While the requirements of the updated and improved South African Mineral Resources (Samrec) code and South African Mineral Valuation (Samval) code are no more onerous than the previous codes, they reinforce existing principles and attempt to provide greater certainty with respect to the mineral assets and projects they report on.
The codes were released in May last year and officially replaced the previous versions in January this year,
“What has happened over time is that the mining industry has changed and gaps in the reporting codes were identified. “These updates are aimed at addressing those gaps to ensure that there is less ambiguity and more direction,” explains Samrec committee chairperson and Pivot Mining Consultants geology and resources director Ken Lomberg.
The last time the Samval and Samrec codes were updated was in 2008 and 2009 respectively. Lomberg tells Mining Weekly that, during the intermission between the two iterations, monthly meetings were held to discuss some of the issues on reporting with volunteers from the mining industry The Samcodes standards committee supervised the work of the Samrec and Samval committees, with quarterly meetings to monitor progress and provide direction where necessary.
The Samrec code complies with the Committee for Mineral Reserves International Reporting Standards (Crirsco) template and is in line with other international reporting codes, as the Australasian Joint Ore Reserves Committee and the Canadian NI 43-101.
Lomberg points out that the most significant update to the Samval code, was the addition of ‘reasonableness’ to one of its guiding principles. The other guiding principles are ‘transparency’, ‘materiality’ and ‘competence’.
“While there are a number of interpretations of the principle, the Samval code does provide guidance on the application of the principle of reasonableness. The important thing is that, for example, a report should not be based on an unreasonable gold price of, say, $2 200 oz when the current gold price is at $1 200,” he explains.
Lomberg adds that evaluations using a discounted cash flow formulation in its cost projections will have to apply the reasonableness principle to avoid compiling reports that provide only the lowest costs, which is often not a true reflection of a project being evaluated.
“Unfortunately, there are a lot of guys that mine the stock market rather than mine the mine,” he says.
Meanwhile, Lomberg explains that the Samrec code has introduced the ‘if not, why not’ principle, which involves testing statements against a list of questions and, if any question cannot be answered, the competent person (CP) must indicate why not. He adds that this principle attempts to preclude any reports that would, for example, report on only the two boreholes that have any grade at all in a 20-borehole drilling programme where the majority of the boreholes have very low grade.
“The codes also required that the CP or competent valuator should not remain silent on the aspects that may negatively affect the perception of the project, such as not reporting the negatives associated with the project,” Lomberg concludes.