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By K. Böde

Hochtief AG Germany has developed a comprehensive management and information system for the construction industry named Aristoteles. This system is an efficient supporting tool to manage a variety of construction sites as well as operating business units with required economic targets. As such, Aristoteles offers wide-ranging control of complex economic processes in construction in a consistent manner. In this paper the process oriented functions of the system will be described with special emphasis on finance accounting and cost control. The basic elements in this respect are tender estimation, creation of initial project budgets and running budgets, regular determination of work done and result forecast to the end of the project. Further, cost accounting, monthly reporting, and all balance-related postings are included. On the basis of the extensive reporting (targeted/actual cost comparison, cost manager, project report, actual/targeted hours worked comparison, overhead cost report, amendment report or project (result) lists of all projects realized by one business unit), the responsible managers can make justified project evaluations, project controls and variance analyses during the project period and derive appropriate management measures. Thus, Aristoteles includes all substantial elements for the risk management of the operational business. In big construction joint-stock companies it is of crucial importance to satisfy the information requirements of the investors. In this respect the system provides a transparent presentation of the financial, investment and profitability situation of the company. In the international construction industry the balancing rules according to IAS (International Accounting Standards) have already been used to a larger extent. In accordance with these rules the partial profits of the work during execution can be shown as realized even before completion of a long-term contract. The validity of Aristoteles will be outlined briefly. Major advantages using the system are highly enhanced accuracy of project controlling, systematic overhead allocation to projects, change of attitude of the project personnel due to increased cost consciousness and improved flow of information within the company.

Jan 1, 2003

By Herbert D. Drechsler

La financiación minera está inter-relacionada con los siguientes aspectos: "determinatión de los recursos totales a utilizar en una empresa minera; adjudicación eficiente de estos recursos a los varios multiples activos de la empresa; y obtención del mejor balance financiero en relación con la situación general de toda la compañia". La primera parte comprende un repaso de los problemas financieros a traves del estudio y análisis del Balance General y Cuenta de Explotación. La parte siguiente es una exposición de la naturaleza de los criterion desarrollados en el estudio de viabilidad. La tercera parte describe las fuentes de financiación del capital, y la parte final describe casos prácticos de financiación minera.

Jan 1, 1982

By Daniel T. O’Brian

Exploration targets and results in the mining industry are commonly summarized in terms of tonnage and grade. Business appraisals require, as additional information, the expected profit or loss implied by the physical summary. The early incorporation of knowledge gained through financial analysis computations can provide a means for economically resolving many common exploration and development problems. Examples of such applications from the activities of exploration planning, reconnaissance, land acquisition, and development planning are presented in this paper.

Jan 1, 1969

By Daniel T. Brian, O&apos

Exploration targets and results in the mining industry are commonly summarized in terms of tonnage and grade. Business appraisals require, as additional information, the expected profit or loss implied by the physical summary. The early incorporation of knowledge gained through financial analysis computations can provide a means for economically resolving many common exploration and development problems. Examples of such applications from the activities of exploration planning, reconnaissance, land acquisition, and development planning are presented in this paper.

Jan 1, 1969

"This paper challenges the traditional notion that mine planners need to plan production so as to incur the lowest mining cost. For a given mine configuration, a mine that increases its mining rate will incur increased mining costs. In an environment in which operations are fixated on cost reduction, a proposal that increases costs will not be readily accepted. Such a proposal requires financial justification—the increase in costs might be recuperated by the additional production. This paper evaluates the net present value (NPV) across a range of copper prices for two underground orebodies located at different depths, using a production rate of 300 kt per quarter and a scenario that introduces additional equipment and costs for 450 kt per quarter. The evaluation was based on the changes of NPV for the orebody located at a shallow depth compared with the orebody at a greater depth. Discrete event simulation combined with mixed integer programming was used for analysis. Unlike traditional sensitivity analysis, this study re-optimizes the mine plan for each commodity price at each production rate. The results show that, for the low mining rate at the final copper price, an NPV of A$1530.64 million is achieved, whereas an NPV of A$1537.59 million is achieved at a higher mining rate. Even though pushing mining rates beyond traditional limits may increase mining costs, this option may be beneficial at certain commodity prices, particularly when prices are elevated. IntroductionA traditional notion among mine planners is that mining rates should be planned in such a way as to reduce production costs. This concept generally relates to the mining rate that results in the highest machine utilization for the selected equipment. Although an existing mine may consider increasing its mining rate by adding equipment to a given mine configuration, this typically increases mining costs. In an environment in which operations are fixated on cost reduction, a proposal to increase costs may be very difficult to argue for. The value of the mine plan is well recognized as varying with the mining rate for a given orebody (Smith, 1997)"

Jan 1, 2017

By C. A. Roberts

What are the benefits and limitations of financial analysis software as a decision making tool in the mining industry? Traditionally, the assumptions and simplifications imposed by complex and uncertain information have been viewed as the main obstacle to reaching an optimum decision. Recently, however, phenomena such as corporate culture and power structure have received increasing attention as significant influences on organizational decision making processes. Studies of these phenomena have suggested an alternative way of understanding decision making processes and an alternative view of the role played by computer analysis in such processes. This paper presents these two views of decision making, and examines what each implies about the role of financial analysis software as a decision making tool in the mining industry.

Jan 1, 1992

By Daniel T. O’Brian

Exploration targets and results in the mining industry are commonly summarized in terms of tonnage and grade. Business appraisals require, as additional information, the expected profit or loss implied by the physical summary. The early incorporation of knowledge gained through financial analysis computations can provide a means for economically resolving many common exploration and development problems. Examples of such applications from the activities of exploration planning, reconnaissance, land acquisition and develoment planning follow. While prospecting for mineral deposits, geologists are frequently asked what they have found or hope to find. The response is usually descriptive, such as: "50 million tons of 1% copper," and the economic implications are deferred until a capital investment decision is required. At that time a financial analysis integrating the four analysis components-tonnage and average grade above cutoff grade, capital and operating costs, product value, appropriate profit or loss accounting-are completed.

Jan 10, 1969

By M. Grenon

OBJECTIVE ?To link slope stability and financial assessment algorithms into a commercially available mine design software packages to provide integrated global pit optimization.

May 1, 2013

By David C. N. Cockburn

INTRODUCTION This paper analyses certain of the financial considerations which will commonly apply in relation to the following questions: - what equity structure or project vehicle should be adopted for the exploration and/or exploitation of a project by more than one unrelated participant? - what vehicle should be adopted by a participant for its participation in a multiparty project? Due to local, politically motivated laws in certain jurisdictions, or due to the overriding requirements of a dominant participant, there may be little choice of the underlying multiparty structure which may be adopted for the exploration, appraisal and/or development phases of a project. Nevertheless, even in such circumstances, attention should be given, at least in the preparation of the related documentation, or in considering methods of participating or funding the project, to certain of the points discussed below. This discussion of financial considerations in the context of the more commonly adopted multiparty structures concentrates primarily on fiscal, financial accounting, financing and funding aspects. TYPES OF PROJECT VEHICLE FOR MULTIPARTY INTERESTS The well known types of vehicle adopted for the participation in a project by more than one participant (assuming that the participants are effectively unrelated) are as follows. Joint Venture (unincorporated joint venture) By far the most commonly adopted structure for mining ventures, a joint venture is usually defined and documented in terms to distinguish it from a partnership for important tax and legal reasons. In essence, this is a contractual association of more than one participant to carry out a specific commercial project or purpose. The relationship between the separate participants and their respective rights, interests, obligations and liabilities are agreed between the participants in one or more contracts (viz Joint Venture Agreements or Joint Operating Agreements together with ancillary documentation). Unlike other project vehicles of participation, in most jurisdictions there is no specific body of law governing joint ventures. The participants thus enjoy contractual freedom to negotiate whatever deal they may wish between themselves. Jointly-Owned Project Company (corporate joint venture) A very familiar vehicle, this is a separate and distinct legal and tax entity incorporated under the company laws of the place of incorporation to undertake specific objects, and granted specific powers, in relation to the Project. Although certain rights, interests and obligations may be circumscribed in the governing corporate instruments by the promoter participants, the corporation laws of the relevant place of incorporation, and the selection of such governing laws (assuming freedom of choice) and future political changes in such corporate laws, should be carefully considered. The use of a company in a multiparty structure may be peripheral to the project itself as a specific purpose vehicle (for example, a joint sales agent or marketing company or a joint borrowing vehicle) or it may form a central function such as in the case of a tolling company which will own the project for legal and taxation purposes and raise financing with the backing of the shareholder participants commonly by the adoption of take-off, throughput and/or user agreements. Partnership This is a legal relationship, subject to the often wide-sweeping restrictions of the relevant local partnership laws, under which the participants have agreed to carry on a business venture together with a view to profit. The effect of the relevant partnership laws, as well as the various types of partnerships and the

Jan 1, 1985

By A. H. C. A. Zimmerman

WE have just heard what must be regarded as a thoughtful, constructive and somewhat painful analysis of the financial function of our industry. While thinking about this, it is interesting to reflect on the conditions which have stunted the growth of the financial side of our affairs. Mining must be regarded as a wealthy business. •while immeasurable grub takes and development budgets have been lost, there can be little argument that a productive ore-body nearly always produces the type of wealth that breeds some extravagance. I recognize that this statement can be attacked from many sides, but an historical comparison with a commercial enterprise involving similar investment will demonstrate what I mean. However, these old times are be-ginning to disappear for a variety of reasons. High amongst these are: ( l) Increased costs of exploration. (2) Remoteness of many new finds. (3) Fixed or declining metal prices (particularly when expressed in constant dollars). ( 4) Constant demands for higher wages.

Jan 1, 1962

A variety of environmental financial assurance instruments are in use across the globe. This paper reviews some of the more common forms currently used in New Zealand, Canada, USA and Australia. In order to be effective, the form of assurance instrument selected needs to be aligned with a countryÆs specific environmental objectives, geography and political climates and also allow for a healthy investment climate. Industry and Government both have a strong interest in ensuring financial assurance criteria meet these objectives.   Recently Golder Associates have been involved in financial assurance assessments for various mining and quarrying companies across the South Island. Multiple stakeholders and regulatory agencies can make the setting of effective and fair financial assurance criteria a complex exercise for both regulatory agencies and industry.  The author relates experience gained in assessing financial assurance under current New Zealand legislation (RMA, 1991), effectively dealing with issues such as ôdouble bondingö and overviews potential approaches to dealing with transitional issues for historic and existing operating mine sites.

Jan 1, 2006

By M Pizey

After 60 years of operation, coal extraction at Solid Energy New ZealandÆs (SENZ) Strongman Mine, near Rapahoe is scheduled to end in early 2005. Up until 2003 the closure bond for Strongman Mine was only $930, and both SENZ and the West Coast Regional Council (WCRC) agreed that a more realistic level of bonding was required.   A conceptual closure plan has been developed by Golder Associates, and the cost of the work estimated. Closure includes decommissioning of equipment and facilities, rehabilitation and replanting of all disturbed areas and a period of maintenance and monitoring to verify that closure objectives have been met. Significant maintenance allowances are included to cover management of underground fire, subsidence and slope instability. These make up much of the potential ongoing environmental liability at the Strongman. All costs incurred beyond year 1 of closure are discounted to present value. Uncertainty in costs is addressed by Monte Carlo simulation, with an 80 % confidence level adopted.   A bond quantum of $3.0 million has been calculated for the first year of closure at Strongman. A three-year ærollingÆ bond is proposed. Progress will be reviewed annually, with the bond adjusted up or down accordingly. It is then renewed for a further three years. This allows for progressive return of the bond as rehabilitation objectives are met and verified. Similarly, if there are delays in meeting objectives, a proportion of the bond may need to be kept in place for a longer period than assumed. The level of bonding in place for the Strongman operation at any time in the future will therefore reflect the cost to complete the closure work programme.

Jan 1, 2004

By C. M. Jones

Cyprus Sierrita Corp. has developed a training program that has led to several significant improvements in safety performance and productivity. Truck productivity has increased 6% as measured by truck cycle times. Increased skill levels and awareness on the part of the mine's operators are due to the new training effort. Costs associated with productivity training have been about $185,300. This includes program development and execution costs, as well as lost productivity during the training itself. These costs are offset by $1.9 million in savings attributable to the increased skill levels of technicians due to the training effort. Cyprus Sierrita is a subsidiary of Cyprus Amax of Englewood, CO. The company operates a copper and molybdenum mining and processing facility south of Tucson, AZ, near the town of Green Valley. The Cyprus Sierrita operation produces about 109 kt/a (240 million lbs/ year) of copper, 11.3 kt/a (25 million lbs/year) of molybdenum, 31.1 t/a (1 million oz/year) of silver and 1.8 t/a (4,000 lbs/year) of rhenium. The opera¬tion employs 770 people at the site. About 200 of these employees work in the mine operations. Mining at Sierrita uses standard open-pit techniques. Crews of 43 people rotate on 12-hour shifts. Hourly technicians are nonunion and do not use rigid job classifications to define pay. Rather, the system is designed to pay employees for what they are able to do. Administering this effort requires that training opportunities are provided to those people who desire them. Successful training opportunities al¬low people to gain skills. The more skills an employee can demonstrate, the higher his or her "tech level." A technician's pay is commensurate with his or her tech level. Much of Sierrita's training in past years concentrated on building basic

Jan 1, 1998

By C. M. Jones

The training program developed at Sierrita over the last twelve months has led to several significant improvements in both safety performance and productivity. Our most easily quantified results have been in truck productivity, where we have also experienced a 6% decrease in truck cycle times. We feel this is due to increased skill levels and awareness on the part of our operators due to our new training effort. The cycle time improvement has resulted in an increase in Truck productivity of 6%. Costs associated with productivity training have been $160,300. This includes program development and execution costs, as well as lost productivity during the training itself. These costs are offset by $1,400,000 in savings directly attributable to the increased skill levels of our technicians due to our training effort. As such, this represents a solid, high return investment at Sierrita.

Jan 1, 1998

By John L. Halls

INTRODUCTION In this section, it is assumed that the reader is an engineer with sufficient training in underground mining work, preferably with budgetary control, to understand the mining methods outlined in other sections of this handbook. The mining-method descriptions are not repeated herein; only sufficient information is provided to enable the reader to comprehend the development of the costs presented. All costs are in 1977 US dollars, except where explicitly stated otherwise. CAPITAL INVESTMENT The capital investment in the underground mining portion of any mining property includes the following: 1) The development of original access involving adits, shafts, declines, etc. It includes the necessary equipment for transporting men, materials, and rock. 2) The purchase of mine equipment including loaders, underground haulage equipment, fans, pumps, electrical distribution, surface facilities associated with the underground mine, etc. 3) Sufficient preproduction mine development to assure steadily increasing production after startup. De- pending upon the mining method used, the preproduction development should provide a supply of three months to one year of ore that is developed and is ready to be stoped. Underground development also includes excavations other than shaft stations, loading pockets, sumps, etc., which usually are associated with the means of access and are excavated by the contractor. These excavations could include a crusher cavern, an ore- storage pocket, and underground workshops that may or may not be included by the shaft-sinking contractor. Portions of these could be delayed until after production begins, but it is preferable to complete them during the development phase, so there is no interference with the production buildup. 4) The staff and labor costs for all phases from inception through final production. 5) The provision of mine-surface equipment and facilities strictly applicable to the underground portion of the operation. The required facilities include a changehouse with a lamp room, a first-aid station, compressors, an electrical substation, workshops, a ware- house, water pipelines to the concentrator, water storage tanks, explosive storage, etc. A concrete-batch plant, a sand-fill plant, and boilers for heating may be required. 6) Other direct and indirect costs. 7) Engineering, design, and procurement costs. 8) Contingency allocations. 9) Contractor's fees, startup costs, and owner's costs. Original Access As part of a study for the US Bureau of Mines, Dravo Corp. conducted an extensive literature research survey covering underground operations in the United States between 1963 and 1973. Table 1 is compiled from the section of that study pertaining to the types of access to underground mines. Table 1 does not include distances attributable to the deepening of existing shafts, nor does it include shafts bored by raise drills or downhole machines that need existing underground workings for the disposal of the cuttings. During the period under review in the report ( 1963 through 1973). concrete-lined circular vertical shafts were the predominant means of providing the first access to a new underground mine; these shafts accounted for 80% of the original access in terms of the number of accesses completed, and 75% in terms of the total verti- cal linear distances. The inside diameters of the conventional circular shafts ranged from 3.7 to 7.0 m (12 to 23 ft). Most (72% ) of these conventional shafts were for production,

Jan 1, 1982

By William Mayrsohn

INTRODUCTION The net smelter return (NSR) calculations made on various smelter-refiner alternatives, is usually done by taking the gross metal value less metal deductions, smelter-refiner charges and transportation-insurance costs. An important further step in the calculations is the financial charges imputed by refining time, transportation delays, to the time gold is returned (if tolled) or paid for if bought by the refiner. Metal that is priced in advance of payment also requires a forward premium that the mine may or may not be getting. This is a hidden cost that is often omitted from the calculations. Segmentation of each of the above costs are vital to see where improvements can be made through negotiations, better choice of metal pricing or transportation alternatives. BASIC NSR CALCULATIONS SMELTER-REFINER CHARGES Payable Metals - Treatment Refining Charges: Since these can vary from one smelter to another, the effect of a $25 per ounce price increase/decrease should be calculated and kept in mind. This effect is compared to differences in refining/treatment charge and a total smelter/refiner cost on a cost per ounce of dore, gold, or a dry ton of concentrate. Transportation - Insurance: Research has to be done on transportation alternatives perhaps with some assistance from the smelters, railroads or trucking companies. For dore, the U.S. postal service is viable and inexpensive. For railroads, deal with the regional office ie., B&N El Paso, if production warrants regular bulk shipments. Spot rates tend to be higher. A small mine producing concentrates usually goes to the nearest smelter due to extremely high transportation costs. Here is where a refiner can help. Insurance-Quotes for rates on dore/ concentrates are easily obtainable, but the mine has to shop for the best rates. Your insurance broker is the best source of this information. Differences between Mine and Smelter/Refiners Metal losses can be caused by the following: - Concentrate dry weight differences caused by moisture determination or faulty scales (often at the mine). - Sample bias by poor preparation practices on either side ie., grinding of the sample removing gold; or a poorly mixed concentrate. Dore bullion has no such difficulties.

Jan 1, 1987

By D. Drymonitis, G. Gialoglou

"Placer gold mineralizations have been observed in the north-eastern parts of Greece. Some of them have been at first evaluated to be of special interest so, exploration campaigns have been designed and carried out. Among the other exploration techniques applied on the sites of interest, drilling was the one to give the detailed information and data for the evaluation of the deposits. Having collected the data from trenching and two consecutive drilling campaigns, they were processed geostatistically to estimate the ore reserves and therefore the economic interest of the deposits. The latter was done by using exploitability indices, which would give a rough idea whether the deposits were economically feasible. A small number of such deposits have been spotted in the area and have been explored and evaluated as above. The present paper deals with the most important of them, giving all the process followed and the results derived from the exploration carried out."

Jan 1, 2005

By James H. Boettcher, W. Durand Eppler

INTRODUCTION In the second quarter of 1979, Rapid Mining Co., Inc. ("Rapid") inquired whether Crocker National Bank ("CNB") would provide $4 million in term loan financing to help ("Dry Creek") acquire the outstanding shares of the Dry Creek Coal Company ("Dry Creek") in West Virginia. Prior to approaching CNB, Rapid had sought financing with the assistance of a financial advisor from a number of commercial banks without success. A summary of the initial terms requested by Rapid is shown in Table 1 compared with the actual terms on which the transaction closed. It is not difficult to note that the two sets of terms differ significantly. This is often the case when financing requests based on the expectations and vision of a mine developer are juxtaposed with more pragmatic requirements of a commercial bank. The "art" and fund of structuring financing plans for mining ventures (highly leveraged acquisitions or grass roots) comes in working with mine developers to arrive at a final financial structure that meets their objectives and constraints as well as those of the bank or other financial institutions providing much of the financing. Beginning with the terms requested by Rapid and ending with the terms that closed the transaction, this article briefly describes the process we went through with Rapid Mining. The Seller and Buyer The Dry Creek Coal Company was established in 1961, after its owner acquired the coal leases from Republic Steel. Republic has mined the primary coal seam from 1948-1961. Dry Creek was owned as a subchapter S corporation (i.e., for federal income tax purposes, income is taxed at the shareholder level) and had been run on a low key basis. Since the company had virtually no debt and limited cash needs, the owner produced primarily when rail cars were available and income was required. Output was therefore erratic as is shown in the top of Table II, but the result was a profitable little company with an attractive free cash position. Because the owner wished to retire and enjoy his wealth in a more readily spendable form, he had put the mine, with stated recoverable reserves of approximately 13 million tons, up for sale. In contrast, Rapid Coal's investors consisted of a number of investors of disparate financial situations. They had agreed upon a primary objective of income maximization and planned an annual production rate of 120,000 TPA which they and the current owner believed realizable. The Formulation of a Financing Structure Figure 1 presents a simplified overview of the sequence of steps taken in the financing process which lasted approximately three months from start to finish. Since banks see many requests for funding and considerble time is required to follow up on each, an important step was determining, after a brief review of the materials provided to us, whether the basic "eonomic entity" was viable. In this case, the size and quality of the reserves, the inherent operating cost characteristics, the sales arrangements, the management/labor situation and Rapid's principles all appeared to be sound enough to warrant investing the time necessary to do a thorough analysis of the project. Once this decision was made, the evaluation and analytic process shown in Figure 2 was initiated. The first and most fundamental concern of any banker is whether the loan will be paid back as scheduled from the cash flow generated by the project. The amount of debt relative to the owner's equity is of course crucial in such a determination. Before the debt/equity issue was addressed, however, a number of more qualitative factors had to be studied and if

Jan 1, 1985

By P. J. Petit

Financial evaluation is necessary to investigate the viability of implementing and/or utilising new technology in mining projects. It establishes a techno-economic base for decision-making and justifies capital expenditure. This paper aims to present a monetary appraisal of the electric rock drilling system in a typical feasibility project, whose purpose is to increase the production rate. The in situ environment is a platinum orebody, and the stoping operations occur in UG2 reef. The results are a function of production requirements, technical parameters and financial outlay of the drills. The costs involved in implementing and operating electric rock drills are assessed to the current method of drilling, namely the compressed air operation. A comparison of the electric and pneumatic rock drills in terms of financial outlays for drilling and service requirements, peripheral equipping and training is discussed. Other factors that affect the business case are technical advantages, safety and risk management and the environmental objective of the company.

Jan 1, 2006

By Xu C

This paper describes the structure and operation of an interacth.. computer program for mineral industry financial analysis and production planning. It includes comprehensive risk analysis with correlated variables and optimal production scheduling using Lane's balancing cut-off grades and the general dynamic programming approach.

Jan 1, 1995