Mark Howson PERC Representative Ankara 26 January 2016 Competent or Qualified PERC Europe JORC Australasia SME USA etc Competent Person Canada Qualified Person ID: 636497
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Role of the Qualified or Competent Person
Mark Howson, PERC Representative, Ankara, 26 January 2016
Competent or
Qualified?
PERC (Europe), JORC (Australasia), SME (USA) etc. – ‘Competent Person’
Canada – ‘Qualified Person’
Chile – ‘
Qualified
Competent
Person’
Brazil – ‘
Qualified Professional’Slide3
Why are Competent Persons needed for reporting?
Copper (disseminated, massive veins, porphyry, sediment-hosted, skarns)
Gold
(
disseminated, veins)Iron Ore (sediment-hosted, skarns)Diamonds (pipes, alluvial, marine)Nickel (sulphides, laterites)Potash (bedded salts solution mining versus conventional mining) Uranium (hard-rock, sandstone-hosted in situ leach versus conventional mining)Lead-Zinc-Silver (Volcanogenic massive sulphides, carbonate-hosted)Specialties (Lithium, vanadium, rare earths) Coal (structurally disturbed, flat-bedded)Industrial minerals Construction materials (cement raw materials, aggregates, brick clays)
Dimension StonesMineral commodities and occurrences are diverse
Is anyone a specialist in all of deposits?Exploration Delineation Conceptual studyScoping study Pre-feasibility studyFeasibility studyCommissioningProductionClosure
Requiring:Geological knowledgeMining expertiseProcessing and metallurgical expertiseLegal understandingEnvironmental managementCommercial and economic knowledgeSocial/cultural awarenessStages of development need different skillsIs anyone responsible for all of these activities?Geological reportsInternal project reportsManagement planning reportsInvestment and strategy reportsState inventory reportsExternal statements and reports for investors
Different reports have different audiencesIs anyone writing all of these reports?Slide4
Requirements for a Competent
Person
A minerals industry
professional
Often
a geologist or mining engineerEmployed to work with mineral deposit occurrences in geological environments
Exchanges & sharing of information with other countries & companiesA member of a Recognised Professional Organization (RPO)
Appropriate membership level Subject to ethics and disciplinary codes
Minimum 5 years relevant experience"Competent Persons should be clearly satisfied in their own minds that they could face their peers and demonstrate competence in the commodity, type of deposit and situation under consideration. If doubt exists, the person should either seek opinions from appropriately experienced colleagues or should decline to act as a Competent Person."What is a Competent Person?Style of mineralizationType of depositActivity or area of technical input which that person is undertaking
Note: These requirements are also subject to any additional restrictions or conditions which may be required by relevant stock exchanges or regulatory authorities.Those that think experience in a similar but still different deposit type makes them competent, should do so with caution.Requires academic qualifications, professional experience & peer scrutinySlide5
What are the responsibilities of a Competent Person?
Preparing Competent Persons Reports
Issued by owners of mineral assets
Provide information on Exploration Results, Mineral Resources & Mineral Reserves
Reports are any public announcement that includes or relies on this information
Reports are prepared at different stages of project development and operationEnabling balanced and reasoned investment decisions
Information is provided to enable investors and/or professional advisors to make informed decisionsExercising judgement in providing external information
Ensuring that information available is properly considered and reasonable conclusions are drawn, supported by objective viewsUpholding the principles of transparency, materiality, competence and impartiality
The core principles inherent in the CRIRSCO aligned standardsSlide6
Competent Person Activities
Primary responsibility
Reporting
May be annual, or for specific purpose
Include 'first time' reporting, bond issues, results updates, divestments, privatization, press releases, etc.
Exploration geologists report exploration resultsMining (or estimation) geologists estimate and report mineral resources
Mining engineers estimate and report mineral/ore reservesCo-ordinating other specialistsLeading a team
Can include other Competent PersonsOversees and directs work on those not Competent Persons in their own rightCould include metallurgists, environmental engineers, economists, marketing experts, etc.Responsibility for the work included in reports done by othersConsidering all matters in reports
Organizing audits and reviewsLegacy informationGeological confidenceModifying factorsExperience from similar or analogue deposits can be important in making assumptions about poorly drilled deposits or unknown aspects in initial stages, but can also be misleading.Slide7
Consent for release of reports
The Competent Person Consent
Necessary for all reports released
Confirms the name of the Competent Person, professional qualifications, and experience relevant to the report
Can be a stand-alone statement
Can be included as a compliance statement in the reportSlide8
Inferred
Indicated
Measured
Probable
Proved
( ≡ Ore Reserves in JORC)
CP Judgement - ClassificationAn important part of the CP’s Role is to assess confidence in estimates.Mineral Resources and Reserves are classified in accordance with Figure 1. Slide9
CP Judgement - Classification
Ground-truth Based on Blast Holes
(7 X 7 m Spacing)
75 X 75 m Spacing; High-grade is
under-
represented
Inferred50 X 50 m Spacing; High-grade is still under-representedIndicated
25 x 25 m Spacing High-grade is fairly well representedMeasuredPlans of Example Bench: Blue ≥ 0.25, Pink
≥ 2.5% Zinc Open Pit Mine Example (supplied by Dr H Parker)The CP must judge what sample spacing is appropriate to classify confidence in Mineral Resources as Inferred, Indicated & Measured This must be based on geological & mathematical (geostatistical) reasoning.Before the deposit is mined:CP may also refer to other comparable operations with same style of mineralization.After mining has started:CP must reconcile what was estimated with ground truth, and develop estimation procedure so that future estimates are unbiased. Slide10
Time periods
of
, typically, 1-2 years
Tonnage
, up to 500 Mt
Scoping Study
Conceptual Study
Reporting through
a
mine’s life
(1)
This illustration is of a hypothetical generalised open pit life cycle, not necessarily typical nor average, but based on the author’s experience.
Feasibility Study
Commissioning
Ramp-up
Full production
engineering & construction
Closure
Stages of Development
Italics
indicates defined or quoted in PERC and other CRIRSCO Standards
Graph preceded by exploration target identification
‘
Discovery Hole’ identifies potentially economic mineralization
Drilling & trenching continue to define deposit
Conceptual
Study determines if exploration worth continued investment
Exploration Results
reported
as drill intersection lengths and
grades
to
raise interest &
investment
Mineralization quantity identified but
not reported
since
“Reasonable
prospects for eventual economic extraction”
have not been established
Report prepared by a Competent Person (Exploration Geologist)Slide11
Feasibility Study
Commissioning
Ramp-up
Full production
engineering & construction
Time periods of,
typically
, 1-2 years
Closure
Tonnage
, up
to
500 Mt
Scoping Study
PFS
Reporting through a mine’s life
(2)
This illustration is of a hypothetical generalised open pit life cycle, not necessarily typical nor average, but based on the author’s experience.
Stages of Development
Scoping
Study
determines
potential
viability
with a range of mining & processing
options if
“progress to a Pre-Feasibility Study can be reasonably justified”
Inferred Mineral Resources
reported
if there are
“reasonable
prospects for eventual economic extraction”
Pre-Feasibility
Study
(
PFS) determines:
If satisfactory
“
financial analysis based on reasonable assumptions
”
If mining
likely to proceed subject to
“Modifying Factors
”
G
eological
investigation for more mineralization
Reduces, since
sufficient found
to
establish economic case to proceed
Report prepared by a Competent Person (Mining Geologist)
Mineral Resources
reported
Inferred
Mineral
Resources
Indicated
Mineral Resources
Report prepared by a Competent Person (Mining Geologist)
Conceptual StudySlide12
Conceptual Study
Scoping
Study
PFS
FS
Full production
engineering & construction
Time periods of, typically, 1-2 years
Closure
Tonnage, up to 500 Mt
Reporting through a mine’s life
(3)
This illustration is of a hypothetical generalised open pit life cycle, not necessarily typical nor average, but based on the author’s experience.
Stages of Development
Feasibility
Study
(FS)
determines if project should proceed
comprehensive
studies of
“Modifying Factors
”
final economic case & production rate
If approved, engineering & construction begins
Probable Mineral Reserves
reported
within
the economic mining
shell with
any mining dilution & recovery calculations
Report prepared by Competent Persons
(Mining geologist & Mining Engineer)
Measured Mineral Resources developed
after
infill drilling where mining will
start
Proved
Mineral Reserves
reported
Transferred from
Measured Mineral Resources
Some
left
as
Mineral Resources
Report prepared by Competent Persons
(Mining geologist & Mining Engineer)Slide13
Conceptual Study
Commissioning & Ramp-up
Full production
Time periods of, typically, 1-2 years
Periods of 1 year
Closure
Tonnage, up to 500 Mt
OoM Study
PFS
FS
engineering & construction
Reporting through a mine’s life
(4)
This illustration is of a hypothetical generalised open pit life cycle, not necessarily typical nor average, but based on the author’s experience.
Stages of Development
Commissioning & Ramp-up
Reduced production rate while equipment is tested and
adjusted and
construction is
completed
Full production starts
Proved
Mineral Reserves
reviewed and/or reported
Depleted and updated annually from
part of
Measured Resources
Upgraded by infill drilling of
Indicated Resources
Annual CP Report prepared by Competent Persons
(Mining geologist & Mining Engineer)Slide14
Conceptual Study
C. & Ramp-up
Full production
engineering & construction
Periods of 1 year
Tonnage, up to 500 Mt
OoM Study
PFS
FS
Closure / Sale / Underground / Technology improvement
Periods of 1 year
Reporting through a mine’s life
(5)
This illustration is of a hypothetical generalised open pit life cycle, not necessarily typical nor average, but based on the author’s experience.
Stages of Development
Mine planning
revised
to include all
Indicated &
Measured
Mineral
Resources
as
Probable & Proved
Reserves, also may include economic stockpiles e.g
. low-grade
Measured Resources
mined but not
processed
New
exploration drilling
campaigns
Find more mineralization, some of which is infill-drilled and may be upgraded on an annual basis to categories of
Mineral Resources
for mine planning and transfer to
Mineral Reserves
Mineral Reserves & Resources
Updated to remove
Mineral Reserves
depleted by production, also to add and report material upgraded and transferred to
Mineral Reserves
CP Report
Annual CP Report
Mineralization of ore grade but not confirmed as economic
Mining Strategy Revision
Decision
to reduce
cut-off substantially increases
Mineral Resources &
Reserves
, including
from marginal stockpiles (Dumps
)
Proved Mineral Reserves
are no longer reported, because infill drilling to this confidence is no longer necessarySlide15
Conceptual Study
Full production
Time periods of, typically, 1-2 years
Periods of 1 year
Tonnage, up to 500 Mt
OoM Study
PFS
FS
engineering & construction
C. & Ramp-up
Break even
+
-
Break even
Project Value Curve
Value with additional exploration
Value with
FS
Mineral Reserve
Little further increase due to cut-off reduction
Reporting through a mine’s life
(6)
This illustration is of a hypothetical generalised open pit life cycle, not necessarily typical nor average, but based on the author’s experience.
Stages of Development
Value with
starter
Mineral Reserve
Mineralization
of ore grade but not confirmed as economic
Closure / Sale / Underground / Technology improvementSlide16
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