news

Mineral Resource Estimation

Recent advances in
mineral resource modelling

No. 51
SRK Consultings
International
Newsletter

Three dimensional mineral resource

modelling at an active operational asset

In this dynamic and challenging time for the mining industry, SRK Consultings mineral resource
consultants continue to stay up to date. Using the latest technological advances and considering
regulatory developments, we can help our clients derive the most value from their mining assets.

Challenging market conditions have led to resource solutions to operational assets as

increased competition for cost-effective mineral well as to developing projects.
resource modelling solutions. In response, SRK
Due to regulatory developments in recent years,
is applying advances in implicit three-dimensional
the mineral resource discipline has consolidated
geological modelling associated with innovative
reporting codes and standards to ensure
interpolation algorithms within specialised and
consistent and accurate reporting of international
traditional modelling software to provide faster and
mineral resources. SRK contributes to and
more accurate cost-effective modelling solutions.
supports this consolidation, taking advantage
The availability of increased computing power has of its global footprint to provide seamless
allowed us to apply powerful geostatistical mineral services to clients in all jurisdictions.
resource estimation techniques. SRK is able to
This newsletter documents case studies that
incorporate complex data sets and geological
highlight how SRK applies technology advances
spatial controls of mineralisation into the mineral
to meet evolving market demands, adding value
resource modelling methodology. The result?
to international multi-commodity exploration and
More accurate and robust mineral resource
operational projects.
models. By combining underground and surface
exploration data sets, we can provide mineral

1
 PETER GLEESON

Peter has over

29 years of Leapfrog Geo developments and
experience in both
consulting and the future for 3D modelling
production roles.
He has worked on
resource estimation
projects, project
evaluations and
3D modelling studies for a variety of
different geological environments and
commodities, ranging from precious,
base metals, and uranium through
to iron ore. Peter has implemented
several innovative geological modelling
technologies which have helped to
improve their effectiveness and the
way in which companies produce 3D
geological models and interpretations to
facilitate the exploration and evaluation
of mineral deposits. He is an expert
user of several mining and geological
modelling software packages such as
Vulcan, GOCAD, Geomodeller, FracSIS,
Leapfrog Geo, 3D model of surface geological interpretation based on surface mapping and structural data (left)
Leapfrog and Datamine.
3D model section through an overturned Stratiform Base Metal Sulphide model and fault network produced in Leapfrog Geo (right)

Peter Gleeson: pgleeson@srk.co.uk

Implicit Software Modelling stratigraphy, veins, faults, intrusions

technologies are designed to improve and other geological formations. Other
J F R AV E N E L L E 3D geological modelling for exploration developers GOCAD-SKUA and BRGM-
and resource definition. Since 2005 Intrepid GEOMODELLER tackled this
D r Jean-Francois when SRK consultants in Australia problem with varying degrees of success
Ravenelle is a sought to replace CAD-based, wire- using a workflow-based approach. So I
Senior Consultant framing tools, SRK has actively asked the question:
(Structural Geology) promoted these implicit technologies, Can Leapfrog Mining expand into this
and has over 14 because of their scientific, commercial area and provide rapid modelling of
years of experience and economic benefits. complex general geology for the minerals
in structural industry in a workflow style?
Implicit Modelling defines an approach
analysis of precious to 3D modelling that is fundamentally ARANZ Geo eventually produced the
and base metal different from CAD-based, semi-manual commercial products Leapfrog Hydro and
deposits hosted in various parts of software, using a mathematical function Leapfrog Geothermal for the water and
the world. His specialisation includes to profile 3D geological surfaces directly geothermal resource industries, and now,
deposit- to regional-scale structural from primary observations without based on this success, ARANZ released
mapping, generation and optimisation laborious manual manipulations. The Leapfrog Geo, its first commercial version
of 3D resource domains, structural main advantages are: speed, cost, better of a general geological modelling package
interpretation of aeromagnetic data, and use of complex data sets and repeatable for the mining industry, in February 2013.
field- and classroom-based structural models. SRK got involved with innovative Geo provides an integrated workflow
geology training. Jean-Francois is an software vendors to provide them approach to building complete geological
expert in deciphering structural controls technical feedback from end users and and resource domain models. Geologists
on mineralisation and develops new independent market insights, such as can use the software to construct a
methods to generate 3D models that are ARANZ Geo the provider of Leapfrog complete, integrated, 3D geological
sound and structurally constrained. Mining software. model from fault systems to grade shells,
Jean-Francois Ravenelle: and making it possible to build complete
With Leapfrog Minings tool box approach
jfravenelle@srk.com geological models of a mine.
users began developing models of

2
 Rigorous geological input in gold
mineralisation models

Despite the intention to include SRK conducted rigorous structural

geological controls during the wireframing analysis using surface mapping, drill
phase of the mineral resource estimation core analysis, and 3D litho-structural
process, modelling methodology is modelling to define and understand the
sometimes reduced to connecting geometry of the auriferous vein system.
grade data along trends judged to be Three sets of mineralised structures were
geologically valid. This is specifically the identified including east-trending and
case for precious metal vein deposits west-northwest-trending sets, as well as a
where the grade distribution is controlled series of older northwest-trending massive
by complex vein systems. This case replacement zones. Individual veins
study exemplifies how such models can were modelled independent of grade by
be enhanced by incorporating structural diligently reconciling logged vein intervals
geology analysis into the modelling with vein intervals mapped at surface.
process.
The final modelling stage involved
Eastmain Resources Inc. commissioned constructing gold mineralisation
SRK to construct a mineral resource wireframes that incorporate assay data
model for its Eau Claire gold deposit located within both the veins and their
located in James Bay (Quebec). Gold altered selvages. This methodology
mineralisation at Eau Claire occurs ensured that the resulting wireframes
primarily in metre-scale quartz-tourmaline honoured the vein system geometry,
veins associated with massive actinolite- adding considerable confidence to the
tourmaline-biotite alteration of their host mineral resource modelling process.
rock. A wireframe model for the gold This increased confidence will prove
mineralisation was previously constructed invaluable as the project advances to
by a third party but was discarded as conceptual mining studies.
it failed to honour factual geological
Robust and reliable, cost-effective Jean-Francois Ravenelle:
observations.
geological models enable clients to jfravenelle@srk.com
realise cost savings in modelling as well
as geological control that previously Third party model
were not practical. These models can
help clients perform risk analyses quickly,
avoiding a single static model, producing
a wide range of scenarios instead.

These new software technologies open

up Leapfrogs capabilities in a wide range
of industry applications. For SRK, using
Leapfrog Geo expands our ability to bring
geology back into resource estimates.
In the past only large corporations 100m
could afford to engage SRK to build
these complex geological models. Now, E-trending SRK model
veins (red)
juniors can benefit from having projects
Massive replacement
underpinned by robust geological models. zones (green)

Introducing such new technologies can WNW-trending

veins (yellow)
result in a winwin situation for all. It can
spur other mining software companies
to compete healthy competition among
vendors in this new and exciting area
will benefit the geologist and industry in
general. 100m
Peter Gleeson: pgleeson@srk.co.uk
Comparison between third party gold mineralisation model (top) and SRK model (bottom)

Comparison between
3 third party gold mineralization model (top
SRK model (bottom).
 J AY P E N N I N G T O N

Jay Pennington Dilution: GEOs get some skin

has over 30 years
of international
in the game
experience,
including 18 years
consulting. His
expertise includes
mineral exploration, Original Gradeshell
open-pit and
underground mining
geology, mineral resource estimation
and operations strategic planning.
Mr. Pennington has been the QP and
primary author of NI 43-101 compliant
Technical Reports in resource geology,
and has authored or co-authored Anisotropic Dilution Skin
technical studies to Feasibility level.
Jay has been the lead on multi-
disciplinary, due diligence teams
assessing metal mining operations for
investment and banking institutions.
He has teamed with stakeholders
Inflated grade envelope built by Leapfrog Geo for more accurate dilution estimation
and regulators to develop innovative
solutions for mine closure.

Jay Pennington: jpennington@srk.com

T ypically, conversions from mineral SOLUTION: In a recent case study,
resources to mineral reserves are the best means of estimating dilution
B E N PA R S O N S handled by mining engineers, rather came from the geologists toolkit.
than geologists. One of the key Using Leapfrog Geo, SRK created an

B en Parson, BSc,
concerns in reserve conversion is how
to apply dilution so that the grades
inflated gradeshell to simulate the
predicted over-mining in an open pit
MSc, MAusIMM
sent to the process facility meet operation. We applied this method in a
(CP), is a Principal
expectations and the metal mined structurally-controlled, epithermal gold-
Resource Geologist
reconciles with the amount produced. silver deposit containing seven mineral
with SRK. He has
In preparing technical prefeasibility domains. The SRK project engineer and
over 15 years
and feasibility studies, SRK commonly geologist worked closely to define the
of international
prepares both resources and reserves. dimensions of the dilution envelope or
experience,
Clients benefit from having two skin by considering the geometry
including eight years
disciplines apply the best possible tools and thickness of mineralisation, mining
working on open pit and underground
to complete the task. methods and equipment limitations.
Gold Mines in Africa, before joining SRK in
2008. Bens responsibilities have included PROBLEM: How can dilution be In areas of tabular shallow dipping
the authoring and auditing of mineral determined in a narrow-vein deposit? Is mineralisation, SRK modelled dilution
resource estimates, as part of technical there a more accurate way to estimate with a thin vertical and broad radial
studies, independent assessments, due the amount of mineable ore on the envelope. In more massive areas of the
diligence/technical reviews, Competent perimeter of the model compared deposit, we built the dilution envelope
Persons Reports and Stock Exchange to the full block volume when global to a fixed radius outside the interpreted
listings. He acts as a Competent/Qualified assumptions drop grades below cut-off. mineralised shell. We applied structural
person for a number of commodities and controls and measurements from the
styles of mineralisation. original gradeshell interpretations and

Ben Parsons: bparsons@srk.com

4
 Vein modelling using Leapfrog,
leads into drillhole planning

H istorically the modelling of narrow Guide strings allow further refinement to

vein deposits has relied on classical tie into potentially existing features such
two dimensional methods to estimate as underground development or stopes.
tonnage, grade and thickness in narrow
The selection of the mineralised
vein deposits. The use of three dimensional
intersections ensures accurate definition
models has been limited by complexity
of hanging wall and footwall contact
of this style of mineralisation leading to
points with the known data in the
difficulties generating valid wireframes,
sampling database, which can be
associated with linking issues.
extracted within Leapfrog Geo. Using the
Recent developments in implicit software extracted datapoints, surfaces can be
modelling enable geologists to model generated using predefined orientations
complex veins, dykes and individual or existing structural trends to model
strata with ease and speed directly surfaces. Surfaces can be combined
from drill logs using Leapfrogs interval into a single solid with use of a
selection tools in combination with minimum thickness to produce validated
advanced vein modelling workflows. wireframes which can be exported to
any Mining Estimation Software (such
The advantage of the software is that it
as Datamine/Vulcan) for use in the
provides reasonably quick interpretation,
downstream workflow.
conducts active validation to avoid the
classical issues of potential wireframe SRK has implemented this process on a
Plunge +13 cross-overs, users can specify a number of projects which have enabled
Azimuth 026
minimum thickness and easily visualise the clients to increase the understanding
variations in thickness of the veins. of grade/thickness relationships to
more regional structural information, or
adjusted them to mimic mining, using To complete the process different
interaction between veins in cases of
GEOs Interpolant/New Distance approaches can be used to achieve the
epithermal systems which may have
function. The speed and flexibility of same goal from coding of the main vein
been missed using more traditional 2D
the software allowed us to run several domains in the geological database,
methods.
iterations, achieving the desired to manual selection of intervals as an
domain-specific outcome. alternative to sectional interpretation. Ben Parsons: bparsons@srk.com

Generating the original gradeshells

in the same software facilitated
the development of the dilution
envelopes, but the approach is also
valid with outsourced wireframes. In
this case, the skin was assigned a
zero grade, but we could have used
envelope composites to estimate
fringing contributions to the reserve.
In that application, capping fringe
composites to the mining cut-off grade
is recommended.

With the case study a success, it

appears this technique can be applied
beyond epithermal gold into tabular or
complex seam geometry.

Jay Pennington: jpennington@srk.com

5
Modelled narrow mesothermal vein system Columbia 2013
Cut-off grades for Resource Geologists are geologists who A COG is expressed in grade units that
can value the basic underlying economic may require conversion from market
mineral resource attractiveness of a mineral deposit. pricing units. For the COG, the price
This means knowing the costs and needs to be expressed in grams.
reporting: going practicalities of mining and processing for
Ore denominated operating cost 60 $/t
the extra rare a particular product.
Grade denominated revenue 34.7 $/g
= 1.73 g/t

A cut-off grade (COG) is an industry-

earth mile accepted standard expression used to Sometimes we face complicated cost,
determine what part of a mineral deposit recovery and revenue concepts in deriving
to include in a mineral resource estimate a COG for resource reporting. These may
(MRE). For MRE reporting, COGs tend to stem from:
be rounded down to ensure that material
of no economic significance is excluded Mineralogically different ore types
from the resource. Multiple process routes
To calculate a COG, we can gauge the Deleterious elements
likely extraction costs and operating Stockpile strategy
efficiencies using benchmarks from
Blending constraints
analogous mines, and determine
commodity prices from public reports or By-product credits & metal equivalence
price forecast research notes. Net smelter returns
With the recent popularity of rare earth
element (REE) projects, SRK developed
a complex COG estimation method to
assess reasonable prospects of eventual

6
economic extraction using specific studies Using COGs based on complex technical
and generally-held concepts. The COG and economic parameters, SRK
calculation integrates multi-staged costs demonstrated reasonable prospects
and efficiencies from extraction through to of eventual economic extraction which
refining, all of which are required to realise enabled geologists to estimate and report
quoted market prices. REE-project mineral resources using an
appropriate cut-off grade.
Ore operating cost reflects multiple MARTIN PITTUCK
concentrating stages whose unit costs The technical aspects of extracting REE
are measured in different denominations, products are complex and vary from one
such as: process costs per tonne of mill project to the next. Most of the extraction M artin Pittuck,
feed, mining costs per tonne of ore, cost occurs in downstream refining, MSc MIMMM,
transport costs per tonne of concentrate which is mineralogically sensitive. We CEng, is a Director
and refinery costs per kg of product. These conclude that early stage projects should of SRK (UK) and
measures need to be back calculated and not be quoted as Mineral Resources until a Corporate
expressed in terms of cost per ore tonne their mineralogy is sufficiently known to Consultant with
in the ground. conceptualise the extraction method with 18 years of
reasonable confidence. experience in
Revenue is normally derived from several resource estimation
REE co-products, with very different Martin Pittuck: mpittuck@srk.co.uk and mining geology, specialising in
individual prices that occur in varying geological modelling, grade estimation,
proportions. The REE basket price mine project evaluation and reporting
is a weighted value per kg of REE co- according to international reporting
products. There may also be by-products codes. He has worked with SRK since
with different process recoveries whose graduating, contributing to the growth,
revenues need to be incorporated in management and mentoring of the
the COG calculation and expressed as 30-strong Cardiff-based resource
recoverable revenue on a REE-equivalent geology team. Martin is particularly
basis. experienced with former Soviet Union
projects, African gold projects and
tantalum/REE-bearing deposits. He
has managed due diligence studies for
debt funding and undertaken resource
estimates for exploration, development
and mining properties.

Martin Pittuck: mpittuck@srk.co.uk

Dig line separating ore from

waste using a cut-off grade

7
 Multi-element ratios to define
estimation domains: Kvanefjeld

Greenland Minerals and Energy Ltds base in Narsaq, South Greenland

K vanefjeld is the flagship orebody of The host rock for Kvanefjeld metallurgical studies developed from the
Greenland Minerals and Energy Ltds mineralisation is lujvarite a form of resource model.
(GMEL) Northern Ilimaussaq project. nepheline syenite unique to this complex
Kvanefjeld contains the worlds largest in southern Greenland. The lujavrite Early work to establish criteria for
mineral resource of rare earth elements, occurs in a layer about 250m thick, subdividing the lujavrite, based either on
as defined by the reporting standards of shallow dipping, and extending laterally core logging or statistics from the uranium
the JORC Code or NI 43-101. for several kilometres. The visual contrast and REE assays, yielded inconclusive
between the dark lujavrite, and adjacent, results.
In 2011, SRK Australia prepared a
lightly coloured host makes it easy to By the time SRK became involved in the
Mineral Resource estimation for the
identify from surface mapping. project, GMEL had made substantial
project. SRK updated this estimation
in 2015. The resource inventory is A challenge for GMEL was to identify additions to the drill hole database,
1,010 Mt @ 1.1 % Total Rare Earth Oxide higher grade zones within the lujavrite including reassaying historical core and
(TREO): lanthanide series plus yttrium, that could be accessed early in the mining broadening the analyses to include 14 rare
and 266 ppm U3O8. Based on SRKs schedule, to improve the economic viability earth elements, yttrium, uranium, zinc and
resource model, a feasibility study of exploiting a very large but essentially 23 more elements.
was completed and the maiden Ore low-grade orebody. Defining subdomains SRK worked with GMEL to test the
Reserves were reported in June 2015. would also be critical for focusing usefulness of elements, singly or

8
 ROBIN SIMPSON

R obin Simpson,
MSc (Mineral
Resource and
Environmental
Geostatistics), MAIG,
Principal Consultant
with SRK, has over
combined, to define estimation domains. hard boundaries between them.
15 years experience
SRKs skills using Isatis software for
Of particular financial importance for in resource
statistical analysis and Leapfrog software
GMEL, the upper two layers that will be estimation, mining and exploration.
for 3D visualisation were particularly suited
accessed first when mining starts are In 2004, Robin completed an MSc in
to this task.
the highest grade: mean TREO is about Geostatistics at the University of Leeds
The key breakthrough came when 50% greater than the lower layers. in the UK and graduated with Distinction.
we divided mineralised samples into The improved domain definition in the His dissertation topic was a conditional
subpopulations, based on the ratio of SRK resource update meant that these simulation study of a gold deposit in New
zirconium or hafnium to heavy rare earth high grade zones were not obscured South Wales. Robin is a fluent user of
elements. by the influence of lower grades during Surpac, Isatis and Leapfrog, and has
estimation. substantial experience in setting up and
The hafnium to ytterbium ratio was maintaining grade control and resource
adopted as a geochemical marker for Robin Simpson: rsimpson@srk.ru.com databases. Robins specific commodity
dividing the lujavrite into five layers experience includes gold, iron ore,
that became the estimation domains. uranium, rare earths, phosphate, bauxite,
Analysing multi-element ratios justified copper, nickel laterite and nickel sulphide.
estimating these domains separately with
Robin Simpson: rsimpson@srk.ru.com

9
 Grade capping for mineral
resource estimates

High grade drill intersects are often necessary. This process usually results
a welcome occurrence for a mining in fewer capped assays than a typical
company, its shareholders and/or process. Any undue influence of high
potential investors. They represent grade assays can be further corrected
the potential for even greater metal during estimating. 6
content in the deposit. However, from
The following procedure is
a resource evaluation perspective,
recommended for treating outliers 5
they may present complications in
during resource estimation:
generating a realistic resource estimate,
by overestimating or underestimating Determine data validity. Are the 4

Bulk density (t/m3)

grade. data free of sampling, handling,
measurement and transfer errors
Capping high grades by lowering the 3
outliers to a reasonable level can, Review geology logs for samples with
by itself, affect the analysis of the high grade assays. Capping may not
economic viability of a project. Still, this be necessary for assays where the 2
arbitrary choice is often made more by logs clearly explain the presence of
art and tradition than by sound technical high grade
analysis. Capping should not be considered 1
for deleterious substances that
Two major reasons for grade capping have negative impacts on project
are to guard against overstating the true 0
economics
underlying average grade, and against 1
Decide if capping should be
an overly optimistic assessment of local
considered before or after
block grades located near some very
compositing
high grade assays. For these reasons,
capping is often considered a better-
Keep capping to a necessary
minimum. If high grade assays unduly
M ineral resources are reported in
safe-than-sorry practice on most tonnage and grades. While great care is
affect overall grade average, cap
mineral resource models. placed on generating a reliable estimate
them. Bootstrapping or cutting curve
of grade, determining bulk density for
We propose a procedure that can deal plots could help determine capping
resource estimation is often overlooked.
with outlier data in two phases. The levels
Instead, a simple average value of bulk
first phase analyses the data before Restrict influence of very high grade density is used. While this estimate can
estimation is performed and focuses assays. Commercial software is well work for some deposit types, an overly
on identifying true outliers and an designed for this approach simplistic estimate of bulk density can
appropriate cap for them. The second Visually and/or numerically assess cause serious errors in tonnage estimates
phase focuses on restricting high grade the effect of high grade assays to be and an over or under estimate of metal
assays that would likely be capped sure they dont affect estimated block content. Constructing a reliable bulk
to further mitigate the influence of grades density model requires developing a
high grades during estimation without Check the effect of capping on final good understanding of how bulk density
capping. resource estimates and document the varies with grade and geology. A reliable
Outlier data, or extreme high values, differences bulk density database is essential in
may significantly skew simple determining the appropriate modelling
Marek Nowak: mnowak@srk.com
summary statistics like the mean technique to minimise the errors in
grade, variance and coefficient of mineral resource statements.
This article represents an excerpt from a
variation. To determine the impact of Suggestions for Good Grade Capping Practices Modelling bulk density for resource
a potential outlier on these statistics, from Historical Literature Paper.
estimates can be complex and intricate,
first assess the actual average grade in Authors: Marek Nowak (SRK Vancouver),
and each deposit type needs to be
a mineralised domain. This could lower Oy Leuangthong (SRK Toronto) and Mohan
Srivastava (Independent). carefully evaluated to determine the most
the risk of distorting the average grade. appropriate methodology to best model
Once the risk is lowered to acceptable bulk density. In a survey of 50 publicly
levels, further capping may not be filed technical reports on SEDAR, 29
precious metal, 10 base metal, 7 porphyry

10
 Estimating bulk density for mineral
resource reporting GILLES ARSENEAU

D r Gilles Arseneau
has over 25 years
of experience in
exploration project
y = 7E06x3 7E05x2 + 0.0078x + 1.8767 management and has
extensive knowledge
of geostatistical
mineral resource
estimations and
reserve audits. He has worked for major
and junior mining companies as well as
with consulting engineering groups in
North and South America, China, and
Europe. He has also served for three years
Bulk density against grade for a typical as manager of geology for the TSX Venture
high grade uranium deposit
Exchange in Vancouver. He has a BSc
from the University of New Brunswick,
10 100 an MSc from the University of Western
U3O8 (%) Ontario and a PhD from the Colorado
School of Mines.

Gilles Arseneau: garseneau@srk.com

and 4 rare metal deposits, bulk density Bulk density is a critical component
is only marginally considered when of the resource estimate. For mineral
preparing resource estimates. The reports deposits with low metal content and MAREK NOWAK
were selected at random and included 6 simple mineralogy, calculating an average
pre-feasibility (PFS) reports, 6 preliminary
economic assessment (PEA) reports
of all bulk density measurements can
be adequate with sufficient data and
Marek Nowak,
a Principal
and 38 mineral resource reports. Nine a meaningful average. However, each
Geostatistician with
of these reports failed to mention bulk geological domain must be examined
SRK, has over 30 years
density or to indicate how bulk density individually with a separate bulk density
of experience in the
was assigned to the resource estimate. value calculated for each.
mining industry. He
Of the reports that included bulk
For deposits with more complex specialises in natural
density sampling, most used the water
mineralogy, where a relationship resource evaluation
displacement method for calculating it.
exists between density and grade, using classical
On average, bulk density was measured
simply averaging bulk density for each geostatistical techniques like kriging,
for less than 20% of the assay data and
geological domain will produce errors in and risk assessments based on various
29 reports used a simple average value.
local estimates and errors in resource simulation techniques. Marek has also
Of the 10 base metal deposits examined,
tonnage. A better approach is to apply been involved in assessment and risks
4 used a simple average, and 6 estimated
similar interpolation parameters for grade analyses of diamond resources. He has
bulk density geostatistically with 2
estimates. For deposits with high grade optimised drill hole spacing on advanced
reports including bulk density weighting
and density variability, weighting grades exploration projects and has been
in the estimate. All reports indicated
by density and estimating grade times involved with grade control studies for
that multiple geological domains were
bulk density can produce a more accurate producing mines.
present, yet most used the same bulk
density value to estimate the resource resource estimate.
Marek Nowak: mnowak@srk.com
tonnage for all domains, ignoring the Gilles Arseneau: garseneau@srk.com
multiple geological domains that indicate
multiple bulk density domains.

11
 MultiGaussian kriging for grade
domaining an uncertainty based
approach
The place for MultiGaussian kriging for grade domaining

OY L E U A N G T H O N G

Dr Oy Leuangthong
is a Principal
Consultant
(Geostatistics)
and has over 10
years of teaching
and consulting
experience in
geostatistics
for resource characterisation and
uncertainty assessment. Prior to joining
SRK, she was an Assistant Professor in
Mining Engineering at the University of
Alberta in Edmonton. Oy has authored
and coauthored 2 books, 18 journal G rade domains are often considered, fast, semi-automatic alternative to the
papers and over 30 conference articles. following the modelling of geologic more traditional manual approach to
Her areas of expertise are resource domains, to further control the wireframing. Unfortunately, modellers
estimation, conditional simulation distribution of grades during must enter parameters that indicate
and uncertainty assessment using resource estimation. This is usually spatial correlations, for which they
geostatistics. achieved by wireframe modelling on either do not have the time and/or the
sections displaying grade assays or expertise to suitably calculate or model
Oy Leuangthong: oleuangthong@srk.com
composites, indicator kriging, and/ the required variograms.
or implicit modelling using radial
As an alternative to an implicit
basis functions. The latter approach is
modelling approach, we propose the
often facilitated by using commercial
use of MultiGaussian (MG) kriging to
software such as Leapfrog, making it a
establish grade domains. The method
consists of estimating grades using
Grey 20% probability or higher MG kriging; however, instead of back
Cyan 30% probability or higher transforming to obtain a grade estimate
Red 40% probability or higher
at each location, we determine the
A comparison of iso-probability shells for 0.90 gpt gold
probability to exceed certain grade
thresholds and categorise grade
domains accordingly. This block model
approach can then be imported into
any commercial package to generate
iso-probability contours for any grade
thresholds of interest. This permits
the uncertainty assessment of grade
domains by post-processing for various
grade thresholds and iso-probability
shells, and permits the user to assess
confidence in the grade shell for that
threshold.
12
 Ordinary kriging vs localised
uniform conditioning

Linear Estimators, such as Ordinary north of Chile. The results revealed there
Kriging, can produce smoothed was an improvement in representing the
assessments in the results of your grades pertaining to the distribution group
resource estimation. The conventional close to the average. But, because this
Uniform Conditioning method estimates project had a high amount of information
a tonnage and grade of mineralisation overall, final results are quite similar to the
that can be recovered using the Selective results obtained in the Ordinary Kriging
Mining Unit (SMU) of size at the chosen approach.
cutoff value. A set of grade tonnage
SRK plans to continue using this technique
distributions is constructed for each
in exploration projects with a smaller
panel under study by applying several
amount of information to reduce the
cut-off values. A new method called Local
impact of smoothing that linear estimation
Uniform Conditioning (LUC) enhances
methods produce.
the Uniform Conditioning approach by
localising the model results. The LUC Ernesto Jaramillo: ejaramillo@srk.cl
algorithm then estimates the mean grade
of the grade classes in each panel at the
given SMU support level. The grade class ERNESTO JARAMILLO
is the portion of the panel whose grade is
higher than a given cut-off, but lower than Ernesto is a
the next cut-off. Geologist with
The next step is to rank the SMU blocks more than 25 years
in each panel in their grade, distributed in of professional
increasing grade order. Finally, the mean experience and
grades of the grade class which have a specialist with
This method was applied to the Rainy been deduced from the UC model are wide-ranging
River gold deposit in Northern Ontario, assigned to the SMU blocks whose rank experience
with visual comparisons to grade shells matches the grade class. Thus, the key in geological
used for the previous resource model. advantage of the LUC approach is the modelling, resource estimation,
The resource shells were manually ability to calculate the mean grade of the lithological and alteration modelling,
generated with guidance from Leapfrog grade class and assign these mean grades geologic units, metallurgy and
shells. While results showed the MG to the SMU size blocks, which have been database management for copper, iron
kriging approach to grade domains ranked in each panel in increasing grade and gold projects. He is an expert user
can yield shells comparable to existing order (Abzalov 2006). of Gemcom, Vulcan, Gslib and Leafrog.
implicit modelling methods, they Ernesto Jaramillo: ejaramillo@srk.cl
SRK used a Local Uniform Conditioning
also showed better conformity to the
method to calculate an Iron deposit in the
manually digitised wireframes accepted
for resource modelling.

The MG approach provides a balance Probability Plot, Samples VS Ordinary Kriging VS LUC
between the more time intensive
99.99
manual approach to grade domaining Samples
99.9 Ordinary Kriging
and the fast, semi automatic modelling 99.8
LUC
using implicit methods. It also provides 99
98
greater fidelity to the data by requiring
Cumulative Probability

95
90
that spatial correlations are calculated
80
and modelled. Finally, this alternative 70
60
MG kriging approach is attractive 50
40
30
because the method and model 20
parameters are data-driven, tractable 10
5
and repeatable, with the added benefit 2
of quantifying a measure of confidence 1
.2
associated to the resulting grade shells. .1

.01
Oy Leuangthong: 1.0 10. 100.
oleuangthong@srk.com Fe
13
 Update on geostatistical advances
M ost recent developments in resource Madaouela 1 exploration license of the
estimation have taken place in the GoviEx Uranium Madaouela Project. Scatter plots of optimal kriging against grade
following fields: Since then, the deposit has been drilled control and a single simulation against grade
intensively (from 200m to 50m grid). The control. Note the distributions with respect
Geological modelling: 3D modelling to the misclassification quadrants and the
latest drilling phase, at 50m center grid,
has become much faster and increased dispersion of the simulated values.
delivered the current resources used in
more accurate, by implementing
preparing the preliminary feasibility study
fast interpolation algorithms within
of the complete Madaouela Project. Grade Control v Simulation
specialised software like Leapfrog,
GOCAD, Geomodeller. More traditional The presence of mineralisation linked with
mining packages have added implicit a vertical redox front was confirmed and,
modelling to their capabilities at the 100m center grid, it became clear
(Minesight, Micromine, etc.). The that there was more than one vertical,
advantages of these methods are structurally-oriented redox front.
well known: a true 3D approach (as
After the 50m center grid was completed
opposed to the traditional wireframing
with controls by oblique core drilling,
technique), a very fast creation of
the interpretations showed that the
models, eliminating the tedious tasks of
high-grade zones are related to the
working section by section and allowing
intersection of discrete expansion faulting
for tests of alternative geologically
with favorable sedimentological units,
plausible solutions.
resulting in the Christmas tree aspect of

Simulation 1
Domaining: the definition of these high-grade zones.
homogeneous (stationary) 3D zones
is made easier by the availability of The ore envelope was constructed
good statistical methods and software three-dimensionally, using the interpreted
Grade Control
(clustering techniques, contact analysis, sedimentological controls and the vertical
border effects). interpreted structures. The model was
built within Leapfrog software with two
Geostatistical techniques: while no
cut-off grades defined shells.
radically new techniques have appeared A fundamental concept of
in the last few years, progress in The estimation within the Leapfrog geostatistics that is often overlooked
computing power has led to a significant envelope was carried out using a uniform or misunderstood in resource
increase in the use of non-linear conditioning method, reflecting both estimation during the early project
methods like uniform conditioning and the data density and the potential mine stage is the relationship between
conditional simulations for geological selectivity in an open pit. The method is the global grade tonnage curve and
variables, such as lithology and grades. well adapted to estimating the resource the quality of the local block by block
The combination of the modern 3D for open pit projects at this PFS or FS estimate.
geological modelling approach and stage, particularly in cases of relatively
Kriging, with a properly optimised
powerful geostatistical resource complex geometry.
set of search parameters, will always
estimating techniques is illustrated by
The Miriam deposit appears to be the give the best local block estimate
SRKs recent evaluation of the Miriam
only one of this type in the region and it with the data available. That means
Uranium deposit in Niger for GoviEx.
opens new ideas for further discoveries in misclassification errors resulting from
The Miriam deposit was discovered in a similar geological context. local block selection compared to
2012, at 400m drill spacing, within the reality are minimised.
Daniel Guibal: dguibal@srk.com.au
The trade-off is that the less data
Control // to discrete Miriam geological model you have, the higher the so-called
expansion corridors smoothing effect on the local blocks
Control // to bottom sets becomes. Consequently, the overall
of sedim sequences tonnages and grades estimated at
higher cut-offs can still be significantly
different from the actual tonnages

Plunge +04, Azimuth 129

14
 Selectivity local vs global
DANNY KENTWELL

Grade Control v Optimal OK D anny Kentwell,

a Geostatistician
and Engineer, has
a background in
geological modelling,
mine planning and
surveying. He has
25 years international
experience with
varied commodities including gold,
copper, mineral sands, iron ore,
nickel laterites, nickel sulphides and
Optimum Search OK

phosphate. Dannys skills cover 3D

modelling, resource estimation, open
pit design, scheduling and optimisation,
independent technical expert reporting,
fatal flaw analysis and due diligence.
Grade Control He understands the advantages
and limitations of different resource
estimation techniques and their use in
mine planning. Danny is a Competent
and grades at those cut-offs. Grades estimating and to understand any Person for JORC Code and NI 43-101
at higher cut-offs are typically differences between the best local reporting.
underestimated and tonnages block estimate and the theoretical
Danny Kentwell: dkentwell@srk.com.au
overestimated. global grade tonnage curves.

Reducing the smoothing by At the early stage of a project the

introducing increased variability into accuracy of the local block estimate DANIEL GUIBAL
the block estimation in an attempt to is often not critical but the overall
match the actual block variance is an tonnage and grade at a specific cut-off With over 35
alternative. This produces local block are critical. The differences between years experience
estimates that are worse than those the best local estimate and the in resources,
of optimised kriging. Misclassification theoretical global estimate for an early Daniels expertise
of ore and waste would be more stage project are most pronounced includes resource
extensive if mining were to take with commodities with highly skewed estimation, resource
place with selection based on those distributions, such as gold. classification (JORC),
blocks. However, on a global grade recoverable resource
and tonnage basis, the overall In early stage projects, techniques
for obtaining a global estimate that is evaluation and
nonselective grades and tonnages at risk analysis, sampling theory, mining
higher cut-offs are closer to reality, closer to reality, compared to optimal
kriging, include global change of simulation, open pit optimisation and
if the smoothing is reduced by some training of professionals in statistics,
appropriate method. support, sub-optimal kriging (reduced
sample search), uniform conditioning geostatistics, sampling and grade
It is therefore critical to understand and simulation. control. Daniels range of deposit types
the purpose of early stage resource studied includes gold, copper, iron,
Danny Kentwell: dkentwell@srk.com.au tin, nickel, lead-silver-zinc, uranium,
mineral sands, phosphate, coal,
diamonds and bauxite.

Daniel Guibal: dguibal@srk.com.au

15
 Estimating metallurgical variability:
a case study

After discovering a mineral deposit, and Probable reserve categories contain

S B AST I E N B E R N I E R delineating the drilling, and developing approximately 6.9 billion pounds of nickel.
a geological framework, the next step Once in operation, the mine is expected
Sbastien B. is usually estimating metal content by
quantifying the grade and tonnage of
to rank as the fifth-largest nickel sulphide
mine in the world by annual production,
Bernier, MSc,
the mineral occurrence. To support mine and to last more than 30 years.
PGeo, is a Principal
design and the economic analysis of
Consultant The deposit comprises pervasively
the project, a geometallurgical model
(Resource Geology) serpentinised olivine + sulphide
can also be generated by bridging the
specialising cumulates which make up differentiated
gap between the geostatistics and
in geological layers of the Dumont sill, a komatiitic
the metallurgy. SRK generated such a
modelling, intrusion contained within the Archean
geometallurgical model for Royal Nickel
geostatistics, and Abitibi Greenstone Belt.
Corporations (RNC) Dumont nickel
mineral resource estimation. Proficient
deposit, located in the established Nickel mineralisation within the deposit
in CAE Datamine Studio 3, he has co-
Abitibi mining camp, 25km northwest of is characterised by disseminated blebs
authored several National Instrument
Amos, Qubec, Canada. of pentlandite ((Ni,Fe)9S8), heazlewoodite
43-101 technical reports and worked
on numerous projects around the (Ni3S2), and the ferronickel alloy awaruite
In 2013, RNC commissioned SRK to
world. Sbastiens expertise includes (Ni2.5Fe) occurring in various proportions
produce a mineral resource model to
a variety of commodities like base throughout the sill. These minerals can
support a feasibility study. The model
metals, precious metals, uranium and occur together as coarse agglomerates,
estimated
Miriam 9.7model
geological billion pounds of nickel
lithium in a variety of deposit types, or as individual disseminated grains.
resources in the Measured and Indicated
from unconformity-type uranium Nickel can also occur in the crystal
category and 2.9 billion pounds of nickel
deposits to narrow gold veins and structure of several silicate minerals
the Inferred resource category. The
volcanic massive sulphides. Sbastien including relict olivine and serpentine.
feasibility study concluded that the Proven
is also the co-instructor of SRK NAs This mineralogical variability must be
Geostatistics and Resource Estimation accurately modelled in order to calculate
Workshop. recovery for the feasibility study.

Sbastien B. Bernier: sbernier@srk.com To investigate the correlation between

mineralogy and metallurgical recoveries,
RNC completed a detailed Quantitative
Evaluation of Minerals by Scanning

Conceptual
Pit Shell

North

1 kilometre

16
 Block variance validation

Generally speaking, grade interpolation variance shrinks. The only parameter that
can be validated by VMS (visual is not affected is the mean; it should stay
assessment, mean assessment, swath the same regardless of support changes.
Electron Microscopy (QEMSCAN) study. plot validation) and block variance Theoretically, the distribution presented
They analysed 1,420 samples to provide validation. These methods are easily by the sample data should vary more than
detailed mineralogical information on understood and applied, except for the that presented by the blocks. But in actual
mineral assemblages, nickel deportment, block variance validation. practice, the block variance is occasionally
liberation, alteration and the variability larger than the samples variance when all
When applying kriging to grade
of these factors. Mineralogical samples the reasonable interpolating methods and
interpolation, the theoretical block variance
were also taken to characterise the parameters are considered. Therefore, it
adjustment ratio (f) and the actual block
metallurgical domain composites and for is preferable to remove outliers that still
variance adjustment ratio (f*) can differ by
mineralogical mapping. exist in the borehole dataset before re-
a large measure that is not reflected in the
estimating the resources.
The results were used to construct VMS methods. Block variance validation is
estimation models of mineral important for a kriging interpolation, but is Finally, we can answer the question of how
abundances. SRK modelled the not relevant to a non-kriging interpolation, to apply block variance validation:
abundance distribution of awaruite, so, the question is how to apply it?
1. U
 se it to decide which result is the most
brucite, coalingite, heazlewoodite, One way is to examine which interpolation robust among kriging interpolations
serpentine, low-iron serpentine, iron- is most robust. As we know, the block
rich serpentine, magnetite, olivine, and 2. Ignore it in non-kriging interpolations
variance is a measure of how far a set of
pentlandite. 3. U
 se it to mark the presence of outliers in
numbers is spread out. It is one of several
the borehole dataset
In conjunction with defining the nickel descriptors of a probability distribution,
grade, the models were used by RNC describing how far the numbers lie from Yonggang Wu: ywu@srk.cn
to establish four distinct metallurgical the mean. Usually, different parameters
domains: heazlewoodite dominant, produce almost identical global mean
mixed sulphide, pentlandite dominant, grades, but obviously different variances. YONGGANG WU
and high-iron serpentine. A separate This difference can produce different
regression recovery equation was tonnage-grade curves. All the curves
determined by RNC for each domain, show the same level of confidence at the Y onggang Wu,
minimum reporting cut-off, but different M.Eng, is a Senior
and was applied to the resource on
levels of confidence at increasing cut-offs. Consultant (Mining).
a block-by-block basis to calculate a
Using a kriging method, the most robust He joined SRK after
net smelter return per tonne, which
choice is the one with the minimum graduating from
was subsequently used to support a
difference between f and f*, which Jiangxi University
feasibility study.
indicates that the estimated result follows of Science and
Sbastien B. Bernier: sbernier@srk.com well with the operators expectation. For Technology in 2007.
a non-kriging method, the f cannot be With specialised
calculated, so the confidence levels of knowledge of mining engineering and
f* and tonnage-grade curve cannot be MineSight software; he began training
assessed. mine technical staff in MineSight while
still a student. Yonggangs projects
Another application is to find outliers involve the minerals Au, Pb, Zn, Mn, Cu,
in a borehole dataset. During grade Fe, fluorite, potassium salts, alum, and
interpolation, the smoothing effect more. He has extensive experience in
happens inevitably as the support resource/reserve estimation, pit limit
enlarges. The term support at optimisation and design, underground
the sampling stage refers to the mining design, long-term production
Geometallurgical Domains characteristics of the sampling unit, such planning, and due diligence studies,
Heazlewoodite Dominant as the size, shape and orientation of the with his expertise in modelling and
sample. At the modelling stage, the term specialised software.
Mixed Sulphide support refers to the volume of the blocks.
Pentlandite Dominant As support increases, the data is gradually Yonggang Wu: ywu@srk.cn
distributed more symmetrically, and the
High-Iron Serpentine
spread of the data is reduced, as the

17
 Mapping the Indian Resource
Classification System with the
CRIRSCO Template

In early 2015, India introduced a (331) or Indicated (332) categories of

set of new mining rules, using the resources, as defined in the Indian
General workflow for a mineral resource estimate
terminologies defined in the UNFC system; and found to be uneconomic
1997 guideline and the CRIRSCO after completing prefeasibility or feasibility Understanding of the
Data quantity and
Template. Since then, mapping the Indian studies. SRK does not consider these geology and controls
quality assessment
Resource Classification system against to be part of the mineral resource, as of mineralisation

the CRIRSCO Template has become defined in the CRIRSCO Template.

extremely important to the Indian and
Since estimates of the Reconnaissance
foreign investors.
Resources (334) are typically based on
In the recent past, SRK assisted regional exploration data, SRK generally High/Outlier
Statistical analysis
grade capping
several Indian mining companies and considers them to be equivalent to
international financial institutions by the CRIRSCO definition of Exploration
producing audited mineral resource Results. On the other hand, reclassifying
statements and, where appropriate, the other three categories of mineral
reclassifying them from the UNFC 1997 resources from the Indian system to the
system to the CRIRSCO Template. CRIRSCO Template requires thorough Model validation
These experiences led SRK to conclude assessment on a case-by-case basis.
that, although both codes use similar The most critical part in this process
terminologies, reclassification from the is assessing the reasonable prospects
Indian system to the CRIRSCO Template for eventual economic extraction of the
is not straightforward and warrants material, reported as mineral resources
the diligence and careful professional according to the Indian system. This
A t some point during your professional
career as a Resource Geologist, you
judgment of Competent Persons. process involves professional judgment
can expect that the Mineral Resource
and application of project-specific
The Indian system consists of four estimates (MREs) you have produced in
techno-economic assumptions. Part of
categories of mineral resources in the accordance with international reporting
the mineralisation, that meets with the
increasing order of geological knowledge. codes will be subject to a technical audit
CRIRSCO definition of mineral resources,
These categories are: Reconnaissance by an external organisation, most likely
are classified based on the nature, quality
(334), Inferred (333), Indicated (332) and by a Competent/Qualified Person from a
and distribution of the exploration data;
Measured (331). Further, reporting of third-party consultancy.
and confidence on the estimated results.
mineral resource estimates are based
Audits of MREs are required for reasons
on a set of prescribed cut-off grades for Based on practical experience, SRK has
ranging from a companys request for
different commodities, known as the developed a rule-of-thumb mapping of
a second opinion to a detailed audit,
threshold value. the Indian system against the CRIRSCO
required by a third party, signing off on
Template, as outlined below.
In addition, the Indian system recognises the MRE as part of a Stock Exchange
the terms Pre-Feasibility Resources Shameek Chattopadhyay: listing/IPO or financial transaction.
(221 and 222) and Feasibility Resources schattopadhyay@srk.co.in
An audit of your MRE can be daunting
(211). These are part of either Measured
and stressful, as often the third-party
reviewers are looking to identify
Indian System CRIRSCO Template underlying issues, as opposed to
Mineral Resource Exploration Target Unclassied
commenting on the correctness and
Measured Indicated Inferred material aspects of the process, and
UNFC Code 211 the reviewer may have a vested interest
UNFC Code 221 in finding issues that angle the client
Economic Axis

UNFC Code 331

towards choosing them for technical
UNFC Code 222
UNFC Code 332 work in the future.
UNFC Code 333
UNFC Code 334 MREs help to underpin the success
or failure of mining projects, and
professionals should assume their work

18
 External mineral resource audits MARK CAMPODONIC

M ark Campodonic,
BSc, MSc, FGS,
MAusIMM, is Head
Domaining sample
Data validation Geology modelling
data and compositing of the Geology
department, and a
Principal Resource
Geologist with SRK
(UK) and has over 12
Quantitative Kriging Selection of years of international
Geostatistical analysis neighbourhood appropriate
experience. Marks responsibilities have
analysis (QKNA) estimation method
included the authoring and auditing of
mineral resource and ore reserves, as
part of technical studies, independent
assessments, feasibility studies, due
Mineral resource Reporting with Compliant mineral diligence/technical reviews, Competent
classification economic potential resource statement Persons Reports and Stock Exchange
listings. He acts as a Competent/Qualified
person for a number of commodities and
styles of mineralisation.

will be presented in the public domain and procedures (such as selecting Mark Campodonic:
and be reviewed and interrogated by a the composite length, grade capping mcampodonic@srk.co.uk
third party. The Resource Geologist must theory, interpolation method, etc)
remember that the results of the MRE and built-in validation checks are
are the culmination of an often extensive undertaken to assess the materiality SHAMEEK
and expensive exploration campaign, the and relevance of each step. This is C H A T T O PA D H YAY
results of which mean everything to the critical to the successful completion
success of the client company. of an external audit and enables the
geologist to defend the selected
Shameek
It is therefore essential that the Chattopadhyay,
methods. Individual geologists will
quality of SRKs work on the MRE is Senior Consultant
have different opinions about the
comprehensive and that the results are (Resource Geology)
correct approach and methodology, so
not influenced by client expectations has over 12 years
these built-in checks make an external
regarding tonnages and grades. In of experience in
audit a smoother process. Remember
reality, additional drilling expenditure exploration and
that these are estimates and not
does not always result in additional mineral resource
precise calculations.
tonnes and metal in the ground. estimation. Since
SRK prides itself on the quality of the joining SRK in 2007, Shameeks
Producing an MRE is a complex
MREs we undertake. We are front responsibilities include producing 3D
process that requires a diligent and
runners in developing and applying geological models using specialised
well structured approach, and SRK has
modern resource estimation practices, mining software, resource estimation,
developed robust process workflows
using cutting edge technology undertaking technical due diligence
to guide the geologist through the
described in this newsletter. studies associated with fundraising and
critical decision points. No two deposits
Stock Exchange Listing, and preparing
and projects are the same and MRE External audits can be daunting, but technical reports following various
workflows allow the geologist to by following the correct workflow to international reporting codes.
consider project-specific requirements, guarantee the quality of the work, they
ensuring that correct data checks are can be stimulating and rewarding. Shameek Chattopadhyay:
undertaken before moving to the next schattopadhyay@srk.co.in
step in the process. Furthermore, SRK Mark Campodonic:
recognises that multiple techniques mcampodonic@srk.co.uk

19
 Application of the JORC code to a
complex Mozambique coal deposit

ANNA FARDELL
Coal mining in Mozambique

A nna Fardell
is a Resource C lassifying coal deposits in recently Structural interpretation was primarily
Geologist with explored basins to internationally based on remote sensing data and
SRK, specialising in recognised reporting codes requires recognisable coal zones. Intrusions
various aspects of close attention to data quality and a could not be confidently correlated
coal and stratiform comprehensive understanding of the between fault blocks or the quality
modelling, resource geology. and thickness of contained clean coal
estimation and estimated.
The coal basins and sub-basins of
applied geostatistics.
the Zambezi coalfield are structurally SRK used density, ash and thickness
She has 6 years experience in the
complex, affected in varying degrees cut-offs to define the clean coal
resources sector. Since completing an
by intrusive bodies, with centimetre within the zone. This approach
MSc in Mining Geology and joining SRK
scale inter-bedded coal and shale assumes that although the drill spacing
in 2009, Anna has undertaken resource
comprising the target coal zones does not support the delineation of
estimates for various bulk commodities
which are between 5 and 30m thick. individual coal bands, selective mining
and worked on coal projects in Canada,
can separate them from the waste.
Russia, Southern Africa and Colombia A recent Coal Resource Estimate of
Hence, the coal qualities and densities
and assisted in the generation of a Mozambique deposit was sampled
were only counted on the composited
Competent Persons Reports for various with boreholes spaced between 100
clean coal bands.
international exchanges. Key skills and 1000m apart. In well sampled
include knowledge of geological and areas, the coal zones could be Clean coal quality grids show significant
mine planning software including Vulcan, correlated between drillholes and variations laterally across coal zones,
Minex, Datamine and Isatis geostatistical faulted blocks and major structures indicating that coal quality cannot be
software. could be modelled confidently. inferred across sparsely drilled areas. In
Intrusions and the extent of burning terms of sedimentology, the coal zones
Anna Fardell: afardell@srk.co.uk
were modelled, extrapolated between have high variability vertically but are
drillhole intersections through the less variable laterally. Where the whole
coal zones. However, in poorly drilled coal zone was not sampled, a high level
areas there is high ambiguity and little of variability introduces significant bias
confidence in the interpretation. in the resource estimate.

20
 Block modelling in the CIS and
alignment with the GKZ

T he CIS countries inherited the SRK is part of the group currently

resource estimate code from the working on adopting the block
Soviet era that was originally created modelling approach in GKZ. The group
and is still updated by the Geological is trying to explain the main difference
Commission for Reserves or GKZ. in the two methods and to propose
The official method of the resource the possible solutions and changes
estimation is still based on sections required to adopt the block modelling
and plans. technique. SRK is trying to prevent
the usage of a mixed approach when
Now the GKZ body in Russia plans
the block model is only used to honor
to implement the block modelling
the polygonal method, since this could
approach; however, it faces serious
not provide a reliable and unbiased
methodological differences.
estimate according to the international
The main problem is this: the GKZ approach.
approach requires an estimate
Liubov Egorova: egoroval@srk.ru.com
within a hard boundary based on
an economic cut-off that excludes
any material below the stated cut-
off grade. If the boundary includes
lower-grade material, the resource
L I U B OV EG O R OVA
figures should be corrected, using the
ore-waste coefficient, to exclude any L iubov Egorova
possible dilution in the estimate. In has 10 years
contrast, the international approach experience
uses the mineralisation boundary to working in minings
SRK classified the deposit by considering define the zone of estimate. geological
each coal zone individually, assessing sectors. Her varied
the quantity and quality of the data This block modelling approach
background has
influencing the coal quality and allows for some dilution, depending
enabled her to build
thickness within and between individual on the style of mineralisation,
expertise in many
fault zones, including availability of geostatistical characteristics and
topics concerning mineral resource
downhole geophysical logs and full block size. Comparing the results of
estimation and exploration activities
seam intersection and analysis. Where the two estimates, using a cut-off
for a broad range of commodities.
intrusions appeared in the coal zones, grade, reveals this difference: the
Liubovs responsibilities have included
SRK downgraded the areas classification. GKZ approach excludes any possible
geological modelling, mineral resource
dilution below the stated cut-off
The coal model was tested for economic estimation and QA/QC, as well as
grade, while block modelling allows
potential with a Pit Optimisation using preparing NI 43-101s, geological
some dilution in the model.
a range of coal prices for high level chapters in Scoping Studies, CPRs
fixed costs to ensure the resource was The current GKZ requires the estimate and FS reports, supervising drill
economically viable. The model used to be made strictly according to the and exploration programs and
the ratio of clean coal within the zone to existing code, using hard boundaries. many other geological activities.
washability yield (processing recovery) If block modelling is used, it should Liubov has developed a deep
to quantify the saleable coal. This compare closely to the polygonal understanding of the Russian system
excluded coal from depth, at the licence estimate results, but it is seldom of mineral resource estimation and
boundaries and in areas where the strip possible to achieve results comparable reporting. Currently, she is actively
ratio was too high to support extraction. to the sections method. Therefore, participating in developing a method
to use block modelling following for harmonising international and GKZ
SRK reported the clean coal (with international standards, some GKZ systems for resource estimation.
associated partings) that fell within requirements need to be changed.
the pit optimisation shell as the Coal Liubov Egorova: egoroval@srk.ru.com
Resource.

Anna Fardell: afardell@srk.co.uk

21
 Satisfying the reasonable prospects
for economic extraction requirement

International professional organisations for economic extraction by open pit

in Australia, Canada, South Africa, USA, mining are defined. Portions of the
UK, Ireland, and many countries in block models that are external to an
Europe have adopted comparable codes, open pit, but satisfy the cut-off grade
guidelines, and standards for mineral criteria for an appropriate underground
resource reporting. The definition of a extraction method, are considered
mineral resource usually includes the to show reasonable prospects for T he Committee for Mineral Reserve
requirement that reasonable prospects economic extraction by underground International Reporting Standards
for economic extraction exist. mining. Optimisation parameters used (CRIRSCO) has consolidated reporting
to derive the conceptual pit shells codes and standards to produce a
This requirement implies a judgment consistent definition of a Mineral
are generally optimistic, aligned with
by the Qualified Person regarding the Resource.
standards used in recent comparable
technical and economic factors likely
studies, and are usually determined
to influence the prospect of economic A Mineral Resource is a
in collaboration with an SRK mining
extraction. This in turn implies that the concentration or occurrence of material
engineer and the client.
quantity and grade estimates meet of economic interest in or on the
certain economic thresholds and that It is important to state that the results Earths crust in such form, quality and
the mineral resources are reported at an from the pit optimisation are used quantity that there are reasonable
appropriate cut-off grade that considers solely for assessing those portions of prospects for eventual economic
economic inputs, extraction scenarios the block models that show reasonable extraction. The location, quantity,
and processing recoveries. prospects for economic extraction and grade, continuity and other geological
do not represent an attempt to evaluate characteristics of a Mineral Resource
It is important to apply a consistent are known, estimated or interpreted
mineral reserves. Mineral reserves can
methodology when assessing the from specific geological evidence
only be estimated based on the results
reasonable prospects for economic and knowledge. Mineral Resources
of an economic evaluation as part of
extraction for mineral resource are subdivided, in order of increasing
a preliminary feasibility study or a full
reporting. SRK applies the Lerchs- geological confidence, into Inferred,
feasibility study.
Grossman optimising algorithm to Indicated and Measured categories.
develop the conceptual pit shells within Glen Cole: gcole@srk.com
which the portions of the block models This definition raises two key
that show reasonable prospects questions: first, what is considered
reasonable and second, what is
N the time scale for eventual economic
extraction?

Following CRIRSCOs, the eventual

economic extraction can be stated
clearly. The Template continues:
The term reasonable prospects for
eventual economic extraction implies
the Competent Person [judges] the
technical and economic factors likely
to influence the prospect of economic
extraction, including the approximate
mining parameters. It is a realistic
inventory of mineralisation which might
200 M become economically extractable.

The Competent Person (CP) makes

preliminary judgments on factors
An oblique view of modelled gold mineralisation used when converting a resource to a
wireframes in relation to a conceptual pit shell
reserve (see Figure 1) including: mining,
(Aurora Gold Project, Guyana, 2011).
Reproduced with the permission of Guyana metallurgical and processing, economic,
Goldfields, Inc. marketing, legal, infrastructure and
environmental and social.

22
 ROGER DIXON
Reasonable prospects for eventual
R oger Dixon,
economic extraction (RPEEE) Corporate
Consultant, is
Chairman of SRK
South Africa.
He has 43 years
In defining eventual, the CP might How then does the CP decide what is
experience in
ask: what will the resource price be reasonable? The geological confidence
mining engineering,
30 years from now? Will there be is the primary consideration but not the
with projects
sufficient electrical power to grow the only one. This multi-disciplined decision
relating to engineering studies, mineral
minerals industry? How will power be must consider all the modifying factors.
reserve estimation, due diligence,
generated? The CP has to wrestle with
As Erich Fromm said, in part: and feasibility studies on open-pit
such questions, even at this early stage.
and underground operations. Roger
Why, then, are resources declared What the majority of people consider to helped formulate the Mine Health and
when, at best, they should be in Mineral be reasonable is that about which there Safety Act of 1996. In 2000, he helped
inventory? First, at this stage, the is agreement, if not among all, at least prepare the South African Code for
Resource Geologist usually estimates among a substantial number of people; reporting mineral resources and
resources to meet the stringent QA/QC reasonable for most people, has nothing reserves (Samrec Code), and mineral
requirements and assess the level of to do with reason, but with consensus. asset valuation (Samval Code) in
geological confidence. Would he need After considering the modifying 2008. He represents South Africa on
to involve an engineer or economist factors and geological confidence, the Committee for Mineral Reserves
now? Second, client pressure. With would the decision stand the scrutiny International Reporting Standards
an ambitious exploration target and of the majority of your peers? Thats (CRIRSCO), which represents the major
sizeable investment, the client needs the benefit of a multi-disciplined peer mining regions around the world.
results. The client may suggest the review process in the preliminary Roger Dixon: rdixon@srk.co.za
chance of follow up work for the stages of declaring a resource.
geologists company are slim without
results. Roger Dixon: rdixon@srk.co.za
GLEN COLE

Figure 1
Glen Cole, Principal
Consultant (Resource
Exploration Results Geology) has over 20
years of experience
MINERAL RESOURCES MINERAL RESERVES in mine geology,
precious and base
Inferred metals exploration,
resource geology,
Increasing level mine feasibility
of geological Indicated Probable and due diligence. He worked as a Chief
knowledge
Geologist and Chief Resource Geologist
and confidence
on various underground and opencast
Measured Proved gold operations in South Africa and
Ghana before joining SRK in 2006. He has
worked on multi-commodity projects in
The Modifying Factors* South America, North America and Africa
producing resource estimates, auditing
*The Modifying Factors: mining operations, undertaking due
Consideration of mining, processing, metallurgical, economic, marketing, legal, diligence studies and technical reporting
environmental, infrastructure, social, and governmental factors
for Competent Persons Reports and Stock
Exchange Listings.

Glen Cole: gcole@srk.com

23
 SRK project countries SRK offices

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To learn more about SRK and how we can help

you with your next challenge, visit our website:

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SRK Consulting 2015

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