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Mineral resources and reserves

A resource is metal that is reasonably expected to be extractable one day. A reserve is the part of it a study has shown can be mined at a profit. The categories in between are about confidence, and they follow the same logic under the JORC Code, NI 43-101 and the other codes like them.

The ladder of confidence

Exploration Results Drill holes, trenches and samples, reported as they come. No tonnes or grade for the deposit yet.

Inferred Enough drilling to imply tonnes and grade, not to confirm continuity. Cannot become a reserve until upgraded.

Indicated Drilling close enough to assume continuity. Can support a Probable reserve once a study applies the modifying factors.

Measured Close-spaced drilling that confirms continuity. Can support a Proved (or Probable) reserve.

Probable The economically mineable part of an Indicated (or Measured) resource, shown by at least a Pre-Feasibility Study.

Proved The economically mineable part of a Measured resource: the highest confidence category.

After the JORC Code's Figure 1. The same ladder is used under NI 43-101 and the other CRIRSCO codes. Tap a box.

Category	What it rests on	Can become
Exploration Results	Drill holes, trenches and samples, reported as they come	A resource, once there is enough data
Exploration Target (JORC)	Ranges of tonnes and grade from early data; conceptual	A resource, if drilling confirms it
Inferred Resource	Limited drilling; continuity implied, not verified	Indicated, with more drilling
Indicated Resource	Drilling close enough to assume continuity	Probable Reserve
Measured Resource	Close-spaced drilling; continuity confirmed	Proved (or Probable) Reserve
Probable Reserve	Indicated (or Measured) resource plus modifying factors	Mined
Proved Reserve	Measured resource plus modifying factors	Mined

What makes something a resource

Not every mineralised rock is a resource. The codes ask for "reasonable prospects for eventual economic extraction", usually shown with a cut-off grade and, for an open pit, a conceptual pit shell. A Competent Person (JORC) or Qualified Person (NI 43-101) takes responsibility for the estimate and its category.

From resource to reserve: the modifying factors

A reserve needs at least a Pre-Feasibility Study. It applies the modifying factors: mining method and dilution, metallurgical recovery, processing, infrastructure, costs and prices, marketing, and legal, environmental, social and government factors. Mining dilution adds waste rock, so a reserve's grade is usually lower than the grade of the resource it came from.

Study stages

Scoping study (JORC) or Preliminary Economic Assessment (NI 43-101): an early look at whether a mine could work. It may use Inferred resources, with a cautionary statement, and cannot support a reserve.
Pre-Feasibility Study (PFS): picks the preferred mining and processing options; the minimum to declare a reserve.
Feasibility Study (FS or DFS): detailed engineering and costs, usually what lenders want before construction.

Reading a resource table

A resource statement lists tonnes, grade and contained metal for each category, at a stated cut-off grade. Check the cut-off (a lower cut-off adds tonnes and lowers the grade), how much is Inferred, whether it is inclusive or exclusive of any reserve, and the date. Contained metal is tonnes times grade: 10 Mt at 1.5 g/t gold is about 482,000 ounces in the ground (see grade units).

Worked example: a resource statement

An illustrative gold resource at a 0.5 g/t cut-off, inclusive of reserves:

Category	Tonnes (Mt)	Grade (g/t Au)	Contained gold (koz)
Measured	4.2	1.62	219
Indicated	11.5	1.38	510
Inferred	9.8	1.21	381
Total	25.5	1.35	1,110

What to read from it: about a third of the ounces (381 of 1,110 koz) are Inferred, so they need more drilling before any of them can become a reserve. Each row's ounces are tonnes × grade ÷ 31.1035: 4.2 Mt × 1.62 g/t is about 219,000 oz. The numbers are made up.

A made-up gold deposit with a lognormal grade distribution. Raise the cut-off and the tonnes fall while the average grade rises; contained ounces fall more slowly. Every real resource statement is a point on a curve like this.

Questions

What is the difference between a mineral resource and a reserve?

A Mineral Resource is a concentration of material with reasonable prospects for eventual economic extraction, estimated from drilling. A reserve (Ore Reserve under JORC, Mineral Reserve under CIM and NI 43-101) is the part of the Measured and Indicated resources that a Pre-Feasibility or Feasibility Study shows can be mined economically once mining, processing, cost, legal, environmental and social factors are applied.

What is an Inferred resource?

The lowest-confidence resource category: enough drilling to imply the tonnes and grade, not enough to confirm continuity. Inferred resources cannot be converted to reserves; more drilling has to upgrade them to Indicated or Measured first.

What is an Exploration Target?

Under the JORC Code, an estimate of the potential size and grade of a deposit given as ranges, before there is enough data for a resource. It must say that the potential is conceptual and that it is uncertain whether further work will define a resource.

Are resources reported inclusive or exclusive of reserves?

Either, and companies must say which. Inclusive means the reserve tonnes are also counted in the resource; exclusive means the resource is what is left over. Adding the two is only right when resources are exclusive.

Sources

An explainer of how mining companies report their work, written from the public codes and rules linked above. It describes the documents and does not rate any company, project or result. Not investment advice.