B4_2024_L6 Ken Lomberg Lecture Wits Sept 2024 PDF

Introduction to the SAMREC Code and Mineral Resource Reporting Presenter Ken Lomberg Pr. Sci. Nat. Date – September 2024 Previous Chairperson of SAMREC Committee Ken Lomberg (Pr.Sci.Nat.) Director (Geology and Resources)...

Introduction to the SAMREC Code and Mineral Resource Reporting Presenter Ken Lomberg Pr. Sci. Nat. Date – September 2024 Previous Chairperson of SAMREC Committee Ken Lomberg (Pr.Sci.Nat.) Director (Geology and Resources) Pivot Mining Consultants [email protected] 30 years experience Background To promote International Best Practice in the Reporting of Mineral Exploration Results, Mineral Resources and Mineral Reserves Background In Australia in 1960’s concern about unacceptable reporting practices - the so-called “Poseidon nickel boom and bust” Australian Stock exchanges responded with proposal to self-regulate, resulting in the Australasian Joint Ore Reserves Committee (JORC) established 1971 In February 1989, JORC released the first version of the JORC Code US reporting code derived from Hoover’s work in the 1930’s published initially by US Geological Survey now SEC Industry Guide 7 Mount Windarra Mine The diamond head drill tower. Events during the 1990’s such as the BreX affair (1997) cause re-examination by the regulatory bodies The Enron, Shell and other events in the US have lead to greater scrutiny by the US SEC of company reporting, with significant penalties for misrepresentation  Bre-X Scandal Canadian Junior based in Calgary Au Deposit Busang, Indonesia May 1998 – Bre-x incorporated at Can$0.30 (Alberta) by David Walsh 1992-1993 – Exploration at Busang, Indonesia on advice of John Felderhof Michael de Guzman hired as Exploration Manager - Initial drilling 1994-1995 Drilling ramps up and share moves to $14.87 by July 1995 Oct 1995 – 10MOz Au maybe 30 Moz Au Analysts bullish buy – price goes to $50 April 1996 – lists on TSX and hits $180 May 10,1996 – Stock at $280 June 1996 – Announces 39 Moz Au July 1996 – Announces 47 Moz Au Feb 1997 – Agreement reached with Indonesian government, Indonesian investors and Freeport to develop mine Feb 1997 – estimate at 71 Moz Au Walsh says as much as 200 Moz Au  Bre-X Scandal 12 March 1997 - Due Diligence by Freeport – only minor amounts of Au Demands to meet De Guzman about sampling 19 March 1997 – De Guzman falls to his death from a helicopter over the Indonesian jungle. Reports say suicide note is found, but speculation swirls that de Guzman was either murdered or may even have faked his death 21 March 1997 - Indonesian paper first to report that Busang may not contain much gold; Bre-X shares drop 13% to $152 26 March 1997 - Bre-X trading halted after report issued by Freeport-McMoRan indicates Busang deposit contains "insignificant amount of gold." 27 March 1997 - Bre-X shares plunge to $2.50 when trading resumes; volume crashes TSX computers as panicked investors sell. 5 May 1997 - Report by independent mining firm confirms there's virtually no gold in Busang, saying samples were tampered with. Report calls the Bre-X debacle as being "without precedent in the history of mining anywhere in the world." The following day, Bre-X shares fall to 80 cents and continue to plunge. The stock is soon delisted. Investors lose everything; some Canadian pension funds are out tens of millions of dollars.  Bre-X Litigation Nov 1997 – Walsh and VP McAnulty resign June 1998 – Walsh dies of a brain aneurysm 11 May 1999 - Ontario Securities Commission lays four counts of illegal insider trading and four counts of authorizing false press releases against Felderhof. The next day, the RCMP announces there isn't enough evidence to lay any criminal charges in the Bre-X fraud. But several class-action lawsuits against former Bre-X directors proceed. 31 July 2007 - Felderhof is acquitted of all eight charges of Felderhof De Guzman illegal insider trading and approving false press releases.  GLOBAL REACH, PROVIDING A SINGLE VIEW Canada – Russia – OERN CIM Europe – PERC Kazakhstan - KAZRC USA – Mongolia – MPIGM SME Turkey - UMREK Colombia Indonesia - – KOMBERS- CCRR KCMI Brazil – CBRR Chile – South Africa – Comisión SAMREC Australasia – Minera JORC  15 CRIRSCO Members CRIRSCO comprises fourteen self regulating national bodies JORC (Australasia) 1994 CBRR (Brazil) 2015 CIM (Canada) 1994 Comision Minera (Chile) 2003 CCRR (Colombia) 2018 PERC (Europe) 1994 (as IMM Code) The National Kombers-KCMI (Indonesia) 2017 Reporting Organizations KAZRC (Kazakhstan) 2016 CRIRSCO (NROs) MPIGM (Mongolia) 2014 NACRI (India) 2019 NAEN (Russia) 2011 SAMCODES (South Africa) 1994 UMREK (Turkey) 2018 SME (United States of America) 1994 The mining industry is a vital contributor to national and global economies; never more so than at present with soaring demand for the commodities that it produces. It is a truly international business that depends on the trust and confidence of investors and other stakeholders for its financial and operational well-being. Unlike many other industries, it is based on depleting mineral assets, the knowledge of which is imperfect prior to the commencement of extraction. It is therefore essential that the industry communicates the risks associated with investment effectively and transparently in order to earn the level of trust necessary to underpin its activities. (CRIRSCO Website)  Why was CRIRSCO created? "To promote International Best Practice in the Reporting of Mineral Exploration Results, Mineral Resources and Mineral Reserves" Provides the framework for a required minimum standard for the Public Reporting of Exploration Results, Mineral Resources and Mineral Reserves Relevant to all solid minerals Why did the Codes Develop Good Governance Technical Excellence (Self Regulation, (Scientific and Engineering Best Practice) Principles) International Reporting Codes Reliable Reporting (Financial Sector, Public Reporting (minimum Valuations Common requirements) Language and Concepts) What are the benefits of the CRIRSCO Codes Promotes best practice Common language Common concepts Comparative for transactions/projects/ mines etc Non-technical professionals understand it Basis for valuation Guidance to Competent Persons Self Regulation Accountability Risk Mitigation  WHY DO WE HAVE MINING DISCLOSURE RULES? Once public confidence Mining is capital intensive and risky is lost it is very hard to Companies need access to risk get it back capital Investors rely on Company information Mining has numerous intrinsic risks Being misled is not an acceptable risk We Regulate Disclosure to: Protect investors Maintain integrity of capital markets Nothing happens without money and confidence!  SAMCODES HISTORY OF DEVELOPMENT JORC 1971 Committee 1989 JORC Code Published IMM Code 1991 Published Poseidon Nickel SAMREC WG SME Guide 1992 1992 Formed Published CMMI 1994 initiative (CRIRSCO) (Australia, Canada, South 1997 Denver Accord Africa, UK, USA ) CRIRSCO/UNECE 1999 Agreement Adopted by: The JSE Bre-X Scandal SAMREC 2000 Code The Professional Bodies – GSSA and SAIMM And by the Statutory Bodies - SACNASP, ECSA, SAGC CIM Code 2001 published Matt Mullins | 18 September Slide 19  SAMCODES HISTORY OF DEVELOPMENT SAMVAL WG CRIRSCO 2002 Formed 2002 formed SANS SAMREC SSC 10320:2004 2007 Update * 2008 Established SAMVAL Code 2008 Published SAMREC/SAMVAL 2009 Code update SAMCODES Launch at the JSE, 2016 SAMOG WG 2014 Formed SAMOG Code 2015 SAMREC/ Published SAMVAL SAMESG WG 2015 Launch, Formed SAMCODES 2016 Update & 2007 Consolidation Matt Mullins | 18 September Slide 20 South African Framework The Scope of the Code  The Code sets out a required minimum standard for the public reporting of exploration results, mineral resources and mineral reserves. The Code is applicable to the reporting of all styles of solid mineralisation or economic deposit. x The Code does not apply to Oil, Gas and Water Public Reports are all those reports prepared for the purpose of informing investors or potential investors and their advisors What the SAMREC Code is not It’s not a guarantee of good work It places an obligation on the issuer to have work done by a QP The QP is supposed to do it right It’s not a cookbook for mineral resource or reserve estimation The rule sets disclosure standards, not estimation practices It is designed so others can review and judge the QP’s work It’s not confirmation that the project is good Just because there is a technical report (CPR) does not mean it is compliant It is the issuer's responsibility to comply Public Reporting What it’s meant be Requires that technical information is: Signed off by a professional (CP) who takes responsibly for the information Based on reasonable assumptions which are clearly explained Consistent in its use of standardized terms and definitions Unbiased and identifies the potential risks and uncertainties Balanced and not misleading In a format that allows for comparing similar projects Understandable to a reasonably informed investor  JSE Listing JSE Rules specially for Mineral Companies Section 12 JSE is a user of the Code Review of CPRs for compliance not investment opportunity/potential SECTION 12 Pertinent Aspects of the SAMREC Code A required minimum standard for the Public Reporting of Exploration Results, Mineral Resources and Mineral Reserves Considered relevant to all solid minerals Present information about mineral assets to Investors and potential investors Advisors Satisfy regulatory requirements https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcTH4dvZM5nOOIm21NnUT6DGSavxG9sYsPi-klwWe-tUYnKw-0uzF6tbpXU Guidance to CPs The principles that are applicable to the Code: Materiality Transparency Competency Pertinent Aspects of the SAMREC Code Not prescriptive set of rules Not a “stick” to punish Competent Persons Vast jurisdiction Commodities, Mineralisation styles, Locations etc Data integrity What is the benefit of SAMREC Promotes best practice Basis for valuation Guidance to CPs Common language Self Regulation Common concepts Accountability Comparative for Risk Mitigation transactions/projects/ Relevant to SA and Southern Africa mines etc. Non-technical http://difog.files.wordpress.com/2010/07/be-relevant.jpg?w=450h=338 professionals understand it  The Importance of Public Reporting Tighter Corporate Governance Demands The Application Of Good Practice Reporting by responsible, experienced persons.  Public Reports Public Reports are reports prepared for the purpose of informing investors or potential investors and their advisers on Exploration Results, Mineral Resources or Mineral Reserves. They include, but are not limited to, annual and quarterly company reports, press releases, information memoranda, technical papers, website postings and public presentations. These Public Reports may be in printed or electronic media (including social media) and will include JSE circulars, reports as required by the Companies Act, reports for other regulatory authorities or as required by law. For companies issuing annual reports or other summary reports, all material information relating to Exploration Results, Mineral Resources and Mineral Reserves shall be included. Where a summary is presented, it should be clearly stated that it is a summary, with a reference attached giving the location of the Public Reports or Public Reporting as reported under the Code on which the summary is based. Companies and other entities are encouraged to provide information that is as comprehensive as possible in their Public Reports. Public Reporting - What it’s meant be Requires that technical information is: Signed off by a professional (CP) who takes responsibly for the information Based on reasonable assumptions which are clearly explained Consistent in its use of standardized terms and definitions Unbiased and identifies the potential risks and uncertainties Balanced and not misleading In a format that allows for comparing similar projects Understandable to a reasonably informed investor Consequences for Companies After a detailed re-assessment of the previously declared Sterkfontein Project Coal Reserve estimate by the responsible CP, it was evident that the estimate had been compiled on the basis of the findings and conclusions of a Concept Study compiled by independent consultant RSV Enco Consulting Proprietary Limited during May 2013. At the time the CP was of the view that the underground life-of- mine production schedule and associated economic study had been conducted in sufficient detail to support the declaration of a Coal Reserve for the project. However, notwithstanding the relative confidence in the project and its economics, the SAMREC Code sections 33 and 34 are clear on the level of study required for the declaration of Probable and Proved Coal Reserve estimates. In terms of these guidelines, therefore, the Coal Reserve previously declared has been formally retracted from Keaton Energy’s 31 March 2015 Coal Resource and Coal Reserve estimate. There was no change to the Sterkfontein 90.9Mt (MTIS) Coal Resource estimate declared at 31 March 2014. Muddy Waters Structure Of The Code Contents ❑ Glossary of Terms ❑ Foreword, Introduction and Scope ❑ Competence and Responsibility ❑ Reporting Terminology ❑ Reporting General ❑ Reporting of Exploration Results ❑ Reporting of Mineral Resources ❑ Reporting of Mineral Reserves ❑ Technical Studies ❑ Reporting of Coal Exploration Results, Coal Resources and Coal Reserves ❑ Reporting of Diamond Exploration Results, Diamond Resources and Diamond Reserves ❑ Reporting of Exploration Results, Mineral Resources and Mineral Reserves for Industrial Minerals ❑ Reporting of Metal Equivalents Structure Of The Code Tables and Appendices ❖Table 1: Checklist and guideline of reporting and assessment criteria ❖Table 2: Guidance on Technical Studies ❖Appendix 1: Suggested Table of Contents ❖Appendix 2: Suggested Authors Certificates ❖Appendix 3: Guidance in respect of Compliance statements Reading the Code Definition Code Guidance A Public Report contains all the relevant information that investors and their Materiality professional advisors would reasonably require, and expect to find, for the purpose of making a reasoned and balanced judgement regarding the Exploration Results, Mineral Competency Transparency Resources and Mineral Reserves being reported on. The Public Report is based on The reader of a Public Report work that is the responsibility of must be provided with sufficient suitably qualified and information, the presentation of experienced persons who are which is clear and unambiguous, subject to an enforceable to understand the report and not Professional Code of Ethics be misled. Competent Person A ‘Competent Person’ is a person who is registered with SACNASP, ECSA or SAGC, or is a Member or Fellow of the SAIMM, the GSSA, IMSSA or a Recognized Professional Organisation (RPO). These organisations have enforceable disciplinary processes including the powers to suspend or expel a member. A complete list of recognized organizations will be promulgated by the SSC from time to time. The Competent Person must comply with the provisions of the relevant promulgated Acts. REVISED A Competent Person must have a minimum of five years experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he or she is undertaking. If the Competent Person is estimating or supervising the estimation of Mineral Resources, the relevant experience must be in the estimation, assessment and evaluation of Mineral Resources. If the Competent Person is estimating, or supervising the estimation of Mineral Reserves, the relevant experience must be in the estimation, assessment, evaluation and assessment of the economic extraction of Mineral Reserves. Persons being called upon to sign as a Competent Person must be clearly satisfied in their own minds that they are able to face their peers and demonstrate competence in the commodity, type of deposit and situation under consideration  Competent Persons A ‘Competent Person’ is a person who is registered with SACNASP, ECSA or SAGC, or is a Member or Fellow of the SAIMM, the GSSA, IMSSA… or of a Recognized Professional Organisation (RPO). A complete list of recognized organizations will be promulgated by the SSC from time to time. The Competent Person must comply with the provisions of the SACNASP relevant promulgated Acts.  Competent Person Registered with SACNASP, ECSA or SAGC, or is a Accreditation/ Member or Fellow of the SAIMM, the GSSA, IMSSA or of a Recognized Professional Education Organisation (RPO). Be a self-regulatory organization covering professionals in mining or exploration or both; Ethics/ Admit members primarily on the basis of their academic Disciplinary Experience qualifications and experience; Require compliance with the Code A minimum of 5 (five) years professional standards of experience relevant to the competence and ethics established style of mineralisation and by the organization; type of deposit or class of Have disciplinary powers, deposit under consideration including the power to suspend or and to the activity which expel a member that person is undertaking.  Competent Person Accreditation/ A minimum of 5 (five) years Education experience relevant to the style of mineralisation and type of deposit or class of deposit under consideration and to the activity which that person is undertaking. Relevant Ethics/ Experience Disciplinary Code Experience  RESPONSIBILITY http://www.chrismower.com/wp-content/uploads/2010/02/Taking-Personal-Responsibility-001-Personal-Responsibility-ChrisMower.com_.jpg Board-of-Directors-Duties-Team-Silhoutte Competent person are personally visible and liable. Having been named, having signed and approved, having qualifications and a professional status , the CP enters a legal space where they come into contact with investors (pensioners, widows and orphans etc) to whom they now have legal and personal relationship on a par with that of directors. Facing your Peers Persons being called upon to sign as a Competent Person must be clearly satisfied in their own minds that they are able to face their peers and demonstrate competence in the commodity, type of deposit and situation under consideration. Team Effort Team Effort It almost always a team effort The actual estimation, modelling etc is almost always done by a whole team of specialists including external contractors. Increasingly the CP is a team leader with requisite experience.  Professionalism Professional Status What is a professional ? In South Africa it ideally means you have registration with a statutory organisation (as per an Act of Parliament) which has confirmed your educational qualifications are of standard and which has an enforceable Code of Ethics and which gives you the right to practice your chosen profession as a professional Without the possibility of being denied employability in your selected profession, are you truly subject to professionalism  Competent Person SAMREC Code Public Report  Figure 1 EXPLORATION RESULTS MINERAL MINERAL RESOURCES RESERVES INFERRED Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE MEASURED PROVED Reported as in situ Reported mineable mineralisation estimates production estimates Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors)  Figure 1 EXPLORATION RESULTS MINERAL MINERAL RESOURCES RESERVES INFERRED Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE MEASURED PROVED Reported as in situ Reported mineable mineralisation estimates production estimates Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors)  EXPLORATION RESULTS MINERAL MINERAL RESOURCES RESERVES INFERRED Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE MEASURED PROVED Reported as in situ Reported mineable mineralisation estimates production estimates Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors) Mineral Commodities Bulk Commodities (coal, bauxite, iron ore, manganese) Base metals (lead, zinc, nickel, copper) Precious metals (PGM’s, gold, silver) Precious Stones (diamonds, emeralds etc) Mineral sands (rutile, zircon) Energy (coal, uranium, oil, gas) REE (rare earth elements) Industrial minerals manganese, perlite, nitrogen, phosphate, potash, salt, sulfur, pumice, gypsum, helium, iodine, kyanite, lithium, magnesium, clays, diatomite, feldspar, fluorite, garnet, graphite, asbestos, barite, beryllium, borates, bromine, silica, sodium sulfate, trona (soda ash), vermiculite, niobium, wollastonite 55  Core Definitions Public Reports Modifying Factors Competent Person Mineral Reserve Exploration Target Probable Reserve Exploration Results Proved Reserve Mineral Resource Scoping Study Indicated Resource Pre-Feasibility Study Inferred Resource Feasibility Study Measured Resources SAMREC 2016 – General Minerals EXPLORATION RESULTS MINERAL MINERAL RESOURCES RESERVES INFERRED Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE MEASURED PROVED Reported as in situ Reported mineable mineralisation estimates production estimates Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors)  SAMREC 2016 – Coal EXPLORATION RESULTS COAL RESOURCES COAL RESERVES Reported as Mineable Reported as in situ estimates ROM and Saleable estimates Increasing level of geoscientific INFERRED knowledge and confidence INDICATED PROBABLE ROM and Saleable MEASURED PROVED ROM and Saleable Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors) SAMREC 2016 – Diamonds & Gemstones EXPLORATION RESULTS DIAMOND DIAMOND RESOURCES RESERVES Reported as in situ Reported mineable mineralisation production estimates estimates Increasing level of INFERRED geoscientific knowledge and confidence INDICATED PROBABLE MEASURED PROVED Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors)  Degree of Confidence Increasing Level of geoscientific knowledge and confidence ❖Tons and Grade are reported so as to reflect different levels of geoscientific confidence and different degrees of technical and economic evaluation. The Competent Person responsible for the Resource estimate must determine the appropriate Mineral Resource category based upon the quantity, distribution and quality of data available and the level of confidence attached to the data with reference to Table 1. The method of determining these confidence levels must be disclosed. EXPLORATION RESULTS Note: This usually reduces to quite a short list of MINERAL MINERAL RESOURCES RESERVES Resource critical geoscientific elements such as volume, density and sampling and chemical INFERRED analysis QA and QC. Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE So, for example, if there is concern over the MEASURED confidence in the representivity and accuracy of PROVED density measurements so then an appropriately Reported as in situ Reported mineable mineralisation estimates production estimates low or high degree of confidence must be assigned to a resource estimate. Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors)  Exploration Results Exploration Results include data and information generated by exploration programmes that may be of use to investor but which do not form part of a declaration of Mineral Resources or Mineral Reserves. Note : Exploration Results can include an exploration EXPLORATION RESULTS target, if the report includes this target it must be MINERAL RESOURCES MINERAL RESERVES expressed in such a way not to misrepresent it as an INFERRED estimate of a Mineral Resource or Mineral Reserve. Any Increasing level of geoscientific knowledge and confidence INDICATED PROBABLE statement referring to the potential mineralisation must MEASURED PROVED be expressed as a range and should include a statement Reported as in situ mineralisation estimates Reported mineable production estimates that it is uncertain whether further exploration will result Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying in the determination of a Mineral Resource Factors)  Exploration Target http://www.duluthmetals.com/i/misc/2014-04-11_NR-Fig1_sm.jpg An Exploration Target is a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnes and a range of grade or quality, relates to mineralisation for which there has been insufficient exploration to estimate Mineral Resources An ‘Exploration Target’ is a concept of mineralisation with respect to type, quantity and quality, which would be of interest to an exploration or mining company. There must be a likelihood that this exploration target occurs in an area of geological prospectivity for that commodity and mineralisation type. An Exploration Target need not represent any discovered mineralisation, nor does it imply reasonable prospects for possible economic extraction. Note : Reporting of Ranges for an Exploration Target ‘Mineralisation’ ‘Mineralisation’ as used in the Code, is defined as a concentration (or occurrence) of material of possible economic interest, in or on the earth’s crust, for which quantity and quality cannot be estimated with sufficient confidence to be defined as a Mineral Resource. Mineralisation not classified as a Mineral Resource or Mineral Reserve can only be reported under Exploration Results. The data and information relating to it must be enough to allow a considered and balanced judgement of its significance. Mineral Resource http://rfried.info/wp-content/uploads/2011/04/Prospects.jpg A ‘Mineral Resource’ is a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. EXPLORATION RESULTS MINERAL MINERAL RESOURCES RESERVES Note: The Geologists World. INFERRED It all comes down to geological confidence in:- location, Increasing level of geoscientific knowledge and confidence INDICATED PROBABLE shape, tonnage, densities, physical characteristics, MEASURED PROVED grade and mineral content of the deposit Reported as in situ mineralisation estimates Reported mineable There are no confidence limits production estimates Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors)  Mineral Resource A deposit is a concentration (or occurrence) of http://www.maptek.com/images/forge/jun_2013/effective_reserving_solution_gallery2_thm.jpg material of possible economic interest, in or on the earth’s crust, that may include mineralized material that cannot be estimated with sufficient confidence to be classified in the Inferred category. Portions of a deposit that do not have reasonable prospects for eventual economic extraction are not included in a Mineral Resource. The term Mineral Resource covers in-situ mineralization as well as dumps or tailings that have been identified and estimated through exploration or assessment and sampling from which Mineral Reserves may be derived by the application of modifying factors.  Mineral Resource Any material assumptions made in determining the ‘reasonable prospects for eventual economic extraction’ (RPEEE) should be clearly stated in the Public Report. The term ‘reasonable prospects for eventual economic extraction’ implies a judgment (albeit preliminary) by the Competent Person in respect of technical and economic factors likely to influence the prospect of economic extraction, including the approximate mining parameters. In other words, a Mineral Resource is not an inventory of all mineralization drilled or sampled, regardless of cut-off grades, likely mining dimensions, location or continuity. It is a realistic inventory of mineralization that, at the time of reporting and under assumed and justifiable technical and economic conditions, might become economically extractable. Note: role of Cut off Grade, yields and selected minimum thicknesses  Mineral Resource Hello I am the Future Nametag Sticker Change Interpretation of the word ‘eventual’ in this context may vary depending on the commodity, mineral involved or legal tenure. For example, for many occurrences of coal, iron ore, bauxite and other bulk minerals or commodities, it may be reasonable to envisage ‘eventual economic extraction’ as covering periods of 50 years or more. However for other deposits, application of the concept would normally be restricted to perhaps 20 to 30 years and frequently much shorter periods. A misuse of the term eventual may include using an undefined or indefinite period of time for economic extraction resulting in metal pricing assumptions that would not meet the reasonable prospects test Ultimately, it comes down to whether another reasonable CP would derive the same conclusions under the same circumstances Potential concern that the word “eventual” relaxes the reporting standards Potential concern about using extremely forward looking metal price assumptions  Mineral Resource Any adjustment made to the data for the purpose of making the Mineral Resource estimate, e.g.by cutting or factoring grades, or any other relevant assumptions, should be clearly described in the Public Report. Mineral Resources may include mineralization below the selected cut-off grade to ensure that the Mineral Resource consists of bodies of mineralization of adequate size and continuity to properly consider the most appropriate approach to mining, including any dilution or contamination resulting from the requirements of any minimum mining width. Documentation of Mineral Resource estimates should clearly define any such inclusions, and Public Reports should include commentary on the matter if considered material. Inferred Resource An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. (= geological OR grade continuity) An Inferred Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration EXPLORATION RESULTS MINERAL MINERAL RESOURCES RESERVES INFERRED Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE MEASURED PROVED Reported as in situ Reported mineable mineralisation estimates production estimates Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors) Inferred Resource This category is intended to cover situations in which a mineral concentration or occurrence has been identified and limited measurements and sampling have been completed, but in which the data are insufficient to allow the geological or grade continuity to be interpreted with confidence. Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or Measured Mineral Resource after continued exploration. Inferred Mineral Resources cannot be converted to Mineral Reserves and must not be stated as part of the Mineral Reserve CRIRSCO definitions that “it is reasonable to expect that the majority of Inferred Mineral Resources would upgrade to Indicated Mineral Resources with continued exploration.”  Inferred Resource It is accepted that mine design and planning may include a proportion of Inferred Mineral Resources. If this category is considered in mine design, planning or economic studies, the results of which are publicly reported, full disclosure must be made and the effect on the results of the studies must be stated. Inferred Mineral Resources may be included in mine design, mine planning and economic studies only if there exists a mine plan and a statement of Mineral Reserves that admits that Inferred Mineral Resources have been used. Where a material amount of mining in the mine plan includes Inferred Mineral Resources, a comparison of the results with and without these Inferred Mineral Resources must be shown, and the rationale behind their inclusion must be explained  Indicated Resource An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of EXPLORATION RESULTS observation. MINERAL RESOURCES MINERAL RESERVES An Indicated Mineral Resource has a lower level Increasing level of geoscientific knowledge INFERRED INDICATED PROBABLE of confidence than that applying to a Measured and confidence MEASURED PROVED Mineral Resource and may only be converted to Reported as in situ mineralisation estimates Reported mineable production estimates a Probable Mineral Reserve. Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors) Indicated Mineral Resource (CIM, 2012) An „Indicated Mineral Resource‟ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. Measured Resource A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm EXPLORATION RESULTS geological and grade or quality continuity MINERAL RESOURCES MINERAL RESERVES between points of observation. INFERRED Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE MEASURED PROVED Reported as in situ Reported mineable mineralisation estimates production estimates Note : The specifics of drill density are not Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying prescribed, a judgement based upon basic Factors) principles is called for  Measured Mineral Resource (CIM, 2012) A „Measured Mineral Resource‟ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.  Measured Resource A Measured Mineral Resource http://goldreachresources.com/_resources/ootsa_summary/6.jpg has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proved Mineral Reserve or to a Probable Mineral Reserve  Mineral Resources Reporting Public Reports must specify one or more categories. Reports must not contain Mineral Resource figures combining 2 or more categories unless figures for the individual categories are also provided. A Mineral Resource must not be reported in terms of contained mineral content unless corresponding tonnages and grades are also reported The words “Ore” and “Reserves” must not be used in stating “Mineral Resources”. These imply a level of technical feasibility and economic viability and are only appropriate when relevant modifying factors have been applied. Mineral Resource estimates are not precise calculations being dependent upon interpretation; Rounding off must convey the uncertainties in estimation. Inferred Resources must always be qualified as “approximately”. The final result must always be referred to as an estimate and not a calculation.  Classification of Mineral Resources Exploration Results Mineral Resource classification is a matter for skilled judgement and Competent Persons should take into account those items in Table 1 which relate to confidence in Mineral Resource estimation Modifying Factors Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors  Modifying Factors 1. Mining (Costs & losses) Note: The Mining Engineer 2. Metallurgical (Costs, recoveries and yields) and other Specialists World, These are usually best 3. Infrastructural (Costs, technical constraints) estimated by appropriate 4. Economic (Supply and Demand) experts ; They involve Multi- 5. Marketing (Price and Cost of Sales) disciplinary teams and numerous technical and 6. Legal (Rights and limits) economic studies 7. Environmental (costs and limits to mining) 8. Social (Impacts and costs of impacts) 9. Governmental (Constraints) EXPLORATION RESULTS MINERAL MINERAL RESOURCES RESERVES INFERRED Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE MEASURED PROVED Reported as in situ Reported mineable mineralisation estimates production estimates Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors)  Mineral Reserves A Mineral Reserve is the economically Note : Prior to determining a Mineral mineable part of a Measured and/or Indicated Reserve appropriate assessments and Mineral Resource. studies must have been carried out, and include consideration of realistic It includes diluting materials and allowances modifying factors. These studies for losses, which may occur when the material is mined or extracted and is defined by studies must demonstrate that at the at Pre-Feasibility or Feasibility level as time of reporting extraction appropriate that include application of could reasonably be justified and Modifying Factors. Such studies demonstrate are technically achievable and that, at the time of reporting, extraction could economically viable reasonably be justified. EXPLORATION RESULTS MINERAL MINERAL RESOURCES RESERVES INFERRED Increasing level of geoscientific knowledge INDICATED and confidence PROBABLE MEASURED PROVED Reported as in situ Reported mineable mineralisation estimates production estimates Consideration of mining, metallurgical, infrastructural, economic, marketing, legal, environmental, social and governmental factors (the Modifying Factors) Reference Point The reference point at which Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported. Precious Metals Base Metals Industrial Metals Coal Bulk Commodities  Mineral Reserves You can not report Mineral Reserves unless there is a Pre-Feasibility Study or a Life of Mine Plan Inclusive vs. Exclusive Resources Mineral Mineral Resource Reserve Inclusive Reporting Exclusive Reporting Mineral Resource + Mineral Mineral Resource (excl Reserve intersection with Mineral Reserve) + Mineral Reserve Inclusive Reporting Mineral Mineral Resource Reserve Mineral Resource + Mineral Reserve  Exclusive Reporting Mineral Mineral Resource Reserve Mineral Resource (excl intersection with Mineral Reserve) + Mineral Reserve  PROSPECT MINE MINERAL EXPLORATION MINE CONSTRUCTION EVALUATION PRODUCTION Proved Mineral Probable Reserves Measured Indicated Mineral Inferred Resources PROJECT COMMISSIONING FEASIBILITY STUDY MME METHOD PRE-FEASIBILITY DCF METHOD STUDY MARKET COMPARISONS PROJECT VALUE DESKTOP STUDY DCF METHOD + MARKET COMPARISONS DISCOVERY CONFIDENCE (A function of the amount of knowledge on a mineral resource property and degree of probability of being brought to account)  Industrial Minerals Industrial minerals manganese, perlite, nitrogen, phosphate, potash, salt, sulfur, pumice, gypsum, helium, iodine, kyanite, lithium, magnesium, clays, diatomite, feldspar, fluorite, garnet, graphite, asbestos, barite, beryllium, borates, bromine, silica, sodium sulfate, trona (soda ash), PPC vermiculite, niobium, wollastonite SepFluor limited logo [image]  Industrial Minerals Industrial minerals are covered by the SAMREC Code if they meet the criteria set out in Clauses 5 and 6 of the Code. For the purpose of the SAMREC Code, industrial minerals can be considered to cover commodities such as kaolin, phosphate, limestone, talc, etc. For minerals that are defined by a specification, the Mineral Resource or Mineral Reserve estimation must be reported in terms of the mineral or minerals on which the project is to be based and must include the specification of those minerals. When reporting information and estimates for industrial minerals, the key principles and purpose of the SAMREC Code apply and should be borne in mind. Assays may not always be relevant, and other quality criteria may be more applicable. If criteria such as deleterious minerals or physical properties are of more relevance than the composition of the bulk mineral itself, then they should be reported accordingly. Andalusite Resources Must be solid mineral  Industrial Minerals The factors underpinning the estimation of Mineral Resources and Mineral Reserves for industrial minerals are the same as those for other deposit types covered by the SAMREC Code. It may be necessary, prior to the reporting of a Mineral Resource or Mineral Reserve, to take particular account of certain key characteristics or qualities such as likely product specifications, proximity to markets and general product marketability. For some industrial minerals, it is common practice to report the saleable product rather than the ‘as-mined’ product, which is traditionally regarded as the Mineral Reserve. SAMREC’s preference is that, if the saleable product is reported, it should be in conjunction with, not instead of, reporting of the Mineral Reserve. However, it is recognised that commercial sensitivities may not always permit this preferred style of reporting. It is important that, in all situations where the saleable product is reported, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported. Some industrial mineral deposits may be capable of yielding products suitable for more than one application and/or specification. If considered material by the reporting company, such multiple products should be quantified either separately or as a percentage of the bulk deposit.  Metal Equivalents The reporting of Exploration Results, Mineral Resources or Mineral Reserves for polymetallic deposits in terms of metal equivalents (a single equivalent grade of one major metal) must show details of all material factors contributing to the net value derived from each constituent. The following minimum information must accompany any Public Report that includes reference to metal equivalents, in order to conform to the principles of Transparency, Materiality and Competence, as set out in Clause 4: individual grades for all metals included in the metal equivalent calculation, assumed commodity prices for all metals (Reports should disclose the actual assumed prices. It is not sufficient to refer to a spot price without disclosing the price used in calculating the metal equivalent. However where the actual prices used are commercially sensitive, the company must disclose sufficient information, perhaps in narrative rather than numerical form, for investors to understand the methodology it has used to determine these prices), assumed metallurgical recoveries for all metals and discussion of the basis on which the assumed recoveries are derived (metallurgical test work, detailed mineralogy, similar deposits, etc), http://www.laconia.com.au/images/site/logo.gif  Metal Equivalents a clear statement that it is the company’s opinion that all the elements included in the metal equivalents calculation have a reasonable potential to be recovered and sold, and the calculation formula used. In most circumstances, the metal chosen for reporting on an equivalent basis should be the one that contributes most to the metal equivalent calculation. If this is not the case, a clear explanation of the logic of choosing another metal must be included in the report. Estimates of metallurgical recoveries for each metal must be used to calculate meaningful metal equivalents. Reporting on the basis of metal equivalents is not appropriate if metallurgical recovery information is not available or able to be estimated with reasonable confidence. For many projects at the Exploration Results stage, metallurgical recovery information may not be available or able to be estimated with reasonable confidence. In such cases reporting of metal equivalents may be misleading Metal Equivalent Calculation - How to Calculate the Mineral Equivalents in Polymetallic Deposits Table 1 ‘if not, why not’ Used of a verb i.e. ask a question Not an additional reporting requirement Triggers: Maiden announcement Significant change of a Material Project Table 1 Table 1 is applicable to all declarations in terms of the guidelines of the SAMREC Code SAMREC TABLE 1 Exploration Results Mineral Resources Mineral Reserves General Section 1: Project Outline Section 2: Geological Setting, Deposit, Mineralisation Section 3: Exploration and Drilling, Sampling Techniques and Data Section 4: Estimation and Reporting of Exploration Results and Mineral Resources Section 5: Techncial Studies Section 6: Estimation and Reporting of Mineral Reserves Section 7: Audits and Reviews Section 8: Other Relevant Information Section 9: Qualification of Competent Person(s) and other key technical staff. Date and Signature Page Section 10: Reporting of Diamonds and Gemstones Section 11: Reporting of for Coal Resources and Reserves Table 2  SAMREC 2016 (Table 2) - CAPEX Capital Cost Category Scoping Study Prefeasibility Study Feasibility Study Basis of Estimate to include the Order-of-magnitude, based on Estimated from historic factors Detailed from engineering following areas: historic data or factoring. or percentages and vendor at 20% to 50% complete, Civil/structural, architectural, piping/HVAC, Engineering quotes based on material electrical, instrumentation, construction estimated material take- < 5% complete. volumes. Engineering at 5- labor, construction labor productivity, off quantities, and 15% complete. material volumes/amounts, multiple vendor material/equipment, pricing, infrastructure quotations Contractors Percentage of direct cost by area Included in unit cost or as a Written quotes from contractor for contractors; historic for percentage of total cost and subcontractors subcontractors Engineering, procurement, and Percentage of estimated Key parameters, Percentage of Detailed estimate construction management (EPCM) construction cost detailed construction cost Pricing FOB mine site, including taxes and FOB mine site, including taxes and FOB mine site, including taxes and duties duties duties Owner’s costs Budgeted quotes on key Factored, benchmark, database or parameters and estimates from Detailed estimate historic estimate experience, factored from similar project Environmental compliance Estimate prepared from detailed Estimate from experience, zero-based budget for design Factored from historic estimate factored from similar project engineering and specific permit requirements Escalation Based on entity’s current budget Not considered Based on cost area with risk percentage Accuracy Range ±25-50% ±15-25% ±10-15% Contingency Range (Allowance for 10% - 15% (actual to be items not specified in scope that will be ±30% 15-30% determined based on risk needed) analysis)  SAMREC 2016 (Table 2) - OPEX Operating Cost Category Scoping Study Prefeasibility Study Feasibility Study Basis Estimated from historic factors Order-of-magnitude, based on or percentages and vendor Detailed estimate historic data or factoring. quotes based on material volumes. Operating quantities Specific estimates with some General Detailed estimates factoring Unit costs Based on historic data for Estimates for labour, power, and Letter quotes from factoring consumables, some factoring vendors; minimal factoring Accuracy Range ±25-50% 15% - 25% 10% - 15% Contingency Range + 10% (actual to be (Allowance for items not specified in scope that will be + 25% + 15% determined based on risk needed) analysis)  Table of Contents RECOMMENDED TABLE OF CONTENTS FOR COMPETENT PERSONS REPORT (“CPR”) This table of contents is given only as a guide to the compilation of CPR’s. It is designed to incorporate all of the requirements of Table 1. It must be read in conjunction with Table 1 and the Code. Title Page Executive Summary Table of Contents Introduction Project Outline Accessibility, Physiography, Climate, Local Resources and Infrastructure Project History Geological Setting, Mineralisation and Deposit Types Exploration Data/Information Mineral Resource Estimates Technical Studies Mineral Reserve Estimates Other Relevant Data and Information Interpretation and Conclusions References Appendices Date and Signature Page Authors Certificate APPENDIX 2 CERTIFICATE OF COMPETENT PERSON This Certificate of Competent Person is given only as a guide to the CP. It is designed to incorporate all of the requirements of the Code. Certificate of Competent Person As the author of the report entitled [report title], I hereby state:- My name is [Competent Person’s name] and [details – position in company, company name, Obtain a Copy of Your Birth Certificate in Washington Step 1.jpg address].. {profession and details of registration body]. [qualifications] [relevant experience]. I am a “Competent Person” as defined in the SAMREC Code. [Work undertaken or services rendered]. [Site inspection details] [details of aspects of this report for which the CP is responsible]. I am not aware of any material fact or material change with respect to the subject matter of the Report, which is not reflected in the Report, the omission of which would make the Report misleading. Authors Certificate. I declare that this report appropriately reflects the Competent Person’s/author view I am independent/not independent of [name of issuer]. I have read the SAMREC Code (2015) and the Report has been prepared in accordance with the guidelines of the SAMREC Code. I do not have nor do I expect to receive a direct or indirect interest in the [project/mine details] or [name of issuer] OR I am an employee/shareholder/director or other interested party in respect of the issuer [name of issuer] or the mineral asset. At the effective date of the Report, to the best of my knowledge, information and belief, the Report contains all scientific and technical information that is required to be disclosed to make the Report not misleading. Dated at [place] and [date] [Signed] [name of CP]  Site Visit A site visit to or inspection of the mineral property being evaluated should be undertaken by the Competent Person(s) and appropriate member(s) of the team. If a site visit is not undertaken, the reasons should be given, which may include non-materiality. Where work was undertaken prior to the inspection, a declaration by the Competent Person that the work has been validated and the information can be relied on, should be made. Site visit Site Visit Complaints Procedure The SSC maintains a complaints procedure for complaints received regarding Competent Persons, Competent Valuators and Qualified Reserve Evaluators as defined in the various Codes. The purpose of the complaints procedure is to conduct an initial investigation into a complaint and thence to correctly direct the complainant to the appropriate professional body for further deliberation and consideration in terms of that body’s Code of Ethics. Such complaints are not limited to documents submitted to the JSE, but also include any public report purported to have been compiled in accordance with a SAMCODES..  Competent Person’s Report (for JSE reporting) 12.10 Competent Person’s Report must comply with the SAMREC and SAMVAL Codes and must: (a) have an effective date (being the date at which the contents of the Competent Person’s Report are valid) less than six months prior to the date of publication of the pre-listing statement, listing particulars, prospectus or Category 1 circular; (b) be updated prior to publication of the pre-listing statement, listing particulars, prospectus or Category 1 circular if further material data becomes available after the effective date; ▪ (c) if the Competent Person is not independent of the issuer, clearly disclose the nature of the relationship or interest; ▪ (d) show the particular paragraph of this section, the SAMREC Code (including Table 1) and SAMVAL Code complied with in the margin of Competent Person’s Report;  Competent Person’s Report (For JSE Reporting) 12.10 A Competent Person’s Report must comply with the SAMREC and SAMVAL Codes and must: (f) contain a valuation section which must be completed and signed off by a Competent Valuator in terms of and in compliance with the SAMVAL Code; (g) be published in full on the applicant issuer’s website; (h) be included in the relevant JSE document either in full or as an executive summary. The executive summary must be approved by the JSE (after approval by the Readers Panel) at the same time as the Competent Person’s Report is approved by the JSE and the Readers Panel. The executive summary should be a concise summary of the Competent Person’s Report and must cover, at a minimum, where applicable:  TECHNICAL REPORTS (CPR) To do Do Not ❑ Make sure you have relevant experience ❑ Assume all technical reports are reviewed by the JSE ❑ Know the purpose of the technical report (i.e. the triggering event) ❑ Forget the audience reading the report ❑ Use the SAMREC Code (2016) ❑ Use the technical report as a data dump ❑ Follow Best Practice Guidelines as ❑ Forget that there is only one current appropriate technical report at a point in time ❑ Include a concise & complete summary of ❑ Neglect a proper summary section significant findings ❑ Ignore CP independence requirements ❑ Describe the risks and uncertainties ❑ Disclaim responsibility for technical data ❑ Have the draft report peer reviewed When All Else Fails, Read the Instructions CPR’S ❑ IPO ❑ Information Memoranda ❑ Updated Reports ❑ Continuous disclosure SAMCODES APP Questions? www.samcodes.co.za