National Classification System for Identified Mineral Resources

AIMR 2011
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Introduction

Australia's mineral resources are an important component of its wealth, and knowledge of the location, quantity and quality of such resources – including estimates of resources yet to be discovered – is an essential prerequisite of formulating sound policies on resources, land-access, land-use and conservation. Results of resource assessment can also be used to set priorities for exploration and mineral potential which are important inputs to decisions where alternative land uses are being considered.

In 1975, the then Bureau of Mineral Resources, Geology and Geophysics (BMR) adopted, with minor changes (BMR 1976), the McKelvey resource classification system used by the US Bureau of Mines and USGS (USBM/USGS 1980). Subsequently informal guidelines for using the system's definitions were developed and used by BMR for several years, until the whole system and its application was reviewed in the light of accumulated experience. The results of that review were published (BMR 1984) as the refined BMR mineral resource classification system for national resource assessment.

The principles of the McKelvey system were retained, as were most of the definitions used by BMR in its original system, although minor changes were made to some. Guidelines on applying the system were established, and adopted. It was decided that the term 'reserves' would not be used for regional or national aggregates of resources, so as to avoid the confusion arising from its use with different meanings in other contexts, particularly for commercial reporting for individual deposits using the JORC Code.

Several editions of an industry code for reporting resources in individual deposits have been published, the most recent being the 2004 edition entitled 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves', commonly referred to as the JORC Code. This is a report by a Joint Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists, and the Minerals Council of Australia.
The modified McKelvey system and JORC Code are compatible, and data reported for individual deposits by mining companies are used by Geoscience Australia in the preparation of its national assessments of Australia's mineral resources.

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Classification principles

Geoscience Australia classifies known (identified) mineral resources according to two parameters: degree of assurance of occurrence (degree of geological assurance) and degree of economic feasibility of exploitation. The former takes account of information on quantity (tonnage) and grade; the latter takes account of changing economic factors such as commodity prices, operating costs, capital costs, and discount rates.

Resources are classified in accordance with circumstances at the time of classification. Resources which are not available for development at the time of classification because of legal and/or land-use factors are classified without regard to such factors; however, the amount of resource thus affected will, wherever possible, be stated.

The classification framework is designed to accommodate all naturally occurring metals, non-metals, and fossil fuels, and to provide a means of comparing data on different resources, which may have a similar end use (eg. petroleum, coal, and uranium as energy sources).

The modified McKelvey system used by Geoscience Australia for classifying identified mineral resources is illustrated below.

The McKelvey system for classifying identified mineral resources

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Terminology and definitions

Resource: A concentration of naturally occurring solid, liquid, or gaseous materials in or on the Earth's crust and in such form that its economic extraction is presently or potentially (within a 20–25 year timeframe) feasible (see guideline i).

Categories of resources based on degree of assurance of occurrence

Identified (Mineral) Resource: Specific bodies of mineral-bearing material whose location, quantity, and quality are known from specific measurements or estimates from geological evidence. Identified resources include economic and subeconomic components. To reflect degrees of geological assurance, identified resources can be divided into the following categories:

Measured: Resources for which tonnage is computed from dimensions revealed in outcrops, trenches, workings, and drill holes, and for which the grade is computed from the results of detailed sampling. The sites for inspection, sampling, and measurement are spaced so closely, and the geological character is so well defined, that size, shape, and mineral content are well established.

Indicated: Resources for which tonnage and grade are computed from information similar to that used for measured resources, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than for resources in the measured category, is high enough to assume continuity between points of observation. Demonstrated: A collective term for the sum of measured and indicated resources.

Inferred: Resources for which quantitative estimates are based largely on broad knowledge of the geological character of the deposit and for which there are few, if any, samples or measurements. The estimates are based on an assumed continuity or repetition for which there is geological evidence. This evidence may include comparison with deposits of similar type. Bodies that are completely concealed may be included if there is specific geological evidence of their presence. Estimates of inferred resources should be stated separately and not combined in a single total with measured or indicated resources (see guideline ii).

Categories of resources based on economic considerations.

Economic: This term implies that, at the time of determination, profitable extraction or production under defined investment assumptions has been established, analytically demonstrated, or assumed with reasonable certainty (see guideline iii).

Subeconomic: This term refers to those resources which do not meet the criteria of economic; subeconomic resources include paramarginal and submarginal categories.

Paramarginal: That part of subeconomic resources which, at the time of determination, almost satisfies the criteria for economic. The main characteristics of this category are economic uncertainty and/or failure (albeit just) to meet the criteria which define economic. Included are resources which could be produced given postulated changes in economic or technologic factors.

Submarginal: That part of subeconomic resources that would require a substantially higher commodity price or some major cost-reducing advance in technology, to render them economic.

Geoscience Australia guidelines for classifying mineral resources

  1. Use of the term 'resources' is restricted to material, the extraction of which is generally judged to be potentially economically viable in an arbitrary time frame of about 20 to 25 years. The term includes, where appropriate, material such as tailings and slags. The definition does not intend to imply that exploitation of any such material will take place in that time span, but only that its possibility might reasonably be considered. This guideline attempts to establish a lower limit to what is worth assessing. It should be applied on a commodity by commodity basis to take account of prevailing and prospective technologies. Material falling outside the category of resource should be referred to as 'occurrences'.

  2. definition, inferred resources are classified as such for want of adequate knowledge and therefore it may not be feasible to differentiate between economic and subeconomic inferred resources. Where inferred resources are shown as 'undifferentiated', the amount known or judged to be economic may be indicated. Such judgements must take careful account of the commodity being assessed and its mode of occurrence as these factors will have a bearing on the reliability of estimates made. Specifically, grade estimates can be more reliably made for concordant sedimentary and biological deposits than for discordant epigenetic deposits (King et al. 1982, p. 8).

  3. The definition of 'economic' is based on the important assumption that markets exist for the commodity concerned. All deposits which are judged to be exploitable economically at the time of assessment, whether or not exploitation is commercially practical, are included in the economic resources category. It is also assumed that producers or potential producers will receive the 'going market price' for their production. The classification is therefore based on the concept of what is judged to be economic rather than what is considered to be commercial at any particular time.

    The information required to make detailed assessments of economic viability of a particular deposit is commercially sensitive (eg. a company's costs and required internal rate of return), and these data may not be available to Geoscience Australia. Furthermore, as corporate strategies are likely to be different, individual companies will have different criteria for what is considered to be 'economic'. Thus to standardise the approach for national or regional resource assessments, the following mineral deposits/situations are accepted by Geoscience Australia, as a general guide, to be economic:

    1. the resources (published or unpublished) of operating enterprises, whether or not such operations are sustained by long- or short-term, direct or indirect, government subsidies;
    2. resources in a deposit which is being developed for production (ie. where there is a corporate commitment to production);
    3. undeveloped resources which are judged to be economic on the basis of a financial analysis using actual, estimated, or assumed variables – viz., the tax rate, capital and operating costs, discount rate (which reflects the long-term bond rate), commodity prices, and depreciation schedules; the values for the economic variables used in an assessment must be realistic for the circumstances prevailing at the time of the assessment;
    4. resources at mines on care-and-maintenance meeting the criteria outlined in (c) above.
  4. Allowances (deductions) for losses due to mining and milling

    For resource categories of the National Scheme, allowances for losses due to mining and milling are the same as those for corresponding categories in the JORC Code. The allowances for losses, which apply to all minerals except coal and uranium, are summarised as follows:

    Table of allowances for losses.

    For coal, different terms are used – 'Recoverable coal resources' is used when allowance has been made for mining losses only. 'Saleable coal' is used when allowance has been made for mining as well as processing losses.

    Uranium resources are reported in the categories of the OECD Nuclear Energy Agency & International Atomic Energy Agency classification scheme. Losses due to mining and milling are deducted from resources in all categories. These estimates are referred to as 'Recoverable resources' and reported under the corresponding categories in the National Scheme.

  5. Some minerals derive their economic viability from their co-product or by-product relationships with other minerals. Such relationships and assumptions must be clearly explained in footnotes or in accompanying text.

  6. National aggregates of resource estimates should be rounded to the appropriate last significant digit, so as not to create false impressions of accuracy.

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References

  • BMR, 1976. BMR adopts new system of resource classification. Australian Mineral Industry Quarterly, 28(1), 11–13.
  • BMR, 1984. BMR refines its mineral resource classification system. Australian Mineral Industry Quarterly, 36(3) 73–82.
  • JORC, 2004. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Report of the joint committee of the Australasian Institute of Mining & Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, 20pp.
  • King, H.F., McMahon, D.W. and Bujtor, G.J., 1982. A guide to the understanding of ore reserve estimation. Australasian Institute of Mining and Metallurgy, Melbourne, 21 pp.
  • McKay, W.J., Miezitis, Y., Exon, N.F. and Sait, R., 2005. Australia's Offshore Minerals: an overview.
  • USBM/USGS, 1980. Principles of a resource/reserve classification for minerals. US Geological Survey Circular 831, 5 pp.
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