I'll join in the fun :)AResource is a concentration of a...

I'll join in the fun

AResource is a concentration of a minerals that has a reasonable prospect ofeconomic extraction. Its location, grade, quantity and continuity arereasonably known from specific geological knowledge and evidence. Essentially,a prospect is not a Resource until enough work has been done to demonstrate agood understanding of the mineral occurrence, and the quantity and qualityshow the potential make it an economic play. Within the Resourcecategory there are a few more specific sub-categories.

An “InferredResource” is one that is based on limited samplingand is based on reasonably assumed, but limited information. Samples mightinclude those from outcrops, trenches, pits or drill holes. Previous geologicalmaps may allow for reasonable assumptions about the size and scope ofthe resource.

An “IndicatedResource” is a Resource whose quantity, grade (quality), shape, sizeand continuity can be more confidently reported. Larger and more closely spacedsamples have more reliably established the characteristics of the resourceto the point where preliminary economic viability and resourceextraction calculations can be made.

A “MeasuredResource” represents the highest level of geologic knowledge andconfidence in a Resource. The Resource characteristics are wellestablished through detailed and reliable exploration work. Economic andtechnical factors can be more confidently applied. Mine andproduction planning can give more detailed estimates of economic viability.

Itshould be noted that with many projects, a combination of confidencelevels and Resource level classifications may be used. A company may target aprimary deposit as its “Measured Resource”, but have reasonable evidence of an“Inferred Resource” in the vicinity of the main deposit or “along thetrend” of the primary project area.

Thedecision of which term should be used lies in the hands of the Competent Personpreparing the report.

MineralReserves

Thedifference between a resource and reserve boils down one thing: a feasibility study.At the very least a preliminary, or “pre-feasibility” study must be completedwhich takes into account the “Modifying” non-geological factors. Theseinclude technical factors include mining, processing, metallurgy. They alsoinclude mine planning, economic planning, environmental andcommunity related factors. (See our article on mining project location)

AReserve is Probable when economic extraction CANBE justified. A Reserve is Proven when economicextraction IS justified. This distinction isgenerally based on the geologic knowledge and as with Resources manyprojects include a hybrid classification (eg. “Proven and Probable”).

It’simportant to note that the arrows are two-sided, this means that not onlycan resources and reserves be upgraded to reserves but the reverse can also betrue. Sometimes reserves are downgraded when information pertaining tomodifying factors is flawed or turns negative. This can happen quickly whencommodity prices turn South.

Whenevaluating projects and companies pay particular attention to the variablemodifying factors, particularly the break-even commodity price used indetermining economic feasibility. A break-even price that’s near to arecent market high might be a risky investment. In addition, sincemany companies may lump “proven and probable” or “inferred and indicated”together, be sure to get the breakdown. How much is proven? How muchis probable?

Lastly,understand that all of this information comes from people that provide it.Ultimately you’re relying on the judgement of the Management team and itsCompetent Person.