If you're researching junior mining stocks, there's a question you must clarify: do you truly understand what’s underground in the company? This directly impacts investment decisions. I’ve found that many investors confuse mineral resources with mineral reserves, but these two concepts are vastly different.

First, let's talk about mineral resources. This term usually appears during the exploration stage of a project, divided into three categories: inferred, indicated, and measured. Each category represents a different level of confidence. Inferred resources are the earliest stage, possibly based only on surface sampling or a few drill holes. At this point, the company knows there might be mineralization but needs financing to continue exploration. Honestly, inferred resources carry the highest risk; although the grade and size look promising, the information is too limited.

Next are indicated resources. After more drilling, the company has a clearer understanding of the deposit's shape, depth, and orientation. Through drill data, they also know the grade and mineral types. This data can be used for feasibility studies, allowing an initial assessment of whether the project can truly become a mine.

Measured resources are the most detailed and reliable data set. These are used in later technical reports and feasibility studies. The company uses this data to determine whether mining is economically viable. As an investor, you can view measured resources as indicators of the actual existence of mineralization underground.

But here’s a key point: mineral resources refer to all mineralization in a region, while mineral reserves only include the economically feasible portion. This is the fundamental difference between the two concepts. Some mineralization may be too far from the main ore body, too costly to extract, or of too low quality to be profitable, so it’s not included in reserves.

What is the practical significance of mineral reserves? Probable reserves and proven reserves are two levels. Probable reserves are based on indicated resources but adjusted for metallurgical, processing, environmental, and other factors. Proven reserves are the final estimate, representing the highest confidence level, usually based on current commodity prices.

From an investment perspective, when a company moves from exploration to development and begins conducting feasibility studies, reports on mineral reserves become especially important. At this stage, you can see the company's final assessment of the project's true value. Probable and proven reserves tell you how long the mine can operate, when costs will be recovered, and how much profit can ultimately be made. These data are crucial for judging whether a project is worth investing in. So next time you look at junior mining stocks, don’t just focus on resource quantities—make sure you understand the meaning behind these terms.