Indicated Mineral Resource

An Indicated Mineral Resource is a category in the classification of a mineral deposit that represents a higher level of geological confidence than an Inferred Mineral Resource. Think of it as moving from a promising hunch to a well-supported estimate. This classification means a company has gathered enough information from drilling, trenching, and sampling to create a reasonably accurate model of the deposit's geology, grade (quality), and tonnage (quantity). The locations of samples are close enough together that a geologist can confidently assume the mineralisation continues between them. While an Indicated Resource has reasonable prospects for eventual economic extraction, it's crucial to remember that it is not yet a Mineral Reserve. It still lacks the detailed technical and economic studies needed to prove it can be mined profitably. For investors, seeing a resource upgraded to 'Indicated' is a significant de-risking event, as it's the first step on the path to becoming a mineable asset.

Imagine you're hunting for buried treasure. An Inferred Resource is like having an old map with an 'X' marking a general area. You believe treasure could be there based on some clues. An Indicated Mineral Resource, however, is like you've gone to that area with a metal detector and gotten consistent, strong signals in a well-defined patch of ground. You've dug a few test holes and found some gold coins. This upgrade in confidence comes from more extensive and higher-quality work:

• Closer Spacing: Drill holes and other samples are spaced much more closely than in the Inferred stage. This allows geologists to connect the dots and be reasonably sure about the shape, size, and quality of the deposit.
• Better Data: The quality of the sampling, analysis, and geological interpretation is higher, lending more credibility to the final estimate.

Essentially, the company has moved from a rough sketch of the treasure to a more detailed blueprint of what lies underground. This blueprint is solid enough to support more advanced engineering and mine planning studies.

For a value investor scrutinizing mining stocks, the distinction between a resource and a reserve is everything. 'Indicated' is the critical bridge between the two.

The single most important thing to know about an Indicated Mineral Resource is that it's the minimum level of confidence required for it to be converted into a Probable Mineral Reserve. This conversion is the magic moment when a geological curiosity becomes a potential economic asset. To make this leap, the company must apply what are called 'modifying factors' in a detailed study. These factors include:

• Mining & Processing: Can we actually dig it up and extract the metal efficiently?
• Economics: Is the price of the commodity high enough to make a profit after all costs?
• Legal & Environmental: Do we have the permits? Can we mine without breaking environmental laws?
• Social & Governmental: Will the local community and government support the project?

A Preliminary Feasibility Study (PFS) is often the report that attempts to answer these questions and convert Indicated Resources into Probable Reserves.

While an upgrade to 'Indicated' is great news and reduces a project's risk profile, don't pop the champagne just yet. An Indicated Resource is not a guarantee of a profitable mine. A project can have millions of tonnes of Indicated material and still be uneconomic because the costs of extraction are too high, the metallurgy is too complex, or the local government won't grant a permit. Always dig into the company's technical reports. A large Indicated Resource is a fantastic start, but its true value is only unlocked when a rigorous study, like a PFS or a full Feasibility Study (FS), proves it can be mined for a profit. Until then, treat it as a well-defined opportunity, not a guaranteed payday.

Let's simplify this with a trip to the kitchen. You want to bake a cake.

• Inferred Resource: You have a fuzzy memory of buying flour, sugar, and eggs last week. You think you have the ingredients. There's a reasonable chance, but you're not certain.
• Indicated Resource: You've opened the pantry and the fridge. You can see the bag of flour, the box of sugar, and the carton of eggs. You're now reasonably confident you have the core components to bake a cake. You can start planning.
• Mineral Reserve: You've not only seen the ingredients, but you've measured them out, pre-heated the oven, greased the pan, and double-checked the recipe. You are now fully confident you can bake a delicious—and in mining terms, profitable—cake.