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S o m e c o m m e n t s on the classification o f resources and reserves

M . G. A R M I T A G E & M . F. A. P O T T S

Steffen Robertson and Kirsten UK Ltd, Summit House, 9-10 Windsor Place,
Cardiff CF1 3BX, UK

Abstract: Resource and reserve classification systems are used by stock markets,
investors, mining companies etc. in order to make their decision making apparently
more soundly based. In view of the subjectivity of geology and diversity of mining
methods, in producing and adhering to such systems those charged with the
responsibility of estimating reserves run the risk of inadvertently misleading these
people and of risking their own integrity. This is not to say that we should not have
classification systems at all, but more that they need to reflect the reality as much as
the requirement. There are additional problems at present because of the number of
classification systems currently in use and the widely different uses to which they are
commonly put. The worldwide acceptance of a single terminology of resource and
reserve classification would go some way to reducing these. Different classification
systems may be required for different applications. In addition, a move to a more
systematic quantitative assessment of confidence is proposed which may reduce some
of the problems inherent in such an imprecise science.

The Institution of Mining and Metallurgy
(IMM) has recently (1991) produced definitions
and guidelines for the reporting of resources and
reserves. The system of resource and reserve
classification proposed joins a growing list of
similar such systems already in use. The two
most commonly used systems at present are that
proposed in 1980 jointly by the Bureau of Mines
(USBM) and the US Geological Survey (USGS),
and that proposed in 1989 by the Australasian
institution of Mining and Metallurgy (AIMM)
and the Australian Mining Industry Council
(AMIC). Other systems in regular use include
those proposed by the Association of Profes-
sional Engineers of Ontario (APEO), the Society
for M i n i n g , M e t a l l u r g y a n d E x p l o r a t i o n
(SMME), and the United States Securities and
Exchange Commission (SEC), respectively.
All these systems use slightly different
terminologies, but, more confusingly, give
slightly different definitions for the main terms
common to each, i.e. 'resource' and 'reserve',
and also 'measured', 'indicated' and 'inferred'.
The result is that figures assigned to these terms
in international literature, feasibility studies, and
consultants and company annual reports are
unclear unless the system being used is stated.
This is, unfortunately, rarely the case.
More fundamental problems rest with the
diversity of mineral deposits, the progressive
stages of exploration and exploitation, the
different mining methods, and the varying
degrees of confidence in continuity and grade
of mineralization, that the systems attempt to
describe. In attempting to cover so much with so
few categories the systems depend heavily on the
judgement of the user. The constraints imposed
by the systems often force reporters of reserves
to use hybrid terminology or to ignore them
altogether. More importantly, even with the best
and most honest will in the world, and even if
the system being used is stated, the results are
open to misinterpretation and potential misuse.
This paper describes the workings of the
USBM/USGS, A I M M / A M I C and I M M sys-
tems and discusses the differences between them
and the potential problems with their use and
interpretation. The U S B M / U S G S and A I M M /
A M I C systems are discussed as they are
probably the most widely known of the systems
currently in use; the I M M system because it is
the latest offering by a professional body. The
paper does not seek to comment as to which of
these is the 'better' system; they are all similar in
style and preference is largely individualistic.
Instead it concentrates discussion on specific
problems facing both the user, in trying to
adhere to any such system, and the interpreter
(who may only have a limited knowledge of
geology or mining) in trying to understand the
meaning of the resulting classification. Although
the paper stops short of proposing an alternative
system, it does introduce a new approach to the
subject which the authors consider would reduce
some of these problems.

From Whateley, M. K. G. & Harvey, P. K. (eds), 1994, Mineral Resource Evaluation II: 11
Methods and Case Histories, Geological Society Special Publication No. 79, 11-16.
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12 M.G. ARMITAGE & M. F. A. POTTS
Current classification systems
U S B M / U S G S classification
This system, proposed in USBM & USGS
(1980), is largely based on 'The McKelvey Box'
of McKelvey (1972). The main terminology is
summarized in Table 1. It covers everything
from as yet undiscovered deposits to 'blocked-
off' stopes. It also covers deposits not economic
at present but which may become economic in
the future. It can therefore be used to classify
anything from a particular mine's economically
mineable tonnage, to a country's mineral
potential. 'Identified Resources' are blocks of
ground for which grades, tonnage and geological
continuity have been estimated, 'Subeconomic
Resources' are parts of 'Identified Resources'
which studies have shown could not be econom-
ically extracted at the time of determination, and
'Undiscovered Resources' are as yet undiscov-
ered unspecified deposits projected to be present
based on geological interpretation and guess-
work. 'Reserves' are specific blocks of ground
containing mineralization deemed to be econ-
omic to mine at the present day. 'Reserves', and
'Subeconomic Resources', are further classified
as 'measured', 'indicated', or 'inferred' depen-
dent on the degree to which the geological
continuity has been confirmed. Briefly, for
'measured' the continuity is 'so well defined
that the size, shape and mineral content are well
established'; while for 'indicated' the sites
available for inspection are 'too widely or
otherwise inappropriately spaced to outline the
ore completely or to establish its grade through-
out'. 'Inferred' is estimated from 'assumed
continuity or repetition for which there is
geological evidence' but few samples or mea-
surements.
Table 1. USBM/USGS system
Identified resources
Economic Marginal Subeconomic
reserves reserves reserves
Measured
Economics
I Increasing
Indicated geological
confidence
Inferred
Undiscovered resources
Hypothetical
I Increasing
geological
confidence
Speculative
AIMM/AMIC classification
Since its introduction this system, A I M M &
AMIC (1989), has been the main challenger to
the U S B M / U S G S system for international
recognition. The system is similar in that it
distinguishes between resources and reserves
based on economic analysis (specifically on the
results of feasibility studies), and between sub-
categories of both of these based on perceived
geological continuity. It is dissimilar in precise
definitions and in that it attempts only to
address specific identified mineral occurrences
and not 'global' resources. A 'Resource' is an
'identified in situ mineral occurrence' which has
'reasonable prospects for eventual economic
exploitation'. An 'Ore Reserve' is that part of a
'Resource' that feasibility studies have shown
'could be recovered economically under condi-
tions realistically assumed at the time of
reporting'.
'Measured Resources' have 'confirmed con-
tinuity', while 'Indicated Resources' have a
'reasonable indication of continuity'. 'Inferred
Resources' are estimates where the available
data are of insufficient coverage to enable the
'geological framework to be confidently inter-
preted, and the continuity of mineralization to
be predicted'. 'Measured Resources' require a
'firm understanding of the geology and controls
of mineralization' and even 'Indicated Re-
sources' 'assume continuity of mineralization'.
A 'Proved Ore Reserve' is that portion of a
'Measured Resource' that studies have shown is
economically mineable even after account is
taken of dilution, while a 'Probable Ore Reserve'
is the equivalent portion of an 'Indicated
Resource'. Table 2 shows how the system works
in practice.
Table 2. AIMM/AMIC system
Ore reserve Resource
1A Proved ore reserve~- 2a Measured resource
Increasing
l
geological
confidence
1B Probable ore reserve+--- 2B Indicated resource
increasing
T
geological
confidence
2C Inferred resource
Economic input
(
3 Pre-resource mineralization
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CLASSIFICATION SYSTEMS
The guidelines to the A I M M / A M I C system
also refers to an additional category 'Pre-
Resource Mineralization'. This relates to speci-
fic mineral occurrences where there is as yet
insufficient data to enable it to be classified as a
' Resource'.
I M M classification
These definitions and reporting guidelines,
proposed in I M M (1991), are the product of a
working party set up in 1989, the aim of which
was to impose rules on, and maintain the
credibility of, the reporting of resources and
reserves in the UK. The London Stock Ex-
change has this year made it a condition of
listing that companies adhere to these guidelines
in the same way as the Australian Stock
Exchange has for some time with the A I M M /
A M I C system.
The I M M definitions are clearly based on the
A I M M / A M I C system but there are subtle, yet
significant, differences between the two. Both
restrict their attention to specific identified
mineral occurrences only, both distinguish
between resources and reserves as a function of
the result of feasibility studies and b o t h
subdivide resources based on perceived geologi-
cal continuity. They differ, however, in that their
sub-division of reserves which in the I M M
system is a function of the depth of the
economic studies carried out as well as the
perceived geological continuity, not solely
geological continuity as is the case with the
A I M M / A M I C system. Also, in the I M M system
both resources and reserves may be in situ or
'mineable' dependent on whether the quoted
tonnages allow for mining dilution and losses. In
addition the 'inferred' category of resource has
been dropped. Table 3 gives the terminology and
the workings of the system.
Table 3. IMM system
Mineral reserve Mineral resource
1A Proved mineral 2A Measured mineral
reserve resource
Full feasibility ~ ,
study ~ I Increasing confidence
J .Economic I in geological
f input \ continuity
1B Probable
^' t--~-'A --:
mineral
.... 1 ~ 2B Indicated mineral
reserve resource
3 Mineral potential
13
Briefly, a 'Measured Mineral Resource' is
defined as that portion of a 'Mineral Resource'
where 'the geological character, continuity,
grades and nature of the material are so well
defined that the physical character, size, shape,
quality and mineral content are established with
a high degree of certainty'. An 'Indicated
Mineral Resource' is simply that portion where
the 'sites used for inspection and sampling and
measurements are too widely or inappropriately
spaced to enable the material or its continuity
to be defined or its grade throughout to be
established'.
A 'Proven Mineral Reserve' is that portion of
a 'Measured Mineral Resource' which a full
feasibility study (sufficiently detailed to enable a
decision on implementation to be made) has
shown to 'justify extraction at the time of
determination'. A 'Probable Mineral Reserve'
is that portion of a 'Measured' and/or 'Indicated
Resource' which economic studies, not of the
detail of a full feasibility study, have similarly
shown to justify extraction.
The system also contains a 'Mineral Potential'
category which corresponds to the 'Pre-Re-
source Mineralization' category of the A I M M /
AMIC system.
Discussion
Problems with terminology
The same terms are used by all the three systems
discussed here but within each system they have
slightly different definitions. U S B M / U S G S
'resources' may be u n e c o n o m i c and even
undiscovered, while A I M M / A M I C and IMM
'resources' must be both identified and poten-
tially economic. A I M M / A M I C 'reserves' take
account of mining dilution, but this is not
necessarily the case with I M M 'reserves'. Also
I M M 'proven reserves' are ready to mine, while
A I M M / A M I C 'proven reserves' may still not
have the backing of a feasibility study and may
simply be 'resources' roughly discounted at an
early exploration stage to allow for likely
mineability induced losses and dilution. Also
the I M M 'resource' subdivision is more sub-
jective than the A I M M / A M I C subdivision
which, for example, requires 'Measured Re-
sources' to have 'confirmed continuity' as
opposed to simply being known with 'a high
degree of certainty'. This situation is further
complicated if the terminology of other systems
not discussed in detail here are also considered.
Those proposed by the Association of Profes-
sional Engineers of the Province of Ontario
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14 M. G. ARMITAGE & M. F. A. POTTS
(APEO) and the Society for Mining, Metallurgy,
and Exploration (SMME), for example, use
similar terms (e.g. ore reserve, geological
reserve, in situ reserve and mineable reserve;
and inferred, indicated and measured resources,
and probable and proven reserves respectively)
but in a slightly different way again.
The result is that reported resources and
reserves are at best unclear and at worst
misleading unless the system being used is
stated. As mentioned in the introduction to
this paper, this is rarely the case as can be seen in
a quick scan through any of the many mining
publications. The problem would clearly be best
addressed by the adoption of one system, such as
has been done by the Australian Stock Exchange
and more recently the London Stock Exchange.
There is little doubt that adoption of the
A I M M / A M I C system by the Australian Stock
Exchange has improved the standard of the
reporting of resources and reserves in that
country as can be seen in mining publications,
in feasibility documents and in company annual
reports.
In this regard, the authors randomly selected
Annual Reports from 15 UK listed companies
all of which reported and discussed resources
and reserves. Of these only two indicated which
classification system they had used (in both cases
the A I M M / A M I C system), two had instead
described and used their own systems (for
example type 1 reserve, type 2 reserve etc.) and
the remainder gave no indication of resource or
reserve definitions at all.
Mining is a worldwide activity and many
companies run, or fund, operations in different
continents as well as different countries. Yet
though the problem has been addressed by
several national institutions and to some extent
locally controlled, there can be little doubt that
the terminology used worldwide for the report-
ing of resources and reserves is in a confused
state. It is the opinion of the authors that what is
required is one internationally accepted system
of resource and reserve classification.
Problems with usage
The USBM/USGS, A I M M / A M I C and IMM
systems can be used to classify deposits in the
process of being evaluated. They can be used to
classify tonnages of prospective mines from the
early exploration stage to the production of a
full feasibility document. In addition the USBM/
USGS system covers unexplored and even
unknown deposits and this can be used to
classify a country's mining potential.
In addition to the above it is important, from
a planning point of view, that a mine is able to
quantify the tonnages of ore that are in the
different stages of preparation for mining i.e.
'ore blocked out', and 'ore developed'. This was
covered by abandoned terminology such as 'ore
in sight' which was in use when diamond drilling
was not the prevalent exploration technique but
is not covered by modern systems such as those
discussed in this paper here which all now use
their extremes at the exploration phase (using
previous systems there would be no 'proven' or
'possible' ore until mining commenced). This is a
weakness of such systems as despite this they are
still commonly used on operating mines for this
specific purpose. This results in the situation that
blocks of ground classified as 'proven' in
feasibility documents are reclassified as 'prob-
able' on the commencement of mining, and/or in
the generation of locally adapted hybrid systems
of classification.
The use of such a few categories to cover a
wide variety of mineral deposit types and mining
methods causes additional problems. The classi-
fication of vein gold deposits is a very different
business to that of limestone deposits. It is hard
to see how a deep sub-outcropping shear zone
gold deposit, which is planned to be mined from
a shaft, can have any 'proven' or 'measured'
tonnage even using the newer definitions of the
systems discussed here until it has been exten-
sively exposed in underground development.
This is supported by the major difficulties with
geological continuity recently experienced by
mines such as Big Bell in Australia, and
Goldstream, Nickel Plate and Silbak-Prem in
Canada (H. G. Taylor, pers. comm.). This
despite the owners of these properties having
completed sufficient studies to attract the
development capital required.
It is, however, also hard to envisage many
investors risking money in a venture that at the
end of its full feasibility study has no 'Proved
Mineral Reserve' or 'Proved Ore Reserve'. It is
necessary therefore for classification systems to
take account of the ability of different deposits
to achieve the various requirements of different
categories while an alternative would be to have
different systems for different types of deposits
and mining methods.
In summary, therefore, it is regarded by the
authors as important that any proposed inter-
national classification system should cover the
requirements of all the uses to which it is likely
to be put and not just the requirements of
deposits during the build-up to mining. It should
also be able to be used to classify meaningfully,
and reflect confidence in the profitability of
mining of, all deposit types using any mining
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CLASSIFICATION SYSTEMS
style. At the same time it must still be simple,
and capable of being clearly understood by all
those who are likely to use it.
Problems with subjectivity
The three systems discussed here subdivide to a
similar degree. Each uses a handful of phrases to
describe confidence in the presence and econ-
omics of exploiting any type of non-petroleum
mineral deposit (though the A I M M / A M I C
system has a separate terminology for coal
deposits) using any type of mining method. In
so doing each has trodden a fine line between
over-categorization and under-distinction. The
result in all cases is a subjective system that relies
heavily on experience and knowledge in its use.
All the systems contain 'grey' areas within which
different geologists, in trying to adhere to any
one system (even using the same information),
would classify the same body differently depen-
dent on their view of the geological continuity.
This is not a function of the respective ability of
different geologists but rather because geology
is not a subject that can be easily boxed and
because with mineable reserves one is predicting
not measuring. It is consequently hard to make
realistic comparisons for quoted resources and
reserves for different deposits unless they have
all been produced by the same person or team or
they are supported by details regarding the
geology and the extent of sampling. Clearly to
simply report a resource or reserve figure and a
corresponding classification is insufficient, and
when used in this way, because of the subjectiv-
ity of geology and the broadness of the current
systems, a classification system may become a
liability. Despite this, the facility to compare
deposits and rank anticipated benefits and
returns on investment is a major reason for
having the classification in the first place.
Suggestions that geostatistical techniques on
their own can quantify error and form the basis
of classification are flawed in most cases.
Certainly they can quantify grade uncertainty
and to a limited extent geological uncertainty,
but only down to the spacing for which there are
data (i.e. the drillhole spacing). Where an
underground mine is being planned this is often
insufficient to determine the variations in
geometry and grade at the detail required to
predict mineability on a stope scale.
There will always be a subjective element in
the reporting of resources and reserves, yet in
placing too much emphasis on broad classifica-
tion systems we run the risk of both losing good
information and of implying a confidence to the
resulting classification that cannot be justified.
15
The effect of this can be reduced by the inclusion
of details regarding the geology and sample
coverage. More fundamentally, however, as such
detail will be left out at some point and anyway
is not meaningful to all parties concerned, there
may be some room for reducing the problem by
either increasing the number of categories or
alternatively by making classification systems
more end-use specific. Planned underground
mines for example have different requirements
regarding geological continuity than open pit
mines. An alternative would be to introduce a
way in which uncertainty regarding geological
and grade continuity and its relevance to the
proposed mining method could be ranked in a
more methodical manner. This is discussed more
in the next section of this paper.
Summary
Three main causes of concern with current
classifications of resources and reserves have
been discussed. These are:
• that there are several classification systems
currently in use all of which use the same, or
very similar terminology, but all of which
give these terms significantly different
definitions;
• that the most commonly used classification
systems were not designed to cover all the
situations in which they are now used;
• that, by attempting to categorize an area
as subjective as geology, a certainty and
distinction is implied t h a t c a n n o t be
justified nor would be likely to be repeated
if the same work was u n d e r t a k e n by
different people.
These areas of concern can cause problems
enough when viewed in isolation but when
combined, however, the problems multiply. For
example, if a proven, probable and possible
reserve is reported without reference to either a
given system or the amount of supporting
evidence, it can simply mean that in the view
of the writer the first reported tonnage is
considered better known than the second which
is in turn better known than the third. In reading
the report, not only do we not know on what
basis the given tonnages were allocated to the
various categories, we do not even know what
these categories mean.
The first two areas of concern could be
reduced if a single terminology for resource
and reserve classification which covered all the
requirements of governments, mining compa-
nies, banks and shareholders could be inter-
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16 M. G. ARMITAGE & M. F. A. POTTS
nationally agreed. Different classification sys-
tems may be required for different applications
but if so these should be compatible not
contradictory. The third area of concern is
inherent to the subject. A suggested method for
reducing this subjectivity is given in the follow-
ing section.
An alternative approach to classification
Most proposed classification systems, as well as
defining terms and categories, also highlight
those aspects that should be considered by 'the
responsible person' in both calculating and
categorizing the deposit grades and tonnages.
These include the reliability of the geological
data and interpretation; the perceived geological
continuity and deposit type; the drilling techni-
que and core recovery; the type of sampling, the
sampling coverage and the reliability of the
sampling method; the sample preparation and
sample analyses; the variability of the assays; the
planned mining method and impact on reserves
of mineability and selectivity; the impact of any
geotechnical problems; the processing route and
expected recovery; the total costs and conse-
quent likely cut-off grade; and land ownership
aspects and mineralized extensions.
A major problem for 'the responsible person'
when categorizing a calculated tonnage and
grade is in quantifying the effect, and relative
importance, of all these on the confidence in the
figures calculated. In shear-zone gold deposits
the major uncertainty may be geological con-
tinuity; in complex massive sulphide ores and
refractory gold ores, the recovery may be more
uncertain; in highly folded and faulted ores then
mineability may be the key. Where 'the
responsible person' has experience of many
different deposit types there is more chance
that more accurate estimates of these effects will
be made. Where 'the responsible person' has
more restricted experience then there is more
potential for large errors of judgement.
A solution may be to incorporate these
aspects more directly into the classification
process. The authors envisage a system in which
each perceived area of uncertainty is given a
quantitative rating reflecting its potential impact
on the calculated resource or reserve. The system
would need to give examples for each rating. For
example, regarding continuity a shear-zone gold
deposit in an Archaean greenstone belt inter-
sected by drillholes only would be an example of
a higher uncertainty rating than a chromite seam
cropping out on the Bushveld Complex or the
Great Dyke. The respective ratings could then be
cumulated (in a manner reflecting their relative
importance) and the sum used as the basis for
categorization. A degree of subjectivity would
still remain, but in asking all the relevant
questions, and giving examples for each rating,
the system would force all issues to be addressed
and enable 'the responsible person' to estimate
better how the various factors relate to his/her
deposit compared to how they do at other
deposits elsewhere. The resulting classification
should then be more robust. There may also be
an additional benefit here in that the classifica-
tion system could be used to target the
exploration strategy better to the requirements
of the type of deposit and planned mining
method.
The production of such a system would
require input from experienced workers in all
fields of relevance to resource and reserve
classification. The result may be a reduction in
the subjectivity of the process and an improved
ability to compare resource estimates produced
by different groups.
References
AUSTRALASIANINSTITUTE OF MINING AND METAL-
LURGY 1989. Australasian Code for Reporting
Identified Mineral Resources and Ore Reserves.
Report of the Joint Committee.
MCKELVEY, V. E. 1972. Mineral resource estimates
and public policy. American Scientist, 60, 32-40.
THE INSTITUTIONOF MININGANDMETALLURGY1991.
Ore and Reserves Working Party Report.
US BUREAUOF MINES & US GEOLOGICALSURVEY
1980. Resource/Reserve Classification System. US
Geological Survey Circular C831.