Compliant Exploration for JORC and

CIM Definition Standards / NI 43-

101 Certification

Dr Norman Lock

Private Consultant

norman.lock@yahoo.co.uk

+1 647 242 9471

Presentation to CBMINA

Belo Horizonte, August, 2014

Comply with What?

• Código de Mineração Brasileiro

• SAMREC

• JORC

• CIM Definition Standards (NI43-101)

• BM&FBOVESPA, JSE, ASX, TSX, AIM, etc.

• Financial & Funding Institutions

WHY?WHY?→→→→→→→→ Rules of the gameRules of the game

→→→→→→→→ $$

Typical Problem Areas

• Broken audit trail

• Not representative (geology, grade, geotechnical)

• Contamination (grade)

• Database

– Definitive master copy

– Availability

– Up to date

– Accurate

– Contents

“DEMONSTRABILITY”

• The principle of “demonstrability”

– You must be able to demonstrate clearly that none of the mentioned problems exist, and that you comply with the applicable codes and regulations.

– Does the clear view above the clouds continue below??

Five Stages of a Project

• Stage 1 Excitement, Euphoria

• Stage 2 Disenchantment

• Stage 3 Search for the Guilty

• Stage 4 Punishment of the Innocent

• Stage 5 Distinction for the Uninvolved

What is a “Bankable Project”?

• Approved for bank financing by credit committee

• Feasibility (or pre-feasibility) study shows clear

pay-back period with substantial ‘debt tail’

• The project is technically sound

• The project is what it seems - you will be audited!

Components of a Typical Feasibility

Study

• Country environment

• Land tenure

• Financial environment

• Exploration data

acquisition

• Environmental studies

• Geotechnical and

hydrological

investigations

• Socio-economic aspects

• Operating cost

estimates

• Capital cost estimates

• Financial analysis

• Project risk analysis

Inherent Project Risk

• Technical risk

• Production risk

• Environmental risk

• Political risk

• Management risk

• Financial risk

Data Required for Feasibility Studies

• Drilling and sampling

• Assaying

• Surveying

• Geology

• Density data

• Geotechnical

• Metallurgical

• Environmental

Goals of Data Collection

• Compile relevant data as soon as possible

• Data will give the most likely outcome

• Data are demonstrably of high quality

• Data are easily accessible and inter-related

• Robust resource models

• Effective mine planning & production scheduling

• Project funding

Steps in Compliant Exploration

Programs

• Planning

• Documentation

• Environment

• Geophysical Surveys

• Geochemical Surveys

• Surveying

• Field Mapping &

Geology

• Trenching & Pitting

• Drilling

• Logging

• Sampling

• Assaying

• Bulk Densities

• Geotechnical

Investigations

• Data Management

• Resources and Reserves

Compilation for Public Disclosure

(Australia and Canada)

• ASX

• CP

• JORC

• TSX

• QP

• CIM/NI43-101

Comparison between Australia and

Canada

• National Instrument 43-101 is not a reporting

code

• CIM Definition Standards is the equivalent of

JORC

• Both JORC and CIM similar to CRIRSCO

Comparison between Australia and

Canada

• However:

– JORC is required by ASX

– CIM is incorporated into NI43-101

– NI43-101 is a legal document

– NI43-101 references CIM

– TSX references NI43-101 (and thus CIM)

Competent/Qualified Person

JORC

• Minerals industry

professional

• Professional Association

membership (AusIMM, AIG,

Recognised Professional

Organisation)

• 5 years relevant experience

• Binding on AusIMM & AIG

NI43-101

• Engineer or geoscientist

• Professional Association

membership (PGeo, PEng,

Accepted Foreign

Associations)

• 5 years relevant experience

• NB. MAusIMM excluded

Comparison between Australia and

Canada

• Comment:

– JORC has no prescribed report format/template

– NI43-101 is well known for the report template

• But:

– JORC reports must include Table 1 Checklist as

Appendix

– “if not, why not”

Comparison between Australia and

Canada

JORC Table 1 checklist• Section 1 Sampling Techniques and Data

• Criteria

• Sampling techniques

• Drilling techniques

• Drill sample recovery

• Logging

• Sub-sampling techniques and sample preparation

• Quality of assay data and laboratory tests

• Verification of sampling and assaying

• Location of data points

• Data spacing and distribution

• Orientation of data in relation to geological structure

• Sample security

• Audits or reviews

• Section 2 Reporting of Exploration Results

• Criteria

• Mineral tenement and land tenure status

• Exploration done by other parties

• Geology

• Drill hole Information

• Data aggregation methods

• Relationship between mineralisation widths and intercept lengths

• Diagrams

• Balanced reporting

• Other substantive exploration data

• Further work

• Section 3 Estimation and Reporting of Mineral Resources

• Criteria

• Database integrity

• Site visits

• Geological interpretation

• Dimensions

• Estimation and modelling techniques

• Moisture

• Cut-off parameters

• Mining factors or assumptions

• Metallurgical factors or assumptions

• Environmental factors or assumptions

• Bulk density

• Classification

• Audits or reviews

• Discussion of relative accuracy/ confidence

NI43-101 template1. Summary

2. Introduction

3. Reliance on Other Experts

4. Property Description and Location

5. Accessibility, Climate, Local Resources, Infrastructure and Physiography

6. History

7. Geological Setting and Mineralisation

8. Deposit Types

9. Exploration

10. Drilling

11. Sample Preparation, Analyses and Security

12. Data Verification

13. Mineral Processing and Metallurgical Testing

14. Mineral Resource Estimates

15. Adjacent Properties

16. Other Relevant Data and Information

17. Interpretation and Conclusions

18. Recommendations

19. References

Mineral Resources

JORC

• reasonable prospects for

eventual economic

extraction (could be long for

bulk commodities)

• always a material matter,

and must be explicitly

disclosed and discussed

• technical and economic

support for the cut-off

assumptions

CIM

• reasonable prospects for

economic extraction

• assumptions must be

presented explicitly

• Not in CIM Defn Stds but see

Guidelines

Mineral Resources

(Inferred)

JORC

• sufficient to imply but not

verify geological and grade

(or quality) continuity

• exploration, sampling and

testing information

CIM

• reasonably assumed, but

not verified, geological and

grade continuity

• limited information and

sampling

Mineral Resources

(Inferred)

JORC

• Reasonably expected that

the majority of Inferred

Mineral Resources could be

upgraded to Indicated

Mineral Resources with

continued exploration

CIM

• Cannot be assumed that all

or any part of an Inferred

Mineral Resource will be

upgraded to an Indicated or

Measured Mineral Resource

as a result of continued

exploration.

Mineral Resources

(Inferred)

JORC

• Confidence in the estimate

of Inferred Mineral

Resources is not sufficient

to allow the results of the

application of technical and

economic parameters to be

used for detailed planning

in Pre-Feasibility or

Feasibility Studies

CIM

• Confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic studies

Mineral Resources

(Inferred)

JORC

• Caution should be exercised

if Inferred Mineral

Resources are used to

support technical and

economic studies such as

Scoping Studies

CIM

• Inferred Mineral Resources

must be excluded from

estimates forming the basis

of feasibility or other

economic studies

• But allowed in NI43-101

Preliminary Economic

Assessments

Mineral Resources (Indicated)

JORC

• sufficient confidence to

allow the application of

Modifying Factors within a

technical and economic

study

CIM

• confidence sufficient to

allow the appropriate

application of technical and

economic parameters

• sufficient quality to support

a Preliminary Feasibility

Study

Mineral Resources

JORC

• Categories must not be reported in a combined form unless details for the individual categories are also provided

• Mineral Resources must not be reported in terms of contained metal or mineral content unless corresponding tonnages and grades are also presented

• Mineral Resources must not be aggregated with Ore Reserves.

CIM

• NI43-101 prohibits

combining Inferred with

Measured and Indicated

• NI43-101 is identical

• NI43-101 is identical

Mineral Resources

JORC

• The words ‘ore’ and

‘reserves’ must not be used

in describing Mineral

Resource estimates as the

terms imply technical

feasibility and economic

viability

CIM

• NI43-101 (CP) > Use of Term

“Ore” – We consider the use

of the word “ore” in the

context of mineral resource

estimates to be potentially

misleading because “ore”

implies technical feasibility

and economic viability that

should only be attributed to

mineral reserves

Technical Studies

(Scoping Study)

JORC

• an order of magnitude

technical and economic

study of the potential

viability of Mineral

Resources

• Cautionary statements

CIM

• Not defined

• BUT, NI43-101 defines a

Preliminary Economic

Assessment

• an economic analysis of the

potential viability of mineral

resources

• Cautionary statements

Technical Studies

(Preliminary Feasibility Study)

JORC

• comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined

CIM

• comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined

Technical Studies

(Feasibility Study)

JORC

• comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable Modifying Factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable)

• The confidence level of the study will be higher than that of a Pre-Feasibility Study

CIM• comprehensive technical and economic

study of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable)

• The confidence level of the study will be higher than that of a Pre-Feasibility Study

Exploration

JORC

• An Exploration Target is a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnes and a range of grade (or quality), relates to mineralisation for which there has been insufficient exploration to estimate a Mineral Resource.

CIM

• NI43-101 allows - potential

quantity and grade,

expressed as ranges, of a

target for further

exploration

• conceptual

• basis for determination is

disclosed

Conclusions

• Comply with what?

• Problem areas

• Demonstrability

• Bankability and feasibility

• Project risk

• Data requirements

• Data collection for feasibility

• Steps in a compliant programme

Conclusions

• JORC similar to CIM Defn Stds (+NI43-101)

• JORC and CIM/NI43-101 linked to National Stock Exchange rules

• JORC requires Table 1 – CIM/NI43-101 requires report template

• JORC: CP binding – CIM/NI43-101: QP excludes MAusIMM

• JORC: Mineral Resources defined as "eventual extraction"

• JORC: Inferred are "reasonably expected" to convert whereas CIM: Inferred "cannot be assumed"

• CIM: prohibits combining Inferred with Measured and/or Indicated. JORC: requires full and clear disclosure

QUESTIONS?

Dr Norman Lock

Private Consultant

Presentation to CBMINA

Belo Horizonte, August, 2014