B4 2024 L8 Resources and Reserves Classification PDF

Linda Iaccheri School of Geosciences [email protected] GEOL3051A Block 4 L8: Resources and Reserves Classifications What do Resource & Reserve classifications mean?  Mine Value Chain Exploration 3D...

Linda Iaccheri School of Geosciences [email protected] GEOL3051A Block 4 L8: Resources and Reserves Classifications What do Resource & Reserve classifications mean?  Mine Value Chain Exploration 3D Ore Resource Modifying Ore Reserve Grade Control modelling Estimation Factors Estimation Production & Classification & Classification & Reconcilliation Reporting Reporting 2 What do Resource & Reserve classifications really mean in practical terms about what I can and can not do? 9 Greenfields = Prospecting rights Inferred Resources Brownfields = Mining permit/rights Limited geology evidence means you can do the following: Grassroots & Greenfields Exploration (prospecting): build your database & hunt opportunity 10 Greenfields = Prospecting rights Indicated Resources Brownfields = Mining permit/rights Competent person Confidence means you can do the following: Greenfields Exploration (prospecting); build your database; resource modelling; early mine design; sampling via drilling mostly 11 Greenfields = Prospecting rights Measured Resources Brownfields = Mining permit/rights Competent person 12 Greenfields = Prospecting rights Measured Resources Brownfields = Mining permit/rights 13  Measured Resources It means you really understand the resource model! Brownfields = Mining permit/rights Probable Reserves Competent person Mining Laws Minus Brownfields = Mining permit/rights Proven Reserves Competent person Mining Laws Minus I gave you the homework to look into the resources and reserves reports of a mining company… What do Resource & Reserve classifications really mean in financial terms? 9 Example 1 Goldfields South Deep Mine  Can you mine this So we can actually only make $ out of this as underground & Goldfields South Deep Mine before conversion make a profit or is this nonsense? Can you mine this and make a profit or is this nonsense? BUT, inferred can’t be mined so we can take that off, and indicated means we have more work to do and money to spend to get it to reserve  Be INDICATED relates to PROBABLE not PROVEN = Risk 5 and uncertainty Goldfields South Deep Mine  We therefore enter with 35,774 kt resources, and end Goldfields South Deep Mine up with 13,914 kt the engineer can use to design the mine. The MF ate 21,800 kt or 61.1% of what you started with. Grade dropped from 6.65 g/t to 5.82 g/t. Why? Dilution! 6 Resources Reserves So in $ terms for gold price at 2650 USD/oz (spot price 2/4/2024) how did the conversion of Measure Resources (35,774 kt @ 6.65 g/t ) into Mineral Reserves (13,974 kt @ 5.82 g/t ) cost to YOU as mining engineer financially? Please remember 8 Measured resources (35,774 kt @ 6.65 g/t ) 6.65 g/t / troy ounce (31.1g)= 0.214oz/ton 0.214oz/ton * 35774000 ton= 7.6 Moz 7.6 Moz * 2560 US$/oz= 19,456 M$ (19.5 Billion $) Proven Reserves (13,974 kt @ 5.82 g/t) 5.82 g/t / troy ounce (31.1g)= 0.187oz/ton 0.187oz/ton * 13974000ton= 2.6 Moz 2.6 Moz * 2650 US$/oz= 6,890 M$ (6.9 Billion $) Goldfields South Deep Mine So in $ terms for gold price of 2650 USD/oz, how did this cost you the engineer in terms financially in the conversion from resources to reserves: 35,774 kt @ 6.65 g/t = 19.5 billion USD 13,974kt @ 5.82 g/t = 6.9 billion USD With the remainder billion US$ are you able to operate your mine? TO MAKE MONEY $$$$$$$$ CUT BACK ON SPENDING FOR MODIFYING FACTORS 7 What do you think?  Mine Value Chain Exploration 3D Ore Resource Modifying Ore Reserve Grade Control modelling Estimation Factors Estimation Production & Classification & Classification & Reconcilliation Reporting Reporting 2 Different types of modelling in the mine value chain: GEOLOGICAL RESOURCE MODEL RESERVE ESTIMATION – ORE RESERVE MODEL MINING MODEL  Geological modeling is the applied science of creating GEOLOGICAL computerized (schematic) representations of the Earth's crust MODEL based on geophysical and geological observations made on and below the Earth’s surface.  RESERVE ESTIMATION – RESERVE MODEL GEOLOGICAL MODEL Economic factors such as costs and expected revenues vary with modifying factors. Cut-off grade and blocks location are then applied. The result is an economic block model. Some of the blocks in the model will eventually fall within the pit or mine, but others will lie outside, depending on the cut-off grade of the mined commodity. MINING MODEL Mine design, equipment, ventilation, service portals, access, stoping scheduling, etc, etc