External mineral resource audits

At some point during your professional career as a Resource Geologist, you can expect that the Mineral Resource estimates (MRE’s) you have produced in accordance with international reporting codes will be subject to a technical audit by an external organisation, most likely by a Competent/Qualified Person from a third-party consultancy.

Audits of MRE’s are required for reasons ranging from a company’s request for a second opinion to a detailed audit, required by a third party, signing off on the MRE as part of a Stock Exchange listing/IPO or financial transaction.

An audit of your MRE can be daunting and stressful, as often the third-party reviewers are looking to identify underlying issues, as opposed to commenting on the correctness and material aspects of the process, and the reviewer may have a vested interest in finding issues that angle the client towards choosing them for technical work in the future.

MRE’s help to underpin the success or failure of mining projects, and professionals should assume their work will be presented in the public domain and be reviewed and interrogated by a third party. The Resource Geologist must remember that the results of the MRE are the culmination of an often extensive and expensive exploration campaign, the results of which mean everything to the success of the client company.

It is therefore essential that the quality of SRK’s work on the MRE is comprehensive and that the results are not influenced by client expectations regarding tonnages and grades. In reality, additional drilling expenditure does not always result in additional tonnes and metal in the ground.

Producing an MRE is a complex process that requires a diligent and well structured approach, and SRK has developed robust process workflows to guide the geologist through the critical decision points. No two deposits and projects are the same and MRE workflows allow the geologist to consider project-specific requirements, ensuring that correct data checks are undertaken before moving to the next step in the process. Furthermore, SRK recognises that multiple techniques and procedures (such as selecting the composite length, grade capping theory, interpolation method, etc) and built-in validation checks are undertaken to assess the materiality and relevance of each step. This is critical to the successful completion of an external audit and enables the geologist to defend the selected methods. Individual geologists will have different opinions about the correct approach and methodology, so these built-in checks make an external audit a smoother process. Remember that these are estimates and not precise calculations.

SRK prides itself on the quality of the MRE’s we undertake. We are front runners in developing and applying modern resource estimation practices, using cutting edge technology described in this newsletter.

External audits can be daunting, but by following the correct workflow to guarantee the quality of the work, they can be stimulating and rewarding.

Mark Campodonic: mcampodonic@srk.co.uk

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