Inferred vs indicated vs measured vs proven & probable

D

downtown

New member
Joined
Jun 18, 2026
Messages
0
Reaction score
0
Can anyone provide a high level definition of the following vis-a-vis the mining sector:
Inferred
indicated
measured
proven
probable
Some of these may seem obvious from their names but what would actually constitute a mine with reserves that are inferred or indicated and so forth.
Are there any special caveats to watch for when reviewing balance sheets for the mining sector? A few obvious ones are diversification of properties (ie. not just one mine) and geo-political risk.
Thanks
 
Proven equals Measured plus Indicated.
Measured equals well defined resources as the result of a tight drillhole matrix. Measured resources are assumed to be fully bankable as there is little chance of your assumptions being incorrect due to such tight drillhole spacing.
Indicated equals somewhat well defined resources which have a high certainty of being there but are somewhat less reliable than measured resources as drillhole spacing is much greater than in an area of measured resources.
Probable equals Inferred.
Inferred resources are not based on any drillhole campaign and are an educated guess regarding the mineral reserves in the land base in question. Inferred resources rely on seismic data and an understanding of the geology of the area in question.
As per balance sheets, etc. The market often gives little to no value to inferred resources unless there is a massive ongoing drilling campaign which is expected to convert most of the inferred resources to indicated and/or measured. Many segments of the materials sector, such a potash, iron ore, and molybdenum to name a few, often get valued on measured resources alone.
geopolitical risk is a major consideration as companies with similar resources can trade at extremely different valuations, for example, look at any Canadian copper company versus any copper company with operations in the DRC.
diversification of properties is not a major consideration if the company in question has one major mine that it is focusing on. if the main driver of value for the company is derailed, there will be major implications to the stock price. see Taseko and the Prosperity mine debacle which occured last year.
 
MattLikesAnalysis Wrote:
——————————————————-
[epic post goes here]
Welp, I know who I’m asking for help when mining companies eventually crap the bed and need looking at. Excellent post.
 
FredMC Wrote:
——————————————————-
> MLA
> I wouldnt say and resource estimate would equal a
> reserve, as reserves are resources that are
> constrained by economic viability.
you’re right, reserves are bound by economic feasibility but because commodity prices are so volatile, it is a blurry definition. what exactly is “economic feasibility”. it it an NPV of at least $0 at 8% or is it an IRR of 15%+? you could go so far to say that reserves are only what has been mined and stored if you want to get technical b/c tomorrow the price of your commodity could go to $0 and all mines are unfeasible. take asbestos for example. once out of favour, reserves using the economically feasible definition would have dropped off a cliff.
 
fair enough
are you in mining as well ?
where are u located ?
 
FredMC Wrote:
——————————————————-
> fair enough
> are you in mining as well ?
> where are u located ?
i’m not in mining but i do have access to plenty of mining research and have built my own models in the past for any companies i’m seriously interested in. i’m actually in TechTown (Waterloo), which is pretty much as far from mining in Canada as you can get…
where are you located?
 
Just to clarify an simplify things;
The first distinction to be made is Reserves vs Resources.
As previously mentioned, Reserves have a published study/report demonstrating positive economics. Typically this will be done using 3 year rolling average’s for commodity prices.
Resources are known bodies of mineralization exceeding a specified cut-off grade (minimum amount of desired element).
Reserves and Resources can only be reported by a company if an independent qualified person (likely a consulting geologist or mining engineer) publishes a technical report up to the exchanges standards. (N.I. 43-101 in Canada, JORC in Australia).
Proven and Probable are classifications of Reserves only, and are indicators of confidence level. Proven Reserves are more certain than Probable Reserves.
Measured, Indicated, and Inferred are classifications of Resources only, and are also indicators of confidence levels. Measured being the most confident, Inferred being the least. These categories are not specifically defined and are somewhat left up to the independent qualified person estimating the resource to decide.
Factor contributing to resource confidence;
-drill hole spacing
-geological complexity of the ore body
-source of data (some times historic data is used to estimate resources and even if there is tight drill spacing, if the qualified person did not personally collect the data, they will likely not put full confidence in it)
I hoped that helped restate some of the correct info above, and correct some of the misinformation. I’m not going to lie, I’m a long time reader, first time poster and created this account just for this. I’m a mining guy and couldn’t handle reading some of the false statements above.
As for some Statement items to note;
-Plant, Property, and Equipment Assets should be taken with a grain of salt. If an exploration company spends $100 million drilling on a property and turns up diddly squat, they can still record the $100 million as part of property asset.
-It is common for companies to use contract mining which will be off-sheet financing items
-Check out how much hedging (if any) on their produced commodities is in place before you put your commodity price forecasts into your DCF
-Watch your currencies as typically revenues are received in US dollars when dealing with commodity sales and expenses will be incurred in the country of operation
 
The junior market has been pretty soft since Feb/March and there isn’t anything I would confidently dump my money into right now. Right now the I think the best buys are Gold and Silver miners in production. Mining stocks have been pounded in the last month or so down 15-20%, but those in production are still selling gold and silver at record levels and earning record profits. Many of the majors are trading at P/E ratios around 10 or less based on earnings where their realized gold selling prices were less than $1400/oz. Specifically I like Barrick and Silver Wheaton, both up around 5% this week already and I think you could easily see another 10% within a month without a rise in gold and silver prices.
On the junior side if you have patience I think the Uranium’s got unnecessarily pounded and could return to previous levels in a year or two (pretty much a double for any Junior Uranium stock). For Gold/Silver keep an eye on the Yukon. There is a lot of new work going on this summer and there could be some interesting discoveries.
(My opinions only, I will not be responsible for any investment losses)
 
i wasn’t trying to misinform in any way. my experience is that your M&I resources better be proven or be assumed to be, or whats the point? if you’re drilling holes to define a resource, you better be adding tangible value. i think valuation discounts take care of the discreptancy between what’s 100% proven and what’s assumed to be proven. i treat inferred resources as probable if a company has an intention to drill the inferred area, as once you drill the holes, you’ll know if they’ll be eventually thrown in with proven or not… i wouldn’t recommend using the textbook definition provided in the link above as geologists and equity analysts are not the same, and equity analysts tend to use valuation discounts and tend to incorporate inferred/contingent resources in some way thus they’re assuming that some or all of the inferred resources are “probable”.
 
MLA I can sort of understand what you are saying, but you cannot use the words proven and probable to describe what you personally consider to be proven and probable when they have legal definitions as outlined by exchange commissions. Maybe for personal use you should revert to something like “likely” and “unlikely”.
Proven and Probable only relate to Reserves which have economic studies to back them up. Calling Inferred resources Probable can get you in a whole lot of trouble with the exchange and cause much confusion. Please re-read my previous post if you still don’t get it.
It is ILLEGAL to misuse these terms in any public document including company websites, press releases, marketing material, etc. These are not fancy geologist terms, these are standards set in place by the exchange to ensure fair representation of mineral properties.
 
i understand that and i’ve seen many analysts refrain from using any of the words above when talking about what resources they include in their models for this reason.
i personally think the standards commissions dropped the ball when using the words “proven” and “probable” as the titles for the standard. why not call them “economical” and “semi-economical” or something to that effect so to not cause confusion when people use the word “probable”, a term used widely in statistics. most people who are looking at the resource reports want resource reports and not economic reports as the economic value of the resource changes on a quarterly basis at minimum due to changes in LT prices.
in the minor metals, i’ve seen three different companies with mines in the same country use three different cut-off rates, making the direct comparison between the feasibility of these resources absolutely worthless. i’ve had to ratchet down cut-off rates in the past such to disqualify some “proven” resources. i think there is major disconnect between these “standards” that define what P&P mean and economic feasibility. providing standards such that uneducated people (non-pros) assume that P&P resources are economic is a major hazard. if you’re going to be able to state that you have such and such P&P resources, you should have to update their feasibility on a daily basis.
 
I think the economic studies are very useful for “non-pros” and cut-off grades can be just as deceptive. The cut-off grade will often be a function of the mining method and the costs involved in mining the ore. You can have very low grade material but if it is within 50m of surface and has simple metallurgy it can be far more valuable than high grade material buried deep requiring expensive underground methods. That’s what these economic studies are for is to give people an idea what the resources are actually worth when things like mining method and metallurgy are considered. There will usually be a DCF included somewhere in the report and I would encourage you to recreate it and use your own LT metal prices.
 
MiningMoney, what is your background?
I think you did a great job explaining the diff
 
You must log in or register to reply here.
Back
Top