On 29 November, 2019, the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) published an updated version of its Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines. The update provides additional guidance on the reporting of a mineral resource and outlines how a mineral resource may meet the standard of ‘reasonable prospects for eventual economic extraction’ under these new guidelines.
According to the 10 May, 2014 CIM code, a “Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.” A resource must have economic potential in order to be considered a resource. In the past, when reporting mineral resources likely to be mined from underground, some practitioners simply used a cut-off grade that was reasonable for the region in question, taking into account exchange rates, commodity prices, metallurgical recovery and local operating costs, to tabulate the mineral resource. However, as stated in the 29 November, 2019 update:
“Practitioners should carefully review the results of all Mineral Resource estimates that utilize the application of an economic limit (such as a cut-off grade or value) only, because reliance on an economic limit alone may produce undesired results due to a selective reporting bias. Mineral Resource statements for underground mining scenarios must satisfy the “reasonable prospects for eventual economic extraction” by demonstration of the spatial continuity of the mineralization within a potentially mineable shape. In cases where this potentially mineable volume contains smaller zones of mineralization with grades or values below the stated cut-off (sometimes referred to as “must take” material), this material must be included in the Mineral Resource estimate.”
Similarly, for likely open pit mining scenarios, the CIM provides the following guidance:
“For Mineral Resources that are amenable to open pit mining methods, the ‘reasonable prospects for eventual economic extraction’ should consider not only an economic limit (such as the cut-off grade or value), but technical requirements as well (such as the wall slope angles). At a minimum, the constraints can be addressed by creation of constraining surfaces (pit shells) using either commercial software packages or manual methods. The constraining surfaces can then be used in conjunction with other criteria for the preparation of Mineral Resource statements.”
“For properties with currently producing operations, the derivation of the input parameters for creation of the constraining [surfaces/volumes] can be determined using factual data from the current operations. For properties that are in the discovery or study stage, the input parameters are best determined from first principles that are consistent with the conceptual operating scenario. All input parameters, methods, and techniques should be fully documented when preparing Mineral Resource statements”
“At a minimum, these constraints can be addressed by creation of constraining volumes. Constraining volumes should be used in conjunction with other criteria for the preparation of Mineral Resource estimates.”
“In many cases where the Mineral Resource estimate is prepared by digital methods, isolated and discontinuous blocks may be present that have grades or values above the stated cut-off grade or value. For underground mining methods, these blocks should be excluded from the Mineral Resource statement if their spatial continuity or their size is insufficient to achieve a potentially mineable shape above the nominated cut-off grade or value.”
The guidelines above are intended, in part, to prevent a situation analogous to the so-called ‘Spotted Dog’ effect, where isolated patches of measured or indicated resources occur within a larger area of indicated or inferred resources, respectively. This update to the CIM guidelines implies that small, isolated patches of mineralization above-cut-off have little chance of being economic and should not be reported as part of the resource while, at the same time, patches of mineralized material below cut-off within the resource should not be excluded.
Resource estimation practitioners and reporting issuers need to take this new guidance into account when preparing a mineral resource estimate in order to ensure their compliance with CIM Best Practices. Although the Canadian Securities Administrators (CSA) states, in the companion policy (43-101CP) to National Instrument 43-101, that “the Instrument does not specifically require the qualified person to follow the CIM best practices guidelines”, it insists that:
“a qualified person, acting in compliance with the professional standards of competence and ethics established by their professional association, will generally use procedures and methodologies that are consistent with industry standard practices, as established by CIM or similar organizations in other jurisdictions. Issuers that disclose scientific and technical information that does not conform to industry standard practices could be making misleading disclosure, which is an offence under securities legislation.”
It is essential for all resource estimation practitioners and reporting issuers to be aware of and keep up to date with Best Practice Guidelines in order to prepare an appropriate and credible mineral resource estimate.
 P.R. Stephenson et al., in a paper presented at the 6th International Mining Geology Conference in Australia held in August, 2006, defined ‘Spotted Dog’ outputs, as those “in which blocks of inferred resources or unclassified material separate blocks of measured and/or indicated resources, or individual drill holes are surrounded by annuli of measured and indicated resource blocks”. Micon would include in this definition “isolated blocks of mineral resources surrounded by unclassified material, those based upon a single drill hole, and/or those based solely on distance from a sample point”. To find out more, read Micon’s article The ‘Spotted Dog’ – Still an Issue in Mineral Resource Classification by Bill Lewis.