Chapter 6

ORE RESERVE ESTIMATION

Alan C. Noble Director Mine Planning and Evaluation Western States Minerals Corporation Wheat Ridge, Colorado

Ore reseme estimation is a multidisciplinary process involving not only tonnage and grade estimation (resource estimation), but also consideration of technical and legal aspects such as mining the deposit, beneficiating the ores, and selling the product. This paper provides a background to understanding resource estimation including geologic modelling, manual estimation methods, conventional computer methods. and eeostatistical methods. Mine metallurgical studies, legallenvironmental, and marketing considerations are also discussed as they relate to estimating ore resemes. INTRODUCTION

Figure 1 -

The ore reserve estimation cycle.

selling the product.

Ore reserves are defined as the tons and grade of a mineral that can be profitably and legally extracted from a mineral deposit through mining andlor mineral beneficiation. Estimation of ore resemes thus involves not only evaluation of the tonnage and grade of a deposit but also consideration of the technical and legal aspects of mining the deposit, beneficiating the ores, and

Some of the areas of investigation for ore reserve estimation include geology, geostatistics, mine planning, metallurgy, mineral economics, land and legal issues, and environmental engineering. Each of these disciplines interacts with the others to create an evaluation cycle such as that shown in Figure 1. This paper concentrates primarily on the resource estimation part of the

44

EVALUATION AND OPTIMIZATION OF METALLURGICAL PERFORMANCE

evaluation cycle which includes determination of the tonnage, grade, size, shape, and location of mineral deposits. The remaining technicaVlega1 considerations are discussed briefly as they relate to ore reserve estimation.

GEOLOGY AND SAMPLING

The foundation of a resource estimate is the basic geologic data which are collected for a deposit. These data are not only the basis for estimating the size, shape, and grade of the deposit, but also for developing key engineering assumptions for pit slope stability, selection of metallurgical samples, and identification of potential environmental contaminants. Geologic data include physical samples such as drill-hole, trench, test pit, and channel samples; measurements such as assays, specific gravity tests, and topographic surveys; and geologic observations such as geologic mapping and drill core logging. These data must be located through accurate surveys of spot samples, drill hole collars, and down-hole deviations and they must be consistently recorded to minimize errors and ambiguities. The geologist's interpretation of the ore body should be used in developing the resource estimate to define the shape and trends of the mineral zones a t different cutoff grades and the character of the mineral zone contacts. Examples of critical geologic features include:
1. Receptive versus non-receptive host rocks. 2. Alteration types that accompany mineralization or create problems in beneficiation. 3. Faulting, folding, and other structural modifications. 4. Multiple phases of mineralization. 5. Post-mineral features such as oxidation and leaching.
KiEI

KXEI

KXE4

Figure 2

Example of resource overestimation due to an incorrect geologic model.

Several interpretations may be combined providing a geologic model. This geologic model is a critical factor in the resource estimation. An inappropriate geologic ore body model is the most common reason for large errors in the resource estimates. An example of serious ore reserve estimation errors from an invalid geologic model is shown in Figure 2. In addition to definition of these physical ore controls and post-mineral modifications, a clear understanding of ore genesis always aids in resource modelling. This knowledge ofken provides clues to the behavior of the grade distributions and variograms; in other cases, the genetic structure is so dominant that it can be used as a direct control in the estimation of mineral resources.

ORE RESERVE ESTIMATION

45

STATIrnCAL ANALYSIS
Basic statistical analysis and grade distribution evaluations are the fundamental tools for quantitative evaluation of the assay data. Important results of these studies include: detection of highgrade or low-grade outlier values; identification of mineral zones based on lithology or other geologic zoning; differentiation of complex grade distributions into simple populations for resource estimation and identification of highly skewed and/or highly variable grade distributions that are difficult to estimate. Compositing Before statistical analysis, assay sample data are often cornposited into longer intervals by computing a weighted average of the assay data. Compositing is usually a length-weighted average, however, if density is extremely variable (e.g., massive sulfides) samples must be weighted by length times density (or specific gravity). Reasons for compositing include: equalsized data are provided for geostatistical analysis; the number of data and computing time are reduced; dilution is incorporated for constant height benches; and erratic variation due to a high nugget effect is reduced. Standard compositing methods include fixed bench height compositing, constant length compositing, and ore zone cornpositing. Geologic codes are usually assigned to composites according to the predominant rock type, ore zone, or other geologic feature for the samples that are included in the composite. Basic Statistics Basic statistics are computed for sample and/or composite grades in each geologic domain. This may include different lithologies, alteration types, structural domains, grade zones, or other

grouping of data that is recognized (or suspected) to have different grade distributions. Statistics should include: the number of data (samples or composites); average grade or thickness; standard deviation and/or variance; coefficient of variation (the standard deviation divided by average grade); the histogram of grades; and the cumulative frequency distribution (probability plot). If sufficient data are available, basic statistics are compared among the geologic domains to detect differences. Distributions with coefficients of variation greater than 25% often have a lognormal grade distribution, and the basic statistics will also be compiled for the natural logarithms of grades. Grade Distribution The grade histogram and cumulative frequency distribution are used to study the relationships between the grade distributions and geologic parameters. The analysis is usually begun with a histogram of sample or composite grades. A bell-shaped, symmetrical histogram indicates a normal distribution. A rightskewed, asyrnetrical histogram often indicates a lognormal distribution. Normal distributions are unusual in mineral deposits except for sedimentary deposits. Lognormal distributions are frequently observed in hydrothermal precious metal and base metal deposits. Probability paper is used to further analyze the grade distribution. Normal probability paper is a special graph paper where a normal distribution plots as a straight line. The slope of the line is proportional to the standard deviation of the distribution, and the 50th percentile is the average grade. Lognormal probability paper is similar
to normal probability paper except that

the y-axis has a logarithmic scale and a lognormal distribution plots as a straight line. The slope of the line is

46

EVALUATION AND OPTIMIZATION OF METALLURGICAL PERFORMANCE

a Snplr

Figure 3 -

Example of a lognormal probability plot with excess low-grade samples.

Figure 5

Typical variogram plot showing range, sill, and nugget.

weakly mineralized late intrusions, postmineral, barren dikes, or an unreceptive host within the ore zone. It may also be a normal distribution that has been plotted on lognormal probability paper if the coefficient of variation is low.

A steeper slope at the upper end of the curve is caused by excess high-grade samples and may indicate geologic features such as high-grade veins. It may also may be caused by high-grade outliers which must be cut.
Pa&

m *Mon(*oil pI

Variogram Modelling The variogram is the fundamental tool used for measurement of the spatial continuity of grade data. It is computed by averaging the squared differences between pairs of samples and dividing by two. The variogram function, $h), is computed for a number of different sample distances then graphed as shown on Figure 5. The most important features of the variogram are the nugget, range, and sill. The nugget is the y-intercept of the variogram curve. It is composed of random and short-distance variability

Figure 4 -

Example of a lognormal probability plot with excess high-grade samples.

proportional to the standard deviation of logarithms of grades, and the 50th percentile is the average of the logs of grades. Often the probability plot will not be a straight line, but will be composed of multiple straight lines or curves as shown in Figures 3 and 4. A downward curve at the low end of the graph is caused by excess low-grade samples and may indicate such geologic features as

ORE RESERVE ESTIMATION

vaticgram

47

'Jariogam

1 .50

07 .0 0.80 -

125 10 .0

0.40 03 .0

02 .5

25 50 75 100 Distance Between Samples 125 0 500 1MM 1500

00 .0 0

2000

2500

Diatsnce Belween Sanples

vemeram

' aJr 1 .00

0.70

00 .0
x

0.80 -

..xXx~X xxx-

08 .0

020 00 .0 0

ExponentialModel
01 .0 1 0 0 m 3 0 0 4 0 0 5 0 0 8 0 0 DistanceBetween Sanples 00 .0 0 100 200 300 400 Mstance Belween Samples 500

Figure 6

Examples of typical variograms and variogram models. The range is equivalent to the geologist's concept of range of influence; that is, the distance beyond which samples are not correlated and beyond which grade trends should not be projected. The sill value is usually equal to the sample variance; a sill that is higher or lower than the variance indicates zonal effects or multiple grade distributions. Lognormally distributed data exhibit a proportional effect where the standard deviation of grades increases proportionally with grade. This results in variograms with higher values in high-grade areas than in low-grade areas. This may be corrected by dividing each cell in the experimental variogram by the square of

h m sampling error, assaying error, and erratic mineralization. High nugget values are commonly found in ore bodies where short distance variability is extremely high, where accurate sampling and assaying of ore is difficult, or where poor sampling and assaying techniques are employed. Small nugget values indicate good sampling techniques and locally continuous mineralization. Most variograms increase from the nugget for some distance and then level a off t a constant value. This distance is called the range and the variogram value at that point is called the sill.

48

EVALUATION AND OPTIMIZATION OF METALLURGICAL PERFORMANCE

c
ZONE

\"

MAXIMUM

'A\
I

..'

Figure 7

Example of polygons constructed for polygonal estimation.

Figure 8

Example of polygons constructed for crosssectional estimation.

the mean of the samples that were used in the variogram for that cell. The resulting variogram is known as a relative variogram. If data are clearly lognormal, a variogram may be computed using the logs of sample grades. The log variogram is often less erratic and more easily interpreted than the variogram of untransformed values. This variogram may be used directly for lognormal geostatistics or may be transformed to a relative variogram. Caution must be exercised when using the lognormal variogram since because data must be strictly lognormal or results will not be valid. The experimental variogram is usually modeled with a continuous curve for further geostatistical evaluation. The most common variogram model is the

spherical variogram which is shown in the upper-left corner of Figure 6. Other common .variogram models are also shown in Figure 6, including the exponential, linear, and a nested model which is the sum of a spherical and a linear model. RESOURCE ESTIMATION Methods for resource estimation are divided into the traditional, geometric methods done manually on plans or cross-sections and interpolation methods such as inverse-distance-weighting and kriging that require the use of a computer. Geometric Methods Manual resource estimations are usually done on plan maps or cross-

ORE RESERVE ESTIMATION

49

sections that cut the deposit i t sets of no parallel slices. Data plotted on the maps include drill hole locations, assay values, and the geologic interpretation of the mineralization controls. These methods are based on geometric weighting of assays and include areaaveraging, polygonal, cross-sectional and triangular estimation methods. The area-averaging method is among the simplest of all reserve estimation methods, involving only a geologic interpretation of the shape of the ore and averaging of the grades within that shape. Despite its simplicity, the areaaveraging method provides excellent estimates where the drilling pattern is uniform, grades are continuous, and ore boundaries are distinct and sharp. Polygonal and cross-sectional methods are related methods in that each ore interval is assigned its own polygon of influence. Grade is then computed based on the average of grade weighted by the area of each individual polygon. Tonnages are computed based on the thickness of the ore interval weighted by the polygon area and divided by the tonnage factor. Polygons for a polygonal estimate are usually constructed from the perpendicular bisectors of the lines between drill holes as shown in Figure 7. The polygons for a cross-sectional estimate are usually drawn one-half the distance from each drill hole as shown in Figure 8 and are irregular shapes following the geologic interpretation.

Figure 9

Example of nearest-neighbor (block polygon) estimation.

implementation. In addition, they provide unbiased estimates of the overall, average grade (at zero cutoff)of a deposit. A resource estimate using a geometric method provides a quick, inexpensive check to verify nonbias of a more complicated, computer-generated resource model. Geometric methods may imply more selective mining than may be achieved by the mining method, however, and usually require dilution or other adjustment fadors to accurately estimate mineable grade and tonnage. Inverse Distance and Kriging The moving average methods, inverse distance weighting and kriging, are the most widely used procedures for computerized resource estimation with a three-dimensional block model. The

A computer approximation of the polygonal method is the nearest neighbor estimation method. For this method of a rectangular grid of blocks is superimposed on the drilled area and the grade of the nearest sample is assigned to each block as shown in Figure 9.
These geometric methods all have the advantage of simplicity and ease of

50

EVALUATION AND OPTIMIZATION OF METALLURGICAL PERFORMANCE

basic procedure is similar for each as follows: Geologic controls are coded into a block model as shown in Figure 9. 2. Samples surrounding each block are selected. 3. The estimated grade for the block is computed based on the weighted average of the selected samples. 4. The above procedure is repeated for each block. Practical factors for kriging or inverse distance estimation include the determination of block size, geologic controls, and sample selection parameters. These factors are often the most critical factors in developing a satisfactory resource block model since they are a means of implementing geologic controls. Poor selection of these parameters often results in an unsatisfactory resource model.
1.

Bkck Model Repmniatlon

Figure 10 - Block coding of geology for a 3-dimensional block model.

Inverse Distance Estimation Inverse distance weighting, one of the earliest interpolation methods, is based on an emperical observation that the weight of each sample is proportional to an inverse power of the distance from the location of the estimate to the sample. The inverse distance estimate is thus a weighted average with the individual weights computed as an inverse power of distance as follows:
&-F"'"'e=

result in more continuous estimations and a greater reduction in the variability of the estimates. Higher weighting powers, smaller search radius, and fewer points result in less reduction in the variability of the estimates. The appropriate parameters are found through trial and error to achieve the desired distribution of the estimated values or to match with production results. Kriging Kriging is the geostatistical estimation method developed to provide the "best linear, unbiased estimate" for grade It is based on a least squares minimization of the estimation variance as follows:
1.

wi = 1

i =1

... number of samples

=.-power

where the wi are the weights computed for each sample i, each di is the distance between the location being estimated and sample i, and -pwer the inverse is distance weighting power.
2.

The estimation variance is a function of the sample weights, the correlations between samples and block, and the correlations among the samples. The correlations are determined from the variogram. The set of weights is found which minimizes the estimation variance, using Langrange multipliers to force the sum of weights equal to one to ensure an unbiased estimate. (Differentiating the

Inverse distance estimation is controlled by changing the weighting power and search parameters. A lower power, larger search radius, and/or greater number of points used in the estimation

ORE RESERVE ESTIMATION

51

estimation variance equation produces a set of simultaneous equations in which the sample weights are the unknowns; these equations are easily solved.) Kriging and its variants have had much theoretical development and are well described in the geostatistical literature. Common variants of kriging include lognormal kriging (for lognormal distributions), universal kriging (for strong trends), and indicator kriging (for erratic grade distributions. For a more detailed discussion of kriging the reader may refer to David (1977, 1988) or Journel and Huijbregts (1978).

discontinuous orebodies will have higher dilution and lower mine extraction than large, massive orebodies. Near surface orebodies will be mined by open pit methods and deep orebodies will be mined using underground methods. Rock strength determines the steepness of the pit walls or the width of underground openings. Steeper pit walls allow less stripping and less costly extraction of ores. Wider underground openings allow fewer, smaller pillars, thus, greater extraction of ores at lower cost. Metallurgical recovery is the most important metallurgical parameter because it determines the amount of product which is recovered to sell. Different ore types which may have different recoveries must be included in the resource model so that the economics of each ore type can be evaluated independently. Other factors which may affect metallurgical and performance include: high clay content; extremely hard or abrasive rocks; density variations; alteration, particulary sulfide vs. oxidized ores; and refractory characteristics such as cyanide consuming ore preg robbing gold ores. Economic Factors The primary economic parameters in d e t e n n i ~ n g ore reserve are the the selling price; mining costs; milling or processing costs; and freight, smelting and refining costs. These economic factors are combined to establish the breakeven cutoff grade, the lowest grade of ore which can be mined a t a profit. The mining schedule may be used to further enhance economic performance by mining higher grade ores early in the life of a mine or minimizing prestripping requirements. Metallurgical plant design can affect economics through multiple processes, each of which is appropriate for a particular type and grade range of material, for example: heap leaching may

MIN-ING AND METALLURGY

Mining and metallurgical factors are the primary determinants of the technical and economic feasibility of mining the ores and creating a marketable product. The engineering application of these parameters is thus the main process in which the economic portion of the mineral resource is determined to estimate the ore reserve. The ore reserve is thus that portion of the mineral resource which is within the designed mine opening, can be metallurgical~ extracted from the ores, and can be upgraded to a saleable product. Physical and Technical Factors Physical factors are primarily those which affect the design of the mine and projection of metallurgical recovery. Primary mining factors include size and shape of the orebody, mine extraction, mine dilution, ore and waste rock strength, and closeness to the surface. Primary metallurgical factors include metallurgical recovery, hardness, abrasiveness, mineralogy, and alteration. Small orebodies must be mined selectively to maximize extraction and minimize dilution; highly irregular and

52

EVALUATION AND OPTIMIZATION (3F METALLURGICAL PERFORMANCE be used for low grade ores and milling Although most of this issues have little for higher grade ores. to do with the orebody itself, the may impact the mine plan and schedule and processing methods through restrictions The resource estimation procedure locations of the mine, waste dumps, and must be made with at least minimal plant. Some enviromental factors which knowledge of mining and metalurgical factors since they affect the size, must be included in the geologic resource shape, and/or grade of the potentially model include the presence and quantity minable ore reserve. The most important contaminents such as high sulfide or mining factors for consideration in heavy metal content in waste rocks. estimating the mineral resource are:
1 . The range of likely cutoff grades. 2 . The degree of selectivity and the size of the selective mining unit for likely mining methods. 3 . Variations in the deposit which affect the ability to mine and/or process the ore.

RTZFERTZNCE LIST BARNES, M., 1980, d r r iw v w n g Engineers, AI&, York, 167p.

New

These mining factors often determine the degree of detail that is required for the resource model and, thus, the degree of dimculty to develop a resource model for estimating ore reserves. For example, a disseminated gold deposit may be continuous and regular in shape, if mined by bulk, open pit methods. The same deposit may be discontinuous and difficult to estimate, however, if mined by more selective underground methods a t a higher cutoff grade. Such large differences in deposit shape due to variations in cutoff grade and mining method may require different ore reserve estimation methods for different mining methods. ENVIRONMENTAL AND UGAL Environmental and legal factors are increasingly important in ore reserve estimation and may be the primary factor in whether or not a mineral deposit is an orebody. For example, it may be too costly and time consuming to get mining permits in sensitive areas or may be difficult to establish the legal right to mine in a third world with an unstable government.

CLARK, I., 1979, Practical Geostatisticg, Elsevier, Amsterdam, Netherlands, 129p. DAVID, M., 1977, Geostatistical Ore Reserve Estimation, Elsevier, Amsterdam, 364p. DAVID, M., 1988, Handbookofdigxi Advanced Geostatistical Ore Reserve Estimation, Elsevier, Amsterdam, 216p. DAVIS, J.C. 1973, Analvsis in Geolow, Wiley, New York, 550p. GUARASCIO, M., DAVID, M. and HUIJBREGTS, C., 1976, Advanced &ostatistics in the Minin~ Industry, Reidel, Dordrecht, Holland, 491 pp. KING, H.F., McMAHON, D.W., and BUJTOR, G.J., 1982, A Guide to the Understanding of Ore Reserve Estimation, Supplement to Proceedings No. 281, Aus. Inst. of Min. and Metall., 21p. JOURNEL, A., 1980, "The Lognormal Approach to Predicting Local Distribution of Selective Mining Unit Grades," Math.,Vol. 12, No. 4, pp. 285-303. JOURNEL, A. AND HUIJBREGTS, C.J.,

. . 1978, M i n i y Geostabstlcs, Academic

Press, London, 600p.

ORE RESERVE ESTIMATION

NOBLE, A. C., 1990 (In Press) Minine! Fnfzineers Handbook, Chapter 5.6 Resource Estimation, H. Hartman Editor, S.M.E. RENDU, J-M, 1978, An Introduction t~

Evaluation, Monograph of the South African Inst. Min. Metall, 1978, 100p. RENDU, J-M, and READDY, L. 1982, "Geology and the Semi-Variogram - A Critical Relationship.", 17th APCOM, AIME, pp771-783. SINCLAIR, A.J., 1976, "Applications of probability graphs in mineral Volume No. 4, The exploration", fi~ecial Association of Exploration Geochemists, 95p.

VERLY, G., DAVID, M., JOURNEL, A. AND MARECHAL. A..eds. ~ , 1984. , , Geostatistics for Natural Resourcea Characterization, Reidel, Dordrecht, Netherlands, Vol. 1 to 3.
-