Reporting Codes – GKZ and CRIRSCO

AMC recently attended the Minex 2017 Central Asia conference in Astana. This year’s conference was particularly significant since Kazakhstan joined CRIRSCO with KAZRC earlier in the year, becoming the latest of the CRIRSCO family of reporting codes.


Kazakhstan becomes the 10th member of the CRISCO organization whose origins began in 1994 with the objective of standardizing the reporting definitions for mineral resources and ore reserves for the purposes of market reporting.

The joining of CRIRSCO is part of the 100 Concrete Steps set out by President Nursultan Nazarbayev for institutional reform. The step, number 74, translates as;

74. Transparency and predictability of subsoil use shall be maintained via introduction of the CRIRSCO reporting standards.

The areas that are now covered by CRIRSCO codes are Australasia, Brazil, Canada, Chile, Europe, Kazakhstan, Mongolia, Russia, South Africa and the United States of America. Collectively these jurisdictions are estimated to cover 80% of the global invested mining capital and hence as Kazakhstan seeks to attract international investment and funding to its mining sector, the adoption of such a widely-recognized reporting system is seen to ease the evaluation of projects by the international community.

The current system of resource and reserve reporting is widely referred to as the GKZ “ГКЗ” system. Under this system, a project is prepared by licensed design institutes using a prescribed methodology that is dependent upon the nature, status, and scale of the project. The project is then presented to a state-appointed body called the Committee of Geology and Subsoil Use, which reviews the project and can ask for changes to the project. Once the committee is satisfied, it approves the estimate and the classification of that estimate. This reporting methodology was common throughout the Soviet Union and hence can be found throughout the FSU states.

AMC presented a conceptual discussion of the similarities and differences between the GKZ and CRIRSCO methodologies and perhaps philosophies. This was obviously not an official view from the perspective of any organization but rather the thoughts of practitioners who have observed both systems.

All reporting codes have grown out of a need to have a set of standards according to which resources can be reported and hence compared and evaluated on a common basis. The adherence to a set of reporting standards also provides the user with confidence in the estimate.

The differences between the systems are in part a result of them being developed independently for different environments and end uses. The GKZ methodology grew around centrally owned assets where a common owner was making all decisions and hence was focussed on making comparison on a common basis. In contrast, designed for assets owned by investors, the CRIRSCO methodology addressed investors’ need to be able to consider the merits of a project and the development strategy being proposed by whoever is managing the project. The CRIRSCO codes also were designed to protect an investor from misrepresentation of a projects potential by a project developer, either through dishonesty, application of an inappropriate methodology, or through an overly optimistic assessment.

In our discussion, we focussed on two key areas where the concept within the CRIRSCO codes is different to GKZ;

Responsibility – Competent Person

Methodology – Non prescriptive

Responsibility – In the case of the GKZ the project is prepared by a design institute but the final responsibility for the estimate rests with the Committee of Geology and Subsoil Use. In the case of the CRIRSCO system, the responsibility lies with the Competent Person who is taking responsibility for the estimate, so it is a personal responsibility rather than resting with an organization.

Methodology – Under the GKZ system for a given deposit size and type, the methodology for developing the estimate is largely mandated. The first organization to assess a deposit will define the deposit class and hence the methodology that applies. Any subsequent assessment will use the same deposit class or must justify a change. The drilling density, the sampling, the metallurgical program etc. are all defined and the project must comply with the methodology for the class of deposit defined.

The CRIRSCO codes place the responsibility for selecting the methodology for the estimation with the Competent Person. The later versions of the codes such as JORC 2012 or the KAZRC code include a list of issues which must be addressed, known as Table 1. However it is up to the Competent Person to determine how the subjects in Table 1 are addressed, or to explain why that topic from Table 1 does not apply to the estimate in question.

These key differences rely on the idea of an individual as the Competent Person taking responsibility for the estimate and for the methodology applied in making the estimate. We discussed who a Competent Person is and what they need to consider in reporting an estimate. In terms of the CRIRSCO codes there are three key reporting principles which are;

Transparency – Reports to contain sufficient information in a clear and unambiguous manner so that the report can be understood and does not mislead.

Materiality- Reports to contain all relevant information at the time of disclosure that users of the report might reasonably require and reasonably expect to find in a Public Report.

Competence – Reports must be based on work that is the responsibility of a suitably qualified and experienced person who is subject to an enforceable professional code of ethics and rules of conduct.

The definition of a Competent Person is very similar in all of the CRIRSCO codes. The KAZRC definition is shown below.

A Competent Person is a minerals industry professional who is a professional member of a recognized professional organization which has disciplinary processes including the powers to suspend or expel a member.

A Competent Person must have a minimum of five years’ relevant experience in the style of mineralization or type of deposit under consideration and in the activity which that person is undertaking.

With respect to the Competent Persons experience, we considered that the key phrase is relevant experience. We suggested that the range of mineral occupancies and mining projects is such that no one has relevant experience in all deposit types and commodities. As such, a person can be a Competent Person for specific types of project but no one is a Competent Person for everything. However, relevant experience does not need to be in the same commodity but it needs to be appropriate experience in the style of mineralization and operation. The Competent Person must decide if he or she has the relevant experience, and would be able to face their peers if challenged. Only if they feel they pass this test should they take on the Competent Person role.

Martin Staples

Director / Principal Mining Engineer