What is a mineral resource? G. P. RIDDLER British Geological Survey, Keyworth, Nottingham NG12 5GG, UK Abstract: Mineral resource evaluation is one of a whole spectrum of quantitative methods which have been used since biblical times for the purpose of improving the process required to aid problem-solving and to increase the quality of strategic management decisions at all levels. Such evaluation leads to the classification of mineral resources. It is important to have a clear knowledge of how mineral resources are classified and what the classification nomenclature actually means to ensure decisions are based on a sound understanding of criteria applied. As interest for investment in mineral resource development spreads into Eastern Europe and the former Soviet Union, the need for some form of harmonization in terminology, nomenclature, criteria, as well as the approach to the classification process for the definition of mineral resources has again been highlighted. The approach to quantitative studies is discussed, and guidelines are given that may improve mineral reserve and resource estimates so that implementation of mining projects can be avoided. Approaches to the classification of mineral resourees are reviewed along with the uses made of such mineral resource information. The argument is put for a standard approach to mineral resource classification and consistency of international nomenclature with a discussion of some of the related problems. Principles are established which may suggest a way forward illustrated by a recent major resource assessment project. There has been much debate about the nomen- clature used when classifying mineral resources. This has continued in the mining press recently following the publication of the latest attempt at defining resources and reserves by the Institution of Mining and Metallurgy (IMM 1991). Mining has become a global business meaning that individual multinational mining companies operate in many different countries. Mineral resource development has in recent years opened up to such companies in the former Soviet Union and Eastern Europe. The approach to mineral resource classification, criteria and nomenclature still varies considerably from country to country (Armitage & Potts, this volume; Jakubiak & Smakowski, this volume). In this era of global communication there is a need for some form of standardization. It has always been important to distinguish between reserves and resources. This paper deals particularly with resource classifications because resource assessment is a primary function of the Minerals Group at the BGS. Some reference to mineral reserves classification is made in this paper to demonstrate their relationship to mineral resources but mineral reserve classifica- tion is essentially the responsibility of mineral deposit developers and should be carried out at the time an investment is made. For the purposes of this paper the distinction between the classification of resources and reserves is made as follows, The term spuross refers to mineral deposits which can or at some time in the future may be mined economically. The term reserves is generally considered to represent that portion of resources the presence ot which i ‘geologically assured and can be imined economically now. Determination of reserves would normally require a multidisci- plinary feasibility study. Since the level of data required for determining reserves and resources differs and the two classifications are used for different purposes, the separate terms are fully justified, Quantitative studies Mineral resource evaluation and classification is one of a whole spectrum of quantitative studies which have been an adjunct to decision making for a long time. When considering how the approach might be harmonized between coun- tries it is worth considering the findings of operational management research projects com- pleted outside the minerals industry on the approach to quantitative studies (Huxham 1987). This research suggests a staged approach From Whatcley, M. K. G. & Harvey, P. K. (eds), 1994, Mineral Resource Evaluation I: 1 Methods and Case Histories, Geological Society Special Publication No. 79, 1-10.2 G. P. RIDDLER Te K% Data collection % End-use FINISH Analysis - Estimation *" Modelling-Interpretation ” *+., Classification |. Implementation R N A&A 4 Requirement START Problem structuring Fig. 1. The main stages of interactive quantitative studies. which provides a logical framework, Some relatively straightforward, obvious, but often neglected guidelines emerge indicating how such studies may improve the potential for success in project implementation. These guidelines indi- cate how the quality of mineral resource evaluation and classification may be improved so as to avoid implementation failures at the project development stage. All quantitative studies start with the defini- tion of the requirements of the study which are governed to a great extent by the proposed end- use. There are four main stages to quantitative studies, data collection, problem structuring, data analysis/estimation/modelling/interpreta- tion, and implementation/classification, all of which are interactive (Fig. 1). Data collection has been recorded since biblical times, the Book of Numbers, appro- priately enough, describing population census, used at the time for taxation or military service. In the minerals industry we have become familiar with the use of sampling for assay and mineralogy by channelling, trenching or drilling as the means of data collection. Of course while this may be adequate for resource classification, additional qualitative and quantitative data on the external environment such as capital, labour, commodity markets, local economics, planning and development policy, infrastructure and other criteria would have to be added for reserve classifications (Riddler 1988). Problem structuring. This is the stage where the end-use must be considered and appropriate data collection put in hand and can involve a wide range of specialized multidisciplinary input. The optimal approach will be chosen through consideration of various alternatives. It is probable that in many cases a particular development project will not proceed as a result, of the output from this stage. Data analysis/estimation/modelling/interpre- tation. This can involve a broad range of techniques being applied to the data including statistics, simulation and linear programming. It is important that such techniques are properly defined and explained because non- specialists can be led to assume that the sophistication of a statistical technique ensures the reliability of the inferences it provides. The right questions should be asked and the answers questioned as more information comes to hand through the interactive process. ‘An early example of this stage comes from the work of John Graunt, a seventeenth century draper, who was probably the world’s first statistician. He was the first to be recorded as making reasoned estimates on the basis of aWHAT IS A MINERAL RESOURCE? 3 specified method mainly because of a lack of accuracy in previous classification in the data. The requirement for his study had the added impetus in that the end-user was the King who wished that a weekly watch be kept on the rise in Plague deaths in the city of London so that he could receive early warning to decamp to the relative safety of the countryside (Kennedy 1983). In the minerals industry, this stage is applied to the estimation of reserves and resources. Use of the results of this by non-specialists such as accountants, lawyers and planners is increasing. Since the estimations have a direct bearing on the commercial viability of mineral development projects, and there is now legal precedent for such viability to be taken into account in planning decisions in UK, it is important that the limits of these estimations are clearly understood. Implementation/classification. Once data have been collected and estimates made, reserves and resources can be identified and classified. Implementation of mineral develop- ments based on data models and this classifica- tion can then take place. It is well known that implementation of mineral development projects can fail because inadequate attention is paid to some factor or other during the process of estimation and classification of reserves and resources through the inadequacy of the approach or the level of data used to distinguish between them. ling project implementation failure Based on such a staged approach to quantitative studies, operational management research find- ings indicate that by following certain guidelines at the datajestimation|modelling] interpretation stage, implementation failures may be avoided. The guidelines highlighted by the research can be related to minerals industry activities as follows. Ensure that all relevant lines of communica- tion relating to input data are kept open. For example, geologists may have the major input to a resource assessment but other disciplines such as metallurgy, mining engineering, mineralogy, environmental science or economics come into play when reserves are being estimated. Involve those who commissioned the study or will use any product of the analysis phase. The end-user should be involved because the require- ments of the study may change as it evolves. For example, local planning authorities may impose local constraints and conditions on a develop- ment and it would be prudent to find out what these may be at the earliest opportunity so that resource and reserve estimates may take these into account. Keep the implementation phase in mind from the start. That is, what is the end-use proposed for the study, who is to be using it, where and when? For example, some of the common uses of mineral resource and reserve evaluation data are given in Table 1 Table 1. Some uses of mineral resources evaluation data Company annual reports Strategic planning exploration development mineral supply location of resources of critical metals eee Investment planning * bankable documents © asset valuation Awareness of mineral endowment Attracting inward investment Decide on the emphasis and level of detail. For example, is a resource assessment or a reserve estimation required? The reserve estima- tion requires much more detailed information. Decide on the suitability of effort on data analyses for the purpose at hand. For example, detailed mineralogy may be required for reserve estimation on complex enriched copper deposits but not necessarily for resource assessments. Keep models simple and be aware of their inadequacies and shelf-life. For example, about AbD 50, the Roman author Pliny records a site specific model for classification of reserves at ‘one prospect, using the orientation of the deposit asa criterion. He stated that all easterly trending deposits were profitable (Agricola 1556). This was probably perfectly adequate 2000 years ago for a specific local small-scale operation but is perhaps not a model which would have wide- spread application now. ‘As technology and knowledge advance, models necessarily become more complex, but they should still be clear, understandable to the user and continuously reviewed. The qualitative exiernal environment (Fig. 1) can have a significant impact on the outcome of a quantitative study. If for example it changes or is not accounted for during the data analysis/ estimation/modelling/interpretation stage of thepruouoseqng (zo12qe) yeusavwgns s Tenusiog —-20uRTeQ JO NE ourouosaqng reudreyy SS euysseweseg as9s01 Tenuajod aqqeqoid AIOSor (o108v) eraA0901 woUDs2 {ponoag, yeyourur a sqvaurA, aouRleg, aru0u09g, a Joruouoog: Surystureng ajqeqord/parosd ~aaneynoadg onsousosg parorpald: aaneynoadg ew € Teonatpodkyt Tenusiod (+79) aouemnsse paxrayuy TeIouy, OW aIqissod aanvodsorg pastuing zt pasiayuy yeoBojood gornosax [PIOUIU Sursea1ouy porearpuy pareotpur 91aeq0rd pareorpuy ni porensuowog t pamseojy —dounoseu jeourUL (19q8 + 19@¥) pounseayay 1 pamstay porord pasoydxg, 8861 £161 oINy so0mn0sy ares01031G ssommosoy pur souayut WWIV 1661 jesmeN uO yeordojoan soul “AByoua Jo ‘T7861 uy) Jo uvrensny WAL sonmuOD NA suru ‘ssa ydaqy ‘vpeue) sol adog sn. swajsts uonvoyfissnj aosnosas sofbiu fo wostundwo> ¥ *% IQELWHAT IS A MINERAL RESOURCE? 5 study then inadequacy and failure at implemen- tation will result, rendering the whole quantita- tive study useless. ‘A good example of an external environment factor on minerals industry activity is the effect that designated planning constraint areas may have on the classification of mineral resources or reserves. In the UK constraints on mineral related developments include national parks, urban areas, green belts, sites of special scientific interest, national nature reserves, areas of outstanding natural beauty, agricultural land and so on. These all affect planning consent decisions. The impact of such constraints is illustrated by UK fuller’s earth reserves. Re- serves (1991) with planning consent amount to 0.78 million tonnes which represents only about 28% of what could be classified as a reserve. 72% of the ‘available’ fuller’s earth is without planning consent and must be classified as a resource as this amount although it may be mined economically, is not available to be mined now. ‘The point here is that no matter how sophis- ticated the model for classifying reserves may be it is only those reserves with planning permission that can sustain production now and it is only these that can be truly classified as reserves. By adopting some form of standard approach, methodology or framework that can be recog- nized and understood by various users along the fines indicated by the operational management research into the approach to quantitative methods, some of the more obvious problems can be anticipated. Resource and reserve estimates and classification may be improved therefore and this will assist the successful implementation of mining projects by increas- ing the quality of strategic management deci- sions at all levels. Approach to classification of resources and reserves Resources For the mineral supply process to continue it is important to have a knowledge of available resources in particular regions. At a company level such information is critical for decision making on worldwide exploration programmes and for strategic planning decisions which address resource replenishment requirements (Riddler 1988). In view of the importance of these decisions with regard to the normally high level of investment required, a clear knowledge of how the mineral quantities are estimated, how classifications are defined and what these mean is essential. The problem is that there are many different national approaches to the classifica- tion of mineral resources which are inconsistent and of differing standards. To illustrate this point a comparison of major resource classification systems is given on Table 2. The opening up of Eastern Europe and the former Soviet Union adds another dimension to nomenclature and classification criteria (Jaku- biak & Smakowski, this volume). Such a variety of nomenclature for what may be equivalent classifications of reserves and resources begs the question ‘What is a mineral resource?’ While the process involved in the data analysis [estimation/modelling|interpretation stage has to vary since the data are site/ technology/time specific, there is certainly scope for a harmonization of the nomenclature used to describe the resultant classified categories of mineral resources after that stage is complete. Reserves and the uncertainty permits, the classification of sustai is getting more difficul For example, in UK the proposed Mineral Planning Guideline (MPG6) for the aggregates industry which is currently at the consultation stage provides two options, the status quo and Option 2, which proposes a 20% reduction in aggregate production, a halving of the Company land banks from 10 to 5 years (that is, halving reserves with planning consent). Option 2 could be expected to force up prices and encourage the use of aggregates from superquarries in Scotland or elsewhere as well as recycling and use of waste materials. On the other hand it raises questions as to how much of these alternative resources could be converted into reserves because of external factors such as planning and environmental constraints in the alternative supply arcas as well as transportation costs. Special interest groups can stop mineral development projects after permitting, so should reserves only be classified after produc- tion commences? Classification of reserves therefore has to be a dynamic process, with volumes switching in and out of the demonstrated resource according to prevailing conditions at the time. Regardless of such classification, it should be possible to envisage standardization of nomenclature.6 G. P. RIDDLER Classification and nomenclature: present and future So what is happening to address the problem of such a varied nomenclature (Table 2)? Codes, guidelines and definitions for mineral resources and reserves abound and there is still much scope for moving towards a common nomen- clature. The USBM/USGS between 1973 and 1980 (McKelvey 1973; USGS 1980) produced a resource/reserve classification system and subse- quently in 1986 produced guidelines which were broadly adopted by the minerals industry Variations of this have followed. In 1988 (with an update in 1992), the Australian IMM and the Australian Mining Industry Council published their code followed by Guidelines in 1990 (Aus IMM 1988, 1990, 1992). In 1991, the SME published broadly similar guidelines (SME 1991). ‘At the Prospectors and Developers Interna- tional Convention in Toronto in April 1993 the CIM announced that it was to produce its report on classification by mid-1993. ‘The CIM has consulted many stakeholders. Its system of classification will be designed to: © cover economic/non-economic criteria; make allowance for commodity price fluctuation; have flexibility to allow reserves to move in and out of resource categories; encompass all external environmental criteria; © base resource/reserve classification on a feasibility study; © utilize terminology from the Aus IMM, IMM, SME and AIME. Together with the Aus IMM and the SME which are the professional bodies in currently significant mining countries, the CIM are moving towards a standardized system of nomenclature which will have measured, indi- cated, and_inferred resources and proven and pi le reserves. Along with the attendant ‘guidelines these appear to meet most require- ments including US Stock Exchange Commis- sion regulations. Another common feature is that all systems require a multidisciplinary feasibility study for the conversion of resources into reserves with the consideration of economic, mining, metallurgical, marketing, environmen- tal, social, governmental factors, as well as statements on grade and dilution. This of course raises the question as to who judges the quality of the study and determines when there is enough information. The latest initiative is being implemented under the auspices of the CMMI (Council of Mining and Metallurgical Institutions) which has set up a working party to seek to establish a set of definitions of reserves and resources for international use. Resource assessment case history The major input to resource assessments can reasonably be expected to come from geologists. This case history relates to phosphorite deposits in the northern region of Saudi Arabia. The strata comprised a layered carbonate sequence with three major phosphorite horizons. The area assessed was 107000 km’. Data were collected from outcrop, trenching and drilling. Approach The general approach adopted for this resource assessment included: © compilation of historical and new drilling and trenching data; * preparation of contour plans of thickness, grade, accumulation and overburden thickness; © definition of mining parameters overburden thickness grade deposit thickness stripping ratio; © a literature search on resource assessment nomenclature; the definitions used were based on the most common relevant usage, and derive from the mineral endowment concept of Harris and Agterberg (1981) and the resource classification system used by USBM/USGS (1980)—the former avoided economic issues and the latter was widely used in the world mineral industry; the USBM/USGS system had been in use for some time and its advantages and limitations are realized and reported in the literature—one such limitation being the lack of indication of mineral availability; this system, however, was primarily designed for resource assess- ment; ¢ the definition of geological and chemical terms; © establishment of criteria for the resource classification such as minimum grade (based on beneficiation technology)WHAT IS A MINERAL RESOURCE? R Table 3. Definition of resource assessment terms ‘Mineral endowment is defined as the total accumulation of elemental metal in a specified region which ‘© is above the crustal average © has a minimum grade (g) has a minimum specified quantity (1) of mineralized material at grade (q) has a depth less than (4) metres where g, t and f are based on current mining practice and are the criteria used as a basis for the resource assessment, [For the phosphorite case history, g = 15% P;Os; ¢= 1m; h = 50m] ‘The total accumulation is known or believed to occur, is in a form that can be extracted physically and has no economic criteria for exploitation. Mineral endowment = total resources + mineral occurrences. Total resources © are concentrations of metals and minerals that are known or believed to occur © meet the thickness, grade and depth criteria for the resource assessment © could be commercially exploited in future say within 20 to 30 years given the necessary infrastructure Mineral occurrences ‘© are concentrations of metals and minerals that are known or believed to occur can be extracted physically ‘fall below the thickness, grade and depth criteria for the resource assessment «are therefore unsuitable for exploitation in the foreseeable future Identified resources are concentrations of metal/mineral that are known to occur to an acceptable level of confidence meet the thickness, grade and depth criteria for the resource assessment © could be commercially exploited in future © sampled at distances not greater than a specified maximum Demonstrated resources © are concentrations of metal/mineral that are known to a high level of confidence * meet the thickness, grade and depth criteria for the resource assessment # are divided into a measured, reserve base or indicated categories depen: criteria ‘* are sampled at distances not exce Reserve base ‘* is that portion of the demonstrated resource which meets the thickness, grade and depth criteria for the resource assessment ‘© has a stripping ratio of less than 5:1 * includes economic, marginally economic and sub-economic categories, subdi when economic criteria are established ‘represents that part of the identified resource with the greatest potential for current exploitation Indicated resources ‘are concentrations of metal/minerals that are known to a high level of confidence meet the thickness, grade and depth criteria for the resource assessment © could be commercially exploited in future © are sampled at distances between the specified minimum and maximum Undiscovered resources * are those concentrations of metal/mineral that are believed to occur based on sparsely located or no sampling points ‘© are thought to meet the resource assessment criteria ‘© could be commercially exploited in future ‘are divided into hypothetical and speculative resources Hypothetical resources ‘© are concentrations of metal/mineral believed to occur based on sparsely located sampling points in known areas ‘© are thought to meet the resource assessment criteria of thickness, grade and depth © could be commercially exploited in future © are sampled above the specified maximum but not more than three times that maximum Speculative resources ‘© are concentrations of metal/mineral believed to occur based on geological extrapolation * are thought to meet the thickness, grade and depth criteria for the resource assessment could be commercially exploited in future © are sampled at distances greater than five times the specified maximum and are believed to exist g on stringency of mining 1g a specified minimum based on geostatistical drilling ns that can be made8 G. P, RIDDLER TNERAL ENOOWMENT ra TOTAL RESOURCES | "een TmORCOVERED DemonsTRATED Typehetat]| Specie inresnen uexcureo | wocaTeo t ves ‘ te || econone ! werenico | —snown —|undacovere warcnaucy| RESERVE MASE eseave} avers | ants || ecoxome Feasbaty nase Economic [sve-econonte pecovey <— One of Goan of Etec Fig. 2. Phosphorite project: definition of resource assessment terms. maximum depth minimum thickness; (this was achieved by comparing operating mines in similar geographical and political environments) * cross-traverse drilling for geostatistical analysis to establish range (continuity) to classify demonstrated resources; © definition of resource assessment terms. Definition of resource assessment terms The nomenclature used in the resource assess- ment is shown in Fig. 2. More detailed definitions of the resource assessment terms are given in Table 3. The resource assessment produced tonnages and average grades for each category of the classification which follows the logical hierarchy of the classification for each of the three phosphorite horizons in the region (Fig. 3). These estimates were accompanied by maps showing the spatial distribution of each class (Riddler et al. 1986). The main principles of any estimates are contained in the USBM/USGS (1980) defini- tions which warrant that ‘resources must be continuously reassessed in the light of new geological knowledge, of progress in science and technology and of shifts in economic and political conditions’. The current trends towards usage of systems based on the USBM/USGS system is clearly emerging as one way forward, and its application is demonstrated by this case history. No reserves were estimated, but a full feasibility study has now been carried out on the reserve base. The role of the British Geological Survey In the early 1980s BGS (IGS as it was then) prepared a classification for mandatory corpo- rate use influenced by the nomenclature pro- posed by the UN Committee on Natural Resources (Table 2) (HMSO 1982). This system has not been widely adopted as it failed, according to the IMM, to address the require- ments of certain end-users particularly those seeking bankable documents. The BGS now use as a general basis, the resource classification proposed by USBM/ USGS (1980) in all discussions of mineral resources while at the same time monitoring, contributing towards and adopting in due course a consistent international system of classification and nomenclature. This assists the BGS in the provision of its mineral resource information products now in preparation on a consistent basis. These include an Industrial Minerals Map of the UK which will incorporate information such as ball clay resources in SW England. The BGS is also producing a Metallogenic Map of UK and compiling a Mineral Occurrence Database which will include resource informa- tion such as the gold occurrences in UK.WHAT IS A MINERAL RESOURCE? MINERAL ENDOWMENT Total Resources 1 — Mineral Occurrences Identified Resources Undiscovered Resources, Hypothetical ‘Speculative v aeaaeeaad eee el Increasing Demonstrated Resources Inferred Resources Geological | Assurance [— | Reserve Base Indicated Resources Fig. 3. Hierarchy of the resource assessment produced for each phosphorite member The way forward More information is required to classify mineral reserves than mineral resources which involves greater expense. Companies therefore will only define mineral reserves required to maintain production over a fixed forward period, which is, relatively short. Mineral reserves are therefore perceived by the public as being short term, limited and running out, which is not the case, because they usually form only a small part of the overall mineral resource inventory. This is a view expressed by the International Council on Metals and the Environment (Crowson 1992). ICME point out that the confusion in the distinction between mineral reserves and re- sources has led to the misguided public percep- tion that the world is running out of its mineral resources. This is leading to international policies which put more stress on protection and conservation of mineral resources rather than supporting more economical, environmen- tally efficient methods of exploration, produc- tion, use, recycling and disposal. In conclusion, therefore, the importance of standardizing mineral resource and reserve classification nomenclature must be stressed so that it may be more easily understood by users and the public perhaps by adopting an approach similar to that suggested in this paper. It is time for the minerals industry worldwide through its professional bodies, to pursue and co-ordinate efforts and arrive at a common approach to the classification and a consistent nomenclature for mineral resources so that the public no longer has to ask the question ‘What is a mineral resource?”. This paper is published with the permission of the Director of the British Geological Survey. References AaricoLa, G. 1556, De Re Metallica. [Translated by H. C. Hoover & L. H. Hoover, Dover Publica- tions Ine, New York, 1950]. Armitace, M. G. & POTTS, M. F. A. Some comments on the reporting of resources and reserves. This volume. AIMM/AMIC 1988/1992. Australian Code for Re- ‘porting of Identified Mineral Resources and Ore ‘Reserves. Report of the Joint Committee of the Australasian Institute of Mining and Metallurgy and the Australian Mining Industry Council 1990. Guidelines to the Australian Code for Reporting of Identified Mineral Resources and Reserves. The Joint Committce of the Australa~ sian Institute of Mining and Metallurgy and the Australian Mining Industry Council Crowson, P. 1992. Mineral Resources: The Infinitely Finite, The International Council on Metals and the Environment. Harais, D. P. & Aorerserc, F. P. 1981. The appraisal of mineral resources. Economic Geol- ogy, 75th Anniversary Volume, 897-938. HMSO 1982, Select Committee on the European ‘Communities: Strategic Minerals: Session 1981- 82 20th Report. Huxam, C, 1987. Quantitative Methods Unit 1. University of Strathclyde Graduate Business School IMM 1991. Definitions of reserves and resources. The Institution of Mining and Metallurgy. Kennepy, G. 1983. Invitation to Statistics. Basil Blackwell, Oxford. McKeLvey, V. £. 1973. Mineral Resource Estimates and Public Policy. US Geological Survey Profes- sional Paper, 820.10 G. P. RIDDLER Ripper, G. P, 1988. Corporate Strategy for Mineral Deputy Ministry for Mineral Resources Technical Exploration. MBA Dissertation, University of Record RF-TR-06-2. Strathclyde Graduate Business School. SME 1991. A Guide for Reporting Exploration ——, VAN ECK, M., ASPINALL, N. C., McHUGH, J. J., Information, Resources and Reserves. SME Parker, T. W. F., FARASANT, A. M. & Dini, S. Planning Committee: Mining Engineering M. 1986. Sirhan-Turayf Phosphate Project—An USGS 1980. Principles of a resource/reserve classifica- Assessment of the Phosphate Resource Potential tion for minerals. US Geo! gical Survey Circular, of the Sirhan-Turayf Region. Saudi Arabian 831.