The modern mining history of every country is different but, as a result of globalization, mining and exploration companies operate in a global capital and commodity market. Public companies from northern Russia to southern in Chile have the obligation to regularly inform their investors, government and regulators about their achievements, reporting discoveries and troubles, issuing annual and/or quarterly reports, press releases, web page postings and public presentations. But how to compare exploration results and mineral resources reported in different jurisdictions?
1. CRIRSCO Reporting Systems, Codes and Guidelines
Since the 1980s there have been several attempts to develop “reporting systems” and “codes” to define the various categories of resources and reserves and to certify mineral assets. The existing mineral resource and reserve classification systems were developed by governments and scientific organizations, such as the U.S. Bureau of Mines and U.S. Geological Survey, Russian State Commission on Mineral Resources (GKZ), Chinese Mineral Resource and Reserve Evaluation Centre etc. The objective of all these systems was to classify identified economic and non-economic mineralization, and identify the potential mineral wealth of a project or a country for the near future. In the 1990s Australian and US geologists and mining professionals took the lead on preparing a code for reporting exploration and mining results designed to inform investors and potential investors. Many mining and geological associations in Canada, South Africa, Europe and Latin America followed and prepared their own codes, similar to the existing ones. In 1997, a Committee for Mineral Reserves International Reporting Standards (CRIRSCO) was created, which is a part of the Council of Mining and Metallurgical Institutes (CMMI), with the main objective of unifying and amalgamating the existing codes and guidelines for public disclosure.
In the same year, the participants reached an agreement (the Denver Accord) for the description and definitions of exploration and mining projects. The latest update of CRIRSCO (2012) gives definitions of the following terms: Public Report, Competent Person, Modifying Factors, Exploration Target, Exploration Results, Mineral Resource, Inferred Resource, Indicated Resource, Measured Resource, Mineral Reserve, Probable Reserve, Proved Reserve, Scoping Study, Pre-Feasibility Study, and Feasibility Study. It was decided that mineralized material must be classified into two major categories: Mineral Resources and Mineral Reserves. Every category has sub-categories, respectively Measured, Indicated and Inferred Mineral Resources, and Proved and Probable Mineral Reserves, based on economics and geological confidence (See Figure 1).
General Relationship between Exploration Results, Mineral Resources and Mineral Reserves
Source: The 2004 Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves (The JORC Code)
1.1 CRIRSCO Members
The CRIRSCO members have their respective National Reporting Standards that are very close to the CRIRSCO template, but some of them may have another reserve and resource classification for reporting to the government. The CRIRSCO codes do not change, supersede or invalidate any country, state or provincial Mining Code, Mining Law or any other laws.
Current CRIRSCO members and their reporting codes are:
- Australia and Australasia – JORC Code (2012) – the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC)
- Brazil – CBRR Guide – Brazilian Resource and Reserve Commission
- Canada – CIM Definition Standards for Mineral Resources and Mineral Reserves (CIM)
- Chile and Peru- Commission Minera de Chile (2004) Certification Code for Exploration Prospects, Mineral Resources and Ore Reserves
- Europe and United Kingdom – PERC Code – Pan-European Reserves and Resources Reporting Committee (PERC)
- Kazakhstan – KAZRC – Kazakhstan Reporting Code
- Mongolia – MRC Code (2014) – Mongolian Code for Public Reporting of Exploration Results, Mineral Resources and Reserves
- Russia – NAEN Code – Russian Code for the Public Reporting of Exploration Results, Mineral Resources and Mineral Reserves
- South Africa – SAMREC (2016) -the South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC)
- United States – SME Guide for Reporting Exploration Results, Mineral Resources, and Mineral Reserves has been adopted by the Society for Mining, Metallurgy, and Exploration Inc. (SME) in the USA
1.2 JORC Code
The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (‘the JORC Code’) is a professional code of practice that sets minimum standards for public reporting in Australia and Australasia. It provides a mandatory system for the classification of Exploration Results, Mineral Resources and Ore Reserves according to the levels of confidence in geological knowledge and technical and economic considerations in public reports.
1.3 CIM Definition Standards
The CIM Definition Standards on Mineral Resources and Reserves introduced definitions and guidance for the public disclosure of mineral resources and mineral reserves and mining studies used in Canada by Canadian public reporting mining companies, whether their deposits are in Canada or elsewhere in the world. They were adopted by the Canadian Securities Administrators in 2001 and incorporated into National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101). The latest update in 2014 aligned the CIM Definition Standards for all public disclosure of geological and technical information for mineral exploration and mining projects with the principles and definitions of the CRIRSCO template. The category to which a Mineral Resource (Measured, Indicated and Inferred) or Mineral Reserve (Proven and Probable) is assigned depends on the level of confidence in the geological information available on the mineral deposit; the quality and quantity of data available on the deposit; the level of detail of the technical and economic information which has been generated about the deposit, and the interpretation of the data and information.
1.4 SME Guide
The SME Guide for Reporting Exploration Results, Mineral Resources, and Mineral Reserves has been adopted by the Society for Mining, Metallurgy, and Exploration, Inc. (SME) in the USA and is used by members of this organization. The latest SME Guide (2014) is recommended as a minimum standard for reporting Exploration Results, Mineral Resources and Mineral Reserves for public and private purposes. In terms of the Guide, Public Reports are reports prepared for the purpose of informing investors or potential investors and their advisers on Mineral Reserves (but not exploration results or mineral resources).
Under the current system the mining and exploration companies have to comply with the Industry Guide 7 of the US Securities and Exchange Commission (SEC), as distinct from the SME Guide. On June 16, 2016 the SEC announced that it had proposed new rules to modernize the disclosure for mining properties by aligning them with current industry and global regulatory practices and standards, and that the proposed rules would rescind SEC Industry Guide 7. This will align the SEC practices with the rest of the major global stock exchanges.
1.5 NAEN Code
The NAEN Code, was developed by the Society of Experts on Mineral Resources in close cooperation with the Russian State Commission of Reserves (GKZ) and with members of CRISCO in 2011. The NAEN Code is based on the CRIRSCO Public Reporting Template and was updated in 2014. It currently provides the Guidelines on the Alignment of Russian Minerals Reporting Standards and a mapping of the Russian and the CRIRSCO categorization of mineral resources and mineral reserves (Figure 2). It is recommended that the Competent Person (CP) for the project use the proposed alignment guidelines to report exploration and mining results in public disclosures. The proposed “mapping” facilitates the conversion of the Russian classification categories of Resources and Reserves, used for state and corporate reporting in the GKZ (Categories A, B, C1, C2) to CRIRSCO categories (Figure 3), commonly used for public disclosure, which is simple and understandable for the investor community.
Recommended Conversion of the Russian GKZ System to CRIRSCO Exploration Results, Mineral Resources and Mineral Reserves
Source: Russian Code for Public Reporting of Exploration Results, Mineral Resources, Mineral Reserves (NAEN Code) (2011)
For example, the Russian classification system prescribes the grid density for drilling and trenching, based on the type of deposit, size, shape and complexity. The drilling and trenching should be carried out on a grid with the prescribed density. Obviously a magnetite iron deposit requires less dense drilling than a vein gold deposit. Huge amounts of lithological, mineralogical and geochemical data are interpreted and summarized in geological and technical-economic reports, filed at a local and central state committee or directorate. The density of the drilling and level of detail of knowledge about the mineral prospect determines the “reserve category”. After applying mining parameters such as cut-off grade, minimum thickness of the ore body, maximum thickness of the waste and minimum grade per mining unit, the mineralized material is classified as fully explored and ready for mining development, an evaluated and prognostic “reserve”. Every geological and technical-economic report with resources or reserves is reviewed by a technical committee on mineral resource and reserve evaluations. If the committee decides that the project has a significant amount of mineralized material the resource/reserve is approved and included in the mineral inventory of the country.
Conversion of the Russian GKZ System to CRIRSCO Mineral Resources and Mineral Reserves
Source: S. Henley (2010), presentation at CRIRSCO meeting.
Categories A, B, C1 and C2 were widely used for resource classifications in Mongolia, the Kirgiz Republic, Armenia and other countries in Eastern Europe and Central Asia. The NAEN Guidelines can be used for conversion of the resources from historical geological reports from those countries and also from China.
One of the main differences between the CRIRSCO Reporting Standards and the classification systems for State Regulatory purposes is that CRIRSCO standards are non-prescriptive. The Competent or Qualified Person (CP or QP) for the project can design and implement exploration programs, following the best exploration practices, but having the freedom to choose appropriate exploration techniques, field activities and analyses. The Resource/Reserve estimation parameters and procedures are selected by the CP or QP in regards to the implementation of appropriate exploration programmes. The code does not recommend observation point density, drill hole spacing or any other metrics. The resource categories depend on the CP’s or QP’s experience, technical skills, and professional judgement.
2. Other International and Local Reporting Systems
Some governments require that the mineral exploration programs follow a series of formal stages that include reconnaissance exploration, grass roots exploration, advanced exploration and engineering studies within a fixed timeframe. The Russian, Chinese and some other State mineral resource classifications are very prescriptive and strict. The respective ministry or state bureau of geology and/or mining have published guidelines with general specifications for geological exploration for mineral deposits with detailed instructions for sampling, trenching and drilling, density of the exploration grid and corresponding resource category. The objective of this type of reporting system is to have a consistent, transparent and unambiguous categorization of the mineral reserves, so that the local government can make decisions and collect the appropriate amount of royalties.
In 1997, the United Nations Economic Commission for Europe (UNECE) developed another international reporting system – United Nations Framework Classification for Fossil Energy and Mineral Resources (UNFC). The new system was approved by the Expert Group on Resource Classification and Economic Commission for Europe (United Nations), international scientific organizations, intergovernmental bodies, professional associations and representatives of the private sector, which has been updated in 2004 and 2009.
The UNFC classification is based on a generic, principle-based system, in which quantities are classified on the basis of the three fundamental criteria; economic and social viability (E), field project status and feasibility (F), and geological knowledge (G), using a numerical and language independent coding scheme. Combinations of these criteria create a three-dimensional system (See Figure 4).
UNFC-2009 Categories and Examples of Classes
Source: United Nations Framework Classification for Fossil Energy and Mineral Reserves and Resources (2009)
The E axis shows the socio-economic sustainability and evaluates the favourability of social and economic conditions in establishing the commercial viability of the project, including consideration of market prices, legal, regulatory, environmental and contractual conditions.
The F axis shows the progress of feasibility study for exploration or mine development, the maturity of studies and additional work required to implement mining plans or development projects. They range from early exploration through to advanced exploration, mine development, production and sales of the final product (i.e., gold, copper, etc.). The F axis reflects standard project stages and management principles.
The G axis is based on the confidence in the geological knowledge and potential recoverability of the quantities.
The categories and sub‐categories are the building blocks of the system, and are combined in the form of “classes”.
The current Chinese State Mineral Resource and Reserve System is based on the UNFC classification (See Figure 5). In 1999, the Chinese Mineral Resource and Reserve Evaluation Center compared the CRIRSCO resource and reserve categories and the UNFC (Chinese or Indian) reserve categories. There is not a complete overlap between CRIRSCO categories and the UNFC categories, but based on the amount of exploration work and geological knowledge G1, G2 and G3 categories are almost equivalent respectively to Measured, Indicated and Inferred categories (See Figure 5).
Chinese Mineral Resource and Reserve System
Source: Mineral Resource and Reserves Evaluation Centre, Ministry of Land and Resources, China (2009)
There is agreement to incorporate the CRIRSCO definitions into the UNFC. While few individual companies report their resources and reserves using the UNFC, the system is accepted as a basis for reporting by some governments, including those of China, India and some Eastern European countries.
3. Micon’s Experience
Micon has worked in many different jurisdictions, with almost all types of mineral deposits. Our understanding of the correlation between different resource categories, defined in different standards, is illustrated in Table 1. Our experience shows that diligent geological exploration and mineral resource estimation will generally be recognized and accepted as satisfactory by regulators and investors.
Comparisons between CRIRSCO and Other Resource and Reserve Classifications