Reporting Exploration Results, Resources and Reserves in Context

Transcription

1 Reporting Exploration Results, Resources and Reserves in Context Mark Noppe SRK Consulting AIG Seminar, 21 August 2015

2 Content Reporting Resources & Reserves and project development how clear are we? Really? Introduction Context is everything Codes, standards, guidelines and industry practice Accuracy, confidence and quality Context project reporting Conclusions

3 Introduction Mining is an inherently risky business We need transparent, consistent and balanced views of technical confidence Risks and opportunities exist for advancing an exploration prospect to a viable project, and operating a mine Xstract, 2014

4 Context Why feasibility studies or mine projects fail Mined ore grade is lower than expected Processing plant under-performs Development cannot keep up with planned schedule Technical factors resulted in feasibility study failure Geology, resource and reserve estimation: 17% Geo-technical analysis: 9% Metallurgical test work, sampling, mineralogy: 15% Geo-hydrology: 4% Mine design and scheduling: 32% Mining equipment selection: 4% Process plant design: 12% Cost estimation: 7% Some 50% of causes relate to geo technical data collection and interpretation How do we convey uncertainty?

5 Context Importance of Resources & Reserves Mineral Resources and Ore Reserves underpin strategic and actual investment and valuations Valuation buckets Reserve (mine schedule) Residual resources Exploration potential Xstract, 2014

6 Codes Reporting definitions What about: Development stages Timing Level of technical- economic study Level of confidence in all relevant factors Transparent, consistent, balanced reporting JORC Code, 2012

7 Codes Project development stages VALMIN Code, 2005 Project development stage Exploration areas Advanced exploration areas Pre-development / resource Development Operating Criterion Mineralisation may or may not be defined, but where a Mineral Resource has not been identified. Considerable exploration has been undertaken and specific targets identified. Sufficient work has been completed on at least one prospect to provide a good geological understanding and encouragement that further work is likely to result in the determination of a Mineral Resource. Mineral Resources and/or Ore Reserves were identified and estimated. A positive development decision has not been made. This includes properties where a development decision has been negative and properties are either on care and maintenance or held on retention titles. Committed to production but not yet commissioned or not initially operating at design levels. Mineral properties, in particular mines and processing plants, which were fully commissioned and are in production.

8 Industry practice Timeline of development stages Xstract, 2014

9 Industry guidelines - types of study After Hatch M E White & I Harrington, Feasibility Studies Scope and Accuracy. AusIMM Monograph 30.

10 Industry practice & guidelines Technical-economic study levels Accuracy and confidence levels not provided in reporting Codes Measure / Item Scoping Study Pre-feasibility Study Final Feasibility Study Cost accuracy ±25%-50% ±15-25% ±10-15% Cost contingency 30-50% 15-30% <15% Proportion of Engineering complete Resource categories Reserve categories <5% <20% <50% Mostly Inferred Mostly Indicated Measured and Indicated None Mostly Probable Proved and Probable Mining method Assumed General Optimised Mine design Scheduling None or high-level conceptual Annual approximation Preliminary mine plan and schedule 3-monthly to annual Detailed mine plan and schedule Monthly for much of payback period Risk tolerance High Medium Low M E White & I Harrington, Feasibility Studies Scope and Accuracy. AusIMM Monograph 30.

11 Context How it all fits together Project advancement Data quantity and data quality Technical/economic assessment - Resource & Reserve reporting Final engineering / Construction Commissioning Operating Noppe, 2014

12 Codes & guidelines Mineral Resources - reasonable prospects for eventual economic extraction assessment of all matters likely to influence the prospect of economic extraction including the approximate mining parameters not an inventory of all mineralisation drilled or sampled, regardless of cut-off grade, likely mining dimensions location or continuity. Economic assessment applies equally to Inferred Resources Eventual economic extraction does not provide a license to speculate Approximate mining parameters are not necessarily the same as Modifying Factors required for defining an Ore Reserve

13 Codes & guidelines Ore Reserves timing of study & reporting The studies at Pre-Feasibility or Feasibility level demonstrate that, at the time of reporting, extraction could reasonably be justified Applicable if longer term price trends, market conditions, political, environmental, social or infrastructure issues, legislation or approvals, or funding issues that may prevent the intended project being developed in the time frame considered in the relevant technical study If re-evaluation indicates that the Ore Reserves are no longer viable, the Ore Reserves must be reclassified as Mineral Resources or removed from Mineral Resource/Ore Reserve statements

14 Accuracy, confidence & quality Accuracy and the nature of the deposit No two deposits are identical Essential the Competent Person s meaning of Resource or Reserve categories is provided May be possible to report the same accuracy for Measured Resources for a stratiform base metal deposit over a 3-month period a nickel sulphide deposit over a 6-month period, or A nuggetty gold deposit over 2-years of production

15 Accuracy, confidence & quality Discussing reporting confidence What do we really mean? Discuss and where possible provide a statement of the relative accuracy and confidence level of the reported Resource and Reserve categories, or The Code terminology Measured, Indicated, Inferred Proved and Probable accuracy, uncertainty, reliability, confidence, confidence level, quality of data, quality of information, quality of reported results Provide at least a qualitative discussion of the relevant uncertainties

16 Context - quantity & quality Item Reconciliation Ore Reserves Increasing Confidence in Quantity and Quality of Grade Information (JORC Code, ASX) Production Target on Measured + Indicated (ASX) Measured and Indicated Resources Production Target on Inferred (ASX) Inferred Resources Foreign / Historical Estimate (ASX) Exploration Target Exploration Results Early Exploration

17 Context - project stage Exploration Areas Project Development Stage (VALMIN, 2005) Advanced Prospect Evaluation Development Operating Exploration Resource Definition Preliminary Development Options Final Development Option

18 Context - study accuracy Exploration (pre-discovery) Mineralisation Delineation (postdiscovery) Level of Technical-Economic Accuracy Approximate Scoping Pre- Feasibility Mining Study Feasibility Study Parameters Study Final Engineering Operating

19 Context - project reporting

20 Example

21 Context project reporting example

22 Example retraction & clarification

23 Context project reporting example Still to update Resources Yet to define a Reserve; Economics not available; Development decision conditional Not a definitive Feas Study

24 Project development & reporting context

25 References Noppe, M A, Reporting and converting resources to reserves how confident are we? In AusIMM Ninth International Mining Geology Conference Proceedings, Adelaide August 2014, and In AusIMM Monograph 30, Mineral Resource and Ore Reserve Estimation, 2nd Edition. Noppe, M A, A framework for presenting and benchmarking resource projects. In preparation for the 2016 AusIMM Project Evaluation Conference. Xstract, AusIMM Monograph 30 Roadshow Presentations by Noppe, M A. Mark Noppe mnoppe@srk.com.au