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By Michael Samis

Conventional project valuation techniques, such as discounted cash flow (DCF) method, are more frequently being criticised for the manner in which they consider the interacting effects of uncertainty and project structure (including management flexibility) on project value. Modern asset pricing (MAP; often called ?real options valuation? when applied to the analysis of flexibility) is a more general valuation framework that corrects many of the shortcomings of common valuation methods. Previous mining applications of MAP have tended to treat the ore deposit as a homogenous entity. While useful for demonstration purposes, this is inadequate for practical application in industry. This paper presents a MAP valuation example that allows for the heterogeneous nature of an ore deposit. It shows that deposit structure may increase the complexity of the mine planner?s decision so that results of a standard DCF analysis, or a simple MAP analysis that ignores the details of deposit structure, are misleading. In the example, a management is considering the development of an adjacent low-grade zone while mining operations in a high-grade zone are ongoing. If the low-grade zone is developed before high-grade reserves are exhausted, the proposed development will include both low-grade zone development and a capacity expansion to handle additional low-grade reserve production. If development of these reserves is delayed until the high-grade reserves are depleted, then the low-grade reserves can be developed without a capacity expansion. A typical DCF analysis would reduce the management?s decision problem to three alternatives: 1) continue mining only in the highgrade reserves, 2) immediately develop the low-grade reserves and expand capacity, and 3) delay low-grade zone development until the high-grade reserves are exhausted. The model presented here allows the management to reconsider the development and capacity expansion decision on a discrete half-year basis. It delineates price regions, for given levels of high-grade zone reserves, in which it is optimal to develop the low-grade zone, defer low-grade zone development and abandon the mine irrevocably. The model presented here extends the ability of mine planners to describe actual project structure while using the MAP valuation framework that is already noted for its capacity to combine project uncertainty and risk insights with a dynamic project description.

May 1, 2001

By Loris S. Pascoli

The increased pace of globalization in the mining industry has presented more opportunities for Canadian service companies to participate in ventures abroad. However, varying cultures, laws, competitive environments and contracting philosophies in other countries make it impossible to take for granted what is normal in the Canadian context. The author discusses some of his experiences and situations encountered in over 30 years in the diamond drilling industry, the last third of which were primarily focused on projects outside of this country.

May 1, 2001

By Mario E. Rossi

Geostatistical conditional simulations are becoming increasingly popular as tools that provide models of uncertainty at different stages of a mining project. They have been used as grade control tools in daily operations, to assess the uncertainty of minable reserves at the project?s feasibility stage, and to assess mineralization potential in certain settings. Other applications include assessment of recoverable reserves, resource and reserve classification, and drill hole spacing optimization studies. All large-scale applications of conditional simulations intend to benefit from the ?correct? (or ?accurate?) characterization of uncertainty, adequately describing the variability observed from the data and its impact on the final objective. The objective of this paper is to compare the ad-hoc ?uncertainty model? provided by a traditional classification scheme with the probability intervals resulting from a conditional simulation model. It is argued that the uncertainty model derived from the use of classification schemes is of little practical use to the mining company or operation. The paper emphasizes differences in uncertainty based on the size of the mining unit considered and the extraction method, and local geological differences. Most importantly, it discusses confidence intervals for these mining units, as compared to the relative precision envisioned by a typical classification scheme. The application described in this paper is taken from a medium-sized Cu open and underground mine in northern Chile, and it demonstrates the impact of several variables on the resulting conditional simulation models. It also compares a more ?traditional? resource classification scheme applied, and the wide difference in local confidence intervals for each mining unit.

May 1, 2001

By J. Peterson

A review of blast designs and improved blasting practices at the Ekati??Diamond Mine is presented along with the results of three blast-monitoring experiments. Blast monitoring was undertaken to investigate blast damage mechanisms in the mine's well jointed rock mass. Rock mass damage caused by production, pre-shear and wall control blasts was measured. Ekati??uses 270mm holes for production blasting, and 165mm holes loaded with a decoupled charge for pre-shearing. The production blasts are loaded with bulk emulsion / ANFO blends. The mine plan involves using 30m double benches. A 30m high pre-shear is drilled and blasted prior to the production blasting that is done with sequential 15m benches. This paper summarizes the monitoring equipment and data gathered to date.

May 1, 2001

By Hermann A. Derbuch

Twin Mining made a conscious decision when it changed from gold mine explorer and developer to become a diamond explorer in Canada?s Arctic. It was a decision of survival in an environment that saw junior gold companies either disappear or turn into dot com companies. Twin Mining learned fast and staked within weeks of that decision the first 50 sq. km of claims on, what became, its TORNGAT property at 59½° latitude on the east coast of the Ungava Bay in northern Quebec. This land position, 724 diamonds later (including 322 macro diamonds of gem quality, white and transparent) grew to 507 sq. km today. The 74° latitude called when Twin Mining exercised the option to acquire 3 claims owned by Helix Resources Inc. which revealed exceptional diamond potential. A gem quality 5.4 mm (0.768 carat white and transparent) diamond and the discovery of 16 pipes on 15.2 ha convinced Twin Mining?s board to sanction the deal. Both properties have outstanding features. Kimberlite Dykes and Pipes are in outcrop. The property locations have deep-sea access near existing infrastructure. Their locations are in an environment that is stable and development friendly and has a positive track record with successfully operating mines near-by.

May 1, 2001

By S. Caron

From the early 70?s, ?Centre de Recherche Minérale? (CRM) has conducted and co-ordinated Research and Development activities for the mineralurgical and metallurgical industries. Since 1999, CRM has continued its mandate through COREM which is a consortium of 13 members that uses the benefits and advantages of collaborative pre-competitive industry / university research. In particular, COREM?s ?In-Situ Optimization Group? is involved in the implementation of modern optimization and control tools. The POP Project was launched in order to increase and consolidate the use of modern optimization and control tools and methods for mineralurgical and metallurgical processes. To ensure a successful transfer in the industry, there are a number of essential activities that have to be undertaken. These activities have been identified by COREM?s members and are grouped into three main modules: - R&D Module: Research and Development in universities, research centres and other partners; - Technology Transfer Module: integration of new tools and methods into the POP Software, industrial applications and technical support; - Training Module: education of new engineers in universities, continuing education of plant personnel through on-site workshops and resource networking by specific information exchange tools. This paper outlines the opportunities that led to the definition of the POP Project and describes its main modules. The main features of the POP Software are presented, the first application is described and finally, future developments are discussed.

May 1, 2001

By Bennett McLaughlin

AGNICO-EAGLE started sinking the Penna Shaft in 1995 with a hoisting plant capable of hoisting 1,800 tonnes per day from a 2,240 metre deep shaft. Exploration success lead to the installation of a hoisting plant capable of extracting 4,500 tonnes of ore and 1,800 tonnes of waste per day from a depth of 2,210 metres. The introduction of a new rope selection factor, permitting a safety factor of 4.0, represented the breakthrough required for a cost-effective project. This paper describes the process taken to introduce the new rope selection factor and its impact on the original plant.

May 1, 2001

Objective To identify techniques to reduce the probability of gob gas explosions. Background In the last 6 years, seven explosions of methane and/or coal dust occurred within worked-out, sealed areas (gobs) of underground U.S. coal mines. These explosions, believed to have been started by lightning, destroyed many mine seals and caused much damage external to the sealed area. Three of these gob gas explosions occurred in one mine in Alabama over a 3-year period. Fortunately, the explosion forces and the toxic gases that vented from the sealed gob area did not cause fatalities or injuries, but they destroyed several large seals. If miners had been inspecting or working near these areas, the potential for serious injury and/or death would have been high. The United Mine Workers of America and the Mine Safety and Health Administration (MSHA) requested that the National Institute for Occupational Safety and Health (NIOSH) help identify the mechanisms for lightning penetration into the gob and recommend ways to reduce the probability of occurrence of future explosions from such lightning penetrations into sealed areas of underground coal mines. Because three of the explosions occurred in a single mine, special attention was focused on these particular explosions. The first occurred in April 1994 in a sealed area, which enclosed about 1.35square miles of abandoned workings (gob). This explosion destroyed 3 of the 38 seals that surrounded the gob. These seals were less than 2,000 ft away from three 4.5-in-diam steel-cased test wells that extended from the surface into the mine entry. At the time of the explosion, the National Lightning Detection Network (NLDN)verified 12 lightning strikes within 10 miles of the mine, including several above the gob. After the 1994 explosion, the damaged seals were rebuilt using an acceptable seal design capable of with standing a 20-psi explosion, as required by 30 CFR 75.335. On January 26,1996, a second gob explosion destroyed five more cementitious pumpable seals less than 2,000 ft away from those destroyed in 1994and even closer to the steel-cased wells. The NLDN verified72 lightning strikes in the area of this second gob explosion. Compressive strength analyses of fragments from the destroyed seals showed that strengths ranged from 11 to 138 psi, with an average of83 psi. This is over 100 psi below the minimum 200-psi compressive strength requirement for cementitious pumpable seals. These seals were again replaced. On July 9, 1997, the third and most violent explosion occurred in the same vicinity of the last two explosions. Three more cementitious pumpable seals were destroyed, including one newer seal that exceeded the minimum 200-psi compressive strength requirement. The NLDN verified 695 lightning strikes above the mine during the time in which the explosion occurred. MSHA's

May 1, 2001

By Louis Cabot

A pilot plant of the Modular Gold Processing Unit (MGPU) was designed, installed and operated, over a 8 months period, by RSW-Béroma, at the Granada Mine located near Rouyn-Noranda, Quebec. A description of the project geology, plant set up as well as exploitation results, including productivity and profitability curves, are given for a small scale mining operation in comparison with larger ones. Copyright ã 2001 CIM

May 1, 2001

By Mary Jean Buchanan

The last twenty years have seen the advent of environmental concerns and sustainable development, and the industry has witnessed the rise of Environmental Management Systems and their registration through several international standardization systems such as EMAS and ISO 14001. Beyond EMS and ISO 14001, which new goal the mining industry should aim at. Life-cycle assessment (LCA), another tool from the Environmental Management System series, is also on the rise and currently the object of an international standard (ISO 14040:1997). Through LCA, it is possible to assess the environmental aspects and potential impacts associated with products and services, taking into account all the activities required for its fabrication, its use, its transportation and its disposal. How could LCA be applied to the mining industry ? Is the international market pressurizing on mining companies to supply an ?environmental ore?? What about the automobile industry and its use of LCA ? Will it influence the ferrous and non-ferrous metal industry, suppliers of raw materials ? This paper presents a review of possible applications of LCA for the mining industry as well as world trends.

May 1, 2001

By Nancy C. Mohn

?Even though the age of many existing coal units exceeds 30 years, these units continue to perform with excellent reliability and at a competitive cost with other fossil fuel units. ?NERC data shows a consistent increase in availability for all utility coal generation ?With the opening of power markets, the challenge for coal is to produce competitive electricity while meeting increasingly stringent, and costly environmental limits. ?During the 60s and 70s, subcritical steam power plants dominated the market. The emphasis was on scale-up to larger MW size units. ?In the last decade, we have seen interest in a broader set of technologies with new drivers: ?Fluidized bed technology was developed to respond to increased environmental requirements, particularly with lower quality fuels ?Supercritical pressure units have gained interest for both fuel cost savings and reduced emissions due to higher efficiency.

May 1, 2001

By Marcel Labbé

La largeur de l?armature peut être modifiée selon les besoins du client entre 48 " et 64" de largeur totale, donc 2 sections de 24" à 32". Ceci permet à l?opérateur d?effectuer le démantèlement de l?équipement pour le déplacement dans les endroits restreints. Le déménagement d?un niveau à un sous-niveau devrait se faire dans un quart de travail de 8 heures. L?option de largeur permet au client de choisir un équipement adapté à son environnement de travail (1). La largeur de la table de forage peut être modifiée selon les besoins du client entre 48" et 96". Cette particularité permet une meilleure stabilité, et plus de précision dans le forage (2). Il y a 4 pattes hydrauliques à chaque coin pour la stabilisation lors de forage (3). La table de forage a 360° d?angle de forage sur 3 côtés du transporteur. La table peut sortir de chaque côté du transporteur de 40 ½" à partir du centre du transporteur pour faciliter la mise en place de la foreuse dans les endroits difficiles d?accès. La plage de forage est considérablement agrandie. Cette caractéristique qui fonctionne hydraulique, permet à l?opérateur de forer sans être obligé de changer la position du transporteur pour des changements de trous. Tous les types de foreuse peuvent être installés sur cette table de forage (4). Sa petite dimension lui permet d?accéder, par des monteries de 30" de diamètre, à des sites de travail de 2,5 mètres de hauteur et largeur. C?est un équipement adapté aux gisements filoniens. Ce genre de gisement est de moins en moins rentable pour les compagnies minières. La mécanisation des ces gisements va permettre de les rentabilisés en augmentant la productivité et la santé du travailleur, en réduisant la dilution (5). Les manettes de contrôle de la foreuse, les mouvements de la table de forage ainsi que le déplacement du transporteur ont été installés selon les recommandations d?un ergonome. Des recherches ont été effectuées par ce spécialiste sur les cas d?accident survenus avec l?utilisation de ce genre d?équipement. Il a déterminé les positions le plus confortable que l?opérateur doit prendre pour éviter les douleurs prolongées (6). Le système de roulement est composé de 4 roues pleines installées sur 4 planétaires de 9000 à 15000 livres de capacité munis chacun d?un moteur hydraulique. Des freins ont été installés sur les planétaires pour assurer la sécurité de l?opérateur et faciliter le positionnement du transporteur lors du forage. Des roues rétractables peuvent être installées pour faciliter l?accès sur rail (7). Ce transporteur peut être alimenté par une puissance électrique plutôt que par une puissance pneumatique. Cette puissance électrique est fournie par un Power Pack qui transforme l?énergie en puissance hydraulique. Ce type d?alimentation est employé lors du forage de développement, mais il peut aussi être utilisé pour le forage long trou. Cet avantage permet au client qui a un problème de pression d?air d?utiliser l?électricité. Par contre si vous utilisez l?électricité mais que dans un secteur isolé le gros courant électrique n?est pas accessible vous pouvez utiliser votre équipement en utilisant la puissance pneumatique. Le changement d?alimentation énergétique se fait facilement (8). Cet équipement est construit pour effectuer 4 types d?activités : forage de développement de niveau et sousniveau avec l?installation d?un bras porteur, forage et pose de câbles d?encrage pour soutènement de terrain, forage de production long trou et forage de monterie ascendante et descendante. L?avantage est que vous investissez dans un seul équipement au lieu de 2 ou 3. Cet avantage vous fait économiser dans votre budget d?équipement. En plus cet équipement est construit pour de dure travaux et ne contient aucun système électronique (9).

May 1, 2001

By John Hansen

This paper has been written for presentation at the 103rd Annual General Meeting of the Canadian Institute of Mining, Metallurgy, and Petroleum, April 29 to May 02, 2000. The paper addresses blast pattern fragmentation and diggability versus the blasting technique used. RESUME The author is the Vice President for Thunderbird Mining Systems. In this capacity he manages the mine site installation of surface mining mobile equipment monitoring and navigation systems. These systems are onboard instrumentation and software systems designed to: ??measure and log mobile equipments? production and health; and ??direct the equipment operators via onboard displays that show comprehensive maps and engineering instructions. The author is a mining engineering graduate from the Royal School of Mines. His work experience includes front line supervisor and mining engineer for Hudson Bay Mining & Smelting, mining engineer for Teck Corporation, and mining consultant for PriceWaterhouseCoopers.

May 1, 2001

By Patrick M. Y. Waye

As mines utilise more automation in mining operations to improve efficiency and safety, a corresponding increasing demand is placed on the transport of information. Some of the recent technological advances in underground telecommunications are described for various data, voice and video applications. In particular, two new innovative underground communication systems are described, one with high speed data at 30 Mbps and the other for mine wide evacuation and safety applications. The high speed data system incorporates stateof- the-art data networking technologies and the existing leaky cable narrow band radio channels. The new system provides over the same basic infrastructure the high speed data network at 30 Mbps TCP/IP Ethernet with 100 Base-T interconnection, plus 32 narrow band radio channels. The second system is a system for mine wide evacuation with "through the earth" communication infrastructure. Emergency situation can be communicated to and from all the miners within seconds through a central control location. The technology involved does not require leaky cable or any other similar transmission media installation. Many applications are possible, including warning miners of emergency situations, mine rescue operation to communicate with trapped miners, regular reporting from miners working alone.

May 1, 2001

By Geoffrey C. Streeton

A continual objective of mine operations is to reduce ground control costs without compromising the overall safety or performance of the installed ground support. Any change in the ground support regime must not result in a less secure or safe workplace. The due diligence required to implement a change in rockbolting practice is extensive, particularly when the new bolting system has not been used at any other mining operation. Factors such as yield, shear strength and embedment strength must all be investigated to gain an understanding of how the rockbolt can be expected to perform. This paper also discusses the substantial cost reductions and efficiency gains which can be achieved through the introduction of the Jumbolt rockbolt.

May 1, 2001

By Chin J. Chang

Powder metallurgy (P/M) technique is known for its capability of producing near-net-shape parts. Its specific characteristics have resulted in low cost and eliminated of many secondary machining. However, more and more P/M parts do require additional operations to fulfil their complex geometric features and surface roughness. Many of the machining factors that influence the machinability of cast and wrought steel parts, such as cutting speed, feedrate, coolant, tool geometry and shape, are also considered in the machining of P/M components. The special feature in P/M structure is the porosity that can decrease the machinability and shorten the tool life. Different variables have been considered in the machinability of P/M materials. Densities and the free machining additive manganese sulphide (MnS), are the two main factors of material composition, which dominate the P/M machining performance. Machining process is the main method that generates the desired working surface of machining components. This paper will discuss the metallurgical structure of the powder metallurgy components, their physical properties and possible issues when encountering machining operation. Turning operation has been tested in this investigation to show the relationship between the cutting speed, federate, cutting forces and chip formation. This investigation also discusses how the free machining additive, manganese sulphide, affects the P/M structure and machinability in order to understand how the metallurgical structure can affect the machining operation and, how to obtain the optimised surface results.

May 1, 2001

By Pierre Gaucher

It is possible to selectively mine an orebody by combining the use of the SSW probe with any bulk mining methods as well as narrow vein exploitations. In other words, thanks to the use of the SSW probe, mining operators will be able to reduce and control dilution that is generally associated to every mining operation. Already, quick and substantial savings have been obtained. Falconbridge mines have demonstrated in Sudbury and Raglan operations, that the SSW probe can log nickel, copper and iron sulphides in blast holes. They have raised the grade and reduced dilution by outlining the limits of the ore zones before selectively loading explosives in the blast holes. By lowering the probe in a blast hole, a profile of the ore content is instantly measured and recorded. Logging cored diamond drill holes at the mine have demonstrated that the ore content (nickel, copper, cobalt, PGM) as assayed is proportional to the intensity of the probe?s electromagnetic response (EM), probably because the nickel / pyrrhotite ratio is uniform within a given orebody. The probe also measures the intrinsic conductivity of the sulphides and the percentage of magnetite. All probe readings are displayed and automatically stored at a 10-cm interval within the same reading unit. A 30-meter blast hole takes less than 2 minutes to survey. The whole instrument is light (12 kg) and very simple to use. One operator can carry the SSW system and survey either down or up-holes. The probe works from ?40°C to +50°C. Plotting the measurements of the SSW probe in blast holes (2-3-4-6-10 inches in diameter) before blasting allows to determine the exact shape of the orebody within the waste rock and uneconomic low-grade ore. Thus, only the portion of the holes that contains ore is blasted. The dilution is then much reduced and, by leaving the waste and low-grade ore in place, the mine saves on transportation, blasting, crushing, backfilling, milling, etc. Thousands of dollars are thus saved. Some savings may also be achieved during the development of stopes by guiding development drifts and by replacing diamond drilling by percussion drilling. In some circumstances, when the probe shows that some of the rich ore was not drilled-off, additional blast holes will allow to recover pockets of rich ore that otherwise would have been abandoned in the walls of a stope.

May 1, 2001

By Raymond S. Suglo

Increasing depths of mining coupled with the mechanization of most underground mining operations have led to growing complexities in the mine environments with the production of large amounts of gaseous and particulate contaminants. Over 100,000 lives have been lost due methane gas and dust explosions in coal mine workings in both the US and Canada since 1900 when the methane concentrations exceeded stipulated levels in some workings. There is therefore the need to constantly assess and evaluate the performance of the existing mine ventilation systems to maintain safe and acceptable mine environmental conditions in workings to meet the requirements of federal, state or provincial laws. This paper uses the results of continuous monitoring of methane concentrations conducted in selected development headings in coal mines in North America to assess the effectiveness of existing auxiliary ventilation systems in the control of methane gas concentrations in the headings. The results show that the average quantities of fresh air required to dilute, disperse and remove methane concentrations within set levels of one minute varied from 5.43 m3/s in Heading #11 (Condition 2) to 27.97 m3/s in Heading #10 (Condition 1) and this represented about 12 to 26% of the quantities required to dilute methane concentrations to safe levels within one minute under Condition 1 and 32 to 139% under Condition 2. The average dilution times in the headings studied were less than 8 minutes. The forcing efficiencies of the auxiliary systems in the headings studied ranged from poor to excellent implying that the auxiliary ventilation systems were capable of controlling the methane concentrations below statutory levels but may not be able to cope with large and unusual methane concentrations in the headings. This study is important to prevent methane gas and coal dust explosions in coal mines and thus avoid any loss of lives and property.

May 1, 2001

By Claude Gosselin

En 1995, la Compagnie minière Québec Cartier a mis de l'avant un projet de recherche sur la modélisation de l'écoulement des gaz pour ses fours de frittage à l'usine de bouletage de Port-Cartier. Cette démarche s'inscrivait dans un large processus de collaboration avec l'Université Laval et le Consortium de Recherche Minérale (COREM). L'usine de bouletage possède deux fours de frittage d'une capacité moyenne de 600 tonnes/heure pour chacun des fours. Les fours de frittage sont des systèmes complexes d'échange de chaleur qui fonctionnent à contre-courant (le débit de boulettes versus les débits de gaz). Pour rencontrer les spécifications reliées aux propriétés mécaniques des boulettes, le processus de fabrication requiert des mesures et un contrôle des systèmes très précis. L'information fournie par plus de 70 capteurs (pression, température, puissance, vitesse, hauteur de lit, position de volet....) est utilisée pour manipuler une vitesse de grille, cinq ventilateurs et neuf zones de brûleurs. Malheureusement, les variables qui influencent fortement les mécanismes de frittage, c'est-à-dire les débits de gaz dans les différentes zones du four ainsi que la masse de boulettes qui circulent ne sont pas mesurées. Une méthode est donc proposée pour une estimation en ligne de ces variables. La méthode est basée sur un arrangement de 65 équations reliant pressions, températures et débits de gaz dans les conduites, les ventilateurs, les sections du lit et les fuites (Gosselin, 1998). Pour des raisons de simplification de cet article, seul un sous-système du four sera présenté. Les techniques de réconciliation des données reliées à la conservation de la matière et de l'énergie montrent que la mesure en ligne du débit de boulettes mène à l'estimation des débits de gaz et apporte des avantages intéressants pour le contrôle des variables stratégiques des fours.

May 1, 2001

Centralia?Mine Operations ?Centralia Mine ?Mountainous Terrain ?High rainfall (greater than 50 inches/yr) ?Multiple Pit/Multiple Seam ?Truck/Shovel Prestripping ?Dragline Overburden ?Coal Wash Plants

May 1, 2001