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By Asanga S. Nanayakkara

The surface deformations induced by reservoir dilations can be measured using tiltmeters and these measurements can be used to infer reservoir level volume changes by solving an inverse problem. Preferred approach to solve such an inverse problem is to consider more tiltmeter measurements than the number of unknown variables considered in the inverse problem. However, sufficient number of measurement points is not always available due to economical and practical issues. This paper proposes a new approach to circumvent this problem. The new approach entails generation of pseudo surface deformation data by curve fitting tiltmeter measurements using a mathematical function, which delineates three-dimensional characteristics of surface deformation profiles. Then a three-dimensional inverse problem is solved using pseudo surface deformation data. This method is useful in inferring reservoir volume changes with high areal resolution when the number of available measurements is not sufficient to acquire the desired areal resolution.

Jun 1, 2012

By M Parcell

"Ventilation risks in an underground mine have essentially remained the same for centuries, yet theevidence suggests that there are many coal mines that have failed to adequately control these risks.The conduit for the knowledge learned by previous generations exists in the mining legislation. In an ideal world, mines would not need legislation to tell them what to do; they would resolve the risks to an acceptable level so as to protect the safety of persons in the mines based on the acquired knowledge. There will be some who have been personally aff ected by a mining disaster but for the majority they will be remembered as a vague recollection of an event from long ago. The mining legislation is the repository for the knowledge and outcomes from inquiries of past disasters. The challenge for the current generation, and the generations to come is to appreciate the legislation that exists, so as to not ælearn the hard wayÆ. In reviewing most disasters there is comment or discussion on the adequacy of the legislation, which ultimately results in some amendment to the law. For each person, there is an increasing responsibility to ensure that the same mistakes are not repeated. Understanding the legislation, its history and its purpose is the fi rst step in ensuring thatventilation risks are eff ectively managed. Failing to do this will be disastrous. This paper discussesthe relevance, importance and potential pitfalls of coal mine ventilation regulation."

Jun 1, 2012

By Nathan Deisman

Coupled reservoir geomechanical simulations have become a key component of caprock integrity assessments for SAGD operations. This work demonstrates the differences of stress evolution when considering coupled versus uncoupled reservoir simulation. Coupled simulation involves the use of a reservoir and a geomechanical simulator with feedback to each simulator to update reservoir or geomechanical variable (permeability, porosity, relative permeability, pressure, temperature, saturations). Uncoupled simulation only passes the pressure and temperature to the geomechanical simulation with no reservoir simulator updating. Therefore, it is possible to complete uncoupled simulations exclusively with no knowledge of geomechanical flow property evolution. However, it is important to understand the differences between the stress evolution in each model for caprock integrity analysis. A single geological model was selected and parametric analysis was completed while varying the geomechanical the production injection pressures (1600 kPa, 1900 kPa, 2200 kPa) for a reservoir with an initial pressure at the injector of 1300 kPa. The results of the six uncoupled and coupled models are compared through the changes in mean stress, shear stress, and strength with focus on geomechanical assessment of caprock integrity.

Jun 1, 2012

By D Chalmers

"There is a tendency to treat mine roadways with fan installations as leak proof systems. Morecomplex ventilation arrangements are being installed in coal mines out of necessity or designand these can introduce additional hazards. This paper explores the leakage paths that can existaround fans and in particular the hazards these leakage paths may generate around undergroundfan installations. The behaviour or these leakage paths in the event of a fan failure has also beenexplored. Early detection of spontaneous combustion is essential, so understanding the leakage behaviour around fans especially boosters or main fans installed underground will assist in sett ing up monitoring locations in the correct places. If this behaviour is not fully understood then monitoring may be placed incorrectly, or trends may not be picked up until it is too late."

Jun 1, 2012

By Bruce Macdonald

Operational monitoring of slope stability can be achieved by space based InSAR monitoring platforms. Natural and man-made rock slopes are monitored using a novel stack-based InSAR method that exploits both persistent point scatterers (PS) as well as coherent distributed scatterers (DS) such as areas of pavement and sparsely vegetated surfaces. The new method, Homogenous Distributed Scatterer (HDS)-InSAR identifies InSAR targets by using adaptive multilooking of statistically homogenous pixel neighbourhoods combined with thresholding the differential temporal coherence of each target candidate with respect to its surroundings. HDS-InSAR preserves PS and therefore forms a direct generalization to our proven DualScale-PSI method. The density of HDS exceeds that of PS by more than an order of magnitude often providing essentially continuous coverage over urban and industrial landscapes featuring a mix of infrastructure with mostly bare soils or rock surfaces. The improved coverage enables better definition of surface motion and underlying geology, which will lead to superior interpretation of the geophysical mechanisms causing the surface deformation, e.g. through improved integration with 3D deformation modeling. We illustrate the performance of our new HDS-InSAR method compared to DualScale-PSI using displacement results from Vancouver, Canada; Bingham mine, USA; and the Palabora mine, South Africa.

Jun 1, 2012

By Kamran Esmaieli

This paper investigates the behavior of ore pass walls under impact loads caused by material transiting through an ore pass. In particular it considers the influence of foliation in the rock mass surrounding an ore pass as both a triggering and accentuating cause of degradation. Based on empirical observations in several underground mines a numerical experiment was designed to understand the influence of rock mass foliation on impact-induced damage on ore pass walls. The distinct element method, and in particular the Particle Flow Code (PFC2D) was used to simulate three different rock masses surrounding an ore pass. Each simulated rock mass has similar properties but was defined by distinct dominant foliation (70o, 80o, 90o) along the foot wall. The numerical experiments investigated different scenarios whereby the walls were loaded by a projected rock fragment striking the foliated walls at a constant impact angle and velocity. The damage inflicted by the projectile rock fragment, on the foliated rock mass, was quantified using the number of impact-induced micro-cracks initiated on the ore pass wall. The results of the numerical analysis indicated that the presence of foliation resulted in greater damage zones in the surrounding rock mass. In addition, the extent of impact-induced damage to the ore pass wall increased as the angle of interception between the ore pass wall and the rock mass foliations decreases. This is in agreement with qualitative field observations.

Jun 1, 2012

By Hamidreza Soltanzadeh

The injection of CO2 into a reservoir or aquifer can potentially result in deformation, induced fracturing and fault reactivation in the injection zone and/or the rocks that surround it. This paper reviews the data collection and geomechanical analyses performed to assess these potential hazards for the Heartland Area Redwater Project (HARP), in which CO2 sequestration is being considered in a carbonate (Leduc Formation) reef. A three-dimensional mechanical earth model (3D MEM) was developed using available geophysical log data from several wells. The geomechanical response to CO2 injection was studied using a finite element numerical model based on the 3D MEM and pore pressure distributions predicted using a reservoir simulator. The modeling results suggest that the potential for induced fracturing and fault reactivation is low and the maximum predicted ground surface heave is less than 2 cm. Sensitivity analyses conducted with a 2D geomechanical model that was extracted from the 3D model confirm that this conclusion holds true even when a reasonable measure of uncertainty in rock mechanical properties, ambient pore pressures and horizontal stress magnitudes is accounted for.

Jun 1, 2012

By Kathy S. Kalenchuk

Damages have been observed in shafts, backfill infrastructure and the slick line at the Leeville Mine. Shaft damage (shearing and spalling of the concrete liner) is attributed to mine-induced rock mass deformations concentrated where regional faults intersect the shafts. Aggregate bin, mixer station and conveyor drive damage (shotcrete shearing, heave of concrete floor slabs and bending of a vertical steel beams) is attributed to rock mass squeezing induced by elevated magnitudes of the vertically orientated major principal stresses. Separation of the slick line has occurred do to extension of the stressshadowed rock mass immediately above the mined out areas. Three-dimensional numerical models have been developed and calibrated to simulated rock mass deformations with magnitudes similar to those believed to have produced the observed damages. By stepping through the mine sequence, models reproduce deformations at the same mining stage as when damage has occurred. Calibrated models have been used to forward project further damage over the remaining mine life.

Jun 1, 2012

By D Cliff

"It has been 17 years since the mine disaster at Moura No 2 Mine in Queensland. Recent disasters in the USA and New Zealand prompt the question what has changed since 1994. This paper att emptsto answer this question and identify areas that need improvement."

Jun 1, 2012

By B Beamish

"All underground coal mines in Australia are required to develop a Spontaneous CombustionManagement Plan (SCMP). The New South Wales Government has developed a guideline (MDG1006) to assist operations to comply with this requirement. A reference document is alsosupplied with the guideline that describes the type of information that is needed for input to theplan, including identifying possible tests that can be used for propensity assessment. However,there is no clear indication of what program of sampling and testing is suffi cient to provide adefi nitive assessment of spontaneous combustion propensity prior to and during mining. This paper reviews the existing methods available for quantifying spontaneous combustion propensity and discusses the sampling requirements that are needed from exploration to mining. A new, more defi nitive method of spontaneous combustion testing is also presented that benchmarks coal self-heating performance from mine ambient temperature to thermal runaway. Examples of the eff ectiveness of this new test method for identifying and quantifying reactive pyrite in coal as well as quantifying the diff erence between dry and wet season conditions are provided in the paper."

Jun 1, 2012

By Allan R. Punkkinen

Safe extraction of the valued ore resource in the deep levels of VALE Creighton Mine has progressed in a pillar-less fashion using vertical retreat, slot-slash and uppers retreat methods since the cessation of ?cut and fill? mining in the late 1980?s. Sequencing of the panel extraction and filling has been the key to successful exploitation of high stress orebodies at depth. In late 2010, discussions between the Operating Department and Creighton Ground Control revealed an opportunity to evaluate a trial primarysecondary sequence in the west end of the 400 Orebody at the 2340m horizon. To manage the trial primarysecondary project, a high level risk analysis and management of change was carried out to mitigate potential danger. As part of the requirements, an instrumentation project was conducted in the hanging wall and footwall bottomsills of the secondary panel and within the secondary panel itself. The extraction sequence was modeled with Map3D® software, confirming high stress levels with the advance of the primary panel. Enhanced ground support was installed based on modelling results. A key objective of the instrumentation project was to verify support system response to mining and to obtain knowledge in regards to the behavior of the stope. This paper describes the first time that this type of new innovative instrumented rockbolt technology had been used in a hard rock mining environment. Understanding of the physical deformation mechanisms of ground support in response to high stress conditions is the basis for an effective ground control strategy. The data played an important role in subsequent enhanced ground support system design at the mine and importantly, established the fact that the secondary pillar had not totally failed. Subsequent cavity monitor results helped establish that fact.

Jun 1, 2012

By Cheowchan Leelasukseree

Mae Moh mine, operated by Electricity Generation Authority of Thailand (EGAT), is the largest open pit mine in Southeast Asia. Its production is approximately 15 million lignite tons and 90 million m3 of waste, annually. The bottom of the final pit limit is designed to be approximately 500 m in depth. Presently, the pit depth is almost 250 m below original surface. The complexity of geological structures, such as faults, has caused a number of geotechnical difficulties. In a challenging lowwall area, called Area 4.1, an inclined weak bedding plane, G1, will be daylighted along the lowwall as following by mine plans. The dimensions of Area 4.1 are nearly 300 m wide and 90 m high. The friction and dip angles of the G1 interface are reportedly 12° and 15°, respectively. A three million m3 claystone block, resting above G1, would potentially slide down, and possibly cause a massive failure. EGAT engineers are acutely aware of the potential gigantic sliding failure and are modifying the mine plan in Area 4.1 to improve mine safety and minimize the displacement of the potential sliding block, reduce the possibility of failure and lower the additional mining cost as much as possible. The cut and fill mining technique was selected and studied to achieve those goals for mining in Area 4.1. With this mining technique, G1 will be partially daylighted. Therefore, an arch formation is induced with a sliding block above the mining area, which could perform as a temporary support undercutting a certain span. Initial studies of the behavior of the partially undercut slope are presented in this paper, along with a review of the similar failure history in Mae Moh mine and a 3-dimensional numerical model of the mine. The failure history review provides an estimation of undercut span without failure. The three-dimensional numerical model results, using 3DEC, gave an initial approximation of the displacement of the sliding block in Area 4.1. The next exciting study of the behavior of partially undercut slope is a trial undercut slope field experiment in Area 4.1. Currently, a trial undercut slope field experiment in Area 4.1 is under construction. In the field experiment, a number of monitoring programs will be installed in Area 4.1 to monitor and obtain information to allow a better understanding of the behavior.

Jun 1, 2012

By P Guj, J A. Bell

The valuation of early-stage exploration projects requires a valuer to take into account a large number of uncertain value drivers, the interplay among which may be non-linear. This paper examines some of the key value drivers including geology, target metrics, project area and maturity, the market and the psychology behind the decision-making process. The commonly accepted valuation methods and their underlying logic are outlined, including a view on why they evolved, what value drivers they attempt to address and their potential shortcomings. These methods include the multiple of exploration expenditure, geoscience rating, expected values and market based methods. The potential future valuation methods of replacement values and neural networks are also introduced along with how to minimise heuristic bias and error within the market-based approach.CITATION:Bell, J A and Guj, P, 2012. Exploration value drivers and methodologies, in Proceedings Project Evaluation 2012 , pp 17-28 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By B Maybee, L Fava, D Millar

In the context of a case study for an underground gold mine, the value generated by a schedule optimisation tool (SOT) is assessed. SOT is a software tool for underground mine planning that maximises the net present value (NPV) of a development and production schedule. A baseline study measures the NPV of a schedule generated by SOT from a sequence prepared by the site mine planners. Operational resource constraints and precedence constraints are adhered to by the schedule and NPV is evaluated with a financial model including revenues, costs and discount rate, as specified by the mine planner.The case study has several facets in addition to the baselining component. Scenarios were conducted that examined the degree of constraint on operational resources, the projected gold price and unit costs. Life-of-mine schedules subject to optimisation using SOT allowed for equitable comparisons.Haulage was identified as a dominant constraint for the mine. It was one of six operational resources that were used to constrain the optimisation of the mine schedule, with alternative levels for some of these constraints being identified so that their effects on the NPV could be studied. Alternative price projections for gold and different cost projections were identified and their effects on the optimised schedule examined. Price and cost scenarios that brought additional economic material into the schedule at various times in the mine life were considered in comparison to a scenario that assumed no additional economic material would become available.This case study illustrated that the use of a schedule optimisation tool to optimise mine schedules provides mine planners with an ability to perform a wide variety of analyses in a relatively short period of time. Such tools thereby support strategic decision-making that can add significant value to an orebody.The case study demonstrates that by fixing the set of development and production activities to be carried out before optimising the life-of-mine schedule, the mine planners can inadvertently set up a situation where the NPV would be progressively eroded in the last several years of the mine life. This clearly illustrates the need for schedule optimisation to be integrated with life-of-mine planning.CITATION:Fava, L, Maybee, B and Millar, D, 2012. Decision support for an underground gold mining operation - A case study using the schedule optimisation tool, in Proceedings Project Evaluation 2012 , pp 41-48 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By A Chandra, P Guj

Only a few complex real options can be valued using closed-form equations, such as the Black and Scholes formula, because these algorithms are restrictive and prevent the construction of practical project evaluation models. Although a binomial lattice method paired with the ærisk-neutral probabilityÆ provides an easier and flexible modelling of exploration and mining projects, it has limitations when projects are complex, long-lived and influenced by the interplay of various market and private uncertainties. In order to overcome these limitations, modern decision tree software using dynamic programming capability can be used for real option valuations. This is a powerful computational tool in which the impact of various sources of uncertainties can be differentiated, so that the optimal decision path can be explicitly displayed visually. There has been significant academic controversy surrounding whether different real option (RO) valuation methods would lead to different real option values (ROV). This paper, using a realistic copper mining example, demonstrates that as long as the same degree of subjectivity and consistency are used in different real option valuation methods, they yield the same result. This conclusion is valid irrespective of whether the cash flow volatility generated by various sources of uncertainties is handled in an aggregated or in an explicit and differentiated manner. This paper compares two choices for an investor either to æbuy now and developÆ a project or to enter into a ætwo-year option to purchaseÆ after the proponents have developed it. It also shows how significantly different net after-tax operating cash flows may be generated by these different choices on the same underlying asset represented by the project. This is due to the difference in the amount and timing of the relevant capital investments affecting the depreciation and amortisation charges and as a consequence, the income tax paid. CITATION:Guj, P and Chandra, A, 2012. Real option valuation of mineral exploration/mining projects using decision trees - Differentiating market risk from private risk, in Proceedings Project Evaluation 2012 , pp 177-188 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By J Gould, T Elkington

Mine operation strategies are commonly optimised with a net present value (NPV) maximisation objective. There are well known properties of a typical mining project optimised for NPV, including high production rates and declining cut-off grade schedules. In practice, however, frequently there are operations that diverge from such NPV-maximising properties. Although a range of reasons for this can be at play, one possible explanation is that operators intuitively adjust their strategies to compensate for the flaws inherent to NPV maximisation. In particular, NPV analysis does not reflect the benefits of managerial flexibility inherent in a mining plan. Real options valuation (ROV) is an alternative approach that addresses this issue. We compare the properties of NPV and ROV optimisation solutions generated for the same scenario. Our simple case study demonstrates that the presence of real operating options in the optimisation model not only entails increased project value as expected, but also tends to encourage lower processing capacity (with lower associated capital cost), higher cut-off grades and greater use of stockpiles.CITATION:Elkington, T and Gould, J, 2012. Real option value optimisation, in Proceedings Project Evaluation 2012 , pp 35-40 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By S Shafiee, N Abbate

The evaluation of mining projects requires a methodology that will give flexibility and manage the existing uncertainty within the projects. The discount cash flow (DCF) and other traditional evaluation approaches, which are widely used in evaluating a significant number of mining projects, have simply assumed that the main variables remain constant in their evaluation; elements such as discounted rate, mine life, operating cost and production rate. The DCF ignores managementÆs flexibility to adapt and reforecast and revise decisions. Real options valuation (ROV) is one of the modern evaluation methodologies that provide a tool to adapt and revise mining projects under uncertainty and future variables movements. ROV brings more variables into the evaluation model compared to DCF and assumes them as uncertain and dependent. Finally, ROV provides a range of solutions that can assist in managing this flexibility.This paper endeavours to compare ROV and DCF for mining projects comprehensively and applies these two techniques in the model. The paper shows that ROV will be inclusive of extra value in mining projects due to variables not allowed for, or even ignored, when the DCF model alone is used. One of the significant advantages of the ROV method is being able to evaluate mining projects under different scenarios from the inception of the projects. Furthermore, ROV gives the ability to evaluate the mining project while allowing for abandonment, temporary suspension, or expanding the mining project. In other words, the ROV evaluation process creates an analytical environment, which allows for optimisation of the mining plan within the mining project, as well as the ability to change the capital structure dependant on existing circumstances over the life of the project. The ROV is a new evaluation method that can add value in mining project analysis and offers opportunities to amplify gains, or to mitigate losses. This paper also discusses some of the reluctance to use ROV instead of DCF in current project evaluation.CITATION:Shafiee, S and Abbate, N, 2012. Now, this is the time for mining companies to choose - Real option valuation or discount cash flow, in Proceedings Project Evaluation 2012 , pp 225-234 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By G M. Jones, J Rademan

Debswana, owned by the Government of the Republic of Botswana (GRB) and De Beers in a 50:50 joint venture partnership, operates the Jwaneng diamond mine in Botswana - the most valuable diamond mine in the world. The mine provides between 60 - 70 per cent of DebswanaÆs earnings, and about 30 - 40 per cent of the GRBÆs income. In 2008, the company embarked on the Cut 8 Project - an open pit waste cut-back to expose more diamond bearing ore to sustain mine life by another six to seven years. This undertaking was much larger than previous cut-backs; it increased the waste stripping ratio threefold, increasing significantly the waste handling fleet of trucks, shovels and infrastructure, and impacted a large part of the materials handling plant which required replacement with new facilities. The project coincided with the beginning of the Global Financial Crisis (GFC) and a slowdown in the economy. Its $4 billion total life cost was billed as æthe largest private investment project in BotswanaÆ which produced heightened expectations amongst stakeholders that it would redress some of the issues brought about by the GFC and leave behind a legacy of jobs, increased opportunities for citizen owned business and improved social infrastructure.Most of the big project challenges were non-technical and ranged from dealing with various stakeholders?at?all levels, a 25 per cent currency depreciation of the Botswana Pula against the South African Rand, obtaining work permits for non-citizens in a job starved environment, managing construction to world class safety standards, managing the low productivity of construction workers and producing a viable legacy program that satisfied the GRB and stakeholders. Whilst most of these risks were identified in front end studies, the magnitudes were in many instances underestimated. Managing this uncertainty on Cut 8 can provide valuable lessons to other projects in a similar environment, or at least provide the information to indicate that these factors should be adequately provided for in the financial evaluation of a project in the form of budget, schedule, contingency or risk mitigation.CITATION:Jones, G M and J Rademan, 2012. Reliability of expert judgements and uncertainty assessments, in Proceedings Project Evaluation 2012 , pp 109-116 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By T Y. Dube

In this paper current net present value (NPV) based mine valuation techniques that take into account market and private risk are discussed and analysed. Potential pitfalls that arise from the application of a portfolio, market or commodity based risk metric to a mining project are identified. An alternative non-simulative framework for quantifying and factoring market and private risk in NPV calculations is proposed and then applied to a hypothetical case study in an attempt to overcome identified pitfalls. Mathematical proof that a static discounted cash flow (DCF) calculation can underestimate or overestimate mine NPV is presented, the conditions for each are outlined and the degree of underestimation defined.CITATION:Dube, T Y, 2012. How the use of market-based risk metrics can undervalue good mining projects and overvalue poor ones, in Proceedings Project Evaluation 2012 , pp 29-34 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By D Jeffery, R Whittering, G Lane

Most aspects of process design are best addressed via bench scale or pilot plant scale test work. However, as experience is gained, fundamental or indicative data can provide more than adequate information to manage the risk associated with some process aspects of concentrator design.Historical precedence exists where minimal design test work has resulted in successful projects. On many occasions benchmarking, sometimes supported by fundamental data such as mineralogy, has been used to successfully develop effective process plant outcomes. Of course, this style of approach is most common with æfast trackÆ projects and often comes with the usual surprises that result from inadequate geometallurgy to define the project cash flow.This paper explores the risks and opportunities associated with the various facets of process development and design for a base metals concentrator. The paper is intended to provide guidance to project managers rather than address the technical aspects of process engineering.CITATION:Lane, G, Whittering, R and Jeffery, D, 2012. Benchmarking versus test work - How should you manage process risk?, in Proceedings Project Evaluation 2012 , pp 49-52 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012