Debunking a myth HOW TO COMPENSATE FOR INITIAL UNDERESTIMATION OF

The precise dimensions of most mineral deposits are not known until they have been nearly mined out. The amount of ore that is ultimately recovered is, in many cases, considerably greater than the initial ore estimate at the time of discovery or even at the start of production. The reason is that the inadequacy of initial drill-hole information leads to underestimation of true deposit size. In an analysis of exploration success over time, such underestimation causes undeveloped discoveries to seem unduly small. An approach was developed to compensate for this bias in an approximate but systematic way (Cranstone, 1980). An analysis was made of about 100 Canadian mines — some of which have been mined out, others of which are still in production. For each mine, account was taken of initial ore reserves when production began, historical year-by- year ore production, current ore reserves, and potential for additional ore. For each mine a multiplier was derived that, applied to the metal value of the initial ore reserves (when production began), gives the metal value of the total amount of ore that was ultimately produced (in the case of mined-out deposits) or that is likely to be ultimately produced (in the case of deposits still in production).

From this analysis, multipliers (applied to initial reserves to give total deposit size) were derived from four generalized deposit types: For open-pit porphyry-type copper, copper-molybdenum and molybdenum, a multiplier of 2 was derived; non-porphyry, non-vein base-metal sulphide deposits (excluding copper-nickel deposits), 2; vein-type deposits of gold, silver and other metals, 3; copper-nickel deposits other than those at Sudbury and the Thompson Nickel Belt (which were dealt with separately), 1.3.

While these deposit types do not cover all mineral deposits discovered in Canada since the start of 1946, the choice of appropriate multipliers applicable to other deposit types for which insufficient Canadian examples are available was influenced by the above. For uranium deposits a different approach was followed. Resource estimates made by the “Uranium Research Appraisal Group” of Energy, Mines and Resources (emr) were used as a basis for estimating deposit sizes.

The multipliers derived for a generalized deposit type were applied to those discoveries of deposits yet to be mined for which not enough information was available to allow a better judgment. In regard to many producing mines, sufficient knowledge exists within emr to permit resasonable estimates of how much ore beyond current reserves is likely to be produced from each mine; such knowledge has been taken into account.

In general these multipliers were chosen deliberately on the conservative side. In the effort to eliminate bias favoring developed discoveries through the use of multipliers, care was taken not to swing to the other side and create a bias favoring undeveloped discoveries.