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By T. Boyd, K. McTaggart, J. Qiu

"Hudbay Minerals’ Flin Flon process plant produces a copper concentrate and zinc concentrate from the three ores it processes: 777, Reed and Lalor. Unlike many Cu-Zn ores, the average Zn: Cu ratio in feed is around 2:1, whereas, in many Cu-Zn separation plants the Zn: Cu feed grade is substantially higher than 2:1. The lower Zn: Cu in plant feed is a challenge for limiting Zn recovery to the Cu concentrate. While total recoveries of Cu and Zn at Flin Flon are very good; selectivity is the key challenge and small changes in ore or plant, can result in quite variable Zn recovery to Cu concentrate, and accordingly, Zn recovery to Zn concentrate. Magnetic conditioning has been shown to be selective between the two paramagnetic minerals chalcopyrite and sphalerite. Statistical testing of magnetic conditioning was undertaken at Flin Flon with the objective of increasing Cu recovery to Cu concentrate without increasing the Zn recovery to Cu concentrate - in effect increasing Cu-Zn selectivity. This has been achieved elsewhere with magnetic conditioning with the probable mechanism being an increase in fine chalcopyrite recovery, and a reduction in entrained, ultrafine, non-activated sphalerite to Cu concentrate. The results did indeed show an increase in Cu recovery to Cu concentrate of 0.8% to high confidence, but the decrease in Zn recovery to Cu concentrate was not to high confidence. This is effectively an increase in Cu: Zn selectivity in the Cu circuit – higher Cu recovery with no change in Zn recovery. However, while there was an increase of 1% in Zn recovery to Zn concentrate with magnetic conditioning, the variability in this parameter meant that this increase, though larger in magnitude than the Cu result, was not to high confidence."

Jan 1, 2019

By S. Kelebek, E. Yalcin

"Diethylenetriamine (DETA) and/or triethylenetetramine (TETA) are reagents that can generally be categorized under ""flotation modifiers"". These polyamines are known to be effective for the deactivation/depression of pyrrhotite that is present in Canadian nickel-copper sulphide ores in large quantities. Recent bench scale testing on some of these complex ores indicated that chalcopyrite flotation can also be adversely affected under certain conditions involving polyamines, which may be taken to be an evidence of their specific affinity towards chalcopyrite. In general, DETA shows no significant depressant action on chalcopyrite while TETA's promotion of hydrophilicity for this mineral has been observed even in the presence of xanthate. This prompted an investigation on thermodynamic equilibria involving these polyamines and copper ions. Results serve a useful purpose to identify conditions for deactivation phenomena. CuDETA2+ and CuTETA2+ chelates as products of sequestration have large predominance areas covering a wide range of redox and pH conditions, where copper xanthate species are not stable, especially in the presence of TETA."

Jan 1, 2009

By K. A. Mackinnon

The choice of fan type (axial flow, centrifugal or mixed flow) most suited for a mine ventilation application depends on a number of technical and economic factors. For each project, the relative importance of these factors will vary. It is worthwhile to carry out an assessment on a case by case basis. The paper, by discussing a number of technical and economic factors and their interactions, will provide the ventilation official a methodology to easily and methodically undertake such an assessment.

Aug 1, 2013

By G. P. Gu

The in-service 90/10 cupro-nickel tubes in a water-chiller system suffered from severe corrosion damage during their relatively short service life causing unexpected down time. In addition to downtime, the environmental risk associated with losing refrigerant was also a concern that initiated this investigation, Microstructural investigation using SEM and electron microprobe indicated that pitting corrosion had resulted in local nickel depletion, During the corrosion process, copper appeared to have re-deposited around the corrosion pits accelerating the local corrosion.

Jan 1, 2005

By L. Jones, S. R. Lawrence, A. R. Holloway

Whilst dense medium separation is best known for its ability to concentrate diamond and coal deposits, the process is now being employed in southern Africa as a pre-concentration step to improve the economics of platinum group metal and nickel ores. DMS plants built for these industries (such as the 1600tph unit at Tati Nickel, Botswana), are spearheading an expansion in this area by reducing mine and process operating costs yet maintaining economic metal recoveries. This paper provides an overview of DMS technology and examines the economic benefits available to North American operators and projects, with recent case studies as reference.

Jan 1, 2009

By R. Drozd

"The Bui/moose Mine is in the northeast coal area of British Columbia, and less than $300 million was spent to bring this 2.3 million-tonnes-per-year metallurgical and thermal coal mine into production by November 1, 1983, one month ahead of schedule. The project is an unincorporated joint venture undertaking, with Teck-Bullmoose Coal Inc., a wholly-owned subsidiary of Teck Corporation, holding 51%, Lornex Mining Corporation holding 39%, and Nissho-lwai (Canada) Ltd. holding 10%. Bullmoose Operating Corporation will be the manager and operator of the project. This paper will broadly cover the history and exploration work on the property, the geology, open-pit mining plans and equipment, the preparation plant flowsheet from breaker station to clean coal silo, the 35 km highway truck haul, the railroad loadout system, manpower requirements, approvals and permits, and general financial arrangements. Introduction The Bullmoose Mine Project is located about 87 km by road south of Chetwynd, B.C. and consists of an open-pit coal mine, a plant facility in the Bullmoose Creek valley below the mine, and a separate rail loadout facility on the British Columbia Railway Branchline near the new town of Tumbler Ridge some 35 km by road to the east. The plant will be capable of producing a total of 2.3 million tonnes per year (mty) of washed metallurgical and thermal coal. Long-term metallurgical coal contracts for high-quality, medium-volatile, bituminous coal have been signed with nine Japanese buyers for 1.7 mty, and the balance of0.6 mty will be for thermal coal production. Plant construction began in the spring of 1982, and in May 1983, preproduction waste and overburden removal in the mine was started. The plant began tuning up in October and was fully operational by December 1983. Metallurgical coal began moving to the coast in unit trains during November, and first vessel loading at the Ridley Island port began in late December 1983."

Jan 1, 1985

By J. Wong, M. G. Lipsett, L. K. Daneshmend

"Current trends of increased size, complexity, and automation of surface mining equipment necessitate more comprehensive and objective techniques for equipment comparison and selection. The field of reliability analysis provides tools to generate quantitative bases for maintenance and reliability aspects of such comparisons. Results from statistical analyses of failure and repair time data are used to perform the comparison. A case study is presented which analyzes five machines of two different technologies and three different designs.IntroductionThe surface mining industry is currently faced with a rapid evolution in production equipment. The more obvious trend in this evolution is the steady introduction of even larger machines. Parallel, and complementary, to this increase in size is the introduction or adaptation of new technologies. Together, these two trends result in new surface mining equipment designs; these designs are often more complex and may feature technologies that have yet to be proven for the application or at the scale they are now fielded.The prospect of significant automation of open pit equipment is also bound to add complexity to future equipment designs. Semi-automated features, such as drilling controllers (Aquila, 2000), have already been commercialized. Fully autonomous haul trucks have been demonstrated in open pit mines (Jackson and Zoschke, 2000). Design concepts for comprehensive teleoperation of open pit operations have been formulated (Lipsett, 1998).With this rapid availability and deployment of new technology and equipment, managers and maintainers are faced with a multitude of decisions regarding what equipment to acquire and what maintenance strategies to implement. In light of this evolution in mining equipment, it is necessary to develop better methods for making equipment management decisions (Dessureault et al., 1999; Paraszczak, 1999). The incentive for development of such techniques is that a large portion of an open pit mine’s operating cost is maintenance related, as shown in Table 1."

Jan 1, 2000

By John Stoten

"The 1980s have proven extremely difficult years for many resource-based organizations. Mining companies have learned how to weather the negative effects of inevitable economic cycles. However, with some notable exceptions, such as gold mining companies, the mining industry has faced a broader and deeper round of cutbacks than any experienced since the 1930s. Downsizing has been a major issue for many mining companies as they have faced the need for dramatic staffing cost reductions in the recent past.The continuing current rapid rate of change in technology and the marketplace, coupled with increasing merger and acquisition activity, will provide an on-going need for some companies to face major reorganization. This inevitably will involve down-sizing activity in some instances.Given this scenario, it is worth reviewing the industry's past experiences to identify approaches and techniques that could prove of value in handling a future staff downsizing challenge. This paper is based upon a downsizing consultant's experiences with the mining industry and other sectors, and highlights what appear to be key staff reduction planning and process issues.Planning for DownsizingA review of companies' downsizing activities of the last few years reveals four key activity stages which need to be addressed to ensure a successful transition. These stages are:1. organization planning;2. developing cost reduction strategies;3. implementing downsizing; and4. building for the future.A business situation that is severe enough to require drastic staff cuts typically affects all aspects of a company's operations. Most mining companies have reviewed cost efficiencies in many operational areas. However, these reviews often have been short term in focus . As a result, some companies have experienced multiple downsizing; each event a response to an immediate economic threat. This has sometimes resulted in an unstable organizational environment, with severe stresses on staff morale and productivity.In the long term it is more efficient and less stressful to the organization to adopt a more comprehensive and longer-term strategy. Especially in capital intensive mining operations, it makes sense to review all areas of business activity, not just staffing."

Jan 1, 1989

By Sean Hillacre, Arthur Lieu

NexGen’s approach to uranium processing design including the crushing/grinding and leaching of raw ore through to yellowcake precipitation and tailings management focuses on minimizing surface footprint, freshwater consumption, and human radiation exposure. Applying the concept of best available technologies economically achievable (“BATEA”), NexGen continues to research, evaluate, test and validate various advanced technologies that can be incorporated into the Project design, including distinctive tailings storage techniques. Additionally, NexGen is proposing that tailings generated from the mill processes be used as cemented paste backfill of stopes, as well as stored in a purpose-built, Underground Tailings Management Facility (“UGTMF”) comprised of several dedicated chambers. The paste backfill method of tailings storage is used globally, however, constructing purpose-built tailings chambers in waste rock is a new concept in uranium mining, which would typically be cost prohibitive for most projects given the expense to develop non-economic material for the sole purpose of storing tailings. The Rook I Project is uniquely positioned to implement the UGTMF due to robust Project economics and favourable technical setting which provides NexGen with the opportunity to set an elite standard for tailings management. When compared to conventional surface tailings management facilities, storing tailings underground as cemented paste reduces geotechnical, geochemical, environmental, and human health risks associated with tailings management. Additionally, the UGTMF vastly reduces the area of surface disturbance and allows for progressive decommissioning during the life of mine operations.

Jan 1, 2020

By D. G. Minnes

Many non-metallic minerals and structural materials are produced in Ontario to serve the needs of domestic manufacturers and export markets. In 1982 production was estimated to have a value of $765 million. Approximately 81 per cent of this was represented by structural materials, nearly 12.8 per cent by salt, and the remainder was other industrial minerals. Total mineral production in Ontario in 1982 was estimated at $3 .16 billion, down nearly $1.5 billion from 1980's high of $4.58 billion.

Jan 1, 1984

By J. S. Fox

"Pyroclastic rocks are useful guides to volcanic centers due to the tendency of their fragments to increase in size and volume toward the source vent. The felsic rocks of these centers can be the prime hosts of base metal deposits in the Precambrian Shield; their sub-volcanic equivalents are often the focus of porphyry copper mineralization in the Cordillera. Quantitative mapping of pyroclastic rocks has not yet developed into a routine prospecting tool in Canada, however, possibly due to the cumbersome nature of existing manual techniques and their limitation to structurally simple terrains.A rapid pyroclastic mapping method has been developed whereby the field geologist acquires only a down-plunge outcrop photograph, a record of the fragmental deformation ellipsoid and a record of some descriptive features from each station. Mean fragment size and volume percent are obtained later in the laboratory from a photo-enlargement: by means of a digital analyzer. A computer program uses the strain parameters to 'undeform' the field measurements and obtains genetic information from the descriptive data. Results can be superimposed on a geologic map, with values for each station being represented by a dot of a specified diameter corresponding to the size or volume percentile range to which the value belongs.Control traverses were run over the pyroclastic rocks surrounding the Anderson Lake mine and the Flin Flon South main shaft in northern Manitoba. In both locations, the mapping has delineated regular increasing trends in mean size and volume per cent toward the head frame."

Jan 1, 1977

By B. Calver, D. J. M. Farnsworth

"As open-pit operations expanded at Pine Point, hydraulic aquifer evaluation was undertaken to establish the criteria necessary for the design of a feasible dewatering system.The extreme climate of this northern location dictated that the ore zone under extraction be rendered as dry as possible to minimize freezing effects. The design and implementation of such a system necessitated detailed hydraulic evaluation, and the problems that occurred are typical of those inherent in open-pit mining operations in northern areas.The paper describes the problem solution as approached from a mine engineering point of view, with particular reference to the practical aspects of operation and installation. The hydrological analysis used is simple and readily applicable to most open-pit dewatering problems."

Jan 1, 1969

By E. Heikkinen, J. Suikkanen, T. Siren, J. Valli, M. Hakala

Diametrically faced borehole breakout observations are a fairly good indication of magnitude of the secondary stresses acting perpendicular to the borehole. In cases of low in situ stresses, where borehole breakouts are not observed naturally, it is possible to increase the prevailing stress state around the borehole by increasing the rock temperature. When the temperature is increased sufficiently, thermally induced borehole breakouts will occur. By implementing the temperature increase in boreholes located at excavated tunnels, it is also possible to study the effect of the near-field stresses caused by the excavation. The near-field stress state changes as a function of borehole depth, thus increasing the information available from experiment. To study the feasibility of this proposed low cost method, a Borehole Thermal Spalling (BTS) experiment was executed in ONKALO Underground Rock Characterization Facility, in Western Finland in 2014. The first borehole pilot test with the method was conducted in ONKALO at the POSE niche in already at May 2010, with the second pilot test following in August 2010 at Äspö HRL. The major objective of the experiments was to define the trend of the maximum in situ stress component, while also providing knowledge of the in situ spalling strength of the ONKALO rock mass. The stress state in ONKALO is nearly isotropic in horizontal layer, causing problems for the use of more traditional stress measurement methods. With boreholes heated over long interval, the weakest rock parts are observed to fail, thus providing statistical confidence. For these reasons, continuous test sections have an advantage in ONKALO, compared to spatially limited stress measurement methods such as overcoring and hydraulic fracturing. The BTS experiment is conducted in 9 meter deep vertical boreholes located at the POSE niche, situated -345 m depth below the ground surface. The boreholes used within the BTS experiment are located in migmatitic granite, in an experiment area where the surrounding stress state and the rock strength are fairly well known. The prior knowledge of the stresses is favourable for the experiment, as it requires careful planning and iterations to determine the appropriate heating power domain. Too low heating power will not be sufficient to cause borehole breakout, while too high heating power causes breakout in all directions thus making determination of stress direction hard or impossible. The initial state of the borehole and induced borehole breakouts will be monitored using acoustic televiewer logging (ABI) and optical borehole logging (OBI) imaging techniques. Fracture mechanics modelling is used in planning of the experiment, also in back-analysis to link the observed breakout angle to stress state. Both the pilot test in 2010 and BTS test in 2014 resulted in similar borehole breakout direction. The results are in line with so called EDZ & VT1 stress interpretation, revealed the maximum horizontal component bearing the magnitude of 21.5 MPa, with the trend of 166°.

Jan 1, 2015

By P. V. Golde, R. A. Poole, G. R. Baiden

"The results being presented in this paper are those obtained during 1996 on a drilling automation project at Stobie mine. This project has successfully demonstrated that the remote operation of multiple drills (by a single driller) from surface using Tamrock Data Solo 1000 Sixty drillrigs is technically feasible and can potentially bring significant rewards in terms of productivity and work environment improvements, as well as labour and maintenance savings. BackgroundThe ObjectiveThis paper is an update of a previous report on remote drilling research at Stobie mine. Enabled by the communications system installed at the mine, the ability to remotely control underground equipment from surface has been demonstrated (Poole et al., 1996). This paper discusses the needs and process required to carry this concept to consolidate the operation of multiple machines under a single operator.The TeamThe team assembled to develop and implement the automation and the communi-cations extensions needed to allow the multiple machines’ operation from the surface by one operator included the following:INCO Mines Research supplied the project management and original project initiative. The primary purpose was to prove the advantages of savings associated with the driller not being required to travel to the underground drill location coupled with the savings associated with one-man, multiple-machine techniques.Tamrock EJC supplied the Data Solo 1000 Sixty drills and the Tamrock specific machine-based custom software. The drills were produced in Finland with no provision for remote operation of the drill from other than the umbilical attached local console.Automated Mining Systems supplied the modifications to the drill communications equipment to allow the machine communications to become broadband compatible. As well, Automated Mining Systems also supplied the hardware necessary to be able to remotely control the portable video camera, as well as the data logging equipment.Stobie Mine personnel were made available to test the function and then integrate the concept of remote control drilling into the Stobie operations."

Jan 1, 1997

By Osvaldo A. Bascur, Curt Heftier

The lack of integrated information including the Energy/Utility Suppliers with sufficient detail for analysis causes inefficient operation in metallurgical complexes including the Energy/Utility Suppliers . Defining the right context for information use is essential for sustainable operations. This being said, what are we doing to enable people to act upon information and to be aligned to optimize the use of resources like raw materials, energy, water and consumables for an entire metallurgical complex? Collaboration between all company entities is a key component of improving efficiency. Evolution of web technology and object modeling of enterprise assets enables collaboration across the whole business. Operational troubleshooting occurs more quickly as the organization acts on issues to reduce wasteful operation. This paper presents a real time software infrastructure with tools that give users the ability to sift through available data, transform data into information for business continuous improvement and optimization. We will introduce a new technology for analyzing real time data, information and events using multidimensional analysis of information to detect anomalies based on the statistics of the data classified by time events to reduce the information into action. A new paradigm for collaboration at a local and strategic level is proposed to enable the enterprise to become proactive in dealing with wasted time and products. Three examples from the industry will presented and their benefits highlighted.

Jan 1, 2011

By A. Ghahreman, M. Oliazadeh

"Heap leaching is an attractive process for low grade deposits where the metal content of ore does not justify the high cost of milling and agitated leaching. In general, the heap leaching capital cost is low, construction is rapid, and production costs are low. The primary disadvantage of heap leaching is low recoveries (typically 65% of agitated leach recovery); thus, recovery improvements could convert more lower-grade deposits into minable reserves. This will also allow to process primary sulfide ores and result in a dramatic expansion of the technology, as ~80% of total ore types are sulfidic in nature. The old gold operations tailings are another massive source of low-grade gold material that can be retreated by the heap leach process. The major parameters affecting the recovery rates are ore characteristics (mineralogy, particles size of metal and host minerals, ore permeability), and operational conditions (segregation of ore, compaction, leach cycle time, lift height, and solution application rates). The design of a percolation leach process is based on a limited number of coarse ore bottle roll and/or column tests under ideal conditions. The economics of the projects and engineering design of the process facilities are developed based on the bench scale test work results and the application of the conventional engineering scale up factors. This paper will deal with the parameters affecting the HL efficiencies and focus on the potential improvement of gold heap leach recoveries. This would include design of heap leach operation and evaluation of processes such as fine crushing and bioleaching.INTRODUCTION Gold heap leaching is a hydrometallurgical process designed to treat amenable low-grade gold ores that contain typically 0.5 to 1.5 g/t gold (Marsden and House, 2006; Wong Wai Leong and Mujumdar, 2010). Ore is stacked by various types of equipment on an impermeable barrier, and a sodium cyanide solution is applied to the surface of the stacked ore. Gold, silver, and other metals contained in the ore are dissolved to various degrees by the cyanide application, as it percolates downward through the stack of the ore. The pregnant leach solution (PLS) is then collected at the bottom of the heap. The PLS is then sent to the gold recovery plant where the metals are extracted. The barren leach solution (BLS) is then reapplied to the top of the pad. Ore is placed on a pad or previously leached lift by various means, including ramp conveyor belts, radial-arm and self-leveling stackers, and trucks. Once trucks are used to construct the pads, the pad can be compacted and hence the pad should be graded and ripped or scarified (roughened up) with wheeled or tracked equipment to produce shallow cuts to increase surface area exposure to the leachate."

Jan 1, 2019

By R. Argane

In this work we assessed the geochemical behavior of concentrator tailings deposited at the abandoned mines of Zeida and Mibladen (Upper Moulouya, Morocco), using physico-chemical analyses, mineralogical characterization, acid base accounting and weathering cell tests. The aim of the study was to evaluate mine drainage quality and to assess metal mobility from these concentrator tailings. Chemical analyses show that the Upper-Moulouya abandoned tailings contain relatively high quantities of lead (0.261 to 0.594 % wt). Mineralogical analyses reveal the abundance of neutralizing minerals (calcite, dolomite, ankerite, and aluminosilicates) which influence mine drainage and metal mobility in mine tailings. Leachate analyses from weathering cell tests show alkaline conditions, small conductivity values, and low solubility of Pb-mineral phases. According to these results, abandoned mine tailings in the Upper-Moulouya district have very low potential for generation of contaminated mine drainage and for leaching of heavy metals. However, the inhalation of tailings exposed to winds generate dust problem facing the local population and may cause health consequences.

Aug 1, 2013

By T. Verdel, Y. Gunzburger

Rockfalls are major and essentially unpredictable sources of danger, particularly along transportation routes (roads and railways). Thus, the assessment of their probability of occurrence is a major challenge for risk management. From a qualitative perspective, it is known that rockfalls occur mainly during periods of rain, snowmelt, or freeze-thaw. Nevertheless, from a quantitative perspective, these generally assumed correlations between rockfalls and their possible meteorological triggering events are often difficult to identify because i) rockfalls are too rare for the use of classical statistical analysis techniques and ii) all intensities of triggering factors do not have the same probability. In this study, we propose a new approach to investigate the correlation of rockfalls with rain, freezing periods, and strong temperature variations. This approach is tested on three French rockfall databases, the first of which exhibits an outstandingly high frequency of rockfalls (approximately 950 events over 11 years), whereas the other two databases are more typical (approximately 140 events over 11 years). These databases come from (1) the national highway RN1 on La Réunion Island, (2) a railway in the Bourgogne-Franche Comté region, and (3) a railway in the Auvergne region. Whereas a basic correlation analysis is only able to highlight an already obvious correlation in the case of the “rich” database, the newly suggested method appears to detect correlations even in the “poor” ones. Indeed, the use of this method confirms the positive correlation between rainfalls and rockfalls on La Réunion Island database. This method highlights a correlation between cumulative rainfalls and rockfalls in the Bourgogne region, and it detects a correlation between the daily minimum temperature and rockfalls in the Auvergne region. This new approach is easy to use and also serves to determine the conditional probability of rockfall function of a given meteorological factor. This approach will help to optimize risk management in the studied areas based on their meteorological conditions. Nevertheless, even if some rockfalls are correlated to meteorological factors, other seems to occur independently of these factors, which highlights the unpredictability of rockfall hazard.

Jan 1, 2015

By G. Bonin, A. Jamal, G. Preciado, S. Gillis

"Accurate, easy to obtain, and reliable methods of measurement are the cornerstone of shaft and tunnel developments - during their sinking, operation and maintenance, or in some cases, remediation. This paper presents a new methodology to capture existing shaft conditions in such a manner that they can be transferred from the field to a digital copy, where they can be stored and used for engineering design purposes in a space not directly affected by the costs associated with schedule and equipment performance. The methodology utilizes basic principles of excavation alignment (plumb lines and survey instruments) while adding modern LiDAR, geolocation and survey control tools that can more completely capture the surrounding environment. The complete cycle of collection, processing, and delivery of pertinent information underground can take under an hour. During sinking, capturing data as a live stream measurement and being able to assess the alignment of the shaft liner can be critical to meeting rigid design tolerances. As sinking progresses, small changes in alignment or liner deviations can be captured and immediately corrected. Likewise, post-construction as-built conditions can be recorded and digitized, which will allow the mine personnel to compare the proper working condition to the actual condition years later. Observed changes can be identified and planned as future shaft repair works. This methodology has been developed and successfully deployed during the on-going sinking works of the two shafts at the Jansen Potash Project in south-central Saskatchewan and is described in greater detail in this paper.INTRODUCTION Light Detection and Ranging (or LiDAR) scans of the BHP Jansen Production and Service shafts during construction identified sections of both shafts where the internal radius of the temporary primary liner was insufficient to accommodate the tolerances of the permanent liner that was to be installed inside the temporary liner. These locations are referred to as “tights”. The “Tights Removal Program” was designed to collect high resolution point clouds of the shaft, using stringent survey control, that could be compared to the design profile to generate a heat map of locations for removal of up to 75 mm of steel-fiber-reinforced, 70 MPa concrete liner. This work was all on critical path, which made it valuable to save time on the schedule. Because concrete removal was a time-intensive task, it was essential to locate and remove only the concrete that would encroach on the planned permanent liner, while attempting to maximize the amount of cutting time. Removal was carried by a road header attached to a Brokk(R) 160, a small multi-attachment demolition machine."

Jan 1, 2019

By Michael Samis

Conventional project valuation techniques, such as discounted cash flow (DCF) method, are more frequently being criticised for the manner in which they consider the interacting effects of uncertainty and project structure (including management flexibility) on project value. Modern asset pricing (MAP; often called ?real options valuation? when applied to the analysis of flexibility) is a more general valuation framework that corrects many of the shortcomings of common valuation methods. Previous mining applications of MAP have tended to treat the ore deposit as a homogenous entity. While useful for demonstration purposes, this is inadequate for practical application in industry. This paper presents a MAP valuation example that allows for the heterogeneous nature of an ore deposit. It shows that deposit structure may increase the complexity of the mine planner?s decision so that results of a standard DCF analysis, or a simple MAP analysis that ignores the details of deposit structure, are misleading. In the example, a management is considering the development of an adjacent low-grade zone while mining operations in a high-grade zone are ongoing. If the low-grade zone is developed before high-grade reserves are exhausted, the proposed development will include both low-grade zone development and a capacity expansion to handle additional low-grade reserve production. If development of these reserves is delayed until the high-grade reserves are depleted, then the low-grade reserves can be developed without a capacity expansion. A typical DCF analysis would reduce the management?s decision problem to three alternatives: 1) continue mining only in the highgrade reserves, 2) immediately develop the low-grade reserves and expand capacity, and 3) delay low-grade zone development until the high-grade reserves are exhausted. The model presented here allows the management to reconsider the development and capacity expansion decision on a discrete half-year basis. It delineates price regions, for given levels of high-grade zone reserves, in which it is optimal to develop the low-grade zone, defer low-grade zone development and abandon the mine irrevocably. The model presented here extends the ability of mine planners to describe actual project structure while using the MAP valuation framework that is already noted for its capacity to combine project uncertainty and risk insights with a dynamic project description.

May 1, 2001