Estimates of the tonnage and average grade of ore deposits (ore-reserve estimates) are made for various purposes. They may be made by examining engineers as a basis for placing a value on a mining property in connection with reports on behalf of owners or vendors, on the one hand, or for prospective purchasers or lessees, on the other. They are made for tax purposes and sometimes in connection with mergers of two or more companies or with litigation.

Most operating companies make periodical ore-reserve estimates, usually at least annually, to determine their ore-reserve position as a basis for controlling development and exploration and allocation of funds therefor; for determining deferred, depletion, and depreciation charges per ton; or as a basis for deciding upon operating policy—expansion or contraction of operations, capital expenditures, and the like.

The final estimate in any instance usually is a composite of estimates of different blocks or areas which often differ appreciably from each other in grade or character of ore. A continuous ore-reserve inventory, by blocks, levels, and stopes, in a mine may be required as a basis for controlling stoping operations to maintain a desired grade of output by mixing ores from different blocks.

Some mines produce two or more grades or kinds of ore, which must be mined, milled, and shipped separately; and it becomes necessary, then, to know the grade and type of ore available in each section of the mine.

Thus, iron ores are often mixed to give a desired iron, phosphorus, silica, manganese content. The copper-bearing sulfide ores of Ducktown, Tenn., chiefly valuable for their sulfur, are roasted for the manufacture of sulfuric acid; it is necessary to grade the ore from different stopes carefully, on the basis of sulfur content, to form the right mix for this purpose.

Ore-reserve estimates are based upon the results of exploration and development and analyses of the samples derived therefrom. Unless a deposit is fully developed (and even then to a lesser degree), certain assumptions have to be made regarding the continuity and grade of ore between exposed faces or drill holes that have been sampled. In making these assumptions, the engineer must interpret all available information, and the accuracy of the final results will depend largely on his experience and the soundness of his judgment. Not only must he correctly combine the assay values of the samples, but he must, interpret the geological criteria and consider the influence of structural conditions on continuity and grade of ore, the probable loss of ore in mining, the dilution with waste (which, in turn, may depend on the mining method employed or to be employed), and the cost of mining and milling, which may be an important factor in determining the minimum grade of rock that can be classed as ore.

It is apparent, then, that estimation of tonnage and grade of ore reserves is not a precise science. In some districts where the character, uniformity, and habit of the ore bodies have been learned from long mining experience, more or less arbitrary methods may be applied with considerable confidence in estimating ore extending beyond exposed faces. Thus, in Minnesota and Michigan the mining companies and the State tax commissions accept valuations of ore reserves based upon certain rules as to continuity and grade of the ore.

Ore reserve estimates include the determination of (1) tonnages of ore and (2) average grade or value per ton.