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Summary of Comparison

Joint Ore Reserves Committee 2012 Edition and Kode


Cadangan Mineral Indonesia 2011 Edition

KCMI 2011
Scope
1. The KCMI 2011 declares the scope of 1.
application of the code to industrial
minerals, coal, gemstones and
diamond. Especially legal letter for
Coal (SNI 5015:2011) and Mineral
(SNI 4726:2011)

JORC 2012
The JORC clarifies the scope of
application of the Code to all solid
minerals,
diamonds,
gemstones,
industrial minerals and coal

Competency of Competent Person


2. Competent Person just only member of 2. Competent Person could to declares
PERHAPI and IAGI
himself without the legitimate
Institution into control election as
Competent person.
Reporting Term
3. Existence of resources hypothetical,
3. There is no resources hypothetical
the number of area investigation what
term
calculated based on data and fulfilled
all of the requirements are
considering when do to survey
Geological Perspective
4. The KCMI code presuppose about 4. Methodology implantation JORC more
complexity geology structure more
depend on Competent Person such as
than
JORC
based
Indonesia
regulate procedure.
stratigraphy what used.
5. Classification of coal based on caloric 5. JORC is considering about coal more
energy, the requirements of the
simple than KCMI such as there is no
distance between the drill holes, as
modelling coal seam thickness based
well as the quantitative requirements
sedimentary process
of coal seam thickness and the
impurity to be mined
Reporting
6. Aspects of reporting, there is a 6. Aspects of reporting, JORC is more
standard table that describes the final
complex than KCMI causes there are
status of resources and reserves of
table check list of assessment and
coal and mineral clearly what located
reporting criteria, included technical
in supplement
and sampling data, results of
exploration, reserves even market
study. Furthermore, JORC reporting is

7. Mineable and marketable term not


explained by KCMI 2011, just proved
ore reserves through modifying
factors.

detail but not specific what depend on


Competent person.
7. The JORC 2012 enable classify of coal
reserves commodities to can be
claimed what JORC called mineable
reserve and marketable reserve.

8. Not to control about information and 8. JORC have sense of correlation market
data based on market study
study and results of exploration.
economically correlation by results of
Therefore, public knows this financial
exploration
company who implemented open data
and increase confidence level on
public. Enable will be required from
time to time
9. KCMI have standard operational of 9. JORC is not designed covering coal
exploration
about
Coal
(SNI
standardized with steps exploration
5015;2011)
and
Mineral
(SNI
by defaults
4726;2011)
Legitimate Institution
10. Institution
related:
PERHAPI 10. Institution related: The Australasian
(Perhimpunan Ahi Pertambangan
Institute of Mining and Metallurgy,
Indonesia) and IAGI (Ikatan Ahli
Australian Institute of Geoscientists, or
Geologi Indonesia)
Recognized Overseas Professional
Organization (ROPO)
Business Sector
11. The KCMI Code is the required
11. The JORC Code is the required
reporting code for public reporting of
reporting code for public reporting of
exploration results in Indonesia
exploration results, mineral resources,
Exchange (IDX). In 2017, the
and ore reserves in Australia, New
regulation will do it.
Zealand and Papua New Guinea
12. The JORC Code is an accepted standard
for reporting to the Singapore
Exchange, Hong Kong Stock Exchange,
Australian Securities Exchange (ASX)
and New Zealand Exchange (NZX)

References:
Team Perhapi, et all. 2011. Kode Cadangan Mineral Indonesia. Indonesia
Team AusIMM, et.al. 2012. Australasian Code for Reporting of Exploration Results,
Minerals Resources and Ore Reserves (JORC 2012 Edition). Australia

Case Study
Joint Ore Reserves Committee 2012 Edition and Kode
Cadangan Mineral Indonesia 2011 Edition
Case Study I Poseidon Nickel Bubble
Nickel mining took a long time to get going in Australia, but when it did, it did so in a
spectacular fashion, fueling a frenzy that Business Insider recently included on its list of
the 10 most ridiculous price bubbles in history.
In December 1965, Western Mining Corporation (WMC), acting on information from two
local prospectors, commenced diamond drilling in the Kambalda region and intersected
2.75 meters grading 8.3-percent nickel. WMC announced the find on April 4, 1966, and
other discoveries soon followed. The most memorable find was made by Ken Shirley, a
prospector with Poseidon, who discovered nickel deposits at Mount Windarra and staked
around 40 claims in the area.
The timing was fortuitous: the Vietnam War was pushing up nickel demand, while a strike
at Incos mines in Canada was crippling supply. The result was a sharp rise in nickel
prices. Speculators put two and two together and sent Poseidons stock on an incredible
ride, from $1.85 in September 1969 to a peak of $280 in February 1970.
That fueled a bubble in shares of Australian junior miners that went well beyond nickel.
Any penny stock, it was believed, could make you rich overnight, mining journalist
Trevor Sykes told ABCs Radio National in 2007. And so Poseidon, when it roared off for
the wild blue yonder, dragged a whole ragtag and bobtail of other penny stocks along
with them. All sorts of things became believable. To give you an example: there was a little
stock called Pursuit Oil down in Victoria, which in one trading session ran from 4 cents to
12 cents. And I was spending most of the day as a reporter at the Melbourne Sun trying
to find out why.
However, grades at the mine ended up being about half of the 3.6 percent originally
reported. That, combined with higher-than-expected costs and a fall in nickel prices,
forced Poseidon into receivership in 1975. Mount Windarra, however, carried on. WMC
acquired it in 1974 and operated it until 1991, when low nickel prices forced the company
to shut the project down.
All was quiet at the site until 2006, when it was acquired by Niagara Mining, which was
later renamed Poseidon Nickel (ASX:POS) in honor of the original discoverers. It is now
conducting underground drilling at the site and has defined a JORC-compliant resource
of 3.95 million MT grading 1.73-percent nickel, for a total of 68,300 MT of contained
nickel metal, according to the companys website.
Another example of an Australian junior that has attracted investor attention is Rox
Resources (ASX:RXL), which continues to report positive results from its Camelwood
nickel sulfide prospect at its Fisher East project in Western Australia. The companys
latest assay results, which it released on March 21, include 16.3 meters grading 1.8percent nickel, including 6.3 meters grading 2.5-percent nickel and 0.47 meters grading
5.4 percent.

Case Study II The Bre-X Story


The most infamous case of stock scamming in the history of mining has to be that of BreX which blew the lid off its supposed pot of gold in 1997 and sent repercussions around
the world. Several major mutual funds and a number of banks were heavily invested into
Bre-X with upwards of 7 to 20% of their funds involved when it crashed. Bre-X Minerals
first announced it had discovered the largest gold deposit in the world at Busang on the
island of Borneo in Indonesia in 1994.
A lot of people showed immediate interest geologists, mining companies, stockbrokers
and investors. Initially blinded by the glitter, only later did they realize they had been
taken by one of the oldest scams in mining "salting" of samples with gold. When an
independent study of the samples finally occurred, the faking hadn't even been done well
when examined under a microscope some samples contained shavings from gold
jewelry. In two days, Bre-X stock dropped 85%, losing $3 billion in market value. At the
same time, two Bre-X executives moved to the Caribbean, and a key geologist apparently
committed suicide.
Bre-X was founded by David Walsh in 1988, after leaving his position as a stockbroker.
He operated the firm out of the basement of his home. Bre-X began trading on the Alberta
Stock Exchange in July 1989 but it soon began to waste away as Walsh was unable to
secure sufficient funding to explore their mineral claims. He spent most of 1992 and 1993
in personal bankruptcy, but then using his last $10,000, he flew to Indonesia and met with
John Felderhof, a graduate from Dalhousie University and one of the geologists who had
discovered the giant Ok Tedi deposit in Papua-New Guinea in 1968.
Felderhof hired a geologist friend named Michael de Guzman from The Philippines and
soon after, the company began drilling for gold. Busang consisted of three properties:
Busang I (Central Zone), in which Bre-X had purportedly acquired an 80 percent interest;
Busang II (Southeast Zone), in which Bre-X purportedly acquired a 90 percent interest;
and Busang III (Northwest Zone), in which Bre-X purportedly acquired a 90 percent
interest. Bre-X announced its acquisition of the Central Zone property in a press release
dated July 19, 1993 which also declared commencement of a drilling program to delineate
the potential productivity of Busang, "which is believed to contain an open-pit resource
of 20 million tonnes at +2 gm/tonne gold (equivalent to 1,000,000 ounces of gold)" a
good starting size orebody for a junior.
Within about 18 months, Bre-X claimed to have "proven" the existence of 71 million
ounces of gold, worth about $25 billion. Felderhof in fact, began touting that there were
at least 200 million ounces in the ground. Egizio Bianchini, a stockbroker for NesbittBurns and reputedly at the time, one of Canada's top gold analysts, was quoted as follows
"What most people are now realizing is that Bre-X has made one of the great gold
discoveries of our generation." Another broker, Kerry Smith a mining engineering
graduate from Queen's University, who worked for First Marathon, also became a major
advocate of the stock. 7 The actions of Bre-X essentially conditioned the market to believe
that Busang was one of the richest goldfields ever discovered and that the profits from
this discovery would be enormous.
The company published ever-increasing amounts of gold in the deposit on a weekly and
sometimes, daily basis. The price of Bre-X shares rapidly rose from a few pennies to a
high of $250 Canadian per share (before a 10 for 1 split). Bre-X became the star of the
gold investment community and many members of the general public became convinced
that the company owned a massive and uniquely profitable gold deposit the largest one

ever discovered. The company's descriptions of gold-laden drill samples were accepted
as proof of the Company's claims until independent drilling and analysis revealed that a
the massive deception had been committed by certain company employees. The Bre-X
saga is now known as the gold fraud of the century.
The whole play began to unravel in the spring of 1997 just after the annual Prospectors
and Developers Association of Canada Convention in Toronto a meeting at which
Felderhof was named Prospector of the Year and Walsh received the Developer of the
Year award. Within days, Bre-X shocked the investment world by announcing that an
interim report provided by its independent mining consultant concluded there was "a
strong possibility" that prior estimates concerning the quantity of gold at Busang "have
been overstated because of invalid samples and assaying of these samples."
On the same day of this announcement, Freeport McMoRan Gold & Copper, Inc., which
had recently been selected as Bre-X's major partner, reported its own due-diligence
analyses of seven core samples that "indicate insignificant amounts of gold." That news
came exactly one week after the death of Bre-X's chief geologist Michael de Guzman, who
supposedly jumped to his death from a helicopter while traveling to Busang to meet with
representatives of Freeport to discuss the assay results. A rambling suicide note was left
behind.

References :
http://investingnews.com/daily/resource-investing/base-metals-investing/nickelinvesting/inside-the-booms-and-busts-of-the-australian-nickel-business/ accessed on
April 29th 2016 at 10:41 AM

http://www.infomine.com/library/publications/docs/Meech.pdf accessed on April 29th


2016 at 11;06 AM

Summary of Comparison and Case Study


Joint Ore Reserves Committee 2012 Edition and Kode
Cadangan Mineral Indonesia 2011 Edition

Achmad Juanzah
12113043

Mining Engineering
Faculty of Mining and Petroleum Engineering
Institut Teknologi Bandung
2016