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Evaluation of gold deposits - Part 1: Review of mineral resource estimation

methodology applied to fault- and fracture-related systems

Article in Applied Earth Science IMM Transactions section B · December 2001

DOI: 10.1179/aes.2001.110.3.145

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Evaluation of gold deposits—Part 1: review of mineral
resource estimation methodology applied to fault- and
fracture-related systems

S. C. Dominy and A. E. Annels

Synopsis of this work include shear-zone (Archaean), other meso-

Mineral resource estimation is a highly skilled activity thermal-type systems (e.g. intrusive and black-shale hosted)
that is critical to the successful development and and epithermal systems as fault- and fracture-related
exploitation of any gold deposit. The methods available deposits. These systems can comprise discrete veins, reefs or
to the estimator for the determination of local and lodes, sheeted veins/stockworks, en-échelon veins, net veins,
global grades and tonnages fall into two categories: saddle reefs, etc. Individual structures may display forms
conventional and geostatistical. Conventional tech- ranging from breccia through to laminated vein. In some
niques are generally based on weighting, averaging or instances gold may also be distributed in the wallrocks
projection of grade, thickness, etc., to produce a global through disseminations and/or micro-veining. Some of these
or local resource. Geostatistical methods are mathe- deposits will be characterized by fine, sulphide-locked gold
matically more complex, less biased and permit global and others by coarse, free gold. Those containing coarse gold
and local estimation through the use of interpolation will be particularly challenging to evaluate because of their
procedures, which reflect the nature and continuity of inherent sampling and grade estimation problems.16,17
the mineralization. The choice of what method to apply
must be made in consideration of the deposit geology,
grade distribution and sample density. In fault- and
fracture-related gold deposits major considerations in
resource estimation comprise the deposit geology
(including continuity and ore controls) and grade dis-
tribution (skewness, nugget effect, continuity, mixed
populations, etc.). Selected conventional and geostatis-
tical methods are subjected to a critical review, and
deposit characteristics that must be taken into account
during estimation are discussed.

Mineral resource estimation requires a high level of skill and

experience.33,34 The role of properly experienced geoscien-
tists and engineers has been heightened following the Bre-X
and other recent scandals. Modern mining projects require
substantial investment for exploration, evaluation and sub-
sequent exploitation and it is important, therefore, that
investors, shareholders, etc., are protected through high-
quality work.
A critical review of selected estimation methods as applied
to fault- and fracture-related gold deposits and of important
deposit characteristics is presented here. The discussions
have wider applications and relevance to all types of gold
mineralization. In the authors’ experience of both teaching
and professional practice it is still common to find ‘estima-
tors’ who are not fully aware of the relative advantages and
disadvantages of the various techniques. Further details of the
estimation methods have been given in publications of previ-
ous workers.1,3,10,11,12,22,23,36,37,38
General background: geology and grade
characteristics
Deposit geology
The types of gold mineralization considered for the purposes
Manuscript first received by the Institution of Mining and
Metallurgy on 23 January, 2001; revised manuscript received on
7 February, 2002. Paper published in T rans. Instn Min. Metall.
(Se ct. B: Appl. earth sc i.), 110, September–December 2001. © The
Institution of Mining and Metallurgy 2002.
Fig. 1 Schematic representation of geological and grade variability
for range of deposit types
The main point to consider when undertaking a resource
estimation is that it must be appropriate to the geology of the
deposit in question.12,25,33 Fig. 1 is a schematic representa-
tion of geological and grade variability for a range of deposit
types, which depicts the degree of difficulty in resource esti-
mation. Deposits with reasonably simple geometrical shapes
and regular grade distributions can be evaluated by a variety
of techniques with little inherent risk. In contrast, deposits
with high geological variability and complex grade distri-
butions can only be evaluated properly by fewer techniques
and substantial experience and knowledge are required. For
example, there is little point in applying a block-modelling
technique to a poorly drilled gold reef characterized by an
extreme nugget effect—generally, such deposits can be esti-
mated only globally.17
Most fault- and fracture-related gold deposits plot in a
zone that extends from the centre to the top right-hand
corner of Fig. 1. Table 1 indicates the general geological and
resource-estimation characteristics of these deposits.
B145
Table 1 General geological and grade characteristics of
fracture-hosted gold deposits
Criteria Features
Geological Dip between 0 and 90°. Width variable; potentially
characteristics pinch and swell. Structural variability; potentially
splitting and branching. Variable mineralogy. Free
and/or sulphide-locked gold
Data Drill-holes typically <100 m. Difficult to obtain
characteristics representative samples. Low average concentration
and high variance of Au. Skewed distribution of
grades. Large grade range
Evaluation Geological mapping, etc. Diamond and reverse-
data sources circulation drilling. Underground development.
Underground bulk sampling/trial mining
Spatial Low to high geological continuity. Low to medium
continuity grade continuity. Short- and long-range features
Domaining Often sharp definition of overall vein structure,
although internally there may be complex inter-
mingling of ore and waste. Mineralization as
veining and/or disseminations in altered wallrocks.
Presence of ore shoots
Interpretation Characterization of grade distribution.
focus Identification of extreme grades. Recognition of
high-grade ore shoots. Understanding of geology.
Effects of ‘late’ faulting, etc.
Grade Handling of extreme high grades; medium to high
estimation nugget effect; highly skewed populations and
requirements multiple populations
Assessment of geological and grade continuity through
domaining
Continuity is a critical factor in resource estimation. In gen-
eral, two types are defined: (i) geological continuity—the
geometrical continuity of the geological structure(s) hosting
mineralization (e.g. vein thickness and up-/downdip continu-
Fig. 2 Raw gold-grade histogram showing highly skewed population from narrow vein in Australia.
Extreme values are marked; population has coefficient of variation of 114%
B146
ation); and (ii) grade continuity—the continuity of grade
within the mineralization that exists within a zone of geologi-
cal characteristics and/or grade cutoff.
Geological and grade continuity assessment is the key to
resource evaluation. Within fault- and fracture-related gold
systems grade continuity is often less consistent than geo-
logical continuity. Geological continuity has important
implications for the estimation of tonnage. It is particularly
important to remember that geological continuity is a three-
dimensional feature. For example, a vein may have good
vertical and horizontal continuity, but if its width varies errat-
ically and over a wide range, the tonnage estimate will be
poor if drill-holes are not close enough. Geological and grade
continuity cannot be proven by the use of mathematical
methods but only by diamond drilling and underground
development.
Following a study of continuity the deposit will need to be
‘domained’. A domain is a single grade population that dis-
plays a single orientation of continuity. This domain is likely
to be geologically homogeneous and will have statistical and
geostatistical parameters that are applicable throughout.
A gold-mineralized system could, for example, include four
domains representing (1) low-grade to barren material out-
side the ore shoot, (2) the main ore shoot (less sub-shoots),
(3) internal, very high-grade sub-shoots and (4) disseminated
mineralization in the wallrocks of the ore shoot. These
domains are likely to show variability ranging from low (coef-
ficient of variation, CV, <25% for the low grade/barren zone)
to high (CV >300% for sub-shoots). Failure to define
domains properly will lead to complex grade populations that
will be difficult to model. In some instances, however, even
well-constrained domaining will not allow complex grade
populations to be resolved.
Nature of gold grade
Grade distribution, ore shoots
Gold grades are often related to variously sized ore shoots of
‘high-grade’ mineralization surrounded by lower-grade
areas.14 Ore shoots often account for a relatively small pro-
portion of the total mineralization, but may contain in excess
of 70% of the contained gold. They can be complex, display-
ing an overall plunge direction and containing smaller,
higher-grade internal sub-shoots. The possible effects of post-
mineralization deformation that may dislocate an ore shoot
must be realized. The recognition of ore shoots and their
grade and geological character is a critical part of the
resource-estimation process.
Grade statistics
Gold deposits generally have complex grade distributions.
This complexity is often reflected in (1) low grade continuity
and (2) diversity of ore trends. The gold grade distribution in
fault- and fracture-related systems typically displays strongly
positively skewed populations with an excess of high values
(Fig. 2). This apparent extreme skewness is often due to the
combined effect of small gold grains that tend to have a nor-
mal distribution and coarse grains that approximate to a
Poisson distribution.32
Fig. 3 Probability plot of log grade data from narrow vein gold deposit in Australia showing ‘near’-
lognormal distribution
To add to the complexities, extreme values (sometimes
known as ‘outliers’)* are also common (Fig. 2). They gener-
ally have low continuity and cause problems in resource
estimation by imposing a high variance on the population.
This leads to arguments as to whether they should be cut,
filtered or retained; this problem is discussed later. In
addition, some data display very low-grade sub-populations
that represent unmineralized samples. These can be identi-
fied on histograms and log-probability plots as a ‘break’ in the
distribution at low grade. The boundary between the unmin-
eralized and mineralized sub-population is referred to as the
mineralization indicator grade (MIG). This value is typically
*The term ‘outlier’ is generally used in classical statistics to mean a
threshold above which values are uncharacteristic of the main popu-
lation. In the context of gold grade populations ‘outliers’ should be
applied cautiously as closely spaced sampling may show them to be a
valid part of the distribution, i.e. ‘real’ values. The term ‘extreme
value’ used here simply means a high value that has an undue influ-
ence on the statistics of the population. These values will also often
have undue influence on experimental semi-variograms.
between 0.05 and 0.3 g/t in gold deposits. Many gold data-
sets show evidence of multi-modal distributions, i.e. two or
more superimposed populations that could reflect, for exam-
ple, grades below the MIG, grades above the MIG and
extreme values.
The coefficient of variation statistic (CV% = Standard
deviation/Mean ´ 100)—essentially the relative standard devi-
ation—provides a good measure of the nature of the grade
population. Values of <25% generally indicate simple sym-
metrical distributions for which resource estimation will be
relatively easy. From 25 to 100% the distribution will be
skewed (potentially lognormal) and estimation will be moder-
ately difficult. When values reach 120% or more the
distributions are highly skewed with a large grade range and
some difficulty will be faced in estimating local resources. If
the CV% is in excess of 200%, the population will be
extremely skewed and erratic, and multiple populations will
almost certainly be present. In this case local estimates are very
difficult or even impossible. Many fault- and fracture-related
gold deposits will display CV% values in excess of 100%.
To gain a better understanding of these assay populations
they can be log-transformed (two- or three-parameter) to
enable study of their statistical characteristics by the use of
histograms and log-probability plots (Fig. 3).1 Their spatial
characteristics can be quantified by the use of absolute and
pairwise relative semi-variograms. However, the assumption
that gold assay populations are always lognormal may be
invalid. Studies on the Eastern Goldfields of Western
Australia, for example, indicate that the gamma distribution
is more appropriate.8
Data quality
Many potential sources of error exist that will affect the accu-
racy of estimates.19 These combine to enhance the random
component of the data variation and, thus, contribute to
nugget variance. In gold deposit evaluation errors can be
introduced at several stages; these include poor survey pick-
up (ground and downhole surveys); drilling and core logging
(poor recovery); geological mapping (poor quality); sampling
B147
(inappropriate method etc); assaying (poor preparation, cont-
amination, etc); modelling (lack of geological knowledge, too
many assumptions on both grade and geological continuity);
and grade/tonnage estimation (incorrect technique used,
wrong cut level, etc.).
Throughout the resource-estimation process the project
management team must strive to monitor and minimize
errors.
Data compositing
Discussion of data handling prior to statistical or geostatisti-
cal analysis and estimation is beyond the scope of the present
contribution and the reader is referred elsewhere for a
detailed treatment.1
One activity that has strong implications for estimation is
compositing, which transforms irregular sample intervals to
regular downhole or regular bench heights, etc. Compositing
should be kept to a minimum in complex geological environ-
ments. Within gold deposits of shear-zone type, for example,
intersections are generally composited to 1- or 2-m intervals.
In contrast, within wide epithermal systems 5-m composites
may give adequate definition. It is important to ensure that
drill-hole data are evenly composited prior to analysis. This is
because the variance of data values is dependent on the size of
the samples; hence, 5-m composites will display less variabil-
ity than those of 1 m. Compositing lowers variance and gives
smoother semi-variograms, but should be undertaken care-
fully to avoid loss of definition at the orebody margins.
Nugget effect
One of the most notable features of gold mineralization with
which the estimator must deal is the ‘nugget effect’. This
characterizes the degree of randomness of a body of mineral-
ization. It is a quantitative geostatistical term that describes
the level of variability between samples at, or very close to,
zero distance apart. It is defined from a semi-variogram as the
percentage ratio of ‘nugget variance’ to ‘total variance’:1
é Co ù
e% = ´ 100 (1)
êë Co + C ûú
where e% is nugget effect, Co is nugget variance, C is spatial
variance and Co + C is total variance.
On the basis of this definition gold deposits can be broadly
defined as displaying a low nugget effect, <25%; medium
nugget effect, 25–50%; high nugget effect, 50–75%; or
extreme nugget effect, >75%. Those with values of more than
75% are likely to be the most challenging to evaluate.17 Some
evaluators define nugget effect differently, as the direct ratio
of ‘nugget variance’ to ‘spatial variance’:
Co (2)
e% = ´ 100
C carefully thought-out sampling and preparation protocols are
The former definition is used here, but either is acceptable
provided that it is clear which is being used.
The best estimate of nugget effect is obtained from a semi-
variogram calculated in the direction of closest sampling
spacing, i.e. the downhole or along-drive direction when
using exploration or grade-control data.
Nugget effect in practice
A high nugget effect means that however closely samples are
taken there will be large differences in value because of the
‘nuggety’ distribution of gold. This inherent variability is
most serious where there are very small-scale structures, such
B148
as coarse gold or small-scale veining. A deposit that shows a
so-called ‘pure nugget effect’ (e% » 100) is characterized by a
totally random grade distribution. This implies that the data
are independent and that geostatistical methods are relatively
ineffectual in predicting the grade of unsampled locations and
only classical statistical approaches can be applied.1 Many
gold deposits display a nugget effect of between 25 and 85%.
In a recent survey of 97 hardrock and alluvial deposits by the
first-named author 50% were found to have a nugget effect
exceeding 50%.
Composition of nugget effect
The nugget effect has two components: the ‘geological or
natural’ nugget effect (GNE) and the ‘sampling or human’
nugget effect (SNE).
The GNE is related to the natural distribution of the gold
within the mineralization. At a small scale this refers to the
distribution of single grains or ‘groups’ of grains through to
larger-scale ‘zones’ of high grades. The physical continuity
of mineralization is also an important consideration. Small,
erratically distributed, high-grade veinlets will result in a high
nugget effect. The dissection and displacement of a previ-
ously continuous high-grade vein by later barren events will
also lead to a high nugget effect.
SNE is related to errors induced by inadequate sample size
or preparation and analytical procedures and is particularly
problematic where coarse gold occurs.17 In some instances
the SNE is the sole component of the total nugget effect and
it is purely a reflection of the fundamental error or the short-
range heterogeneity fluctuation error.20 Gold deposits display
a high nugget effect as a result of sparsely distributed grains of
gold. These grains are commonly the only phase in the mater-
ial that contains the element of interest. As a result, random
sampling of the material results in a range of grain abun-
dances and, because only a few grains are present, this range
is relatively large. For example, if a sample contains on aver-
age five gold grains/kg, sub-samples of this material may only
capture a few of these ‘nuggets’. The concentrations of the
gold could be 20–100% of the actual mean grade.
Implications of nugget effect
High nugget-effect deposits (e.g. gold) are the most difficult
mineralization types to evaluate. The higher the nugget effect
the greater the potential error during estimation. The
randomness so introduced makes prediction of unsampled
locations more difficult. Deposits displaying an extreme
nugget effect may sometimes be evaluated best by conven-
tional estimation methods.
If the large variations associated with the nugget effect can
be avoided, exploration is made more successful and resource
evaluation more accurate. Consequently, understanding of,
coping with and potentially reducing the ‘nugget effect’ have
significant economic importance. Assuring rigorous quality
controls during preparation and analysis can reduce the SNE;
essential.17 The GNE can only be reduced through careful
interpretation of the geology and grade distribution, leading
to effective domaining.27
Dealing with extreme values
The presence of extreme values (e.g. raw grade or grade accu-
mulation) causes problems during resource estimation for
three reasons: (i) they may be spurious and result from poor
sample preparation; (ii) they may represent a high-grade zone
with limited spatial extent and, even though present, these
zones may be spatially discontinuous and impossible to pre-
dict in production scheduling; and (iii) a few high-grade
assays may be responsible for much of the metal content.
Even small variations in the proportion of high grades may be
responsible for large positive or negative differences between
estimated and recovered reserves.
Extreme values give the grade population a high CV%,
which is likely to be in excess of 120%. It must be remem-
bered, however, that CV% is a function of sample size
because variance is also a function of sample size.
Numerically, extreme values may represent less than 5% of
the total population, though up to 90% of contained gold.
Their distribution is generally erratic and of low continuity
and they impart a high nugget variance to the grade popula-
tion (hence, a high nugget effect). These values can have a
major influence on the deposit grade and in some cases make
it viable. If they are excluded from resource calculations, the
deposit grade could be severely underestimated and deemed
of no economic potential. The important question is: does an
extreme value, or group of values, indicate a true high-grade
zone or even stoping block?
The traditional method of dealing with extreme values
involves cutting, i.e. their reduction to a predetermined value.
Cutting has little theoretical basis, but sometimes gives
acceptable results in an operating mine. For resource esti-
mates prior to production cutting must be used with extreme
caution. The resource-estimation method used should allow
all sample values to be incorporated without unduly influenc-
ing the average grade.
Arbitrary cut factors that may be applied include reduction
to: (1) 15.5 g/t (0.5 oz/t) or 31 g/t (1 oz/t); (2) the average of
the two closest samples; (3) mine average grade (if pro-
duction records exist); (4) 1.5 or 2 times the mean of the
population; (5) 15–20% of the extreme value; (6) the 97.5
percentile value on a cumulative frequency curve; (7) a value
of four or five times the standard deviation; (8) the value
where the ragged tail commences on a histogram; and (9) the
upper break point on a log-probability plot. It is common
practice to cut extreme values to the value below which
97.5% of the population lies. In this way the sample mean is
lowered to a value more likely to represent the population
average, but not always. When grades are lognormally distri-
buted Sichel’s t estimator of the mean is compared with that
produced by progressively cutting extreme values; if the
results coincide, the cut grade is likely to be valid.
If cutting is not undertaken, interpolated block grades
could be considerably higher. Cutting reduces their influence,
but it is difficult to determine the correct level of cut to apply.
This is potentially defined by grade reconciliation during
mining. The use of reconciliation results to justify cutting is,
however, often based on an erroneous interpretation of data.
Many other errors may remain undetected since the predic-
tions are being fudged to agree with actual production, which
may be sub-optimal if there are, for example, poor mining
(dilution) or processing (ore loss to tailings) practices.
A recent approach to dealing with extreme values involves
their transformation using logarithmic, gaussian anamor-
phosis, rank and indicator techniques. The special treatment
of semi-variograms for extreme values will be discussed later.
The treatment of extreme values is a deposit-dependent
problem. The disadvantage of using cut grades is that they
are specific to the given orebody and to areas within it. It
should be noted that cut values should also be related to the
size and type of sample being taken. Cut factors on larger vol-
umes (e.g. reverse-circulation drill cuttings) should not be as
great as on small volumes (e.g. underground chip samples);
this is related to the volume–variance relationship. No global
cut grade is likely to be appropriate for a mine or group of
mines. Cutting is an attempt to deal with skewed data, but it
is a technique that is not well understood and frequently
abused. In many cases cutting is too severe and sometimes, at
the other extreme, totally ineffective. The key to the problem
of deciding the level of cut lies in an appreciation of the grade
distribution and an understanding of how to deal with some-
times lognormally distributed data. It is necessary to ensure
that the spatial distribution of the gold is honoured via
detailed statistical analysis and domaining.32 It is suggested
that both uncut resource estimates and others cut at various
cut levels be prepared since the difference between them will
give a measure of the problem.
Selection and approach to estimation
Types of resource estimate
Different types of resource estimates will be encountered dur-
ing the development of a mining project. These range from
global to local estimates of both resources and reserves.
Resource estimation, which is the focus of the present study,
is also critical as a basis for reserve estimates.
Global resource estimate
Estimation of the global resource is the first step in the
determination of a minable reserve for an orebody and its
reliability is dominantly controlled by the amount and quality
of both geological and grade data. The objective is to obtain
an estimate of the grade–tonnage curve within a deposit
defined by geological and/or grade boundaries from within
which representative samples have been taken. Deposits of
certain types may yield insufficient data to lend themselves to
the application of geostatistics and more reliance will have to
be placed on conventional methods.
Global reserve estimate
The aim of the global reserve is to determine the amount of
minable material that can be recovered from the global
resource following the application of cutoff grades, a selective
mining unit size and technical constraints specific to the min-
ing method applied. Global reserves are the basis for the
feasibility analysis of the project. At this stage the grade–
tonnage curve generated is for blocks of dimensions roughly
equal to the drill spacing, whereas the size of the selective
mining unit is normally much smaller. Therefore, the grade–
tonnage curve of the large blocks must be corrected (the so-
called ‘affine correction’1,11) to obtain the grade–tonnage
curve of the selective mining units. This correction requires
the use of geostatistical methods.
Local resource and reserve estimates
The estimation of local resources and reserves is performed
as part of detailed mine design and scheduling undertaken
during both the feasibility and pre-production planning
stages. More accurate estimates of the grade of individual
mining blocks are now required. Geostatistics will provide the
best estimation method provided that the block dimensions
are not too small. The best local estimates will be obtained by
kriging blocks of similar size to the drill spacing and esti-
mating local grade–tonnage curves that define the selective
mining units within the larger blocks. Advanced methods,
such as indicator kriging, can be used to make an initial esti-
mate of the recoverable reserve in each resource block during
global resource estimation and conditional simulation can be
used to define local reserves.
Grade-control reserve estimate
Grade-control reserve estimation is undertaken during pro-
duction and is the basis for the final decision on whether a
block should be mined or not. At this stage the estimator will
have much more detailed sampling information at his dis-
posal. With the availability of closely spaced samples and
B149
suitable geological control geostatistics generally outperforms
conventional methods.
Selecting a resource-estimation technique
The selection of an appropriate resource-estimation method
depends on the geometry of the deposit, the character of the
ore boundaries and grade variability and distribution. The
deposit geometry determines the level of detail that must be
interpreted and input to the estimate, whereas the grade vari-
ability and distribution determine the amount of smoothing
that is required for the estimation of minable blocks. The
character of the ore boundaries determines how grade will be
estimated at the borders between different grade domains.
Geometrically, fault- and fracture-related gold deposits can
vary from simple, tabular vein structures to highly complex
shear zones. Ore boundaries can vary from sharp to highly
complex and irregular with high risks of dilution along the
contact.
Carras 8 listed four major characteristics of shear-zone gold
systems (based on the Eastern Goldfields, Western Australia)
that must be considered during resource estimation. (1) The
distribution of gold is strongly geologically controlled in fresh
rock, but this is somewhat weaker, though still evident, in
the oxide zone. (2) In fresh rock there is a strong correlation
between the sample grade and the block grade—i.e. high-
grade ore blocks are reflected by high-grade samples, which
are usually indicative of some form of shoot-like control.
(3) Complex local geometry is found, which increases in
complexity as the cutoff grade increases—i.e. an understand-
ing of how shape alters as a function of cutoff grade is
important. (4) The gold grade data are highly skewed. These
characteristics have key implications for resource estimation.
It is critical that estimates are constrained through the use
of geological contacts between the ‘fresh’ and ‘oxide’ ores.
These ore zones need to be internally domained by grade to
control the grade interpolation process. The complex geo-
metry gives rise to edge dilution that is ultimately controlled
by geometry, cutoff grade and production rate.
Arguably the most critical consideration relates to the
variability and predictability of grade and the density of data
available. The CV% statistic provides a useful measure of
variation when coupled with knowledge of the deposit geo-
logy. For example, a deposit with a CV% less than 50% and
an expectation of high tonnage could be modelled by both
conventional and geostatistical estimation techniques. Grade
estimates in such deposits exhibit little sensitivity to extreme
values because there are few of them, if any, and the propor-
tion of the mineralized tonnage recovered is high. When the
CV% exceeds 120% and mineralization is likely to be con-
tained in small-scale structures poor grade continuity is
indicated. In this case a significant proportion of the mineral-
ized rock is likely to be sub-economic and conventional
methods may be outperformed by such techniques as indica-
tor kriging. Where the CV% exceeds 300% and the
breakeven cutoff grade falls above the population median
value it is difficult to estimate resources accurately, especially
if the samples are widely spaced. Global and local estimates
of both tonnage and grade in these deposits can be signifi-
cantly in error whatever estimation technique used. In this
case conventional methods may be the better option.
Approach to estimation
A clear approach needs to be adopted in resource estimation
if block-modelling techniques are to be used, e.g. inverse dis-
tance weighting (IDW) or kriging. Recognition that resource
estimation cannot be treated as just a geometrical exercise
and that geological constraints must be applied needs to be
incorporated in the methodology. The nature of the mineral-
B150
ization contained within the mineralized fracture (vein) is
likely to be very different from any located within the wall-
rocks. Combination of the two potentially very different assay
populations will create problems and errors and, in any case,
makes little sense geologically. Effective domaining of these
zones is required so that vein metal accumulation, e.g. m.g/t,
and thickness, m, are modelled separately. Spatial variations
and continuity will then relate to factors controlling mineral
deposition in the vein only. There is, thus, a greater prob-
ability of producing semi-variograms with clearly defined
structures. A separate exercise is then undertaken on the wall-
rock samples, whose combined thickness should take into
account the difference between the vein thickness and the
minimum stoping width. It also accounts for economic grades
that extend from the vein to beyond the minimum stoping
width. The metal accumulations and thicknesses may not
allow the production of acceptable semi-variograms and IDW
methods may, therefore, have to be applied using the same
blocks as for the vein material. The combination of the thick-
nesses and metal accumulations for the two material types
then enables the tonnage and grade of the resources to be
calculated. A key part of this process is the definition of
‘boundary conditions’ as either ‘soft’ or ‘hard’. Imposing hard
boundaries means that block grades within a certain domain
(e.g. vein) are estimated solely from sample assays within that
domain. Soft boundaries allow grades to be estimated with
the use of all samples that fall within the search ellipse regard-
less of what domain they are in.
Conventional resource-estimation methods
Sectional methods
In sectional methods the ore envelope or computer-generated
orebody solid model is sliced either vertically or horizontally
so as to define panels of ore centred on, or bounded by, each
of these slices, their thickness thus equalling the section
spacing (Figs. 4 and 5). The grades of all samples or drill-
holes falling within, or at the margins of, this volume are then
weighted by use of the individual sample lengths and, ideally,
specific gravity as well. The accumulation of all the sectional
volumes gives the total volume of the orebody, whereas the
global grade is based on weighting of each of the panel grades
Fig. 4 Sectional resource estimation by vertical section. Panel
volume = A ´ D or (A + B) ´ D/2 (alternative panel)

Fig. 5 Sectional resource estimation by horizontal section
by either volume (constant sp. gr. assumed) or tonnage (vari-
able sp. gr.).
Sectional methods are prone to a number of shortcomings.
End-corrections are needed at the strike terminations of
the deposit if vertical sections are used. Terminations of
orebodies along strike are easier to represent on horizontal
sections/panels. A significant problem is that, in either
vertical or horizontal panels, there is no change in panel
morphology over the width of the panel. Thus, systematic
changes between sections are not reflected. Grade estimation
is often suspect as a consequence of the variable spacing of
drill-holes or samples along sections and different densities of
drilling or sampling between sections. This is especially true if
variable areas of influence of each sample are not taken into
account. Sectional methods are thus not suitable for local
resource estimation.
Polygonal methods
Where drill-holes are randomly distributed, i.e. not on a regu-
lar grid, the grade and thickness of each hole are assigned to
an irregular polygon whose size is variable. The method thus
defines a geometrical zone of influence for each sample or
drill-hole in the database that is unrelated to the nature of the
mineralization (Fig. 6). Each polygonal block is produced by:
Fig. 6 Polygonal estimate in which circular geometrical zone of
influence is expanded to geostatistical range
(1) construction of perpendicular bisectors to tie lines linking
the holes that surround each hole in the database; (2) linking
drill-holes with tie lines and then constructing angular bi-
sectors between these lines to define a central polygon; or
(3) expanding circular zones of influence around each hole
until these zones impinge and create a polygonal mosaic
except at the margins of the drilling, where the outline
remains a segment of a circle. The grade and a thickness
component of the contained borehole or sample are then
assigned to the whole polygon. Global grades are produced
by volume or tonnage weighting of individual polygon grades.
This requires determination of the polygon area and a suit-
able specific gravity.
The problems associated with the application of polygonal
methods are numerous. Importantly, they only use informa-
tion from the contained hole to evaluate each polygon; the
values in adjacent holes are ignored. They also fail to account
for trends in grade distribution as constant grade is assumed
across the entire area of the polygon. Bias is introduced by
giving large weighting to drill-holes in areas of low drilling
density, and this increases with the nugget variance. Where
the nugget effect is high the sample values have a higher vari-
ance, leading to higher probabilities of drawing either very
low or very high grades, which will be less like the average
grade of the material in the polygon. Royle and Newton28
have shown that some samples have grades lower than the
mean grade of the poorest block and, at the other extreme,
other samples have grades higher than the richest or thickest
blocks. Selection or rejection of blocks on the basis of their
single sample grades causes the rejection of payable blocks
and an inflated expectation of the mean grade of the selected
blocks, brought about by the assumption that a high grade
extends over the whole of the block.
Some attempts have been made to assign weights arbitra-
rily to immediately adjacent samples to each polygon to
reduce the effect of using a single intersection.5 This
approach is, however, non-statistical and does not reflect he
grade distribution.
The third method mentioned above does constrain the
dimensions of a polygon to a circle whose radius is the maxi-
mum expansion applied to the whole data-set. There is no
logical reason why some holes should be given more influence
than others. Where radial expansion of circular zones of influ-
ence is used the problem arises that less well-drilled areas
may suffer from gaps between individual circular polygons,
thus breaking up the continuity of the mineralization (Fig. 7).
Fig. 7 Polygonal estimate in which complete polygons are formed
by continued expansion beyond geostatistical range
B151
If large polygons are constructed in a deposit where the true
zone of influence of a sample is small, large areas of the poly-
gon are effectively unsampled and unknown.
The irregular shape of polygons makes them unsuitable for
local resource estimation and mine planning. The process of
converting them to a usable block is complex and time-
consuming. Polygonal estimators are biased in that the grade
distribution of polygons is the same as that for the sample or
drill-hole grades. The maximum radius of circles is con-
strained by the computer operator and relates to the value of
polygons produced over most of the orebody (Fig. 6); it is
unrelated to any knowledge of continuity of the mineraliza-
tion. Where the expansion exceeds the zone of influence of
samples (e.g. geostatistical range) portions of polygons are
again effectively unsampled (Fig. 6). Where extrapolation
extends beyond the limit of drilling the polygons can be
clipped to the limits of drilling or to the estimated range
beyond these limits.
The polygonal and triangulation methods (see below) are
not strictly estimation techniques.28 Rather they are ways of
dividing a deposit into a series of blocks and then making a
series of assumptions about the sample data in the blocks.
The ‘block matrices’ or ‘random stratified grid’ (RSG)
method is an alternative that can be used on regular or irregu-
larly spaced data. Where drill-holes are regularly spaced the
four bounding drill-holes are averaged to yield the block
grade. Where the drill spacing is irregular a series of blocks is
drawn in such a way that, on average, one intersection occurs
within each RSG block whose grade is assigned to the block.
If semi-variograms of the data are available, the errors of esti-
mation can be calculated from extension variance theory.2
Triangulation
The triangulation method requires that all mid-point inter-
sections of an orebody be projected on to a suitable plan and
that groups of three adjacent holes can be joined by tie lines
to create a matrix of triangles, which should ideally be
equiangular so that small angles are avoided (Fig. 8).
In this method constant grade values within triangles are
assumed and are determined by application of a weighting
Fig. 8 Resource estimation by triangulation. Volume = A ´ VT
where A is horizontal area of triangle on plan projection and VT is
weighted average of vertical thickness components VT1, VT2 and
VT3
B152
procedure. This weighting allows for both the thickness and
the shape of the triangle and has no ability to reflect gradual
grade variations between boreholes.1 The three thickness
components (Thi) will only be weighted by the ‘sine of half
the included angle (qi)’ method:
æ q i ö÷
å ni =1çè T hi ´ sin 2ø
Thickness = (3)
æ q i ö÷
å ni =1çè sin
2ø
The best weighting method for grade, however, is use of a
combination of thickness and included angle together with
sp. gr. (SG) if there is significant variation between the drill-
hole intersections. The formula is
qi ù
é
å ni=1ê Z i ´ T hi ´ SG i ´ sin2 ûú
ë
ZTRI = (4)
) é q ù
å ni =1 êT hi ´ SG i ´ sin i ú
ë 2û
where the triangle grade is ZTRI and the grade at each inter-
section is Zi . The area of the triangle is then multiplied by the
weighted thickness value to determine the volume and,
hence, the tonnage. To compute the global reserve each tri-
angle grade is weighted by its volume or tonnage.
The orebody is then represented by a series of triangular
prisms with flat end faces—and so no account is taken of any
margin variation between intersections. Although triangula-
tion is better than the polygonal method in that three holes
are used to evaluate a block of ground, the weighting applied
to grade is still controlled by geometrical features of the block
and is unrelated to knowledge of the mineralization, and
again it ignores all other nearby holes.
By its very nature the method restricts the resource to the
limits of drilling or sampling and thus produces a conserva-
tive estimate. No grade extrapolation is allowed into fringe
areas.
Block modelling with inverse distance weighting
IDW is a linear interpolator by which data are smoothed
without reference to their spatial variability. The variants of
this method are suitable for two- or three-dimensional model-
ling of an orebody via a matrix of rectangular prisms or blocks
(Fig. 9). In each case a search area or volume is erected
around each block centre (or discretization point) in turn.
Any sample values (grade and thickness) captured by these
areas or volumes are weighted by the inverse of the distance
of the sample from this point raised to a power N.
In two-dimensional routines the search areas may be circu-
lar (which assumes directional isotropism, i.e. uniform grade
variability in all directions) or elliptical (when anisotropism
exists). For a two-dimensional isotropic case the block grade
(or whatever is being estimated) is given by
æZ ö
n
å i=1 ç
i
N÷
è di ø
ZB = (5)
æ 1 ö
å n
i=1 ç N÷
è di ø
where ZB is the estimate of block grade based on the values of
each Zi at each sample location in the search area and di is
distance from the block centre.
In the two-dimensional anisotropic case the ellipse should
have a preferred orientation and axial ratios defined by geo-
Fig. 9 Two-dimensional resource estimation by IDW: part of block model based on data from precious-metal vein in CIS

logical and geostatistical studies. If necessary, different orien- where XDi is differences in the x coordinates of the sample
tations can be used in areas of differing strike. All samples are and the block centre, YDi is difference in the y coordinates of
then weighted by inverse distance thus: the sample and the block centre, K is ratio of the chosen
ellipse axes (major axis/minor axis) and Zi is the sample value
Zi at each sample site. The transformation of the coordinates
å ni=1 N has effectively transformed the search area to a circle of radius
é XD2 + K.YD 2 ù 2
ë i ( i)
û
a. The application of IDW will thus give a greater weighting
ZB = (6) to those samples which lie closer to the long axis of the
1 ellipse.
å n
i=1 N The data used will be the two-dimensional regularized

ë i ( i)
é XD2 + K.YD 2 ù 2
û
composites of the potential ore zone. Different search rou-
tines may also be chosen including sector, often octant,
B153
search areas, and a minimum and maximum number of sam-
ples are specified for each sector. If the number does not
meet this requirement and more than one adjacent sector
fails, no values are interpolated into the block on the first run
of the program. A second run may be implemented with a
longer range to attempt to fill the voids in the block model.
This method reduces the bias incurred when sampling is
denser on one side of the block being estimated, such as at
the orebody fringes, where some sectors will be totally empty.
One aspect of the sector search criteria that has rarely been
discussed is that excessive restriction on the number of sam-
ples produces a result that is similar to a high-power IDW
interpolator, i.e. there is less smoothing. The use of more
samples in the octant search produces a result that is similar
to a low-power IDW interpolator, which indicates more
smoothing. It is thus possible to control the amount of local
smoothing by changing the octant search criteria.8 The
degree of smoothing induced affects the selectivity of mining
that is possible and the size of selective mining units. Where a
large degree of smoothing has occurred larger blocks and less
selective mining methods will be required.
In three-dimensional block modelling the search volumes
are either spherical or ellipsoidal. In the latter case the axes of
the ellipsoid can be assigned azimuths and plunges based on
geological and, perhaps, geostatistical studies. The data used
will now be equal-length composites derived from the original
sampling lengths (often variable).
The weighting power for the inverse of the distance may
vary between 1 and 5. The lowest power may result in exces-
sive smoothing, whereas the highest effectively only selects
the nearest sample as this receives a dominant weighting.
Beyond N = 5 the estimate effectively becomes very similar to
a polygonal result. (Inverse distance)3 is suited to erratic
high-grade, domained data that will be selectively mined. For
orebodies to be bulk-mined if the nugget effect is in excess of
50%, (Inverse distance)1 is the best estimator, smoothing the
data, whereas low nugget-effect (<25%) bulk-mine systems
can be modelled with (Inverse distance)3. As IDW is a linear
combination of data, it cannot interpolate above or below the
range of the original measurements. Thus, if peaks and
troughs have not been specifically sampled, they cannot be
inferred.
Most modern versions of the method employ a discretiza-
tion grid within each block. This overcomes the problem that
a value is only assigned to the centre of the block and fails to
take any account of the actual block size (Fig. 9). A small
block and a large block with coincident centres would be
given the same values for a set search range. The discret-
ization grid is a matrix of points uniformly distributed
throughout each block, typically at 5- or 10-m centres. The
weighted value at each point is determined and the average is
then assigned to the block as a whole.
The problems that arise in the application of the IDW
method include the selection of unsuitable search and weight-
ing parameters that fail to reflect the nature and variability of
the mineralization. There is rarely any relationship between
the search area and the geostatistical range. An irregular
deposit with a small range would be treated in exactly the
same way as a regular deposit with a large range. The tech-
nique results in the excessive smoothing and smearing of high
grades through the use of large search areas combined with
low values of the weighting power, resulting in lower global
and local grade estimates. Grades are smeared into barren or
low-grade areas, which generally results in excessive tonnage
estimates. Erroneous estimates are related to the use of cir-
cular search areas or spherical volumes when there is clear
evidence of directional variability in grade or thickness values.
Limited downdip sampling may result in bias due to the
greater influence of along-strike sampling (e.g. along under-
ground development). According to Royle, 32 the method has
often been used to value small blocks of ground from too
sparse data (e.g. an exploration drill database). This problem
is indicated when vastly different estimates can be derived
from the same data by the use of different, essentially arbi-
trary, search parameters.
The IDW method gives satisfactory estimates in some
orebodies but not others. As with all non-geostatistical esti-
mators, IDW makes no distinction between the nugget and
spatial components of the total variation. Only spatial varia-
tion is assumed, although a nugget component is an

Table 2 Summary of conventional resource estimation techniques and their application to different gold deposit types (modi-
fied from Annels and Armitage2)

Sectional modelling Polygonal modelling Triangulation Inverse distance weighting

Project status Exploration stage to Exploration stage to Exploration stage to Feasibility and grade control
feasibility estimates feasibility estimates feasibility estimates estimates

Deposit geometry Thick tabular or wide Thin, tabular orebodies Thin, tabular orebodies Tabular deposits regularized
three-dimensional regularized in two regularized in two in two dimensions or large
orebodies dimensions on plans or dimensions on plans or three-dimensional deposits
VLP VLP

Grade distribution Orebodies with systematic Orebodies characterized by Orebodies characterized Normal statistical
(method best suited to) or little spatial variations rapid changes in geology by gradual systematic distributions, but without
in grade and/or grade, which can be changes in grade observable spatial
reflected by polygon distribution patterns
boundaries

Key factors Top-cuts, orebody limits Top-cuts, orebody limits Top-cuts, orebody limits Top-cuts, assay weighting,
and assay weighting and assay weighting and assay weighting composite length, search
parameters, degree of
smoothing, unfilled blocks
and orebody limits

Styles of gold Shear-zone and Relatively thin shear-zone, Relatively thin shear-zone, Shear-zone, epithermal and
mineralization where epithermal vein gold epithermal and ‘other’ vein epithermal and ‘other’ vein ‘other’ vein gold deposits
method has been applied deposits gold deposits gold deposits

B154
observable fact in all gold orebodies. The smaller the nugget
component the better the method works, and vice versa. As
the nugget component increases IDW becomes more biased
and there is an increasing, negative linear correlation between
the nugget effect (e.g. high nugget variance in relation to the
total variance) and the regression slope of the true block value
on its estimated value.
the vector passing through each discretization point in the ore
block and the sample.1 These points form a three-dimen-
sional matrix of grid points throughout the block and their
use allows the size of the block to be taken into account.
If the nugget effect is low, only the values nearest the block

Discussion of conventional techniques

The methods described, with the exception of IDW, use the
arithmetic mean of the sample data as the estimated value of
the section or orebody. They all fail to give unbiased esti-
mates of what tonnages lie above various cutoff grades, so
that biased grade–tonnage curves are obtained. The sample
values are useless for this purpose as they are based on core-
size or smaller volumes, not the volumes of the mining blocks
on which a selection of ore/waste will be made. Nor can these
methods deal with the problems posed by orebodies whose
grades or thicknesses diminish toward their edges; they leave
the problem of valuing reserves in the fringe areas unsolved.
Where high or extreme grades are assigned over large ton-
nages these methods can lead to severe overestimation of
grade. It is industry practice to cut these grades, though the
effects of cutting can still lead to excessive bias if this is
applied arbitrarily. Like other conventional methods, IDW
makes no distinction between the nugget and spatial compo-
nents of the total variation.
Conventional methods have a diminishing role in the
evaluation of mineral deposits. Their application is only rele-
vant during the exploration and, perhaps, pre-feasibility
stages, though they are sometimes used to cross-check geo-
statistical estimates (Table 2). As indicated, they possess
many shortcomings that can affect the reliability of the esti-
mate. Their limitations need to be assessed in light of the Fig. 10 Kriging equations for ordinary kriging
geological and grade continuity of each particular deposit.
One very important limitation is that most can only be
applied in two dimensions and are thus only suitable for gain a significant weighting factor and more distant values are
deposits that are thin and tabular in form. effectively screened out—the ‘screen effect’.1 However, as the
nugget effect increases so the screen effect begins to break
Geostatistical resource-estimation methodologies down and, as a result, values further away begin to influence
the block estimate. In the extreme situation, when the nugget
Geostatistical methods (e.g. kriging) are defined as either effect is very high, the best estimator of a block is the
linear or nonlinear. Linear methods estimate grade at a given arithmetic mean of the whole deposit. This shows that con-
location by weighting samples on their distance from the ventional methods are likely to be more applicable to high
block being evaluated. Given certain assumptions, linear nugget-effect deposits. Kriging is generally considered to be
kriging is a best linear unbiased estimator (‘blue’) where the superior to IDW if the nugget effect is less than about
weighting factors applied to the sample values are determined 35%.1,6,7 Even above this value, however, kriging is better as
in such a way that the mean squared estimation error is mini- it allows an estimate to be made of the confidence of each
mized. Nonlinear geostatistical estimators are those which block via the kriging variance. Global resource confidence
use nonlinear functions of the data to obtain the conditional limits can be calculated through the application of extension
expectation. Nonlinear estimators allocate weights to samples variance theory.1,29
that are functions of the grades themselves, i.e. not solely The key attributes of kriging are that the results are
dependent on the location of data. unbiased and the method minimizes estimation errors. It
Kriging is essentially a moving average method by which overcomes the ‘regression effect’ that afflicts many conven-
weights—the kriging coefficients—are allocated to sample tional methods, in which low-grade areas are underestimated
values captured by a search area or volume.10,11,12 It is simi- and high-grade areas overestimated.1 However, like IDW, it
lar to the ‘conventional’ inverse distance weighting technique is a smoothing technique that may present a problem when
except that the weighting factors applied to the data are not an ore zone has ‘hard’ contacts as opposed to those orebodies
simple functions of distance. In kriging, for each sample in whose grade diminishes gradually out into barren rock (‘soft’
the search area or volume, the relationships between it and all contacts).
the other samples and between it and the mesh point under It is generally accepted that kriging is theoretically superior
evaluation are expressed in the form of covariances that are to the conventional estimators, but in some cases kriging esti-
combined in a kriging equation. If there are four samples, mates for gold may not be more accurate than conventional
there will be four such simultaneous equations plus a fifth methods. In terms of recoverable ounces kriging estimates
that contains the condition that the sum of the weighting often deviate from production by up to 20%. Inaccurate esti-
coefficients equals one. These must be solved to determine mates made by kriging are due primarily to poor estimation of
the kriging coefficients (Fig. 10). They are also dependent on tonnage. There are several reasons for this overestimation.
the sampling pattern or hole density and the orientation of One important source is smearing of ore into waste, which
B155
can occur, in part, as a result of inaccurate semi-variogram
models representing mineralization continuity. A second fac-
tor responsible for smearing is related to the quality of data
used in the estimate. In gold-mineralized systems it is not
uncommon to encounter nugget effect values in excess of
50%; the reduction in screening effects leads to over-averag-
ing. Finally, a change of support will also effect smearing. In
many instances the sizes of modelling blocks are larger than
selective mining units, which implies that the modelled blocks
incorporate more dilution than the mined blocks.
Whether or not a deposit can be evaluated by kriging is
dependent on there being measurable continuity of geology
and grade at the sample spacing available. The decision on
whether a deposit should be evaluated by kriging should be
based on the quality, quantity and representativeness of the
data available, the robustness of the geometry and grade
models and the aims and required accuracy of the estimate.
The key initial step is to construct a geological model of the
deposit and then conduct semi-variogram analysis of the
composited grade data. Geostatistical resource estimation is
not a ‘black box’ process—it requires that assumptions be
challenged and decisions understood all the way through the
process.
Many variants of kriging are available, but only a limited
number have been applied in practice to mineral resource
estimation. These are briefly described and critically reviewed
later.
Geostatistical spatial analysis
Principles of variography
A semi-variogram is a graph that illustrates the average vari-
ability between samples and the distances between samples.
In simple terms, it measures the influence that sample values
in one location have on surrounding sample values, and vice
versa. Semi-variogram parameters are required to control the
kriging process.
The experimental semi-variogram is a graph of geostatisti-
cal variance or gamma function, g(h), values plotted against
distance or lag, h, spacing (Fig. 11). The experimental semi-
Fig. 11 Semi-variogram and its main components. g(h) is semi-
variance at lag distance—
å( x 1 -x 2 )
2
g (h) =
2N
where N is number of differences at lag (h) and x1 and x2 are values
separated by distance lag (h); Co is nugget variance; C is regionalized
variance; Co + C is sill variance or dispersion variance (s2); and a is
geostatistical range (covariance = 0)
B156
variogram for each lag is obtained by application of the for-
mula
å i =1(X i - X i +h )
n 2
g (h) = (7)
2N
where N is total number of data pairs counted at each lag and
Xi and Xi+h are the values of regionalized variables (e.g. grade,
metal accumulation, etc.) separated by h.
During the construction of a semi-variogram consideration
must be given to the lag spacing, the number of lags used and
the distance of reliability. The lag is the distance at which
sample differences are compared and is generally dictated by
simple spacing, i.e. it should be equal to the minimum sample
spacing in each direction of the sample grid. The number of
lags is the number of such distance intervals that will be
examined; its selection is controlled by the deposit size. In
general, semi-variogram results are not valid beyond half of
the lateral extent of the deposit, i.e. the distance of reliability.
For example, if a strike-direction semi-variogram is being
constructed along a 600-m drive that has been sampled every
2 m, the distance of reliability will be 300 m and the number
of lags will be 150. Beyond the distance of reliability the semi-
variogram will generally break up and become difficult to
model.
The most critical semi-variogram parameters affecting
kriging are nugget variance, spatial variance and the geosta-
tistical ranges, a, in the direction of each semi-variogram
(Fig. 11). The intersection of the semi-variogram on the g(h)
axis represents nugget variance, which is often erroneously
called ‘nugget effect’ in the literature. The nugget effect has
been defined previously as the percentage ratio of the nugget
variance to the sill. It should be noted that the term ‘sill’ is
also often incorrectly applied to the spatial variance. The
semi-variogram defined from the sample data is known as an
‘experimental’ semi-variogram.
As a general rule, 150–200 data points or more are
required to produce a high-quality semi-variogram, though in
some instances as few as 50 will work (e.g. drill-hole inter-
sections).1 Empirical analyses have shown that the number
of samples, N, needed to produce an interpretable semi-
variogram of accumulations in a gold deposit is related to the
CV% value by the approximate expression30,32
N = 4CV% (8)
i.e. the number of samples required for successful vario-
graphy increases with CV%.
The ratio of the ranges in different planes gives an indica-
tion of the anisotropism of the orebody grades. For example,
shear-zone and other vein-type gold deposits commonly dis-
play geometrical anisotropy whereby they have the same sill
value in different directions, but differing ranges. The semi-
variogram parameters characterize the spatial variation of
the variable under study. In particular, the nugget variance
reflects the variability induced by short-range geological
structures and random effects combined with an additional
variability (error) induced by the drilling, sampling, prepara-
tion and analytical methods used. Unlike IDW, which applies
arbitrary weighting systems, kriging takes into account the
nature of the mineralization in assigning weighting factors to
sample values.
For the experimental semi-variogram to be useful as a tool
for estimating values within a deposit a generalized equation
must be applied that fits all types of spatial behaviour. The
model is a continuous mathematical function that represents
the experimental data. Semi-variogram definition and model
fitting are of great importance in geostatistical estimation as
kriging relies on obtaining a semi-variogram that accurately é 3ù
æhö æhö
g (h) = Co + C ê1.5 - 0.5 h£a
describes the spatial continuity of the mineralization in èaø èaø ú (9a)
question. Variographic studies must be controlled by a strong ë û
geological knowledge of the mineralization to ensure that g (h) = C o + C h >a (9b)
grade distribution etc. is faithfully described.
A number of semi-variogram model types can be applied to Where the nugget effect variance is at the extreme (i.e. >95%)
gold deposits. The ‘spherical’ model is perhaps the most a ‘pure nugget effect’ model exists (Fig. 13). ‘Composite or
common and reflects mineralization that is characterized by nested’ models are combinations of semi-variogram models
data that show good continuity (Fig. 12). It is given by that reflect variability on different scales (e.g. short ranges

Fig. 12 Omni-directional experimental semi-variogram with spherical model fitted for raw grade data
from narrow vein gold deposit in Australia. The spherical model shows a discontinuous nature where
g(h) does not tend to zero as h tends to zero; this reflects highly irregular behaviour at short distances

Fig. 13 Directional experimental semi-variogram with pure nugget effect model fitted for raw grade
data from gold deposit in Australia. This approximately flat g(h) plot represents extreme discontinuity
of grade with little or no correlation at any of the lags used to construct the experimental semi-
variogram

B157
 Fig. 14 Omni-directional experimental log semi-variogram with composite model fitted for grade from
narrow gold vein in Australia. This shows intermeshed structures that indicate different scales of varia-
tion with ranges at 12 m and 48 m
less than the minimum lag, relatively short ranges of several
lags and longer ranges of potentially tens of lags). They typi-
cally have a nugget effect and a short- and long-range model.
For example, a composite semi-variogram may be a combina-
tion of a nugget and a spherical model. Such semi-variograms
generally reflect the presence of richer zones within a sparsely
mineralized zone, e.g. a high-grade ore shoot in a low-grade
quartz vein (Fig. 14). The determination of nugget variance,
sill and range values for composite semi-variograms requires
some experience. ‘Hole-effect’ semi-variograms have curves
that show a periodicity, the curve first rising above and then
dipping below the level of the semi-variogram sill (Fig. 15).
In many cases an apparent ‘hole-effect’ is the result of a lack
of samples for given lags or other fluctuations of the experi-
mental semi-variogram. In some cases it represents a deposit
that contains a series of high-grade ore zones separated by
Fig. 15 Omni-directional experimental log semi-variogram with
‘hole-effect’ model fitted for metal accumulation from epithermal
precious-metal vein system in Indonesia
B158
lower-grade areas. The hole-effect model is not mathemati-
cally stable and can lead to poor results if used without care.
Gold grades, extreme values and variography
The grade and geological complexities displayed by gold
deposits have strong implications for the production of semi-
variograms. A direct consequence for variography is unstable
behaviour, which, in turn, gives rise to modelling incon-
sistencies. This will almost certainly result in erroneous
semi-variogram models and associated parameters that con-
trol the kriging process.
One of the most frequently quoted problems in the
application of geostatistics to gold deposits is the inability to
create stable semi-variograms in the presence of high grades.
As variography uses a squared function, large differences in
grade between the samples composing a semi-variogram pair
become exponentially large. This can cause the shape of the
experimental semi-variogram curve to become erratic and dif-
ficult to interpret.
Many gold-grade data-sets are composed of complex,
multi-modal populations. They could include domains
characterized by high grades or extreme values, low to high
grades and waste to low grades, each possessing its own spa-
tial continuity. Experimental semi-variograms are generally
computed with the use of all data pairs. In effect, the final
semi-variogram model is a blended average of all these differ-
ent grade domains and their respective spatial continuities.
The modelled semi-variogram may be one of ‘ordinary’
values because the number of high grades is small. In other
cases, however, the effects of the high grades may be more
marked and thus important. Such complexities should be
recognized during statistical analysis and taken into con-
sideration during variography. The domaining of different
‘statistical’ zones is of critical importance during variography.
The method often used to improve the experimental semi-
variogram is to remove or filter the samples that contain the
highest concentrations. However, two problems arise with
this approach. First, the assumption that they produce the
greatest squared difference is not always valid as samples with
high grades may be grouped with others of similar magnitude,
producing relatively small differences. Thus, filtering will not
necessarily solve the problem. The second problem is how to
determine the number of samples that should be filtered.
There are no rules, numbers or percentages and there may be
no significant improvement in the semi-variogram structure.
It is possible to eliminate the particular pairs of data that
contribute most to the erratic nature of the experimental
semi-variogram. Although this seems to be an acceptable
solution, it often has little effect on the semi-variogram
results. In any case, filtering of samples is not satisfactory.
The data are part of the true continuity structure and should
not be ignored and, in the absence of objective rules, any
procedure is at best arbitrary. Despite these problems, filter-
ing of extreme-value data or data pairs can greatly improve
the appearance of the experimental semi-variogram for some
data-sets. It is not possible to tell beforehand whether data
removal will be effective.
An alternative filtering option practised by some consists
in the removal of waste and low-grade sample values. A
threshold must be chosen that represents the mineralization
indicator grade, below which all grades are considered waste.
This approach is reasonable if the data-set of mineralized
values is sufficiently large to produce stable semi-variograms.
The principle of removing low-grade samples is theoretically
good, but it may be difficult to justify if the number of high-
grade samples is limited. When waste and low-grade samples
are removed experimental semi-variograms based on the rest
of the data-set are generally unstable if the truncated popula-
tion is not large enough. As a result it will be very difficult to
find a model that fits the experimental semi-variogram.
Difficulty in obtaining good spatial continuity may indicate
that grade domaining is necessary. Also, poor sampling may
influence the semi-variogram results, especially where coarse
gold is present in the deposit.16
The effect of extreme values can be addressed more scien-
tifically by the use of mathematical transformations. It is
generally found that as the mean of a population increases
so does its variance. This feature indicates a relationship
between the mean and the variability of the data. In fact, a
linear relationship often exists between the mean and the
standard deviation, implying that the coefficient of variation
is constant. This is known as the ‘proportional effect’.11 For
semi-variogram construction the idea is to divide the variance
of the semi-variogram function by the square of the mean—
the relative semi-variogram. This makes the variance
proportional to the mean and reduces the effects of extreme
values since the larger squared differences are divided by the
larger squared mean. Various types of relative semi-variogram
have been devised, but production of a pairwise relative semi-
variogram is the most common method used to deal with
extreme values.
Pairwise relative semi-variograms employ the average of
the two samples comprising the semi-variogram pair as the
local mean. This reduces the influence of very large values on
a local basis. The semi-variogram can become unstable if the
two data values are both equal to zero as the denominator is
also zero and the semi-variogram function is infinite. In
practice this can be avoided by setting any zeros to very low
values (e.g. 0.01). The experimental pairwise relative semi-
variogram g(h) values are obtained from the formula
( X i - X i +h )
2
n
å i =1
é X -X 2ù
(
ë i i+h) / 2
û
g PR (h) = (10)
2N
where N is number of data pairs at each lag and Xi and Xi+h
are the sample values of each pair separated by distance h.
Another way of reducing the erratic behaviour of the exper-
imental semi-variogram is to transform the raw data to log
values. Strictly, log semi-variograms can only be employed in
the lognormal kriging process, though this is not the case of
lognormal short-cut kriging (see later). The log semi-vario-
gram can be used as a qualitative tool for experimental
semi-variogram analysis. When erratic behaviour is reduced a
clearer estimate of the range of the semi-variogram and the
anisotropy ratios can be obtained. The experimental log
semi-variogram g(h) values are obtained by application of the
formula
å i =1[ln ( X i ) - ln ( X i+ h ) ]
n 2
g L (h) = (11)
2N
The application of indicator semi-variograms also reduces
the effects of extreme value and skewed distributions. This
technique involves transformation of the raw data to indicator
values based on a selected threshold. Indicator semi-vario-
grams use the 0/1 data of the threshold-based transformation
to calculate the spatial continuity of the 1/0 data (Fig. 16).
Indicator kriging is discussed later.
Influence of nugget effect on kriging
The nugget effect influences the kriging system such that the
estimate produced is closer to a simple average than it would
be without a nugget value. Taken to the extreme, a pure
nugget effect will simply average the available data. The
resulting kriging weights will all be equal—fine for the kriging
system, but not good for the kriging variance, s K2.
Defining search areas and block size for kriging
Search areas
A prerequisite of resource estimation by block kriging is the
establishment of a search area (or search volume in the case
of three-dimensional kriging) around each block being esti-
mated. The search diameter should be at least equivalent to
the geostatistical range, but not more than twice this range in
each direction. However, if drift is apparent in the semi-vari-
ograms, this search distance must be restricted to less than
the distance at which drift occurs. In the case of a ‘composite’
or ‘nested’ semi-variogram model the largest geostatistical
range should be used.
When the nugget effect is high estimation tends to generate
over-smoothed values. In practice use of a search area smaller
than the range can reduce excessive smoothing. In the evalua-
tion of gold deposits the preservation of variability should
take precedence over smoothing since the prediction of recov-
erable reserves requires the modelling of local variabilities.
Each sample point captured by the search area or volume
is then allocated an optimum-weighting coefficient (the krig-
ing coefficient), which is derived from the semi-variogram
parameters. Ideally there should be 15 or 16 samples in the
search area, but if the number drops below five, the block is
not estimated.
Block size
The choice of estimation block size is important as large
blocks will improve the reliability of estimates and smaller
blocks will have increasingly high estimation variances. The
‘small block’ problem, which has been documented by
many, 1,11,12,23,40 arises with blocks that have small dimen-
sions relative to the sampling grid.
B159
 Where the semi-variogram has a very low nugget effect and
long range (unusual for gold deposits) it may be possible to
estimate small blocks by a linear geostatistical technique. In
very high nugget-effect situations even blocks with dimen-
sions close to the drill spacing may be problematic. It is still
common practice for estimators to use blocks that are far too
small.
A correct block size will lead to low conditional bias, which
gives a measure of the over-smoothing of high and low
grades. An empirical rule that is usually applied in the selec-
tion of the optimum block size is that it should be not less
than half the routine sample spacing in each direction. Blocks
that are one-third or one-quarter of the sample spacing will
result in very strong smoothing of estimates and misallocation
of ore and waste. With such small blocks the data density
cannot justify the interpolation of grade into smaller blocks
and strong warnings against the estimation of small blocks by
linear methods have been given in the literature. Nonlinear
methods are considered to provide the best solution to the
‘small block’ problem. These also allow estimation of the
proportion of blocks that lie above a specified cutoff. The
concept of change of support is critical in most practical
applications of nonlinear estimation.40,41
The effectiveness of block size can be determined by the
kriging variance, sK2, and kriging efficiency, KE. Kriging vari-
ance is defined as
s K = s BK - å i =1( K i s i , B) + m
2 2 n (12)
where s2BK is the variance of the block defined as the average
difference in values of pairs of points within the block;
åni=1(Kisi ,B) is the sum of the covariances between each
sample and the block being estimated; and µ is the Lagrange
multiplier. sK2 measures the accuracy of the local kriged esti-
mate and, optimally, should be equal to zero. Where a value
of greater than zero is obtained the block estimate is not accu-
rate and shows variability.
KE is also a measure of local block accuracy and is given as
2 available data are inadequate and the block value is close to
s BK - s2K
KE = ´ 100 (13)
s 2BK
If s K2 is close to zero, KE will be close to 100%, whereas if sK2
is high, KE will be very small or negative. KE measures the
effectiveness of the kriging estimate to reproduce the local
block grade accurately (e.g. conditional bias). Where a value
of 100% is obtained no conditional bias is present. If KE is
below zero, there is very poor local reliability and the best
estimate of grade is the average grade. A KE value of >50% is
expected for an estimate based on ‘exploration’ drilling (e.g.
during a feasibility study) and a value of >90% for a produc-
tion ‘grade control’ estimate.
Geostatistical interpolation methods
Linear methods
Simple (SK) and ordinary (OK) kriging
SK and OK are reasonably robust estimators, though ideally
they should be used on normally distributed variables. When
the sampling distribution is skewed the evaluation of some
blocks is not well done when the local samples around the
block contain one or more high values. In these conditions
SK and OK assign a value to the block that is much more
than its true value. This is because the weights do not depend
on the sample grades. In general, if SK and OK are used
where the sampling distribution is skewed towards log-
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normality but is not lognormal, they are more satisfactory
estimators than lognormal kriging in that fewer nonsensical
block estimates are made.
A characteristic of OK is known as ‘the weight indepen-
dence of data’ value (WID), which reflects the fact that the
OK weights do not depend on the sample grades. This is
commonly considered one of the major causes of the over-
smoothing of estimates when OK is used. For most
configurations of samples the variance of the kriged estimates
is lower than the dispersion variance of the blocks being
estimated. Contributors to WID are highly skewed distri-
butions, extreme values and mixed grade populations
(e.g. related to several stages of mineralization). Such features
of grade distribution may be interrelated—for example, a
highly skewed distribution is usually related to the mixture of
two or more grade models. In any of these instances OK will
probably fail to quantify the spatial variabilities of grades
accurately. A major reason for this is that OK uses only infor-
mation on average continuities of grade. In other words, it
does not distinguish continuities of high grades from those of
low grades.
SK and OK should theoretically be applied in stationary
conditions, i.e. where drift or trends are absent.29 Applied
rigorously, the no-drift requirement would exclude their use
from virtually all orebodies. However, as they are robust esti-
mators and where the drift is a large-scale feature it is often
possible to assume local stationarity over a restricted field—
for example, over the size of the search area.
The main feature of the OK method is that the sum of the
kriging coefficients equals 1. With SK the condition that the
sum of the weighting coefficients equals 1 is not applied, but
the unity condition is achieved by calculating an ‘external
weight’ by subtracting the sum of the kriging coefficients
from 1. This external weight is then applied to the mean
value of the whole deposit, or of a locally defined area within
the deposit, on the basis of geological criteria. If the external
weight is small, this implies that there are adequate data
points in the search area and the results of OK and SK are
similar. Conversely, a large external weight indicates that the
that of the deposit or sub-area as a whole. Blocks that have
low confidence can thus be detected by a comparison of the
results of the two methods.
One problem in the application of both OK and SK is their
inability to produce a semi-variogram with a recognizable
structure. This is generally due to a combination of extreme
skewness, erratic data distributions, lack of data, extreme
values, very high nugget effect and/or short range or the
incorrect estimation of semi-variogram parameters. SK is
rarely used in the mining industry, OK being more popular.
Lognormal kriging (LK)
Where the data distribution is highly skewed log-transforma-
tion of the data may result in a lognormal population. It must
first be established whether the population is two- or three-
parameter lognormal, requiring either ln(value) or ln(value +
a) to be modelled. If the modelled lognormal semi-vari-
ograms are robust and without significant zonal anisotropy,
LK is likely to be an appropriate method.
The log-transformed values are then kriged by OK and the
results are back-transformed. The method requires that the
log-transformed data have a normal distribution to avoid the
production of nonsensical results and negative kriging vari-
ances. High kriging variances resulting from this may cause
problems in the back-transformation of the log values and
give excessively high grades.
When LK is used it is often found that in the majority of
cases the mean of the block values estimated by LK differs
from the mean of the data values. This is because although
the variable is lognormally distributed, it does not necessarily
follow that its multivariate distribution is lognormal. This
bias (of the order of 5–7%) is a negative feature of the
method, but LK has the advantage that it gives smaller krig-
ing variances than SK.31 LK gives similar results to OK at
low grades, but at higher grades OK gives higher results and
is biased; LK is more resistant to extreme values than OK.
A critical aspect of LK is the back-transformation of log
values to return to the original units. Simply antilogging the
value does not produce unbiased estimators. The correct
back-transformation for LK contains the kriging estimate for
the average log, g; half of the kriging variance for this
estimate, s2/2; and the Lagrangian multiplier, µ. The back-
transformation to obtain the absolute estimate, Z*, is
æ s2 ö
Z* = expç g + - m÷ (14)
è 2 ø ogram is produced and then each ore block is kriged, using
A similar back-transformation is required to covert the log
variance into an absolute kriging variance:
2
( ){
2
( 2
)[
s K = m exp s v 1 + exp m - sKE exp( m) - 2
2
]} (15)
where sK2 is the absolute kriging variance; m is the average of
block values in the orebody; sv2 is the variance of the logs of
the block values; and s2KE is the log kriging variance.
Another important aspect of applying LK is accurate deter-
(a) (b)
Fig. 16 (a) Directional ‘indicator’ experimental semi-variogram for grade from Australian shear-zone hosted deposit with (b) fitted spherical
model and (c) special case ‘Paddington mix’ model9
mination of the relevant grade distribution. It is vital to
recognize the mineralization indicator grade above which the
data are lognormally distributed during semi-variogram
calculation. This is effectively the removal of the spike of
near-zero values that do not represent the orebody as such,
but are merely due to drilling through barren ground. If these
are not removed, the variance of the population predicted by
the semi-variogram will be inflated. LK is sensitive to the
total variance and caution should be exercised in defining the
variance correctly.
Nonlinear methods
Indicator kriging
Indicator kriging (IK) and its variants do not rely on the
assumption of a particular statistical distribution model for
their results24 and, despite the relative difficulty of their appli-
cation, they have grown to be one of the most widely used
kriging systems. IK is the prime nonlinear geostatistical tech-
nique used in the minerals industry today and has found
application to different styles of gold mineralization. There
are, however, well-documented pitfalls in the use of this
method.40
For IK a threshold is selected for a specific variable that
may reflect, for example, a cutoff grade or an acceptable level
of core recovery, and the data are split at this level. All values
above this level are set to 1 and those below to 0. These are
referred to as indicator variables. An indicator semi-vari-
OK, to produce a kriged indicator value. This lies between 0
and 1 and represents the proportion of the block whose grade
lies above the cutoff or the proportion of the grade values
used to evaluate the block that lie above this cutoff. Indicator
semi-variograms are generally superior to ordinary semi-
variograms in having well-defined structures from which the
parameters can be determined with ease (Fig. 16).
The technique offers practical solutions to some of the
common estimation problems, such as the issue of mixed or
poorly domained populations and their theoretical ability to
generate ‘recoverable’ resources.
(c)
‘Three-stage’ indicator kriging
A variant of IK is referred to as ‘three-stage kriging’ (TSK).
This is used for data populations that are clearly bimodal in
that a low-grade population (e.g. disseminated in host rock)
is combined with a high-grade population (e.g. quartz vein-
ing), as in some epithermal gold deposits. This method
breaks the problem of grade estimation down into three more
manageable problems: (1) what is the proportion of material
in the high-grade class? (2) What is the grade of the high-
grade material? And (3) what is the grade of the low-grade
B161
material? An indicator threshold is selected to separate the lie. To reduce the impact of these high grades the median
two populations, which are then modelled (by variography grade value, ZM, is used.
and OK) totally separately before recombination using the The application of this method can be illustrated by the
indicator variable assigned to each block by IK as the weight- worked example shown in Table 3, where the deposit grades
ing factor. lie between 0 and 4 g/t Au.
The data are thus split, following statistical analysis, into a The weighted grade assigned to this block is thus the sum
high-grade and a low-grade population. Indicator kriging is of the ‘product’ column, whose values are calculated by mul-
then undertaken to assess the proportion of each block, IK, tiplying the åni=1(Ii–1–Ii) values by the mean values. The sum
that lies in the high-grade category, ZH, and, hence, the por- of the weighting factors is 1.
tion in the low-grade category, ZL. The two data-sets are then In MIK the histogram is discretized into n classes each
separately kriged by either OK or LK following variography bounded by an upper- and a lower-cutoff threshold value
of the two populations. The three values thus obtained for (Fig. 17). The estimator defines the number of classes and
each block can be combined to produce a final block grade: their bounding value, which poses a number of practical
problems—in particular, the choice of cutoffs is often evenly
ZB = (IK ´ ZH) + (1 – IK) ´ ZL (16) distributed. In gold deposits the geological domain may be
divided into decile classes on the basis of grade. The disad-
Multiple indicator kriging (MIK) vantage of grade-based deciles is that many of the indicator
MIK is a variant of IK that estimates the proportion of each grades will be concentrated at the lower end of the positively
block that lies above each of a series of thresholds across the skewed grade distribution. Fewer indicator thresholds will
entire data population. The application of MIK has been the represent the higher grades, which contain most of the metal.
subject of much recent debate. 40,41 It requires indicator vari - Potential alternatives include additional discretization of
ography for each threshold followed by block kriging— these critical parts (e.g. the tail, in particular) or discretization
usually OK. The proportion of the block that lies in each such that equal metal content is assigned to each class.38
grade range can then be obtained by subtracting the indicator Metal content indicators also provide the advantage of reveal-
variable for the upper limit for each range from that for the ing the amount of metal that is associated with the higher
lower limit (Fig. 17). This value is then used as a weighting grades. Metal indicators for gold projects often reveal that
40% of the metal is derived from grades above the nintieth
grade percentile. In rarer cases up to 75% of the metal may
be above the nintieth grade percentile. The disadvantage of
metal-based indicators is that it is often difficult to define the
continuity of grades for indicators set at or above the nintieth
grade percentile owing to the low numbers of high-grade
samples and their sparse distribution. This often results in the
most significant part of the distribution being estimated
under conditions of poorly defined or assumed grade conti-
nuity. This is not necessarily a fatal flaw in the method, but
careful consideration and judgement are needed.
If indicator grades have been selected carefully with regard
to the grade distribution, the distribution within many classes
will be nearly linear. The distribution of sample grades in the
upper and lower grade classes will not normally be linear
Fig. 17 MIK thresholds showing means by which grade weighting and will require special treatment. In the case of a positively
factors are calculated skewed grade distribution the greatest estimation sensitivities
are associated with the grade assigned to the upper class.
Distribution skew and extreme grade values both influence
factor for the mean grade that lies in each range to produce the grade distribution in this class, which requires a more
the final block grade according to the equation sophisticated method of mean grade selection if grade overes-
timation or underestimation is to be avoided.
ZB = éë å i =1( I i -1 - I i ) ´ Gi ùû + I n -1 ´ Z B
n (17) The tail of the population generally has few samples, which
means that a model must be defined to give the ‘shape’ of the
histogram to the tail. Choices between different models may
where n is the number of indicator thresholds, Ii is the indica- have a material effect on the estimates at higher cutoffs, but
tor value at each threshold I and Gi is the mean grade for that there is little objectivity in such choices. When evaluating
threshold. I0 (=1) is the lowest threshold above which all the grade it is necessary to have estimates of the average grades of
data population lies; In–1 is the indicator value for the upper each class. It is common practice to take the average value of
threshold above, in which the majority of the extreme values the samples belonging to that class. A different choice is often
made for the final class (e.g. the tail): potentially the median
or trimmed mean. This choice is often arbitrary, yet it can
Table 3 Example of application
have a strong impact on the estimation of the richest zones of
Threshold Grade IK Ii–1 – I i Mean Product the orebody.
In MIK the search volumes defined during kriging at the
I0 0 1.00 0.40 0.5 0.20 various cutoffs are the same. This situation is valid only when
I1 1 0.60 0.15 1.5 0.22 the semi-variograms for all the indicators have roughly the
I2 2 0.45 0.30 2.5 0.75 same shape (e.g. are proportional—showing the same ranges
I3 3 0.15 0.15 3.5 0.52 and nugget effect), which is not usually the case for mineral
I4 4 0.00 – – – deposits. This results in serious order relation problems
leading, for example, to the prediction of significantly higher
Totals 1.00 – 1.70
grade or more metal above a higher cutoff than above a lower
B162
one. Semi-variograms for the high-grade classes often tend
towards pure nugget effect. With such semi-variograms large
search ‘areas’ should be used to avoid conditional biases.
Change of support is not inherent in MIK and is applied as
a post-modelling step. Many practical applications of MIK
involve use of the affine correction, which assumes that the
shape of the selective mining unit’s distribution is identical to
that of the samples.40 The sole change in the distribution is
variance reduction, as predicted by Krige’s relationship.
Warnings have been given in the literature about the inherent
deskewing of the distribution when going from samples to
blocks.42 The affine correction assumes no deskewing and
thus is not suited to situations where there is a large decrease
in variance, e.g. where the nugget effect is high and/or there is
a pronounced small-scale structure in the grade semi-vario-
gram. Other approaches that have been adopted include
indirect lognormal corrections (very distribution-dependent),
conditional simulation and assumptions that the block distri-
bution is normal.40 In the last instance the underlying
assumption is that block grades are totally deskewed.
Whichever method is used, there can be no guarantee that the
corrections applied at the local level are consistent with the
same type of correction applied at a global level.
In response to these problems in the application of MIK
such techniques as residual indicator kriging (RIK) and uni-
form conditioning (UC) have been reported as being more
robust and effective.40,41,42
Median indicator kriging (MedIK)
In MedIK the median indicator semi-variogram is used to
define the continuity conditions for all indicators. The
method is a simplified form of MIK that may be considered
in the early stages of a resource project when sample data are
sparse and it is difficult to define grade continuity for a full
range of indicators. The median indicator semi-variogram is
typically the most robust of all indicators as it tends to have
the greatest range of continuity. It is the easiest to define with
some confidence from sparse data. The semi-variogram at the
median is sometimes considered to be ‘representative’ of the
indicator semi-variograms at other ‘cutoffs’.41 This may or
may not be true and needs to be checked. Experience from
full indicator variography shows that grade continuity almost
always varies with indicator grade and invariably declines
with increasing indicator grade. This will often result in an
overestimation of the quantiles of the upper grade classes
with MedIK, resulting in a higher than normal expected
grade. In practice MedIK is not a recommended method
where the data permit full estimation of a set of indicator
semi-variograms. The clear advantage of MedIK over MIK is
one of time. The critical risk is in the adequacy of the implied
approximation. If there are noticeable differences in the shape
of the indicator semi-variograms at various cutoffs, caution
should be used in applying the method.41
Discussion
Validation of kriged estimates
Kriged block models must be validated to ensure that they
reflect the truth. The validity of a block model is conditional
on geological interpretation, grade domaining, continuity
parameters (e.g. the semi-variogram), handling of extreme
grades and the grade interpolation method. The mean grade
of the block model should equal the mean grade of the input
samples, indicating that there is no global bias. Similarly,
comparison of input and output grade histograms should
show the same distribution. At the local scale comparison
between block grades and composite grades should show a
close correspondence. Further checks can be undertaken by
comparison of different estimation methods—for example, an
IK and an IDW block model. If a major difference is found in
the results, there is likely to be a problem.
Problems in the kriging method
Kriging has had its share of sceptics over the 40 years since
its inception. Various criticisms have been levelled at the
method, a few of which are noted here.21
Interpretation of an experimental semi-variogram to fit a
model can be difficult and generally requires a high degree of
experience. Various problems related to mixed populations
and high grades and the need for effective domaining have
already been highlighted. An orebody for which the semi-
variogram is not satisfactorily identified by the available data
may be incorrectly evaluated. Semi-variogram model quality
can be checked by cross-validation (or jack-knifing) methods,
in which values at known points are estimated from those
around them and the set of estimates is compared with the
original data-set.
The kriging or estimation variance, sK2, is derived from the
semi-variogram and is based on the number of samples that
were available within the defined search area and their
spacing. It is not directly related to the actual data points
(meaning it has no dependence on local data conditions),
which may deviate from those represented in the semi-
variogram. For example, in a high-grade zone within a gold
vein the kriging variance would be just the same as in a low-
grade zone. This is potentially unrealistic, as the predictability
of grades will be poorer in the high-grade zones than in the
low-grade zones. If the correct semi-variogram model is not
fitted to the data, the resulting estimation variance may yield
a value lower than if the correct model had been used, the
result being undue confidence in the estimate. Conversely,
the value could be higher, the result being undue caution.
Geostatistical theory requires that the data population
shows stationarity, i.e. it may be correctly assumed that the
mean grade of a deposit is the same everywhere. This is often
not true in mineralized systems, where there will be both low-
and high-grade regions. Linear kriging methods do not work
well where there is systematic variation over the region being
modelled, but the global estimate will remain relatively un-
biased. The development of the universal kriging technique
was an attempt to resolve this problem, but its application is
complex.32
Another problem encountered in the application of geosta-
tistics is that of data distribution. A normal distribution is not
generally expected for the data (e.g. OK is robust in the pres-
ence of some skewness), but a normal distribution is assumed
for errors. In many cases of precious-metal deposits the data
are far from normal and the error distribution cannot be
assumed normal either. Even if the error distribution is nor-
mal, use of a linear kriging method will tend to underestimate
the peaks and overestimate the troughs. For highly skewed
distributions, as in gold deposits, this smoothing of the peaks
will often result in the underestimation of high-grade zones.
This problem has been addressed to some extent by the
application of nonlinear methods.
There is no doubt that there are imperfections in the
kriging process. The important point is that it is a better, less
biased technique than conventional estimation methods. It
does, however, require a high level of skill to implement pro-
perly. Until such time as an alternative is developed kriging
will continue to be the most important technique used to
evaluate mineral resources.
Recent advances—conditional simulation
Conditional simulation is a set of geostatistical tools that is
becoming more popular for resource-evaluation purposes.
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Like the other methods for spatial estimation (OK, IK, etc.),
conditional simulation addresses the problem of character-
izing the variability of a deposit between the known data
locations by different means. Such models honour the real
sampling data, but have no smoothing effect so that effects of
decisions on grade variability can be modelled. Conditional
simulation provides a number of equiprobable images of a
deposit, at a finer resolution than would be economic or prac-
tical to sample, that can be constrained by various criteria
(e.g. geological, statistical and geostatistical), to ensure that
the images represent the deposit reasonably. These images
can then be used to assess the risk involved in various prac-
tical mining decisions. Conditional simulation can be used
for validating resource-estimate parameters, for optimizing
grade-control sampling grids and for ore-block optimization
for mining grade control.
Final comments on geostatistics
Geostatistics is a powerful technique for grade estimation
provided that it is applied in the light of geological under-
standing. Most importantly, the evaluator must examine the
results of a kriged estimate and pay particular regard to: the
location of very high- and very low-value blocks; estimates
near the margins of the deposit; estimates in the context of
geology (especially continuity); kriging variance in relation to
sample spacing; and estimates for poorly sampled or unsam-
pled regions.
There are three advantages in the use of geostatistics. First,
resource-estimate results are more easily duplicated by differ-
ent persons and there is less requirement for subjective
interpretation after the semi-variogram models are defined.
Second, the technique effectively improves grade estimates
even when using grade data of differing size and reliability.
Third, the improved mineral resource (and, hence, reserve)
permits better long- and short-term planning and allows the
operator flexibility when dealing with such problems as metal
price changes, mining difficulties, etc.
Many companies have faced considerable difficulties in
their attempts to implement geostatistical techniques. Possible
reasons for this includelack of ‘in-house’ geostatistical exper-
tise as a consequence of time and training constraints; an
erroneous attitude that geostatistics is not applicable to gold
deposits; an erroneous attitude that geostatistics only works for
open-pit operations; managerial resistance to change or lack
of understanding of the benefits; inability to produce recog-
nizable or reliable semi-variograms owing to inadequate
geological understanding and control or to inappropriate data
manipulation; sparse data and/or no financial commitment to
improve the level of sampling; poor-quality data stemming
from poor drill recoveries, sampling, sample splitting or
mixing procedures or analysis; choice of inappropriate
methodology; or a high degree of unpredictability of the min-
eralization and lack of grade continuity due to factors related
to structural or lithological control or the mineralization
process.
Table 4 indicates types of deposit to which the geostatisti-
cal techniques discussed can sometimes be applied. The list is
not exhaustive and should not be considered definitive.
Use of the correct kriging method is vital as misuse can be
as dangerous as non-use. It is important that the grade distri-
bution within the mineralization and the relevant estimation
technique for the style of mining be considered: for selective
mining: normal distribution, OK; lognormal distribution, LK;
highly skewed distribution, IK (e.g. TSK, MIK, MedIK and
possibly UC or RIK); for bulk mining: normal distribution,
OK; lognormal distribution, LK.
Conclusion
Conventional methods are playing a less important role in the

Table 4 Summary of geostatistical resource-estimation techniques and their application to different gold deposit types (modi-
fied from Annels and Armitage2)

Ordinary kriging Lognormal kriging Indicator/three-stage Multiple indicator

kriging kriging

Project status Feasibility to grade- Feasibility to grade-control Feasibility to grade-control Feasibility to grade-control
control estimates estimates estimates estimates

Deposit geometry Two- and three- Two- and three- Two- and three-dimensional Two- and three-
dimensional tabular dimensional tabular tabular and massive deposits dimensional tabular
and massive deposits and massive deposits comprising different ore types and massive deposits

Grade distribution Normal statistical Strictly lognormal Different ore types with Statistically skewed or
(method best suited distributions with statistical distributions different and largely separate complex distributions with
to) observable spatial with observable spatial statistical distributions each observable spatial
distribution patterns distribution patterns with observable spatial distribution patterns
distribution patterns

Key factors Nugget effect, top- Nugget effect, assay Nugget effect, assay Nugget effect, assay weighting
cuts, assay weighting, weighting, composite weighting, composite length, weighting, composite length,
composite length, length, search parameters, search parameters, indicator search parameters, indicator
search parameters, degree of smoothing, cutoff, mean grade selection, cutoff, grade estimators for
degree of smoothing, unfilled blocks, orebody degree of smoothing, unfilled upper bins, degree of smoothing
unfilled blocks and limits, back-transformations blocks, orebody limits and unfilled blocks, orebody limits,
orebody limits and classical statistical classical statistical order relational problems and
comparisons comparisons classical statistical comparisons

Styles of gold Various types, though Shear-zone gold deposits Shear-zone, epithermal and Shear-zone, epithermal and
mineralization where not commonly applied ‘other’ vein gold deposits ‘other’ vein gold deposits
method has been due to nature of gold
applied distributions

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evaluation of mineral deposits. Their application is generally
only relevant during the exploration or perhaps pre-feasibility
stages, although they are sometimes used to cross-check geo-
statistical estimates during feasibility studies etc. In instances
of highly discontinuous and/or high nugget-effect mineraliza-
tion the only practical estimation method available may well
be conventional.
If the only method deemed applicable to the particular
situation is conventional, the evaluator should consider care-
fully whether sufficient sample/drilling data are available.
Financial judgments cannot be based on flawed estimates
founded on sparse data. If the data density does not permit
geostatistical estimation, one is bound to ask whether it will
allow the definition of proven and probable ore reserves any-
way. Conventional techniques have many shortcomings that
can affect the reliability of the estimate. Their limitations
need to be assessed in the light of the geological and grade
continuity of each particular deposit. One very important lim-
itation is the fact that most can only be applied in two
dimensions and are thus only suitable for deposits that are
thin and tabular in form.
Geostatistics is an extremely powerful method for grade
estimation provided that it is applied correctly and in the light
of geological understanding. Because kriging is not a ‘black
box’ technique, its use requires a variety of interactive deci-
sions, including variography, search strategy, number of
samples, etc. One of the principal complaints voiced against
the use of geostatistical methods is that they require larger
amounts of data than conventional techniques. This is incor-
rect as the conventional methods give biased estimates for
which estimation error cannot be calculated. Geostatistical
methods reveal where data are inadequate.28
The excuse given by many engaged in the evaluation of
gold orebodies is that they are characterized by complex geo-
logy and grade distribution—as expected, for instance, in
shear zone-related mineralization.4,6,7,8 Such deposits require
very careful geological interpretation, grade domaining and
statistical study.4,14,15,26 If, however, the geology is dis-
continuous and/or an extreme nugget effect (in excess of
75%) is present, geostatistics may be inapplicable and
reliance placed in conventional methods.17
Another problem encountered in applying geostatistics is
the difficulty in obtaining reliable semi-variograms in the
presence of high grades and inadequate samples. Many gold
deposits have a coefficient of variation ³200%.6 A CV% of
this magnitude may require 800 plus data-points according to
the relationship of Royle.30,32 There are many instances in
which the application of geostatistics to complex gold
deposits is possible through the use of kriging variants such as
LK, IK or MIK.2
On a final note, it is important to remember the critical
role that geology plays in the resource-evaluation process.
Such exhortations as ‘Let’s put the “geo” back into geostatis-
tics’ and ‘Geology is king’ are important. Geology should
guide resource estimation, not resource estimation guide the
geology. Geological interpretations are continually evolving
components of the resource-estimation process because new
information becomes available continually as exploration,
evaluation and exploitation proceed. The requirement for
high-quality resource estimates demands upgrading of the
geological database and related interpretations. The evalua-
tion process is affected significantly by various aspects of
geology, including sampling and sample quality, geological
mapping, three-dimensional modelling, mineralogy and
studies of continuity, etc. If the resource estimation is based
on high-quality data whose interpretation is controlled by
geology and statistics, it has a good chance of being close to
the truth.
Acknowledgement
The authors thank many individuals who have helped with
this contribution. S.C.D. thanks Welsh Gold PLC, Cardiff
University, the Royal Society, the Institution of Mining and
Metallurgy and the North Queensland Branch of the
Australasian Institute of Mining and Metallurgy for funding
study leave periods to Australia during 1998–2001. A.E.A.
acknowledges colleagues from SRK Consulting (UK), Ltd.,
including Dr. M. G. Armitage, Dr. J. Arthur, M. F. Pittuck
and R. Clayton. Discussions with Dr. Isobel Clark
(Geostokos, Ltd., Scotland), Dr. A. G. Royle (independent
consultant, England), Dr. S. Henley (Resources Computing
International, Ltd., England), Vivienne Snowden, I. Glacken
and M. Noppe (Snowden Mining Industry Consultants,
Ltd., Australia), P. R. Stephenson (Australian Mining
Consultants Pty, Ltd., Australia) and Dr. Suzanne Hunt
(University of Adelaide, Australia) are acknowledged. P. B.
Bright (SRK Consulting UK, Ltd.) drafted Figs. 1, 4–11 and
17. R. Evans (Cardiff University) produced Figs. 3, 12 and
13 and Lucy Roberts (James Cook University) Fig. 14. Fig.
16 is reproduced with the kind permission of Dr. Isobel
Clark. Three IMM referees are thanked for their critical
review of this contribution, as is Dr. Simon Dunton for his
expertise in making it publishable and, it is hoped, readable.
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Authors

S. C. Dominy Member is a graduate of the City of London Polytechnic

and the Camborne School of Mines and was awarded a Ph.D. from
Kingston University, England, in 1992. He has recently moved from
Cardiff University, Wales, to take up the post of Minerals Council of
Australia lecturer in mining geology and director of the M.App.Sc.
mining and exploration geology course at James Cook University,
Australia. He is principal mining geologist with GGI Consulting and
has worked on a number of gold deposits in Eastern and Western
Europe, Africa, Australia and North and South America.
Address: Economic Geology Research Unit (EGRU), School of Earth

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