Rare Element Resources
Bear Lodge Project
Canadian NI 43-101 Technical Report
October 9
th
, 2014
10135-200-46 - Rev. 0
14-44
The second source of dilution is called the volume-variance effect by geostatisticians
and resource estimation professionals. In geostatistics and mineral resource
estimation, the volume-variance effect refers to the effect of sample volume on the
grade distribution of samples. Small volume samples tend to have greater sample
variability than larger volume samples, thus the statistical variance is higher for small
samples (e.g. assays) than for large samples (e.g. composites). A mining block is a
very large sample, and the variance of minable blocks is generally much smaller than
the variance of composites. The highest grade in a low variance population is lower
than the highest grade in a higher variance population with the same average grade,
thus volume-variance effects tend to dilute higher grades downward. Volume-
variance effects also tend to upgrade lower grades, but that effect does not usually
increase the tonnage of ore-grade mineralization.
Volume-variance effects are incorporated in the resource estimate through the
averaging effects of inverse-distance-power (IDP) grade estimation, as follows: 1)
composited assays are selected for grade estimation from the immediate area in and
around the block that is estimated; 2) the block estimate is computed as the IDP-
weighted average grade of the composites; and 3) the variance of the block estimates
is lower than the variance of the original composites, thus adding dilution.
Volume-variance dilution is measured by comparing the tonnage and grade from the
composited assays to the tonnage and grade of the IDP block estimates. The
nearest-neighbor estimate assigns the grade of the nearest composite to each block
and retains the grade distribution of the composites, while declustering them for
variability in sample spacing. Thus, volume-variance dilution can be measured by
comparing the tonnage-grade distribution of the NN-estimates to the tonnage-grade
distribution of IDP-estimates. This comparison is made in Table 14.26, where tons
and grade above and below cutoff are tabulated for the NN and IDP estimates at
cutoffs of 1.5% and 3.0% TREO. Dilution is immediately apparent, since the grade
above cutoff for the IDP estimates is lower than that of the NN estimates. The
difference between the two estimates is not simply the dilution, but also includes ore-
tonnage losses. Ore-tonnage losses and dilution are estimated based on the
difference in tonnage and grade between the estimates and reasonable assumptions
for the grades of the dilution and ore-loss tonnages. The amount of dilution and ore-
