How many drillholes do I need to upgrade my Inferred Mineral Resource

The following article is an extract of a technical paper that was presented by the authors at the Perumin conference in September 2015 and at an AusIMM technical session in July 2015. Not all results and discussion are presented below.

The aim of an in-fill drilling programme is to improve geological understanding and support the upgrading of lower-confidence Inferred Mineral Resources to the higher-confidence categories of Indicated and Measured (grouped together in this paper as “higher resource categories”). This upgrade in resource category is one of the prerequisites for converting a resource to an Ore/Mineral Reserve.

In the optimal situation, the in-fill drilling programme should use the fewest number of drillholes to upgrade a desired proportion of the resource. However, can we quantify the optimal number of drillholes required to achieve the desired upgrade? If so, we can begin to establish a benchmark that companies can use to plan their in-fill drilling programmes.

This study applies AMC’s benchmarking methodology to compare 50 mineral projects and establish a relationship between in-fill drilling programmes and conversion of Mineral Resources from Inferred to higher resource categories.

The projects were selected from AMC’s in-house project database and from publically available NI 43-101 Technical Reports. The earliest case study is from 2002, although the majority of studies are from 2012 – 2014. Figure 1 shows the projects categorized by commodity group.

Figure 1 – Case Studies by commodity group

To investigate the relationship between in-fill drilling and resource upgrade, for each project, the proportional change in higher resource categories is plotted against percentage increase in drilling in Figure 2.

It is important to note that most drilling programmes actually include a combination of in-fill and extensional drilling. However, in a normal situation, only the in-fill drilling will lead to conversion to higher resource categories. Conversely, purely extensional drilling often adds to the Inferred Mineral Resource and not the higher resource categories. Therefore, the authors interpret that the positive proportional change projects are dominated by in-fill drilling, while the negative proportional change projects are dominated by extensional drilling. This is a simplification of reality, but it aids interpretation of the plots.

The 50 projects fall into four populations, as annotated in Figure 2:

1. An optimal population where upgrade to higher resource categories is positively correlated with increased drilling. The optimal group is defined as those projects where greater proportion increase is achieved with the least amount of drilling.
2. A suboptimal population, where there is generally a positive correlation between upgrade to higher resource categories with increased drilling. The suboptimal group is offset from the optimal group because it shows that significantly more drilling was required to achieve similar proportional change.
3. The extensional drilling population showing negative proportional change. This population will not be considered further in this study, because the projects in this population do not contain a significant in-fill drilling component.
4. No significant in-fill drilling population, where significant upgrade to higher resource categories has occurred with little or no change in drilling. This population will not be included in the analysis, because the projects in this population do not contain a significant in-fill drilling component.

Figure 2 Proportion change (metal) versus percentage change in drillholes

Note:

A = Dominant effect is in-fill drilling

B = Dominant effect is extensional drilling

The optimal and suboptimal populations both exhibit a positive correlation between increased drilling and resource upgrade. Trend lines fitted to each population give correlation coefficients of 0.54 for the optimal population and 0.77 for the suboptimal population, respectively. The steeper slope of the optimal population suggests that having fewer drillholes results in a higher proportion change relative to the suboptimal population. The authors consider that these are meaningful correlations that further studies will help to refine and improve.

The relationship between in-fill drilling and resource upgrade is investigated further by plotting the case studies by commodity groups (Figure 3). There appears to be no obvious relationship between commodity type and whether the project sits in the optimal population or suboptimal population. However, there is one trend that warrants further investigation – the fact that the majority of base metal projects lie in the optimal population.

Figure 3 Proportion change (metal) versus percentage change in drillholes grouped by commodity type

The effect on grade when the resource is upgraded from Inferred to higher resource categories is investigated by plotting positive and negative grade change against resource proportional change. The grade changes are calculated as percentages. The resource proportional changes are calculated as changes in tonnes rather than metal. The results are grouped by commodity type (Figure 4). The figure explores how the grade changes with the in-fill drilling programme and whether this is impacted by commodity type. The mean percentage grade change is negative across all commodity types. This suggests that earlier interpretations based on fewer drillholes assumed continuity that subsequent drilling disproved. This is possibly a reflection of human nature, as we tend to be optimistic in our geological interpretation at the early stage of a project. Another trend observed in Figure 4 is the large variation in grade changes for the precious metal projects relative to the bulk commodities. This is expected considering that precious metal deposits are naturally more variable than bulk commodities.

Figure 4 Proportion change (tonnes) versus grade change: grouped by commodity type

Drilling programmes with a significant in-fill component display a positive linear correlation between percentage increase in drilling and proportional increase in higher resource categories. This positive linear correlation was observed in two populations — the optimal and suboptimal.

The authors propose that projects in the suboptimal population relate to instances where:

1. The CP/QP was not adequately consulted during the planning phase to avoid redundancy in the drilling programme.
2. The initial geological interpretation of the project was simplistic and subsequent drilling revealed complexity that reduced, rather than increased, geological confidence.
3. There were managerial, contractual, regulatory or other requirements to complete drillholes that were not specifically related to resource upgrading.

An optimal in-fill drilling programme will upgrade the resource using the fewest drillholes, targeting locations that will define mineralization and increase confidence in the grade and geological continuity.

The study results and discussion are presented to assist CP/QPs that are planning drill programmes and managers that approve drilling budgets. It is hoped that the results will prompt CP/QPs and managers to ask if the proposed drill programme will meet the resource upgrade objectives. Where the proposed drill programme is not expected to produce the resource upgrade predicted by the optimal population, it might be pertinent to consider if there is redundancy in the drilling programme.

Andrew Fowler and Kathy Zunica