Guides
Mineral resources versus mineral reserves
The two words sound alike and are treated very differently. A reserve has been shown to be economic. A resource has only been shown to exist in a form with reasonable prospects of eventual extraction.
The resource categories
Inferred resources have the lowest confidence in geology and grade. Indicated resources have enough drilling to support planning. Measured resources have the highest confidence. Inferred material is not a reserve and cannot be converted directly into one without more work.
Reserves
Probable and proven reserves come from measured and indicated resources after modifying factors such as mining method, metallurgy, cost, permits and price assumptions have been tested in at least a pre-feasibility study. Reserves are prepared under a code such as NI 43-101 or JORC, so check which one applies.
Why in-ground value is only a screen
Multiplying ounces by a price gives an in-ground figure. It ignores capital, operating costs, recovery losses, tax, delays and the time value of money. It is not a feasibility study NAV. Use it to compare how much each company is valued per unit of metal, then dig deeper where something looks interesting.
Also remember that resources may be inclusive of reserves or additional to them. Adding both can double count, so read the table notes.
Try it with your own figures
The calculator starts with the market snapshot. Nothing is pre-filled for you, and results depend on what you enter.
Open the mining stock calculatorFrequently asked questions
- Can inferred resources become reserves?
- Not directly. They generally need more drilling to be upgraded before they can support reserves.
- Why enter categories on separate lines?
- So you can see how dependent the valuation is on lower confidence material.