The iron orebodies of the Pilbara region are formed by supergene enrichment of banded iron formation and rarely do such processes produce orebodies with uniform grade distrib- utions. The orebodies being mined or developed have to be worked to grade/quality constraints imposed by contractual agreement rather than natural characteristics. Hence it is imperative to use a non-biased ore reserve calculation method. The geostatistical study of a typical iron orebody is presented. Emphasised are the geological characteristics of the orebody manifested as a variable grade distribution of iron and impurities; the determination of variogram model; subsequent uses of the model for computation of ore reserves and kriged lock estimates; computation of dispersion variance and conditional simulation of orebody.