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By R. B. Throndycraft

"1. Belt-Drop Agglomeration Preferred at Heap Leach Operations. The agglomeration method now preferred at heap leach operations utilizes belt-drops along conveyors. Belt-drop agglomeration is being designed into numerous upcoming heap leach operations. It offers substantial capital cost savings over previously favored drum agglomerators. It has such significant operating and maintenance advantages that some drum agglomerators have been retired in favor of belt-drops.The majority of heap leach operations are now built with crushing included in the flowsheet. If crushing is included, belt-drop agglomeration can be added for almost no cost. The agglomeration equipment is simply a few conveyor transfers, designed to provide the tumbling and rolling action which forms the agglomerates. Controlled water sprays are needed at each of these agglomeration transfers. Cement or lime is added as a binder, to stabilize the agglomerates. This reagent is also needed to raise pH to safe operating levels.Addition of the pH control reagent before stacking the ore offers a reagent cost benefit. In the belt-drop mixing technique, the ore is intimately mixed with the lime (or cement). After stacking on the heaps, when the cyanide solution is sprayed onto the high-ph ore, very little cyanide is consumed. Without the pre-addition of lime or cement, the leach solution is sprayed onto neutral ore. The mixture of high-pH leach solution and neutral pH ore causes the solution pH to drop, releasing cyanide gas. This release is minor from a safety viewpoint, much less than dangerous, but the gas release is a costly waste of the cyanide reagent. Pilot-scale comparison tests were made at Pinson. Ore pre-treated with lime or cement showed 30% less cyanide consumption than untreated ore."

Jan 1, 1989

By G. Papachristodoulou, O. Trass

"Performance data for both wet and dry grinding of materials have been obtained in this novel, planetary ring-roller mill over wide ranges or operating conditions. The Szego mill consists of a stationary cylindrical shell inside which grooved, radially mobile rollers rotate, driven by a central shaft. The mill has several internal design variables such as number, diameter and length of rollers as well as size, shape and pitch oi helical grooves. It is compact, has a high specific capacity, modest power consumption, and can grind many materials down to ultrafine powders. Illustrative data on product fineness and mill power consumption are given along with results from studies on grinding kinetics.INTRODUCTIONThe extensive use and importance of grinding as a unit operation, coupled with the rather low energy efficiency of conventional equipment provide a challenging incentive to investigate novel methods of comminution. Yet, most current development work is taking place in mill performance modelling and optimization, or with various detailed improvements rather than in the field of new equipment development.This paper is a report on the development of a ring-roller mill invented by the late L.L. Szego which embodies several novel concepts. The mill has a broad range of applications, may be operated wet or dry, and can grind materials down to ultrafine sizes with modest energy consumption. It has been developed by General Comminution Inc. in close cooperation with the University of Toronto."

Jan 1, 1986

By Stephen L. Chryssoulis, Stamen Dimov

"Preg-robbing has been known for many years, where increased losses are suffered because dissolved gold is removed from solution by adsorption onto carbonaceous matter. In direct cyanidation circuits it is reasonable to conclude that the preg-robbed gold is either in a gold cyanide [Au(CN) - 2, AuCN] or metallic [Au°] form. However, in circuits with a pre-oxidation step possibilities increase and multiply even further because of water recycle streams containing apparent and not-so-apparent gold ligands. It is in these circuits where speciation of sorbed gold, i.e. the identification of the gold compound, is useful. The importance arises from the fact that proper identification of the sorbed gold species can be used to determine how, when, where and why gold was removed from solution, thereby identifying the exact cause of the problem and providing clues as to how it may be rectified.INTRODUCTIONTo the best of our knowledge, this is the first attempt ever to speciate gold preg-robbed by carbonaceous matter using a surface sensitive microbeam technique. This approach enables the direct determination of gold species sorbed on carbonaceous particulates, opening an entirely new field in the understanding of the chemistry of gold sorption on carbon. The reasoning behind this effort was to add to the current knowledge of the detrimental effect chloride ions have on gold recovery by the pressure oxidation and in particular why in the ensuing CIL step, gold is not being desorbed from the surface of the carbonaceous particles (Table 1)."

Jan 1, 2004

By A. L. Mular, R. P. Edwards

"The operation of flotation circuits is often regarded as a combination of art and science. Expert systems offer a method by which the art may be captured and supervisory control of flotation circuits fully realized. Operating knowledge, the art, can be consistently employed to enhance regulatory control through the judicious application of an expert system. Using an expert system, a supervisory control routine was developed, and successfully implemented, in the copper flotation circuit at Brenda Mines Ltd.The expert system ran in conjunction with regulatory PI controllers on a personal computer. The expert system received assays via an on-stream analyzer and adjusted regulatory loop setpoints as required in real-time. From its commissioning in November 1989, to the end of the mine's operation in June, 1990, the ES was enthusiastically embraced by the operators and attained operating levels superior to those achievable manually.INTRODUCTIONExpert system (ES) software springs from research into artificial intelligence and is currently making significant inroads into business and industry. Proponents of ES's make many attractive claims; they are a means of capturing the knowledge of experts and they can be programmed by non-programmers. To date, most uses of this software in the process industry are in off-line applications, meaning that the applications are not tied directly to operating (on-line) environments. Moreover, in on-line environments, they are typically employed as advisors and only suggest changes. Human operators are required to close-the-loop to the process. Yet, ES's should be applicable to operating environments and, if the claims of the proponents are valid, should also be better than existing tools. As an intelligent controller an ES must use the knowledge of experienced operators, apply it directly to a process and do this without the intervention of human operators. On-line applications have been successfully employed in the closed loop control of SAG circuits (Herbst et al., 1989) and flotation circuits (Hales, 1989). Harris and Kosick (1988) detail an implementation for flotation control at the Polaris Mine."

Jan 1, 1991

By Les Johnston

_ BACKGROUND - About EPCOR - Genesee Generating Station - Phase 3 Expansion _ TECHNOLOGY SELECTION - Selection Criteria - Combustion Options - Flue Gas Emission Control Options _ STAKEHOLDER VIEWS _ PROJECT STATUS _ EPCOR is an integrated utility company for water, gas, electricity and technology services. _ EPCOR has about 1.6 million customers in Alberta, Ontario, Manitoba, BC, and the U.S. Pacific Northwest. _ EPCOR Generation Inc. operates three power stations in Alberta which were in operation before deregulation, including the coal-fired Genesee Generating Station. _ EPCOR Power Development Corporation owns generating stations in Alberta, BC and Washington State and will be building the Genesee Phase 3 expansion.

May 1, 2002

By W. Bullen

A hypothetical economic model has been developed for diamond projects in the Canadian Arctic using data from recent exploration and mining projects. The model reflects economic conditions applicable to the diamond mining industry in the Canadian Arctic at the present time. The economic model captures pre-production expenditures, production data, and post-production costs. Before- and after-tax cash flows are derived from the data along with the relevant economic criteria. From the corporate perspective, the model provides guidance concerning the minimum size and/or in situ value per tonne requirements of targets being sought in order to ensure economic success and predict exploration and development expenditures. From the government perspective, the model provides an indication of income and mining tax revenues that can be expected from a particular diamond project. The model shows, on average, diamond projects in the Canadian Arctic are expensive to explore for and develop, but are economically robust under the present conditions. They generate great economic return for mining companies and significant amounts of tax revenue for governments. The fact that diamonds can be transported directly from the minesite by air makes them particularly attractive targets for mining companies that operate in the Canadian Arctic.

Jan 1, 2006

By S. McCalpine, W. Muir, P. J. Downey

"Golden Bear Operating Company Ltd. (GBOC) was a joint venture between Chevron Minerals Ltd. and North American Metals Corp. that was formed for the development of the Golden Bear Project. The mine is located at Muddy Lake, Western British Columbia, approximately 80 km northwest of Telegraph Creek and 135 km west of Dease Lake (see Figure 1). Road access to the mine was developed by Golden Bear and consists of a radio controlled 155 km gravel road originating at highway 114.A feasibility study was completed in 1987 and project approval was finalized in 1988 with Golden Bear issuing a ""Request For Proposal"" for detailed engineering in May 1988. Golden Bear also commenced negotiating with vendors at this time for the supply of the two principal process equipment packages: the dry grinding and classification system and the whole ore roaster package.Process plant engineering and plant construction was completed in October 1989 with plant startup commencing in November 1989. Two months into the commissioning phase it became apparent that the plant, as designed, would not achieve the anticipated production targets.Kilborn Engineering Pacific were subsequently contracted by GBOC to review and modify the plant design, assist the operating personnel with plant commissioning and startup and provide operator training.This Paper describes some of the problems encountered during the startup and the plant modifications incorporated to achieve design parameters."

Jan 1, 1992

By D. M. Wyslouzil

"This paper was prepared for presentation at the 16th Canadian Mineral Processor's Annual Meeting, Ottawa, Ontario, Jan. 17 to Jan. 19, 1984.This paper gives an account of the development of treatment procedures for the differential flotation of refractory copper-zinc ores. Special references are made to the effectiveness of various zinc depressants and their combinations.Studies carried out on refractory copper-zinc ores demonstrated that conventional zinc depressants such as cyanide and zinc sulphate were not particularly effective when secondary copper minerals were present in the ore; the flotation activity of sphalerite was enhanced in the presence of cyanide.Among the various zinc depressants evaluated, the following depressant combinations were found most effective: Zn(OH) 2-S02 , 802-CaO, Na2S-Na2S03-S02, Na 2 S-S02 and Na 2S-S0rDS22.The practical application of any of these systems depends on the type of ore treated and other conditions such as pH, levels and points of collector and depressant additions.In this paper the effect of each depressant combination on different ores is described with reference to the selection of collectors."

Jan 1, 1984

By M. Pekguleryuz, S. A. Argyropoulos

"The recovery of additions in light metals is an important parameter influencing consistency of the finished product, which ultimately means cost. Recovery is a function of many parameters such as assimilation speed, addition density, addition practice, liquid metal processing conditions, etc. In liquid metal processing operations, it is desirable to have the maximum possible recovery at the shortest possible time.In this paper a new index will be presented, namely, the rate of recovery (RR). This index quantifies the addition recovery and introduces the time dimension in the recovery increase. As such, the RR equips the liquid metal practitioner with an accurate picture of addition assimilation in liquid metals. Results will be presented on how this index is applied to a variety of additions in liquid aluminum. IntroductionThe data on addition assimilation kinetics offer a valuable parameter describing how fast a given addition enters the metal bath. These data may be expressed as gr m-2 s-1 of additive for a set of experimental conditions which might include bath temperature and degree of bath agitation among others. However, the liquid metal processing practitioner is more interested in the recovery of additions. In other words, the point of interest is the percentage of the used addition entering the metal bath. Ideally, the addition recovery can reach the 100% level. However, in practice, the addition recovery never or rarely reaches that level. Many factors can contribute to this. Some of these factors can be slow assimilation kinetics, addition density, addition practice, turbulence of the melt, etc. In some cases, sloppy addition practices can contribute to low recoveries, or even worse, to erratic recoveries.In this paper a new parameter is introduced. This parameter relates the maximum addition recovery observed over the time needed to achieve this maximum recovery."

Jan 1, 2002

By A. Garnier, K. Tremblay-Bouliane, B. Gaillet, S. Moineau, D. Tremblay

"A heptapeptide library displayed on M13 bacteriophages (phages) was screened to identify peptide sequences able to selectively bind to gold, chalcopyrite, sphalerite, pyrite, and silica ores, and to evaluate phage potential as bioflotation reagents. Many peptide sequences were isolated through biopanning and differed from known sequences. Adsorption isotherms were determined and a receptor/ligand interaction model was identified and used to compare affinity of peptide sequences toward ores. Some phage sequences have slightly lower affinity to sphalerite than other sulphides. Adsorption was higher on sulphides than on silica. Induction time measurements suggested filamentous M13 phages lower hydrophobicity of the ore surface.RÉSUMÉ Une librairie d’heptapeptides présentés sur des bactériophages M13 (phages) a été criblée afin d’identifier les séquences peptidiques affinitaires à des minerais d’or, de chalcopyrite, de sphalérite, de pyrite et de silice et d’évaluer le potentiel de ces phages en tant que de bio-réactifs de flottation. De nombreuses séquences peptidiques ont été isolées par bio-criblage et différenciées d’autres séquences connues. Des isothermes d’adsorption ont été déterminées et un modèle d’interaction récepteur–ligand a été identifié et utilisé pour comparer l’affinité des séquences peptidiques par rapport aux minerais. Certaines séquences de phages possèdent une affinité légèrement inférieure pour la sphalérite comparativement aux autres sulfures. L’adsorption sur les sulfures était plus élevée que sur la silice. Des mesures de temps d’induction suggèrent que les phages filamenteux M13 diminuent l’hydrophobicité de la surface des minerais."

Jan 1, 2016

By E. W. Johnson

"The title of my paper is ""I 'Wonder Where The Yellow Went"". As you can readily guess, it is not related to an old-fashioned ""Pepsodent"" sales pitch! Rather, it concerns a situation which arises all too frequently in some gold milling operations, namely when actual ounces of gold production do not come up to estimated or projected ounces. The boss man scratches his head and wonders where the missing gold has gone and how it has disappeared. The problem, if one exists, is amplified if one forgets that an estimate is just that - an estimate - and not a hard fact - even though the numbers are produced by computers. And yet, from the point of view of engineering; financial and production planning and security; it is most desirable to tie together all data relating to production estimates, losses and actual production.In the course of this paper reference will be made to the term ""variance psychology"", to a few of the physical properties of gold and to the nature of its occurrence in Canadian ores, in relation to the topic under consideration. Activities which have a bearing on production estimates will be reviewed. These include: weighing, sampling, assaying, estimating residual losses and, in cyanide plants, gold precipitate production. Mention will be made of apparent, unaccounted for and unknown losses. In conclusion, I shall draw from personal experience and relate three examples of ""Where the Yellow Went''."

Jan 1, 1986

By Gordon E. Agar

"The effectiveness of two this compounds for copper sulphide depression in molybdenite flotation has been examined with batch bench scale tests.Both thioglycollate and trithiocarbonate proved to be good depressants producing results similar to those f or cyanide and hydrosulphide. Ferrocyanide was ineffective on the samplematerial tested.The depressing effect of thioglycollate was readily reversed by an addition of xanthate.IntroductionThe separation of molybdenite from copper sulphide minerals has been practised for a long time(1,2). The predominant scheme is to depress the copper sulphides while capitalizing on the ready floatability of molybdenite to effect the separation. There are many recipes for depressing the copper minerals(3), among them the addition of sodium cyanide, particularly if the copper is present primarily as chalcopyrite; some form of sulphide whether as sodium sulphide, sodium hydrosulphide or phosphorous pentasulphide when there is a mixture of copper sulphides such as bornite, chalcocite and chalcopyrite; potassium ferro cyanide may be used when chalcocite is the principal copper sulphide; peroxide or hypochlorite; as well as heating in the presence of lime. There are different mechanisms by which these reagent s depress the copper sulphides. Sodium cyanide and the sulphide-producing compounds apparently reduce the potential of the copper sulphides to the point where they ar e rendered unfloatable by xanthates . Another study(4) showed that after cyanide addition, chalcopyrite was rendered un floatabl e until the REDOX potential (measured with a gold electrode with a saturated calomel reference) had become more positive than -250 mY. If the chalcopyrite pulp was conditioned after the cyanide addition the REDOX potential increased slowly, whereas if air was introduced during the conditioning the potential r ose much more rapidly. The difference in time to reach the desired level of - 250 mV was as much as 20 minutes' 25 minutes being required when air was absent but less than 5 minutes when air was admitted . These observation s demonstrate some of the problems encountered when using cyanide to depress sulphides such as chalcopyrite . The system adjusts to counteract the depressing effect of the additive. To overcome this tendency it is necessary to either add an overdose at the beginning or to more or less continuously add the regulating reagent. In this study cyanide solution was added under automatic control to maintain a specified REDOX potential."

Jan 1, 1984

By R. E. Dye

Introduction Research concerning all phases of hoisting practice, but more particularly the causes and prevention of hoisting rope deterioration and the improvement of safety dogs 158 for shaft conveyances, has been carried on intensively for the past three years in the Province of Ontario. Prior to the hoisting accident at the Paymaster mine on February 2nd, 1945, there had been no fatalities in the Province due to a hoisting rope failure. It was probably on this account that little original research on hoisting problems had been undertaken here and that the mining industry had been content to look to British, South African, and United States investigators for new developments in this field. Except for the Paymaster accident this might still be the case since, in any industry, it is apparently necessary for a serious accident to occur before any extensive programme of preventive research is launched. When this accident occurred, the Government of Ontario, with the close co-operation of the Paymaster officials and the mining industry as a whole, took immediate steps to determine the cause. A five-man, non-industry committee, selected from the Faculty of the University of Toronto with Dean C. R. Young as Chairman, was appointed by the Government, and a three-man Committee consisting of R. D. Parker, General Superintendent of the International Nickel Company of Canada, Limited, R. L. Healy, General Manager of Wright Hargreaves Mines, Limited, and R. E. Dye, General Manager of Dome Mines, Limited, with the latter acting as Chairman, was appointed by the Ontario Mining Association.

Jan 1, 1948

By A. Uribe-Salas, J. A. Finch, B. J. Huls

Froth depth or interface level is an important control variable in column flotation which can influence both grade and recovery. A common method of locating the level is based on sensing the hydrostatic pressure at one or more points along the column. The level position is then calculated from these pressure readings using an equation which includes the bulk density in the froth and bubbling zones. The precision with which the level is detected depends on how well these density values represent both zones. The calculation of these bulk densities from theoretical considerations is not possible and, therefore, the practice is to estimate them by calibration. Unfortunately, the calibration parameters often do not report the level with an acceptable accuracy. A portable conductivity probe has been developed to detect the position of the interface from conductance measurements across the interface. The location of the interface corresponds to the position where a large change in conductance is observed, which is primarily a consequence of the difference in gas holdup between the bubbling and froth zones. This probe can be used to detect the position of the interface to an accuracy of± 5 cm. The probe can be used while the column is in operation, which allows the on-line calibration of the level detection system. Results obtained in its application in a pilot-scale column (0.91 min diameter) are described.

Jan 1, 1989

By V. K. Gupta

"Effect of mill speed on grinding kinetics has been investigated with a view to using mill speed as a manipulated variable for control and optimization of the grinding circuit performance under variable ore hardness conditions. Dry and wet batch grinding tests were carried out for quartz, limestone and cement clinker in a 29 cm x 18 cm laboratory ball mill. Mill speed values selected were 55 and 70% critical. In the case of dry grinding operation, with an exception of quartz, for all materials studied the effect of mill speed on grinding rate was found to be insignificant for sizes finer than about 35 mesh. In the case of wet operation, grinding rates were found to be approximately proportional to the mill speed. The implications of these results are discussed.INTRODUCTIONIt is well known that mill speed has a considerable effect on the grinding rate of the ore particles l-3 For particles of a given size there is an optimum speed at which mill grinding efficiency is maximum (i.e. specific energy consumption is minimum) 3•4. Mill speed can, therefore, be effectively used as a manipulated variable to deal with the disturbances arising from changes in the size and hardness (grinding rate) of the ore being fed to the grinding circuit. Though, it has not been the case so far, with recent developments of ring motors2 and frequency inverters5 a continuous variation of mill speed has now become feasible, and it is expected that mill speed control will soon be a regular feature of plant operation2,6."

Jan 1, 1985

By Ross Byron, Ken Roberts

"During the fall of 2001 a program was initiated to determine the feasibility of improving the metallurgy in the flotation circuit at the Penhorwood Talc Concentrator located near Timmins, Ontario. Bench scale testwork led Plant staff to believe that opportunities existed to improve the flotation performance. Pilot scale testing was then conducted using two vendors and their respective cylindrical type flotation cells to indicate where these opportunities existed.The results of the test program determined that the replacement of the existing flotation circuit (roughers, scavengers and cleaners) with new flotation cells could be economically viable. Justification was due to a reduction in installed horsepower, maintenance costs and a subsequent increase in recovery and throughput while maintaining product quality. Unforeseen benefits included reagent and air reduction, accurate level control as well as improved working conditions due to the removal of the antiquated equipment and ancillaries.This paper will detail the justification, installation and implementation of the new flotation circuit. A special emphasis will explain the hurdles encountered while trying to install and commission the circuit in an operating Concentrator with minimal interruptions to production.INTRODUCTIONThe Penhorwood mine and Concentrator is 28 yrs old and has gone through many ups and downs with different owners, Johns Manville, Steetley Talc and now Luzenac. It has also been expanded twice, with flotation and grinding capacity being added in recent years.All of the concentration is completed at the mine site while the fine grinding takes place in the Timmins micronizing plant.Luzenac’s Philosophy is to be the world leader in Talc production, technology and sales, having about 70% of the current world High Grade talc market."

Jan 1, 2004

By Don Thompson

Canada’s oil sands are a controversial topic and virtually every newsmaker and layperson seems to have an opinion about this 179 billion barrel resource. The oil sands represent 97 per cent of Canada’s remaining oil reserves, but misinterpretation and misrepresentation of the facts are threatening development of a resource that generates significant employment and tax revenue for Canadians. Join Don Thompson, president of the Oil Sands Developers Group, as he dispels the top ten myths about Canada’s oil sands and presents an alternative perspective on an industry that can play a critical role in North America’s economic recovery.

Jan 1, 2010

By Galen Bauer

"Up until the mid 1960's, the only available methods for making continuous weight measurements were through the use of mechanical and electro-mechanical weigh scales. It was during this time period that a new concept in weighing was introduced. It was known and is still known as the nuclear belt weigh scale.During the early days of its appearance in the market place, many things were learned about its advantages and disadvantages for weighing various materials. As with many new devices, it had to go through a ""wringing out stage"" before it became accepted by the weighing industry. Even today, even though it is a proven device, there are skeptics who believe the nuclear belt weigh scale will not survive. Let me assure you, it is here to stay.. 'PRINCIPLE OF MEASUREMENTThe nuclear belt weigh scale consists of a ""C"" Frame assembly which houses the radioactive source (Cesiwn 137) and the radiation detector (Ionization chamber). The ""C"" Frame assembly is put in place around the conveyor belt as shown in Figure 1. The radiation source emits a fan shaped beam of radiation which covers the full width of the material being conveyed on the belt. Radiation which has passed through the material on the belt is detected by the ionization chamber which is located in the lower arm of the ""C"" Frame assembly. The ionization chamber changes the radiation energy into an electrical signal which is related to pounds per foot belt loading. This signal is transmitted to a highly stable amplifier which combines the pounds per foot signal with a belt travel signal from a digital tachometer which allowed the scale user to be able to monitor total mass being conveyed. Many so-called conventional type scales use belt speed rather than travel to obtain mass per unit time, and then integrate the signal to obtain their weight signal. This unnecessary step tends to erode the overall accuracy of the weighing system."

Jan 1, 1975

By A. Yaghini, Y. Pourrahimian

"Human factors (HFs) play an important role in the mining and mineral industry, affecting operational and maintenance efficiency and safety. Despite the introduction of new technologies and automation in this sector, it is well known that a significantly large proportion of total human errors occur during the operation and maintenance phase. A comprehensive literature review of HFs across several industries is provided. From this review, the impact of HFs on operation and maintenance is summarized, with a focus on what the mining industry is currently doing and what opportunities exist for additional improvements. Future research directions and themes are also identified.RÉSUMÉ Les facteurs humains (FH) jouent un rôle important dans l’industrie des mines et des minéraux, en ce qu’ils affectent l’efficacité et la sécurité de l’exploitation et de l’entretien. Malgré l’apparition de nouvelles technologies et de l’automatisation dans ce secteur, il est bien connu qu’une grande partie des erreurs humaines (EH) se produisent durant une phase d’exploitation et d’entretien. Cet article propose une analyse documentaire approfondie des FH dans plusieurs secteurs. L’impact des FH sur l’exploitation et l’entretien est résumé à partir de cette analyse, une attention particulière étant accordée à l’évolution de l’industrie minière et aux possibilités d’améliorer davantage ses activités. Sont également identifiés les futurs thèmes et voies de recherche.INTRODUCTIONDuring the past several decades, the mining industry has focused on improving equipment, machinery, and methods that have led to more advanced hardware and software, equipment with higher reliability and productivity, and other technological advancements. These actions have improved safety and productivity and have reduced casualties and maintenance workload. Although today’s mining equipment and machinery are technologically advanced and highly reliable, the risk of accidents is still relatively high and key performance indicators have not improved significantly compared to other industries (Sorensen, 2012). A prominent reason could be due to insignificant integration of human factors (HFs) as part of planning, operation, and maintenance activities. The current mining system is a people system, and inevitably HFs and human error (HE) figure prominently in all aspects of this industry. Even the most advanced technologies and innovations require operators and maintainers with significant knowledge and skill, which could increase the potential for HE."

Jan 1, 2018

By Emmanuel Henry

Few industries are more challenged by technical, political and market uncertainty than the mineral industry. Technical uncertainty in mining projects concerns the volume and quality of the resource, the processing and metallurgical parameters, the production efficiency, etc. Political uncertainty can take diverse forms and includes possibilities of change in the taxation system, risk of expropriation and risk of social instability or war. Market uncertainty depends on the market structure of the commodity; price and demand volatilities are the most common sources of market uncertainty. Intensive feasibility studies including these uncertainties and risks are required before investing up to billions of dollars in the development of a new mine. Current feasibility studies are often based on a single (or very few) mean geological scenario and simplified price profiles along the life of the project. Yet, strategic decisions, for example, the level of investment in exploration and metallurgical studies, adoption of a flexible, but more costly, mine design and risk-sharing strategies are made at an early stage. Over the last twenty years, Real Option theory has emerged as a unifying framework enabling strategic planning under uncertainty (technical, political and market). Geological and market variances (second order statistics) are pivotal for proper uncertainty quantification. The present study explores the possible benefits of combining modern geostatistical tools and financial techniques for project management. More precisely, the following questions are examined: Is geological uncertainty really an issue? Can we combine geological and price uncertainties in a unifying Real Option framework? A simple example aimed at illustrating the concepts involved is presented.

May 1, 2003