24-MMP-A4 Mine Valuation and Mineral Resource Estimation · Undated paper
Nivaar worked solution (AI-drafted; not reviewed by a licensed engineer)
EGBC National Exam — Mining and Mineral Processing Engineering, 09-MMP-A4 Mine Valuation and Mineral Resource Estimation, undated sitting. 3 hours duration; one handwritten 8.5×11 in reference sheet permitted (not an open-book exam); only approved Sharp or Casio calculators allowed. Question 1 is compulsory (parts 1.1–1.5); candidates then select THREE of the five optional Questions 2–6 (20 marks each) to complete the paper.
Reference texts: Isaaks & Srivastava, An Introduction to Applied Geostatistics (variogram modelling, anisotropy, volume–variance relations); Hustrulid, Kuchta & Martin, Open Pit Mine Planning and Design (mine scheduling, NPV/valuation methods, stripping-ratio economics); Gentry & O'Neil, Mine Investment Analysis (Canadian mining taxation, CCA classes, smelter/refining contract terms, net smelter return); SME Mining Engineering Handbook, 3rd ed. (mineral exploration/evaluation stages, ore reserve classification); Guilbert & Park, The Geology of Ore Deposits (volcanogenic massive sulphide genesis); CIM Best Practice Guidelines and NI 43-101 (Canadian Securities Administrators).
Question text not reproduced: the examination questions are © Engineers and Geoscientists BC. Open the official past paper (linked at the top of this page) to read the question, then follow the worked solution below.
1.5.1 — The McKelvey diagram. The USGS McKelvey diagram is a two-axis matrix: the horizontal axis is increasing economic viability (from sub-economic through marginally economic to economic, left to right) and the vertical axis is increasing geological assurance/confidence (from inferred at the bottom through indicated to measured at the top). Any occurrence of a mineral is plotted into one cell of this grid: material that is both well-drilled/well-sampled (high geological assurance) and economically extractable at current prices falls in the top-right cell and is termed a Reserve; material anywhere in the matrix, regardless of economic viability, that has adequate geological confidence is a Resource. Moving right across the diagram (better economics: rising price, lower cost, better technology) or moving up (more drilling/sampling) both convert material from a lower-value classification toward Reserve status — the diagram is the conceptual origin of the entire resource/reserve category system used worldwide today.
1.5.2 — NI 43-101 reserve classification. NI 43-101 (built on the CIM Definition Standards) implements the McKelvey concept as a two-tier reserve system: a Probable Mineral Reserve is the economically mineable part of an Indicated (and, in limited circumstances, Measured) Mineral Resource, demonstrated by at least a Preliminary Feasibility Study to be economically viable under a defined mine plan; a Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource, likewise demonstrated viable by at least a Preliminary Feasibility Study, and carries the highest confidence category because it is drilled/sampled densely enough to support detailed mine planning. Both categories require a formal, documented economic study (not simply an inferred price assumption) before material can be reclassified from Resource to Reserve, directly satisfying the McKelvey diagram's requirement that the material sit in the high-assurance and high-economic-viability cell.
1.5.3 — Definition of a "qualified person." Under NI 43-101 a Qualified Person (QP) is an individual who (i) is an engineer or geoscientist with a university degree, or equivalent accreditation, in a relevant discipline; (ii) has at least five years of relevant experience in mineral exploration, mine development/operation, or mineral project evaluation, specific to the type of deposit and the type of activity being undertaken; (iii) has experience relevant to the subject matter of the technical report; and (iv) is a member in good standing of a recognized professional association (such as EGBC or another provincial engineering/geoscience regulator) that has the authority to discipline its members. Only a QP may prepare, supervise the preparation of, or take responsibility for the technical disclosure and technical reports (including resource/reserve estimates) a Canadian-listed mining company publishes.
1.5.4 — Ensuring grade data quality. A QP ensures grade data is fit for purpose primarily through a documented Quality Assurance/Quality Control (QA/QC) program covering the full sample chain: certified reference material (standards) and blanks inserted at a set frequency into every assay batch to detect analytical bias/contamination; field and laboratory duplicates (and periodic umpire-lab check assays) to quantify sampling and analytical precision; secure chain-of-custody from drill core/sample to laboratory to prevent tampering or mix-up; and independent database audits/site visits by the QP personally verifying core logging, sampling protocols and survey control. The QP's professional signature on the technical report is the mechanism that makes them personally accountable (and disciplinable by their professional association) for having actually reviewed this evidence, not simply taken the operator's numbers on trust — this personal accountability is the core investor-protection purpose of the QP system.
