Roscoe Postle Associates, Inc. Ore Reserve Audit Records

The Homestake Mining Claim was founded on April 9, 1876, by Fred and Moses Manuel and Hank Harney. They soon sold their interests to a group of men, led by George Hearst. Under Hearst’s direction, the Homestake Mining Company was incorporated in November 1877 and grew into the major economic driving force of the Black Hills area.

Starting in 1996, the Homestake Mining Company's Geology Department hired Roscoe Postle Associates, Inc. (RPA) to audit their ore reserves and in 1997 to recalculate the 1996 ore reserves. For the review, RPA examined the geological and assay database (Vulcan), the parameter and assumptions used, estimation methodology and procedures, estimates of a number of blocks, discussions with mine staff, and the reserve classification.

In the September 15, 1997 report, “Audit of Underground Reserves at the Homestake Mine for Homestake Mining Company,” RPA concluded that the Vulcan database was error-free, and well-organized but needed to be updated. RPA also concluded that the methodology and procedure for ore estimates were appropriate and the proven and probable ore reserve calculations were reasonable. However, under the definitions set by the U.S. Securities and Exchange Commission (SEC), a large portion of tonnage used by the Homestake Mining Company to calculate probable reserve could not be used for reporting purposes.

After the September 1997 report, Homestake continued to employ RPA to do a complete recalculation of the 1996 ore-reserve estimates and to provide a new report. Seven RPA employees worked on this project and it was completed in February 1998. The report discovered there was a quantifiable difference between the new method of reserve calculation and the 1996 “in-house” calculations.

Roscoe Postle Associates, Inc. was formed as an Ontario corporation on October 10, 1984, by William Roscoe and John Postle. RPA is a world-leading mining advisory business with services that range from all the stages in the mining industry. In 2019, SLR Consulting acquired RPA. (Information is taken from http://www.rpacan.com/home.html.)

Ore reserves are the calculated tonnage and grade of mineralization that can be extracted profitably. Ore reserves are classified as possible, probable, and proven, according to the level of confidence that can be placed on the data. Possible or inferred reserves are valuable mineralization not sampled enough to accurately estimate its tonnage and grade or even verify its existence. Probable or indicated reserves are valuable mineralization not sampled enough to accurately estimate its tonnage and grade. Proven or measured reserves are reserves that have been sampled extensively by closely spaced diamond drill holes and developed by underground workings in sufficient detail to render an accurate estimation of grade and tonnage.