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By TvS. von Moltke

Steel is a highly versatile material due to its low cost and good mechanical properties, but typically needs some or other form of corrosion protection due to its tendency to corrode when exposed to atmospheric conditions. In the case of organic coatings, the corrosion protection and functionality of the final product is critically dependent on the adhesion of the coating to the surface of the steel. In this work the effect of contaminants and the nature of the surface layers present on industrial steel products are investigated by means of paint adhesion tests, Auger electron spectroscopy (AES), and X-ray Photoelectron spectroscopy (XPS). It was found that the presence of sodium species on the surface is very detrimental to paint adhesion under wet conditions, while satisfactory adhesion may be obtained even in the presence of silicon and carbon residues. It was also found that the nature of the Fe-O layer, formed under wet conditions is labile and different from that formed in dry air, and that subtle changes in process conditions, such as changing the oxygen content of the quench water, may change the adhesion of paint to the surface of the steel. Lewis acid-base interactions are discussed as a mechanism that may determine the bonding between the steel and polymer coating.

Jan 1, 2003

By F. P. Hassani, H. B. Poorooshasb

"A kinematically admissible velocity field is applied to study the arching phenomenon in a cohesionless granular backfill placed between two rough vertical inflexible walls. The study is different from the previous works which are almost entirely based on statically admissible stress fields. It is shown that the development of arches is strongly influenced by the previous loading history of the backfill which controls the nature of the constitutive laws that govern the mode of stress deformation of the backfill. This preliminary study employs simple models in order to show the potential use of such an approach in evaluating and understanding mine backfill behaviour in the underground excavation. The pressure exerted on the floor supporting the backfill is also studied in some detail.INTRODUCTIONAlthough the importance of the design of mine backfill has been discussed extensively by a number of authors, i.e. Hassani et al. (1985), such theories have not as yet been incorporated in design criteria for underground mine backfilling operation . One factor that such theories must incorporate is the so-called arching action .The phenomenon of arching has been the subject of study by many researchers in the field of civil engineering and mining engineering. Among these scholars the works of Terzaghi (1943), Krynine (1945), Lusher and Hoeg (1964) and Handy (1985) are noteworthy. All these authors use a statically admissible stress field as a starting point to develop their theories. The approach taken by the authors of the present paper is completely different because they employ a kinematicallyadmissible velocity field. It is their belief that the arching phenomenon is closely linked to the interlocking of grains as manifested by the degree of dilatation of the granular mass when subjected to a shearing process.This paper is written in the following sequence. To define the interlocking quantitatively it is necessary to state the constitutive law governing the stress deformation characateristics of the granular mass. This is done in the next section as the law proposed by Poorooshasb and Pietruszazck (1985, 1986) is stated and simplified to suit the present analysis. Next the mode of formation of an arch in a simple system consisting of a mass of backfill sandwiched between two vertical rough walls of infinite extent is examined. The velocity field obtained from the above example is used to obtain solutions to two more complicated situations. The first situation assumes that the backfill is supported, in addition to the vertical rough walls, by a Winkler foundation at its base. The second situation assumes that the Winkler foundation has been replaced by a horizontal beam of uniform section and simply supported at its extremities. The findings of the study are summarized and their practical implications discussed in the concluding remarks."

Jan 1, 1989

By K. D. Hester

"1.0 INTRODUCTIONThe uranium industry started in Canada with the reopening of the gravity concentrator at Eldorado's Port Radium mine in the North West Territories in 1942. In 1948, uranium exploration and processing was opened to the private sector, and the Federal government offered special pricing incentives to the industry. Eldorado explored the Lake Athabaska deposits in northern Saskatchewan, and in 1953 opened the Beaverlodge mine. Other mines in the area soon followed. In 1953 also, the deposits in the Blind River - Elliot Lake area and in the Bancroft area of Ontario were discovered. Mines and mills were quickly developed in these areas.Canadian uranium production peaked at 15,900 short tons of U3O8 in 1959. In that year, uranium exports at $300,000,000 exceeded those of all other minerals in value. On October 1, 1959, Canadian uranium operations employed 13,900 people.Up to 1956, it was a seller's market. By 1958, world production of uranium was far ahead of requirements. Accordingly, in November of 1959, the USAEC announced it would not renew it's options for continued delivery of uranium from Canadian mines. This led to the ""stretchout"" of existing uranium contracts, and many mines were shut down (see Table 1) .In the early 1970's, a commercial uranium market seemed to be developing. In Ontario, at Elliot Lake and Bancroft, mines reopened. But competition was coming from the Athabaska basin of Saskatchewan. Currently it is these high grade, open pit deposits of northern Saskatchewan which are in the forefront of Canadian uranium developments. Canadian developments since 1942 reflect the political and market forces, as well as metallurgical progress and changes in environmental standards. This paper attempts to show these process changes in broad perspective."

Jan 1, 1987

By Günter Huber, Bruno Mattle, Helmut Westermayr, Daniel Spöndlin, Max John, Nejad Ayaydin

PROJECT DESCRIPTION Alignment The Strenger Tunnel forms part of the S16 four-lane expressway between Landeckand Bludenz. The construction of this important East-West connection started in 1973with the Arlberg Road Tunnel as its key constituent. Beginning in 1992, solutions for the section between Pians and Flirsch were investigated. Efforts to conserve nature and to avoid potential avalanche and landslide areas led to a solution detouring the villages in the Stanz valley. The starting points were predetermind by the intersections at Pians in the East and at Flirsch in the West. As a result of the expected traffic load and the comparatively high gradient of 2.9%, both one-way, two-lane tubes were constructed at once. The north tube is 5.851 m long, the south tube 5.775 m, see Figure 1. Layout of Tunnel Cross-Section The tunnel cross-section was determined by 2 × 3.75 m wide, 4.70 m high roadways, two sidewalks and sufficient space for two fans above the clearance

Jan 1, 2005

By R. E. Heithecker

In Kansas, almost every oil well drilled into a limestone formation is treated with hydrochloric (muriatic) acid upon completion. This is done to increase the potential capacity of the well and thereby increase its "daily allowable" production (see p. 9 ), to shorten the time required to produce the recoverable oil, and to increase the quantity of oil recovered ultimately from the reservoir. The porosity and. permeability of limestone formations seldom are uniform throughout the proved area, consequently the production capacities of completed wells vary considerably. Acid treatment of wells tends to increase production capacity and to equalize potential capacity. If offset wells already have been treated with acid, new wells usually are treated to protect the property on which they are drilled against drainage. Even though competitive conditions do not exist in a field, it

Jan 1, 1939

By J. D. Noll, S. E. Mischler

Measurement and sampling of diesel particulate matter in mine air presents a challenge due to the complexity of the diesel aerosol. The results of a series of tests carried out by the National Institute for Occupation Safety and Health, Pittsburgh Research Laboratory, in an underground mine were used to evaluate several measurement methods that are currently used to characterize particulate matter emitted by diesel-powered equipment. This paper presents an overview of these techniques and examples of the results along with a discussion of the advantages and information gained by each technique. The measurement methods discussed include particle size measurements using a scanning mobility particle sizer, total particulate matter measurements using a tapered elemental oscillating microbalance, a size selective sampling method for workplace and personal exposure assessment and a size-selective high volume sampling method for carbon analysis.

By Pamplinm J. W.

"INTRODUCTION For the past six years the United States Bureau of Mines in cooperation with the University of Alabama, Tuscaloosa, Ala., the Missouri School of Mines and Metallurgy, Rolla, Mo., and certain operating companies of the Florida land-pebble phosphate district have conducted an investigation to determine the amenability of phosphatic sands to concentration. 4 This paper discusses briefly an investigation of the concentration of fine phosphatic sanads of the land-pebble district of Florida. The process used - namely, the tabling of material previously given a selective oiling treatment - is new in its application to the phosphate industry, although old in principle.The feed to the standard phospidate washery is a hydraulically wined mixture of phosphate pebbles, quartz sand, and clay in which the quartz sand grains are segregated in the fine sizes. Me standard method of concentrating (washing) consists of wet-screening. at about 20 mesh to recover the plus 20-mesh material. 5 Lately some of the washeries have introduced hydraulic classifiers for sizing of the screen undersize to recover the coarser spigot products, but even this additional treatment allows much of the fine phosphate to be wasted."

Dec 1, 1932

By J. Leinart

As is readily apparent, the reliability of the early-stage costs estimated for any mining project are critical to the viability of that project. An estimate too high might leave a potentially profitable deposit undeveloped or worse yet, available to a competitor. One too low might waste investment dollars in a project not yet economically ripe. There are two aspects critical to any estimate: 1. The cost data used to represent the values of the wages, salaries, supplies, and equipment. 2. The design used to determine the engineering parameters upon which the above estimated values are based. Given that all of the information contained in Mining Cost Service is provided by suppliers, equipment manufacturers and mine operators, one wonders why there is any question as to the reliability of cost estimates developed using this information. Given that it is all actual (as opposed to statistically derived) data, where do the problems with estimate reliability lie and what is the impact of the data on that reliability? The following presents a series of analyses designed to assess the reliability of the cost estimating process. Both the actual cost data and the engineering parameters upon which they are based are examined in an attempt to quantify and understand the importance of each. While several sources of cost information are available (Means, Richardson, Primedia?s Equipment Watch, and individual suppliers and manufacturers), the following rely solely on data contained in InfoMine USA, Inc?s, Mining Cost Service and in its Sherpa Mine Cost Estimating Software.

Feb 27, 2013

By W. W. Adams

"The eighth National Safety Competition, that for 1932, conducted by the United States Bureau of Mines, was participated in by 322 mines and quarries operating in 34 States. Tables 2 to 6 show the relative standing of the various plants. Bronze trophies, known as the 'Sentinels of Safety,' which were provided by The Explosives Engineer magazine to be awarded annually by the Bureau of Mines, were awarded to five companies, each company having established the best accident-prevention record within one of the five classes into which all companies were divided, - namely, anthracite-mining companies, bituminous-coal-mining companies, metal-mining companies, operators of nonmetallic-mineral mines other than coal mines, and quarries or open-cut mines. The trophies are awarded for one year and are then transferred to the winners of the succeeding year's contest.The trophy for bituminous-coal mines, which has been in New Mexico for the past year, was won by a mine in West Virginia. The metal-mine trophy goes to New York State for the first time in the history of the contest. Previously it had been won by mines in Minnesota, Michigan, Kansas, and Oklahoma. The trophy for nonmetal mines remains for another year at Retsof, N. Y.; that for quarries and open-cut mines is transferred to a quarry in Michigan. The trophy for anthracite mines, of course, remains in Pennsylvania, as all anthracite mines in the contest are in that State.In determining the relative standing of the various companies enrolled in the competition, all mines and quarries were graded according to their accident-severity rates, - that is, according to the number of days of disability of employees on account of accidents in proportion to the number of man-hours of work done by all employees at the plant. Reports of accidents and of man-hours worked were furnished by the companies to the Bureau of Mines. These reports were carefully examined and classified to insure uniform weighting of accidents according to the number of days of disability to be charged and to insure uniformity of methods of calculating the accident-severity rates for the various mines and quarries. When the relative standing of all plants had been determined in this way, a summary of the records of the companies having the lowest accident-severity rates in their respective groups was sent to the members of a committee of award for examination in accordance with the rules governing the safety contest. The members of the committee of award were W. H. Cameron, managing director of the National Safety Council; William Green, president of the American Federation of Labor; James F. Callbreath, secretary of the American Mining Congress; T. T. Read, Vinton professor of mining engineering of Columbia University; C. B. Huntress, executive secretary of the National Coal Association; A. J. R. Curtis, assistant to the general manager of the Portland Cement Association; and A. T. Goldbeck, director of the bureau of engineering of the National Crushed Stone Association. When two or more mines within the same group operated without an accident during the year, the contest rules provided that the trophy for the group should be awarded to the plant whose record showed the largest number of man-hours worked."

Jul 1, 1933

By Don Rose

INTRODUCTION A number of tunnels supported and permanently lined by steel-fiber-reinforced shotcrete (SFRS) have been built in North America in the 1980s. The material is more economical than, and technically equal or superior to, conventional shotcrete using wire mesh. The design and construction of SFRS-lined tunnels is straightforward, and only a few new design principles, laboratory tests or construction equipment modifications appear necessary in order to use this material. Modern tunnel Contractors may use cyclic drill-and-blast methods on some tunnels, with intermittent shotcreting as part of an orderly cycle. The Dry Mix method is most suitable for cyclic, intermittent, relatively small-scale shotcreting. However, modern Contractors excavating tunnels continuously using large long Tunnel Boring Machines (TBMs) or Roadheaders may prefer Wet Mix shotcreting on a mass production basis. In either case, the use of steel-fiber-rein¬forced shotcrete (SFRS) promotes the rapid and economical excavation of tunnels. The addition of microsilica will improve SFRS properties and reduce rebound, and is expected to become standard practice with SFRS in North America, as it now is in Scandinavia. HISTORICAL REVIEW Steel-fiber-reinforced shotcrete (SFRS) at the present time (1985) is essentially conventional shotcrete with straight or deformed steel fibers added, and in general SFRS for tunnel linings encounters the same problems that conventional shotcrete does. Shotcrete history is well known. The use of sprayed plaster on wire frames for mounting animal skins by Carl Akeley of the Smithsonian

Jan 1, 1985

By O. J. C. Runnalls

"Canada became the world's largest uranium producer in 1984. That leadership position is likely to be maintained for many years into the future because of a firm production base, many undeveloped known deposits with commercial promise, and a large geologicalpotential for new discoveries.There are some uncertainties on the horizon, principally because of restrictive actions in process within the U.S.A., which are aimed at preserving a deteriorating domestic uranium industry. Should such actions result in import restrictions, for example, there would be a negative effect on foreign producers at least in the short term. Canada may avoid such difficulties under a tentative U.S.-Canada free-trade agreement where restrictions on the import of Canadian uranium into the United States would be eliminated. Over the longer term, demand for Canada's uranium resources will grow because of the foreseen growth in the world's installed nuclear power capacity. IntroductionSince the phenomenon of nuclear fission was discovered in 1938, the utilization of uranium has grown substantially. Initially, the principal use for uranium was in the production of nuclear weapons. However, once civilian nuclear power reactors began to be built in the 1950s, an increasing fraction of uranium output was directed to the production of fuel elements for use in electricity generating stations.The cumulative uranium production by those countries in the World Outside Centrally-Planned-Economies Areas, WOCA, during the period 1938 to 1985 exceeded 800 000 tonnes of uranium. Some 60% of that was mined in the United States and Canada, as indicated in Figure 1. In 1986, nearly 80% of WOCA output came from five countries, Canada, United States, South Africa, Australia, and Namibia, as indicated in Table 1 and illustrated in Figure 2.During the past decade the world annual consumption of nuclear energy has more than tripled (Fig. 3). As of December 31, 1986, the world total of nuclear power reactors had reached 394 with a total net capacity of 270 GWe. The thermal output from nuclear power plants in 1985 exceeded 60% of the energy contained in all of the oil produced that year in the Middle East. Thus, nuclear power has already become an important component in the world energy supply picture."

Jan 1, 1988

Carlisle: An old friend and good friend, Alan Bateman, is the Silliman Professor of Geology Emeritus at Yale and editor of the Journal of Economic Geology. Now, Alan, let's start off by telling us something about how you became interested in copper. Bateman: Well, after I left Yale in 1913, I was appointed one of the field members of the Secondary Enrichment Investigation. We spent three years in the field studying all the copper deposits of North America, trying to find out how secondary copper enrichment took place. As part of this investigation, I went up to Kennecott, Alaska, in 1916. After the trip I was asked by the president of the company to become consulting geologist to them. I accepted his offer, and to this day I'm still consulting geologist to the Kennecott Copper Corp. Up at Kennecott, there were both Henry Krumb and my good friend Henry DeWitt Smith, who was general superintendent. He and I had been together at Yale, and I had ushered at his wedding. Interestingly enough, Henry took his bride to Alaska and I took mine there two months later. My assistant was Don McLaughlin, and I think that was his first experience in a mining camp. We published a paper on Kennecott together and cemented a friendship lasting to this day.

Jan 11, 1964

By Wade Edward Speer

The Hiddenite District of Alexander County, NC has produced some of the world?s finest large emeralds since the first one was discovered 134 years ago. In fact, North America?s largest emeralds come from the district, making this one of the continent?s most unique gem deposits. In addition to emeralds, the Hiddenite District is also famous as the discovery site for the rare spodumene mineral hiddenite, first identified in 1881. Nowhere else in the world do these two minerals naturally occur together. The emeralds are a unique color variety of beryl (Al2Be3Si6O18) with trace amounts of Cr+3 and V+3 substituting for Al+3. The hiddenite (LiAlSi2O6) crystals also exhibit emerald green color due to traces of chromium. Consisting of three large deposits and numerous prospects, the district encompasses an area of 10 km2 (4 sq miles) centered on the small town of Hiddenite. Operations at the Adams, Ellis and North American Emerald Mines properties have been productive at irregular intervals since the 1880s. Currently, only the North American Emerald Mines property is being mined on a regular basis. Recent activity there has exposed a 3-hm2 (7.4-acre) pit with depths of 25 m (82 ft) that provides the best exposures of unweathered bedrock seen in the district in more than 120 years. Although no official records exist, public and private data indicate that the production of the entire Hiddenite District from 1880 to 2007 is about 70,000 carats of emerald and 20,000 carats of hiddenite. The bulk of the emeralds came from the North American Emerald Mine property (NAEM, formerly known as the Rist Mine) where sustained mining replaced the previous sporadic prospecting in 2000.

Jan 1, 2009

By GEO M. FOWLER

AN appraisal of the activities of the mining geologists during 1936 clearly indicates the ever in- creasing utilization of geology in the search for ore. Few men with geo- logic training are idle at present; this is particularly true regarding recent graduates. Many have accepted employment in distant fields, such as the Philippines and South America, and greatly increased mineral production from these places reflects their activities. In North America, regions of intense mineralization formerly important are being restudied in greater de- tail and with better understanding; as a result, new mineral wealth is being found in many such districts. Much is being done by private companies and individuals, and it is to be hoped that mining companies will increasingly make available the purely scientific results of such studies by permitting their geologists to publish. On such generosity to a large extent will future advances in ore finding depend.

Jan 1, 1937

By P. J. Rua

The Piedras Verdes copper mine is a new run-of-mine (ROM), heap leach, solvent-extraction/electrowinning (SX-EW) operation located 21 km (13 miles) north-northwest of the town of Alamos in the state of Sonora, Mexico. The Piedras Verdes copper mine is wholly owned by Frontera Copper Corp. (FCC), a Canadian corporation, through its 100 percent beneficial interest in Cobre del Mayo S.A. de C.V. (CDM), a Mexican registered company. The January 2008, minable reserves were estimated to be 193.6 Mt (213 million st) at a grade of 0.36 percent copper. The overall recovery of total copper was estimated to be 61.9 percent. The property has an additional 17-year life and is designed to produce 31.7 kt/a (70 million lbs/year) of cathode copper. Construction commenced in early October 2005. The first copper cathode was produced 12 months later at a total capital cost of $100 million. Elevations at the site range from 150 to 300 m (490 to 985 ft) above sea level. The area has excellent infra-structure in the form of towns, power, water, roads, rail, airfield and access to the deepwater port of Guaymas (Fig. 1). The surrounding area is also famous for its numerous polymetallic (lead, zinc, copper, silver and gold) epithermal veins. Some of these were mined for more than 200 years and provided the wealth on which the town of Alamos was built. The original village of Piedras Verdes was located in the area of the proposed openpit mine and, consequently, it was necessary to construct a new townsite 6 km (3.7 miles) to the south before project development could commence. The new town site (Fig. 2), complete with power and water supplies, roads, sewer system, schools, clinic and recreational facilities, was completed and occupied by 49 families in September 2005. CDM received its remaining permits from the Mexican environmental authorities on Sept. 20, 2005. This enabled the company to proceed with full-scale development. CDM owns or controls 27 mining concessions covering the resource. Surface rights to the Piedras Verdes project were controlled by four Ejidos (communal agrarian and/or ranching societies) and five individual landowners. CDM has acquired all surface rights necessary for its mining operations and associated facilities either through outright purchase or long term lease agreements.

Jan 1, 2008

By Manuel Pérez-Tello, María M. Salazar-Campoy, Óscar Rodríguez-Hoyos

A common problem during the operation of the Kaldo furnace is the formation of accretions and blockage of the injection lance due to splashing. This typically occurs during the processing of anodic slimes for the production of doré. In this work, a 1:7 scale model of the Kaldo furnace currently in operation at Metalúrgica de Cobre, Mexico, was built in transparent acrylic plastic. Water and colored oil were used to represent the doré and slag, respectively. The model was used to determine the maximum penetration distance of the injection lance under a variety of experimental conditions at room temperature. Input variables included two types of oil, rotation speed, inclination angle, and the fraction of the vessel volume occupied by the liquids (φ). A mathematical correlation for the dimensionless maximum penetration distance of the injection lance d ∗ as a function of φ, the Froude number of the liquids in the vessel (Fr), the Reynolds number of the gas jet (Re), and the oil-to-water kinematic viscosity ratio (η)was developed. Reasonable agreement between the calculated and experimental values was obtained. Digital images showed that splashing was caused by the turbulent gas jet impinging upon the free surface of the liquids, whereas the cascade effect was negligible. The results of this work have been useful to improve the operation of an industrial Kaldo reactor.

By Manuel Pérez-Tello, María M. Salazar-Campoy, Óscar Rodríguez-Hoyos

A common problem during the operation of the Kaldo furnace is the formation of accretions and blockage of the injection lance due to splashing. This typically occurs during the processing of anodic slimes for the production of doré. In this work, a 1:7 scale model of the Kaldo furnace currently in operation at Metalúrgica de Cobre, Mexico, was built in transparent acrylic plastic. Water and colored oil were used to represent the doré and slag, respectively. The model was used to determine the maximum penetration distance of the injection lance under a variety of experimental conditions at room temperature. Input variables included two types of oil, rotation speed, inclination angle, and the fraction of the vessel volume occupied by the liquids (φ). A mathematical correlation for the dimensionless maximum penetration distance of the injection lance d ∗ as a function of φ, the Froude number of the liquids in the vessel (Fr), the Reynolds number of the gas jet (Re), and the oil-to-water kinematic viscosity ratio (η)was developed. Reasonable agreement between the calculated and experimental values was obtained. Digital images showed that splashing was caused by the turbulent gas jet impinging upon the free surface of the liquids, whereas the cascade effect was negligible. The results of this work have been useful to improve the operation of an industrial Kaldo reactor.

Brief descriptions of several types of unit pulverizeI' are given and the functioning of the components that crush, carry, dry and classify the coal is considered. A distinction is drawn between pulverizers which crush particle beds and those .operating by free-crushing. The overall performance of pulverijlers is considered in terms of correlations between mill variables, coal grindability, abrasiveness, moisture and particle size. Brief discussioiJ. of the influence of pulverized fuel quality on boiler operation and of pulverizing costs concludes the paper.INTRODUCTIONModern coal pulverizers function as carriers of materials and as crushers, as dryers and as size classification machines and, thus, the unit pulverizer comprises. several components that normally function as separate apparatus. The controls of the unit pulverizer must have sufficient flexibility to accommodate rapid variations of boiler load or coal quality. Further, the machine must be robust, yet easy to maintain preferably at annual intervals-so that maintenance costs are small (for coal is a relatively cheap material). Usually, the full load of a modern pulverized-fuel fired boiler can be raised with one pulverizer off-line. All coals, from anthracites to brown coal, may be prepared as pulverized fuel (hereafter P.F.) .Each pulverizer of a direct-fired boiler has, broadly, to supply the burners with coal powdered so that about 80 per cent passes a 200 B.S. sieve and only a small proportion, less than about 10 per cent, remains on the 100 B.S. sieve. The classification processes must prevent any appreciable proportion of coarse particles in the P.F. and yet not return excessive proportions of "finished" fines. The quality of the P.F. should not vary greatly with output rates which may be anywhere between the maximum rate and one quarter ofthe maximum. The suspension of P.F. in the primary air...

Jan 1, 1957

By Paul F. Gnirk, Ralph A. Wagner, Joe L. Ratigan

This thermomechanical analysis used the finite element method to investigate the behavior of crushed salt backfill in a waste disposal room situated in a salt dome repository. The first of two objectives was to determine the transient temperature rise and degree of thermomechanical consolidation that occur in the backfill as a function of drillhole depths. The second objective involved the evaluation of closure due to salt creep of unlined emplacement drillholes and the determination of pressure on steel sleeve liners in the drillholes should liners become necessary for canister retrieval. The retrievability period was considered to extend for 25 years after waste emplacement. The canisters were assumed to contain ten-year old high level waste with a thermal output of 4.3 kW at the time of emplacement.

Jan 1, 1981

By A A. Ndiaye, A Galli

In a companion paper on current hedging practices in the mining industry (Armstrong et al, 2009) we showed that contrary to popular belief, mining groups are still using financial derivatives to hedge against foreign exchange risk and interest rate risk, and more recently against adverse changes in energy prices, notably the oil price. This paper presents a case study on a hypothetical gold mine to illustrate the impact that hedging policies could have on its profitability by reducing the downside risk due to adverse changes in the exchange rate and increases in fuel prices. The characteristics of the hypothetical mine have been set to reproduce those of a real gold deposit, the Kisladag mine that is currently being exploited by open pit methods in Turkey. This mine was selected because its feasibility study was available to the public. Geostatistical simulations are used to reproduce the inherent uncertainty on the recoverable reserves û stochastic simulations are used to generate the variability of the other three key sources of uncertainty: the gold price, the cost of energy and the exchange rate. A simple strategy based on straightforward vanilla options (puts and calls) was developed for hedging the last two risks, on the assumption that the company sells its production at the prevailing spot price.

Jan 1, 2009