There was an interesting discussion on the fmg iron ore price thread this week which discussed fmg's LOM. By JORC regulations there is an ore reserve equating to 10 years LOM, with a total resource equating to 50 years. The consensus of the discussion was that it was more than likely that much of the resource will be converted to reserve bit by bit as time goes by.
A few weeks ago at Noosa Peter Kerr stated that in the 20 odd years of mining KI, MGX have never stated a reserve equating to more than 5 years at any one time, yet two decades later MGX is still mining.
Also at Noosa, Peter Kerr discussed blending the satellites (which are not included in the current reserve, thus not permitted to be included in calculating LOM).
Peter also discussed taking main pit down some 150 to 200 metres (but did not mention what part of that is in the current ore reserve).
It is against JORC and ASX regulations to state a LOM based on the potential of ore resource. Only once a responsible person under the JORC rules defines an ore reserve can it be expressed as LOM. When a resource is incorprated into the mine plan then the JORC responsible person will include it in the reserve.
The resource / reserve statement is due out next month.
MGX Price at posting:
31.5¢ Sentiment: Buy Disclosure: Held
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