Evaluating and Controlling Geological Risk

Organization: The Australasian Institute of Mining and Metallurgy
Pages: 10
Publication Date: Jan 1, 1994
The paper first outlines the conceptual basis for evaluating and controlling geological risk. Geological risk, the economic reflection of the uncertainties associated with tonnage, grade, and other pertinent deposit parameters, is evaluated in terms of economic risk criteria. Delineation provides the deposit information required to appraise and control this risk. The improved reliability of geological estimates resulting from additional delineation reduces the economic risk associated with mine development and production decisions. However, the benefits of delineation, subject to diminishing returns, have to be weighed up against the direct and time costs involved. These costs decrease base case economic values and shift the probability distributions of possible outcomes towards, lower values. The optimum amount of delineation normally is achieved short of the point where economic risk is minimised, depending on the mining company's relative preference for a higher base case value or a lower economic risk. Then, two open pit copper mine examples, based on actual situations, are analysed to illustrate the application of the concepts presented. The first case concerns the extension of ore reserves at an operating mine. Finally, a new mine development opportunity is considered.
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