Rod Webster opines that many mining companies are cutting exploration budgets to survive the current mining downturn and low commodity prices. As a result, some firms either do not have enough geological and support staff or they have inexperienced staff members who do not adequately understand the geology, mining method used and processing aspects of their operation or project. This can negatively impact the quality of Mineral Resource or Reserve estimates and statements as well as the preparation of long-term mine plans. When a company lacks proper staffing, the quantity of the remaining Mineral Resources and Reserves after initial mining suffers. Some mines, for example, now live a hand-to-mouth existence, with enough defined Mineral Reserves for only a year, or perhaps just a few months, due to a lack of drilling, geological evaluation and mine planning. Some mines are being forced, because of this dearth of defined Measured and Indicated Resources, to include Inferred Mineral Resources (as defined by the National Instrument 43-101 code) as Reserves. Both instances result in a limited understanding of possible dilution and ore losses, stemming from a poor understanding of the mineralization, geology and geotechnical issues. Most international reporting standards define Mineral Resources as having a reasonable prospect of eventual economic extraction. The company CEO and investors must ask if this requirement is being overlooked or ignored to keep the remaining reported Mineral Resources at a reasonable level to maintain the share price. Is the modest exploration that is now being carried out concentrating on known areas of higher grade in order to maintain the company key market-related performance indicators? A good read.
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