Mineral Resources vs. Reserves
From Geological Confidence to a Mine Plan
The difference between "it's there" and "we can actually mine it."
- A mineral resource estimates a deposit with reasonable prospects for eventual economic extraction.
- A mineral reserve is the part of that resource shown to be economically mineable once technical and other factors are assessed.
- Inferred, indicated and measured describe increasing geological confidence within resources.
- Probable and proven are reserve categories. Inferred resources cannot convert directly into reserves.
- Always check the estimate's date, its assumptions, and whether the resource figure includes or excludes reserves.
Two Different Questions
A resource asks what the company has reasonable grounds to believe is in the ground. A reserve asks how much of that material can go into an economically justified mining plan.
It's a bit like the difference between a well-documented pantry inventory and a costed plan for producing and selling meals from it. Knowing the ingredients are there matters. It doesn't settle every question about the business built on top of them.
The Resource Confidence Ladder
These are reporting classifications, not promises that a mine will get built. A company can report different parts of the same deposit under different categories.
What Turns a Resource Into a Reserve?
Reserve estimates draw on pre-feasibility or feasibility level work and account for things like mining losses, processing, costs, infrastructure, environmental factors and legal or social conditions. Reserves are classified as probable or proven. The CIM Definition Standards set out these Canadian reporting rules.
In practice, the mine design has to work with the deposit as it actually is. Some rock gets left behind for technical reasons. Some lower grade material gets pulled in anyway. Recovery and operating assumptions shape the final number too.
Beginner Benchmark
Why "inferred" isn't a reserve waiting to happen. There's no fixed conversion rate from inferred resources to reserves, and any specific percentage you see quoted should be treated skeptically. Inferred material needs further geological work before it can support a reserve estimate. A preliminary economic assessment (PEA) may include inferred resources, but these are too geologically uncertain to be classified as mineral reserves, and there is no certainty that the PEA will be realized. When you see a resource estimate, it's worth checking how much sits in inferred versus indicated and measured, since that split says a lot about how far the project still has to go.Do Not Count the Same Metal Twice
A company might report resources inclusive of reserves, or exclusive of reserves. Inclusive means the reserve material is already counted inside the resource estimate. Adding the two together would double count it.
For example, if a hypothetical company reports 2 million resource ounces inclusive of 800,000 reserve ounces, the real headline is 2 million ounces, not 2.8 million. Read the table notes before doing any arithmetic yourself.
Estimates Can Change
More drilling can improve confidence, or it can reveal that the original geological interpretation was too optimistic. Changes in metal prices, costs, mine design or recovery assumptions can shift the reported numbers too.
The useful habit is keeping geological evidence and demonstrated economics separate in your own notes. A bigger resource can be encouraging. The next question is always how much of it can actually support a workable mine.Want more mining news explained this way?
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PEA, PFS & Feasibility Studies
How a project is de-risked on paper before any dirt actually moves.
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