Reasonable Prospects for economic extraction

"These are heady times for the mining industry, with strong metal prices, investor enthusiasm for the junior explorer and ready access to finance for mineral projects. Many projects were shelved in the past because of technical deficiencies — insufficient tonnes or grade, metallurgical problems, the deposit was too deep or too narrow, or the project was physically or economically under water. With the possibility of sustained metal prices, now is the time for those previously “challenged” projects to be re-evaluated and financing sought for continued development. The question is, do these deposits have reasonable prospects for economic extraction, as required by all mineral resource reporting codes? NI 43-101 defines a mineral resource as that portion of the mineral inventory that has reasonable prospects for economic extraction. However, a mineral resource is not simply an inventory of all blocks above a given cut-off grade. The spatial distribution and geological and grade continuity must also be considered. The qualified person (QP) must consider factors significant to project economics at the mineral resource estimation stage, and not just when qualifying mineral reserves. CIM Best Practice Guidelines for estimating mineral resources require the factors significant to project economics be current, reasonably developed and based on generally accepted industry practice and experience. In establishing the cut-off grade, it must realistically reflect the location, deposit scale, continuity, assumed mining method, metallurgical processes, costs and reasonable long-term metal prices appropriate for the deposit. Variations within the resource model (rock characteristics, metallurgy, mining methods, etc.) may necessitate more than one cut-off grade or economic limit in different parts of the deposit model. There must be sufficient knowledge of the metallurgical characteristics of the deposit, which should be supported by preliminary metallurgical test results."