Understanding The Risks In Coal Reserve Estimates

Coal reserve estimates are prepared using a simple equation: the product of area, bed thickness, density and recovery factors. Each of these elements involves a degree of risk based on certain assumptions. Reserve area, thickness and density rely on certain physical data whose accuracy, reliability and sufficiency may be problematical. Estimates of recovery factors for mining and coal preparation are often subjective. Most reserve estimates assume, sometimes incorrectly, that the subject reserves will be completely extracted. The principle that certain coal resources are reserves, if they can be considered economically recoverable at the time of determination, needs to be reexamined in the light of recent market cycles. Reserve estimating requires the exercise of judgments, the validity of which reflect the qualifications, experience and objectivity of the estimator.