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By M. Abumiya, N. Onodera

"The synthesis of large scorodite particles in non-ferrous metallurgical industries usually requires a high-cost operation involving heating and high-pressure autoclaving. To overcome these obstacles, an atmospheric-pressure process for scorodite synthesis (DMSP®) was developed, in which ferrous ions were oxidized by oxygen gas in the presence of pentavalent arsenic ions. This process gives scorodite of good crystallinity with particle sizes as large as 15-20 µm. The solutions used for scorodite synthesis in the DMSP® are prepared from various residues containing arsenic from non-ferrous smelters. The solutions may be contaminated with Cu, Sb, and Bi, for example, and therefore the effects of such impurities on the formation of crystalline scorodite need to be investigated. In this study, the effects of Cu, Sb, and Bi contaminants on the formation behaviors of scorodite particles in the DMSP® were investigated systematically.INTRODUCTIONThe synthesis of crystalline scorodite (FeAsO4·2H2O) is a suitable method for arsenic (As) stabilization and storage of As-containing by-products such as flue gas dusts in non-ferrous smelters. It is expected that the formation of large, highly-crystalline scorodite particles would be an ideal method for avoiding the release of arsenic to the environment. Generally, autoclave methods under pressurized oxidation conditions at temperatures above 100°C have been used for the formation of arsenic minerals such as scorodite. However, the autoclave method requires sealed vessels that are resistant to high pressure, heat and acids. This process is also unfavorable on account of the high construction expenses, and high running costs as a result of vapor heat loss. Processes for synthesizing scorodite under atmospheric conditions at temperatures below 100°C which do not need an autoclave have therefore been extensively investigated (Demopoulos, Droppert, & VanWeert, 1994; Demopoulos, 1996; Demopoulos, Lagno, Wang, & Singhania, 2003; Droppert, Demopoulos, & Harris, 1996; Filippou & Demopoulos, 1997).Recently, Fujita et al. (Fujita, Taguchi, Abumiya, Matsumoto, Shibata, & Nakamura, 2008a, 2008b, 2009; Fujita, Taguchi, Kubo, Shibata, & Nakamura, 2009; Fujita, Taguchi, Shibata, & Nakamura, 2009) developed a new method for producing large scorodite crystalline particles with improved filtration and washability properties at normal atmospheric pressure and temperatures below 100°C. In the new method, oxygen gas (O2) is blown into solutions containing a high concentration of arsenic ions (As(V)) and ferrous ions (Fe(II)). The Fe(II) ions were subsequently oxidized to ferric ions (Fe(III)), resulting in the formation of large scorodite particles. High supersaturation of solutes such as Fe(III) will result in excessive nucleation, and the formation of poorly crystalline phases. The scorodite formation must therefore be conducted in a manner that avoids the critical supersaturation level being exceeded. It is supposed that the oxidation of Fe(II) to Fe(III) by O2 gas in the new method suppressed the supersaturation of Fe(III) during scorodite formation. The low Fe(III) supersaturation resulted in formations of highly crystalline scorodite particles of size of around 20 µm. In June 2008, based on the developed process described above, DOWA began experiments to verify the industrial capability of a plant with a capacity of 30 MT/month of As. It was successfully proven that it is possible to produce crystalline scorodite industrially on a commercial scale. This process was named and trademarked as DMSP® (Kubo, Abumiya, & Matsumoto, 2010)."

Jan 1, 2012

By R. D. Brown

The first step in achieving a rationalization of Canada's crazy patch-work quilt of mining taxes and policies was achieved with the release last November of a major federal-provincial report on the taxation of the Canadian mining industry. The Report, prepared by a group of federal and provincial civil servants, sets out a concise and informative discussion of the major taxation and incentive issues facing the mining industry, and puts forward major recommendations for more rational and moderate taxation policies. It will be considered by federal and provincial Finance and Resource Ministers for possible action by the respective governments. The Report was prepared in response to a directive from the federal and provincial First Ministers in February 1978 to review the federal and provincial taxation of the resource areas. Although the Report is more successful in identifying problems rather than concrete solutions, and reflects some continuing differences of opinion between the governments involved, it does represent an important first step in a comprehensive review of our resource tax policies. This article summarizes the Report, which is some sixty pages in length. Although a detailed discussion of it is beyond the scope of this article, the report itself is recommended reading for those concerned about the current state of the Canadian mining industry.

Jan 1, 1979

By G. B. Harris, C. W. White

A study to investigate the recovery of base metals, notably copper, nickel, cobalt, zinc and manganese from iron-free concentrated chloride solutions using ion exchange was undertaken. In such solutions, apart from nickel and, to a lesser extent manganese, these metals are present predominantly as complex anions, and therefore conventional separation techniques based on cationic resins are not applicable. The results demonstrated that zinc, copper and cobalt can all be separately recovered leaving nickel and manganese behind. Specifically, zinc is a major nuisance element in nickel and cobalt processing, and the testwork showed that it can be preferentially removed prior to copper and cobalt. Selective resins for both copper and cobalt were identified, and it was demonstrated that the strength of the chloride background matrix has a significant effect on the efficiency of separation. An additional major advantage in such systems is that stripping can mostly be effected with water. Finally, some observations are made on the hurdles that must be overcome when attempting to introduce and commercialise new technologies.

Jan 1, 2015

By R. M. Lauer

OVER THE YEARS concentration of the Sullivan ore has become progressively more difficult as the ore has become increasingly refractory. The introduction of new reagents and changes in the flow of the concentrator have been and continue to be necessary in order to maintain and improve the efficiency of metal extraction. Prior to the completion of the pilot mill in 1957 ail new ideas were developed in laboratory equipment. If these were found to be promising, there was no alternative but to introduce them directly to the main mill flow in one step. When a major change was involved there was always the possibility of serious losses while the mill was being adjusted to the changed conditions. It proved difficult to determine whether these losses were the result of the changed procedure or of failure to adjust the flow to a change in the condition of the ore during the test. The pilot mill has provided a valuable intermediate step between the laboratory and the mill. It avoids the losses which occurred when unsuccessful full-scale tests were attempted, and conversely it provides assurance that full-scale flow changes can be made without serious hazard.

Jan 1, 1960

By M. Tadayonsaidi

The effect of alloying elements on the mechanical properties and thermal expansion of 336 casting alloy usually used as piston alloy which has low thermal expansion and very good high-temperature mechanical properties and good wear resistance was investigated. The mechanical properties and thermal expansion characteristic of samples with different combination of alloying elements, which enhance to reduce the cost of products, have been studies, The results show remarkable increase in the mechanical properties with increasing the amount of Cu and Mg, while are reduced with increasing amount of Ni, On the other hand, the use of eutectic aluminum alloy as 336 alloy with higher percent of Cu and Mg and lower percent of Ni are recommended for industry, due to economical viewpoint and satisfactory properties.

Jan 1, 2005

By Henrik Saxén, Mikko Helle, Hamid Ghanbari

In this study, a process integration approach in a primary steelmaking is investigated to evaluate future operation concepts of a steelmaking site considering sustainability issues. Mathematical programming is used to study the integration of the steel plant with chemical units for utilization of available off-gases in the system, and carbon capturing and sequestration unit. Different industrial carbon utilization options are considered to find the best route of development. A multi-period optimization model is developed based on site-wide mass and energy balances by considering the availability of the fuels and by-product gases and their consumption in the production system and a conceptual polygeneration system. The objective is to reach maximum economic profit while environmental aspects of integrated system are considered for different fuel systems, alternative blast furnace reductants and implementation of new process technologies. The model can provide useful information concerning techno-environmental and economic aspects for decision-making and can estimate optimal operational condition of current and future primary steelmaking under alternative scenarios. The results of the work illustrate the potential to develop steelmaking towards more sustainable operation in the future.

Jan 1, 2015

By Gilles Tremblay

The legacy of orphaned/abandoned mines, with their associated environmental liability, human health concerns and the financial costs of clean up is a serious issue facing Canada. In 1999 and 2000, a number of stakeholders put forth requests to Mines Ministers to establish a joint industry-government working group, assisted by other stakeholders to review the issue of abandoned mines. The Ministers supported this initiative and asked that a multi-stakeholder workshop be organized to identify key issues and priorities. The Workshop on Abandoned Mines, held June 2001 in Winnipeg, developed consensus, guiding principles and recommendations that were presented at the Mines Ministers? Conference, September 2001. Ministers agreed on the importance of a large-scale program for the rehabilitation of orphaned/abandoned mines sites. A multi-stakeholder Orphaned/Abandoned (O/A) Mines Advisory Committee was formed and a plan was developed to study various issues relating to the implementation of remediation programs across Canada. Three task groups were formed to address the following key areas: Information Gathering; Community Involvement; and Barriers to Collaboration. The presentation will include a summary of the results of the three projects and the future work plan for the program.

Nov 1, 2002

By Tassos Grammatikopoulos, Vladimiros Papangelakis, Douglass Duffy, Cheryl Washer, Srinath Garg

Flotation operations in Sudbury, Ontario, seeking to separate pentlandite and chalcopyrite from mixed sulphide deposits, produce pyrrhotite tailings that have been disposed of in tailings ponds for over 50 years. These reactive tailings are viewed as waste, despite containing ~0.8 wt% Ni, and represent an environmental liability because of their acid mine drainage (AMD) potential. Given the large quantities of pyrrhotite currently stored in Sudbury, and declining ore grades elsewhere, these tailings have shifted from being viewed as a waste to a potential resource. Recent advances in the bioleaching of low-grade sulphide ores have raised the prospect of bioleaching as a potential low-cost processing option. However optimization of this proposed process requires a thorough understanding of the mineralogy of the pyrrhotite tailings that would be leached. The work presented here addresses the characterization of two distinct Sudbury pyrrhotite tailings, namely from the Vale and Glencore operations, using electron microprobe, XRD and QEMSCAN analysis. Particular focus is given to how the mineralogy may affect bioleaching as a processing option, through the deportment of nickel and the various phases present

Jan 1, 2015

By Balmer Neilly

In these days of arrested prosperity, when patience is tried and the future but dimly outlined, Canada's gold mining industry stands out as a beacon light shedding its rays of hope and confidence and demonstrating that there is still one product unaffected by Customs barriers and eagerly sought by all the people of the world. Some other forms of industry have hesitated and side-stepped. Some have cried for help, and in spite of public assistance, generously extended, they are still unable to demonstrate definitely their ability to resume the onward march. But gold mining has never hesitated. As an industry, it has bad an unique experience. When prices are high and conditions are generally referred to as prosperous, this industry is adversely affected. The cost of production goes up; profits are diminished; public sympathy is lacking; and, thrown upon its own resources, the industry tightens up its belt and throws its whole energy into an effort to improve operating conditions, and offset high prices by increased efficiency. When, in due course, depression follows inflation and prices ebb, the gold miner, through necessity, finds himself physically and mentally prepared to meet the situation.

Jan 1, 1932

By D. A. Temple, G. O. John

Until recently, the approach to the problem of treating complex ores bas been to produce, insofar as is possible, mono-metal concentrates which are treated in traditional zinc, lead and copper smelting circuits, with the residues and by-products from some of these circuits being retreated for the recovery of contained values either by a separate residue treatment process or along with the primary feed to the appropriate circuit. The continued development of the Imperial Smelting Process, with its ability to treat poly-metal concentrates, calls for a re-examination of the traditional approach to this problem, and this the paper attempts to do. A survey of recent progress in the technical development of the process is made and a summary of current operational performance is included.

Jan 1, 1971

By E. M. Stiles

THE Wellington Lake power plant of the Consolidated Mining and Smelting Company of Canada, Limited, about 25 miles from Goldfields, Saskatchewan, is the second hydro-electric project operating in that Province, the first being the Island Falls plant of the Churchill River Power Company which serves the operations of the Hudson Bay Mining and Smelting Company at Flin Flon, Manitoba. The Churchill River project develops 90,000 h.p. at 56-ft. head; the Wellington Lake plant 3,300 h.p. at 75-ft. with pro-vision for an additional 3,300 h.p. unit. Churchill River power is trans-mitted at 110,000 volts over a 58-mile line of steel towers to Flin Flon and an additional 45 miles over a wooden pole-line to Sherritt-Gordon. Our steel tower-line is 22 miles long, and the voltage is 60,000; this choice be-cause certain such equipment was available from Trail. The diversion of 15,000? second-feet at 56-ft. head for 90,000 h. p. at Churchill river dwarfs our 500 second-feet flow at 75-ft. head for 3,300 h.p. In both cases, the main obstacles to be overcome during plant construction were the lack of transport facilities and the short open season. Let it be noted here that this paper deals mainly with those phases of plant construction which were particularly interesting to the writer. With-out these variations from the ordinary routine, this is just another power project whose story is better told by the accompanying charts and pictures. To many members of the Institute it is still just that; but I am writing for those who, like myself, have been too seldom responsible for major under-rakings at an appreciable distance from a railway siding. When it was planned in early 1937 to erect a 1,000-ton mill at our Box mine, both hydro and Diesel power were discussed. With ten years' ore in sight, even an expensive hydro project, such as ours turned out to be, produces kilowatts materially below the 2-cent operating cost of a Diesel plant using fuel-oil at 14 cents a gallon.

Jan 1, 1940

By A. J. Stapleton

"The Copper Mountain mine of Gaspe Copper Mines, Limited was brought into production in January, 1968.This paper describes the organization, scheduling and control of maintenance of large open-pit equipment, including 8-cu.yd shovels and 85-ton electric-wheel haulage units. The facilities for repair as well as maintenance are also described, including repair shops and field repair equipment. Maintenance costs are discussed and particular reference is made to tire inspection, records and costs."

Jan 1, 1969

By J. U. MacEwan

THE basis on which the modern metallurgical industry is operated is the endeavour to attain maximum return in purchasing power for the least expenditure of energy. This has always been the general objective of the industry, as of all industries. In recent years, however, it has received a new emphasis. Today, as never before, increased attention is being directed to the detailed study of plant operations and the application of scientific knowledge and of business principles in order to achieve the maximum efficiency. This new emphasis is the result in large part of the new problems and conditions with which the industry has been confronted, chief among which are the following: (l) Development of new ore-bodies and the treatment of complex ores. (2) Necessity of achieving a greater degree of purity in some of the metals in order to meet the newly discovered demands for some of the industrial metals. (3) Discovery of new markets for many of the metals, either in pure form or in the form of alloys. ( 4) Change in values, absolute or relative, of some of the important metals. (5) Increasing scale of investment in expensive plant and equipment, which makes imperative most efficient utilization if total unit costs are to be kept to a minimum. (6) Increasing scale of operations in some important branches of the industry, which also makes essential maximum efficiency in organization, administration, and operation. The success with which the metallurgical industry has met the problems created by these changing conditions has been due primarily to the following factors: (1) Results of research and experimental work carried on by universities, government laboratories, and many private corporations in the industry itself. (2) Closet study of every detail of plant operation, both from the technological and from the economic point of view, with the object of increasing plant efficiency. (3) Interchange of information and experience amongst the operating companies. It is only by the concerted efforts of numerous investigators and experimenters that the underlying fundamentals of plant operations can be learned. The exchange of results permits their easy assembly and correlation with maximum benefit to the whole industry. Unnecessary duplication of research and experimental work is avoided and the industry as a whole is able to reap the fruits of this work with the maximum of-speed and efficiency. (4) Advances made in recent years in so-called 'scientific management' in industry as a whole and the application of the principles learned to the metallurgical industry. A review of the modern trends in extractive non-ferrous metallurgical processes illustrates the afore-mentioned new conditions and problems, and gives some idea of the methods by which they have been and are being surmounted.

Jan 1, 1937

By H. Itou

A mechanism of scorodite formation at ambient pressure was investigated using transmission electron microscopy (TEM). Several types of iron arsenate were obtained from Fe/As solutions (Fe/As = 1.0 and 1.5) at pH values of 1.0, 1.25 and 1.5 at 95°C. Amorphous FeAsO4.xH2O was precipitated from solutions having a higher mole ratio of Fe/As at pH l.5, even after 9 hours. A few micron sized particles were observed by SEM, but these proved to be agglomerates of 10-50 nm amorphous FeAsarxH2O particles when observed by TEM. This means that supersaturation of the solution causes the acceleration of nucleation of iron arsenate hydrate. Crystalline scorodite was obtained from a solution in which the Fe/As mole ratio was unity, at pH l.0 and pH 1.5, after 3 hours. Almond-type crystalline scorodite particles were observed by TEM and most of them showed high crystallinity. The addition of scorodite seed material enhanced the crystallization. Amorphous FeAsO4.xH2O, however, was observed at the surface of the seeds during the early stages of precipitation. It is postulated that crystalline scorodite is not directly precipitated even on crystalline scorodite seeds, but requires a certain time to crystallize on the seed material.

Jan 1, 2006

By M. F. Goudge

ROCK wool, one of the most recent additions to the list of Canadian-made, insulating materials, is a soft, light, fibrous material consisting of interlaced, flexible, glassy fibres so exceedingly fine that, individually, they are almost invisible to the naked eye and will float in air. In the process of manufacture, a suitable rock, generally a self-fluxing argillaceous dolomite consisting of nearly equal proportions of acidic and basic constituents, is melted to a completely fluid state and then converted into fibres either by a blast of steam or air, or by a mechanical device. The increase within the past five years in the number of plants in the United States making rock wool and slag wool has been remarkable, especially in view of the depressed conditions prevailing 'with most industries during this period. In 1930, there were only 8 plants reporting production of .these materials, whereas at the present time there are 44 plants in the United States listed as making these products, and there are 3 plants in Canada. In 1929, the total sales of rock-wool products in the United States amounted to-$2,377,324. In 1934, according to the National Rock and Slag Wool Association, 26 member companies reported sales of $3,695,405, and in 1935 the sale's of 30 member companies had a value of $5,571,469. The establishment of the rock-wool industry in Canada followed the publication in 1931 of a report (1) by the Mines Branch, Department of Mines, Ottawa, in which was set forth the results of field work and laboratory studies which indicated that large deposits of rock in the Niagara peninsula, hitherto regarded as valueless, were suitable for the making of rock wool. This report was supplemented in 1934 by another report (2), giving the results of further laboratory and commercial-scale tests on the rock from these particular deposits, which proved conclusively that rock wool of good quality could be made from the rock in question.

Jan 1, 1936

By W. G. Johnson

"As we move into 1983, Canada is not only in a deep recession, there are major changes taking place.International competition is growing fiercer.Major core industries such as automobile, steel, mining, oil, agriculture, forestry, fishing, major manufacturing and others are just not expanding.If and when recovery comes starting in mid-1983, as many predict, don't expect industries to suddenly resume former growth patterns. It's just not possible.Companies, by necessity, are becoming lean and mean, and they are still in the process of reducing staff to meet changing times and conditions. Many of the staff now being released may never return to fulltime work with a single employer, particularly if they cannot measure up to more exacting performance standards and management expectations.There are clear cut instances of people who lose a job for reasons beyond their control. A merger, the loss of function, or a major reorganization sometimes creates casualties of people who were excellent performers. Such people can survive well, based on the tongue of good report and with some help from associates or others. However, even good performers often have difficulty in adjusting to the rigors of finding a new job and to become their own personal salesman."

Jan 1, 1983

By C. A. Sutherland

"Smelting of copper-gold ore from nearby Rossland mines started at Trail in the 1890s. As ore from the Rossland mines became exhausted, lead smelting of hand-sorted galena ore from other British Columbia mines was initiated. With the development of flotation technology for the separation of lead, zinc, and iron sulphides in the first two decades of this century, the large Sullivan orebody at Kimberley, British Columbia, became the f oundation for the growth of a major zinc and lead smelter at Trail. Lead smelting began in 1901, electrolytic zinc in 1916, and by 1984, the Trail metallurgical complex had produced 10 million tons of each metal. Its present capacity is 270000 tonnes per year of zinc and 110 000 tonnes/year of lead.This paper reviews the history of technological changes in the Trail production plants, emphasizing the zinc plant modernization program started in the 1970s, and also the planned introduction of the QSL oxygen lead smelting process in the late 1980s. Lead modernization will increase production capacity to a maximum of 160000 tonnes per year.IntroductionCopper-gold ore was discovered at Rossland, British Columbia, in the year 1890, starting a mining industry that was to last over three decade s. Selected ore was at first transported at high cost to distant U.S. smelters, so there naturally followed a decision to construct a small copper smelter to process the local ore to matte. It was built in 1896 at the mouth of Trail Creek on the Columbia River, about 10 km from Rossland. This little smelter was to develop and diversify in the next 90 years into the world 's largest lead-zinc producer).The mining boom that occurred in the northwestern United States and southeastern British Columbia in the period of 1890 to 1910 saw the brief operation of many small local smelters. The only one to survive was the smelter at Trail. The circumstances that permitted its continued life and subsequent growth, form a fascinating history of business deals, litigation, andsteady technical progress.Early investment in local railway transportation and options by F.A. Heinze, the smelter' s founder, attracted the attention of the Canadian Pacific Railway Company, which purchased Heinze' s assets in 1898. This provided the capital base for survival and growth of the smelter, which remained and prospered under the Canadian Pacific umbrella for almost ninety years. It was registered as the Consolidated Mining and Smelting Company of Canada Limited in 1906; in 1966, this name wasshortened to Cominco Ltd.The Rossland mines continued to supply copper ore for the smelter until the late 1920s, but lead-silver ore also became available from the contemporary mining boom in the Slocan area, about 80 km away. In 1901, the Trail smelter diversified into lead; and when the CM&S Co. acquired the St. Eugene Mine at Moyie and the Sullivan Mine at Kimberley, the smelter was guaranteed a firm supply of lead ore. The company also purchased the West Kootenay Power and Light Company, which even before the turn of the century had constructed the first of four hydroelectric generating plants on the Kootenay River near Trail. This acquisition assured the CM&S smelter and its local mines of a stable power supply and the opportunity to diversify into power intensive technology."

Jan 1, 1988

By R. R. Bassermann

THE property of Howey Gold Mines, Limited is situated at Red Lake, Ontario, one hundred and seventy-five miles east of Winnipeg and eighty miles north of the Canadian National Railway line. The mine has been a continuous producer since April, 1930, and at present is hoisting 1,350 tons of ore per day. The shaft consists of three compartments (see Figure 1, sketch B). Hoisting is done by two skips in balance, one of which is interchangeable with a cage. Sinking had been carried out at three different periods. From the surface to the 550-foot level, the sets had been spaced at seven-foot intervals, from the 550-to the 1,060-foot level at six feet, and from the 1,060-to the 1,500-foot level at five feet. During the five years of operation, the shaft had become so badly worn, due to spill from the tipples and, to a certain extent, from the loading pockets, that re-timbering was considered necessary. It should be explained that no crushing is done underground because of the ad verse effect this would have on the efficiency of the sorting. The grizzly rail clearance above the ore pockets is fourteen inches and consequently the ore hoisted is extremely coarse. More than average spill from the loading pockets and tipples under such conditions is inevitable, and it is debatable whether underground crushing with consequent increased sorting costs would not be justified. The cost of complete re-timbering according to standard practice would have been prohibitive both directly and indirectly: A lengthy shut-down of the shaft, with the consequent disorganization of the staff and workmen, could not be considered. Accordingly, it became necessary to devise some method of repair that could be carried to completion in a very limited period of time. The shaft timber for the first 250 feet was not in need of repair. From the 250-foot to the 1,060-foot level the wall plates, posts, and blocking were in good condition. These had been protected by a one-inch plank lining put in at various periods during the past three years without interfering with hoisting operations. The end plates and dividers, however, could not be protected in this manner because of the lack of skip clearance. It was decided that, if the dividers in this section could be replaced, the shaft would be as satisfactory as if completely re-timbered. Several factors had to be taken into consideration in deciding on a suit-able method of repair. In the first place, the tipple plates had to be re-designed. To complete the job in a reasonable time, not only had work to be done on the tipple, but simultaneously from several points in the shaft itself. Since all power cables, pipe lines, etc., were in the manway compartment of the shaft, this compartment had to be left undisturbed.

Jan 1, 1935

By J B. Maughan

Gas and oil seeps have been known in Quebec for more than one hundred years. These occur in three main areas which contain sedimentary rocks with a total thickness estimated to vary from 6,000 to 20,000 feet. The strata in these areas are similar in many respects to those in producing areas of southwestern Ontario and the Appalachian basin, and the prospects for finding and developing commercial reserves of oil and gas in Quebec would therefore also appear to be favourable. Little of the exploratory drilling to date has been con-ducted in a systematic manner, and most of the drilling has utilized improper or inadequate equipment. Many wells have also failed to adequately test and fully evaluate the principal zones of interest. Relatively high drilling costs have hindered systematic exploration; however, with improved portable equipment, it is expected that future wells can be drilled with greater efficiency and at less cost. Most of the mineral rights in Quebec are held by the Provincial Government, and acreage can still be leased in large blocks on favourable terms.

Jan 1, 1964

"Option pricing is used in finance for valuing options to buy (or sell) shares at some future date because it provides a convenient framework for quantifying values subject to uncertainty. As one of the main sources of uncertainty in mining is the price (sales) of the metal, this approach can also be used for valuing mining projects.The first part of this paper reviews options and option pricing; the second part presents the approach developed by Brennan and Schwartz (1985) for using option pricing to value natural resources. Several applications of this methodology have been published; these are described. From a mining point of view, the assumptions made by Brennan and Schwartz are too simplistic. The weaknesses are discussed with a view to improving an apparently promising new way of assessing the value of projects. IntroductionThe collapse of the British merchant banking group, Barings, has highlighted the risks that can be incurred by speculators and arbitragers in the futures and options markets. But this negative attention on futures and options should not make us forget their positive aspects. They can provide producers and consumers of metals with more predictable sales prices. The introduction of the new traded average price options, TAPOS, by the London Metal Exchange in January 1997 is a response to this need. Equally important, the theory that the finance industry has developed for valuing options provides an interesting framework for valuing mineral projects as well. While this paper was being revised, the South African gold mining house, JCI, announced that it was using a methodology based on option pricing for valuing the mineral rights to deeplevel gold resources (see Box 1)."

Jan 1, 1997