Mineral Resource Classification: How the Viability of your Project may hang on a Qualified Person's Judgement
Mining projects depend on the amount and quality of the mineral reserves, which in turn depend on the amount and quality of the mineral resources. Only Measured and Indicated Resources may be converted to mineral reserves and Inferred Resources may not, with certain exceptions, be used in economic studies. Responsibility for the estimation of mineral resources rests with the Qualified Person and there is a wealth of literature, text books and case studies to guide the QP. Responsibility for the classification of the mineral resources also rests with the QP. While there is some industry guidance and common practice on approaches to resource classification on which the QP can draw, the process is (or should be) heavily dependent on the exercise of judgement by the QP. However, this inevitably leads to situations where, for example, one QP’s Inferred Resource is another QP’s Indicated Resource. If the QP’s judgement is poorly reasoned or illogical (as is sometimes the case), it can have a major impact on the project, often with substantial cost or value implications. Project managers and company executives should not unquestioningly accept QP’s classification decisions and should apply the same intensity of due diligence that they apply to other critical elements of the project.
Mineral resources, Qualified Person, Project viability, Classification, Judgement, Due diligence