# Mining Investment Must Read: Resources vs Reserves, one can make money while the other may not

When looking at junior mining company stocks, the most common pitfall is not understanding two terms: **Mineral Resources (Resource) and Mineral Reserves (Reserve)**.

The simple and brutal difference is:
- **Mineral Resources** = What is underground (including possibilities)
- **Mineral Reserves** = What is underground that can make money (verified + economically feasible)

# # Resources are divided into three levels (confidence from low to high)

**Inferred Resources** — The least reliable
- In the early exploration, there were few drilling holes.
- The company is just speculating that there might be mining.
- Investment risks are high, don't follow easily.

**Indicated Resources** — Not bad.
- Drilling is encrypted, and there is a clear understanding of the shape of the ore deposit.
- Is it possible to estimate how much there is and what the quality is like?
- Can be used for preliminary feasibility studies

**Measured Resources** — The most solid
- The data is the most detailed and reliable.
- Directly used for feasibility studies and economic assessments
- Mining companies can subsequently convert into "proven reserves"

# # The reserves are divided into two tiers (both can earn money)

**Probable Reserves** — 70-80% confidence
- Based on pointer resource conversion
- After considering the costs of smelting, extraction, and environmental protection
- Can support preliminary economic assessment

**Proven Reserves** — Very Certain
- Highest Confidence Level
- Based on measured resources + Comprehensive economic assessment
- The final numbers announced by the mining company

What should investors pay attention to? # #

Early projects focus on the quality of **resources**, while mid to late stages look at the scale of **reserves**—reserves are what truly convert to cash flow. Some resources that seem large can shrink by over 50% when converted to reserves.