Overview of the 2019 Mineral Resource and Mineral …...5.5 Estimation Domains New 6.0 MINERAL RESOURCE ESTIMATION 6.1 Introduction Retained 6.2 Exploratory Data Analysis Retained

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Overview of the 2019 Mineral Resource and Mineral Reserve Best

Practices Guidelines

CIM MES Group, January 29 2020

Reno Pressacco, P.Geo., Principal Geologist, RPA Inc.

Toronto Denver London Vancouver Quebec City

www.rpacan.comRock Solid Resources. Proven Advice.

2

Agenda

• Introduction and Concepts

• Review of Mineral Resource and Mineral Reserve (MRMR) Best Practices Guidelines (MRMR BP Guidelines)

• Acknowledgements

www.mrmr.cim.org/en/best-practices


3

Introduction & Concepts


4

MRMR BP Guidelines – Timeline & Status

Begin Update

(February 2018)

First Draft Complete(February 2019)

Peer Review Complete(April 2019)

Public Comment Complete (June 2019)

Final Committee Approval

(October 2019)

CSA comments

Presentation to CIM Council

(November 2019)

• Peer review: 69 individuals were solicited for comments, 23 responses received. The group comprised respondents to the public Call for Volunteers (September & October 2018), and others who expressed interest in participating.

• Public Comment: Approximately 1,500 visits were made to the web page. A total of 40 responses received.

• Regulator Review and Comments: Canadian Securities Administrators (CSA) / Autoritès canadiennes en valeurs mobilières.

• The result is a document that is written by users, for users.

Peer

Review

Public

Comment

Regulator

Review


5

Summary of Peer Review and Public Comments

The majority of the responses were supportive of the proposed language.

Some were not ……….. .

In general, the responses suggested/requested additional guidance on specific topics.Source: http://www.easyblindsonline.co.uk/blog/wp-content/uploads/2014/10/darth-vader.jpg


6

Practice vs Disclosure

Drill Hole Database

Modelling and Estimation

Mineral Resource Statement

Mineral Resource Estimate

Modifying Factors

Mineral Reserve

Statement

PRACTICE DISCLOSURE

The MRMR Guidelines provide general guidance on

the practices used for the preparation of MRMR

estimates.

Disclosure of the results of MRMR estimates to the public domain must be carried out in compliance with National

Instrument 43-101.


7

MRMR Guidelines – New Content

CHAPTER SUBJECT STATUS

1.0 INTRODUCTION New

2.0 HISTORY New

3.0 GENERAL GUIDELINES - MINERAL DEPOSITS New

4.0 THE MINERAL RESOURCE DATABASE

4.1 General Comments Retained

4.2 Data collection, recording, storing and processing Retained

4.3 Bulk Density Measurements New

4.4 Quality Assurance/Quality Control New

4.5 Data Adequacy Retained

5.0GEOLOGICAL AND MINERALIZATION INTERPRETATIONS

5.1 Introduction New

5.2 Primary Data Visualization Retained

5.3 Geological Modeling Retained

5.4 Mineralization Modeling New

5.5 Estimation Domains New

6.0 MINERAL RESOURCE ESTIMATION

6.1 Introduction Retained

6.2 Exploratory Data Analysis Retained

6.3 Outlier Values New

6.4 Sample Support and Compositing Retained

6.5 Bulk Density Estimation New

6.6 Topography and Excavation Models New

6.7 Trend Analyses New

6.8Autocorrelation Studies (Measures of Spatial Continuity) New

6.9 Mineral Resource Block Models Retained

6.10 Resource Block Model Validation Retained

6.11 Mineral Resource Categorization New

6.12 Mineral Resource Statements New

6.13 Mineral Resource Peer Reviews New

6.14 Mineral Resource Risk Assessment New

CHAPTER SUBJECT STATUS

7.0 MINERAL RESERVE ESTIMATION

7.1 Introduction Retained

7.2 Cut-off Grades of Values New

7.3 Mining Methods New

7.4 Geotechnical, Hydrogeological and Hydrologicals New

7.5 Mine Designs New

7.6 Dilution and Mining Losses New

7.7 Mineral Reserve Categorization Retained

7.8 Mineral Processing New

7.9 Production Schedules New

7.10 Workforce and Equipment Requirements New

7.11 Capital Cost Estimates New

7.12 Operating Cost Estimates New

7.13 Additional Factors Retained

7.14 Economic Analyses New

7.15 Sensitivity Analyses New

7.16 Mineral Reserve Statements Retained

7.17 Stockpiles Retained

7.18 Mineral Reserve Risk Assessments Retained

7.19 Peer Reviews and Audits Retained

8.0 CONCLUSIONS New

9.0 ACKNOWLEDGEMENTS New

10.0 REFERENCES New

APPENDIX 1 GLOSSARY OF MINING TERMS New

• Many new sections (and content) have been added. The updated document is 75 pages in length (compared to 28 pages for the 2003 document).


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Mineral Resource and Mineral Reserve

Best Practices Examples


9

Mineral Resources Guidance: Selected Examples

Exploratory Data Analysis

Outlier Values

Sample Support And Compositing

Bulk Density Estimation

Topography and Excavation Models

Trend Analysis

Spatial Autocorrelation Studies

Mineral Resource Block Models

Resource Block Model Validation

Mineral Resource Classification

Mineral Resource Statements

Mineral Resource Peer Reviews

Mineral Resource Risk Assessment

Data Collection, Recording, Storing, and Processing

Bulk Density Measurements

Quality Assurance/Quality Control

Data Adequacy

Primary Data Visualization

Geological Interpretation and Modelling

Mineralization Modelling

Estimation Domains

Chapter 4: The Mineral Resource Database

Chapter 5: Geological and Mineralization Interpretations

Chapter 6: Mineral Resource Estimation


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Chapter 6.12 Mineral Resource Statements(Reasonable Prospects for Eventual Economic Extraction RPEEE)

Minimum Width


11

Reasonable Prospects and Minimum Widths

• Historically, the RPEEE test has been achieved at the interpretation stage where the mineralized intervals were selected using strict criteria of “economic grades over mineable widths”.

• These criteria are being applied with less rigor in modern Mineral Resource estimates, leading to potentially misleading statements……… .

• Reminder that Qualified Persons are responsible for their opinions and statements, with the full understanding that they are subject to an enforceable code of ethics judged by your peers.

Source: http://www.operarex.com/Fotos4/23464%20-%20The%20Good%20The%20Bad%20and%20the%20Ugly.jpg


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Minimum Width Considerations - Continuity

• For mineralized zones that have narrow widths, important / critical considerations include geological and grade continuity.

• Geological continuity refers to the consistency of the mineralization from drill hole to drill hole (in 3D space).

• Grade continuity also refers to the consistency of the mineralization from drill hole to drill hole (in 3D space).

• Anyone wish to point out where the mineralized interval(s) (if any) is/are?


13

Mineral Resource Example – No Minimum Widths

4,365,000 tonnes @ 2.02 g/t Au (284,000 oz Au)

• Mineral Resource statements prepared using no minimum widths are often misunderstood, as the target audience has an expectation of “Reasonable Prospect for Eventual Economic Extraction.”

• For example, is a tonnage and grade statement such as provided above an accurate estimate of the potential tonnages and grades that can be reasonably excavated?


14

No Minimum Width Justifications

• “We’re modelling the geology” or “We report the in-situ tonnes and grades.” This often then leads to:

• “Yes, but if we have so many Mineral Resources, why don’t we have any Mineral Reserves?”

• It’s not just about geology. “Mining is the process of turning rock into money.”

• Practitioners are reminded that there is an expectation that Mineral Resources have considered and represented the practical limitations of mining (the “Reasonable Prospects” test).


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Reasonable Prospects and Minimum Widths

• Here is one example of (THE) minimum width.

• For Mineral Resources, the “Reasonable Prospects” requirement is also about minimum widths.

• Mineral Resource statements should ensure that reasonable minimum widths have been applied.


16

Chapter 6.12.2 Constraining Surfaces and Volumes

(Reasonable Prospects for Eventual Economic Extraction)

Open Pit Mining Methods


17

RPEE–Open Pit Mineral Resources (Good Practice)

Min

era

l R

esourc

es???

700 m

• Mineral Resource block model prepared using an open pit conceptual operating scenario.


18

RPEE–Open Pit Mineral Resources (Good Practice)

• Open pit Mineral Resources are reported with a cut-off grade (or value), and a constraining surface.

• The use of these criteria demonstrate the technical and economic requirements of the “Reasonable Prospects” test for the declaration of a Mineral Resource (for an open pit scenario).

• The application of a constraining surface DOES NOT represent an attempt to estimate Mineral Reserves.


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Chapter 6.12.2 Constraining Surfaces and Volumes

(Reasonable Prospects for Eventual Economic Extraction)

Underground Mining Methods


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Reasonable Prospects – Underground (Historical)

Count these

Don’t count these

…. Very old discussions …..

• Before computers, Mineral Resources were estimated by use of longitudinal projections or cross-sectional interpretations. Many “discussions” took place….


21

Reasonable Prospects and Mining Selectivity

• In many cases the mineralization occurs in such a manner such that some of the non-mineralized material (waste) must be excavated along with the mineralization.


22

Polygonal Estimates – Manual Calculations

Polygon Area(ft2)

Thickness(ft)

Volume(ft3)

Tonnage Factor

Tons Grade(oz/ton Au)

Oz Au

1 2,102 15 31,530 12 2,600 0.178 460

2 2,248 8 17,984 12 1,500 0.219 330

3 1,962 5 9,810 12 800 0.354 280

• Because the tabulation of the Mineral Resources were historically done by hand, the inclusion or exclusion of desired or undesired blocks was easily done.


23

Block Cut-off Grades – Computer Reporting

Practitioner:

“Computer, report all blocks above the cut-off grade”.

Computer: 100


24


Practitioner: “No! (*&^^%) Computer, report all those blocks that are close together.”

“… But don’t count the isolated red blocks.”

Practitioner:

“Computer, report all blocks above the cut-off grade”.

Computer: 100

Computer: Call Technical Support.

“… Oh, and don’t count those other white blocks. ”

“… And make sure to count those white blocks too.”


25


Practitioner: “Good. Now, how many red or white blocks are there inside the line?”

Computer: There are 75 red blocks and 25 white blocks.

Computer: 100

Practitioner:

“OK, lets try this again. Computer, report all blocks inside the black line”.


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Sum of 64 Blocks:

What is the correct average grade?

71.4 / 64 = 1.12

OR

71.4 / 32 = 2.23 ?

Checker Board Effect - Concepts

What is the correct tonnage?

32 or 64?


27

COG = 0.68

Block Cut-off Grade – Case History

200 m

Internal Dilution Tonnes Grade (g/t) Oz Au

Included 1,160,000 2.65 98,600

Excluded 1,130,000 2.71 98,300

% Difference + 3% - 2 % 0 %

Internal Dilution Tonnes Grade (g/t) Oz Au

Included 1,160,000 2.65 99,600

Excluded 481,000 4.03 62,400

% Difference + 140 % - 35 % + 58 %

COG = 2.6LEGEND:

Pink = Un-estimated Blocks

Grey = Blocks Below Cut-Off

Red = Blocks Above Cut-Off

Reporting using block cut-off grades alone

can result in undesired outcomes!


28

Old vs New (nothing new under the Sun)

Historical estimate:Modern estimate:

Historical or modern estimates -

it’s the same old

discussion!


29

• Mineral Resource statements for underground mining scenarios must satisfy the “reasonable prospects for eventual economic extraction” by demonstration of the spatial continuity of the mineralization within a potentially mineable shape.

• In cases where this potentially mineable volume contains smaller zones of mineralization with grades or values below the stated cut-off (sometimes referred to as “must take” material), this material must be included in the Mineral Resource estimate.

• At a minimum, these constraints can be addressed by creation of constraining volumes.

• Constraining volumes should be used in conjunction with other criteria for the preparation of Mineral Resource estimates.

Section 6.12.2 Constraining Surfaces & Volumes


30

Section 6.12.2 Constraining Surfaces & Volumes

• In many cases where the Mineral Resource estimate is prepared by digital methods, isolated and discontinuous blocks may be present that have grades or values above the stated cut-off grade or value.

• For underground mining methods, these blocks should be excluded from the Mineral Resource statement if their spatial continuity or their size is insufficient to achieve a potentially mineable shape above the nominated cut-off grade or value.


31

Conclusions


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Conclusions

• We continue to learn some very hard lessons. The experiences are painful and expensive.

• Many of the shortcomings of modern MRMR statements are a result of poor practical judgement and/or a poor understanding of how the software programs function.

• “Although computers are fast and provide much more data, they are not a substitute for judgement.” (Clow, 1990)


33

Conclusions

• No amount of new technologies, elegant formulae or computational power can replace a practical understanding of the mineralization style under consideration and knowledge of appropriate mining and processing methods.

• The purpose of these Guidelines is to capture the lessons from our past experiences as well as propose solutions to the current challenges that

we face. “Only a fool learns by their own mistakes. The wise man learns from the mistakes of others.” (Otto von Bismark, 1815-

1898)

• The Guidelines are written by Practitioners who have learned these

lessons. “We stand on the shoulders of giants.” (Isaac Newton, 1675)


34

Acknowledgements

• The updated Guidelines are a result of input from the following who graciously contributed their time and have shared their experiences:

• John Postle (sub-committee member ),

• Greg Gosson (sub-committee member),

• Tomasz Postolski (sub-committee member),

• Lawrence Devon Smith,

• Grant Malensek,

• Keith Boyle,

• John Goode,

• Ian Ward,

• Kathryn Wherry,

• Alastair Sinclair,

• Hendrik Falck, and

• Natalia Dyatlova.

The contributions of these individuals is gratefully acknowledged.

Thank You

Documents

Overview of the 2019 Mineral Resource and Mineral …...5.5 Estimation Domains New 6.0 MINERAL RESOURCE ESTIMATION 6.1 Introduction Retained 6.2 Exploratory Data Analysis Retained