Geology as a Risk Factor in Project Evaluation: Its Impact on Reserve Estimation

Exploration & Mining Geology, Vol. 1, No. 3, 1992

CHRIS M. HEALEY, Cameco Corporation, Saskatoon, Saskatchewan, Canada

Perhaps the single most significant variable in the evaluation of a mining project is the reserve estimate. Many parameters are considered when estimating reserves, among them geology. This paper examines the link between the quality of a reserve estimate and a good understanding of the geological controls for the deposit. A clear understanding of the geometry is essential to the accurate definition of the shape and size of the deposit. This includes the definition of any structural controls as well as the proper interpretation of the stratigraphy. Further when the distribution of grades is erratic and there is consequently a high nugget effect, there are significant problems in estimating the true grade of the deposit. Two Saskatchewan examples are presented, one with good knowledge of the controls and therefore good estimates of reserves, and the other with a poor understanding of the geology and resultant problems in deriving good estimates. In both cases the reserve estimates at various stages in the project development are compared to actual results from underground work. The first example is the Star Lake Mine where just about all the estimates were within 10% of the actual on both tonnage and grade. The Laurel Lake deposit is discussed to show how problems in interpreting the geological data make reserve estimation very difficult. Laurel Lake has the additional problem of erratic grade distribution.