Thanks so much for your interesting and revealing article, “When is a Mineral Resource not a Resource?” by Rod Webster in the October 2015 issue of CIM Magazine. As a professional engineer involved with project and mineral resource evaluation, I am sometimes surprised, frequently disappointed and in some cases outraged by some of the things I see happening in this sector of our business. The degree to which the mineral resource estimation process is oversimplified, resources are overestimated and over-reported, is a stain on our industry. To Mr. Webster’s long list of observed challenges we face in conducting this work, I would add overly optimistic OPEX and CAPEX estimating, simplification of metallurgical treatment results and failure to treat individual (and distinct) mineralogical zones and orebodies as separate economic entities.
We can only hope that continued self-evaluation will lead to better-quality reporting. I suggest that those of us who practice in the field need to do a better job of critically reviewing and critiquing the work being published in this area. Perhaps it is time to call out some of the authors of the more obvious (and misleading) reports. If we do not do a better job, there will only be more scrutiny from regulators. Perhaps this, too, is an idea whose time has come.
President, BWB Consulting Services
Rod Webster’s column gets to the very core issue we see in cases of catastrophic environmental failure and attending huge unfunded and unfundable public liability.
Other faults in currently accepted systems and protocols for resource evaluation have been examined in a paper by an insightful group of mining economists: M. Samis, L. Martinez, G.A. Davis and J.B. Whyte’s “Using Dynamic Discounted Cash Flow and Real Option Methods for Economic Analysis in NI 43-101 Technical Reports,” in the Valmin Seminar Series 2011–12 Proceedings, the Australian Institute of Mining and Metallurgy, Publication Series No 3/2012, 149–60.
Bowker Associates held this up for review and discussion 10 months ago on our website after looking at the head grades of British Columbia mines as compared with global averages and assessing the balance sheets of British Columbia miners with permits at active operating sites. We called for the creation of an independent panel of mining economics experts to conduct a financial audit of all British Columbia mines.
No tailings waste management conference post-Mount Polley has considered or focused on the role of solid fundamental mining economics in preventing mines that are likely to become both an environmental and an economic disaster or correcting already permitted mines on a course to disaster.
The authenticity of Rod Webster’s analysis, and the process of authentication it points to as a possible solution is a light on the path around the road block of the small clique who makes a living from the shabby, off-the-shelf, uniformed resource assessments that are the norm in NI 43-101 technical reports.
I thank CIM for the authenticity and timeliness of Mr. Webster’s article and in general for the excellent work trying to map key issues fully and invite collaborative searches for workable answers to mining’s most profound challenges this decade.
Lindsay Newland Bowker,
CPCU, ARM Environmental
Risk Manager, Bowker Associates