Resources and reserves
All of mining M&A rests on one quantity: the metal that can be extracted at a profit. Reporting codes govern how it is published.
The codes
| Code | Market | Signed by |
|---|---|---|
| JORC (2012 edition) | Australia, ASX | Competent Person |
| NI 43-101, CIM standards | Canada, TSX and TSX-V | Qualified Person |
| S-K 1300 | United States, SEC | Qualified Person |
| PERC | Europe | Competent Person |
| SAMREC | South Africa, JSE | Competent Person |
All follow the international CRIRSCO template: the same categories and the same principles of transparency, materiality and competence.
The classification
Why drill spacing matters
Contained metal
\[ \text{Contained metal (g)} = \text{tonnes} \times \text{grade (g/t)} \qquad \text{oz} = \frac{\text{grams}}{31.1035} \]
\[ 20\ \text{Mt} \times 1.5\ \text{g/t} = 30{,}000{,}000\ \text{g} \approx 964{,}500\ \text{oz} \;\xrightarrow{\;90\%\ \text{recovery}\;}\; \approx 868{,}000\ \text{oz} \]
Two common traps. Are resources reported inclusive or exclusive of reserves? If inclusive, adding the two counts the same metal twice. Also check the cut-off grade and the price used: a resource built on a high price inflates the tonnage.
Key takeaways
- Inferred resources never become reserves.
- A reserve includes dilution, mining losses and an economic test.
- The technical report is where every review starts.
Check your understanding
1. A measured resource with an uncertain modifying factor can become…
- Only a proved reserve
- A probable reserve
- An inferred resource
- Nothing
Answer: A probable reserve. Uncertainty in a modifying factor caps it at probable.
2. Which rules govern a US-listed miner’s disclosure?
- JORC
- NI 43-101
- S-K 1300
- PERC
Answer: S-K 1300. S-K 1300, in force since 2021.
3. 10 Mt at 2 g/t contains about…
- 64,300 oz
- 643,000 oz
- 2 Moz
- 6.4 Moz
Answer: 643,000 oz. 20,000,000 g ÷ 31.1035 ≈ 643,000 oz.