100 not out – a century of professional standards in mineral resource reporting

Materials World magazine
1 Sep 2009

Edmund Sides, Principal Resource Geologist at UK-based energy, power
and process consultancy AMEC, considers a century of professional standards
for mineral resource reporting.

The Pan-European Reserves and Resources Reporting Committee’s (PERC) minerals reporting code (PERC 2008) was formally adopted by its sponsoring organisations on 14 May.

The Committee is co-sponsored by IOM3 and its technical division, the International Mining & Minerals Association, together with the UK’s Geological Society, the European Federation of Geologists and the Institute of Geologists of Ireland.

Interestingly, it is over 100 years since recommendations on the terminology for reporting the size of mineral deposits were first adopted by the former Institution of Mining and Metallurgy (IMM), one of the predecessor organisations of IOM3. Members of IMM played an important role in valuing mining properties around the globe and, as always, there were often unscrupulous speculators who would claim to possess large deposits based on little hard evidence.

Now you see it

‘Ore in sight’ was a term commonly used in reports during the latter part of the 19th century, as discussed in a paper presented to IMM by Mining Engineer J D Kendall on 19 December 1901. He noted that what was referred to as ‘ore in sight’ was often only ‘ore in imagination’, and made a strong case for a more rigorous definition of the term.

Kendall described some of the methods used at the time to estimate quantities of ore and illustrated his paper with several schematic cross-sections. He gave examples of cases where errors had been made, and noted that statements were often not supported by cross-sections or plans that showed the data used to estimate the volumes, tonnages and grade of ore.

He recommended that all reports should be accompanied by such information and believed that this would greatly reduce errors since ‘anyone can then check the calculations, and see at a glance what has been observed and what assumed. Only by wilful misrepresentation could the facts be concealed’.

Kendall’s paper generated a lot of interest, and several of the points raised in the discussion 
would be equally applicable today. Comments at the time included – ‘Some time ago he was asked to determine the quantity of ore in sight at a large Russian property, which had been stated to be something like 500,000t. He, however, could only find some 2,700t, the previous estimates had been based partially on assumptions’.

‘On some future occasion it would, he thought, be profitable to discuss the pernicious influence of market manoeuvres on mining operations. Should the engineer yield in a moment of weakness to the pressure of his directors and his estimate unluckily prove afterwards to be incorrect, then he would find himself in an extremely awkward situation’.

‘He thought that they should define that point in such a way that nothing could be called ore which had not an economic value, and therefore, they must first find out what the cost of working was. If a margin of profit were left after paying cost of extraction and treatment, they could then call it ore’.

Spurred on

The Council of the former IMM established a committee to advise on the use of the term ‘ore in sight’ by members of the Institution. On 30 September 1902, the Council adopted the recommendations as reproduced from Kendall (see comments section below).

As well as calls for transparency and materiality with respect to the data on which the estimates are based, the resolution required a demonstration of economic viability and for members to act in an ethical and competent manner. All of these principles have been retained in the modern codes, such as PERC 2008 which adhere to the template published by the Committee for Mineral Reserves International Reporting Standards in 2006.

Despite the early effort to standardise reporting terminology, the term ‘ore in sight’ seems to have fallen rapidly into disrepute, perhaps because it encompassed two very different categories of ore and did not enable estimation of reserves beyond the limits of existing mine workings. In Herbert Hoover’s textbook Principles of Mining: Valuation, Organization and Administration, published in 1909, he noted that there was an increasing tendency to divide ‘ore in sight’ into different classes to reflect variations within individual mines. Hoover gave his preferred classification as –

• ‘Proved Ore – ore where there is practically no risk of failure of continuity.
• Probable Ore – ore where there is some risk, yet warrantable justification for assumption of continuity.
• Prospective Ore – ore which cannot be included in the above classes, nor definitely known or stated in any terms of tonnage.’

It is interesting to note that the proved and probable categories have survived in similar usage for a century, and are the adjectives used to define the two categories of mineral reserves recognised in the PERC Code. Although the specific terminology adopted by IMM in 1902 did not survive for long, the basic principle of defining common standards for public 
reporting of the size of mineral properties was established.

Comments on the ore in sight issue

‘After due consideration and discussion the Council came to the following decision –
1. That Members of the Institution should not make use of the term “ore in sight”, in their reports, without indicating, in the most explicit manner, the data upon which the estimate is based, and that it is most desirable that estimates should be illustrated by drawings.
2. That as the term “ore in sight” is frequently used to indicate two separate factors in an estimate, namely –
(a) Ore blocked out – that is, ore exposed on at least three sides within reasonable distance of each other – and
(b) Ore which may reasonably be assumed to exist though is not actually “blocked out”, these two factors should in all cases be kept distinct, as (a) is governed by fixed rules, whilst (b) is dependent upon individual judgement and experience.
3. That in making use of the term “ore in sight”, an engineer should demonstrate that the ore so denominated is capable of being profitably extracted under the working conditions obtained in the district.
4. That Members of the Institution be urged to protect the best interests of the profession by using their influence in every way possible to prevent and discourage the use of the term “ore in sight” except as defined above; and the Council also strongly advises that no ambiguity or mystery in this connection should be tolerated, as they [the Council] consider that such ambiguity is an indication of dishonesty or incompetency.’