Mineral Resource

A mineral resource is a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction (17 CFR 229.1300). The SEC rule adds a caution that is easy to miss: a mineral resource "is not merely an inventory of all mineralization drilled or sampled."

What the definition requires

A mineral resource is a reasonable estimate of mineralization that takes into account factors such as cut-off grade, likely mining dimensions, location, and continuity. With assumed and justifiable technical and economic conditions, it must be likely to become economically extractable in whole or in part.

The three classes, from lowest confidence to highest

• Inferred mineral resource: quantity and grade are estimated on the basis of limited geological evidence and sampling. Limited evidence is evidence only sufficient to establish that geological and grade continuity are more likely than not.
• Indicated mineral resource: quantity and grade are estimated on the basis of adequate geological evidence and sampling. Adequate evidence establishes geological and grade continuity with reasonable certainty.
• Measured mineral resource: quantity and grade are estimated on the basis of conclusive geological evidence and sampling. Conclusive evidence is sufficient to test and confirm geological and grade continuity.

What each class can become

• An inferred mineral resource may not be considered when assessing the economic viability of a mining project, and may not be converted to a mineral reserve.
• An indicated mineral resource may only be converted to a probable mineral reserve.
• A measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.

The study behind a resource

Disclosure of mineral resources requires an initial assessment, prepared by a qualified person, that demonstrates reasonable prospects for economic extraction. An initial assessment cannot be used as the basis for disclosure of mineral reserves.

Resource is not reserve

A mineral resource has reasonable prospects of economic extraction. A mineral reserve is the part of an indicated or measured mineral resource that a qualified person has shown can be the basis of an economically viable project. The two are different measures and should not be read as the same thing.

Reading a resource statement

An inferred figure carries its own qualification and the qualification belongs with the number: the geological uncertainty is too high to apply the technical and economic factors that would show economic viability. A statement that quotes an inferred tonnage without that qualification leaves out what the number means.

Standards

These definitions are from SEC Regulation S-K subpart 1300, adopted at 83 FR 66448 on 12/26/2018. Canada's NI 43-101 incorporates by reference the CIM Definition Standards adopted on 5/10/2014.