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

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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 1 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 2 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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