monthly for much
approximation annual of payback period
Risk tolerance High Medium Low

M E White & I Harrington, 2014. Feasibility Studies Scope and Accuracy. AusIMM Monograph 30.
Context
How it all fits together

Project advancement
Data quantity and
data quality
Technical/economic
assessment -
Resource & Reserve
reporting
Final engineering /
Construction
Commissioning
Operating
Noppe, 2014
Codes & guidelines
Mineral Resources - reasonable prospects
for eventual economic extraction

Economic assessment applies


assessment of all matters equally to Inferred Resources
likely to influence the prospect of
economic extraction including the Eventual economic extraction
does not provide a license to
approximate mining speculate
parameters
Approximate mining parameters
are not necessarily the same as
not an inventory of all Modifying Factors required for
mineralisation drilled or sampled, defining an Ore Reserve
regardless of cut-off grade, likely
mining dimensions location or
continuity.
Codes & guidelines
Ore Reserves timing of study & reporting Applicable if
longer term price trends, market
The studies at Pre-Feasibility or conditions, political, environmental,
social or infrastructure issues,
Feasibility level demonstrate that, legislation or approvals, or funding
at the time of reporting, issues that may prevent the intended
project being developed in the time
extraction could reasonably be frame considered in the relevant
justified technical study

If re-evaluation indicates that the


Ore Reserves are no longer
viable, the Ore Reserves must be
reclassified as Mineral Resources
or removed from Mineral
Resource/Ore Reserve
statements
Accuracy, confidence & quality
Accuracy and the nature of the deposit

No two deposits are identical


Essential the Competent Persons
meaning of Resource or Reserve
categories is provided
May be possible to report the same
accuracy for Measured Resources for
a stratiform base metal deposit over
a 3-month period
a nickel sulphide deposit over a
6-month period, or
A nuggetty gold deposit over
2-years of production
Accuracy, confidence & quality
Discussing reporting confidence
The Code terminology
Measured, Indicated, Inferred
What do we really mean? Proved and Probable
accuracy, uncertainty,
Discuss and where possible reliability, confidence,
confidence level, quality of
provide a statement of the data, quality of information,
relative accuracy and quality of reported results
confidence level of the
reported Resource and
Reserve categories, or

Provide at least a qualitative


discussion of the relevant
uncertainties
http://geovoices.geonetric.com/author/kevin-reiter/
Context - quantity & quality
Item

Reconciliation

Ore Reserves

Production Target on Measured + Indicated (ASX)


Increasing Confidence in
Quantity and Quality of Measured and Indicated Resources
Grade Information
Production Target on Inferred (ASX)
(JORC Code, ASX)
Inferred Resources

Foreign / Historical Estimate (ASX)

Exploration Target

Exploration Results
Early Exploration
Context - project stage

Project Development Stage (VALMIN, 2005)


Exploration Advanced Prospect Evaluation Development Operating
Areas Exploration

Resource Preliminary Final


Definition Development Development
Options Option
Context - study accuracy

Level of Technical-Economic Accuracy


Exploration Mineralisation Approximate Scoping Pre- Feasibility Final Operating
(pre-discovery) Delineation Mining Study Feasibility Study Engineering
(post- Parameters Study
discovery)
Context - project reporting
Example
Context project reporting example
Example retraction & clarification
Context project reporting example

Still to
update
Resources

Yet to define a Reserve;


Economics not available;
Development decision conditional

Not a
definitive
Feas Study
Project development & reporting context
References

Noppe, M A, 2014. Reporting and converting resources to reserves


how confident are we? In AusIMM Ninth International Mining Geology
Conference Proceedings, Adelaide August 2014, and In AusIMM Monograph
30, Mineral Resource and Ore Reserve Estimation, 2nd Edition.

Noppe, M A, 2015. A framework for presenting and benchmarking resource


projects. In preparation for the 2016 AusIMM Project Evaluation Conference.

Xstract, 2014. AusIMM Monograph 30 Roadshow Presentations by Noppe, M A.

Mark Noppe
mnoppe@srk.com.au

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