interesting item

I came across this posting on another company that also got hammered when its JORC came out. I have removed the company name so to avoid being off subject. It is a knowledgable post and puts both sides of the story it is worth a read I hope the writer doesn't object to me reusing it here. It shows we still have a long way to go get reliable JORC and we don't really know until we still mining.

(The following from another poster)

Without knowing the full details here...I suggest it is probably not so much a case of missing out on "drilling a couple of holes" and more a case of differing opinions on geological interpretation.

On the one hand you have a team of geos, who live and breathe the project, and over time gain an almost innate understanding of the nature and orientation of the orebody. They plan holes according to their geological model and typically hit their targets within a few metres of prediction most times.

Then, on the other hand you have the resource consultants who are relatively late arrivals to the project, who rely heavily on geostatistical analysis and in all fairness, cannot be expected to understand the project as well as those who have explored, discovered, planned and implemented drilling programmes and then logged and/or analysed every metre of drilling

In short, what you end up with are differences of opinion, between professionals, leading to such things as "holes" within the resource for example, that might require additional drilling.

One persons "hole" is another person's indicated or even inferred extension.

Given the tabular nature of the Irvine resource, one can perhaps excuse XYZ for assuming their drillhole spacing was appropriate.

I fear, since the Bendigo Mining resource fiasco, the industry at large has become ultra-conservative when it comes to resource estimations, preferring to underestimate where possible rather than over-estimate.

In my view, both are equally dangerous, and both will be subject to litigation (after the event), should things not turn out as expected...so underestimation is just as wrong as over-estimation in my view.

I am aware of at least one project that had a price tag put on it based the results of a resource estimate, however production grades were significantly higher when mining figures were eventually availble.

Resource consultants happily quote "the ones they got right", but what of the one's they did not?

Its probably too early in the processa to get a handle on exactly how many resource estimations have been well off the mark, due to the fact not that many mines have been bought into production since the age of computerised, kriging based geostatistical analysis has been adopted.

It would probably make for an interesting analysis.


When you understand how many safeguards and various "margins for error" are introduced at every step of the resource estimation process, from;

- the results generated at assay labs;
- top-cutting of assay data;
- model trimming;
- composite based "smoothing" of raw data;
- low-ball (safe) regression formulas and;
- many "best fit" approaches purely to save time and/or processing complexity
- etc...

...then you start to understand the difficulty in ensuring the final resource statement is in fact representative of what is in the ground.

On the other side of the coin, I have seen resource estimates that I suspsect have gone too far the other way...and have been well and truly over-estimated...at least according to my own modelling based on data supplied to the market.

"Support effect" it appears, is not a dirty word in some circles.