The number on the front page
When a mining company announces that it has discovered a large deposit of lithium, the figure quoted in the headline is almost never a reserve. It is usually a resource estimate, sometimes only an inferred one. The distinction matters enormously, but the financial press, and often the companies themselves, let the two words blur into a single comfortable claim about how much metal is in the ground. Anyone reading supply forecasts, country-level assessments or corporate balance sheets without understanding the difference is working with a map that shows the coast but not the depth of the water.
What the words actually mean
Most mining jurisdictions now follow one of a small number of reporting codes — the Australian JORC Code, Canada's NI 43-101, or the South African SAMREC code among them. These codes are not identical, but they share a common architecture. At the top sits the broadest category: a mineral resource, defined as a concentration of material in the Earth's crust from which recovery is potentially feasible. Resources are subdivided by how well the geology is understood. An inferred resource is based on limited sampling; the tonnage and grade are estimates with wide uncertainty. A measured resource has been sampled densely enough that a qualified person is prepared to commit to relatively tight confidence intervals. The intermediate category, an indicated resource, sits between the two.
A mineral reserve is something different in kind, not merely in confidence level. A reserve is the part of a measured or indicated resource that has passed through a modifying factors assessment — an evaluation of mining method, metallurgical recovery, infrastructure, permitting status, and the economics at a stated commodity price. Only once those factors have been applied and a qualified person has signed off that the material can be mined, processed and sold at a profit does it become a reserve. Reserves are subdivided into probable (derived largely from indicated resources) and proven (from measured resources).
The relationship runs in one direction: every reserve was once a resource, but most resources never become reserves. Geology is necessary but not sufficient. A deposit can be geologically excellent and economically stranded — too deep, too remote, too fine-grained for the available processing technology, or sitting beneath a protected area. In that case, it stays a resource indefinitely.
Why the gap between the two numbers is so wide
The conversion from resource to reserve strips out material for several overlapping reasons. The mining method imposes its own losses: open-pit designs leave material in pit walls for slope stability; underground methods leave pillars to support the roof. Metallurgical processing never recovers every atom of metal — some is lost to tailings, some to intermediate products that are not saleable. Cut-off grade calculations remove any tonne whose metal content would cost more to recover than it would earn at the assumed price. Permitting constraints can exclude portions of a deposit that underlie sensitive land. Each of these filters reduces the headline resource figure before a reserve number can be reported.
To make this concrete: suppose, illustratively, that a company outlines a copper resource of one hundred units at an average grade of zero point eight per cent copper. After applying a mining dilution factor, a metallurgical recovery rate, a cut-off grade calibrated to an assumed copper price, and the exclusion of a zone pending environmental clearance, the qualified person determines that sixty units at an effective recovered grade of zero point six per cent copper meet the criteria for reserve classification. The resource was real; the reserve is the subset of it that the company is prepared to state, publicly and with professional liability attached, can be turned into metal at a profit. The remaining forty units have not vanished — they remain in the resource estimate — but they carry none of the economic endorsement that the reserve figure carries.
The price assumption buried inside every reserve
Because the modifying factors include economics, a reserve figure is not a fixed physical description of the ground. It is a conditional statement: this material is a reserve at the commodity price used in the feasibility study. If the price assumed in that study falls substantially below the actual market price, material that was economically marginal drops out of the reserve. If prices rise, some previously uneconomic material may be reclassified upward at the next reporting cycle. This is why reserve figures at a single mine can change substantially from one annual report to the next without any new drilling having taken place.
It also means that global reserve tallies published by geological surveys are snapshots contingent on prevailing economics and reporting conventions at the time of compilation. They are not inventories of fixed physical quantities. When a country's reported reserves for a given mineral appear to jump or fall sharply between surveys, it is worth asking whether the ground changed or whether the economics and classification methodology changed.
Qualified persons and professional liability
Both the resource and reserve classifications require sign-off by a competent person or qualified person — a professional with relevant experience and, under most codes, membership of a recognised professional body. Signing off on a reserve figure carries personal professional liability in a way that a preliminary resource estimate does not. This asymmetry is deliberate. It means there is a human being with credentials and a registration number who has asserted that the modifying factors are reasonable. Investors, governments and offtake counterparties are not simply trusting a geological model; they are trusting a professional judgement backed by a code of conduct.
Reading the figures in practice
When you encounter a mineral figure in a government assessment, a corporate announcement or a supply-chain analysis, the first question to ask is which category it represents and under which reporting code. An inferred resource and a proven reserve described in the same sentence as though they were equivalent quantities will produce a supply estimate that is wrong not by a small margin but potentially by an order of magnitude. Noting whether a figure is resource or reserve, measured or inferred, is not pedantry. It is the minimum required to understand what the number is claiming.
For the reader who wants to go further
The mechanics of how cut-off grade is calculated — and how it interacts with mine planning, block modelling and the choice of mining method — sit underneath everything discussed here. Understanding how a resource block model is built, and how the modifying factors are applied to it systematically in a feasibility study, gives a much clearer picture of why reserve figures carry the weight they do and where the remaining uncertainty lies even after classification.