3 thoughts on “Q: When the resources may be converted into reserve? And timeline for converting mineral block to mine?

  1. The Resources refer to the mineral wealth whose configuration is well known and the ore body can be mined at a profit with currently known technology. The shape ,size and grades are well understood and the recovery is possible in given cost range . The estimate of tonnage is based on the specific sample data .Though the assurance of the Resources are high and the ore body is known and understood in two dimensions but still the confidence limit is 70 to 80%. In order to take the investment decision the degree of assurance should be around 90 to 95% and this can be achieved when the ore body is partly explored in its third dimension also. Thus the variability of grade,shape and size is reduced to the range of +/- 10% when all the dimensions of the ore block are well known.This is then called as the Reserves- ready to exploit mineral wealth. So more close spaced drill holes,high sample density, 3 D configuration of ore body , may be by partly done Pilot scale mining, will bring the Resources into Reserve category. The market price of the mineral commodity also is an influencing factor like for example if the cost of metal is reduced in the market then Reserves will regress into Resources . So altogether it is a cost benefit ratio and the degree of assurance that matters to define the Resources and Reserves.


  2. The surface investigation by pitting and trenching- sampling and a few scout boreholes of shallow level in large space drilling for 1 or 2nd level will establish preliminary inferred potential of the interested ore/mineral in that particular sector by analyzing the assay values of the samples generated in this process.
    In the next stage, the close spaced drilling with more generation of samples in that particular sector may upgrade the resource from inferred to indicated level and the quality and probable quantity of the ore body may be drawn for this resource. Out of this ore bearing resource, the exact extractable quantity of metal and its exact minable reserve of the ore body after allowing wastages /losses for the ore body during mining may be computed. The favourable /feasible part for mining will form the “reserve” category of the required mineral/ore in different cut off grades (varying from 0.01%, 0.03%, 0.05% to 1.0%) for the specified measured strike length, width and depth of ore body (volume) (indicated and measured reserve). So once the ore resource became economically feasible/ viable, it has become ‘reserve’ category of the particular mineral which defines the quantity (volume X density of the particular mineral/ ore) in metric tons available in different grades (quality) of the ore body. The weighted average of the reserve, cut off grade of the ore, mining cost, the extraction cost of the metal and the market value of the metal will all determine the life of the reserve.
    Once the mining lease and environmental clearance are obtained, only Natural course of administrative time will be taken up to convert the mineral block into exploitable mine, provided all the logistics are kept ready. Only locating and identification of mineral deposits as well as bringing them to level of minable category may require more time.


  3. Question: When the resources may be converted into reserve? And timeline for converting mineral block to mine?

    Answer: If the Resources defined belong to say, JORC Indicated and Measured Resource categories, then the next step is to address environmental concerns, land acquisition, community issues and availability of water and Power sources. If these work out to be positive, then the Resources convert into Probable and Proved Mineral Reserve categories. Without waiting any further, the promoter should raise funds for developing a mine and construction of a processing plant.

    While defining the Resources, one would have to consider the following parameters;
    1) Cut off grade which is mainly dependent on the average market price and any intelligent forecast of price rise or fall.
    2) The 3D morphology of the Mineral resource (A model based on well defined structural & lithological controls. Grade as addressed at (1) above)} .
    3) Whether mineable by underground or open pit. The thickness of the ore body matters; the thickness of overburden if overburden is an issue. 4) Percentage recoverability of the mineral or metal from the ore. Percentage of gold recoverable by gravity (using Knelson concentrator and/or tabling) is also important.
    4) ML is granted or due to be granted in a matter of a few months.
    5)Encumbrances if any, other than those related to environment and community related issues.
    5) Cost of Mining and cost of mineral recoverability,
    6) payback period of borrowed capital.

    When all these and any other area-specific issues are Successfully addressed, Mineral Resource(s) converts to Mineral Reserve(s). A Mineral Reserve is equivalent to cash in the ground. Banks grant loan on the strength of such certified gold in the ground. Certified by a QP.


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