Explor. Mining Geol., Vol. 10, No. 3, pp.

215233, 2001
2003 Canadian Institute of Mining, Metallurgy and Petroleum.
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Classification and Reporting of Mineral Resources

for High-Nugget Effect Gold Vein Deposits
SIMON C. DOMINY
Economic Geology Research Unit, School of Earth Sciences,
James Cook University, Townsville, Queensland, Australia

PATRICK R. STEPHENSON
Australian Mining Consultants Pty Ltd.
Melbourne, Victoria, Australia
and
ALWYN E. ANNELS
SRK Consulting (UK) Ltd.
Cardiff, Wales, United Kingdom

Received March 29, 2001; accepted December 9, 2002.

Abstract The often complex, erratic, and localized nature of gold is a common feature of many
vein-style gold deposits. This style of mineralization is often referred to as being nuggety or pos-
sessing a high-nugget effect. As a result of these complexities resource estimation is difficult and in
general, only Exploration Results can be provided or an Inferred Mineral Resource estimated from
surface drilling data alone. Underground development, further drilling, and probably bulk sampling
will be required to delineate Indicated and Measured Resources. Tonnages can generally be esti-
mated from diamond drill and development information with a reasonable degree of confidence.
Grade is much more difficult to define with confidence because it is commonly highly erratic and
discontinuous in nature. The dependency of higher confidence Resource categories on development
information may create a Catch 22 situation, with funding for such development often depending on
the prior definition of at least Indicated Resources. There are no easy solutions to these challenges
posed by high-nugget effect deposits, and it is important when classifying and reporting not to down-
play the uncertainties often associated with Mineral Resource and Ore Reserve estimates for such
deposits. However, in common with all deposit types, if the principles that underpin the estimation,
classification, and reporting procedures are borne in mind and common sense applied, most issues
can be satisfactorily resolved. This paper discusses the classification and reporting of Mineral
Resources for high-nugget effect gold vein deposits within the framework of the JORC Code (JORC,
1999). 2003 Canadian Institute of Mining, Metallurgy and Petroleum. All rights reserved.

Introduction mineralization is sometimes viewed as high risk because of

Gold vein deposits characterized by a high-nugget effect
present particular challenges during Mineral Resource esti-
mation, classification, and reporting (Yuill, 1985; Pelham,
1991, 1992; Valle, 1992; Dominy et al., 2001). They can be
generally defined as those for which there is a particularly
large expected disparity between adjacent samples, hence
sometimes being described as nugget or nothing deposits.
This characteristic commonly translates into an abnormally
high level of uncertainty in generating grade estimates for
blocks, whatever their size or shape, particularly if the data
arrays are comparable to those used for estimating deposits
characterized by higher grade continuity. In these high-
nugget cases, surface diamond drilling alone generally results
in the definition of Inferred Resources only. Closely spaced
in-fill drilling and underground development and/or bulk
sampling/trial mining will be required to define Measured
and Indicated Resources. To potential investors this style of
the associated low confidence in the grade estimate and gen-
eral paucity of Ore Reserves at mining start-up. Indeed,
many of these operations go underground with only Inferred
Resources and possibly Indicated Resources. The definition
of higher confidence categories is prohibited by the cost of
development, yet the funding is probably being sought for
such development. Without substantial Ore Reserves it is
often difficult for a company to produce a bankable docu-
ment and hence raise funding (Spark, 1990; Hunt, 1990; Bat-
tersby, 1993). In most cases, the following characteristics are
observed:
1. Confidence in the tonnage estimate is variable
depending upon geological continuity, though it is usually
considerably higher than confidence in the grade estimate.
2. Grade shows a high-nugget effect and short range of
autocorrelation.
3. It may only be possible to define a global grade for
each zone of mineralization.

215
216 Explor. Mining Geol., Vol. 10, No. 3, 2001
4. Drilling and other small volume sampling techniques
significantly understate bulk sampling grades and, most
likely, the true grade of mineralization.
However, if common sense is used throughout the
Resource estimation and classification process, the chal-
lenges presented by these deposits should not prove insur-
mountable. Stephenson and Vann (2001) suggest six key
areas in which the application of common sense will aid the
estimation process in any deposit type:
1. understanding of deposit geology (including grade distri-
bution), a key feature stressed by many including Pelham
(1991, 1992), Dominy et al. (1997), Dominy and Annels
(2001) and Sinclair (1998);
2. a well-constructed database derived from quality drilling
and sampling procedures, etc. (Annels and Dominy, 2002;
Dominy et al., 2002a);
3. realistic consideration of estimation parameters such as
cut-off grade, minimum mining width, etc;
4. applicability of the chosen estimation method, i.e., con-
ventional or geostatistical, IDW, OK, or MIK, etc. (Dominy
and Annels, 2001);
5. the classification of results using a suitable code (e.g., the
1999 JORC Code), with emphasis on common sense not on
statistics; and
6. the final presentation of the estimate in a clear, concise
and transparent form.
In Australia, classification impacts directly on the
amount of Mineral Resources which can be converted to Ore
Reserves, since the JORC Code and other national classifi-
cation standards do not permit Inferred Mineral Resources
to be converted to Ore Reserves. It also impacts directly on
the lenders, investors or company executives confidence in
the Ore Reserves. Because the Ore Reserves are the ultimate
basis for the mining project, inappropriate or poorly con-
ceived Mineral Resource classification can have a very seri-
ous effect on the viability of a project.
This paper reviews the nature of high-nugget effect gold
veins and discusses the challenges in classifying and report-
ing of Mineral Resources within the framework of the 1999
JORC Code. A number of case studies are presented. These
discussions are likely to be generally applicable to other
deposit types that display a high-nugget effect (e.g., other
styles of gold mineralization, and tin and uranium deposits).
The Nugget Effect
One of the most notable features of vein-gold mineral-
ization that the estimator has to deal with is the nugget
effect. The term describes the degree of randomness within
a body of mineralization. It is a quantitative geostatistical
term describing the level of variability between samples at
or very close to zero distance apart. It is defined from a
semi-variogram as the percentage ratio of nugget variance to
total variance (Annels, 1991).
Based on the above definition of nugget effect, gold
deposits can be broadly defined as being:
Low-nugget effect <25%
Medium-nugget effect 25% to 50%
High-nugget effect 50% to 75%
Extreme-nugget effect >75%
Those that possess a nugget value above 75% are the
most challenging to evaluate. The best estimate of nugget
effect is obtained from a semi-variogram calculated in the
direction of closest sampling spacing, i.e., the down-hole or
along-drive direction when using exploration or grade con-
trol data.
The Nugget Effect in Practice
A high-nugget effect means that however close samples
are taken, there will be large variations in value. This inher-
ent variability is most serious where there are very small-
scale structures such as coarse gold or small-scale veining.
A deposit that shows so-called pure nugget effect is charac-
terized by a random grade distribution. This implies that the
data are independent and that all estimation methods will be
relatively ineffectual in predicting the grade of unsampled
locations, in which case only classical statistical approaches
are generally applied (Annels, 1991; Dominy and Annels,
2001).
Composition of the Nugget Effect
The nugget effect has two components: (1) the geolog-
ical or natural nugget effect (GNE), and (2) the sampling or
human nugget effect (SNE).
The GNE is related to the natural distribution of the
gold within the mineralization. On a small scale, this refers
to the distribution of single or groups of grains through to
larger-scale zones of high grades. The physical continuity of
mineralization is also an important consideration. Small,
erratically distributed high-grade veinlets will result in a
high-nugget effect. The dissection and displacement of a
previously continuous high-grade vein by later barren events
will also lead to a high-nugget effect.
SNE is related to errors induced by inadequate sample
size, and poor preparation and analytical procedures. SNE is
particularly problematic when dealing with coarse gold-
bearing material (Fig. 1). In some instances, the SNE is the
sole component of the total nugget effect and is nothing else
than a reflection of the fundamental error (Gy, 1982). Gold
deposits display a high-nugget effect as a result of sparsely
distributed grains of gold. These grains are commonly the
only phase in the material that contains the element of inter-
est. As a result, random sampling of the material results in a
range of grain abundances, and because only a few grains
are present, this range is relatively large.
 Classification and Reporting of Mineral Resources for High-Nugget Effect Gold Vein Deposits S.C. DOMINY ET AL. 217

Fig. 1. Examples of coarse gold particles from the BS25 bulk sam-
ple, St. Anthonys Reef, 450 South Drive, New Bendigo Project,
Australia. Such coarse particles impinge on the sampling nugget
effect and lead the evaluator toward bulk sampling as a method for
Plate 1. Slate-hosted quartz veins on the St. Anthonys Reef 450
estimating grade.
South Drive, New Bendigo Project, Australia. The structure is part
Implications of the Nugget Effect of the Deborah line-of-reef and is a typical west-dipping fault reef.
The overall lateral continuity of the reef zones (or ribbons) is
High-nugget effect deposits (e.g., gold) are the most extremely high (1000s m), though individual quartz veins com-
prising the reef are relative discontinuous (10s m).
difficult and challenging of mineralization types to evaluate.
The higher the nugget effect, the higher the potential error
during estimation. The randomness introduced makes pre-
diction of unsampled locations more difficult. Deposits dis-
playing an extreme nugget effect will probably be best eval-
uated using conventional methods to produce global, not
local, estimates.
During exploration and evaluation, avoiding the large
variations associated with the nugget effect improves explo-
ration success and makes resource evaluation more reliable.
As a result, understanding and potentially reducing and cop-
ing with the nugget effect has significant economic impor-
tance. In practical terms assuring rigorous quality controls
during sample preparation and analysis can reduce the SNE.
Carefully thought-out sampling and preparation protocols
are essential (Dominy et al., 2000b). The GNE can only be
reduced through careful interpretation of geology and grade
distribution leading to effective domaining (Platten and
Dominy, 2002).

Geology and Grade Characteristics of High-

Nugget Effect Gold Veins
Deposit Geology
For the purpose of this paper, shear-zone (Achaean),
other mesothermal-type systems (e.g., intrusive and black-
shale hosted), and epithermal systems are included as the
key vein-gold deposits that often display a high-nugget
effect. These systems can comprise discrete veins, reefs or
lodes, sheeted veins/stockworks, en echelon vein systems, Fig. 2. Different gold-quartz reef geometries observed in the
Bendigo Goldfield, Australia. This diverse architecture is common
net veins, saddle reefs, etc. (Plate 1 and Fig. 2). Individual in many fault and fracture-related gold systems.
structures can display complex breccia through to laminated
vein forms. In some instances gold may also be distributed evaluate because of their inherent sampling problems
in the wallrocks through disseminations and/or micro-vein- (Dominy et al., 2000a, 2000b, 2001).
ing. Some of these deposits will be characterized by fine There are three levels of geological complexity
sulphide-hosted gold and others by coarse free gold. Those involved in localization of nuggety gold in many of these
containing coarse gold will be particularly challenging to deposits (Dominy et al., 2000a; 2002b):
218 Explor. Mining Geol., Vol. 10, No. 3, 2001

1. The internal distribution in the immediate host struc-

LIMESTONE SHEAR ZONE
ture may be controlled by vein thickness and/or textural GOLD

INCREASING GRADE VARIABILITY

development of the major vein filling components to give an
irregular distribution of gold.
2. The primary shape and dimensions of the immediate
host vein, which are mostly controlled by slip directions and MISSISSIPPI
initial fracture shape. Fracture pattern and deformation style VALLEY

may be controlled in part by the behavior of the rest of the

vein and the vein host rock.
3. Relationships of the carrying structure to the whole
vein, particularly the effect of later deformation and veining
on its position relative to the gross vein envelope.
These geological features generate the erratic and short-
range characteristics observed during statistical analysis of
gold grade in this style of mineralization. The main point to
consider when undertaking a resource estimate is that it
must be appropriate to the geology of the deposit in question
(Long, 1998; Sinclair, 1998). Figure 3 shows a schematic of
geological and grade variability for a range of deposit types,
depicting the degree of difficulty in resource estimation.
Deposits with reasonably simple geometric shapes and reg-
ular grade distributions can be evaluated by a variety of
techniques with little inherent risk. In contrast, deposits with
high geological variability and complex grade distributions
can only be properly evaluated with fewer techniques and
require substantial experience and knowledge. For example,
there is little point in applying a block modelling technique
to a poorly drilled gold vein characterized by an extreme
nugget effect such deposits can generally only be glob-
ally estimated (Dominy et al., 2000a). Most gold vein
deposits plot in the upper right quadrant of Figure 3.
Nature of Gold Grade
Grade Distribution Ore Shoots
COAL KIMBERLITES
CHROME
Fig. 3. Schematic graph of geological and grade variability for a
range of deposit types. The Y-axis shows grade variability indicated
by the level of nugget effect on semi-variograms (from Annels and
Armitage, 1999).
tail of high values. This apparent extreme skewness is often
due to the combined effect of small gold grains tending to
have a normal distribution, but the coarse grains approxi-
mating to a Poisson distribution.
To add further to the complexities, extreme values
(referred to as outliers by some) are also common. They gener-
ally have low continuities and cause problems in resource esti-
mation by imposing a high variance on the population. This
leads to arguments as to whether they should be cut, filtered or
retained (Bird, 1991; Dominy and Annels, 2001). The coeffi-
cient of variation statistic (coefficient of variation: CV% = stan-
dard deviation/mean
100), essentially the relative standard
deviation, provides a good measure of the nature of the grade

Gold grades are commonly related to variably sized ore

shoots of high-grade mineralization surrounded by lower
grade areas. Ore shoots may account for a relatively small
proportion of the total mineralization, but may contain in
excess of 70% of the contained gold. They can be complex,
displaying an overall plunge direction and containing
smaller higher-grade internal sub-shoots (Dominy et al.,
2000a). The possible effects of post-mineralization defor-
mation that may dislocate an ore shoot must be realized. The
recognition of oreshoots and their grade/geological charac-
ter are a critical part of the resource estimation process.

Grade Statistics

Gold deposits generally show complex grade distribu-

tions. This complexity is typically reflected in two features:
(1) low-grade continuity, and (2) diversity of ore trends. The Fig. 4. Three-dimensional view of the South New Chum line-of-
nature of gold grade distribution in vein systems typically reef, Bendigo Goldfield, Australia, showing strong lateral geologi-
displays strong positively skewed populations with a long cal continuity at the ribbon scale (scale: left to right 2 km).
 Classification and Reporting of Mineral Resources for High-Nugget Effect Gold Vein Deposits S.C. DOMINY ET AL. 219

Fig. 5. Poor lateral geological continuity seen in the granite-hosted El Salva Norde Vein, Pataz
Province, Peru. The gold-barren late-stage quartz vein has laterally dissected the originally relatively
continuous gold-quartz vein. Table 1 shows the grades of the vein and face at each of the sample
sites.

population. Values of less than 25% generally indicate simple the estimation of tonnage. It is particularly important to
symmetrical distributions for which resource estimation should remember that geological continuity is a three-dimensional
be relatively easy. From 50% to 120% the distribution will be feature (Figs. 4 and 5; Table 1). A vein may have good ver-
skewed (potentially lognormal), with estimation being moder- tical and horizontal continuity, though if its width varies
ately difficult. When values reach 120% or more the distribu- erratically and with a wide range, the tonnage estimate will
tions are highly skewed with a large grade range and some dif- be poor if the drill density is not close enough. Geological
ficulty will be faced in estimating local resources. If the CV% and grade continuity cannot be proven using mathematical
is in excess of 200%, as is common in high-nugget effect gold methods, only by drilling and in-ore mine development
veins, the population will be extremely skewed and erratic, and (Dominy et al., 2002b, 2002c).
multiple populations will almost certainly be present. In this Following a study of continuity the deposit will need to
case local grade estimates are very difficult or will even be be domained. Each domain is likely to be geologically
impossible. Many gold veins will display CV% values in homogeneous and will have statistical and geostatistical
excess of 120%. However, the assumption that gold assay pop- parameters that are applicable throughout it. A gold miner-
ulations are always lognormal is invalid. Studies on the Eastern alized system could, for example, include four domains rep-
Goldfields of Western Australia, for example, indicate that the resenting: (1) low-grade to barren material outside the ore
Gamma distribution may be more appropriate (Carras, 2001). shoot; (2) the main ore shoot (less sub-shoots); (3) the inter-
nal very high-grade sub-shoots; and (4) disseminated miner-
alization in the wallrocks of the ore shoot. These domains
Assessing Geological and Grade Continuity through are likely to show characteristics ranging from low variabil-
Domaining ity (CV% <25; low grade/barren zone) to highly variable
(CV% >300; sub-shoots). Failure to define domains prop-
Continuity is a critical factor in resource estimation. In erly will lead to complex grade populations that will be dif-
general, two types are defined (Sinclair and Vallee, 1994): ficult to model. In some instances, however, even well con-
1. geological continuity the geometric continuity of the strained domaining will not allow complex grade
geological structure(s) hosting mineralization (e.g., vein
thickness and up-/down-dip continuation); and Table 1. Face sample data for the gold vein shown in Figure 5
2. grade continuity the continuity of grade within the vein
Sample No. HG Vein HG Vein Face Face
that exists within a zone of geological characteristics and/or Width Grade Width Grade
grade cut-off. (as on Fig. 5) (m) (g/t Au) (m) (g/t Au)
Geological and grade continuity assessment is the key A 0.7 22.5 4.1 15.8
to resource evaluation, particularly in the high-nugget envi- B 0 0 3.8 0.1
C 0.4 3.2 3.9 1.4
ronment (Dominy et al., 2002b). Within gold vein systems, D 0 0 3.9 1.2
grade continuity is often less consistent than geological con- E 0.6 44.7 3.8 31.6
tinuity. Geological continuity has important implications for
220 Explor. Mining Geol., Vol. 10, No. 3, 2001
populations to be resolved. Different domains are likely to
have different reporting characteristics depending upon
geology, grade distribution, etc.
Defining Grade in High-Nugget Deposits
Grade Estimation Techniques
Most veins are relatively narrow tabular structures
amenable to 2D representation and evaluation on plans and
longitudinal projections. There are some whose dimensions
make the use of 2D sectional methods or 3D block model-
ling using inverse distance weighting or kriging interpola-
tion techniques more appropriate. More discussion of these
methods appears elsewhere (Annels, 1991; Valle, 1992;
Dominy and Annels, 2001).
For vein systems the conventional methods that have
been applied in the past are triangular and polygonal
methods. The former suffers from the inability to allow
extrapolation beyond the drill limits while the latter is
biased and fails to take into account more than one drill
intercept whose grade is then often extrapolated over a
very large area. In other instances, weighted averages
(potentially top-cut) of sample data have been used to
define a global grade for an orebody. Inverse distance
weighting methods are sometimes suitable for gold-bear-
ing veins. Though 2D block kriging has been applied,
often combined with indicator kriging where high-grade
sub-populations exist, the nature of these veins makes var-
iography difficult and the estimation of parameters often
unreliable. Frequently, the drilling density is inadequate to
define the structure of semi-variograms at low lags. Krig-
ing may, however, become more applicable during the
operational phase of a mine when more detailed sampling
has been undertaken. Three-dimensional kriging may also
be used, but suffers from the same problems as for 2D
modelling and it may thus be necessary to revert to inverse
distance weighting.
Grade Estimation by Bulk Sampling
Bulk sampling often provides an effective way to
assess grades in high-nugget gold veins, producing sam-
ples in excess of 1 t, which can be processed in their
entirety (Dominy et al., 2001). Compared to grade con-
trol-type samples, bulk samples are restricted in scope
and are only appropriate to help evaluate the grade of a
particular zone. They will generally not be representative
of the whole deposit. Before bulk sampling commences,
the nature of geological and grade continuity must be
established. If several grade and/or geological domains
are present, then more than one sample will be required.
Bulk sample grade can potentially be assigned directly to
stoping blocks depending upon how and where they were
collected.
Indicating Grade Potential
The erratic nature of grade associated with high-nugget
gold systems often renders gold-only assays problematic
(Dominy et al., 2000a, 2000b; Dominy, 2001). A drill inter-
section of 0.5 g/t in an oreshoot can be misleading, as an
intersection within 0.5 m of the original could return 200 g/t
or more. Clearly, the 0.5 g/t value may represent the zone of
influence of that intersection, but is not representative of the
overall shoot grade. It is sometimes possible to develop a
supporting measure of grade potential within drilling pro-
grams in particular, based on parameters other than gold
grade. These could be, for example chemical, mineralogical,
textural or physical.
Dominy (2001) reports preliminary results of a Gold
Proxy Index, which uses specific trace element ratios to dis-
criminate between gold-poor and gold-rich domains in a
gold vein. It is sometimes possible to link gold oreshoots
with a particular quartz texture. In the Tarnagulla project
(Victoria, Australia), exploration was aided by the recogni-
tion of narrow, laminated veins that were indicative of high-
grade oreshoots. The occurrence of certain minerals can also
be linked to the occurrence of gold. In the Clogau St. Davids
mine (Wales, United Kingdom), the appearance of galena
and/or telluride minerals was indicative of the presence of
gold. Thus, the occurrence of a specific quartz texture or
mineral(s) can provide some degree of confidence during
exploration/evaluation that a gold-bearing domain is pre-
sent. To apply such criteria successfully they need to be well
tested and constrained.
Some Important Issues in Resource Estimation
and Classification
This section has been largely adapted from Stephenson
and Stoker (2001) and Dominy et al. (1997) to which the
reader is referred for a fuller discussion. The points raised
have clear implications for the Resource estimation process
and hence impinge on Resource classification. Resource
estimation techniques in gold deposits are not discussed in
this paper and the reader is referred to Annels (1991),
Dominy et al. (2000a) and Dominy and Annels (2001) for
general discussions.
Geology
With all deposit types, no consideration of Resource
estimation or classification can proceed without first and
foremost taking account of the characteristics of the min-
eralization. This, together with the nature and amount of
available sampling information, will largely dictate the
most appropriate estimation method, and will heavily
influence the classification. By definition, the often dis-
continuous/complex geological characteristics of high-
 Classification and Reporting of Mineral Resources for High-Nugget Effect Gold Vein Deposits S.C. DOMINY ET AL.
nugget effect gold veins must result in Resource esti-
mates being subject to a greater degree of uncertainty
than estimates for deposits with a simpler type of metal
distribution.
Data Density and Distribution
Most approaches to Resource classification are based
fundamentally on the density and distribution of data. This
is entirely appropriate since the more data available in a
deposit or part thereof, the greater should be the confi-
dence in Resource/Reserve estimation. However, it is most
important that classification is not based solely on such
parameters without due consideration of the many other
factors which can impact on confidence in
Resource/Reserve estimates.
For low-nugget effect deposits (e.g., base metal sys-
tems) diamond drill spacings of 50 m to 150 m will gener-
ally be enough to define Inferred Resources. Closing this
down to 25 m to 100 m will result in the definition of Indi-
cated Resources, and with spacings 10 m to 50 m, Measured
Resources are likely. This is a generalization that would
need to be modified if, for example, the orebody geometry
was complex.
The spacing of sample points, whether they be drill
intersections or underground chip-channels, can be opti-
mized by the use of variography (Annels, 1991). How-
ever, at the early exploration stage and even with close-
spaced sampling within high nugget-effect deposits, the
effective use of variograms can be difficult (Dominy and
Annels, 2001). In many cases, the ranges of these
deposits are well below 10 m, thus requiring very close-
spaced sampling to be representative of the distribution.
For example, in the Gwynfynydd mine (Wales, United
Kingdom) a diamond-drilling program on 15 m centers
failed to intersect any high-grade zones. The program
was successful in defining the geometry and location of
the orebody, but would have required a hole spacing of
less than 5 m to resolve the grade distribution and dis-
continuous nature of the gold carrier vein within the
more continuous reef package (Dominy et al., 2000a;
Platten and Dominy, 2002). Subsequent mining revealed
high-grade pockets grading 1000 g/t. No JORC-based
estimate was defined from the drill data and further
underground development followed. This contrasts to the
general base metal deposit scenario given above, where
a 15 m spacing would have allowed a Measured
Resource to be estimated.
Critical points to consider if dealing with high-
nugget effect systems are that, in many cases, the distrib-
ution of samples is highly biased (clustered) toward the
high-grade oreshoot zones. Similarly, it is highly likely
that drill spacings will be considerably larger than the
geostatistical range, thus no correlation between samples
will be present.
221
Type, Quality, and Representativity of Data
Sample representatively and repeatability is of major
concern within high-nugget effect gold systems (Fig. 6).
Diamond drill holes generally define structure, but are not
good estimators of grade because of (1) their relative
small diameters/volumes (e.g., HQ at 8.4 kg/m vs BQ at
2.7 kg/m), and (2) the small assay charge sizes often used.
The use of RC holes increases sample size produced, but
there is loss of geological information (i.e., chippings, no
core) and excessive contamination and loss problems
when coarse gold is present (Goodz and Frith, 1993;
Goodz and dAstoli, 1997; Dominy et al., 2000b;
Williams, 2001). Small channel samples taken in a system
characterized by coarse free gold are unlikely to be repre-
sentative and will contribute greatly to the high-nugget
effect (Dominy et al., 2000b). Large assay charges and
special preparation routes are required to minimize the
sampling-nugget effect (e.g., screen fire assay and/or
accelerated cyanide extraction methods). In many cases,
the best method for grade evaluation is through under-
ground development and well-controlled bulk sampling
(Dominy et al., 2000b, 2001). Sampling and preparation
protocols should be designed in the light of Gy theory
(Gy, 1982; Franois-Bongaron, 1998).
The type and quality of data are two of those other fac-
tors referred to above which can significantly affect
Resource/Reserve estimation and classification. For exam-
ple, if a Resource estimate depends wholly or in part on RC
samples taken in wet ground, consideration must be given to
applying a lower classification category than might other-
wise have been justified on the basis of sample density
alone. Another example is the effect of inappropriate sam-
pling or assaying techniques on confidence in assay data.
The impact of such factors is one of the reasons that
Resource and Reserve estimation and classification should
not be undertaken in ignorance of the quality of the database
(Stephenson and Stoker, 2001; Dominy et al., 2002a; Annels
and Dominy, 2002).
The Use of Historic Data
It is not uncommon for high-nugget effect deposits to
have been mined in earlier years or even in pre-modern
times, the mining method being almost invariably by under-
ground techniques. This may raise the question as to
whether, and in what way, historic mining data should be
used in Resource estimation and classification.
Old plans showing geological and sampling data should
never be ignored. They can usually be used with caution and
with appreciation for the fact that many geologists of yes-
teryear were much better observers and mappers than mod-
ern-day geologists. In addition, they can provide valuable
information in areas that might now be inaccessible. Any
use of historic data in the definition of Resources should
222 Explor. Mining Geol., Vol. 10, No. 3, 2001
Fig. 6a. Scatter plot comparing repeat traditional fire-assay grade data at Bendigo (coarse gold-bearing) and Fosterville (fine, sulfide-
hosted gold) gold deposits, Victoria, Australia. High-nugget deposits characterized by coarse gold generally show poor repeatability
between samples from the same pulp using a traditional 30 g charge fire assay.
Fig. 6b. Scatter plot comparing repeat screen fire assays from the
same pulp collected from the Empire Ranch mine, North America.
Acceptable precision breaks down at grades greater than about
17 g/t. In extreme cases, even the use of techniques designed to
combat the sampling nugget effect in the coarse gold environment
fail to make much impact on the improvement of repeatability. A
regime of development bulk sampling proved the best method for
assessing grade in this case.
only be undertaken once the estimator has done their best to
validate the data and its quality.
However, it would be rare for such historic mining data
to be known with sufficient confidence to be used as a basis
for estimates of Measured Resources, particularly for high-
nugget effect deposits. With respect to Indicated and
Inferred Resources, use of such data for classification pur-
poses would depend almost entirely on the confidence
gained in the information, a very subjective matter. Probably
the best guideline that can be applied is to remember that
Indicated Resources are convertible to Probable Reserves,
requiring sufficient confidence in historic information
underpinning an Indicated Resource estimate for it to be
used as a basis for mine planning and financial studies. In
the authors general view, historical data should only be used
to determine Inferred Resources, unless the data is of the
utmost reliability again difficult to verify.
Work undertaken by some of the authors on gold prop-
erties in western Europe and North America have shown
high levels of competence in historical geological mapping
and surveying (proven by re-mapping and surveying), but
problems with grade data. This was because in many cases
assays were either (1) undertaken as small charge fire assays
in the presence of coarse gold (hence exacerbating the
SNE); or (2) based on dollying or panning of channel sam-
ples to provide a grade estimate. In the latter case, where a
grade value was assigned, it could be highly biased depend-
ing on the care taken during analysis. Such a value(s) may
provide a modern estimator with a feel for grade and with
other data may support an Inferred Resource. The level of
confidence required to define Indicated and Measured
Resources is unlikely to be there.
Dependency of Resource/Reserve Classification on Lower
Cut-off Grades
In most metalliferous deposits, but especially in high-
nugget effect gold deposits, classification will vary depending
on the cut-off grade. Since continuity of metal values usually
decreases with increasing cut-off grade (i.e., the connectivity
of ore grade material decreases), a classification, which is
appropriate at a low cut-off grade, might not be appropriate at
a high cut-off grade. Typically, grade-tonnage curves and sta-
tistics are presented in Mineral Resource or Ore Reserve
reports with no mention made that uniform classifications
would rarely apply to the entire range of the estimates.
The effect of a low cut-off grade was important in the
Gwynfynydd mine (Wales, United Kingdom), since the gold
extracted was turned into jewellery. This yielded a high
 Classification and Reporting of Mineral Resources for High-Nugget Effect Gold Vein Deposits S.C. DOMINY ET AL.
value above the spot gold price and resulted in a very low
breakeven cut-off grade (Dominy et al., 2000a).
This characteristic also explains why deposits to be
mined by underground methods might, at the pre-mining
stage, have a lower proportion of the Resources and
Reserves in the higher classification categories than deposits
to be mined by open-pit methods. Underground mining usu-
ally requires a higher cut-off grade than open-pit mining.
The Over-riding Need to Apply Common Sense
If there is one concept that encapsulates all that is
important in making decisions on Mineral Resource and Ore
Reserve classification, it is the over-riding need to apply
common sense (Stephenson and Vann, 2001). This need
should be buttressed by adequate levels of supporting infor-
mation and data, and well documented in the estimation and
classification process. Ultimate decisions on classification
must take into account all of the information available (or
the information not available), including, but not limited to,
statistical information, together with the Competent Per-
sons experience in the deposit. Only then will classifica-
tions properly reflect the Competent Persons confidence in
the estimates and provide the necessary sound foundation
for mine planning and investment decisions.
Principles of Resource/Reserve Classification
The Competent Person
When publicly reporting Mineral Resources (and/or
Ore Reserves) it is the Competent Person who takes respon-
sibility for the estimate that forms the basis of the public
report. Classification of Resources and Reserves is one of
the most difficult and challenging responsibilities of the
Competent Person this is clearly exacerbated in a high-
nugget effect environment. In the 1999 JORC Code, the
Competent Person is defined as a person who is a Mem-
ber of the Australasian Institute of Mining and Metallurgy
and/or the Australian Institute of Geoscientists with a mini-
mum of five years experience which is relevant to the style of
mineralization and type of deposit under consideration and
to the activity which that person is undertaking. If the Com-
petent Person is estimating, or supervising the estimation of
Mineral Resources, the relevant experience must be in the
estimation, assessment and evaluation of Mineral
Resources. If the Competent Person is estimating, or super-
vising the estimation of Ore Reserves, the relevant experi-
ence must be in the estimation, assessment, evaluation and
economic extraction of Ore Reserves (JORC, 1999). The
key qualifier in the definition of a Competent Person is the
word relevant. Determination of what constitutes relevant
experience can be a difficult area and common sense has to
be applied. For example, in estimating Mineral Resources
for vein gold mineralization, experience in a high-nugget
223
effect vein-type mineralization such as tin or uranium will
probably be relevant, whereas, experience in base metal
deposits for example will not be.
The JORC Code
It is important to appreciate that the main reason why
Mineral Resource and Ore Reserve estimates are classified,
is to provide company executives and others making mining
investment decisions concerning Resources or Reserves
with a basis for assessing relative risk. It is useful to bear
this in mind when making classification decisions, and this
is particularly important when dealing with high-nugget
effect type deposits. The JORC Code (JORC, 1999) has
world-wide recognition as a reporting code further
detailed discussions of the code can be found in Stephenson
(2000, 2001) and Stephenson and Stoker (2001). Figure 7
shows a summary of Resource and Reserve categories of the
1999 JORC Code.
There is nothing in the JORC Code or in other national
classification/reporting standards which requires classifica-
tion to be a complicated process, or to be based on a partic-
ular procedure such as, for example, the use of statistical
data available from a block model estimation method.
Resources for high-nugget effect deposits will often be
estimated using conventional methods, as block modelling
may not be applicable (Dominy et al., 2000a; Dominy and
Annels, 2001). Nevertheless, there is still a danger of losing
sight of reality when making classification decisions. It is
very important that the Competent Person takes into account
not only the relative confidence in tonnage/grade computa-
tions, but also confidence in the continuity of geology and
metal values, and the quality, quantity, and distribution of
the available data. If this is done sensibly, the resulting clas-
sification, whatever method is employed, should properly
reflect the Competent Persons understanding of the deposit,
and will, as a result, be in compliance with the applicable
classification and reporting code.
Classification of High-Nugget Effect Deposits
High-Nugget Effect Deposits and Measured Resources
The 1999 JORC Code defines the Measured Resource
as that part of a Mineral Resource for which tonnage,
densities, shape, physical characteristics, grade and min-
eral content can be estimated with a high level of confi-
dence. It is based on detailed and reliable exploration, sam-
pling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are spaced closely
enough to confirm geological and/or grade continuity.
Although a generalization, the uncertainty associated
with the erratic metal distribution in high-nugget effect gold
veins often results in the category of Measured Resources
224 Explor. Mining Geol., Vol. 10, No. 3, 2001
being confined to a restricted zone around mineralization
which has been physically accessed by mine development
and sampled. This zone essentially represents blocking out
by development, but because of the high-nugget effect and
low range, the center of the block is effectively unsampled.
It may, very rarely, be possible to base Measured
Resources on drilling alone, though usually the high density
of drill holes required to justify a Measured Resource would
be prohibitive in terms of cost, time, and logistics. In most
cases a Measured Resource is going to be based on a mix-
ture of close-spaced underground drilling (potentially less
than 10 m centers) and large assay charge sampling from
development. In more extreme cases the only effective way
will be to undertake bulk sampling along development
drives or trial stoping (Dominy et al., 2001). In extreme-
nugget effect deposits, the definition of Measured Resources
is likely to be impossible due to the nature of the mineral-
ization. Three similar scenarios were discussed in Dominy
et al. (2000a) where even after development, sampling, and
bulk sampling, only an Indicated Resource was defined
because of the uncertainties in the grade estimate.
High-Nugget Effect Deposits and Indicated Resources
A reasonable extension of Resources beyond any clas-
sified as Measured may be classified as Indicated. What
might constitute a reasonable extension in the absence of
nearby supporting drill intercepts would be a matter for
debate and would depend on the style of mineralization. In
general cases, it may be possible to define Indicated
Resources by drilling alone, however, for extreme-nugget
cases, the high density of drill holes required to reduce the
uncertainty would be prohibitive in terms of cost, time, and
logistics. In most cases, an Indicated Resource is going to be
based on a mixture of drilling and large assay charge sam-
pling from development. In the more extreme cases, the only
effective way will be to undertake bulk sampling along
development drives or trial stoping (Dominy et al., 2001).
Away from mineralization that has been development
bulk-sampled, Resource estimation and classification
depend on drill holes and/or on old or historic mining data.
The latter situation has been discussed previously. With ref-
erence to an appropriate drill hole spacing for classifying
Indicated Resources, no specific guidance can be given
because each situation is unique. A technique which one of
the authors (Stephenson, 1995) has found useful for classifi-
cation decisions based on drilling is to try to imagine the
effect which in-fill drilling might have on the tonnage,
grade, shape, and location of the mineralized bodies. If it is
thought that additional drilling or sampling could signifi-
cantly affect the shape and/or distribution of the mineralized
zones, but not substantially affect the tonnage-grade esti-
mate, then the portion of the deposit in question can proba-
bly be classified as Indicated. An even more basic approach
to this decision can also be used. If the Competent Person
has sufficient confidence in the Resource estimate for it to be
used for decisive mine planning and for investment deci-
sions, then it probably meets the requirements for Indicated
Resources. If the Competent Person does not have sufficient
confidence for the estimate to be used for these purposes, it
should be classified as Inferred.
In three examples quoted in Dominy et al. (2000a), the
definition of Indicated Resource blocks was only achieved
after peripheral development and bulk sampling above and
below each block. In all cases geological continuity was
good, but grade continuity was poor. These Resource blocks
were subsequently turned into Probable Ore Reserves upon
the application of mining parameters. Measured Resources
were not defined because of the uncertainties in the grade
estimate. In two of the above examples, the reconciliation
between the Reserve estimate and that mined was generally
within 25%.
An issue, which can arise with both high-nugget effect
mineralization and low-nugget effect mineralization, is
whether it should be allowable to estimate Indicated (or even
Measured) Resources on the basis of a single drill hole inter-
cept. This criterion is particularly important in dealing with
gold veins characterized by a high nugget effect because of
the very limited spatial extension of high grades from their
sampling points. The definition of an Indicated Resource in
the 1999 JORC Code provides clear guidance on this matter.
The definition states: An Indicated Mineral Resource is
that part of a Mineral Resource for which tonnage, densi-
ties, shape, physical characteristics, grade and mineral con-
tent can be estimated with a reasonable level of confidence.
It is based on exploration, sampling and testing information
gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drillholes.
The locations are too widely or inappropriately spaced to
confirm geological and/or grade continuity but are spaced
closely enough for continuity to be assumed. The final sen-
tence in this definition can only apply if there are at least
several drill holes intercepting a mineralized zone.
High-Nugget Effect Deposits and Inferred Resources
The definition of Inferred Resources during evaluation is
an important one, since there is sometimes a tendency to
classify dubious amounts of grade and tonnage as Inferred in
an attempt to report a Mineral Resource. The 1999 JORC
Code defines an Inferred Resource as: that part of a Min-
eral Resource for which tonnage, grade and mineral content
can be estimated with a low level of confidence. It is inferred
from geological evidence and assumed but not verified geo-
logical and/or grade continuity. It is based on information
gathered through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drillholes which
may be limited or of uncertain quality or reliability.
The most important criterion to be considered in sep-
arating mineralization at the exploration results stage
 Classification and Reporting of Mineral Resources for High-Nugget Effect Gold Vein Deposits S.C. DOMINY ET AL.
(1999 JORC Code; Fig. 7) from Inferred Resources relates
to assumptions regarding continuity. Continuity has two
components continuity of geology and continuity of
metal values (Sinclair and Valle, 1994). At the explo-
ration results stage, there would usually be doubts as to
assumptions that could be made with respect to both of
these components due to the sparsity and/or quality of
data. Moreover, in high-nugget effect gold veins, the con-
tinuity of the mineralization is likely to be very different
to the continuity of, for example, any alteration halos or
lower-grade material. At the Inferred Resource stage,
there is a higher level of confidence in assumptions of
geological continuity but possibly some doubts regarding
assumptions of grade continuity, as well as other concerns
of a technical nature. In both situations there must be suf-
ficient sampling data available on which to base the judge-
ment of continuity.
The category of Inferred Resources can cover a wide
range of estimates, from close to the Indicated category to
close to not being classifiable as Resources. If the latter sit-
uation is applicable, this may be material information of
which a reader of the report should be made aware.
It is likely that an Inferred Resource can be defined
from drill information alone. This estimate is likely to be
based on a number of intersections confirming the posi-
tion and continuity of the mineralization. The drill hole
grade(s) is unlikely to reflect the true grade of the in-situ
mineralization because of the relatively small sample
size (especially in a coarse gold-bearing system), though
the occurrence of high grades and/or visible gold will
provide some confidence. Where a hole from a single
collar is proposed in an attempt to define an Inferred
Resource, it is strongly recommended that a series of
daughter holes be placed to investigate the local varia-
tion in geology and grade. When defining the grade of an
Inferred Resource, it is unlikely in a high-nugget effect
regime, that a few (less than 10) intersection grades
alone will be enough to make a reasoned estimate of a
block grade. Evidence of previous production may be
helpful, backed-up with other geological data. Where
more than 30 sample values are available, then it may be
possible to define a global grade.
Fig. 7. Figure shows graphically the terms and categories used in
the JORC Code and the inter-relationship among these categories.
225
Classification Case Studies
This section presents a number of case studies showing
how different operations have dealt with the reporting of
Mineral Resources in a high-nugget effect environment.
These examples range from deposits which show virtually
pure nugget effect down to about 60%. Table 2 summarizes
the main grade and geological features of each deposit.
The New Bendigo Gold Project, Victoria, Australia
The Bendigo Goldfield is located in the State of Victo-
ria, Australia. Underground mining commenced in the
1850s, yielding over 1000 t to date. The Bendigo Goldfield
is centered on the city of Bendigo, 130 km northwest of
Melbourne. In 1993, the operator, Bendigo Mining NL, took
over the Goldfield and has spent the last eight years
researching its potential using modern deep drilling technol-
ogy, 3D reconstruction of old workings and geology using
computer modelling and underground exploration
(Johansen, 1998, 2001a).
The Bendigo Goldfield is a slate-belt style of mineral-
ization dominated by upward-fining turbidite cycles
between 10 m to 50 m thick. The sediment-hosted, aurifer-
ous quartz reefs are closely associated with anticlinal axes
and reverse faulting. These complex reef structures repeat at
regular intervals, known as ribbons, down the fold axial
traces. The mineralization is classically high-nugget effect
(Table 2).
During the recent feasibility-stage exploration and
evaluation, underground development has been under-
taken alongside historical research, and surface and
underground drilling. A program of sampling studies,
underground development and bulk sampling was under-
taken to ascertain the most effective way of dealing with
the high-nugget effect (Johansen, 2001b; Dominy et al.,
2000b, 2001). At the present time (April 2003), the project
has 1.8 Mt at 12 g/t gold within a grade range of 10 to 15
g/t gold classified as an Inferred Resource (Table 3). Dur-
ing the next stage, the Inferred blocks will be assessed by
30 m to 40 m spaced in-fill drilling development to define
Indicated Resources (Fig. 8). The operators do not expect
to define Measured Resources because of the high vari-
ability in gold grade. However, the whole subject of
resource estimation and classification will be re-evaluated
as the project develops.
During its exploration program Bendigo Mining NL
used the term resource potential to describe the companys
estimate of the contained ounces of gold which it believes,
on the basis of a technical evaluation of available data and
geological extrapolation, should occur within the New
Bendigo. This term is not part of the JORC Code and was
only used for illustrative purposes. The resource potential of
the New Bendigo Goldfield is 12.3 million ounces to a depth
of 1500 m (Johansen, 2001b).
226 Explor. Mining Geol., Vol. 10, No. 3, 2001

Empire Ranch Gold Mine, North America

The Empire mine is located in North America and for

reasons of confidentiality its location and details are not
given. The mine is currently dormant, with the most recent
period of operation being between 1992 and 1995. It is a
typical narrow vein (<2.5 m) high-nugget effect deposit
characterized by high-grade oreshoot zones and free gold
(Table 2).
Resource evaluation was undertaken through historical
data analysis, limited surface diamond drilling, and the re-
opening and extending of old workings. The nature of the
gold and its distribution led the operators to base their grade
estimate on bulk sampling, supported by the screen fire Fig. 8. Proposed development and drilling scenario for the defini-
assaying of channel samples for domain definition. A small tion of Indicated Mineral Resources in the New Bendigo Project,
Australia. One hundred meters to 120 m spaced drill fans will be
bulk sampling and production plant was designed to process augmented by 30 m to 40 m spaced fans and on-reef development.
up to 15 000 t of ore per annum. As a result of the inherent The drilling will permit the determination of tonnage and give an
high-nugget effect in the deposit, Indicated Resources were indication of grade distribution (Scale: left to right 120 m).

Table 2. General grade and geological characteristics of the case studies presented
Deposit Location Nugget Effect* Range** COV Continuity Gold Distribution Comments
New Bendigo Victoria, Approaches <1 m 225% Complex zones of Free gold with St. Anthonys Reef
Australia pure nugget veining with good particles to 5 mm Deborah line-of-
effect overall lode zone/ribbon or more erratically reef only
continuity. High-grade distributed.
shoots present.

Empire Ranch North America 87% 5m 285% Continuous vein structure, Free gold with Empire South
gold values within particles to 2 mm vein
discrete oreshoot zones. erratically distributed.

Gwynfynydd Wales, U.K. Approaches <1 m 350% Continuous host vein Free gold with particles Chidlaw Link
pure-nuggett structure. Oreshoot with to 3 mm in very high Zone
effect high-grade gold carrier localized concentrations.
highly discontinuous on
ms scale.

Hadleigh Castle Queensland, 60% 6m 120% Continuous vein structure Sulphide-hosted gold B Lode
Australia with localized areas of 40 m localized in
high-grades. pockets with high sulphide
concentrations.

Tarnagulla Victoria, 76% 5m 190% Continuous vein structure Free gold with particles Hangingwall vein
Australia within the high-grade to 3 mm with moderate
laminated veins. to erratic distribution.

Sutter Creek California, 60% 6.5 m 230% Complex shear zone with Free gold to about Comet Zone
U.S.A relatively discontinuous 3 mm with minor
vein structures on 10s m sulphide hosted.
scale. Localized
high-grade ore shoots.
*, ** Semivariogram parameters reported for metal accumulation omni-directional case only for the purpose of this study. Some datasets were log transformed to enable the

fitting of a variogram model.

*, **, Data based on underground channel samples only.

Table 3. Resource classification for the New Bendigo Project

Class Sampling Level Projection Geology Grade Tonnage

Indicated Underground development and 30 m to Above/below Local Grade assigned from drilling, Estimate based on
Resource 40 m spaced in-fill fan-drilling. Potential development. continuity other indicators and historical continuity implied
use of bulk sampling and/or other proven. production data. by drilling.
sampling data. Grade range quoted.

Inferred Underground diamond fan drilling on Approximately Continuity of Grade assigned from drill data Preliminary
Resource 100 m to 120 m sections and historical 50 m along Ribbon ore and historical production data. estimate.
information. strike. zone proven. Grade range quoted.
 Classification and Reporting of Mineral Resources for High-Nugget Effect Gold Vein Deposits S.C. DOMINY ET AL. 227

based on development and bulk sampling. Measured
Resources were not defined. During the period of operation,
the classes of Inferred and Indicated Resources were
adopted from the 1980 USBM/USGS scheme. For the pur-
pose of this contribution, the 1999 JORC Code terminology
is adapted (Table 4). Reconciliation between the reserve
estimates and the mined blocks was generally within 20%.
Gwynfynydd Gold Mine, North Wales, United Kingdom
The Gwynfynydd gold mine is located in the Dolgellau
Gold-Belt, North Wales, United Kingdom. Underground
mining commenced in the early 1860s with production to
date of about 5 t. The last period of working commenced in
early 1992 and terminated in mid-1999 under the auspices
of Welsh Gold PLC.
The east-north-east-trending Chidlaw Lode is a quartz-
sulfide-bearing vein, which is hosted by Cambrian rocks.
Metadolerite sills, known locally as greenstones, intrude the
sedimentary rocks. The vein occupies a normal fault and
possesses variable strike, dip and width according to the
host rock type. Multi-stage book, and ribbon, and pinch and
swell structures combine to give the vein a complex geome-
try. Gold mineralization is most likely to occur where the
vein is in the Clogau Formation (carbonaceous black-
shales). Within the Chidlaw Lode gold occurs in rich pock-
ets or sub-shoots found within an overall easterly plunging
oreshoot (Dominy et al., 1996). The oreshoot comprises a
number of grade domains adding to the nugget effect and
complexity of the mineralization (Table 2). Historical and
recent production in the Chidlaw Lode, shows that the high-
grade zones are generally found in narrow (<0.2 m wide),
highly discontinuous footwall gold-veins. These are hosted
in the footwall of a larger, regionally continuous, 4 m to 6 m
true width mother-vein. Resource estimation in this environ-
ment was highly challenging and required a strong support-
ing knowledge of both geology and grade distribution
(Dominy et al., 1996, 2000a).
The feasibility study produced in 1994 to raise capital
reported a grade based on historical production (i.e., 15 g/t)
and quoted Measured and Indicated Resources, and Proven
and Probable Reserves. This usage was partly flawed for this
deposit, because the degree of confidence necessarily
implied for a Proved Ore Reserve did not exist. At best, only
an Indicated Resource was present. Subsequent estimates by
the technical staff for company reports used only Inferred
and Indicated Resources and required both development
bulk sampling and large volume (e.g., 50 kg) chip-panel
samples (Table 5). Reconciliation between the reserve esti-
mates and the mined blocks was generally within 25%.
Prior to defining JORC-based Mineral Resources, the
company used the terms Potential Resource Class II (unde-
veloped only drill intersection/or through historical rea-

Table 4. Resource classification for the Empire Ranch mine

Class Sampling Level Projection Geology Grade Tonnage

Indicated Developed on two levels. Projected no Geological Grade assigned based on bulk Reliable estimate
Resource Development bulk sampled and 5 kg more than continuity sampling information. Grade based on
channel sampled with 1.5 kg screen fire 10 m up or well-defined. range quoted. Still uncertainty of continuity proven
assay. down dip. grade as a result of the highly in development.
erratic nature of grades.

Inferred Intersected by diamond drill holes on Diamond drill Good Grade assigned based on Preliminary
Resource 30 m spacings and/or minor development. intersections continuity. historical production only. estimate.
Screen fire assay for all samples. projected about Grade range quoted.
15 m to 20 m.

Table 5. Resource classification at the Gwynfynydd gold mine

Class Sampling Level Projection Geology Grade Tonnage

Indicated Developed on at least three sides (levels Data was Overall Grade assigned based on bulk Reliable estimate
Resource and raise), mapped, and sampled using a projected into geological sampling information. Grade based on
+50 kg chip-panel sample. the host or next continuity well- range quoted. Still uncertainty continuity proven
stope block. defined, greater of grade as a result of the highly in development.
likelihood of discontinuous nature of the high-
presence of the grade vein. Background mining
high-grade vein grade established with confidence.
due to raising.

Inferred Developed on one level, preferably two, Data was Overall Grade assigned based on bulk Reliable estimate
Resource mapped, and sampled using a +50 kg projected into geological sampling information. Grade based on
chip-panel sample. the host or next continuity well- range quoted. Still uncertainty continuity proven
stope block. defined, no of grade as a result of the highly in development.
guarantee of discontinuous nature of the high-
continuity or grade vein. Background mining
presence of the grade established with confidence.
high-grade vein.
228 Explor. Mining Geol., Vol. 10, No. 3, 2001

soning) and Potential Resource Class I (developed minor
development with none/little bulk sampling). These were
used for internal purposes only, and were not quoted in any
public documents.
Hadleigh Castle Gold Mine, North Queensland, Australia
The Hadleigh Castle mine is located 36 km east of
Charters Towers, North Queensland, in the Charters Tow-
ers Goldfield, Australia. Mineralization is typified by two
distinct vein styles (Dominy et al., 1999; Kreuzer et al.,
2002). The Main Lodes are hosted in a strongly sericitized
granodiorite and have a strike length of 250 m, dipping 40
to 45 southward. The veins are up to 1 m in width and
comprise highly sheared quartz-sulfide infill. Above the
Main Lodes lie the Hangingwall Lodes hosted in a weakly
altered granodiorite that displays variations in both strike
and dip (25 to 40 south to west). The Hangingwall Lodes
comprise polyphase quartz-sulfide veins with infill tex-
tures up to 0.5 m in width (e.g., B Lode, Table 2). Both sys-
tems are characterized by fine-grained (5 m to 30 m)
sulfide-locked gold, with rare grains approaching 500 m
in size. Development and drilling suggest that within any
one structure some 60% is likely to be payable. Within
payable ground, gold distribution is more consistent,
though overall it is discontinuous and spotty. Grade is
closely related to sulfide content, particularly galena and
chalcopyrite; and it is not unusual for grab samples of vein
material to exceed 100 g/t Au. In general, grades of 6 to 10
g/t Au report from veins with a stope width of about 1.8 m.
Studies at Hadleigh Castle and elsewhere within the Char-
ters Towers Goldfield have shown that grade localization,
generally in the form of ore shoots, is controlled by vein
splaying, changes in dip, and vein intersections (Kreuzer et
al., 2002).
At commencement of the current working period in 1997,
an Indicated Resource of 597 000 t (9.2 g/t) and an Inferred
Resource of 358 000 t (9.5 g/t) was estimated using a sectional
technique. More recently, polygonal estimates have been used
on parts of the orebody yielding comparable results. The cur-
rent inventory contains a total Mineral Resource of 264 000 t
(12.1 g/t) and a total Ore Reserve of 188 000 t (4.8 g/t) (SMC,
2001). Annual depletion of the Resource/Reserve is planned at
110 000 t at 5 g/t Au. The initial project feasibility study was
based upon a mixture of diamond and RC drill intercepts. Only
Inferred and Indicated Resources were defined. As under-
ground development progresses, Measured Resources are
defined through blocking out of stopes (Table 6).
Tarnagulla Gold Project, Victoria, Australia
The Tarnagulla Goldfield is 45 km west of Bendigo in
the Central Victorian Goldfield of Australia. During 1995-
2000, Reef Mining NL milled 57 400 t at a head grade of
29.1 g/t from the Nick OTime shoot (1.67 t contained gold).
The operation was designed to produce up to 15 000 t or ore
per annum. In May 2000, the Tarnagulla operation was
transferred to Ironbark Mining Pty Ltd, which continues to
explore the Poverty and adjoining Lines-of-Reef.
The Poverty Reef is a typical fault vein within tightly
folded Ordovician quartz turbidites. The Poverty line-of-reef
has developed as an en echelon fracture system between en
echelon anticlinorial domes (Cuffley et al., 1998; Krokowski
et al., 2001). The Nick OTime shoot is a vertical pipe-like
body extending from 70 m to 350 m below the surface. The
upper 180 m of the shoot is high grade and below that a rapid
transition to lower grade occurs. Only the high-grade section
has been mined, to a depth of 250 m below the surface. The
laminated, high-grade structures range up to 1.5 m in width
and occur as oblique hangingwall and footwall veins in an en

Table 6. Resource classification at the Hadleigh Castle gold mine

Class Sampling Level Projection Geology Grade Tonnage

Measured Development on two levels and chip Between two Well-defined Grade assigned from sampling. Reliable estimate
Resource sampled, plus local drill data. levels. through based on
development. continuity proven
in development.

Indicated Development on one level Projected to Well-defined Grade assigned from drill Reasonable
Resource (chip sampled) and/or diamond level 10 m through intersections. estimate based on
drill and RC holes on above or below development. assumed
25
10 m to 20 m spacing. development. Less well-defined continuity.
Half distance to through drilling
next intercept alone.
(maximum 30 m).

Inferred Diamond drill and RC hole(s) on No more than Nominally Grade assigned from drill Preliminary
Resource 25
50 m to 100 m spacing. half distance to understood, intersections. estimated
next intercept mineralized based on assumed
(maximum 20 m). zone likely to broad geological
be continuous continuity.
though local
variability
likely.
 Classification and Reporting of Mineral Resources for High-Nugget Effect Gold Vein Deposits S.C. DOMINY ET AL. 229

echelon pattern around a central core of low-grade massive
quartz, which ranges up to 7 m in width (Table 2). The com-
bined strike length of the structure varies from 20 m at the
top of the shoot to 70 m at the bottom. The gold generally
occurs in laminated veins associated with pyrite, arsenopy-
rite, galena, tetrahedrite, sphalerite and chalcopyrite. In
response to the coarse gold nature of the mineralization, the
company used a bulk leach extractable gold method for all
drill and grade control samples (Dominy et al., 2001a).
In early 1994, Reef Mining NL defined a zone of Pre-
Resource Mineralization (forebear to Exploration Results in
the 1996 JORC Code) based on diamond drilling and old
underground development. In accordance with the JORC
Code, no grade or tonnage was assigned to this zone. Later
that year, the company discovered the Nick OTime shoot by
surface diamond drilling on a 50 m grid pattern. Three of the
first 25 drill holes were direct hits down the vertical axis of
the high-grade shoot. A preliminary resource estimate was
made in 1995. This was based on limited drilling and con-
tained 30 000 t of high-grade ore at a grade of 30 g/t in the
Nick OTime shoot (Inferred Resource, Table 7).
A further 497 000 t of low- to medium-grade Inferred
Resource was defined in the South Poverty Reef. The low-
to medium-grade resource was purposely not assigned a def-
inite overall grade, as the density of drilling did not justify
this. Grade was quoted as ranging up to 10 g/t (i.e., further
exploratory work could define orebodies within the Inferred
Resource up to 10 g/t in grade). Classification in the Inferred
Resource category was best, since uncertainty existed
regarding the overall grade.
Geological studies indicated that there was a strong
geological continuity for the laminated high-grade veins.
Once mining commenced in 1996, the resource estimate for
the high-grade shoot was progressively modified and ele-
vated to the Measured Resource category on the basis of the
15 m to 20 m spaced underground drilling, on-vein develop-
ment and limited bulk sampling.
Lincoln Gold Project, California, U.S.A.
The Lincoln project, Amador County, California, lies
within the historical Mother Lode belt. The project com-
menced in 1983 to investigate an unexplored structural
block of the Mother Lode region. Work involved both sur-
face diamond and RC drilling and, in 1989, an underground
decline was developed. Together with the decline, on-lode
development was undertaken supported by channel sam-
pling, underground diamond drilling and geological studies.
The project, owned by the Sutter Gold Mining Company, is
currently on care and maintenance.
The mine lies within its own structural block (Lincoln
Block) of metasedimentary and metavolcanic rocks (green-
stones) and is bounded by two large-scale strike-slip faults
that belong to major regional structure known as the Gold
Fault Zone. This sinuously braided shear-zone is the pri-
mary control for the gold mineralization in the area. Within
the Lincoln block, reverse splay faults occur and localize the
gold-bearing veins. Within the veins, high-grade oreshoots
occur that have a near horizontal plunge. The ore zones
range from 0.5 m to >3 m wide and are localized only within
the foliated and altered greenstones. Economic mineraliza-
tion is found within altered wallrocks and quartz veins. The
ore zones are tabular and have a sinuous northwesterly strike
and near vertical dip. The veins commonly dip to the west,
but may or may not roll into the more characteristic easterly
direction with depth. The major high-grade gold-quartz
veins are associated with smaller, slightly offset slip/fault
surfaces. Quartz is faulted out completely in some areas
with only small amounts of gouge material. Overall, the
geology of the mineralized zone is complex, being related to
a series of fault movements of different orientations.
The 1993 feasibility study defined 320 000 t at 13.7 g/t
of Indicated and Measured Resources and 190 000 t at 17 g/t
of Inferred Resource based upon a polygonal resource esti-
mate. This estimate was reviewed and proposals put forward

Table 7. Resource classification at the Tarnagulla Gold Project

Class Sampling Level Projection Geology Grade Tonnage

Measured Diamond drilling on 15 m to 25 m spacing Within block Well-defined Grade assigned from sampling Reliable
Resource and underground development at 30 m bounded by through and production from proximal estimate based on
spacing. Chip samples collected and development. development. blocks. continuity
assayed using either BLEG or of grade and
screen fire assay. geology
proven in
development.

Indicated Underground diamond drilling on Polygonal Good Grade assigned from top-cut Gross
Resource 15 m to 25 m spacing. zones around confidence. intersections and supported by continuity
intersections visible gold in core and favorable proved.
controlled by mineralogy.
geology.

Inferred Surface diamond drilling on 50 m spacing. Polygonal Reasonable Grade assigned from top-cut Preliminary
Resource zones around confidence intersections and supported by estimated based
intersections from historical visible gold in core and on assumed
controlled by evidence. favorable mineralogy. geological
geology. Grade range quoted. continuity.
230 Explor. Mining Geol., Vol. 10, No. 3, 2001

Table 8. Resource classification at the Lincoln Gold Project

Class Sampling Level Projection Geology Grade Tonnage

Measured Development on one, preferably two Projected up Well-defined Grade assigned from 2 kg to 3 kg Reliable
Resource levels and fully chip sampled. or down dip through ACE assay and tested by bulk estimate based on
Development rounds (1 in 2) to be bulk to the next development. samples. continuity proven
sampled. level only. development.

Indicated Diamond drilling only, and/or developed Projected no Reasonable Grade assigned from top-cut Reasonable
Resource on one level and sampled. Supported by more than understanding intersections only, unless estimate only.
in-fill (20 m sections) underground 15 m beyond of continuity, development present.
diamond fan drilling. intersection. some small-
scale variations
possible.

Inferred Fan diamond drilling only on 50 m to Projected no Nominally Grade assigned from top-cut Preliminary
Resource 100 m sections. more than half understood intersection. estimate only.
way beyond with
intersection. variability
likely
to be high.

to address the high-nugget effect nature of the deposit (Table
8). Of particular significance was the recommendation to
use bulk sampling to evaluate the gold grade. The previous
studies had not fully addressed the coarse nature of much of
the gold and over-reliance had been placed on the use of tra-
ditional small charge fire assay.
High-Nugget Effect Deposits and the JORC Code
The JORC Code has, from time to time, been criticized
for not adequately addressing high-nugget effect deposits. The
criticism is usually that uncertainties regarding continuity of
metal values result in Competent Persons being reluctant to
use the Measured Resource category, and that with limited
sampling, it may be difficult to classify potentially economic
mineralization even as an Inferred Resource. The suggestion
has also been made that codes such as the JORC Code should
include another Resource category, lower in confidence than
Inferred, solely to cover these types of deposits. The public
reporting of tonnage and grade where such estimates do not
meet the requirements to be classified at least as Inferred
Resources, is prohibited in the JORC and other codes.
While sympathetic to the situation faced by these opera-
tors, the authors argue that it is the nature of the deposits that
is the problem, not the nature of the classification/reporting
codes. Indeed, it is clear that Competent Persons diligently
following the JORC Code in such situations, function exactly
as they should by alerting potential investors and decision-
makers to the inevitable uncertainties surrounding
Resource/Reserve estimates in high-nugget effect gold veins.
The main principle behind prohibiting reporting of estimates
less well known than Inferred Resources is that if the Com-
petent Persons do not have sufficient confidence in their ton-
nage/grade estimates to meet the fairly broad requirements of
Inferred Resources, then it would be improper and poten-
tially misleading for such an estimate to be presented to the
public. It might also be imprudent for the company itself to
use such an estimate for project and financial planning, other
than for sensitivity study purposes. Estimates of this type
should be kept internal to the company and used mainly for
justifying further exploration to generate Resources. There is
no good reason why high-nugget effect gold veins, or other
high-nugget effect deposits, should be an exception to this
general principle.
If a Competent Person has confidence that such an esti-
mate may reasonably be presented to the public and would
not mislead, but has not classified it as an Inferred Resource,
there is often an issue of whether the estimate has been too
conservatively classified. The definition of an Inferred
Resource may cover quite low confidence estimates and it is
for this reason that there is no Ore Reserve equivalent to an
Inferred Mineral Resource. Although the authors would not
endorse over-optimistic use of the category of Inferred
Resources, they argue that the JORC Code and other codes
already appropriately cater for high-nugget effect deposits.
The problem is often that those preparing and/or assessing
Resource/Reserve estimates do not read their governing
codes as fully as they should, and may not be aware of all of
the provisions which exist to help them in classifying and
reporting their results.
One of the reasons why JORC has not acted on sugges-
tions that high-nugget effect deposits (in general, not just
gold veins) be given special treatment in terms of classifica-
tion, is that such an action could open a Pandoras Box for
holders of other deposit types with problematical character-
istics to claim similar specialist treatment. The end result
could be deterioration in the flexible nature of the JORC
Code and an unnecessary increase in its complexity. The
issue with high-nugget effect deposits is just that, they are
high-nugget effect, that is, they are characterized by large
local variations in the grain size and/or distribution of valu-
able minerals. As a result, grade estimates will usually be
subject to a high degree of uncertainty. The public needs to
know this and it must be appropriately reflected in the
Resource/Reserve classification.
 Classification and Reporting of Mineral Resources for High-Nugget Effect Gold Vein Deposits S.C. DOMINY ET AL.
Public Reporting of High-Nugget Effect Gold Veins
One way that companies dealing with high-nugget
effect deposits could assist themselves and investors would
be to provide fuller public disclosure, particularly at the
exploration results stage. Although a degree of caution is
understandable in some situations, there still seems to be a
reluctance by companies to give: all information which
investors and their professional advisers would reasonably
require, and reasonably expect to find in the report, for the
purpose of making a reasoned and balanced judgment
regarding the mineralization being reported (guideline to
Clause 5 of the 1999 JORC Code). It could be argued that
this is more important for high-nugget effect gold veins than
for those less challenging deposits.
An example of more complete and useful disclosure is
the reporting of estimated Resource and Reserve grades as a
range of values or as a best estimate value within a stated
range of values, rather than as a single figure (see previous
case studies). This is one way of more appropriately con-
veying to the public the uncertainty surrounding the esti-
mates of average gold grades in a high-nugget deposit.
Conclusion
High-nugget effect gold-bearing veins are arguably one
of the most challenging types of mineralization to evaluate
and exploit successfully. The classification and reporting of
Minerals Resources in these veins is not straightforward. By
their nature, it is extremely difficult to estimate Measured
Resources. Inferred and Indicated Resources will require
differing levels of diamond drill intersection, underground
development, and bulk sampling. Tonnage can often be
determined to a reasonable level of confidence but not grade,
and it may therefore be difficult to produce bankable docu-
ments. When presenting resource statements, it is suggested
that the grade estimate be defined within a grade range. How
the grade range will be determined will depend upon the
particular operation. Both grade and tonnage figures will be
rounded to reflect the level of precision of the estimations.
For instance, grade may be rounded to one decimal place
within a grade range rounded to the nearest g/t. It is felt that
this approach better reflects the current situation than report-
ing a single grade, and as a consequence better informs
investors and the stockmarket.
With any mineral deposit there is no one recipe for suc-
cess. Once a high-nugget effect vein system is located, its
exploration is from the inside out and linked with develop-
ment. This approach uses the instinct for vein behavior built
up by miners, geologists, and engineers based on experi-
ence. A flexible approach should be used that is sensitive to
the dynamic nature of development-driven exploration.
Above all else, the most important recommendation that the
authors can make is to understand both grade and geological
continuity. This knowledge is the key to improved confi-
231
dence in any Resource estimate (Dominy et al., 1997, 2000a,
2002b, 2002c). Studies should address vein/reef geometry
and structure, and what controls where gold is and why. This
work should be undertaken on both the large scale to guide
exploration and resource drilling, and once accessed by
underground development, on the small scale to control
exploitation.
While classification and reporting codes set the mini-
mum standards to be applied in these activities, successful
Resource/Reserve estimation and classification also requires
a good understanding of the underlying principles and a
healthy dose of common sense. This is particularly the case
with high-nugget effect vein gold deposits. The challenges
faced by such deposits may be considerable, but if the pro-
fessionals involved observe these principles and standards,
make maximum use of their experience and knowledge of
the deposits, and remember that the minerals industry is
largely about understanding and managing risk, the chal-
lenges should not prove insurmountable.
Acknowledgments
This contribution results from a number of years
experience in dealing with the problems of evaluating
high-nugget effect vein-gold systems in Australia and
beyond by the authors. We are particularly grateful to a
number of organizations. S.C.D. thanks Welsh Gold PLC,
Cardiff University, the Royal Society, the U.K. Institution
of Mining and Metallurgy, and the North Queensland
Branch of the Australasian Institute of Mining and Met-
allurgy for supporting study leave periods to Australia
during 1998-2001. He also acknowledges input from
Charters Towers Gold Mines Ltd, Ballarat Goldfields NL
OCX Resources Inc., Clogau Gold Mines Ltd, Elenith
Mining Co. Ltd., Ulster Minerals Ltd., European Gold
Resources Inc., Sutter Creek Gold Mining Company Ltd.,
Eureka Gold Co., AMCO Mining Corp., SAMAX Ltd.,
and MinMet PLC. Former Cardiff University Masters stu-
dents Mark Campodonic, Ben Parsons, Matthew Raine
and Rhys Evans are thanked for their input. P.R.S. thanks
Australian Mining Consultants Pty Ltd. A.E.A. acknowl-
edges colleagues from SRK Consulting (UK) Ltd. Garry
Johansen of Bendigo Mining NL, Brian Cuffley of Iron-
bark Mining Pty Ltd. and Ian Hodkinson (formerly SMC
Gold Ltd.) are thanked for information regarding the
Bendigo, Tarnagulla and Hadleigh Castle projects,
respectively. Discussions with Dr. Isobel Clark
(Geostokos Ltd., U.K.), Dr. Bon Royle (independent con-
sultant, U.K.), Dr. Ian Platten (GGI Consulting, U.K.),
Dr. Steve Henley (Resources Computing International
Ltd., U.K.), Professor Alistair Sinclair (The University of
British Columbia, Canada), Norman Miskelly (indepen-
dent consultant, Australia), and Peter Stoker (Hackch-
ester Pty Ltd., Australia) are particularly acknowledged.
Plate 1 and Figures 1, 2, 4, 6a, and 8 were supplied cour-
232 Explor. Mining Geol., Vol. 10, No. 3, 2001
tesy of Bendigo Mining NL. Two EMG reviewers are
thanked for their detailed comments.
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Addendum
In December 2002, the Joint Ore Reserves Committee
(JORC) issued an Exposure Draft of the proposed 2003
JORC Code (Australasian Code for Reporting of Explo-
ration Results, Mineral Resources and Ore Reserves). The
2003 code revision is due to come into force in July 2003,
and will not affect the discussions and recommendations of
this paper.