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The minerals industry consumes billions of dollars in raw materials, equipment, tools, services and chemicals. The industry, though, has turned overmuch of the research and development (R&D) for these products to manufacturers and suppliers. Now the industry and its suppliers must decide how much R&D the mining industry should be responsible for and what role the suppliers should play. Promoting R&D As a result of the current environment in the mining and minerals industry, there has been a substantial decrease in R&D. Depressed prices, stagnant growth, cost cutting and rationalization are evident.

Jan 1, 2000

Background information, formulae and a systematic set of procedures for estimating capital and operating costs for open pit mining equipment are presented in this paper. Firstly, equipment capital costs are required. These can be obtained from either suppliers, contractors or from first principles. The equipment is then divided into cost elements. Typically these are fuel and power requirements, spare parts consumption, wear items such as tyres, teeth and drill bits and finally repair and operating labour requirements. By consideration of the cost and life of each element a base cost can be derived. The base cost is then adjusted to suit specific site conditions such as the proximity to spare parts suppliers, the duty or ground conditions and the management and operator skills specific to the site. Hence, the same item of equipment can be costed to reflect different operations. Included are tables and data for typical plant items. Several examples are also given to illustrate the methodology being presented. The intention is to provide a set of procedures to allow costs to be built up from base level in a systematic and repeatable way. Applications for these costs include feasibility studies, budgetting and data for economic analyses.

Jan 1, 1990

By R. J. Pine, J. M. Rance, J. S. Coggan

ABSTRACT: The safe design of excavations created in a fractured rock mass is of paramount importance in rock engineering. Depending on the nature of the stress regime acting on an excavation, and the associated deformational behaviour of the rock mass surrounding the excavation, a number of potential failure mechanisms exist. These involve a combination of shear failure on existing joints, extension of critically oriented joints and propagation of new fractures through previously intact rock. Conventional numerical codes usually adopt either a continuum or discontinuum approach; this often results in significant over simplification and kinematic limitations particularly when modelling complex rock mass behaviour in the close vicinity of excavations. This paper describes the results from several case examples using a combined finite element-discrete element code, ELFEN that incorporates a crack propagation mode. Through the use of selected rock engineering examples, the authors demonstrate the potential of the code in the realistic simulation of complex rock failure both in underground and surface excavation applications. RÉSUMÉ: La conception sûre des excavations créées dans une masse de roche fracturée est d'importance primordiale dans la géotechnique. Selon la nature du régime d'effort autour d’une excavation, et le déformation associé de la masse de roche autour de l'excavation, il exsite un certain nombre de mécanismes potentiels d'échec. Ceux-ci comportent une combinaison d'échec de cisaillement sur les joints existants, la prolongation des joints d’orientation critique et la propagation de nouvelles ruptures dans la roche précédemment intacte. Les codes numériques conventionnels adoptent habituellement l’approche, soit d’un continuum, soit de discontinuum; ceci a souvent comme conséquence une sursimplification significative et les limitations cinématiques en particulier en modelant le comportement complexe de la masse de roche très proche des excavations. Cet article décrit les résultats de plusieurs exemples de cas en utilisant un code qui s’agit d’une combination d’élément discret et d'élément fini, ELFEN qui incorpore un mode de propagation de fissure. Par l'utilisation des exemples choisis géotechniques, les auteurs démontrent le potentiel du code dans la simulation réaliste de l'échec complexe de roche pour les applications aux excavations soit au fond soit à l’extérieure. ZUSAMMENFASSUNG: Das sichere Design der Aushöhlungen, die in einer zerbrochenen Felsenmasse verursacht werden, ist vom paramount Wert in der Felsentechnik. Abhängig von der Natur des Druckregimes, das auf einer Aushöhlung und dem dazugehörigen deformationalen Verhalten der Felsenmasse umgibt die Aushöhlung fungiert, bestehen eine Anzahl von möglichen Ausfalleinheiten. Diese beziehen eine Kombination des Scherausfalls auf vorhandenen Verbindungen, Verlängerung der kritisch orientierten Verbindungen und Ausbreitung der neuen Brüche durch vorher intakten Felsen. Herkömmliche numerische Codes nehmen normalerweise entweder ein kontinuum oder discontinuum Annäherung an; dieses ergibt häufig bedeutende Übervereinfachung und kinematische Beschränkungen, besonders wenn es kompliziertes Felsenmasseverhalten in der Nähe der Aushöhlungen modelliert. Dieses Papier beschreibt die Resultate von einigen Fallbeispielen mit einem kombinierten begrenzten Element - getrennten Elementcode, ELFEN, das einen Sprungausbreitungmodus enthält. Durch den Gebrauch von vorgewählten Felsentechnikbeispielen, demonstrieren die Autoren das Potential des Codes in der realistischen Simulation des komplizierten Felsenausfalls bei Anwendungen für beide Tagebaue und Untergrundsaushöhlungen.

Jan 1, 2003

By Michael B. Gilbert

The Woodbury L-73 Tunnel involved the design and construction of a 96-inch tunnel driven through 8,080 lf of very difficult ground conditions. Anticipated ground and groundwater conditions consisted of potentially flowing silty sand with cobbles and boulders, mixed face of sand and sandstone and full face of the St. Peter Sandstone. Actual conditions were similar, although the quantities did change from bid quantities. This paper presents the approach used for development of the GBR regarding risk management. The means of arriving at a fair compensation for variances from the baseline values to address the actual encountered tunneling behavior of the soil, boulder count and its effect on production rates are presented.

Jan 1, 2008

By Sofoulis J

In the Archaean of the Kalgoorlie-Norseman area, the layered rocks have been subdivided into two sequences, both containing basic igneous rocks and sediments. The lower sequence is distinguished by the presence of acid volcanic flows and large acid sills. The upper sequence is unconformable on the lower one.In some areas, clastic sediments become coarser and pass into conglomerates. Th:s passage is accompanied by thinning of the beds.These features and their distribution suggest a basin of subsidence flanked by areas of shore-line conditions.Repeated igneous activity, including vulcanism, has occurred along the flanks of this basin. These different igneous and sedimentary environments have played an important part in the primary distribution of metals.A chronology of all basic and acid igneous activity, as well as sedimentat:on, has been established for the Precambrian of this area.INTRODUCTIONThe subdivision of Archaean rocks into those of basic igneous or of sedimentary origin has formed the basis for the nomenclature appearing in past literature. These subdivisions were distinguished as greenstones (predominantly basic igneous rocks) and whitestones (predominantly sediments), and it was generally accepted that the greenstones were stratigraphically lower in the sequence than the whitestones.Recent studies show that, between Kalgoorlie and Norseman, basic igneous rocks interfinger with and pass laterally to sediments, and that basic volcanic rocks occur at different stratigraphic levels. Younger Precambrian. units are also...

Jan 1, 1965

By Armin W. Stuedlein, Youssef Bougataya

Early stage design of driven piles primarily relies on static analysis based on one or a combination of total and effective stress approaches, the latter known as the method to estimate axial capacity. A database of 85 piles driven in the Puget Sound Lowland region and monitored at End of Driving (EOD) and Beginning of Restrike (BOR) was compiled along with capacities estimated using the CAPWAP procedure. Established soil profiles based on borings with standard penetration tests (SPT), cone penetration tests, and geologic maps were matched with their corresponding unit shaft resistance profiles from the CAPWAP procedure and resulted in more than 1,200 observations. In this study, eight new models were developed to predict the coefficients at EOD and BOR, based on the corresponding USCS categorization. Each coefficient model is formulated using a three-parameter exponential function, calibrated to capture the profile of coefficients with depth. These models could benefit the designer by providing them with a simple, empirical model that accounts for soil type and setup in a smooth, continuous function with depth. A parallel analysis was performed to assess the accuracy and variability of the formulated prediction models to facilitate implementation in load and resistance factor design (LRFD). INTRODUCTION The design of the axial capacity of driven piles during the planning stages of a project is typically based on a static analysis approach. The goals of this approach are to predict the components of capacity, consisting of the shaft and toe bearing resistances, and to assess project concept feasibility and preliminary lengths. In most cases, this analysis is based on empirically-developed methods, such as the total stress method, also known as the method (Tomlinson 1987) or the effective stress method known as the method (Esrig and Kirby 1979; Fellenius 1991). Many other methods, such as those based on in-situ test results exist and rely on correlations of blow counts from the standard penetration test (SPT), and cone tip and sleeve friction resistance from the cone penetration test (CPT), to shaft and toe pile resistances (Schmertmann 1978; Meyerhof 1976; Nottingham and Schmertmann 1975; Nordlund 1963; Eslami and Fellenius, 1997; De Ruiter and Beringen 1979). Although these methods were generally developed using data from specific geological regions, they are often recommended in national design manuals (e.g., FHWA, Hannigan et al. 2006).

Jan 1, 2018

For the third successive year it appears that demand for platinum will exceed supplies of newly-mined metal, forecasts Johnson Matthey in its "Platinum 1987 Interim Review." Based on data available at the end of August 1987, Johnson Matthey estimates that western world demand for platinum could exceed 93t (3 million oz) for the first time ever in 1987. Given a likely increase in demand of 4.3t to around 94t (140,000 oz to around 3.02 million oz), up by about 5% over 1986, there would be a 1.8- to 2.2-t (60,000- to 70,000-oz) shortfall in 1987 supply. South African mines enjoying undisrupted production last year after strikes affected Impala's output in 1986. The rate of increases in western world supplies, though, has probably not kept pace with the growth in demand. A downturn in US demand for platinum was counterbalanced by substantially increased purchases from Japanese and Western European consumers of the metal. Total imports of platinum into Japan in 1987 may have reached a record level of 45t (1.45 million oz). The largest source of demand for platinum remains its use in autocatalysts US and Japanese auto manufacturers reduced their platinum purchases in the wake of falling car production. Therefore, a small decline in overall 1987 sales of perhaps 780 kt (25,000 oz) was expected in 1987. Western European demand, however, rose strongly as a result of increased output. The spread of exhaust emission control regulations has sharply boosted the number of cars equipped with three-way catalysts containing platinum and rhodium. Western European auto makers probably needed 5.6t (180,000 oz) of platinum last year, a 50% increase over 1986. The jewelry industry, the second largest user of platinum, increased its offtake of platinum in 1987. Japan, the key to the jewelry industry's consumption of platinum, could absorb 24.8 to 26.4 (800,000 to 850,000 oz) in 1987, compared with 23t (740,000 oz) in 1986. Platinum has wide and diverse applications in industry. Other major users are the chemical, glass, electronics and petroleum industries. They were expected to increase their aggregate demand by about 1.8t (60,000 oz), or 11% in 1987. Investment demand for small platinum bars and coins of up to 311g (10 oz) dropped back in relatively inhospitable conditions. This, after rapid increases in recent years and a surge in US demand in 1986. However, Japanese investors purchasing bars weighing 500g or 1 kg (16 to 32 oz), and considered more speculative, recovered last year. Over the first eight months of 1987, platinum performed strongly on the open market with average prices well up from 1986 in dollar terms. But the increase was less marked where measured in sterling or yen. Platinum ad¬vanced by $3.70/g ($115 per oz) between Jan. 1 and mid-September with the average price having been surpassed only in the heady days of 1980. Johnson Matthey believes that supply and demand appear likely to keep more or less in step on a gently rising path. The recent open market volatility will continue with prices fluctuating widely over short periods. Writing in mid-September, and basing its view on the tangible evidence of platinum's price fall since the review was written, the company's assessment of price prospects is unchanged. Demand for platinum remains strong all-round. In October, imports of platinum into Japan were exceptionally high. And in the US and Japan there was a marked resurgence of demand from private investors. Although market sentiment may have been influenced in part by the news of several potential new platinum mines in South Africa, the full effects of these prospects on supply, even if they were all to materialize, would not be felt before the early-mid 1990s, Johnson Matthey said. According to the review, no radical change in platinum supplies is discernible in the near-term. Incremental growth from South Africa can be expected as the major producers continue to make the most of their existing resources. The Soviet Union may be keener to sell than it appeared earlier in 1987, especially if prices hold up, but a substantial increase is improbable. Canadian supplies are not capable of much variation from present levels. The palladium-rich Stillwater mine will make a modest contribution. Referring to the investment market, Johnson Matthey concluded that despite this year's reduction in sales of small-denomination investment products, platinum does appear to have established itself with private investors. Bearing in mind how business multiplied in comparatively unfavorable conditions before 1986, it is reasonable to look for a resumption of growth once the climate improves.

Jan 2, 1988

The rock mass classification systems were developed for different functions, including support selection, excavation method selection and the determination of rock mass engineering properties for excavation design, among others. This explains in part why we have several rock mass classification systems. It is often cautioned that the rock mass classifications are to be used for preliminary excavation support design, but this caution is now often overlooked and detail/final support design based on the rock mass classification systems. This paper advocates differentiating between rock mass classification for pre-excavation support planning and rock mass classification for at-face excavation performance assessment. It is concluded that most at-face excavation performance problems are attributable to confusing the virgin rock mass rating with the rock mass rating on exposure during excavation, and that this observation is independent of the method of excavation. Procedures are then presented for virgin rock mass rating and for at-face rock mass rating/assessment during excavation.

May 1, 2009

By Edwards A. B

The following note on the mineral association in the ores of the Tennant Creek Goldfield, Northern Territory, is largely based on Mineragraphic Reports Nos. 49, 89, 117 and 193 of the Council for Scientific and Industrial Research. These reports are the results of the examinations of auriferous specimens from a number of mines of the goldfield and are now supplemented by the examination of further specimens from Mt. Samuel forwarded by Mr. V. G. Martin.The Tennant Creek Goldfield lies in the central portion of the Northern Territory, about Lat. 190 35', Long. 1340 15', on the Overland Telegraph Line and about 369 miles north of Alice Springs. It comprise an area extending about 50 miles east and west, by 30 miles north and south.The geology of the goldfield has been described by Woolnough. (2)The rocks of the area are of pre-Cambrian age, and consist of talcose, chloritic, micaceous and siliceous schists of sedimentary origin, interbedded with flows or dykes of schistose quartz porphyry, and of granites which were intruded subsequent to the regional metarporphism of the area. The rocks are moderately folded, but the beclding tends to be obscured by a pronounced east-west cleavage. The most continuous orebodies run east and west, parallel with this cleavage.Numerous lenses of hematite occur in the schists, with their long axes, parallel to the cleavage, and the gold values of the field are frequently associated with such hematite bodies. The dimensions of these hematite bodies are variable but rarely exceed a length of 300 ft., with an average thickness between 10 and 30 ft.; the original vertical dimensions are thought to be comparable with their length. The lenses tend to occur in groups when they are arranged en echelon both horizontally and in depth; and erosion has exposed individual lenses to different degrees, ranging from incipient exposure to complete removal. The existence of unexposed hematite lenses at depth has been proved by geophysical surveys, coupled with drilling tests. (3)A few of the bodies are pipe-like. Many are surrounded by a casing of brecciated rock, composed of fragments of hematite and shattered country rock, and presumably caused by subsequent earth movements which crushed the country rock against the resistant hematite bodies. In the early days of the field most of the important gold occurences were found within these crushed zones, or, to a less extent, within the hematite bodies themselves.These occurrences appeared to be associated only with those hematite lenses which were intersected by quartz veins or other lines of weakness, of later origin than the crushing. This led Woolnough to think that the introduction of the gold and attendant bismuth was subsequent to the...

Jan 1, 1942

By Paul Krivokuca

Outline Quinsam Coal Mine ?? Location ?? Mine History ?? Safety ?? Production ?? Hiring 4S Mine ?? Depillaring design ?? Structural mapping, Risk assessment ?? Rock Bolt Design Selection ?? Training

May 1, 2008

By Cordner G. D

Titanium is not yet being produced on a commercial scale despite the facts that it has some impressive properties, and that it occurs very abundantly in easily-mined, highgrade oxide ores. One important reason for this is that the excellent mechanical properties of the metal were not widely recognised and appreciated until about twenty years ago.Another factor which has tended to retard progress in titanium metallurgy has been the realization that the oxide minerals of titanium are very stable; in other words, considerable energy has to be expended to reduce the oxide to metal. Table 1 presents the minimum energies which would have to be expended to produce one ton of each of the metals, aluminium, magnesium, titanium and iron from their respective oxides under theoretically ideal conditions at normal temperature and pressure. At higher temperatures, the minimum energy requirements are different, but the values for the various metals still fall in the same order as indicated in Table 1.In actual fact, the energy consumption in the case of any particular metal is higher than the ideal value by an amount which can be determined only by' the results of plant practice. The only general conclusion that can be drawn from the data in Table 1 is that it might eventually prove...

Jan 1, 1950

By P. Ulrich, V. Svalbonas

The early to mid 1980s was a period of mining consolidation, and many senior design engineers retired from the mill industry. Similar conditions have existed in the last few years. This creates a loss of a tremendous amount of experience. This paper is a look back by two senior mill designers who survived the dips in both time periods. From a continuous design practice of over 25 years, mill designs and fabrication practices are surveyed with a view of identifying what works, and is necessary, and what doesn’t, or is not necessary, in the creation of a safe, economic, long-lived grinding mill.

Jan 1, 2001

By Y. V. Vasylchuk

This paper presents an algorithm for optimizing the classification of surface mine material subject to excavating constraints. High-resolution expected profit models are input and optimized to classification maps subject to site-specific rectangular excavating constraints. This optimization problem defies traditional closed-form analytical solutions; a practical heuristic algorithm has been developed to quickly determine the optimal final destination for the material subject to realistic constraints. The optimization is fast and generates results that achieve up to 98–99% of the total expected profit achieved with free selection. This algorithm provides a fast viable option for practical application in short-term grade control and in managing multiple realizations in long-term resource estimation.

By Y. V. Vasylchuk

This paper presents an algorithm for optimizing the classification of surface mine material subject to excavating constraints. High-resolution expected profit models are input and optimized to classification maps subject to site-specific rectangular excavating constraints. This optimization problem defies traditional closed-form analytical solutions; a practical heuristic algorithm has been developed to quickly determine the optimal final destination for the material subject to realistic constraints. The optimization is fast and generates results that achieve up to 98–99% of the total expected profit achieved with free selection. This algorithm provides a fast viable option for practical application in short-term grade control and in managing multiple realizations in long-term resource estimation.

By J. N. Geyer

During the early stages of the mining industry of the United States an apparently inexhaustible supply of high-quality, easily accessible coal made the product cheap and the attendant mining methods wasteful of recoverable coal. Because coal from advance places could be mined with less effort and a large outwit obtained as the entries advanced, much of the coal left in pillars to support the roof was lost. Squeezes often developed in these mined-over areas, or, if pillars were of sufficient size to-prevent squeeze, the roof would be so weakened by long exposure that any pillar recovery was extremely hazardous. As the value of unmined coal increased, a high recovery of the available coal became necessary. Numerous plans were tried during the period that followed, some of the methods proving successful while others were complete failures or only partly successful. As a better knowledge was pained of the roof strata and its behavior, however, pillar mining became more successful and methods suited to special roof conditions were developed.

Jan 1, 1933

By W. W. Adams

In mining coal, the Nation's principal mineral fuel, loss of life has been much lower recently than in earlier years when coal mining contributed so heavily to the industrial-accident death toll in the United States. Particularly notable has been the relatively small number of deaths during the past few years compared with the number that occurred 20 or 30 years ago. Reports received by the United States Bureau of Mines, covering all commercially operated mines that were active during all or any part of the calendar year 1935, showed that accidents during that year had resulted in the loss of 1,242 lives. This death toll, although regrettable, represents a material improvement over the industry's experience during most years prior to 1935, and especially over the industry's worst year, 1907, when 3,242 men were killed. Fewer lives were lost in 1933, when 1,064 men were killed at work, than during any year for which complete figures are available.

Jan 1, 1938

By Patrick Scott, Germán Schmeda, Morgan Mullins, Liam Knudsen, Bradley S. Van Gosen, Carma A. San Juan, Nicholas A. Karl, Jeffrey L. Mauk, Clayton Forbush

The objective of the US Geological Survey’s mineral deposit database project (USMIN) is to develop a comprehensive twentyfirst century geospatial database that is the authoritative source of the most important mines, mineral deposits, and mineral districts of the US. Since May 2017, the project has focused on critical minerals. Data for critical minerals that are produced as products are relatively robust, whereas data for critical minerals that may be recovered as byproducts are commonly of much poorer quality. Similarly, more is known about critical minerals that occur in conventional deposits than where those critical minerals occur in unconventional deposits. For example, rare earth elements occur principally in deposits hosted by alkaline igneous rocks, but there is potential for their production from phosphate rock mining, which is less documented. Lithium (Li) has been recovered from pegmatites and brines, but other Li-bearing deposit types have been delineated that may go into production. Cobalt may be produced as a byproduct or coproduct from a wide range ofmineral deposit types, whereas rheniumis a byproduct of copper ore. Significant opportunities for research exist that could help identify new sources of critical minerals, and may also help increase production and recovery from existing sources.

Feb 8, 2021

By Honeycombe R. W K, Greenwood J. N

Powder metallurgy has been developed rapidly in the last twenty years by overseas metallurgists. The technique of making the powders and their subsequent pressing and sintering into useful forms has' only been introduced into Australia under the stress of war-time economic conditions.The technique involved has very little in common with our usual methods of fabricating engineering alloys by melting the ingredients to a homogeneous mass, followed by casting to shape or casting to ingot form and shaping by application of pressure-so-called mechanical working. On the other hand, the technique includes operations, such as milling and sizing, familiar to the primary metallurgists.The compacting of metal or other powders finds important application in two outstanding fields of engineering production: (a) in making porous bearings and contact brushes, in which such a material as powdered graphite can be incorporated; (b) in making cutting tool tips of hard -carbides, which have a melting point too high to make casting feasible, and which would be too brittle in the cast condition in any case. In both these cases; the final article can be made of the desired shape and size (subject to shrinkage allowances) whilst the compact is in a soft and readily machined condition a consideration of great importance in connection with the hard carbides.In order to develop the necessary equipment and technique and at the same time to assisil in the war effort, it was decided to divert the research work of the Metallurgy Department of the University of Melbourne to the problems associated with the production of hard carbides from local raw materials and the sintering of such into tips for cutting tools. Since this work was started at least two industrial concerns have started to produce these materials in the Commonwealth.The work. to date has included (a) the purification of crude cobalt oxide from Risdon and the reduction of this to metal Particles of less than 10 p. diameter; (b) the production of tungsten powder from King Island scheelite and its conversion into tungsten carbide with particle size less than 4 p. diameter; (c) the sintering of the latter product, using the former as a bond; (d) the production of titanium carbide from titanium dioxide; (e) the separation of columbium and tantalum oxides from a Northern Territory tantalite, and the conversion of these into the respective carbides.

Jan 1, 1942

By D FitzGerald, S Jakica, R Paterson, J Silic

A new 2.5D airborne electromagnetic (AEM) algorithm has been developed by Intrepid Geophysics and Jovan Silic & Associates. The advantage of 2.5D (2D geology, 3D source) AEM inversion in 3D geological mapping applications and identification of conductive drilling targets, compared to the more commonly used conductivity-depth imaging (CDI) transforms or 1D inversions, are demonstrated using examples from banded iron formations (BIFs) and other geological settings. We show emerging AEM systems are capable of providing estimates of economic rock unit thicknesses, dips and fault definition at an accuracy that mitigates the need for pattern drilling.The 2.5D inversion application used in this work and described in Silic et al (2015) is a substantially changed version of ArjunAir (Wilson, Raiche and Sugeng, 2006), a product of CSIRO/AMIRA project P223F. The changes include a new forward model algorithm and a new inversion solver. The application enables the accurate simulation of 3D source excitation for full domain models inclusive of topography, non-conforming boundaries and very high resistivity contrasts. Solution is accurate for a geoelectrical cross-section, which is relatively constant along a strike length that exceeds the AEM system footprint.The major innovation includes a new inversion solver with adaptive regularisation, which allows the incorporation of a misfit to the reference model and the model smoothness function.Memory usage has been dramatically reduced and is estimated prior to execution. For speed the software has been parallelised using Intel message passing interface (MPI) and can be used on standard computing hardware or computing clusters. Data from survey lines with lengths exceeding 100 km can be inverted on high end laptop computers.We allow flexibility in the selection of components and in the estimation of noise.AEM inversion examples are shown for surveys from BIFs, base metals (volcanogenic massive sulfides) and geological mapping projects and the results are compared with known geology and drilling. We demonstrate the much improved mapping and target definition delivered by this inversion method when compared with the other more common transforms or inversion methods used on these projects.CITATION:Paterson, R, Silic, J, FitzGerald, D and Jakica, S, 2017. High accuracy .D airborne electromagnetic inversion method for banded iron formation and other geological settings, in Proceedings Iron Ore 2017, pp 319–330 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 24, 2017

By G. R. Lane

A large opencast gold mining company in Africa had just completed a feasibility study for an expansion of the operations. A traditional net present value project valuation methodology had been used that showed a very positive net present value (NPV). The project team had conducted a qualitative risk assessment that identified and logged all potential project risks and had subjectively incorporated 'risk' via the discount rate and other assumption contingencies around gold price expectations, operating parameters, etc. Management requested that an independent quantitative risk modelling approach be adopted to obtain a better understanding of the impact of risk on the overall project valuation and confidence level in the final valuation. A detailed project valuation model was configured in the Cyest Carbon Modelling Technology platform, and the stochastic modelling module used to perform the Monte Carlo simulations. Analysis of historical operational performance data relating to actual achievements versus planned and budget determined the historical variability of the underlying parameters as well as variance to budget. This was done at a detailed level for mining rates and costs, processing rate, costs and recovery, and other operational efficiency measures. External market assumptions relating to gold price, exchange rate, and inflation were modelled and the dependency between them modelled using a copula. This case study will demonstrate the approach taken to building and populating the quantitative risk model and the overall results of the Monte Carlo simulation. The final valuation demonstrated that the project had a 44 percent probability of an NPV less than zero i.e. a 44 percent chance of project finance loss.

Jan 1, 2013