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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)
    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 1 of 7 , Feb 26, 2002
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      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




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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 2 of 7 , Feb 26, 2002
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        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 3 of 7 , Feb 27, 2002
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          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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