I had my knuckles rapped last week for sloppy reporting. Okay, I deserved it. I failed to read a news release closely enough and confused “reserves” and “resources” as the company reported.
I find it confusing that sometimes resource numbers include reserves and sometimes they don’t. So I asked a knowledgeable reader to clarify the NI 43-101 requirement on this issue.
He responded: The NI 43-101 requirement is to state which way the company is doing it (reserves within resources, or disclosed separately). I find most of the big producers quote reserves and resources separately, while juniors tend to go the other way. That might be because juniors are often looking at development projects rather than producing mines, and so the question they’re answering to themselves is ‘how much of this resource is mineable?’
But it also seems that there are a lot of companies out there that simply assume they’re doing it right because they’ve always done it that way.
CIM definition and best practice standards leave it up to the qualified person to decide whether to report reserves and resources together or separately, but best practices recommends reporting them separately. CIM reiterates the requirement for a clear statement about which practice is being followed.
That takes us into the unhappy sphere of international standards – the other international codes (PERC, JORC, SAMREC) all look for ‘a clear statement’ or ‘a clarifying statement’ of inclusion/exclusion, but Australian practice leans to inclusion and South African to exclusion.US SEC rules mandate disclosure of the reserve only, which I guess is more like exclusion than inclusion!
So there we have it. The reporting of resources and/or reserves will continue to be up to individual qualified persons in Canada. But they are also required to state whether the reserves are or are not included in the resources.
My advice – and what I am going to do at every opportunity – is to read news releases specifically for the answer to the in-or-out question, and if that statement is not included, make a phone call to find out.