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Module 2: JORC Code & The Resource / Reserve Hierarchy

Why this matters

The JORC Code is the rulebook for how Australian-listed mining companies report exploration results, mineral resources, and ore reserves. It is the single biggest source of retail confusion and the single biggest place companies legally mislead unsophisticated investors.

If you can’t read a JORC table and explain what each category means, you are gambling — not investing — in mining.

The basics

  • JORC = Joint Ore Reserves Committee
  • Current code: JORC Code 2012 (released December 2012). A revised version has been in consultation for several years; check the JORC website for current status.
  • Mandatory for all ASX-listed companies reporting exploration results, resources, or reserves.
  • Aligned to the international CRIRSCO template, so JORC, NI 43-101 (Canada), SAMREC (South Africa), PERC (Europe) and SK-1300 (US SEC) are broadly equivalent though not identical.

The hierarchy (most important diagram in mining)

                EXPLORATION RESULTS
                        ↓
                 (geological confidence increases ↓)

    INFERRED RESOURCE  →  INDICATED RESOURCE  →  MEASURED RESOURCE
                                ↓                        ↓
                       (apply Modifying Factors)
                                ↓                        ↓
                          PROBABLE RESERVE        PROVED RESERVE

Two key rules baked into this diagram:

  1. Inferred resources cannot be converted directly to reserves. They must first be upgraded to Indicated or Measured via additional drilling. This is a hard rule and one of the most common things companies blur in their wording.
  2. Reserves require Modifying Factors to be applied. A resource is a geological estimate; a reserve is an economic statement that the rock can be mined and processed profitably under defined assumptions.

Resource categories

Inferred Resource

  • Lowest geological confidence.
  • Drill spacing wide (often hundreds of metres).
  • Tonnage and grade are estimated based on limited sampling.
  • Cannot be used in reserve calculations.
  • Cannot be used in PFS or DFS economics (with very narrow exceptions).
  • Can be used in Scoping Studies — which is one reason scoping studies are not bankable.

Indicated Resource

  • Moderate confidence.
  • Drill spacing tight enough that geological and grade continuity can reasonably be assumed.
  • Can be converted to Probable Reserves after Modifying Factors.
  • Required basis for PFS economics.

Measured Resource

  • Highest geological confidence.
  • Very tight drill spacing, often supported by trenching, channel sampling, or underground development.
  • Can be converted to Proved Reserves (or Probable, depending on confidence in Modifying Factors).

Sub-categories you’ll see

Modifiers like “in-situ” vs “extractable”, “open-pittable” vs “underground”, or constraints by depth or pit shell. Read carefully — companies sometimes report a big global resource then quietly disclose only a fraction is within an economic pit shell.

Reserve categories

Probable Reserve

  • Derived from Indicated (or sometimes Measured) Resources after applying Modifying Factors.
  • Lower confidence than Proved.

Proved Reserve

  • Derived from Measured Resources after applying Modifying Factors.
  • Highest confidence economic mining inventory.

The Modifying Factors

To convert a resource to a reserve, the Competent Person must apply realistic assumptions about:

  • Mining (method, dilution, recovery, geotech)
  • Processing (metallurgical recovery, throughput)
  • Metallurgical (test work supporting flowsheet)
  • Infrastructure (power, water, roads, port access)
  • Economic (commodity price, opex, capex, royalties, taxes)
  • Marketing (offtake potential, product specifications)
  • Legal (tenements, mining leases)
  • Environmental (approvals, rehabilitation)
  • Social (community agreements, ILUAs)
  • Governmental (royalty regimes, foreign investment rules)

If any of these don’t stack up, the resource cannot become a reserve. Many “huge resources” never become reserves because of metallurgy, infrastructure, or social licence.

Competent Person (CP) requirement

Every public report of exploration results, resources, or reserves must:

  1. Be signed off by a Competent Person — a member of AusIMM, AIG, or a recognised overseas equivalent (RPEQ, etc.).
  2. Have at least 5 years’ relevant experience in the style of mineralisation/deposit type and the activity being reported.
  3. Include a named consent statement that the CP has reviewed and approved the form and context of the announcement.

If the CP statement is missing, vague about credentials, or the CP is the company’s CEO with no relevant background — that’s a flag.

Reading a JORC resource table

A standard table looks like:

Category Tonnes (Mt) Grade (g/t Au) Contained Au (Moz)
Measured 5.0 2.5 0.40
Indicated 12.0 1.8 0.69
Inferred 25.0 1.4 1.13
Total 42.0 1.65 2.22

What to actually look at:

  1. % of resource that is Inferred. If it’s 60%+, the headline ounces are largely speculative. Many junior “1Moz+” announcements are 70-90% Inferred.
  2. Cut-off grade applied. Always disclosed in the announcement footnotes. A resource at 0.3 g/t cut-off vs 0.8 g/t cut-off describes a fundamentally different deposit.
  3. Top-cut applied. Were extreme high-grade assays capped (e.g., capped at 30 g/t)? If not, the average grade may be skewed by a few bonanza intercepts.
  4. Density assumption. Tonnage = volume × density. Wrong density = wrong tonnage.
  5. Constraints. Was the resource constrained inside a pit shell at a given commodity price? At what price?

Common gotchas (where companies legally mislead)

“Exploration Target”

This is NOT a JORC resource. It’s a conceptual range (e.g., “10–25 Mt at 1.5–2.5 g/t Au”). The JORC code allows it but requires explicit wording that it is conceptual, not a resource estimate, and based on insufficient drilling. Companies often headline this and bury the disclaimer.

Historical Estimates

Often quoted by companies that have just acquired old projects. Not JORC-compliant unless re-validated by a Competent Person under the 2012 Code. Headlines like “historical resource of 500,000 oz” are essentially marketing until JORC-validated.

“Ore”

Strictly, “ore” means rock that is economically extractable — i.e., reserve-quality. Companies use “ore” loosely for inferred resources, which is technically non-compliant. Watch the language.

Foreign code “equivalents”

A NI 43-101 resource is broadly comparable but not identical to JORC. If a company says “JORC-equivalent”, that’s a softer claim than fully JORC-compliant.

Resource on resource on resource

Multiple updates in a year, each headlined as if it’s a fresh discovery, when it’s the same deposit being re-drilled and re-categorised. Look at how the Indicated + Measured tonnes are growing, not just the headline total.

Why “10Moz” doesn’t mean what you think

A 10Moz Au resource sounds enormous. But:

  • If 70% is Inferred, you have 3Moz of bankable rock until further drilling.
  • If grade is 0.6 g/t, the project is marginal at best (gold).
  • If cut-off was set at 0.3 g/t, lifting the cut-off to 0.8 g/t might leave you with 2Moz.
  • If the deposit is at 800m depth and the company is a $20m junior, no one is mining it for 15 years.
  • If it’s in a jurisdiction with permitting/sovereign risk, it might never be mined.

Resource size without context is meaningless. This is the most common retail mistake in mining.

Practical exercise

Pull up the latest resource update from any ASX gold or copper junior you follow. Answer:

  1. What % of the contained metal is Inferred vs Indicated vs Measured?
  2. What cut-off grade was used?
  3. Was a top-cut applied? At what value?
  4. Is the resource constrained inside a pit shell? At what commodity price?
  5. Who is the Competent Person and are they independent of the company?

If you can answer these for every position you hold, you’re ahead of 95% of retail.

What I’m uncertain about

  • Whether the JORC 2012 Code revision (long in consultation) has been finalised at the time you’re reading this. Worth checking the JORC website (jorc.org) for current status.
  • Specific recent ASX enforcement actions — there have been periodic crackdowns on misleading resource statements but I’d want to verify recent specifics rather than name them from memory.
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