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By Harper F

This paper outlines the authors' views of the methodologies which can be employed to value mineral properties at different stages of development for the purposes of project financing, mergers and public floats. This paper discusses the key issues in Discounted Cash Flow (DCF) analysis including the importance of data verification and the shortcomings in DCF analysis. Stockmarket valuation measures and valuation methodology for exploration and pre development projects are examined through examples and pitfalls are identified. The use of valuations in corporate transactions and their strategic value is also discussed.

Jan 1, 1994

By Thomas A. Wheeler

The reagents commercially used in coal flotation and their roles are reviewed and discussed According to their function the reagents are divided into often overlapping groups: 1. Collectors 2. Frothers 3. Conditioning Reagents Frothers have by far the largest effect on the amount of coal recovered They act not only in their traditionally accepted function of “bubble makers”, but in coal flotation they serve in a seldom acknowledged role of collectors. A lab flotation study on four samples of different coal ranks shows how these react to various frother families and proves that no froher is the optimum reagent for all types of coal. The advent of new technology in flotation equipment in the past decade has resulted in various novel designs of column cells, Jameson and Centrifloat™ cells, air-sped hydrocylones, etc. All should require special frothers or blends of frothers to meet their specific needs.

Jan 1, 1994

By Dodd SF

Valuation of mining companies and their underlying assets prepared by brokers' analysts are, by necessity, approximations. The reliability of the valuations is entirely proportional to the quality of available data, the reliability of forecasts and the nature of underlying commodity price assumptions. The latter is perhaps the greatest single cause of gross variations in company and asset earnings estimates and- valuations. Assumptions are often necessary regarding commodity price achievement based on commodity hedge positions. Public disclosure from listed companies provides a sound base from which to project earnings, cashflows and balance sheets. The uncommon disclosure of projected production and cost schedules often reduces the reliability of future estimates. The application of reserve and resource estimates is contentious with practitioners applying differing weightings to importance of resources in estimating mine lives (and therefore cashflow streams). Valuation methods applied in equity markets usually focus on relative value and the identification of pricing anomalies. The commonest ""rules of thumb"" applied in the valuation of mining companies (and therefore their underlying assets) is with the use of year specific price/earnings (P/E) and price/cashflow (P/CF) ratios, with low multiples suggesting undervalued assets, high multiples overvalued situations (but these rules can often be clouded by market expectations of underlying commodity price movements). Another simply applied valuation tool is to examine the examine the value placed on reserves and resources by the market. Inexpensive gold in the ground (expressed as $ of market capitalisation per ounce of reserves or resources) might indicate a buying opportunity, but the market does discount the value of gold in the ground prior to mine development and where development risk is perceived.

Jan 1, 1994

DCF Valuations are very important to individuals and companies involved in the mining industry. Such valuations are critical to investment decisions in relation to new and existing projects. In particular they provide fundamental information to shareholders in the event of a capital raising or takeover and to financiers supporting mining companies and projects. Also, DCF Valuations are often used to support asset carrying values in the financial statements of mining companies. This paper presents a Chartered Accountant's (CA's) perspective on the main issues to be considered in preparing, analysing and relying upon DCF methods in mineral valuations and provides some practical examples relating to key issues. The paper makes the important point that DCF methods involve making assumptions about future events and circumstances that inherently contain uncertainty which results in a valuation prepared on a DCF basis providing a range of values that are not perfect or accurate. In order that DCF valuations provide meaningful information the underlying methodology used and assumptions made must be consistent, sound and well supported. Credibility of those involved in preparing mineral valuations is vital and this paper supports the adoption of sound practices by all concerned.

Jan 1, 1994

By Grano S. R, Ralston J

It is the perennial problem most metallurgists face when examining data collected from laboratory float tests and plant surveys - there are more numbers than we know what to do with! The objective of this paper is to analyse and interpret a set

Jan 1, 1994

By J. S. Stachulak

"The main ventilation design features adopted at Inco to safeguard personnel against the effects of fires are described in this paper. Measures taken to prevent and detect fires due to spontaneous combustion, and fires involving conveyor belts, are described in detail.IntroductionConsidering the over-all picture of present-day mining operations, the expenditure required to provide a proper system of mine ventilation and fife control should be regarded as a sound investment that will pay back in increased mining efficiency, improved safety, health, and morale of the miners.Mine ventilation control and mine fife detection and fighting are inseparable, because a ventilation system can spread deadly products of combustion just as efficiently as it does life-sustaining oxygen. Therefore, the possibility of a mine fife occurring is of particular concern.The first objective is to prevent a fife.The second objective is to design the ventilation system so that a positive fresh air supply can be ensured on each main level regardless of the location of the fife.The third objective is to be able to detect the fife at an early stage and to extinguish it before it can develop into a major fife. Accordingly, at Inco, very extensive measures are taken to prevent fires and to locate, isolate and extinguish them rapidly. To obtain an early warning, it is not sufficient to know that a fife has started, but it is also necessary to know where the fife is burning."

Jan 1, 1994

By Jerry L. Smith

Industry on a whole has not been very receptive to government prodding to implement waste minimization programs. Waste minimization has the appearance of substantial benefits, however, there are underlying difficulties and suspicions that need to be addressed before industry will support pollution prevention initiatives. They can be summarized as follows: - Human behavior resists change, uncertainty, and unknowns. - New waste minimization techniques are difficult to find and research. - Calculating the true cost of present waste practices as well as new techniques being considered is difficult and time consuming. - Getting a consensus opinion of all the individuals affected on the course or technique to be employed in a pollution prevention program. New software products have addressed many of the problems associated with implementing pollution prevention programs: They contain research on a large number of pollution prevention techniques and case studies; they generally are accessed by EPA ID number, chemical name, or synonym; and some programs have the option to print a comprehensive written user-specific pollution prevention program.

Jan 1, 1994

By C. J. Newman, R. J. St. Eloi, G. Macfarlane

"The Kidd Creek copper smelter has been expanded from its original design of59000 tonnes of copper per year to over 120 000 tonnes per year. Modifications to the process gas handling system and acid plant have been made to accommodate this higher production rate and, generally, to optimize the operation.The gas handling system associated with the continuous smelting process is discussed in terms of boiler accretions and modifications to minimize their impact on operations; design changes to effect reductions in high pressure drop duct configurations; material changes to overcome corrosion and plant additions to improve gas cleaning capability. The acid plant is reviewed with references to changes made to accommodate the increased S02 gas strength resulting from the higher smelting rates. IntroductionThe Kidd Creek Division of Falconbridge Limited is a base-metal mining and metallurgical complex located in Timmins, Ontario. The discovery of the original copper-zinc-silver orebody was announced in April 1964. Mining operations began in 1966 with a 9000 tonnes per day (t/d) concentrator corning on stream in November of that year. In April 1972, a 108 000 tonnes per year zinc plant was conunissioned. Over the years the facilities have been expanded, such that the concentrator now has the capacity to process 13 000 t/d of ore. To expand zinc production, the world's second installation of the Commco/Sherritt pressure leaching facility was completed in 1983 to bring total zinc production capacity to 136 000 tonnes per year. In 1973, serious planning for a smelter operation began. In early 1975, after studying both continuous smelting and flash smelting processes, a decision was made to proceed with the technology offered by Mitsubishi Metal Corporation of Japan. The Mitsubishi Continuous Smelting Process was to be used for the smelter and the Onahama No. 3 tankhouse technology for the copper refinery."

Jan 1, 1994

By André L. B. Bittencourt

The copper content in the waste slag represents the greatest loss in the process of Caraíba Metais' Smelter. By identifying the variables responsible for copper stabilization in the slag, a minimization on these losses is expected, producing a granulated waste slag with a copper content lower than 0.7%. Statistics resourses such as control charts, Pareto's diagram and correlations curves were applied for the data obtained in the first semester of 1992. The magnetite and the calcium oxide contents in the slag of the Flash Smelter Furnace were most prominent variables. Some operational changes introduced during and after this investigation have shown good results.

Jan 1, 1994

By G Neely

COPING WITH COMPLEXITY In every industry, and mining is no exception, plant and processes increase in complexity over time and managers and operators need correspondingly more knowledge. The mine manager has to delegate details to operators, engineers, metallurgists, accountants, safety specialists, personnel officers and the rest. Is it reasonable then, to expect the Mines Inspector to be competent to judge the conduct of all these operations against the criterion of the regulations? Obviously not, but what are the alternatives? One is a superficial inspection where the inspector goes on a hazard hunt for broken steps and missing handrails. Another is one in which an army of specialist inspectors marches on a mine, sometimes outnumbering the staff. Each is competent to assess some part of the operation and if he or she can find an opposite number among the mine staff, they can discuss details. But what good does it achieve? The system acts to remedy present defects and to make recommendations which, if only they were followed, would prevent the same things happening again. Given that this process has been going on since the first Factory Act of about 1840, how is it that there are any more defects left to put right? The answer of course is that defects keep appearing, and new defects arise as fast as the old ones are found and corrected. Further progress can only be made by preventing defects at their source.

Jan 1, 1994

By Douglas R. Simms

O & G Industries, Inc. owns and operates a number of rock quarries within the State of Connecticut. These rock quarries are surrounded by residences and commercial neighbors who have concerns related to blasting. In addition, local commissions which issue the mining permits to O & G are required to hold public hearings, prior to issuing the annual permits each year.

Jan 1, 1994

Getting it right is a very profitable outcome. Shareholders would ideally like to see their directors get it right all the time on the major economic decisions. But it is very difficult for mining directors to get it right all the time in such an uncertain environment. Primary decision-makers of companies with significant stakes in the mining industry should get it right much more frequently. The legal measures of evidence (beyond reasonable doubt and on the balance of probabilities) can be used to determine whether grade estimates (a key revenue variable) are realistic. The application of this approach can be far reaching. More frequently correct decision-making would result in more effective allocation of limited resources (capital and labour). In turn, this would result in higher financial returns and a more extensive mining industry.

Jan 1, 1994

By Michael Harley, E. Guy Charleworth

"Bedding-parallel thrust-hosted gold veins are developed in the Sabie-Pilgrim's Rest goldfield, eastern Transvaal, South Africa. The reefs display a complex history characterized by temporally and spatially overlapping events of similar mineralization and deformation. Recognition of the episodic reactivation of these low angle (5° to 10°) thrust faults implicates high fluid pressures (equalling or exceeding lithostatic pressures). Geochemical constraints limit the amount of fluid-rock interaction and the occurrence of transgressive mineralization within the Archaean granitoid basement suggests that the high pressure fluids originated at depth beneath the Transvaal Basin.Similarities exist between gold deposits of Sabie-Pilgrim's Rest and Telfer, Western Australia as well as Passagem de Mariana, Minas Gerais, Brazil. All deposits are sub-parallel to the enclosing bedding which is shallowly inclined. Furthermore, they are also hosted by contractional deformational structures and are clearly epigenetic in origin."

Jan 1, 1994

By J. S. Wozek

In metallurgical applications, coal fulfills dual roles as a chemical feed stock and as a fuel source. These applications range from cokemaking, ironrnaking (including pulverized coal injection), foundry, basic oxygen furnace / electric arc furnace coal additions, direct ironrnaking, Corex, and the futuristic direct steelmaking. In all steelmaking related processes, chemical reactions are simultaneously temperature and chemical dependent. Therefore, coals used in these processes must consistently comply with specific quality parameters in order to promote efficient operations. This paper limits discussion of Metallurgical Coal Quality to cokemaking and ironmaking applications. Its purpose is to present the customer's perspective on the control of critical coal and coke properties.

Jan 1, 1994

A broker relies heavily on mineral valuations and independent experts' reports to provide the fundamental information, both technical and commercial, which provides the basis of estimating the sharemarket value of securities and underlying assets. It is important to appreciate the significant variance that can occur between the market value and other types of valuation at a particular point in time. In general, most experts' reports and valuations seek to provide estimates of technical/fundamental or ""fair"" value which correspond to the Corporations Law and accounting standards requirements. They do not usually attempt to estimate (stock) market values and it is usually and quite correctly the broker's task to estimate market values on the basis of a technical appraisal and consideration of all other commercial, market and financial influences. Therefore ideally, an independent experts' report or information memorandum will include material relating to commercial and management aspects of a company as well as detailed technical reviews and fundamental valuations. Wherever sensible cash flow projections can be made, cash flow-derived valuations, usually based on discounted cash flow (DCF) calculations, remain the preferred valuation methodology. Brokers in general would not argue with this preference. However, there is a paucity of examples of valuations where alternative methods are applied as a check on the reasonableness of a DCF-based estimate.

Jan 1, 1994

By D. W. Euler, D. G. Brophey

"In an attempt to address the issue of rising labour costs, and to improve productivity, a laser-based system to guide underground LHDs and trucks has been developed. This comprehensive system is known as the Opti-Trak system.Essentially, the vehicle is equipped with front and rear-mounted lasers which scan a reference strip mounted on the drift back. The vehicle follows this reference strip and in addition, based on reflective bar codes mounted beside the reference strip, initiates certain functions (i.e. dump cycle, speed change, brake check, etc.). Any programming that is drift-specific is handled by the positioning of the reference strips and bar codes. Consequently, the vehicle can easily travel to many different haulageways or branches, providing the reference strip and bar codes are in place.The advantages of this system are an immediate elimination of haulage operator costs and an increase in available hauling time to 7 hours out of an 8-hour shift as compared to the typical 5Y2 out of 8 hours that a manned haulage system offers.This paper describes the Opti-Trak system and the benefits to be realized from automation of mine haulage requirements."

Jan 1, 1994

By McMahon D

The approach to valuations at the Normandy Poseidon Group is a measured and methodical process that utilises skills sourced from a number of different disciplines. Whilst being subject to a strict set of guidelines, it is also sufficiently flexible to be able to cope with the considerable variety across the resources industry. The group uses Discounted Cash-Flow (DCF) techniques extensively in order to develop a base valuation. Other external factors (eg the market) are, however, also taken into account when forming a view on value. Other methods of valuation are used in tandem or as alternatives depending on the task. DCF techniques are an important tool but would never be used in isolation. Considerable care must be given to developing the DCF analysis as its components (eg discount rate) are prone to misuse. Whilst the valuation process is quite detailed and scientific, it is really only as good as the inputs or assumptions (technical, financial, etc) that are used. The methodology used remains consistent whether the group is undertaking the corporate planning process or making an acquisition.

Jan 1, 1994

By L. Drisdelle, S. Gendron

"Survival in today's business climate requires participation of all employees in a Total Quality Management Program encompassing everything - ""safety, quality of products, quality ofet1ch and every job done, and of course production "". We all know what needs to be accomplished, but struggle with how to do it, especially in an industry which has not always experienced management/union cooperation, and mistrust is still present.This paper describes a process to improve team work and employee involvement in Inco's nickel carbonyl refinery at Copper Cliff The process involves facilitatorship training for all employees, and a system for reinforcing and accomplishing the required behavioural change. The system is described in detail and a number of examples are presented. At the refinery, the staff is starting to understand as Max DePree recently wrote ""Without Quality Behaviour, you cannot have Quality Product"". IntroductionThe Copper Cliff Nickel Refinery (CCNR) is Inco's largest and most modern nickel refinery, which celebrated its twentieth year of successful operation in April 1993.The heart of the refinery is the Inco pressure carbonyl (IPq plant which produces high purity nickel pellets and specialty powders by refining an approximate 80% nickel granule feed. The carbonyl plant is a modem chemical plant with very special and demanding requirements for safety and environmental protection due to the toxic nature of the refining gas.Since 1987, there has been an emphasis at CCNR on a comprehensive Total Quality Improvement (TQI) Program which was designed based on recognizing customers' needs for improved systems for quality management. This program is customer oriented and comprises such elements as team organizational concepts, customer audits, process assessment and internal quality auditing.A detailed review of progress was made in early 1991 and it became apparent that the ""ownership"" of the TQI program was not broad based. In fact, the program was very much a staff driven effort and fell far short of total employee involvement and relentless continuous improvement that are now considered essential to remain competitive and stay in business.Inco staff has now come to regard that early phase of our TQI program as ""the technical aspects of total quality improvement"".The safety experience was also puzzling. Even though the safety statistics were good with an average lost time frequency of 1.6 for the last five years, the perfonnance improvement had plateaued and remained pretty much the same. Clearly a new approach was required if significant progress and continuous improvement was to be made."

Jan 1, 1994

By Kelly D, Moore C

The Golden Mile, which has been mined continuously for the past 100 years by both underground and more recently open pit methods, occupies an area of 1.2 km by 4 km adjacent to the city of Kalgoorlie Boulder in Western Australia (Figure 1). Large-scale open pit mining at the Kalgoorlie Consolidated Gold Mines (KCGM) Fimiston operations is currently extracting 7.8 million tonnes of oxide and sulphide ore for a total production of 522 000 oz per annum. The effectiveness of grade estimation techniques at KCGM has been examined with reference to existing 10 m bench sample data from all operating areas within the Eastern Lode System of the Main and North pits. The aim of the study was to recommend practical parameters for grade control estimation. The review included comprehensive variography and comparison of nonparametric estimation methods (Joumel, 1983) such as indicator kriging and probability kriging with ordinary kriging, leading to the development of improved grade control parameters and procedures for both daily quality control and short term mine planning. This paper reviews the geological, statistical, geostatistical, mining and modelling features studied in order to present KCGM's Mining Department with recommendations for improving grade control.

Jan 1, 1994

By Michael Harley, E. Guy Charlesworth

"Abstract - Bedding-parallel thrust-hosted gold veins are developed in the Sabie-Pilgrim's Rest goldfield, eastern Transvaal, South Africa. The reefs display a complex history characterized by temporally and spatially overlapping events of similar mineralization and deformation. Recognition of the episodic reactivation of these low angle (5° to 10°) thrust faults implicates high fluid pressures (equalling or exceeding lithostatic pressures). Geochemical constraints limit the amount of fluid-rock interaction and the occurrence of transgressive mineralization within the Archaean granitoid basement suggests that the high pressure fluids originated at depth beneath the Transvaal Basin.Similarities exist between gold deposits of Sabie-Pilgrim's Rest and Telfer, Western Australia as well as Passagem de Mariana, Minas Gerais, Brazil. All deposits are sub-parallel to the enclosing bedding which is shallowly inclined. Furthermore, they are also hosted by contractional deformational structures and are clearly epigenetic in origin."

Jan 1, 1994