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RE: AI-GEOSTATS: What are appropriate measures of reliability for Mineral Resource and Ore Reserve estimates?

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  • Farquhar, James (HI)
    I m not sure that any one parameter can provide the measure. Resources can be classified on 1. drill data and support (quality of the drill logs, sampling,
    Message 1 of 7 , Feb 26, 2002
      I'm not sure that any one parameter can provide the measure. Resources can
      be classified on

      1. drill data and support (quality of the drill logs, sampling, assays,
      standards and duplicates);
      2. drill hole spacing (adequacy for the resource type, eg less than
      variogram major range);
      3. structural complexity;
      4. interpretation quality, strings and triangulations (how well do the
      geology strings fit the drilling and the regional geology);
      5. mineralisation type
      6. continuity of grade;
      7. anomalies (inconsistent or contradictory data);
      8. statistics results eg variance, CV, nugget effect, short range
      structures, neighbourhood test results;
      9. estimation method;
      10. run flag;
      11. kriging variance (relatively high or low within the strand);
      12. tonnage / metre intersected in cases of sparse drilling;
      13. confidence intervals (via gaussian transforms);
      14. conditional simulation results.

      And there are probably more. Our classification is based on a (subjective?)
      assessment of the first 10 above. And we also recognise that one poor
      measure can destroy confidence eg no amount of good interpretation or
      statistics can make up for poor sampling - the deposit will have a low
      classification.

      Hope this makes sense - and as Clint Eastwood says 'works for me!'

      Jim
      ph 08 9327 2263
      fax 08 9327 2294


      -----Original Message-----
      From: Isobel Clark [mailto:drisobelclark@...]
      Sent: Wednesday, 27, February 2002 1:40
      To: Bill Shaw
      Cc: ai-geostats@...
      Subject: Re: AI-GEOSTATS: What are appropriate measures of reliability
      for Mineral Resource and Ore Reserve estimates?


      Bill

      There are several presentations being given this week
      at the APCOM in Phoenix. You might want to look at the
      proceedings and check through those.

      One of the papers I have heard so far compares three
      criteria and shows how they affect a particular case
      study. The three are a weighted distance criterion, a
      kriging variance and an information measure. In this
      particular case, kriging variance came out bottom.

      Pity, because that's what I use!
      Isobel

      Isobel Clark
      http://uk.geocities.com/drisobelclark

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    • Isobel Clark
      Jim I totally agree with your principles. The main difference, in operation not philosophy, is that most (good?) practitioners include all of the above
      Message 2 of 7 , Feb 26, 2002
        Jim

        I totally agree with your principles. The main
        difference, in operation not philosophy, is that most
        (good?) practitioners include 'all of the above'
        before getting to a classification stage.

        For example, the selection of which blocks to estimate
        in the first place is done on the basis of all
        existing geological knowledge plus assumptions about
        continuity etc. So, a block is not even estimated
        unless it is pretty adequately known anyway. The use
        of a single criterion to distinguish the line between
        measured and indicated resources is almost a formality
        and probably depends more on the target audience than
        any other motivation.

        Isobel




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      • Farquhar, James (HI)
        Isobel While your comment a block is not even estimated unless it is pretty adequately known is valid, practised on many sites, and useful eg used to justify
        Message 3 of 7 , Feb 26, 2002
          Isobel

          While your comment "a block is not even estimated unless it is pretty
          adequately known" is valid, practised on many sites, and useful eg used to
          justify more drilling, it is not always practical. Some software such as
          Whittle cannot cope with unestimated blocks, so we estimate a grade for them
          (eg by using larger searches), but they are classified as lower confidence.
          If not estimated, there is still a need to have some statement of this
          resource.

          Related to this, is what I term the 'salt& pepper' problem. If blocks are
          assigned a classification based on individual parameters, it can result in
          a mosaic of Inferred, Indicated and Measured blocks. While this may be
          absolutely, mathematically, correct, it too is impractical (for us anyway).
          Hence our strategy of making a judgement based on many parameters, and
          applying the classification to a 'large' contiguous area.

          I am very pleased to see this topic raised as some guidelines are long
          overdue.

          Jim
          ph 08 9327 2263
          fax 08 9327 2294


          -----Original Message-----
          From: Isobel Clark [mailto:drisobelclark@...]
          Sent: Wednesday, 27, February 2002 12:32
          To: Farquhar, James (HI)
          Cc: ai-geostats@...; Bill Shaw
          Subject: RE: AI-GEOSTATS: What are appropriate measures of reliability
          for Mineral Resource and Ore Reserve estimates?


          Jim

          I totally agree with your principles. The main
          difference, in operation not philosophy, is that most
          (good?) practitioners include 'all of the above'
          before getting to a classification stage.

          For example, the selection of which blocks to estimate
          in the first place is done on the basis of all
          existing geological knowledge plus assumptions about
          continuity etc. So, a block is not even estimated
          unless it is pretty adequately known anyway. The use
          of a single criterion to distinguish the line between
          measured and indicated resources is almost a formality
          and probably depends more on the target audience than
          any other motivation.

          Isobel




          __________________________________________________
          Do You Yahoo!?
          Everything you'll ever need on one web page
          from News and Sport to Email and Music Charts
          http://uk.my.yahoo.com


          ----------------------------------------------
          This email (including all attachments) may be confidential. If you are not
          the intended recipient, you must not use the information contained in it.
          If you have received this email in error, please delete the email and notify
          the sender.

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        • Isobel Clark
          Jim, I may be intolerant in this, but I do not accept software limitations as justification for making policy decisions. There should be no reason why you
          Message 4 of 7 , Feb 26, 2002
            Jim,

            I may be intolerant in this, but I do not accept
            software limitations as justification for making
            policy decisions. There should be no reason why you
            cannot flag the 'dummy' blocks as inferred.

            > Related to this, is what I term the 'salt& pepper'
            > problem. If blocks are
            > assigned a classification based on individual
            > parameters, it can result in
            > a mosaic of Inferred, Indicated and Measured blocks.
            It is possible to classify your resources on the basis
            of larger units than those used to (say) optimise an
            open pit. Anglo-American, for example, generally use
            the forst two or three year's production as a single
            unit and classify that as proven/probable etc
            reserves.

            A mosaic of differently classified blocks is, surely,
            an indication that the overall sampling is inadequate
            to characterise the deposit.

            > I am very pleased to see this topic raised as some
            > guidelines are long overdue.
            I'm sure we all welcome this extension to the current
            debate. Perhaps it should be pointed out that Steve
            Henley has been running a 'chat' facility for almost
            two years on the same topic and getting little
            response.

            Isobel

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          • Marcel Vallée
            Bill I was not yet aware of the JORC call for submissions on this subject. Thanks for the information. See my responses in between the key paragraphs of your
            Message 5 of 7 , Feb 27, 2002
              Bill

              I was not yet aware of the JORC call for submissions on this
              subject. Thanks for the information.

              See my responses in between the key paragraphs of your
              text.

              I have published a considerable amount of material on
              these subjects, and the following comments only scratch
              the top of the subject. Some of that material, I could email
              to you but the printed material would be more convincing.
              So I need your address.

              Good luck in this endavour

              Marcel Vallée Eng., Geo.

              Géoconseil Marcel Vallée Inc.
              706 Routhier Ave
              Sainte-Foy, Québec G1X 3J9
              Canada
              Tel: (1) 418 652 3497
              Fax: (1) 418 652 9148
              Email: vallee.marcel@...

              =======================================

              02-02-25 20:07:59, "Bill Shaw" <wshaw@...>
              wrote:
              >
              > From: "Bill Shaw" <wshaw@...>
              >
              > To: <ai-geostats@...>
              > Subject: AI-GEOSTATS: What are appropriate
              > measures of reliability for Mineral Resource and Ore
              > Reserve estimates?
              > Date: Tue, 26 Feb 2002 09:07:59 +0800
              > Organization:Golder Associates
              >
              > Greetings
              >
              > You may be aware that in Australia the Joint Ore Reserve
              > Committee (JORC) s called for submissions regarding
              > the next revision of the JORC Code. The current JORC
              > Code effective September 1999) can be downloaded
              > from www.jorc.org and the call for submissions is also on
              > that site.
              >
              > I am involved in the teams looking at the definitions for
              > Mineral Resources and for Ore Reserves.
              >
              > Frequently questions are raised about the expected
              >reliability of estimates for Resources classified as
              > Measured, Indicated or Inferred or for Ore Reserves
              > classified as Proved or Probable. There are a number of
              > arguments, both for and against, regarding attempting to
              > quantify the accuracy (and precision?) of such estimates.
              >
              > The Joint Ore Reserve Committee is considering whether
              > it may be timely to introduce some discussion into the
              > Code regarding the pros and cons of such quantification
              > of expectations.
              >
              > Not all such arguments for and against quantifying the
              > reliability of estimates are technical, for example:

              > · FOR - The primary purpose of the Code is to
              ensure Public Reports best inform investors. It thus
              appears important that similarly classified
              estimates have similar ?reliability? even if such reliability
              can only be broadly generalised, rather than quantified.
              >
              > · AGAINST - The JORC Code is not currently
              prescriptive and relies on the Competent Person making
              decisions about many issues including
              >
              Comment by MV: --------------------------------------------------------

              Complete non-prescriptivity raises a basic issue. Can one
              reasonably expect that results may be comparable
              between two QPs or CPs or different projects under this
              condition. My opinion is that objectives and some basic
              requirements basic requirements should be formulated to
              ensure a minimum amount of focussing on what is actually
              required in a particular case, and still leave the QP / CP a
              considerable of authonomy in the practice of his profession.


              --------------- End of Comment ------------------------

              > Transparency, Materiality and Competence (all defined
              > in the Code).
              > Quantification of ?expected reliability? presumably
              > requires estimates of tonnes and grades to be made
              > using a method that would allow ?errors? to be also
              > estimated.
              > This may make the Code more prescriptive if such errors
              > are only provided by certain estimation methods.

              ----------------- Comment by MV ---------------------

              Non prescriptivity again! It this part of some sort of a mining
              gospel or koran!

              ------------------End of Comment ---------------------

              > Either way, if the JORC Code discusses this issue it must
              > get it right. For example it is not very meaningful to
              > suggest that Measured Resources are within +/- 10%? if
              > such a statement can never be tested or demonstrated.
              > Thus it has been suggested that confidence limits and
              > parcel size must also be stated.

              --------------Comment by MV -------------------------

              All solutions need not be complicated. In most cases it
              helps to try and break down the problem first. After the
              recent crop of revisions, we have an international
              resource/reserve system but we still have the same
              problems because, in my opinion, the people that mattered
              wanted to have a SIMPLE and EASY TO APPLY and NON
              PRESCRIPTIVE REPORTING system, not an inventory
              system.

              What sort of objectives were present when juniors were, in
              practice given the opportunity to make early ore reserve
              announcements that are «economically mineable» on the
              basis of «at least a preliminary feasibility study» (Canada)
              or , in several jurisdictions like Australia, «appropriate
              assessments that may include feasibility studies».

              Feasibility studies that, under "generally accepted industry
              practice" are required to launch a mining project, have
              been swept under the rug and are not even defined in
              recent definitions systems. Now an issuer (some are also
              very efficient promoters) could announce an "economically
              mineable reserve» that may never reach production!

              Is this contributing to adequate information to the investors?
              To more efficient mine project development?

              - - - End of comment - - -
              >
              > We would appreciate your considered opinion on this
              > specific issue: What are appropriate measures of
              > reliability for Resource and Reserve estimates and
              > how they are currently used by practitioners? I will
              > undertake to collate submissions, to circulate these and >
              > to prepare an overview for JORC. Please
              > circulate this email to any colleagues that you believe
              > are interested in this issue.

              - - - - - - Comment by MV - - - - - - - -

              For now, I would start by saying that the present resource /
              reserve systems, have been designed without taking into
              accounts the fact that mineral resource and ore reserve
              statements, are primarily INVENTORIES for work purposes
              BEFORE they become REPORTING documents, despite
              the fact that you've got to estimate it before you report it.
              Neither the formulations nor the requirements for reporting
              carry any objetive related nor quantitative requirement.

              Here is an example how useful quantitative requirements
              may be worked in with limited prescriptivity and without
              significant hardship.

              More than 25 years ago, as Chief Geologist, Mines for the
              SOQUEM group, I made minor adaptations to the then
              current Canadian reserves definitions (proven, probable
              possible) to use in our operating mines and advanced
              projects. The chief geologist at the Louvem base metal
              mine (his name is Réal Bourassa) had read the revised
              text and was prepared for my next visit to Val d'Or..

              "Marcel, your definitions are OK, but we have a problem:
              they only provide two levels for delimined reserve (proven
              and probable) , but we have four levels of information in the
              mine with, in addition, the possible reserve level.

              "In the proven category, we have drill proven ore on a 7.5 m
              section spacing and we develop for long hole open stoping
              or shrinkage stoping - undercut at the base overcut at the
              summit, and raises, plus drilling at 12f ft in the ends of zones
              to check projections. Our probable category is based on
              two drill section spacings grids, 15m and 30 m. Would it be
              possible to adapt "your definitions" to take all this into
              account. We did!

              For inventory purposes, we subdivided the proven and
              probable levels to have four categories: «proven
              developed », «proven drilled», «probable 1 and probable
              2». These could be regrouped for reporting, but in such
              cases, I insisted on supplying with each global category the
              information regarding drilling grid size and the percentage/
              and grade for each grid dimension. We rapidly found that
              this system made the work of the geologist easier to
              understand for mining engineers, mine supers, managers
              and directors, as wall as easier to manage for the
              geologist.

              Another of our operating mines, with much larger and
              multiple zones, was a 50/50 joint venture. . The mine
              geologist had more leeway, as the partner was the mine
              operatior and, despite my advice, he decided that is was
              not usefull to distinguish between the probable 1 and
              probable 2 categories. After several years of exploring for
              new zones on a 60 m spacing and a first filling next to
              promising intersections at 30 m spacing, the area
              manager refused to grant additional exploration /
              delineation budgets in that sector, as he could not see from
              the reserve statements any significant progress in the past
              year or two. I was called in. This problem was solved fairly
              easily by recompiling the last two or three reserve
              statements with the probable sub-categories, to show the
              progress in moving large tonnages from probable 2 to
              probable 1. Being a reasonable person, he granted the
              budgets required to carry on.

              Whether with four or with only the two current information
              levels, more information could be available to the investors,
              other industry professionnals managers and mining
              analysts that no resource/reserve information should be
              published without giving a «comprehensive summary» (!) of
              the sampling information network includind number of drill
              holes and samples, and all grid spacings for each
              category wit. Sorry, but somebody has to be prescriptive
              sometime when information needs to be provided.

              This does not mean to be inflexible or unadapted. One
              question I have frequently been asked is: What is the
              requirement for proven ore? My answer is objective based
              and generic:

              ««The sampling grid for proven ore required must be
              adapted to the deposit size, mineralization grade and
              distribution, and be adequate to support the engineering,
              marketing and economic studies required for project
              feasibility for a new project, for efficient mine extraction,
              mineral processing/ metallurgy for specific mining and
              processing methodsin an operating mine. »»

              This somewhat prescriptive, but implementation certainly
              requires professional experience and judgement as well as
              team work.

              In summary, it probably would not be worthwhile to revise
              the JORC guidelines, if they are to be kept non-prescriptive
              in the present fashion and if the people involved do not
              introduce the essential concepts required.

              These include i) a more adequate model of the
              development and mining process is required, ii) both
              global and phase objectives. From these objectives, can
              be developed explicit but fairly high level requirements that
              will help the QPs and CPs to carry out their professional
              responsibilities more efficiently.

              ------- End of Response --------------------

              > Regards,


              > Bill Shaw
              > wshaw@...
              >





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