Marcel -
I couldn't agree more.
As someone who has worked for many years with the Russian as well as the
western system of reserves/resource classification, it is my experience that
the Russian system - being more prescriptive - frequently yields better
resource estimates than the western, despite its reliance on 'antiquated'
polygonal and polyhedral computational methods. Unfortunately, in recent
years the pressures from western companies have led to similar problems to
those you describe, such as lumping together Russian C2+P1 category
resources. Within each category, for each type of deposit, the intensity and
type of work done (drill-hole spacing for example) is well defined: but as
soon as you combine categories this information is lost.
There is another reason that the Russian system, operated mainly by
geologists trained in the Soviet system, yields better quality estimates.
This is quite frankly political. There was, in Soviet times, pressure at the
individual mine management level to minimise stated reserves on which
production quotas were based - in order to make it easier to achieve the
quotas and to receive bonuses for exceeding quotas. This balanced the
geologists' natural optimism to produce fairly reliable estimates.
In the western system, on the other hand, there is often pressure on
consultants from clients who wish to maximise their stated reserves and
resources in order to boost their share price. In one blatant case where I
was personally involved, my own estimate - which was smaller than it might
otherwise have been (and smaller than the client expected) - because I took
into account geological zonation of the deposit - was rejected, and another
consultant was asked to do a new model using a particular flavour of
geostatistics (specified by the client) and ignoring the geological zoning.
Needless to say the second consultant's estimates came out substantially
higher and were the fgures that were published. I do not know the effect on
the client company's share price at the time, but I doubt if it was negative
! However, there is some justice. Not too long after that, the client's
entire board of directors were replaced. Unfortunately mining has still not
started on that deposit, so it remains to be seen whose model was closer to
the truth.
As for the use of inferred resources - the Russian system has three
categories P1, P2, and P3 of "prognostic" resources. Of these only P1 has
any counterpart in the west ('inferred') - the other two reflect different
even more rarefied degrees of geo-philosophy and wishful thinking. There is
perhaps just one justification for either the western or the Russian
categories for inferred or prognostic resources, and that is to indicate the
possibility - NO MORE - that further detailed exploration work might
establish something worth mining. In my view none of these categories should
have any place in the main body of a formal feasibility or pre-feasibility
report or any market statement based on it.
What is even worse, though, in my opinion, is the balds statement in company
announcements of individual drill-hole intersections: e.g. "15 metres at 5
grams per tonne". It just takes three or four of these, and investors, many
of whom should know better, will start joining the dots and doing their own
calculations. The answers they get are invariably over-optimistic (just as
the company intended) and the share price gets an unjustified boost as a
result. I think the reporting of isolated exploration results like this
should simply be outlawed.
- Steve
----- Original Message -----
From: "Marcel Vallée" <[EMAIL PROTECTED]>
To: "Fran Manns" <[EMAIL PROTECTED]>
Cc: "Stephen Henley" <[EMAIL PROTECTED]>; "Isobel Clark"
<[EMAIL PROTECTED]>; "J. E. Tilsley" <[EMAIL PROTECTED]>; "AI
Geostats mailing list" <[email protected]>
Sent: Thursday, February 09, 2006 3:15 PM
Subject: Re: [ai-geostats] Re: Geostats Scam?
Francis Mann et al,
This is a very interesting discussion, with several interesting and
valid points of view. I aggree with most of them. Here are some
additional comments from a mining geologist..
As one of my professors (F.F Osborne, petrology) repeated a few times
when he felt that we were slow to understand : "Rocks are geological
bodies that occur in the field." Ore bodies also only occur in the
field, and they also three dimensions and limits, all to be determined
along with their composition. I wish all professors of mining
geostatistics used similar statements in their lectures occasionally.
Geology is a considerable part of determining the limits of orebodies!
Actually, I feel we are going.backwards. In the past few years, thanks
to NI 43-101 in Canada (and some other similar texts in other
countries), and to loose implementation, we find that less and less
discrite information on drill hole spacing(s) and regularity (or absence
thereof) is provided. Feasibility and pre-feasibility studies are as
bad as scoping studies in this regard. This is a major information
shortcoming not only for the geologists that will be responsible for the
final delineation and extraction of that material, but for the various
people that have to appraise that information for technical, investment
or other purposes, given the nature of orebodies.
Another major information shortcoming that is tolerated by regulators,
despite texts to the contrary, is systematically reporting measured
resources and indicated resources together. How can the investing
public, or even an independent consultant, find out that only 20% of the
total is measured resources and 80 % is indicated resources, for instance.
Current regulations and practice also allow much generous reporting of
inferred resources as well as their use in pre-feasibility study and
feasibility if closely associated with the measured and indicated
categories. In spite of the much lower level of delineation, hence
precision, both grade and tonnage are reported with the same number of
significant figures ! ! !.
These are matters of concern professional geostatisticians as well as to
professors of geostatistics.
Marcel Vallée Eng., Geo.
=============================
Géoconseil M. Vallée Inc.
706 Routhier St
Québec, Québec
Canada G1X 3J9
Tel: (1) 418 652-3497
Email: [EMAIL PROTECTED]
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