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Ministerial Guidelines for Description of a Mineral Resource

Mineral Resources (Sustainable Development) Act 1990: Guidelines issued under s 15(1BB) and s 120A for the Description of a Mineral Resource in a Mining Licence or Retention Licence Application

The following guidelines are issued by the Minister for Energy and Resources, and Minister responsible for administering the Mineral Resources (Sustainable Development) Act 1990 (the Act) under section 120A of the Act for the purposes of section 15(1BB) of the Act. These guidelines apply to mining licence and retention licence applications. To avoid doubt, these guidelines do not apply to exploration licence or prospecting licence applications.

Background

The Act provides for mining, retention, exploration and prospecting licence application requirements. As of 1 February 2012, section 15(1BB) of the Act provides that an application for a mining licence (other than an infrastructure mining licence) or a retention licence must describe, in accordance with guidelines issued by the Minister for Energy and Resources, a mineral resource. Section 120A of the Act further provides that the Minister may, from time to time, issue guidelines relating to any of the objectives or purposes of this Act or the regulations made under this Act.

The applicant is required to submit a mineralisation report, which demonstrates a mineral resource, with the licence application. This is only required if the mineral resource described in the licence application is not already being mined from the land that is the subject of the application. The mineralisation report must be prepared by a competent person (see section 15(1BA) - (1BG) of the Act).

The mineralisation report must set out the following exploration results in relation to the mineral resource (see section 15(1BE) - (1BG) of the Act):

  • the type or types of minerals identified; and
  • the location, depth, quantity and extent of the mineral or minerals; and
  • the method by which that extent has been determined; and
  • analytical results obtained from samples of those minerals.

The mineralisation report must also include an analysis of whether the exploration results indicate that there is a reasonable prospect that the mining of the described mineral resource will be economically viable. A retention licence may only be granted where a mineral resource has been identified but is not yet economically viable to mine.

General

To describe the mineral resource, the application must include:

  • the level of geological confidence with which the resource has been characterised using standards provided in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2004 edition), subject to any relevant exceptions, as specified below; and
  • an analysis of whether there is a reasonable prospect that mining of the mineral resource will be economically viable, including a summary and conclusions of the relevant supporting studies as set out below.

JORC Code standards

The application must describe the mineral resource using the JORC Code standards and terminology (for mineral resources, using the categories ‘inferred’, ‘indicated’ and ‘measured’, where applicable):

  • For a retention licence application, a minimum of an inferred resource as defined by the JORC Code must be established within the area covered by the application.
  • For a mining licence application, a minimum of an indicated resource as defined by the JORC Code must be established within the area covered by the application.

Alternative evidence – highly variable minerals and coal seam methane

In limited circumstances, where the estimation of identified resources to a level of confidence specified above and complying with JORC Code standards is not practical due to the nature of the mineral resource, an alternative demonstration that the mineral resource identified within the area covered by the mining or retention licence application may be accepted.

In particular, this applies where the applicant can demonstrate that the grade of the mineral resource is highly variable such that it would require a density of sampling that would not be practically feasible or economically justifiable to establish a minimum JORC-compliant inferred or indicated resource (for a retention licence or mining licence application, respectively). In these circumstances, the onus will be on the applicant to demonstrate that, based on the applicant’s exploration results: a resource exists and that there is a reasonable prospect that mining will become economically viable in the future. The applicant must also demonstrate that it has tested the identified mineralisation to the extent that would typically allow the estimation of a resource to the levels of confidence set out above – i.e. inferred or indicated resource, for a retention licence or mining licence application, respectively – but in the licence area applied for, ore grades are too variable to achieve those particular JORC Code standards.

In the case of coal seam methane, the JORC Code standards of resource reporting are not applicable. In these cases, the applicant must demonstrate that a coal 'discovery' has been made in the area covered by the licence application, and the discovered coal was sampled and analysed to show a commercial initial (original) gas content per tonne of coal. The applicant must also demonstrate that there is a reasonable prospect that mining will become economically viable in the future (see further requirements for retention and mining licences below).

Economic viability of the mineral resource

Unless mining is already being undertaken in the area covered by the application, the description of the mineral resource must also include an analysis of whether there is a reasonable prospect that mining of the mineral resource will be economically viable (as per requirements for a mineralisation report under section 15(1BE) of the Act).

Economic viability will be applied as an objective test to a project concept or plan and is distinguishable from a test of whether or not financial and other resources are immediately available. It should not take into account the financial capacity or particular economic resources of the licensee, which may present timing and financing issues.

Assessment of economic viability should be undertaken by a suitably qualified and experienced person on behalf of the applicant, and will take into account normal industry approaches and standards, applied by commodity, and the general economic environment, including pricing and cost of capital. The assessment would normally be undertaken using pre-feasibility or other relevant studies.

For a retention licence application, the following should be included in the application:

  • Firstly, it must be demonstrated that the mineral resource is not currently economically viable to mine. Generally, this would be satisfied by a description of the further evaluation work that is still required to establish the viability of mining. Note that a retention licence would not normally be granted or renewed where an indicated resource (the standard of mineral resource identification generally required for a mining licence) had been established and a pre-feasibility study indicating economic viability has already been completed, unless -
    1. the proposed work program relates to defining a JORC measured resource commensurate with mining, or
    2. the retention licence application is over a mineral resource that will be required in future to sustain the operations of an existing mine.

  • Secondly, it must be demonstrated that the mineral resource could become economically viable to mine in the future. This assessment should consider matters such as the grade, scale and depth of the resource, and the marketability of the mineral(s). Generally, the proposed work program included in the application would address any matters required for a prefeasibility study that have not yet been addressed.

For a mining licence application, the following should be included in the application:

  • Where a pre-feasibility or other relevant study, plan or analyses demonstrating economic viability has been undertaken, a description and summary of the findings of the study(ies) should be provided with the application, with independent verification by a suitably qualified person that the study meets accepted industry standards. Alternatively, the applicant may choose to provide the full documentation of the relevant studies in-confidence to the department for department to undertake an analysis.
  • Where a pre-feasibility or other relevant study, plan or analyses, has not been undertaken in relation to the relevant mineral resource, the applicant would need to demonstrate a commitment to mining by detailing the formal decision to proceed to mining made by the applicant (e.g. company board decision) and any financing, contractual arrangements and approvals already in place.

 

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Published by the former Department of State Development, Business and Innovation

Earth Resources Development Division, February 2012

© The State of Victoria 2012

This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968.

ISBN 978-1-74326-071-5 (online)

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