The CIM Mineral Resources and Mineral Reserve (MRMR) Committee recently released an updated, consolidated set of leading practice guidelines for primary diamond deposits that place diamond price estimation, and the parcel sizes used to support it, at the centre of resource evaluations. 

The overhaul replaces two earlier documents: the 2003 Guidelines for the Reporting of Diamond Exploration Results and the 2008 CIM Best Practice Guidelines for the Estimation of Mineral Resources and Mineral Reserves for Rock Hosted Diamonds.  

The updated guidance, adopted on Nov. 8 by CIM Council, improves transparency around diamond price estimation, provides guidance on how to quantify the uncertainty in those price assumptions and allocates responsibilities to each step in the process. 

Deborah McCombe, MRMR Committee co-chair, said that “the need to update was reflected because there’s sometimes a general lack of knowledge in the diamond industry on how to estimate diamond prices.” She explained this is because diamonds are not usually traded on a single transparent benchmark price. 

In 2022, CIM established a Diamond Peer Group subcommittee of industry experts. The group reviewed industry disclosures on diamond projects and, from that work, identified four parcel size ranges linked to statistical confidence levels. The findings echoed McCombe’s point that it is extremely difficult to predict run-of-mine (ROM) diamond prices from parcel data based solely on truncated size frequency and size quality distributions from small diamond parcels. 

Following the research, the subcommittee prepared draft guidelines and circulated them within the MRMR community and to Canadian regulators and the public for review and comment prior to CIM Council approval. 

Key changes 

Building on that pricing focus, the updated guidelines set clearer requirements for how valuation assumptions are supported and disclosed, and for communicating uncertainty in a more quantitative way. 

The updates introduced a more structured, two-phase approach for sampling primary diamonds, which are diamond-bearing rocks such as kimberlite and olivine lamproite, for price estimation. Phase 1 targets parcels of around 1,000 carats for sorting and valuation, which is considered sufficient in early-stage assessments of a newly discovered deposit. If the Phase 1 results indicate “economic promise,” Phase 2 sampling is recommended. The second phase calls for larger parcels in the thousands or sometimes in the tens of thousands of carats— with the exact size determined by Phase 1 results—to support ROM price estimates for pre-feasibility/feasibility-level decisions. 

McCombe explained that with this new approach, “the quantity and quality of the data for each phase will be improved, and with these improvements, [any] risks due to parcel size will become transparent,” adding that companies can then decide how to best mitigate such risks. 

The guidelines also set out recommended Phase 2 parcel sizes by linking sample requirements to explicit confidence targets, such as being 90 per cent confident that the true price falls within 20 per cent above or below the estimate. The guidelines also warn that small or incomplete parcels and heavy reliance on modelled size and quality distributions can materially increase the uncertainty in the price estimates. 

To help make those uncertainties transparent to investors, McCombe explained that the updated guidelines now provide a clearer list of recommended minimum documentation items, including weights and stone counts by size class and disclosure of the impact of high-value stones on parcel price. 

Another important change McCombe highlighted is a more defined separation of responsibilities among valuers, modellers and lead diamond practitioners. The valuer is expected to price the recovered parcel of diamonds and provide a signed valuation report. If a company uses modelling to convert parcel prices into a ROM price, the modeller is responsible for both the methodology and the resulting estimate. The lead diamond practitioner must complete appropriate due diligence and remain accountable for how the diamond price is applied in the Mineral Resource and/or Mineral Reserve estimate.  

“The whole diamond subcommittee hopes that the improved guidance will boost investor confidence in the outcomes of future resource valuation programs,” said McCombe. “That’s why we kept pushing for these improvements because it’s so important [to have] investor confidence in order to fund our new exploration and development projects.”