The correct reference for the SAMREC Code is:
THE SOUTH AFRICAN CODE FOR THE REPORTING OF EXPLORATION RESULTS, MINERAL RESOURCES AND MINERAL RESERVES (THE SAMREC CODE), 2016 EDITION
The process of developing a mining project or mine involves technical expertise, requires a substantial capital investment, is a long term investment and carries numerous risks. Unlike many other industries, it is based on depleting assets, the knowledge of which is imperfect prior to the commencement of extraction. To mitigate the risks and obtain support (financial, political, social etc.) for the investment, an understanding of the project/mine is required. It is therefore essential that the industry is able to communicate to the investment risks effectively and thus provide a level of trust and confidence for the investors and other stakeholders to allow project progression and a sustainable operation. Part of the communication is provided by the declaration of the Mineral Resources and Reserves. The international Codes provide significant guidelines that inter alia provide a common understanding of the project/mine. “The international mining industry has a need to communicate effectively. With meaningful standards in place and enforced, sound decision can be made by various stakeholders in their participation in a project as well as the best way to progress it”.
The aim of the Code is to contribute to earning and maintaining the trust of investors and other interested parties by promoting high standards of reporting of mineral deposit estimates (Mineral Resources and Mineral Reserves) and of exploration progress, i.e., Exploration Results. Further, the SAMREC Code are specific guidelines for the Public Reporting of Exploration Results, Mineral Resource and Mineral Reserve for mineral projects and mines. The Code:-
- Provides minimum standards for reporting of Exploration Results, Mineral Resources and Mineral Reserves;
- Adds credibility to declarations by project promoters and assists in comparisons because of a uniform basis of declaration;
- Assists professionals providing them guidance; and
- Assists the Competent Person to demonstrate the legitimacy of the declaration and provides credibility to the Public Report.
The SAMREC Code does not specify the technical details relating to Exploration Results, Mineral Resource and Mineral Reserve. The interpretation of the raw data, the geological interpretation, engineering design, infrastructure requirements, and governmental, social and environmental inputs all require the input of specialists. Because the geological model is open to interpretation and has a huge influence on the mine design and associated financial outlook of the mine or project, there is a need for guidelines. The SAMREC Code provides these guidelines and a mechanism to assist in the progression of mining projects which includes holding various registered professionals accountable for their work.
Over and above undertaking the technical work, the Code requires the contributing professionals to justify and document their technical inputs and the process underlying the declaration of Exploration Results, Mineral Resource and Mineral Reserve. This approach relies on the professional to be prepared to face their peers and being willing to take responsibility for the result.
The aim of the SAMREC Code is to maintain and develop the trust of investors and other interested and affected parties by promoting high standards of Public Reporting. The SAMREC Code is a minimum reporting standard rather than a standard that a Competent Person should attempt to attain. The Code further advises the Competent Person to rather report ‘more information than the barest minimum’. The SAMREC Code provides the guidelines that support these declarations, the sustainability of the industry and the efficient exploration of minerals.
Changes to the SAMREC Code – 2016
Due to the age of the SAMREC Code, it is necessary to regularly review and update the Code.
This revision or update is necessary because:
- The mineral industry has advanced and changed focus as the prevailing economic and political circumstances have changed;
- The manner in which projects and mines are funded, developed, and operated, is continually changing;
- There are shifting requirements by the investment community, government and society (social licence to operate);
- There is a need to promote greater efficiency in the capital raising and fund utilisation for exploration, mining, and production companies; and
- SAMREC must keep abreast of the advances made by other international reporting codes and eliminate possible contradictory reporting practices.
‘If not, why not’ principle
Table 1 provides a comprehensive checklist of the various technical aspects that are required for a ER, Mineral Resource and Mineral Reserve declaration. The use of the checklist for every declaration is considered best practice. If completed properly it can provide the Competent Person with assurance that there are no technical inputs or practices that have not been considered. It would also provide the users of the statement with the confidence that the declaration is fully compliant and can be completely relied upon. Although these are best practice, the revised Code has included a requirement to report against Table 1 on an ‘if not, why not bases for maiden declarations and when a material change in the declaration has occurred for a significant project/mine. The 2016 Code requires every aspect of the Table 1 (checklist) must be answered by the Competent Person so as to adequately address all key elements of the reporting of Exploration Results, Mineral Resources and Mineral Reserves. Where aspects of this table are not included in the Public Report, the Competent Person is required to comment why they have not been addressed.
The motivation for this requirement is to ensure ‘transparency’ and ‘materiality’ as well as making it much harder to be ‘opaque’ or ‘selective’ reporting in market releases or other public reporting. Thus ‘if not, why not’ reporting increases the confidence in public reporting, as well as assists the Competent Person to include all aspects, that a reasonable investor would expect to find in a Public Report. Furthermore, the reporting mechanism assists the Competent Person to provide all relevant details, whether they are perceived as positive or negative, in the Public Report.
The Code has had definitions for Prefeasibility Study (PFS) and Feasibility Study (FS). This is appropriate as the minimum requirement for the declaration of a Mineral Reserve is a Prefeasibility level study. The detailed requirements, although broadly understood are frequently selectively considered. To assist in providing a common understanding Table 2 has been included in the Code to provide some detail and reduce the ambiguity of the definitions. It must be noted that these are generally recognised guidelines and not hard and fast definitions.
Since the last edition of the Code the Preliminary Economic Assessment (PEA) has become increasingly popular in Canada. This is a synonym for a Scoping Study. As a result and following the CRIRSCO lead, a definition is provided backed up by information in Table 2. It must be emphasised that a Scoping Study is not sufficient grounds to allow declaration of a Mineral Reserve.
Introduction of a section on Industrial Minerals
This is a new section. The broadening of the ambit of ER, Mineral Resource and Mineral Reserve has necessitated that more specific information be provided when dealing with industrial minerals. Aspects mentioned include the importance of a market and the saleable specifications.
Introduction of Metal Equivalents
Metal equivalents are a contentious issue. However, some guidance is required and specifically the minimum requirements of grades, recoveries and metal prices are emphasised. These have been included as a separate section to provide better understanding and communication to the various stakeholders and interested and affected persons or parties.
Table of contents
The Canadian National Instrument (NI) 43-101 is often considered a superior form of reporting due to its structure. The structure, like the guidelines in the SAMREC Code, does not guarantee the quality of the Public Report. This still remains the responsibility of the Competent Person. However, the Code now includes a suggested Table of Content to assist the Competent Person in providing a readable document and improve communication of the Technical aspects.
Glossary of Terms and Updating of Definitions
Key changes included the updating of the glossary of terms to provide a minimal consistency with the CRIRSCO reporting template. For instance, the definition of a Recognised Overseas Professional Organisation (ROPO) was updated to Recognised Professional Organisation (RPO). Other terms, such items as review, Competent Person’s Report and audit have been added to the glossary of terms. Clause 9 has also been updated to reflect SAGC (statutory) and IMSSA (learned society) replacing PLATO.
The Competent Person must take responsibility for their work. The provision of some guidance in the form of a suggested signature page is aimed at identifying the Competent Person, noting their qualifications, affiliations and relevant experience, as well as demonstrating that the Competent Person has indeed taken responsibility for their work or their contribution to the Public Report.
Revision of the Classification Diagram
The classification diagram has been revised and although the change is minimal the diagram is now virtually the same as the CRIRSCO diagram. The important inclusion is infrastructure as a modifying factor. In addition, specific diagrams have been drafted for the coal and diamond classification.
SAMREC Figure 1: Relationship between Exploration Results, Mineral Resources and Mineral Reserves
During the last few years the legislation affecting surveying has been revised in the form of the Geomatics Profession Act 19 of 2013. A consequence of this has been the disbanding of PLATO and the establishment of South African Geomatics Council (SAGC) (statutory) and the Institute of Mine Surveyors of South Africa (IMSSA) (learned society) to replace PLATO. These two organisations have the necessary disciplinary codes and codes of ethics; although it is anticipated that it will take a while for these two organisations to be fully functional in the Mineral Resource and Mineral Reserve space.