more certain to be recovered than Possible Reserves. It is equally likely that actual
remaining quantities recovered will be greater than or less than the sum of the
estimated Proved plus Probable Reserves (2P). In this context, when probabilistic
methods are used, there should be at least a 50% probability that the actual
quantities recovered will equal or exceed the 2P estimate.’34
• ‘Possible Reserves are those additional reserves which analysis of geoscience and
engineering data suggest are less likely to be recoverable than Probable Reserves.
The total quantities ultimately recovered from the project have a low probability
to exceed the sum of Proved plus Probable plus Possible (3P) Reserves, which is
equivalent to the high estimate scenario. When probabilistic methods are used,
there should be at least a 10% probability that the actual quantities recovered will
equal or exceed the 3P estimate.’35
The SPE-PRMS distinguishes between Contingent and Prospective Resources:
• The term Resources as used herein is intended to encompass all quantities of
petroleum naturally occurring on or within the Earth’s crust, both discovered and
undiscovered (whether recoverable or unrecoverable), plus those quantities
already produced. Further, it includes all types of petroleum whether currently
considered ‘conventional’ or ‘unconventional’ resources.36
• ‘Contingent Resources are those quantities of petroleum estimated, as of a given date,
to be potentially recoverable from known accumulations, by the application of
development project(s) not currently deemed to be commercial owing to one or more
contingencies. Contingent Resources have an associated chance of development.
Contingent Resources may include, for example, projects for which there are
currently no viable markets, or where commercial recovery is dependent on
technology under development, or where evaluation of the accumulation is
insufficient to clearly assess commerciality. Contingent Resources are further
categorized in accordance with the range of uncertainty associated with the estimates
and may be sub-classified based on project maturity and/or economic status.’37
• ‘Prospective Resources are those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective Resources have both an
associated chance of geologic discovery and a chance of development. Prospective
Resources are further categorized in accordance with the range of uncertainty
associated with recoverable estimates, assuming discovery and development, and
may be sub-classified based on project maturity.’38
Total petroleum initially-in-place (PIIP) is all quantities of petroleum that are estimated
to exist in naturally occurring accumulations, discovered and undiscovered, before
production. Discovered PIIP is the quantity of petroleum that is estimated, as of a given
date, to be contained in known accumulations before production.39 Undiscovered PIIP
is that quantity of petroleum estimated, as of a given date, to be contained within
accumulations yet to be discovered.40
Production is the cumulative quantities of petroleum that has been recovered at a given
date.41 Unrecoverable Resources are that portion of Discovered or Undiscovered PIIP
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evaluated, as of a given date, to be unrecoverable by the currently defined project(s). A
portion of these quantities may become recoverable in the future as commercial
circumstances change, technology is developed, or additional data are acquired. The
remaining portion may never be recovered because of physical/chemical constraints
represented by subsurface interaction of fluids and reservoir rocks.42
2.2.2
Classification and categorisation guidelines
The SPE-PRMS provides guidance on classifying resources depending on the
relative maturity of the development projects being applied to yield the recoverable
quantity estimates.43
Figure 39.2:
Sub-classes based on project maturity
Production
Project maturity sub-classes
On production
cialer
mm
RESERVES
Approved for development
Co
P)
IIP
Justified for development
ciality
lace (PII
er
overed P
n-p
sc
Development pending
Di
lly-i
l
ia
of comm
it
CONTINGENT
ercia
Development unclarified
in
m
RESOURCES
ance
com
ng ch
Sub-
Development not viable
etroleum
asi
l p
Unrecoverable
Incre
Tota
Prospect
IIP
PROSPECTIVE
ed P
Lead
er
RESOURCES
scov
Play
Undi
Unrecoverable
Low
Range of uncertainty
High
As Figure 39.144 above illustrates, development projects and associated recoverable
quantities may be sub-classified according to project maturity levels and the
associated actions (i.e. business decisions) required to move a project forward to
commercial production.45
The SPE-PRMS also provides guidance on categorising resources, depending on the
associated degrees of uncertainty, into the following cumulative categories:46
• proved, probable and possible (1P, 2P and 3P) for reserves;
• low, best and high (1C, 2C and 3C) for contingent resources; and
• low estimate, best estimate and high estimate for prospective resources.
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Additionally, guidance is provided on categorisation of reserves and resources related
to incremental projects, such as workovers, infill drilling and improved recovery.47
To promote consistency in project evaluations and reporting, the SPE-PRMS provides
guidelines on the economic assumptions that are to be used, measurement of
production, and resources entitlement and recognition,48 and also provides guidance
on the analytical procedures, and on the deterministic and probabilistic methods to
be used.
2.3
Mining resource and reserve reporting
The Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (JORC Code) is prepared by the Joint Ore Reserves Committee (JORC)
of the Australasian Institute of Mining and Metallurgy, Australian Institute of
Geoscientists and Minerals Council of Australia. The JORC was established in 1971,
the first edition of the JORC Code was published in 1989,49 with the most recent
edition of the JORC Code issued in 2012. This version of the JORC code and
associated ASX listing rules relating to the disclosure of reserves and resources by
ASX listed mining and oil and gas
exploration and production companies came into
effect on 1 December 2013.
Subsequently, many jurisdictions have established similar national reporting standards.
These include:
• Canada: CIM Definition Standards on Mineral Resources and Mineral Reserves,
Canadian Institute of Mining, Metallurgy and Petroleum (CIM);
• Chile: Code for the Certification of Exploration Prospects, Mineral Resources and
Ore Reserves, Instituto de Ingenieros de Minas de Chile (IIMCh);
• Pan European Reserves Reporting Committee (PERC) in the United Kingdom,
Ireland and Western Europe;
• Peru: Code for Reporting on Mineral Resources and Ore Reserves, Joint
Committee of the Venture Capital Segment of the Lima Stock Exchange;
• South Africa: South African Code for Reporting of Mineral Resources and Mineral
Reserves, South African Mineral Resource Committee (SAMREC); and
• United States: Guide for Reporting Exploration Information, Mineral Resources
and Mineral Reserves, Society for Mining, Metallurgy and Exploration (SME).
In July 2006, CRIRSCO first published a generic International Reporting Template
for reporting mineral resources and mineral ore reserves, modelled on those of the
JORC Code, and the latest update occurred in November 2013. This reflects best
practice national reporting standards but excludes national regulatory requirements.
The template serves as a guide to national standard-setters that do not have a
reporting standard or who want to revise their existing standard to an internationally
acceptable form.50 ‘The system is primarily targeted at establishing international best
practice standards for regulatory and public disclosures and combines the basic
components of a number of national reporting codes and guidelines that have been
adopted in similar forms by all the major agencies [other than] the SEC. The
classification is applied, with small modifications or extensions, by most mining
companies for the purpose of internal resource management.’51
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In the United States, public disclosures of mineral resources and mineral reserves are
regulated by the SEC, which does not recognise the CRIRSCO guidelines.
Unsurprisingly, some of the SEC requirements (Industry Guide 7) for public release of
information are materially different from those applicable in other countries.52 The
SEC’s Industry Guide 7 is discussed at 2.4.2 below.
2.3.1
CRIRSCO International Reporting Template (November 2013)
Set out below are the main requirements of the CRIRSCO International Reporting
Template (CRIRSCO Template) to the extent that they are relevant to financial
reporting by mining companies.
2.3.1.A Scope
The main principles governing the operation and application of the CRIRSCO Template
are transparency, materiality and competence. These are aimed at ensuring that the
reader of a public report is provided with:53
• sufficient information that is clear and unambiguous (transparency);
• a report that contains all relevant information which investors and their
professional advisers would reasonably require and would reasonably expect to
find, to be able to form a reasoned and balanced judgement about the
Exploration Results, Mineral Resources or Mineral Reserves being reported
(materiality); and
• information that is based on work that is the responsibility of suitably qualified and
experienced persons who are subject to an enforceable professional code of ethics
and rules of conduct (competence).
A public report is a report ‘prepared for the purpose of informing investors or
potential investors and their advisors on Exploration Results, Mineral Resources or
Mineral Reserves. They include, but are not limited to, annual and quarterly company
reports, press releases, information memoranda, technical papers, website postings
and public presentations’.54 The CRIRSCO Template is applicable to all solid
minerals, including diamonds, other gemstones, industrial minerals, stone and
aggregates, and coal.55 The CRIRSCO Template provides supplementary rules on
reporting related to coal, diamonds and industrial minerals, due to the special nature
of those types of deposit.
A public report should be prepared by a competent person, defined in the CRIRSCO
Template as ‘... a minerals industry professional (NRO to insert appropriate membership
class and organisation including Recognised Professional Organisations) with
enforceable disciplinary processes including the powers to suspend or expel a
member’.56 (Note that NRO stands for ‘national representative organisations’).
2.3.1.B Reporting
terminology
The general relationship between Exploration Results, Mineral Resources and Mineral
Reserves can be summarised in the following diagram:57
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Figure 39.3:
The general relationship between results, resources and reserves
Exploration results
Mineral resources
Mineral reserves
Inferred
Increasing level of
Indicated
Probable
geological
knowledge and
Measured
Proved
confidence
Consideration of mining, processing, metallurgical,
economic, marketing, legal, environmental, infrastructure,
social and governmental factors (the ‘modifying factors’)
The terms in the above diagram are defined as follows.
Exploration Results include data and information generated by mineral exploration
programmes that might be of use to investors but which do not form part of a declaration
of Mineral Resources or Mineral Reserves.58 The CRIRSCO Template specifically requires
that any information relating to Exploration Results be expressed in such a way that it does
not unreasonably imply that potentially economic mineralisation has been discovered.59
A Mineral Resource is a concentration or occurrence of solid material of economic
interest in or on the Earth’s crust in such form, grade, quality and quantity that there are
reasonable prospects for eventual economic extraction. The location, quantity, grade,
continuity and other geological characteristics of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and knowledge, including
sampling. Mineral Resources are sub-divided, in order of increasing geological
confidence, into Inferred, Indicated and Measured categories:60
• ‘An Inferred Mineral Resource is that part of a Mineral Resource for which quantity
and grade or quality are estimated on the basis of limited geological evidence and
sampling. Geological evidence is sufficient to imply but not verify geological and grade
or quality continuity. An Inferred Resource has a lower level of confidence than that
applying to an Indicated Mineral Resource and must not be converted to a Mineral
Reserve. It is reasonably expected that the majority of Inferred Mineral Resources
could be upgraded to Indicated Mineral Resources with continued exploration.’61
• ‘An Indicated Mineral Resource is that part of a Mineral Resource for which
<
br /> quantity, grade or quality, densities, shape and physical characteristics are
estimated with sufficient confidence to allow the application of Modifying Factors
in sufficient detail to support mine planning and evaluation of the economic
viability of the deposit. Geological evidence is derived from adequately detailed
and reliable exploration, sampling and testing and is sufficient to assume geological
and grade or quality continuity between points of observation. An Indicated
Mineral Resource has a lower level of confidence than that applying to a Measured
Mineral Resource and may only be converted to a Probable Mineral Reserve.’62
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• ‘A Measured Mineral Resource is that part of a Mineral Resource for which quantity,
grade or quality, densities, shape and physical characteristics are estimated with
confidence to allow the application of Modifying Factors to support detailed mine
planning and final evaluation of the economic viability of the deposit. Geological
evidence is derived from detailed and reliable exploration, sampling and testing and
is sufficient to confirm geological and grade or quality continuity between points of
observation. A Measured Mineral Resource has a higher level of confidence than that
applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It
may be converted to a Proved Mineral Reserve or to a Probable Mineral Reserve.’63
• ‘Modifying factors are considerations used to convert Mineral Resources to
Mineral Reserves. These include, but are not restricted to, mining, processing,
metallurgical, infrastructure, economic, marketing, legal, environmental, social and
governmental factors.’64
• ‘A Mineral Reserve is the economically mineable part of a Measured and/or
Indicated Mineral Resource. It includes diluting materials and allowances for
losses, which may occur when the material is mined or extracted and is defined by
studies at Pre-Feasibility or Feasibility level as appropriate that include application
of Modifying Factors. Such studies demonstrate that, at the time of reporting,
extraction could reasonably be justified.’65
• ‘A Probable Mineral Reserve is the economically mineable part of an Indicated,
and in some circumstances, a Measured Mineral Resource. The confidence in the
Modifying Factors applying to a Probable Mineral Reserve is lower than that
applying to a Proved Mineral Reserve. A Probable Mineral Reserve has a lower
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 634
