Recently, on behalf of CIM, I interviewed Niall Weatherstone, president of the Committee for Mineral Reserves International Reporting Standards (CRIRSCO). We examined a number of topics relating to international reporting standards.
CIM: In Canada, we do not hear a lot about CRIRSCO. What is it?
Weatherstone: CRIRSCO has been in existence in one form or another since around 1993. It is a body that is formed of representatives of the major mining National Reporting organizations, including JORC in Australia, SAMREC in South Africa, CIM in Canada, etc.
It is thus an international version of these national bodies. Its mandate is to promote equivalence among the various national standards, for example, reciprocity in accepting qualified/competent person status across national boundaries.
CIM: Is CRIRSCO proposing a new international reporting standard?
Weatherstone: No, not as such. CRIRSCO produces an international reporting template which, with the agreement of its members, provides a model for countries currently without a reporting code or wanting to make theirs internationally compatible. National codes take precedence when it comes to actual reporting as they obviously have to meet local regulator requirements, but the template has been used by a number of countries (including Chile and the Philippines) as the basis for their codes.
CIM: Where are the Russians heading with their system?
Weatherstone: The Russian Federation has recently released a new version of their code, which does not differ greatly from previous ones in adopting a classification (A, B, C1, C2, etc.) that has been used historically and is based on a fairly prescriptive format for use. They are keen to see wider recognition of their system, not in the sense that they want it adopted elsewhere, but they need it to be understood, largely because Russian companies are now moving into the West and vice versa. CRIRSCO has a joint committee with the Russian GKZ (which controls their reserves systems) and we are discussing ways in which the Russian and western systems can be mapped to each other. There are some fundamental differences but a great willingness on both sides to complete this exercise. The Russians have recently established a professional body that would be the equivalent of our professional bodies when it comes to certifying competent persons. Talks are continuing.
CIM: What system do the Chinese use?
Weatherstone: The Chinese have their own system that, in some respects, is similar to the Russian one. Both systems do not explicitly separate resources from reserves, which makes it difficult to use, from our point of view, and both are based on prescriptive criteria to define resource/reserve categories. The Chinese, however, also recognize the need to update their system to something more compatible with international codes, and CRIRSCO is in the process of establishing a similar committee to discuss how this could be done. Our problem to date has been identifying the right people to talk to as the Chinese system is totally government-controlled and their government departments are vast; however, there has been recent progress on this, including preliminary meetings in Beijing, so we are hopeful of good progress in 2008.
CIM: Where are the Americans heading with their system?
Weatherstone: The U.S. system causes everyone a lot of heartburn. We have tried for a number of years to engage with the SEC to get them to adopt the internationally compatible system proposed by SME and developed by a strong Industry Working Group several years ago. SME recently released their Guide 2007, which does not have endorsement by the SEC but which is compatible internationally. The SEC has just announced their intention to update the rules governing oil and gas reporting and have engaged an academic to do this work. We are pushing for them to do the same for minerals so that Industry Guide 7 would be replaced by the SME Guide or an equivalent.
CIM: The current international resource and reserve definitions do not provide terminology to describe mineralization that does not have “reasonable prospects for economic extraction.” It seems to me there is a good deal of mineralization that is excluded by this economic restriction that is still helpful in describing a mineral deposit.
Weatherstone: The topic of mineralization, beyond what is allowed under reporting codes, is a hot one and being discussed in various forums. First, let me point out that reporting codes such as CIM, JORC, etc. are just that — they are intended for public reporting, not for internal analysis or evaluation. They must meet the criterion of reasonable prospect for economic extraction under appropriate assumptions (cutoff grade, access to conventional mining and processing approaches, and so on). This is sensible because these codes restrict reporting to the information that is of greatest interest to investors, who are their main target.
Other institutions, such as the United Nations and governments, often require reporting of mineralization beyond what is covered by the reporting codes, and we recognize this. CRIRSCO has been engaged with the UN for nearly 10 years now to help develop systems that are compatible between minerals and petroleum and which can be used to describe the full range of potential mineralization, including the bits without current prospects, uneconomic materials and, in some cases, even undiscovered mineralization.
The CRIRSCO template and national reporting codes are unlikely to change as a result of this work, which aims at high-level compatibility among systems, but we do recognize that mineralization exists outside the code criteria. CRIRSCO has agreed with the United Nations that it would construct some form of statement to this effect and try to promote consistent terminology when such mineralization is described. The codes do have a category for this material already, called Exploration Results, but of course there are many forms in which these can be presented, from initial exploration through to well-drilled, defined volumes of mineralization that fail to meet the reasonable economic tests.
CIM: How does CRIRSCO address valuation methods to be used on mineral properties?
Weatherstone: To date, CRIRSCO has not involved itself in the development of valuation codes.
Watch for the Standards column in the March/April and May issues of CIM Magazine for more information on CRIRSCO, its codes and new developments.
Larry Smith is the manager of project evaluations, strategic planning and corporate development at Vale Inco.