What are Probable Reserves?

Probable reserves are those mineral reserves for which quantity and grade are computed from information similar to what is used for proven reserves; however, the sites for inspection, sampling, and measurement are less adequately spaced. The resulting degree of assurance is sufficiently high to assume continuity between points of observation.

A publicly held company must disclose the estimated tonnages and grades of its proven and probable reserves. A sample of this reporting appears in the following exhibit, which is an extract from the Newmont Corporation Form 10-K filing.

Reporting the probability of recovery for reserves makes it easier for investors to estimate the present value of a mining company’s assets, and therefore the price they are willing to pay for its shares.