Risk governance is an integral part of corporate assurance and decision making. Assurance regarding the processes applied to data collection, estimation and reporting of Mineral resource and Mineral Reserves is required to mitigate the risk of inaccurate results and must therefore be included in a minerals company’s risk management and control framework.
While some companies recognise the importance of peer review in their standard procedures, there may be no practical or effective assurance process in place. Adequate and effective processes and systems will improve the reliability of estimates.
An effective assurance process for the governance of mineral resource and mineral reserves consists of three layers: self-validation and peer review where and when the work is performed, oversight and targeted internal review, and an independent review or audit mandated by management and/or board risk or audit committees.
Reviews and audits improve the level of reliability of estimated and reported mineral resource and mineral reserves. They not only contribute to governance processes, but also identify improvement opportunities and provide mentoring and professional
development guidance.
A recent technical audit of a client’s operations was conducted because a weakness within its existing mineral resource and mineral reserve processes for one project had been identified and the company wished to review the entire process across all operations to evaluate if the processes were adequately designed and personnel sufficiently skilled to support the accurate generation and reporting of the estimates.
The audit process included:
• Interviews with key stakeholders
• Reviewing systems and process documentation
• Learning the estimation processes and assigned responsibilities and competencies
• Identifying and evaluating compliance with internal and industry standards and the risk management controls within the estimation and reporting
• Testing and validating key procedural controls
• Presenting and documenting findings, recommendations and management
actions required to address any risks found to be inadequately managed.
Some findings were common across all operations, and therefore the company stood to benefit from an integrated solution to manage these risks. The audit also provided an opportunity to share knowledge across the local technical and management teams and between the operations of the importance of the results they generate, and the effort required to produce the results.
Some companies conduct audits and reviews to proactively ensure their processes are robust, their systems appropriate and their staff adequately experienced to accurately generate and report on mineral resource and mineral reserve estimates. If a company does not at least have a system of internal peer review, it may have poor assurance of the estimates generated and reported. Senior management and/or the board should disclose to their stakeholders how adequate assurance on the effectiveness of the company’s governance, risk management and control structure is provided.
