Sustaining and growing the business
The mineral resources and ore reserves of a mining company are core assets forming the foundation of the business.
Ma’aden strives to create value by exploring and adding to our mineral resources and ore reserves to extend the operating life of our existing mines and to build new mines. We replenish and grow our ore reserves through exploration of our licenses and evaluation of new discoveries.
Global standards and JORC Code
Ma’aden is working to align our reporting with the standards and guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 edition (the JORC Code). JORC is the acronym for Australasian Joint Ore Reserves Committee as described more fully in the Definitions section of this annual report.
The JORC Code is an internationally recognized professional code of practice that sets out the minimum standards and guidelines for the public reporting of mineral resources and ore reserves. In many overseas jurisdictions, the regulating authorities require mandatory compliance with the JORC Code or its local equivalent.
in compliance with the JORC Code, so far as possible, using estimates by an independent third-party Competent Persons to provide the estimates.
A ‘Competent Person’ is a minerals industry professional who is a member of a professional organization which is recognized by the JORC Code and who has the required years of relevant experience in the type of mineralization being estimated and the appropriate level of competence in the activity being undertaken i.e. resource and reserve estimation and reporting. The Competent Person consents for public reporting by Ma’aden are valid at the stated effective date of the estimate.
The exceptions are:
- Estimates by Competent Persons which have been amended by Ma’aden employees who are not Competent Persons. These are usually estimates showing the progressive annual depletion of resources and reserves through mining, and are expressly not reported in compliance with the JORC Code.
- The Jabal Sayid mineral resource and ore reserve estimates are estimated by a ‘Qualified Person’ under the National Instrument 43-101, a Canadian reporting standard that is a near equivalent to the JORC Code.
- The Waseemah and Um Naam mineral resources at the Ar Rjum gold exploration project are reported in accordance with the obsolete 2004 edition of the JORC Code. A new mineral resource estimate in compliance with the JORC Code 2012 edition is in an advanced stage of preparation for completion in 2017.
Uncertainty of estimates
There is an inherent degree of uncertainty involved in the estimation and classification of estimated mineral resources and ore reserves compared with the actual mined tonnes and grades. Until mineral resources and ore reserves are mined and processed, the tonnes and grades in mineral resources and ore reserves must be considered as estimates only.
Mineral resources and ore reserves vary with changing metal prices, operating costs and other modifying factors, and are therefore dynamic. Ore reserve estimates have been determined based on long-term commodity price forecasts, capital expenditure and operating costs and economic cut-off grades. Where these assumptions change materially, the resource and the reserve must be updated and reported.
Extrapolation of operational performance from small-scale laboratory tests or pilot plants to full-scale production may not prove to be valid and may affect ore reserves. Changes in assumptions for overburden removal, process plant recoveries or other operational factors can influence the tonnage and grade of an ore reserve which then may affect the economic viability of a project.
Volumes, grades and recoveries of ore reserves actually mined and processed may not be the same as currently anticipated. The results of further drilling, metallurgical testing, mine production and mine planning, may require a previous ore reserve estimate to be revised. Any material reductions in ore reserves could have adverse effects on the company’s businesses, prospects, financial condition and operating results.
Prices used in estimate
The commodity prices and other modifying factors used in the estimation of mineral resources and ore reserves have been reviewed and adjusted where necessary in the annual reporting.
For gold, the mineral resource estimates are determined using a gold price of USD1,300 per troy ounce and ore reserves are estimated at a price of USD1,100 per troy ounce. The exceptions are the older mineral resources at Waseemah and Um Naam in the Ar Rjum exploration project, which are estimated at US1,465 per troy ounce.
For the Jabal Sayid copper ore reserve, a copper price of USD2.25 per pound is used for short term planning to the year 2020 while thereafter a price of USD2.75 per pound is applied for long term planning.
For those operations in which Ma’aden has a vertically integrated production enterprise, with an upstream mine supplying a downstream minerals processing facility, such as our phosphate, metallurgical bauxite and magnesite businesses, the mining operation is indirectly exposed to external market prices. For such operations, the estimated mineral resource and ore reserves are based on the specifications of a mine gate product supplied to a specification required by the downstream plant.
Ma’aden’s mineral resources are stated inclusive of ore reserves. The exception is our Jabal Sayid copper mine, where the mineral resource is reported exclusive of the ore reserves to be consistent with the public reporting of our joint venture partner.
Ma’aden’s mineral resources and ore reserves are stated on a 100 percent basis without allowance for Ma’aden’s ownership interest in each project. However, Ma’aden’s ownership interest in all projects is expressly stated for each mineral resource and ore reserve.
Ore reserves are defined at the point where the ore is delivered to the processing plant. The stated grade represents the estimated metal or product content as mined and has not been adjusted for metallurgical recovery in the processing plant.
Licenses to explore and mine
Exploration Licenses (ELs) confer the right to explore and evaluate, but not to develop and conduct mining operations.
Mining Licenses (MLs) confer the right to mine.
Mineral resource and ore reserve estimates on exploration licenses under renewal or new licenses pending grant are not reported in compliance with the JORC Code. While we expect licence renewals and new license applications will be granted, there is no certainty.
Material changes from 2015
Material changes in mineral resources and ore reserves from the 2015 Ma’aden Annual Report are explained in the pages immediately after the mineral resource and ore reserves tables.