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 History of the Development of the SAMREC Code
The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (the SAMREC Code, or the Code) sets out minimum standards, recommendations and guidelines for Public Reporting of Exploration Results, Mineral Resources and Mineral Reserves in South Africa. It has been drawn up by the SAMREC Committee (previously the SAMREC Working Group) of the SAMCODES Standards Committee (SSC) under the joint auspices of the Southern African Institute of Mining and Metallurgy (SAIMM) and the Geological Society of South Africa (GSSA).
In 1992 a committee was formed by the GSSA, in response to the Council of Mining and Metallurgical Institutions (CMMI) to compile the first South African Code for reporting Mineral Resource and Mineral Reserves. The final draft was presented in conjunction with the SAIMM for discussion at the 1994 CMMI Conference at Sun City and to the JSE Listing Committee. In 1994, the CMMI formed an ad-hoc International Definitions Group to create a set of international definitions for reporting Mineral Resources and Mineral Reserves with representatives from mining and metallurgical institutions from the United States (SME), Australia (AusIMM), Canada (CIM), the United Kingdom (IMM) and South Africa (SAIMM). A breakthrough came in October 1997 when the CMMI International Definitions Group met in Denver, Colorado and reached a provisional agreement (the Denver Accord) on definitions of Mineral Resources and Mineral Reserves which have formed the basis of the international mineral reporting codes since then. Concurrently, and since 1992, the United Nations Economic Commission for Europe (UN-ECE) has been developing an international framework classification for Mineral Resources and Mineral Reserves. A joint meeting was held in Geneva on October 4, 1998, between the CMMI International Definitions Group and the UN-ECE Task Force. Agreement was reached to incorporate the CMMI standard reporting definitions for Mineral Resources and Mineral Reserves into the UN Framework Classification, thus giving truly international status to the CMMI definitions. The definitions in the SAMREC Code are consistent with those agreed at the Denver Accord by the CMMI participants.
The first version of the SAMREC Code was issued in March 2000 and adopted by the JSE in their Listings Requirements later that year. The Code has been adopted by the SAIMM, GSSA, SACNASP, ECSA, IMSSA and SAGC, and it is binding on members of these organisations. A second edition of the SAMREC code was issued in 2007 with an amendment being published in 2009. A third edition was released in May 2016 and came into effect, superseding the previous version of the Code, in January 2017.
Concurrent with the evolution of the SAMREC Code, the Committee for Mineral Reserves International Reporting Standards (CRIRSCO), initially a committee of the Council of Mining and Metallurgical Institutions (CMMI) has, since 1994, been working to create a set of standard definitions for the reporting of Mineral Resources and Mineral Reserves. As a result of the CRIRSCO/ICMM initiative, considerable progress has been made towards widespread adoption of globally consistent reporting standards. These are embodied in similar Codes, guidelines and standards published and adopted by the relevant professional bodies around the world.
The SAMREC Code is one of 11 members of CRIRSCO, the international family of international mineral reporting codes, including the JORC Code (Australasia); The CBBR Guide for Reporting Exploration Results, Mineral Resources, and Mineral Reserves (Brazil); The CIM Definition Standards for Mineral Resources and Reserves (Canada); La Comisión Calificadora de Competencias en Recursos y Reservas Mineras (Comisión Minera, Chile); Pan-European Standard for Reporting of Exploration Results, Mineral Resources and Reserves (PERC Code); Kazakhstan Code for the Public Reporting of Exploration Results, Mineral Resources and Mineral Reserves (Kazakhstan ); The Mongolian Code for the Public Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The MRC Code); The NAEN Code for the Public Reporting of Exploration Results, Mineral Resources, Mineral Reserves (Russian) and The SME Guide for Reporting Exploration Results, Mineral Resources and Mineral Reserves (The SME Guide – United States of America). During November 2017, Indonesia became the 11th member of CRIRSCO. These Codes have common definitions and the reporting framework which are identical making reporting in these codes equivalent.
The purpose of international reporting codes is to ensure that misleading, erroneous or fraudulent information relating to mineral properties is not published and promoted to investors on the stock exchanges. The impetus for developing these codes came from the Poseidon Nickel Bubble (Western Australia) (1970) which prompted the development of the JORC Code (first issued in 1989) and later after the Busang or Bre-X scandal (Indonesia) in 1997, soon after which the other codes were developed and published. In both of these instances, investors were provided with reports of the grade and tonnage of the respective deposits that were unsubstantiated and not based on scientific principles. The reporting was fraudulent. The share prices were driven up by these fraudulent disclosures until the truth immerged at which point the shares became worthless.
The Importance of the Mining Industry and the Mining Life Cycle
Society requires large volumes of raw materials to sustain itself. These materials are typically grown (agriculture) or mined (mining). South Africa is a minerals rich country, and as a result, its economy is driven by the mining industry both as a direct employer (mines) and as indirect employers (services, engineering, housing, food, etc.) and substantially contributes to the sustainability and growth of the economy. The demand for minerals and metals continues to grow as the world’s population grows, becomes more urbanised and as new products and technologies are developed.
Before developing a mine, investors want to have sufficient confidence that they will obtain a return on their investment, as the development of a mine is lengthy and risky process involving significant capital and expertise. The process of developing a mining project or mine includes technical skills, requires a substantial capital investment, is a long-term investment and carries numerous risks. Unlike many other industries, as mining occurs the process depletes the asset, the knowledge of which is imperfect before 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. The use of the SAMREC Code allows the investor or potential investor to assess the asset and compare it to other assets to other opportunities. This technical reassurance is grounded in the scientific and engineering basis for the declaration.
The investors typically look for opportunities - their decision being based on an assessment of the mineral asset as well as the stage at which the project/mine is at and comparing it to other non-mining opportunities. To assist, the international mineral reporting codes, such as the SAMREC Code, have been developed. These allow an assessment of a mineral deposit and the categorisation of the mineral base, allowing the investor to gauge the merits of the project/mine and the likely risks associated with the potential investment. A successful investment provides trust and confidence to the mining industry, the financial institutions, local and international stakeholders as well as contributing to the local and regional economies. “The international mining industry has a need to communicate effectively. With meaningful standards in place and enforced, sound decisions can be made by various stakeholders in their participation in a project as well as the best way to progress it” (Rendu 2000).
The purpose of the SAMREC Code
The SAMREC Code sets out minimum standards, recommendations and guidelines for Public Reporting for solid minerals of Exploration Results, Mineral Resources and Mineral Reserves in South Africa. The commodities (or solid minerals) covered include base metals, precious metals, bulk commodities (iron ore, manganese, bauxite), coal, dimension stone, gemstones (e.g. diamonds, rubies, emeralds, etc) and mineral sands, but exclude oil, gas and water. It is a requirement of mineral companies listed on JSE to report in accordance with the guidelines of the SAMREC (and SAMVAL) Code, typically in the form of a Competent Persons Report (CPR).
Public Reports are reports prepared for the purpose of informing investors or potential investors and their advisers on Exploration Results, Mineral Resources or Mineral Reserves. They include prospectuses, annual and quarterly company reports, press releases, information memoranda, technical papers, website postings, public presentations and announcements on social media.
The Code aims 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 exploration progress, i.e. Exploration Results.
The SAMREC 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 Code is principles based. It is acknowledged that no single document could cover all accepted industry practices or standards given the range of commodities, deposit types, mining methods, and available metallurgical processes. The following principles must be considered in the application of the Code:
Materiality: A Public Report contains all the relevant information that investors and their professional advisors would reasonably require, and expect to find, for the purpose of making a reasoned and balanced judgement.
Transparency: The reader of a Public Report must be provided with sufficient information, the presentation of which is clear and unambiguous, to understand the report and not be misled. It is stressed in the Code that the Competent Person should not remain silent on any issue for which the presence or absence of comment could impact the public perception or value of the deposit.
Competency: The Public Report is based on work that is the responsibility of suitably qualified and experienced persons who are subject to an enforceable Professional Code of Ethics. The author of the Public Report should be satisfied that: his/her work has not been unduly influenced by the organisation, company or person commissioning a report or any report that may be deemed a Public Report; that all assumptions are documented; and adequate disclosure is made of all material aspects that the informed reader may require in order to make a reasonable and balanced judgement.
The framework of the reporting code is captured in Figure 1 of the Code (Fig. 1) where the three main categories are shown – Exploration Results, Mineral Resources and Mineral Reserves. This is a progression from little information and, therefore, poor understanding of, or confidence in, the basic geology to significant technical information and the ability to demonstrate economic viability including scientific understanding, engineering design, economic studies and consideration of political, social and environmental requirements.
Figure 1: SAMREC Figure 1
The lowest category of declaration is the Exploration Result. This refers to the situation where some preliminary geological work has been undertaken suggesting possible interest. This can be reported as a result; such as a mineralised intersection (grade and width), the result of a geophysical or geochemical survey or other work performed at the site of the project. The declaration can also be in the form of an exploration target either a concept i.e. something strategic and yet to be demonstrated or as the result of initial work but where the work is not substantial enough to declare a Mineral Resource. In both these cases the Competent Person is required to declare a range of tonnage and grade/quality, with appropriate uncertainties and caveats.
With further scientific and engineering work, a geological model can be developed and a mineral resource estimate undertaken. The project can be demonstrated to have geological and/or grade continuity and reasonable prospects for eventual economic extraction and so would be considered to be a Mineral Resource. The level of geoscientific confidence would then allow the project to be ranked from the lowest confidence as Inferred (requiring geological and/or grade continuity) to a higher/intermediate level of confidence as Indicated (requiring geological and grade continuity) to the highest level of confidence as Measured (requiring geological and grade continuity). However, the underlying condition is that reasonable prospects for eventual economic extraction have been considered. The Competent Person should asses this based on the understanding of the geology as well as the other technical aspects (mining, metallurgical etc.) as well as reference to political, social and environmental requirements.
The Mineral Resource does not need to fully integrate the technical (including mining, processing, metallurgical, infrastructure), economic, marketing, legal, environmental, social and governmental factors of the project or to have demonstrated economic feasibility. Once these aspects, collectively known as the Modifying Factors, have been considered, designed, engineered and costed and shown to indicate an economically feasible project, a Mineral Reserve can be declared by the Competent Person.
The Code includes some provisions to assist the Competent Person in the estimations such as that an Exploration Result is not a Mineral Resource and that an inferred Mineral Resource cannot be converted into a Mineral Reserve. As a further proviso, an Indicated Mineral resource can only be converted into a Probable Mineral Reserve, whereas a Measure Mineral Resource can be declared as either a Probable or Proved Mineral Reserve. Once again, the requisite professional needs to be involved in the project assessment and be prepared to face their peers in terms of the work he has performed.
The SAMREC Code has four commodity specific sections, each for coal, diamonds, industrial minerals and metal equivalents.
Aspects related to Coal Declarations
Aspects related to Diamonds (and other gemstone) Declarations
Aspects relating to Industrial Minerals Declarations
Industrial minerals are important, but their recovery and saleability are different to metalliferous minerals. This has necessitated that more specific information needs to be provided when dealing with industrial minerals such as the importance of a market and the saleable specifications.
Aspects relating to Metal Equivalents Declarations
When reporting a polymetallic deposit, it may be useful to report all the metals as an equivalent grade related to the major metal. Although this may be a contentious issue some guidance has been provided. Specifically, the minimum requirements of known grades, recoveries and metal prices for each metal, 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.
 The term “range” has no statistical significance
 Note that for all classifications of diamond deposits, both geological and grade continuity is required. For all classifications, diamond assortment/value also has to be considered.