Explainer
By Trent Klarenbach, BSA AgEc, PAg. Updated Oct 28, 2026
A mineral resource estimate tells you how many tonnes of mineralized rock a company thinks it has, at what grade, above a chosen cut-off grade, split by confidence into measured, indicated and inferred. To read one, find the cut-off grade and metal price behind it, check how much of it is inferred, and work out whether the big ounce number comes from a lot of low-grade tonnes. A resource is not a reserve. Nobody has shown it can be mined at a profit yet.
Contained metal is tonnes times grade. Lower the cut-off grade and you get more tonnes at a lower grade, and usually more headline ounces from the same rock.
Inferred is the lowest-confidence category. Under NI 43-101 it is reported separately from measured and indicated, and it cannot be converted to a reserve.
Every resource must have reasonable prospects for eventual economic extraction. The metal price, costs and pit or stope shapes behind that claim are where the judgment hides.
Compare resources on grade, category mix, depth and recovery, not on headline ounces.
The headline number is the least useful number in the release.
| Line | What it tells you | What to check |
|---|---|---|
| Category | Measured, indicated or inferred: how confident the estimate is | How much is inferred. More than half is an early-stage deposit. |
| Tonnes | How much mineralized rock sits above the cut-off | Whether tonnes jumped because the cut-off fell |
| Grade | Average metal content, e.g. grams per tonne (g/t) gold | Grade against peers using the same mining method |
| Contained metal | Tonnes times grade, e.g. ounces of gold | Never read it without the tonnes and grade beside it |
| Cut-off grade | The lowest grade counted as resource | Is it realistic for the mining method and costs? |
| Metal price | The price used to justify the cut-off and pit or stope shapes | How far it sits above today's price and peers' assumptions |
| Effective date and QP | When the estimate applies and who signed it | Is the qualified person independent? Is the estimate stale? |
Under the CIM Definition Standards that NI 43-101 adopts, a mineral resource is a concentration of material of economic interest in such form, grade and quantity that there are reasonable prospects for eventual economic extraction. The qualified person decides what clears that bar and must explain the basis for it.
A resource is a geological inventory with an economic filter. A reserve is the part of a measured or indicated resource that a pre-feasibility or feasibility study shows can be mined at a profit. The resource vs reserve guide covers that conversion.
Inferred. Estimated from limited drilling and sampling. Geological and grade continuity are implied, not confirmed. It can be used in a preliminary economic assessment with cautionary language, but it cannot become a reserve.
Indicated. Enough drilling to assume continuity between holes. Good enough to support mine planning and a pre-feasibility study. It can convert to a probable reserve.
Measured. Closely spaced, reliable data that confirms continuity. It can convert to a proven or probable reserve.
NI 43-101 does not let a company add inferred tonnes to measured and indicated. If a release quotes one total across all three categories, that is a red flag.
Here is one hypothetical gold deposit, reported three ways. The rock does not change. Only the cut-off does.
| Cut-off | Tonnes | Grade | Contained gold |
|---|---|---|---|
| 0.3 g/t | 100 Mt | 0.75 g/t | 2.41 Moz |
| 0.5 g/t | 62 Mt | 0.98 g/t | 1.95 Moz |
| 1.0 g/t | 22 Mt | 1.65 g/t | 1.17 Moz |
Contained ounces equal tonnes times grade divided by 31.1035 grams per troy ounce. 100 Mt at 0.75 g/t is 75 million grams, or 2.41 Moz.
The 0.3 g/t version makes the best headline: 2.4 million ounces. The 1.0 g/t version tells you only half of those ounces sit in rock with real grade. If the deposit has to be mined underground, where costs are higher, the low cut-off may be fantasy. Good releases include a sensitivity table at several cut-offs. If yours doesn't, ask why.
For an open-pit resource, it usually means the tonnes sit inside a conceptual pit shell built from an assumed metal price, mining and processing costs and metallurgical recovery. For an underground resource, it usually means the material falls inside mineable stope shapes above a cut-off. Material outside those shapes should not be reported.
Metal price. Resource prices are often set above spot or consensus. A higher price means a bigger pit and more tonnes.
Recovery. An estimate that assumes 95% recovery without metallurgical test work is a guess.
Unconstrained resources. A resource with no pit shell or stope shapes behind it is a block model, not an economic filter.
Put grade next to mining method. A 1 g/t open-pit deposit and a 1 g/t underground deposit are different businesses.
Compare measured and indicated ounces, not totals with inferred.
Check depth, strip ratio and location. Shallow and near road and power beats deep and remote.
Divide contained metal by fully diluted shares to see what each share actually owns.
Look at what changed since the last estimate: new drilling, a lower cut-off, or a higher metal price. Only the first is real progress. For drilling quality, see how to read a drill result.
Effective date, and whether the qualified person is independent.
Cut-off grade, and whether it fits the mining method.
Metal price and recovery assumptions, compared with spot and peers.
Whether the resource is constrained by a pit shell or stope shapes.
Share of ounces in inferred.
Measured, indicated and inferred reported separately, never added together.
Grade capping of high-grade assays, and how much metal capping removed.
Drill spacing behind each category.
A sensitivity table at other cut-off grades.
Whether the full NI 43-101 technical report was filed on SEDAR+ within 45 days. The NI 43-101 checklist covers the report.
Ounces quoted without tonnes and grade.
Inferred added to measured and indicated in one total.
A metal price far above spot and consensus with no sensitivity case.
Resource growth that came from dropping the cut-off, not from drilling.
No cut-off grade stated at all.
Terms like cut-off grade and inferred resource are in the glossary. Once a resource feeds a study, read the PEA vs PFS vs FS guide.
What is a mineral resource estimate? An estimate of the tonnes, grade and contained metal in a deposit above a cut-off grade, classified as measured, indicated or inferred by confidence, with reasonable prospects for eventual economic extraction.
What is the difference between measured, indicated and inferred resources? They are confidence levels. Inferred rests on limited drilling, indicated on enough drilling to assume continuity, and measured on close-spaced data that confirms it. Only measured and indicated can become reserves.
Why does the cut-off grade change the resource? A lower cut-off counts more low-grade rock, which raises tonnes and lowers the average grade. Headline ounces usually rise even though the deposit has not changed.
Can inferred resources be added to measured and indicated? No. NI 43-101 requires inferred resources to be reported separately and they cannot be converted to mineral reserves.
Is a mineral resource the same as a reserve? No. A reserve is the part of a measured or indicated resource that a pre-feasibility or feasibility study shows can be mined economically.