Mineral Reserves vs Mineral Resources: What the Categories Actually Mean

Summary box

• A Mineral Resource is rock that might one day be mined economically. A Mineral Reserve is the part of it that a study has shown can be mined economically, right now, under stated assumptions.
• Resources are reported as Inferred, Indicated or Measured, in ascending order of geological confidence. Reserves are reported as Probable or Proven.
• Under the CIM Definition Standards, an Inferred Mineral Resource "must not be converted to a Mineral Reserve." There is no discretion in that sentence.
• Converting Resources to Reserves requires at least a Pre-Feasibility Study. A Preliminary Economic Assessment is not sufficient.
• Reserves are usually a subset of Resources, but not always reported that way. Adding the two together is the single most common amateur error in mining analysis.

The one-sentence distinction

A Mineral Resource is a concentration of material in or on the Earth's crust in a form, grade and quantity that gives reasonable prospects for eventual economic extraction. That phrase is doing all the work: "reasonable prospects" and "eventual" are deliberately permissive.

A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource, demonstrated by at least a Pre-Feasibility Study, after applying Modifying Factors — mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental considerations.

Resource is geology. Reserve is geology that has survived engineering, economics and permitting assumptions.

The three resource categories, in the standard's own words

The CIM Definition Standards, adopted by CIM Council on 10 May 2014 and incorporated by reference into Canada's National Instrument 43-101, define the categories as follows.

Inferred Mineral Resource. Quantity and grade "are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity." An Inferred Mineral Resource "has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve."

Indicated Mineral Resource. Quantity, grade, densities, shape and physical characteristics "are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit." Geological evidence is "sufficient to assume geological and grade or quality continuity between points of observation."

Measured Mineral Resource. The same list of attributes, but estimated "with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit." Geological evidence is "sufficient to confirm geological and grade or quality continuity between points of observation."

The escalation from Inferred to Indicated to Measured is imply → assume → confirm. That is the whole hierarchy in three verbs.

The two reserve categories

Probable Mineral Reserve. "The economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource." A Qualified Person may elect to convert Measured Resources to Probable Reserves where confidence in the Modifying Factors is lower than would justify Proven.

Proven Mineral Reserve. "The economically mineable part of a Measured Mineral Resource," implying "a high degree of confidence in the Modifying Factors." The standard adds that the term "should be restricted to that part of the deposit where production planning is taking place."

Note the asymmetry: Measured Resources can become either Proven or Probable Reserves depending on confidence in the Modifying Factors, but Indicated Resources can only become Probable. Confidence can be downgraded on the way through; it can never be upgraded.

Why the study stage matters more than the label

The CIM Definition Standards "requires the completion of a Pre-Feasibility Study as the minimum prerequisite for the conversion of Mineral Resources to Mineral Reserves." A PFS is defined as a comprehensive study of a range of options where a preferred mining method or pit configuration is established, an effective processing method is determined, and a financial analysis based on reasonable assumptions is included.

This is the rule that catches people out. A company can publish a Preliminary Economic Assessment with a headline NPV and IRR, and none of the tonnes underlying it are Reserves. A PEA may include Inferred Resources; a PFS or Feasibility Study reserve statement may not. So two projects with similar-looking NPVs can sit on entirely different evidentiary foundations.

When you read an economic headline, the first question is not "how big is the NPV" but "which study stage produced it, and what resource categories fed the mine plan."

How the three major codes line up

The reporting codes are all descended from the CRIRSCO template, so the vocabulary is largely shared, with local spelling and procedural differences.

Two differences are worth internalising:

1. Australia says "Ore Reserve", Canada and the US say "Mineral Reserve". Same concept. If you are matching datasets across exchanges, this is a field-mapping problem, not an economic one.
2. The United States only recently allowed resource disclosure. Under the old Industry Guide 7 regime, SEC registrants generally could not disclose mineral resources at all — only reserves. Subpart 1300 of Regulation S-K, adopted 31 October 2018 and mandatory for the first fiscal year beginning on or after 1 January 2021, brought US disclosure into line with international practice. This means US-listed miners have a much shorter public history of resource reporting than their TSX and ASX peers, and pre-2021 US filings are not comparable on resources. See the SEC's small entity compliance guide.

The five errors that actually cost money

1. Adding Reserves to Resources. In most reporting conventions the Reserve is carved out of the Measured and Indicated Resource, so the Resource statement is inclusive of the Reserve. Add them and you double-count. Always read the footnote: "Mineral Resources are reported inclusive of Mineral Reserves" and "exclusive of Mineral Reserves" are both common, and they mean different things.

2. Treating Inferred tonnes as bankable. Inferred material has geological continuity that is implied but not verified. Historically, a meaningful share of Inferred tonnes does not survive infill drilling at the same grade. The category exists precisely to flag that.

3. Ignoring the cut-off grade and metal price behind the estimate. Every resource statement is calculated at an assumed cut-off grade, which is itself derived from assumed metal prices, recoveries and costs. A resource restated at a higher gold price will grow without a single new metre of drilling. Compare like for like or compare nothing.

4. Comparing contained metal to recoverable metal. A resource statement reports contained metal in the ground. What matters for cash flow is what comes out of the mill after recovery and payability. A 90% recovery and a 96% payable smelter term turn 1,000,000 contained ounces into roughly 864,000 saleable ounces before you have priced a single tonne of ore.

5. Using a stale estimate. Resource and reserve statements have an effective date. Depletion from mining reduces reserves every quarter. A three-year-old reserve statement at a producing mine is describing a different orebody than the one that exists today.

What to check in ninety seconds

When a resource or reserve statement lands, run this sequence:

• Effective date. How old is it, and has the mine been producing since?
• Category split. What share of tonnes is Inferred? A resource that is 70% Inferred is an exploration story, not a development story.
• Inclusive or exclusive. Read the footnote before doing any arithmetic.
• Cut-off grade and price assumptions. Are they in line with the previous statement and with spot?
• Study stage. PEA, PFS or FS. Only PFS and FS can support Reserves.
• Qualified Person. Named, credentialed, and independent where required.
• Reconciliation. If the estimate changed, does the company explain how much of the change is drilling, how much is price, and how much is depletion? Companies that do not reconcile are hiding the answer.

How Mining Terminal handles this

Every resource and reserve figure in the Mining Terminal corpus is extracted from the source filing and carries its category, effective date, cut-off grade, and the document it came from. We do not blend Inferred with Indicated, we do not sum Resources and Reserves, and we do not infer a value that the filing did not disclose. Where a filing omits the cut-off grade or the scale of a number is ambiguous, the field stays empty rather than being estimated — an empty cell is honest, a fabricated one is not.

That constraint is why the corpus is usable for comparison at all. If you would like to see how a specific deposit's categories have moved across successive filings, talk to us or ask Nara.

Sources

• CIM Definition Standards for Mineral Resources and Mineral Reserves, adopted 10 May 2014 — official copy hosted by the British Columbia Securities Commission
• National Instrument 43-101 Standards of Disclosure for Mineral Projects — Ontario Securities Commission
• The JORC Code, 2012 Edition — Joint Ore Reserves Committee
• Modernization of Property Disclosures for Mining Registrants (Regulation S-K subpart 1300) — U.S. Securities and Exchange Commission

This article is educational and is not investment advice. Mining Terminal is a data platform, not a broker, dealer or investment adviser.