11 01 2010

Tomorrow, I will be posting an entry on junior companies’ rush to become compliant with NI 43-101 in a high-risk, (potentially) high reward venture in Canada’s Ring of Fire. As this involves a bit of jargon and an understanding of the meaning of compliance with this standard, I decided give you a crash course on the matter.

Compliance with NI 43-101 indicates that the estimation made of a mineralization is consistent with the Standards of Disclosure for Mineral Projects in Canada. It essentially provides a mineral resource classification system to assess the economic viability of specific deposits on more solid and reliable foundations. NI 43-101 came in the wake of the Bre-X scandal and is also a way of protecting investors. Compliance with NI 43-101 involves the use of technical jargon such as:

Mineral Resource is sub-divided into Inferred (geological evidence but limited sampling), Indicated (confidence is sufficient to begin assessing economic viability and feasibility of the project) and Measured (tonnage and grade are estimated to close limits and a variation from the estimate would not affect the economic viability of the project).These indicates varying levels of geological confidence which that the quantity, grade, and form of a resource imply reasonable prospects for economic extraction.

Mineral Reserve is subdivided into Probable Reserves and Proven Reserves. In short a reserve is the economically mineable part of a measured or indicated resource as demonstrated by a preliminary feasibility study. A probable reserve can be established from both measured and indicated resource whereas a proven reserve is the economically mineable part of the measured resource only.

Essentially compliance is an indicator of economic viability. What a nice job I have made of vulgarizing the basics. Should you wish to learn more, refer to the Canadian Institute of Mining, Metallurgy and Petroleum’s Definition Standards.




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