Mining is a capital-intensive, long-term investment. Before investing in a site, it must be reliably demonstrated how much mineral the site contains and whether that mineral can be extracted economically. The key documents that answer these two questions are the resource/reserve report and the feasibility report. In this article, we cover what both reports are, how they are prepared, and their relationship to international standards.
The Difference Between a Resource and a Reserve
These two concepts, often confused in mining, in fact express different levels of confidence:
- Mineral Resource: The quantity of mineral whose presence on a site is estimated based on geological data. It is classified according to the level of confidence as "inferred," "indicated," and "measured."
- Mineral Reserve: The portion of the resource that has been proven to be actually operable, taking into account economic, technical, legal, and environmental factors. It is divided into "probable" and "proven."
In short, every reserve is a resource, but not every resource is a reserve. This distinction forms the basis of investment decisions and financing processes.
How Is a Resource/Reserve Report Prepared?
Reserve reporting is based on the drilling, sampling, and analysis data collected during the exploration process. In general, the process includes the following steps:
- Transferring drilling and sampling data into a database and validating it
- Creating a 3D geological model of the ore body
- Estimating the grade (quality) distribution using geostatistical methods
- Calculating the quantity and class of the resource
- Determining the reserve by applying economic and technical constraints
UMREK and International Standards
In Türkiye, the reporting of mineral resources and reserves is standardized by the UMREK (National Mineral Resource and Reserve Reporting Commission) code. UMREK is part of the international CRIRSCO family (alongside JORC, NI 43-101, etc.) and ensures that reports are transparent, repeatable, and comparable.
Reports compliant with the UMREK code can only be signed by a "Competent Person." This compliance is critically important for the validity of the document, particularly in the processes of finding investors, securing bank financing, and transferring licenses.
What Is a Feasibility Report?
A feasibility report is a comprehensive economic analysis document that evaluates whether the identified reserve will truly be profitable. A well-prepared feasibility report includes the following headings:
- Selection of the production method and mining plan
- Calculation of capital (CAPEX) and operating (OPEX) costs
- Ore beneficiation and metallurgical evaluation
- Cash flow, net present value (NPV), and internal rate of return (IRR) analyses
- Environmental and social impact assessment
- Risk analysis and sensitivity scenarios
Feasibility reports are also classified, according to their level of detail, as pre-feasibility (PFS) and final feasibility (FS).
The Investment Value of Accurate Reporting
An incomplete or non-standard reserve and feasibility study can misguide investment decisions, stall financing processes, and cause problems in licensing processes. For this reason, reports must be prepared by a team with sector experience and command of the UMREK/CRIRSCO standards.
Frequently Asked Questions
Are a feasibility report and a reserve report the same thing?
No. While a reserve report determines how much operable mineral is on the site, a feasibility report analyzes whether that reserve will be economically profitable. The two complement each other.
Who can sign a UMREK report?
Resource and reserve reports compliant with the UMREK code can only be prepared and signed by Competent Persons recognized by UMREK.
Why is a feasibility report necessary for investors and banks?
Investors and financial institutions require an independent feasibility report supported by indicators such as cash flow, NPV, and IRR before allocating resources to a project. This report is the fundamental proof of the project's financeability.
Conclusion
A sound resource/reserve estimate and a realistic feasibility report are the foundation of a successful mining investment. Transparent and repeatable reporting compliant with UMREK and international standards enables you both to make sound investment decisions and to place your financing and licensing processes on a solid foundation. As Moz Proje, with our competent persons, we provide resource/reserve valuation and feasibility reporting services. For your project, you can reach us through our contact page.