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Geophysical anomalies result from the passage of hydrothermal fluids through rocks. Interpretation of these anomalies, when integrated with available geological and geochemical data, assists the construction of a conceptual model of the original hydrology of the system. The original extent of a geothermal system is often indicated by the distribution of low resistivity argillic clay alteration. Quartz-adularia vein deposits, silica sinters or stockwork (often mineralised) cause local increases in resistivity. Appropriately chosen electrical techniques can therefore be used to help target such structures. Airborne magnetic surveys have also proven useful in New Zealand epithermal exploration, because hydrothermal fluids destroy magnetite causing extensive demagnetisation anomalies. Ground magnetic surveys can sometimes be useful for geological interpretation on a local scale. Positive gravity anomalies may occur as a result of mineral precipitation (silica or calcite) in high porosity host rocks, while negative gravity anomalies can result from hydrothermal fracturing and leaching of relatively dense host rocks. The relative merits of these geophysical techniques as used in the exploration of epithermal mineral prospects are discussed, with particular reference to the Hauraki Goldfield. The preferred method for defining zones of quartz veining/silicification is vector or tensor gradient resistivity. Exploration strategies and technique refinements are suggested as a means of improving the resolution of potentially mineralised target structures, in a more efficient and cost effective manner.

Jan 1, 1993

By Creelman C. A

The removal of a horizontal piIlar between Nos. 9 and 11 levels (1,116 feet from the collar of main shaft) was successfully carried out by blast hole drilling, and, to the best of the authors' knowledge, this mass blast of 40,000 tons of ore (requiring the use of 7,150 Ibs. of explosive and 5,385 feet of primacord) was the first occasion on which a task of this magnitude has been carried out underground in an Australian mine.Blast hole drilling was introduced by this company approximately fifteen months ago at New Cobar Mine in sub-level stoping.This experimental drilling and blasting gave very valuable information as to the correct technique to be adopted when the final plans were being prepared for the removal of the horizontal pillar at New Occidental Mine.The dimensions of this pillar were approximately 15 feet long, and from 40 to 60 feet wide, and 65 feet in depth.The block of ore extended to 35 feet above the level and 30 feet below, the upper section being partially excavated to form the bell-hole floor and grizzly chambers used for drawing off the broken ore in the shrink stope above the No. 10 level.Description of Ore-bodyThe main ore-body is situated almost vertically in a well-defined shear zone at the junction of sandstone and slate, the sandstone forming the eastern and the slate the western wall.The ore-body consists of highly silicified slate (chert) sparsely impregnated with sulphides, containing a small percentage of copper and bismuth.The total length of the ore-body is approximately 450 feet, with a maximum width of 60 feet in the main section, which is about 200 feet long.This is the section shown in longitudinal and cross-section (Fig. 1).The ore-body is divided by a horse of mullock in the northern end into two legs, the eastern and western, which are approximately 250 feet long and averaging 25 feet in width.This ore-body is strong, hard and abrasive with extremely strong walls, an ideal proposition for open stoping and mass blasting.MiningIn all levels above No. 9 the cut and fill method of ore extraction was adopted. On Nos. 10 and 11 levels the shrinkage method was introduced with economical results, and no difficulty had ever been experienced with shabby or bad walls.Shrink stoping had been carried upwards from No. 11 level to within 10 feet of No. 10 level, when mining hazards developed, and instead of...

Jan 1, 1944

By C J. Moran

Given that the mining industry is committed to sustainable development principles and that Australia is experiencing changes to the regulatory environment that aim to modernise the water sector and encourage adoption of consistent approaches, there is a well defined need for the Australian minerals industry to develop a water accounting framework. This requires: key terms and definitions for water metrics for use in the Australian minerals industry that is consistent with the wider water sector, a suite of metrics representing key components of an operationÆs water balance, a calculation method for some of the metrics, and a reporting protocol. This paper presents the methodology that was used to derive these four components. Existing accounting frameworks were reviewed and key terms and definitions that were consistent with current requirements were proposed. A calculation methodology was developed to obtain some of the key indicators and variables that cannot be easily measured directly (water loss through evaporation is an example). The adopted terms and definitions dictated model development, with the conclusion that a systems approach was the most effective calculation process. To test the proposed definitions and calculation methodology, values for water metrics were derived for eight sites. The proposed framework and definitions could deal with the specific situations selected as case studies. The associated calculation methodology produced complete accounts at various levels. Some elements of the accounts could be directly checked against available data and simulations. The framework captured well variations in the reuse efficiencies; reuse efficiency could even vary for similar processes. It is concluded that this preliminary accounting framework provides a consistent language and metrics for quantifying and communicating water management, both at the intersection of the site with the surrounding landscape (through detailed reporting of site inputs and outputs) and within operational activities. Using this consistent framework for quantifying and documenting water use within an operation will provide a platform for compiling and comparing minerals industry water use with other sectors. This may support benchmarking activities within regions or companies and help demonstrate leadership amongst water users in water resource stewardship. The approach presented here is applicable to a wide variety of mining and processing activities, and biophysical environments, and can be adopted as the first step towards developing national water accounts for the Australian Minerals Industry.

Jan 1, 2009

By Mackenzie J. M W

The mechanism of clay slime flocculation in coal washing circuits is considered and it is concluded that polymer flocculants are most suitable. It was found that the addition of sea water with a polymer flocculant improved flocculation and settling, and it was also found that dilution of a flocculated pulp increased floc size and hence settling rate.In predicting plant consumption of reagent it was found that cylinder tests, or even pilot plant tests, could give erroneous results, particularly on flocculated pulps. Different flocculants may, however, be compared in cylinder tests.For filtration, flocculation with Separan plus sea water was much more beneficial than flocculation with Separan alone.INTRODUCTIONDuring the mining of coal, and its subsequent beneficiation by washing, large quantities of minus 10 mesh material are produced. This fine material, which consists of broken down shales and fine coal, causes difficulties in water clarification circuits, in refuse disposal, and in filtration of fine coal.These difficulties can be largely overcome by flocculation, and this paper discusses the mechanism of flocculation, the methods by which a selection of flocculant may be made from the large number available, and the limitation of the prediction of plant performance from laboratory tests. This work applies particularly to the washeries of The Broken Hill Proprietary Co. Ltd. (B.H.P.) and Australian Iron and Steel Ltd. (A.I. & S.) .

Jan 1, 1962

The consideration of environmental constraints and issues is a fundamental component of all stages of planning, development, operation and decommissioning mining and quarrying projects. Provision needs to be made at all stages for the cost of environmental components since it is of fundamental importance that they be recognised as an integral component of any project. This paper presents an approach to environmental costing, suggested levels for budgeting, and the cost benefits.

Jan 1, 1990

By S Agdaca

Leightons is the sole contractor at the Wahana Coal Mine Project (part of the Bayan Group), a multi-seam thermal deposit consisting of 13 coal seams with thicknesses ranging from 20 cm to 500 cm. The average dip of the deposit is 18 - 20°. However the deposit is heavily faulted in certain domains with anticlinal and synclinal structures present causing seams to dip up to 90°. Average thickness of coal inter-burdens range from less than 2 to 12 m. The minimum coal thickness being mined is 20 cm. Coal production is direct mine mouth feed and there is no coal processing plant currently used.Conventional blasting between the highly variable coal horizons in the early phases of the mine life was suboptimal from a production perspective. Drilling short holes with a reduced drill pattern, and on occasions with sloping benches, resulted in low drilling and explosives loading efficiency.A high frequency of small size blasts fired up to two times daily was required with each blast consisting of four up to five small blast areas. Each blast averaged approximately 36 000 bcm thus causing a low utilisation rate of the mining fleet from frequent blast delays and the inability to deploy larger Liebherr 9350 excavators on bench. It was identified that increasing the production targets required a more efficient drilling and blasting process. Furthermore, due to the highly variable nature of the deposit, the existing coal model was determined to not be able to accurately predict the coal seam location prior to blasthole drilling.In August 2009, Leighton Contractors Indonesia and Orica Mining Services with the full support of the Wahana team, initiated through seam blasting trials using electronic blasting systems. Further trials were conducted in November 2009. Trial evaluations indicated that the benefits from decreased lost time events due to blasting, an increased vertical advance rate per blast, and increased overall blast size could be attained while not damaging or diluting coal.Full-scale?through seam blasting has been ongoing since February 2010 for the upper eight coal seams to extract coal seam thicknesses ranging from 20 - 100 cm. This paper will discuss the parameters of the through seam blasting process in Wahana and the resulting benefits to the overall mine production.

Nov 8, 2011

By A Nugraha, H Thanasekaran, K Tatetdagat

The Kanowna Belle gold mine is located in the Eastern Goldfields of Western Australia, approximately 18 km north-east of Kalgoorlie. The processing plant is designed to process 2 Mt/y and has the capability to treat both refractory and free milling ore from the Kanowna Belle and Kundana mining operations.The Kanowna Belle ore is refractory with the gold mineralisation occurring mostly as fine-grained inclusions in pyrite or as very fine-grained gold located in pyritic arsenic rich growth zones. The Kanowna Belle refractory process includes flotation, roasting of the flotation concentrate, and calcine leaching to extract the gold from the ore.Mineralogical analysis of feed and tailings streams from the flotation circuit have shown that the gold bearing minerals are well liberated and confirmed they are mainly associated with pyrite. Nearly 40% of the flotation circuit losses are in the -38 µm size fraction. To improve the flotation circuit recovery, the fine particle gold recovery was targeted. A Cavitation Tube column was selected for the site-based pilot test work program. This paper presents data generated from the on-site test work, and the benefits of the Cavitation Tube column to improve fine particle flotation.CITATION:Nugraha, A, Tatetdagat, K and Thanasekaran, H, 2018. Flotation circuit efficiency improvement at Northern Star Resources Limited’s Kanowna Belle gold mine, in Proceedings 14th AusIMM Mill Operators' Conference 2018, pp 403–412 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Aug 29, 2018

Computer applications are ideally suited to the day to day operations of grade control and short term planning on a mine site. By refining this part of the operation there is scope to increase profits by more accurately predicting ore grade and tonnage, and allowing the mining engineer more flexibility in his approach to scheduling. Large numbers of blasthole or ditchwitch samples need to be processed in a fast and efficient manner, and stored in a database for future reference. The mining engineer has to calculate tonnages and subdivide the blast or digging area into mineable areas of waste, low and high grade ore. New grade and tonnage information must be used by the mining engineer to update his short term plan. Answers must be obtained quickly and efficiently, but a high level of individual input is necessary in order that maximum use is made of the information. Geostatistical analysis of samples can be used to refine the interpolation techniques. Reconciliation between the original grade model, the newly sampled area, and the final product should be monitored continually.

Jan 1, 1989

The approach to this subject is a very general one, but an attempt has been made to cover briefly a very wide field in the nationally important job of manufacturing iron for the iron and steel industry.Some historical data concerning the development of the furnace itself from early days have been followed by the modern ideas on raw materials and their beneficiation. Recent furnace design and modern auxiliaries have been given attention with, finally, some developments in practical operation.HISTORICALWhen dealing with such large 'and costly operating units as blast furnaces, there is not the same opportunity for research in design as in most other metallurgical processes. Over past generations the development of furnace design, or "lines" as it is usually termed, as well as most radical operating changes, has been very gradual.However, there have been some periods of rapid progress due to revolutionary changes. One such was the adoption of the steam engine for blowing and charging operations, and also, during this same era, about 1750, coke was first used as fuel in place of charcoal. Another revolutionary change came some 100 years later, when heating the blast became usual practice.Since then there have been great improvements in mechanical equipment and in the preparation of raw .materials. These factors, together with a better understanding of what happens inside the furnace, have led to the development of those large mechanically operated structures which are the most modern in blast furnace design.For many, years America has led the world in pig iron production and in furnace development, so that American design and practice is now recognised almost as standard. This type of furnace replaced the older stacks in England, Russia, Germany, South Africa and India, as well as here in Australia.

Jan 1, 1947

The estimation of the shear stress distribution around an excavation is important to the design of the excavation since shear stresses can generate cracks, loosen grain boundaries or otherwise degrade the mechanical and physical properties of the rock and lead to stability problems. In this study, the distribution of shear stresses in a pillar were back-calculated from the deformation measurements made from the SPDV (Site and Preliminary Design Validation) area at the Waste Isolation Pilot Plant (WIPP) site. A plausible pattern of shear stress around an excavation has been suggested based on the Zero Strain Boundary (ZSB) calculation, computer simulation using FLAC, and back-calculation using measured deformation rates in the pillars.

Jan 1, 1998

By P Barrette

The manual gravimetric drying moisture determination methods currently employed by most mineral processing plants fail to provide timely and accurate information required for automatic control. The costs associated with transporting and handling concentrates represent a major portion of the overall treatment price. When considering the cash flow of a mining operation that is governed by both the smelter contract, with moisture penalties and the quantity and quality of the concentrates shipped, any tool that provides real-time feedback on the process is vital (Edwards, RP 1994). The introduction of an on-line moisture sensor would become a welcome addition to the process control field instrumentation package now applied. A novel on-line determination system for ore concentrate moisture content would replace the tedious manual procedure. Since the introduction of microelectronic-based control systems, operators have strived to reduce the treatment costs to the minimum. Therefore a representative and timely determination of on-line moisture content becomes vital for control set points and timely feedback. Reliable sensors have long been on the æwish listÆ of mineral processors since the problem has always been that you can only control what you can measure, (Konigsmann, 1990). Today, the task of moisture determination is still done by the classical technique of loss in weight utilising uncontrolled procedures. These same methods were introduced in the earliest base metal concentrators. Generally, it is acceptable to have ore concentrate moisture content vary within a range of seven to nine percent, but controlling the moisture content below eight percent is a difficult task with a manually controlled system. Many times, delays in manually achieving reliable feedback of the moisture content results in the moisture varying from five to twelve percent before corrective actions can be made. This paper first reviews the traditional and widely available methods for determining moisture content in granular materials by applying physical principals and properties to measure moisture content. All methods are in some form affected when employed on mineral ore concentrates. This paper introduces and describes a unique and promising novel on-line moisture sensor employed for mineral processing de-watering applications, which not only automates the tedious tasks but also results in reliable moisture feedback that can be used in the optimisation of the de-watering process equipment such as pressure or vacuum filters and fuel-fired driers. Finally, two measurement applications will be presented to indicate the usefulness and to summarise the measurement requirements for the proposed method of employing drag force and mechanical properties of the material itself to determine the moisture content. The commercial model of the equipment is described with the features and benefits to the users summarised.

Jan 1, 2003

By G Harbort

The use of geological data for optimisation of operating plants has become a significant part of the modern process mindset. The underlying principle is to convert spatial geological data into metallurgical information to drive production and mine planning, blast design, blending strategies and plant set-up. Increasingly the process designer is required to interface with geological and mining staff to propose the best investment strategy for a project’s benefit.The geometallurgical model development for the Zafranal copper-gold project commenced in March, 2010, several months after the start of a major drilling campaign by AQM Copper Inc. The initial evaluation stage required review of historical Teck RC data to determine areas of metallurgical interest within the project. As drilling transitioned from RC to diamond drilling, core that was considered representative of the resource was selected and subjected to MLA mineralogy analysis. When coupled with sequential copper analyses this allowed calibration of an assay derived mineralogy model, allowing process concept options and a preliminary test program to be developed. This Phase 1 test program provided a preliminary process design, operating costs and anticipated concentrate grades and recoveries. Both this data and resource estimation were used to generate a preliminary Whittle pit optimisation based on maximising net smelter return, which in turn fed into a preliminary mine plan. The preliminary mine plan, in conjunction with geological logs and core results was used to develop a phase 2 metallurgical test program, where variability tests were conducted throughout the resource and composites formed to investigate specific years of the mine plan in locked cycle flotation. In addition comminution tests were modelled against geometallurgical domains allowing comminution components values to be calculated for 36?000 m of core. A flotation geometallurgical model was developed and incorporated into the resource model allowing concentrate grades and recoveries to be estimated on a block-by-block basis.

Sep 5, 2011

By D Smith

The Broken Hill deposit is located in Australia in the far western region of New South Wales. The deposit was found in 1883 and has been mined continuously since its discovery. It is considered the largest lead, zinc, silver deposit that has been discovered in the world and originally contained around 340 Mt of ore at a grade of around 12 per cent lead, ten per cent zinc and 150 g/t silver. The material remaining in the deposit represents only a fraction (perhaps ten per cent) of the original resource. Several of the world’s largest mining companies can trace their origins to the Broken Hill Field. The remaining resources on the CML7 consist of two large lower grade resource lodes that have not been subject to mining, some scattered areas of zinc lode material and the pillars and remnants of the main lead lodes.The deposit occurs in metamorphic rocks of the Broken Hill Group a division of the Willyama Super Group contained within the Curnamona Craton. The Broken Hill Group rocks have undergone multiple phases of deformation. Metamorphism is granulite grade with major shears cutting through the deposit having been retrogressed to mica schists. The deposit lies in an antiform associated with the second phase of deformation.The resultant proposed mine is situated on Consolidated Mining Lease 7 (CML 7) which occupies a strike length of 3.6 km in the central part of the 7.8 km long footprint of the orebody. Underground mining on CML7 ceased in 1975 with surface mining of silver chlorides in the weathered zone continuing until 1991. CBH Resources has been continually working to define and evaluate the remaining resource since 2002. This work has included four surface drilling programs, two underground drilling programs, an exploration decline, enormous amounts of compilation of historical data and detailed three- dimensional (3D) modelling of historical mining and the resource lodes. It is currently planned to commence production at the Rasp Mine in late 2011. The operations will produce from previously unmined lodes and from remnants and pillars.This paper primarily aims to encapsulate the processes involved from information acquisition through to resource estimation and also to highlight some of the challenges encountered and the specific techniques and practices used to overcome them. Many of the experiences at Broken Hill are applicable to all brown field sites.

Aug 22, 2011

By J D. Lubben

Hibbing Taconite is a Lake Superior-type granular magnetite taconite deposit occurring within the Biwabik Iron Formation along Minnesota’s central Mesabi Iron Range. The deposit is situated on the northern margin of the Proterozoic Animikie Basin. The deposit strikes northeast, dips gently southeast, and occupies 10 km of strike length. Mining focuses on 50 m of granular cherty and laminated slaty taconite within the Lower Cherty member.Ores generally consist of a quartz, magnetite, siderite, ankerite, minnesotaite, stilpnomelane, and haematite mineral assemblage. Processing is optimised by exploiting the physical and chemical variations that exist between three major ore types. Taconite ore averages 20 per cent magnetic iron (MagFe), 27 per cent weight recovery (WtRec) and produces a final concentrate with 4.5 per cent silica (SiO2). Since 1976, production has totalled approximately 237 million long tons (Mlt) of pellets (8 Mlt per year rated capacity).Ore processing uses a simple fl ow sheet of autogenous grinding (<0.044 mm) followed by two phases of wet magnetic separation, fi ltering, limestone/bentonite addition, balling, and firing to create pellets averaging 66 per cent total iron. A Liberation Index (LIS) is used as a primary guide for ore grading and metallurgical control. Grind requirements, magnetite liberation and silica grade are closely monitored to ensure plant optimisation and product quality.A recent program of benefi ciation of low-grade ores by in-pit crushing and dry magnetic cobbing has demonstrated that low-grade ores (<17 per cent MagFe, <25 per cent WtRec) can achieve a signifi cant metallurgical upgrade (up to 25 per cent MagFe and 40 per cent WtRec). This operation recovers 60 per cent of the total crushed volume, and has a calculated effi ciency factor (magnetic iron recovery) of 79 per cent. This paper discusses the benefi ts of this upgrading and its effects on ore blending and processing.

Jul 11, 2011

By Fardy J. J

Abundance data are presented for a comprehensive range of elements in oil shale samples from deposits located in Queensland. The techniques of instrumental neutron activation analysis and spark source mass spectrometry were used to obtain concentration data for up to 50 trace elements in each shale. These techniques were supplemented by other spectrometric methods to obtain data for major, minor and some trace elements. Sixty-four elements were determined quantitatively. This comprehensive characterisation of oil shale samples from the major deposits in Australia provides inorganic abundance data not previously available. It also provides important background information for processing studies and the associated environmental aspects of shale oil production and waste disposal.

Jan 1, 1986

By R Markoski, P Grealish

The requirement for rapid vertical development for underground ventilation is often a factor when dealing with dynamic mine plans, with short vertical developments being used to optimise ventilation systems. In an effort to increase the safety and efficiency of the constructions, a simple and effective sinking methodology is required that is both adaptable and repeatable. A modified shaft construction methodology is proposed that attempts to minimise risk to the personnel as well as be cost-effective. Readily available equipment is used to ensure adaptability to the various environments and shaft parameters.One of the greatest risks of shaft sinking is having personnel working suspended over open cavities or underneath suspended loads. Removing this risk, by ensuring all construction is done from solid ground, allows for safer sinking operations. As the process is repeatable, familiarity and confidence in its construction sequence will increase with each successive sink.A trial sink is performed with a 3.6 m diameter, 20 m deep shaft. The shaft was excavated using a conventional strip-and-line philosophy, with the shaft then being lined from the collar via the use of large diameter corrugated steel culverts. The annulus between the steel culverts and shaft excavation is then filled with a concrete mixture to secure it in position.The new process was successful, with no personnel at any time during the process being suspended above an open excavation. The installation had relatively low capital and operational costs and was completed faster than an equivalent, conventional concrete-lined shaft construction. Therefore when compared to conventional shaft-sinking methods, this process can be considered safer, more efficient and relatively cost-effective.Further research is required to determine whether this method can be expanded to larger vertical developments.CITATION:Markoski, R and Grealish, P, 2014. A new method for rapid vertical development of underground ventilation shafts, in Proceedings 15th Australasian Tunnelling Conference 2014 , pp 603–606 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Sep 17, 2014

By N Madani, Y Abildin, E Topal

Mine planning is a crucial part of all mining industry projects, and nowadays, geometallurgical mapping through advanced computer technologies provides an opportunity to involve metallurgical responses of a deposit into 3D block model in order to optimise mine planning activities, especially for production forecasting. Including these metallurgical parameters apart from traditional geology and grade-based attributes into resource modelling leads to an extensive approximation for the economic maximisation of mine production due to better forecasting, planning and increasing certainty and the reliability of the resource model (Macfarlane and Williams, 2014). Commonly, geostatistical techniques and algorithms are used to produce models with the high resolution (Brissette et al. 2014; Deutsch et al. 2014; Tolosana-Delgado et al. 2015). The accuracy of the modelling procedure deeply depends on a reliable block model, produced by spatial analysis of corresponding variables that define the geological, metallurgical, mineralogical and chemical behaviour of the deposit. However, there are special cases, where the application of enhanced geostatistical methods is required, to solve the occurred difficulties between variables with multivariate complexities. For example, in oxide copper deposits, the soluble copper grade is a percentage of total copper grade and recoverable by heap leaching processes (Emery, 2012; Hosseini and Asghari, 2015). Hence, the joint spatial modelling of these variables has two difficulties.CITATION:Abildin, Y, Madani, N and Topal, E, 2018. Forecast the mineral processing destinations based on spatial interpolation of geometallurgical variables, in Proceedings Complex Orebodies Conference 2018, pp 2–5 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 21, 2018

By S Oliver, D Willingham

"Although a resource model is central to the mineral resource value estimation process (Glacken and Snowden, 2001), creating it is a labour intensive task and in the end it is a limited representation of the actual orebody. Creating this resource model is a labour intensive task that requires inputs from geology, mining, metallurgical and commercial disciplines. It requires thousands of samples from hundreds of drill holes to be verified, grouped in geological domain, interpolated and then valued. Even after all this effort, a model is only an estimation; therefore further significant effort has gone into quantifying uncertainty in the model and subsequently risk around any value estimates derived from the model. Further risks to model quality are introduced through poorly conditioned data or incorrect assumptions.This paper proposes the application of machine learning to automate the resource model development. Machine learning is applied to the traditionally manual tasks of geological formation, domain identification and validation of the block model mineralogy. Through automation the resource estimation process can be accelerated, allowing more drill holes or a larger resource body to be processed in a given time frame, or allowing the process to be more agile to changes in input data and assumptions. A case study based on drill hole data from a Western Australian iron ore deposit (Government of Western Australia, Department of Mines and Petroleum, 2015) is used to demonstrate the application of machine learning in this process.CITATION:Oliver, S and Willingham, D, 2016. Maximise Orebody Value through the Automation of Resource Model Development Using Machine Learning, in Proceedings The Third AusIMM International Geometallurgy Conference (GeoMet) 2016, pp 295–302 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Jun 15, 2016

By D Lautier, A A. Ndiaye, A Galli

Traditionally gold producers had built up hedge books to protect themselves against adverse changes in the commodity price, but diversified mining groups were staunchly opposed to hedging in any shape or form. The situation has evolved over the past few years. Gold miners have been reducing the size of their hedge books in line with the rising gold price. Commentators have talked about ædouble-digit dehedgingÆ and have suggested that this is the final countdown for gold hedge books. It sounded as if the era of hedging by mining companies was drawing to a close. But as appearances can sometimes be misleading, we decided to find out what mining companies were actually doing. Companies listed on stock exchanges are now obliged to give details of their derivatives holdings in their annual reports. Two or three years ago there was no such obligation. Our reality check was based on the latest annual report issued by three multinational mining groups; two with diametrically opposed views on hedging (Rio Tinto and Barrick) and the third (BHP Billiton) with an intermediate position. This snapshot of their derivative positions at a point in time revealed that Barrick and BHP Billiton have substantial derivatives positions (worth billions of dollars) to protect against adverse changes in foreign exchange rates and interest rates. Moreover Barrick has recently started hedging against increases in fuel prices. Despite its opposition to hedging, Rio Tinto has derivative positions worth several hundred million dollars, but these are primarily a legacy from various mergers and acquisitions over recent years or were entered into as a condition of project financing. Lastly we were surprised to discover that Barrick was holding asset-backed commercial paper (ABCP). So the idea that mining companies donÆt hedge their risks is just another urban myth.

Jan 1, 2009

Quite often the reserve assessor becomes enamored with the numbers gen- erated and forgets the basis for his assessment. The quality of the assess- ment can only be as good as the quality of the input data. The use of seismic data from the Gippsland Basin in assess- ing Esso/BHP's oil and gas reserves is an excellent example of this principle. By significantly improving the quality of seismic data, a much more reliable estimate of a field's reserve potential can be made. In addition, it provides the basis for further delineation drill- ing which, as recent experience in Gippsland has shown, often leads to increased reserves.

Jan 1, 1979