SAMREC Manual or Guideline

Companion Volume Conference May 2016
The SAMREC Code – manual or guide
Ken Lomberg (Coffey Mining) and

Steven Rupprecht (University of Johannesburg)
1
Outline
 Background
 The Importance of the Reporting Codes
 Role of the SAMREC Code
 Role of the Competent Person
 Changes to The SAMREC Code
Chairman of SAMREC
Ken Lomberg
BSc(Hons) Geology, BCom, MEng
FGSSA, Pr.Sci.Nat.
Senior Principal Consultant
Coffey Mining
30 years experience in SA
2
Deputy Chairman of
SAMREC
Steven Rupprecht
BSc, PhD, Pr.Eng.
Senior Lecturer
University of Johannesburg
30 years experience in SA
Background and History

of the SAMREC Code
JORC
1971 Committee
1989 JORC Code Adopted by JSE
USGS Published CMMI
1980 Circular 1994 initiative
831 SAMREC WG (CRIRSCO)
1992 Denver
Formed 1997 Accord
2000 SAMREC
Code
SAMREC
2009
Code
Poseidon Nickel
CRIRSCO
2002 formed SAMREC
2016
Code
Bre‐X Sandal
Adopted by SAIMM,
GSSA,SACNASP,
ECSA, PLATO
3
CRIRSCO Template –
Figure 1
Denver Accord 1997
CRIRSCO – National
Reporting Organisations
4
The mining industry is a vital contributor to national and global economies;

never more so than at present with soaring demand for the commodities
that it produces. It is a truly international business that depends on the
trust and confidence of investors and other stakeholders for its financial
and operational well‐being. Unlike many other industries, it is based on
depleting mineral assets, the knowledge of which is imperfect prior to the
commencement of extraction. It is therefore essential that the industry
communicates the risks associated with investment effectively and
transparently in order to earn the level of trust necessary to underpin its
activities.
(CRIRSCO Website)
Crossover
Juniors Majors
Pre‐
Exploration Capex Production
development
Resources Reserves
PFS FS
Measured Proved
Operations
Discovery
Indicated Probable
Inferred
Pre‐inferred
Institutions, general public,
Private equity Private equity funds, banks
funds, hedge hedge funds, general
funds public
5
The Importance of the

Reporting Codes
 Provides minimum standards for reporting of Exploration
Results, Mineral Resources and Mineral Reserves;
 Adds credibility to declarations by project promoters and

assists in comparisons due to the uniform basis of
declaration;
 Assists professionals by providing guidance; and
 Assists the Competent Person to demonstrate the

legitimacy of the declaration and provides credibility to the
Public Report.
 Promoting High Standards of Reporting
 Maintaining the trust of investors and other interested parties
Role of the Competent

Person
 Fully Understand the meaning and the responsibilities
 What it is not just:‐
 about the professional training received
 Suitable experience
 having a supervisory role
 Being designated
 Takes responsibility for that part of the Public Report
 Key professions supported by other professionals
 geologists  economists
 Surveyors  metallurgists
 Mining engineers  Engineers (geotechnical, ventilation, civil, mechanical, electrical
 environmentalists
 social scientists/practitioners, and
 lawyers etc.
6
 Contributing professionals to justify and document their technical
inputs
 This approach relies on the professional to be prepared to face their
peers and being willing to take responsibility for the result.
 The guidelines
 support these declarations,
 the sustainability of the industry and
 the efficient exploration of minerals.
PLATO
South African Geomatics Council (SAGC) and Institute of Mine
Surveyors of South Africa (IMSSA) replace PLATO
7
Analogy of a Competent
Person
Commercial Pilots Licence Competent Person
 Private Pilots Licence  Basic qualification
 Night qualification  5 Years experience
 Multi‐Engine Rating  Registration – Pr.Sci.Nat.
 Instrument Rating  (Specific) Relevant experience
 Type rating of a specific aircraft  Regular training
 Regular checks and updates
Motivation to review
and upgrade the Code
 The mineral industry has advanced and changed focus as the prevailing
economic and political circumstances have changed;
 The manner in which projects and mines are funded, developed, and
operated, is continually changing;
 There are shifting requirements by the investment community,

government and society (social licence to operate);
 There is a need to promote greater efficiency in the capital raising and

fund utilisation for exploration, mining, and production companies; and
 SAMREC must keep abreast of the advances made by other

international reporting codes and eliminate possible contradictory
reporting practices.
8
CRIRSCO Definitions
adopted
 Measured Resources  Public Reports
 Mineral Reserve  Competent Person
 Probable Reserve  Modifying Factors
 Proved Reserve  Exploration Target
 Exploration Results
 Scoping Study
 Mineral Resource
 Pre‐Feasibility Study
 Indicated Resource
 Feasibility Study
 Inferred Resource
Exploration Results
 Been used (and occasionally abused)
 Represents the entry level to declarations
 “presented in a way that unreasonably implies the discovery of
potentially economic mineralisation”
 Referring to the deposit as Mineralisation is used so as not to
communicate any degree of technical or economic reliance
 Exploration Targets unchanged in that ranges of tonnes and grade
9
Exploration Results
 It is hoped that this will clearly indicate the low level of
confidence in the information and ensure that a reported
Exploration Target cannot be misconstrued or
misrepresented as a Mineral Resource or Mineral Reserve
Risks and Table 1
10
Expansion of aspects of
Table 1
 New format
 Tried to follow table of contents
 Looked widely at other codes and requirements
 Specific Coal requirements
 Specific Gemstones and Diamonds
 Specific Industrial Minerals
 Specific Metal Equivalents
 Emphasis on economics & transparency/materiality
 Issue of what investors require – noted in Readers Panel
 Information about the assessment of RPEEE
Updated Table 1
Exploration Results Mineral Resources Mineral Reserves
General
Section 1: Project Outline
Section 2: Geological Setting, Deposit, Mineralisation
Section 3: Exploration and Drilling, Sampling Techniques and Data
Section 4: Estimation and Reporting of Exploration Results and Mineral Resources
Section 5: Technical Studies
Section 6: Estimation and Reporting of Mineral Reserves
Section 7: Audits and Reviews
Section 8: Other Relevant Information
Section 9: Qualification of Competent Person(s) and other key technical staff. Date and
Signature Page
Section 10: Reporting of for Coal Resources and Reserves
Section 11: Reporting of Diamonds and Gemstones
Section 12: Reporting of Industrial Minerals
Section 13: Reporting using Metal Equivalents The SAMREC Code – manual or guide
11
Exploration Results Mineral Resources Mineral Reserves

Section 4: Estimation and Reporting of Exploration Results and Mineral Resources
4.1 Geological Model and Describe the geological model, construction technique and assumptions that forms the basis for the Exploration Results or Mineral Resource estimate.
Interpretation (i) Discuss the sufficiency of data density to assure continuity of mineralisation and geology and provide an adequate basis for the estimation and
classification procedures applied.
Describe the nature, detail and reliability of geological information with which lithological, structural, mineralogical, alteration or other geological,
(ii)
geotechnical and geometallurgical characteristics were recorded.
Describe any obvious geological, mining,
metallurgical, environmental, social,
(iii) infrastructural, legal and economic factors that
could have a significant effect on the prospects of
any possible exploration target or deposit.
Discuss all known geological data that could materially influence the estimated quantity and quality
(iv)
of the Mineral Resource.
Discuss whether consideration was given to alternative interpretations or models and their possible
(v)
effect (or potential risk), if any, on the Mineral Resource estimate.
Discuss geological discounts (e.g. magnitude, per reef, domain, etc.) applied in the model, whether
(vi)
applied to mineralised and / or unmineralised material (e.g. potholes, faults, dykes, etc.).
4.2 Estimation and Describe in detail the estimation techniques and
Modelling Techniques (i) assumptions used to determine the grade and
tonnage ranges.
Discuss the nature and appropriateness of the estimation technique(s) applied and key assumptions,
including treatment of extreme grade values (cutting or capping), compositing (including by length
(ii)
and/or density), domaining, sample spacing, estimation unit size (block size), selective mining
units, interpolation parameters and maximum distance of extrapolation from data points.
(iii) Describe assumptions and justification of correlations made between variables.
Provide details of any relevant specialised computer program (software) used, with the version
(iv)
number, together with the estimation parameters used.
State the processes of checking and validation, the comparison of model information to sample data
(v) and use of reconciliation data, and whether the Mineral Resource estimate takes account of such
information.
Describe the assumptions made regarding the estimation of any co‐products, by‐products or
(vi)
deleterious elements.
‘if not, why not’
 Agreed to the principle
 Used of a verb i.e. ask a question
 Not an additional reporting requirement
 Triggers:
 Maiden announcement
 Significant change of a Material Project
12
Technical Studies
 More definition and guidelines included for:
 Scoping Study
 Pre‐feasibility Study
 Feasibility Study
 Guideline Table added
 Additional table in line with SME
Technical Studies
A Scoping Study is an order of magnitude technical and economic study of the potential viability of
Mineral Resources that includes appropriate assessments of realistically assumed Modifying Factors
together with any other relevant operational factors that are necessary to demonstrate at the time of
reporting that progress to a Pre‐Feasibility Study can be reasonably justified.
A Pre‐Feasibility Study is a comprehensive study of a range of options for the technical and economic
viability of a mineral project that has advanced to a stage where a preferred mining method, in the case
of underground mining, or the pit configuration, in the case of an open pit, is established and an
effective method of mineral processing is determined. It includes a financial analysis based on
reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors
which are sufficient for a Competent Person , acting reasonably, to determine if all or part of the
Mineral Resource may be converted to a Mineral Reserve at the time of reporting. A Pre‐Feasibility
Study is at a lower confidence level than a Feasibility Study
A Feasibility Study is a comprehensive technical and economic study of the selected development
option for a mineral project that includes appropriately detailed assessments of applicable Modifying
Factors together with any other relevant operational factors and detailed financial analysis that are
necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically
mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent
or financial institution to proceed with, or finance, the development of the project. The confidence level
of the study will be higher than that of a Pre‐Feasibility Study
13
Table 2 – Capital Costs

Capital Cost Category Scoping Study Prefeasibility Study Feasibility Study
Basis of Estimate to include the
following areas:
Civil/structural, architectural,
piping/HVAC, electrical, Estimated from historic factors or Detailed from engineering at 20%
Order-of-magnitude, based on
instrumentation, construction percentages and vendor quotes to 50% complete, estimated
historic data or factoring.
labour, construction labour based on material volumes. material take-off quantities, and
Engineering < 5% complete.
productivity, material Engineering at 5-20% complete. multiple vendor quotations
volumes/amounts,
material/equipment, pricing,
infrastructure
Percentage of direct cost by area
Included in unit cost or as a Written quotes from contractor and
Contractors for contractors; historic for
percentage of total cost subcontractors
subcontractors
Engineering, procurement, and Percentage of estimated Percentage of detailed construction
Calculated estimate from EPCM
construction management (EPCM) construction cost cost
FOB mine site, including taxes and FOB mine site, including taxes and FOB mine site, including taxes and
Pricing
duties duties duties
Estimate from experience, factored Estimate prepared from detailed
Owner’s costs Historic estimate
from similar project zero-based budget
Estimate prepared from detailed
Estimate from experience, factored zero-based budget for design
Environmental compliance Factored from historic estimate
from similar project engineering and specific permit
requirements
Based on entity’s current budget
Escalation Not considered Based on cost area with risk
percentage
Accuracy Range (Order of
±50% ±15-25% ±10-15%
magnitude)
Contingency Range (Allowance for
10% - 15% (actual to be
items not specified in scope that will 30-50% 15-30%
determined based on risk analysis)
be needed) The SAMREC Code – manual or guide
Table 2 Table 2 – Operating Costs
Operating Cost Scoping Study Prefeasibility Feasibility Study

Category Study
Estimated from historic

Order-of-magnitude,
factors or percentages
Basis based on historic data or Detailed estimate
and vendor quotes based
factoring.
on material volumes.
Specific estimates with
Operating quantities General Detailed estimates
some factoring
Estimates for labour,
Based on historic data for Letter quotes from
Unit costs power, and consumables,
factoring vendors; minimal factoring
some factoring
Accuracy Range ±25-50% 15% - 25% 10% - 15%
Contingency Range
+ 10% (actual to be
(Allowance for items not
+ 25% + 15% determined based on risk
specified in scope that will
analysis)
be needed)
14
Point of Reference
 Introduction of the principle
 Point of sale applicable to bulk commodities and industrials

minerals
 Shaft head for precious and base metals
 The reference point at which Reserves are defined, usually

the point where the ore is delivered to the processing plant,
must be stated. It is important that, in all situations where the
reference point is different, such as for a saleable product, a
clarifying statement is included to ensure that the reader is
fully informed as to what is being reported.
Site Visit
15
Revision of aspects
relating to Coal
The Systematic evaluation of Coal Deposits, Coal Resources and Coal
Reserves (SANS 10320) provides the methodologies and definitions of the
relevant terms that should be considered when preparing reports on Coal
Resources and Coal Reserves.
Table 1 still applies
The confidence levels in the modifying factors must be disclosed for all ROM
and Saleable Reserves.
Diamond and Gemstone

section
 More comprehensive definition and general discussion
 Concern with alluvial diamonds addressed
16
Introduction of a section
on Industrial Minerals
 Adoption of JORC approach
 Guidance provided on deleterious minerals and product

specifications
Introduction of a section
on Metal Equivalence
 Adoption of JORC approach
 Guidance provided on use of price, grade and

metallurgical recovery
17
Table of Contents
Introduction of a Table of Contents
Along the lines of NI 43‐101
Signature page
Inclusion of an “Certificate of Competent Person”
18
Classification Diagram
Current New
Modifying Factors are considerations used to convert Mineral Resources to Mineral
Reserves. These include, but are not restricted to, mining, processing, metallurgical,
infrastructure, economic, marketing, legal, environmental, social and governmental factors.
Classification Diagram
19
Classification Diagram:
Coal
Current Revised
A ‘Mineable Tonnes In Situ Coal Resource’ is the tonnage and coal quality, at a
specified moisture content, contained in the coal seams or sections of the seams
at the theoretical mining height, adjusted by the geological loss factors.
Coal
20
Diamonds and Gemstones
Guideline or Manual?
 Does not specify the technical details
 The interpretation of the raw data requires the input of specialists
 Provides these guidelines
 Mechanism to assist in the progression of mining projects
 Holding various registered professionals accountable for their work
21
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Companion Volume Conference May 2016

The SAMREC Code – manual or guide

Ken Lomberg (Coffey Mining) and

Background and History

The mining industry is a vital contributor to national and global economies;

The Importance of the

 Adds credibility to declarations by project promoters and

 Assists professionals by providing guidance; and

 Assists the Competent Person to demonstrate the

 Promoting High Standards of Reporting

 Maintaining the trust of investors and other interested parties

Role of the Competent

 Multi‐Engine Rating  Registration – Pr.Sci.Nat.

 There are shifting requirements by the investment community,

 There is a need to promote greater efficiency in the capital raising and

 SAMREC must keep abreast of the advances made by other

Risks and Table 1

Exploration Results Mineral Resources Mineral Reserves

‘if not, why not’

 Agreed to the principle

 Used of a verb i.e. ask a question

 Not an additional reporting requirement

Table 2 – Capital Costs

Table 2 Table 2 – Operating Costs

Operating Cost Scoping Study Prefeasibility Feasibility Study

Estimated from historic

 Introduction of the principle

 Point of sale applicable to bulk commodities and industrials

 Shaft head for precious and base metals

 The reference point at which Reserves are defined, usually

Table 1 still applies

Diamond and Gemstone

 More comprehensive definition and general discussion

 Concern with alluvial diamonds addressed

 Adoption of JORC approach

 Guidance provided on deleterious minerals and product

 Adoption of JORC approach

 Guidance provided on use of price, grade and

 Does not specify the technical details

 The interpretation of the raw data requires the input of specialists

 Provides these guidelines

 Mechanism to assist in the progression of mining projects

 Holding various registered professionals accountable for their work

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