Queries How the industry defines ore reserves

When mining companies are calculating their ore reserves before going into production I notice from reading The Northern Miner that reserves are determined in terms of possible, probable and proven ore. Can you explain the difference between these categories? B.S., Toronto, Ont.

Ore, like beauty, is often defined according to the whims of the beholder and that is why no other single item in mining has caused so many arguments or confusion.

While the industry defines ore reserves as “mineral-bearing material that can be profitably extracted and treated to produce a marketable product,” definitions can depend on the previous record of the engineers involved. However, The Ontario Securities Commission, which monitors new mine financings, has set guidelines to define what constitutes, proven, probable and possible ore in the province. Those guidelines are set out in the osc’s National Policy No 2-A.

Since hundreds of millions of dollars are raised on the strength of these reserves, it is important that reserves contained in technical reports and prospectuses are calculated correctly.

According to osc guidelines, the categories are defined as follows:

* Proven ore is a given amount of material calculated from dimensions revealed in outcrops, trenches, underground workings or drill holes and for which grade is computed from adequate sampling.

Inspection sites, sampling and measurements must be spaced to allow geological character, size and shape and mineral content of the deposit to be established. Concise definition

The OSC would like to make this definition more concise but since the geological character of the deposit determines the number of drill holes needed to place grade and tonnage in the proven category, it would be impossible.

For example at small gold mines around Noranda, Que. where localized fractures within the rock make it difficult to predict where the gold- bearing quartz veins will be, the deposit must be sampled from closely spaced drilling.

To develop a clear picture of tonnage and grade, the orebody may have to be open on two sides with drifts running underground and crosscuts through the ore.

“In the Hemlo, Ont. area where deposits are contained in a relatively wide tabular orebody, engineers can gain a higher confidence level with fewer drill holes,” said the osc’s consulting geologist John Drury.

“The distance between drill holes depends to a large degree on the geology and mode of the occurrence,” he said.

Tonnage and grade calculations must be both accurate within stated limits and extractable. The osc says established dilution factors must also be clearly explained. Inspection sites

* Probable ore is calculated from both specific measurements and projections using geological evidence. “There is a lower level of confidence because reserve calculations are based on more assumptions,” said Drury. “Economic projections like metal prices may also come into play.”

In the case of probable ore, Drury says inspection sites, measurements and samplings are too widely spaced to outline the material or establish its grade completely.

* Possible ore is calculated using a broad knowledge of the deposit’s geological character. “The geology may be similar to proven ore but from samples taken there is not enough information to draw detailed conclusions,” said Drury.

In this case, the company knows that a gold-bearing zone is 500 m long and that average intersections are 5 m wide, but the engineers are also aware that the deposit may not behave in the way they expect, Drury says.

Orebodies that are completely concealed may be defined as pos sible ore if there is specific evidence of their existence.

While possible or inferred ore estimates must include a statement of conditions in which the inferred material occurs, the osc will not use possible ore calculations to determine whether a mine is economically viable. Treatment method A statement of how samples were taken must be given, and where mineralization is erratic, method of treatment must be included.

It is important to note that reserves are not defined by the osc as ore until after the feasibility stage.