The world’s main Mineral Resource reporting Codes – the JORC Code (Australia), the CIM Definition Standards (Canada), the SAMREC Code (South Africa) and the PERC Code (Europe) – all refer to the principles of reasonable prospects for eventual economic extraction (RPEEE) as some of the principal criteria for defining a Mineral Resource. Definitions vary slightly, but the onus is very clearly on the Competent or Qualified Person endorsing the Mineral Resource to demonstrate that all of the resource being reported accords with the RPEEE principles. There is some leeway in the meanings of the terms ‘reasonable’ and ‘eventual’, but it is clear that the resource as reported should have an assumed profitability within a realistic and defined time period. It is accepted that the method of extraction (open pit or underground) and the method of processing needs to have been reasonably determined (but not necessarily finalised) at the time of reporting. Clearly the reporting of resources is not as rigorous as that of reserves, and common and accepted practice is to use an elevated commodity price (and potentially foreign exchange rate if applicable) in determining which parts of the mineralisation to report as a resource.
Unfortunately, the interpretation of RPEEE has led to a wide range of practice in reporting Mineral Resources in Australia. A survey of 37 resources reported to the Australian Securities Exchange in May and June 2019 (all reported during this period) revealed that only 11% of those open pit resources reported applied an economic pit constraint, and that 90% of the underground resources were reported without any constraint other than a cut-off grade. It is clear that the flexibility afforded the Competent Person in choosing a commodity price for reporting and a cut-off grade is leading (in some cases) to a less than rigorous application of the RPEEE principles.
The wide range of application of RPEEE principles is not limited to more junior minerals companies; in many cases large resources reported by major miners have been subject to only scant constraints, especially in the case of underground reporting. It is suggested that potential investors should look at the resource to reserve conversion ratio as an ‘index’ of RPEEE, since Ore Reserves are required to be much more tightly constrained by profitability and mineability.
Given the seeming inability of the industry to self-regulate and to honour the principles of RPEEE as clearly explained in the major Codes, it falls upon investors and readers of public reports issued under JORC (and other Codes) to note that not all resources are reported equally. The introduction of the Table 1 declaration in JORC (and similarly in other Codes) allows the reader to be aware of the RPEEE constraints, or lack thereof. It is suggested also that the Code committees and the market regulators need to take further steps to ensure that what is specified in detail in the Codes is actually being practised.
Glacken, I M, 2019. The highly vexed issue of reasonable prospects for eventual economic extraction (RPEEE) – narrowing the range of practice, in Proceedings Mining Geology 2019, pp 26–35 (The Australasian Institute of Mining and Metallurgy: Melbourne).