Estimating Natural Resources

Estimating the amount of a natural resource such as an ore is not a simple task, even for a single ore body. The first consideration is the concentration of the material of interest, and its distribution in the rock. This is illustrated schematically in the figure below. Sinking exploratory shafts or diamond drilling combined with geochemical determination of the concentration (also called "assay") allow an estimate of the number of tons of rock in the ground at a given grade.

Figure 4: Hypothetical concentration distribution for an ore body. Estimation of reserves requires detailed grade measurements in 3 dimensions.

The next consideration is the technology of extraction. Only a certain amount of the ore is extractible, given the geometry of the ore body, its mineralogy and the accessibility of the surface location. Thus the ultimate yield of a given ore body will be lower than the assay concentration of the material in the ore. These all factor into the costs of extraction.

The final factor is the price, which determines whether a given piece of rock below the ground is worth exploiting. Deposits are divided into economic and subeconomic depending on whether it is economically feasible to extract ore from them.

Summing these over a given region, country or over the whole Earth tields an estimate of extractible reserves still in the ground.

Figure 5: McKelvey diagram illustrating resource reserve terminology

When people talk about reserves, they are usually referring to proven reserves. Most geologists think of the boundaries of the boxes in the McKelvey diagram as being fixed things, with prices being an external input into the system, and the right-hand side being relatively unimportant from a societal standpoint.