National Classification System for Identified Mineral Resources

• Introduction
• Classification Principles
• Terminology and definitions for Australia’s national system
• How is the national inventory compiled?

Australia's mineral resources are an important component of its wealth, and a long term perspective of what is likely to be available for mining is a prerequisite for formulating sound policies on resources and land-access.

In 1975, Australia (through the Bureau of Mineral Resources, which has evolved to become Geoscience Australia) adopted, with minor changes, the McKelvey resource classification system used in the United States by the then Bureau of Mines and the US Geological Survey (USGS). Australia's national system remains comparable with the current USGS system, as published in its Mineral Commodity Summaries.

Companies listed on the Australian Securities Exchange are required to report publicly on Ore Reserves and Mineral Resources under their control, using the Joint Ore Reserves Committee (JORC) Code (see http://www.jorc.org/). This has also evolved from the McKelvey system, so the national system and JORC code are compatible. Data reported for individual deposits by mining companies are compiled in Geoscience Australia's national mineral resources database and used in the preparation of the annual national assessments of Australia's mineral resources.

Estimating the total amount of each commodity likely to be available for mining in the long term is not a precise science. For mineral commodities, the long term perspective takes account of the following:

• JORC Code Reserves will, in general, all be mined, but they only provide a short term view of what is likely to be available for mining
• most current JORC Code Measured and Indicated Resources are also likely to be mined
• some current JORC Code Inferred Resources will also be transferred to 'Reserves'
• new discoveries will add to the resource inventory.

The national system for classification of Australia's identified mineral resources is illustrated in Figure 1. It classifies Identified (known) Mineral Resources according to two parameters, the degree of geological assurance and the degree of economic feasibility of exploitation. The former takes account of information on quantity (tonnage) and grade while the latter takes account of economic factors such as commodity prices, operating costs, capital costs, and discount rates.

Figure 1. Australia's national classification system for mineral resources.

Resources are classified in accordance with economic circumstances at the time of estimation. Resources which are not available for development at the time of classification because of legal and/or land access factors are classified without regard to such factors, because circumstances could change in the future. However, wherever possible, the amount of resource affected by these factors is stated.

Because of its specific use in the JORC Code, the term 'Reserve' is not used in the national inventory, where the highest category is 'Economic Demonstrated Resources' (EDR, Figure 1). In essence, EDR combines the JORC Code categories 'Proved Reserves', Probable Reserves', plus 'Measured Resources' and 'Indicated Resources' as shown in Figure 2. This is considered to provide a reasonable and objective estimate of what is likely to be available for mining in the long term.

'Resource': A concentration of naturally occurring solid, liquid or gaseous material in or on the Earth's crust in such form and amount that economic extraction of a commodity from the concentration is currently or potentially (within a 20-25 year timeframe) feasible.

The definition does not intend to imply that exploitation of any such material will take place within that time span, but that exploitation might reasonably be considered. It should be applied also on a commodity by commodity basis to take account of prevailing and prospective technologies. The term includes, where appropriate, material such as tailings and slags. Mineralisation falling outside the definition of 'Resource' is referred to as an 'occurrence' and is not included in the national inventory.

'Identified Resource': A specific body of mineral-bearing material whose location, quantity, and quality are known from specific measurements or estimates from geological evidence for which economic extraction is presently or potentially feasible.

To reflect degrees of geological assurance, Identified Resources are divided into Demonstrated Resources and Inferred Resources.

1. 'Demonstrated Resource': A collective term used in the national inventory for the sum of 'Measured Mineral Resources', 'Indicated Mineral Resources' 'Proved Ore Reserves' and 'Probable Ore Reserves' (see Figure 2), which are all defined according to the JORC Code.
   • A 'Measured Mineral Resource' is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity.
   • An 'Indicated Mineral Resource' is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.
   • A 'Proved Ore Reserve' is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified.
   • A 'Probable Ore Reserve' is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified.
2. An 'Inferred Mineral Resource' is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

By 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 the economics cannot be determined, these Inferred Resources are shown as 'undifferentiated'.

Identified resources include economic and subeconomic components.

1. 'Economic': 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.
2. 'Subeconomic': 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, could be produced given postulated limited increases in commodity prices or cost-reducing advances in technology. The main characteristics of this category are economic uncertainty and/or failure (albeit just) to meet the criteria for economic.
• 'Submarginal': That part of Subeconomic Resources that would require a substantially higher commodity price or major cost-reducing advance in technology, to render them economic.

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 are included in the economic resources category irrespective of whether or not exploitation is commercially practical. It is also assumed that producers or potential producers will receive the 'going market price' for their production.

The information required to make assessments of the economic viability of a particular deposit is commercially sensitive. Geoscience Australia's assessment of what is likely to be economic over the long term must take account of postulated price and cost variations. Economic resources include resources in enterprises which are operating or are committed, plus undeveloped resources which are judged to be economic on the basis of a realistic financial analysis, or compare with similar types of deposits in operating mines.

Virtually all of the mineral resource estimates compiled by Geoscience Australia's commodity specialists, including Subeconomic Resources, originate from published mining company sources reporting under the JORC Code. Given the common resource categories and definitions, the transfer of mineral resources from company reports into Australia's national mineral resource categories is quite straightforward, as summarised in Figure 2.

Figure 2. Correlation of JORC Code mineral resource categories with Australia's national mineral resource classification system.

In essence, for the reasons outlined above, the national inventory is compiled by:

• incorporating the JORC Code Proved and Probable Ore Reserves and Measured and Indicated Mineral Resources into EDR
• transferring JORC Code Inferred Resources to the national Inferred Resources category. There is commonly insufficient information to determine whether or not Inferred Resources are economic.

In addition, Geoscience Australia makes decisions on the transfer of historic JORC Code and pre-JORC Code estimates of ore reserves and mineral resources. Some of these old estimates are economically less attractive under current conditions, usually due to lower commodity prices and/or unforeseen technical problems. Some of these resources may be removed from EDR and transferred to Paramarginal or Submarginal Resources. However, if such resources cannot be reasonably expected to become economic within a time frame of 20 to 25 years, they are removed from the national mineral resources database.

Companies report grade and tonnage data for individual deposits. However, it is not meaningful to add up grades and tonnages from different deposits, so the national inventory reports only the aggregated total tonnage for each commodity - that is, the sum of the contained metal in individual deposits for each resource category which has been derived from company reports.

For resource categories of the national classification system, allowances for losses as a result of 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, uranium, thorium and oil shale, are summarised as follows:

Exceptions :
(i) For coal, different terms are used - 'Recoverable coal resources' makes allowance for mining losses only. 'Saleable coal' makes allowance for mining as well as processing losses.
(ii) Uranium and thorium resources are reported with losses resulting from mining and milling deducted from all categories, consistent with the international uranium resource classification system of the OECD Nuclear Energy Agency and International Atomic Energy Agency.
(iii) Oil Shale resources are reported as recoverable oil.