1987 Jackling Lecture - Elementary geostatistical models applied in forecasting South Africa's long-term gold production

Krige, D. G.
Organization: Society for Mining, Metallurgy & Exploration
Pages: 6
Publication Date: Jan 1, 1988
In the world mining scene, precious metals (particularly gold) have recently monopolized the attention in exploration as well as new production activities. As the major world producer of gold, South Africa plays and will continue to play a very significant role in this commodity. This role will, of course, have its consequential effects on the world's gold supply and, hence, also on the international price of gold. It is essential, therefore, and in the interests of all gold producers that the likely future pattern of gold production in South Africa be estimated such that some measure of production uncertainties can be predicted. For this purpose, some elementary geostatistical models will be used, and the main factors affecting the situation will be analyzed in broad outline only under the following headings: South Africa's basic gold ore potential in the three categories of: (1) ore remaining in existing mines; (2) extensions to existing mines via unexplored areas and/or reef horizons of lower grade; and (3) new mines, potentially deep or ultradeep. Cutoff grades - operating, marginal, and flotation, for the foregoing three ore categories, respectively. The availability of production, financial, and other resources required. Cutoff grades will, of course, depend on cost levels (operating and capital), future inflation and cost escalation trends in South Africa (SA), and/or gold price trends (in US$ and via the exchange rate in SA Rand terms). The differentials in inflation and escalation trends with those in overseas countries, mainly the USA, will, in general, set the scene for future exchange rate levels of the Rand. To predict the effect of various cutoff grades on future gold production from South Africa, it is essential to use geostatistical models. The applicability of such models is tested against past records of price, cost, and grade trends and then applied to the estimated ore potentials. These models were referred to briefly in a paper at a recent seminar on gold (Krige, 1986) but are discussed in detail herein. This lecture was intended originally to cover only technical aspects, but, in view of South Africa's position internationally and the possible effect of sanctions, internal unrest, and strikes on gold production, a brief reference to the third factor above (availability of production, financial, and other resources) seems appropriate.
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