Lithium industry is moving fast, in response to growing demand. Lithium boom represents a major opportunity for mining companies, especially junior ventures, looking for cheap funding.

Therefore, every day we are flooded by a stream of news, that flaunts progress of miners seeking lithium or testing for lithium content in newly found deposits.

Yet for an analyst or investor, without experience in mining or geology, terms that make part of the headlines, as exploration, prospecting, feasibility study may be only vaguely familiar. What is a difference between exploration and prospecting? Which stage comes first? What really is a feasibility study? How scoping relates to feasibility study? Is it a part of it or a next or previous stage?

Even the terms as deposit, resource, reserve might be confusing. Which of them are interchangeable if any?

Hence it is hard to really grasp the developments on the lithium market, without strong grounding in these terms and understanding of sequence of the stages for mine development.

Lithium Today is here for you to clear out the mess.

I. Preparation stage

Exploration companies usually start looking for mineral resources, based either on historical data or starting from known mineralization – since deposits tend to occur in clusters.

Depending on jurisdiction, the legal obligation may exist, to obtain exploration or even prospecting permits.

II. Prospecting

Two main points need to be remembered about prospecting:

a) it covers large areas – in 1000s of square kms and more

b) it is not invasive – it is mainly based on aerial surveying (increasingly with use of satellites) and soil and surface rocks sampling.

III. Exploration

Exploration stage marks a decrease in terms of amount of area covered and increases in terms of invasiveness in comparison to prospecting.

So from prospected terrain, a number of prospects is selected. Prospects for exploration usually amount to a total area of below 100 square kms.

Then on the prospects drilling for samples takes place. Depending on drilling method and a need, maximum drilling depth is from 60 to 5000 meters. Depending on the drilling platform used, the area of terrain disturbance is usually not larger than 10 x 20 m for a single drilling.

People often do not realize how much exploration depends on chance. The discovery of ore deposits that may indicate the existence of reserves happens on average in mining industry for 1 prospect in 1000.

Would be interesting to find out what a success rate is for a lithium industry. Lower or higher than average? Perhaps an interesting area of research for LT to undertake. Please contact us if you would like to share a data that you have or contribute financially to such research.

Deposits, resources, reserves

Here we come to a point where it is necessary to distinguish in between deposits, resources and reserves.

There is a small distinction in between what geology says as a science and what is used within mining industry.

In geology mineral deposits are divided into:

  • resources
  • reserves

In mining deposits almost always refer to reserves of ore X, possibly together with resources of ore Y.

With that in mind, the most important part is to remember that deposit can be used as a high-level all-encompassing term for mineralisation occurring in the ground.

While resources mean, there are ores in the ground which are potentially valuable. Pay attention to the wording – potentially.

Reserves stands for ore which are first of all economically, but also technically and legally – feasible to extract at present.

Two things to note here.

As a technology progresses usually the number of reserves grow with it. So, remember as some years ago, world was talking about peak oil? Due to development of fracking technology, this topic has been largely erased from the public awareness, even if at a time has been as widely discussed as a global warming is now.

Reserves constitute an asset. Based on reserves, mining companies can secure funding (equity and debt).

Reserves and resources are usually graded by the degree of certainty.

Resources can be:

  • inferred
  • indicated
  • measured

As we moved from inferred to measured category, tonnage, grade and mineral content is being estimated with a growing level of confidence. Starting from a low level of confidence in case of inferred resource.

How do we move from low level of confidence to a high level of confidence in case of measured resource? Through a number and method of sampling and through the quality of geologists reasoning.

The reserves can be only determined to exist after feasibility study is done. It is important to obtain feasibility study – due to business value of possessing reserves.

IV. Feasibility studies

Divided into:

scoping/conceptual/order of magnitude study

Preliminary mine plan often developed by taking existing plans and costs from other similar projects as a reference.
Should asses key project risks and outline prospective markets.


Preliminary capital and operating cost estimates updated as a project progresses and engineering solutions become clearer.
Should include generic mine design and may include production scheduling.


Should provide an answer, with highest possible level of certainty, whether to proceed with a project into a construction stage. Full feasibility studies are significantly more expensive than the preceding studies, what does not come as a surprise considering the nature of their actionable implications. They should include:

  • the assessment of technical viability of the mine and extraction methods
  • specify mine equipment and infrastructure requirements and capacities
  • address legal/governmental conditions and requirements, necessary to proceed with mine development
  • define the management, timing of the project and hiring needs
  • estimate the development, capital and operating costs over the economic life of the mine, lay out the marketing plan for mine’s outputs.
  • support the reasoning with financial models

Reserves again

Reserves estimation comes as a conclusion of feasibility studies.

Reserves similarly to resources are graded by a degree of confidence.

They are either described as probable or proved.

A Probable Ore Reserve has a lower level of confidence than a Proved Ore Reserve but is however of sufficient quality to provide a green light for the development of deposit.
Especially since sometimes the style of mineralization or other factors may mean that the status of Proved Ore Reserve is not achievable for some deposits.

The stages presented here are not written in stone. Terms are also sometimes differently used among geologists and mining executives. If you think you may contribute to the discussion do not hesitate to email us.