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By D. Ling, Santos. R. M., T. Van Gerven, M. Guo

The valorization of alkaline waste materials from thermal processes utilizing intensified mineral carbonation routes is investigated. The principal advantages of this approach are the chemical stability and storage safety of mineral carbonates, the opportunities for process integration presented by the technology, and the potential for conversion of low-value materials into useful products. Treatment and disposal of steel slags are a costly burden on steel plants. Sustainable solutions for Argon Oxygen Decarbonisation (AOD) and Continuous Casting (CC) stainless steel slags and Basic Oxygen Furnace (BOF) steel slag are desired. An integrated on-site mineral carbonation approach is envisaged as a favourable solution.

Jan 1, 2011

By M. B. Kime, E. K. Kanowa

"Heap leaching of low-grade copper-cobalt oxidized ore and solvent extraction of copper, cobalt, manganese, and zinc were investigated. Heap-leaching parameters were optimized using agitated and tray batch leaching tests, capped by tests on a pilot semicontinuous heap-leach plant. The optimum pregnant leach solution yielded 2,350 mg/L Cu, 3,800 mg/L Co, 3,600 mg/L Fe, 130 mg/L Mn, 25 mg/L Zn, and 0.58 g/L solids in suspension, with pH and acidity of 1.27 and 3.66 g/L, respectively. Copper, cobalt, and impurities (Mn and Zn) were extracted using (v/v) 30% CP-150, 20% IONQUEST® 290, and 20% D2EHPA, respectively; overall recoveries of copper, cobalt, and impurities were 98, 99, and 70%, respectively.RÉSUMÉ La lixiviation en tas des minerais oxydés de cuivre et de cobalt et l’extraction par solvant du cuivre, du cobalt, du manganèse et du zinc ont été étudiés. Les paramètres de lixiviation en tas ont été optimisés à l’aide d’essais de lixiviation en discontinu sur un plateau, complétés par des essais relatifs à une usine pilote de lixiviation en tas en semi-continu. La liqueur-mère optimale a produit 2 350 mg/L de Cu, 3 800 mg/L de Co, 3 600 mg/L de Fe, 130 mg/L de Mn, 25 mg/L de Zn et 0,58 g/L de solides en suspension, avec un pH et une acidité respectifs de 1,27 et 3,66 g/L. Le cuivre, le cobalt et les impuretés (Mn et Zn) ont été extraits avec un pourcentage volumique (v/v) de 30 % de CP-150, de 20 % d’IONQUEST ® 290 et de 20 % de D2EHPA, respectivement. Les récupérations totales de cuivre, de cobalt et d’impuretés étaient de 98 %, 99 % et 70 % respectivement.INTRODUCTIONBoss Mining S.P.R.L. is a privately owned hydrometallurgical plant located in southeastern Democratic Republic of Congo. It treats oxidized ores of copper and cobalt that are recovered by sulphuric acid heap leaching (Trujillo, Cisternas, Gálvez, & Mellado, 2014; Kime, Kanowa, Mulaba- Bafubiandi, & Diyambi, 2016) and solvent extraction processes (Crane, Urbani, Dudley, Horner, & Virnig, 2009; Fisher, 2011; Kime et al., 2016). The ore to the plant is primarily sourced from the Luita and Mukondo mines. Geological prospecting work by Gecamines and Boss Mining showed that the Mukondo mine contains a very large cobalt reserve not yet exploited, but with grades as low as 0.2%.Currently, Boss Mining is focusing on the production of copper, but is investigating methods to efficiently produce both copper and cobalt. A challenge in the production of cobalt from this ore is its presence in the third oxidation state. This requires the addition of reducing agents, which increases the overall operating cost (Kime & Makgoale, 2016). Cobalt solvent extraction is also very sensitive to impurities such as nickel, zinc, manganese, and aluminum, which are often co-extracted (Swartz, Donegan, & Amos, 2009). This sensitivity to impurities requires the optimization of operational parameters to lower impurity levels as much as possible in the electrolyte."

Jan 1, 2017

By Lawrence Devon Smith, Keith Spence, William Roscoe

"In March 2003 the CIM Council adopted and approved the document “Standards and Guidelines for Valuation of Mineral Properties” as developed by the Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (CIMVal). The document is referred to as the CIMVal Standards and Guidelines. The document evolved from a specific recommendation by The Mining Standards Task Force (MSTF) of the Toronto Stock Exchange and the Ontario Securities Commission in its Final Report (January 1999) that the CIM form a committee of valuation practitioners to review and advise on approaches to valuation of Mineral Properties. The CIMVal Standards and Guidelines are organized into two parts: •,Standards which are general rules in the Valuation of Mineral Properties. The use of the Standards is mandatory if the Valuation Report is stated to follow CIMVal (although not mandatory in the sense of having regulatory authority). Definitions are given at the beginning of the Standards. •,Guidelines which elaborate on the Standards and, while not mandatory, provide guidance and best practices which are highly recommended to be followed in the Valuation of Mineral Properties.CIMVal specifies requirements for the Qualified Valuator who has the responsibility for choosing the appropriate approaches and methods for the valuation of mineral properties. With regard to the specifics of the application and practice of valuation approaches and methods, CIMVal directs the Qualified Valuator to the large body of published papers, published valuations, presentations and court judgments to guide his or her choice. This is also the approach taken by VALMIN (Australia) and SAMVAL (South Africa). To facilitate the dissemination of industry practice, the CIMVal Committee organized a “Valuation Day” at the CIM Annual General Meeting in Toronto (Mining Millennium 2000), on March 8, 2000. Industry experts presented papers on valuation of Mineral Properties which were subsequently published in a proceedings volume and individually ad technical papers in the CIM Bulletin. The Management and Economics Society of CIM has continued to identify and publish papers on valuation in the CIM Bulletin and Magazine. The present document gathers in one place the CIMVal Standards and Guidelines, the papers from the 2000 Valuation Day, and a number of subsequent papers that illustrate industry practice for the valuation of mineral properties."

Jan 1, 2003

By A. M. Nordale

Let us first trace a line, mentally, across Alaska and Yukon, starting at a point in the west slightly south of the delta of the Yukon river and from there continuing eastward, loosely following the 63rd parallel of latitude until we have passed beyond the eastern border of Yukon. We will make two pronounced digressions southward to include the greater parts of the Iditarod and Tanana River valleys. That visualized line roughly defines the southern boundary of permafrost. North of it lies a vast region, fully three-fourths of the area of the two territories, which includes Seward peninsula, the great Yukon River basin, and the tractless wastes of the Arctic. During some frigorific cycle in the distant geological past, the ground there was frozen to a depth of many hundreds of feet. How deep the frost actually penetrated is not known, but it has been found to exceed three hundred feet in many places. Nature afterwards provided a perfect insulating cover in the form of heavy moss and dense grass, which has protected the ground from the heat of the sun's rays during the intervening ages. This frozen condition has always been accepted as something indigenous to the North and little thought was given to -it until recently, when the United States Government and, I believe, the Canadian Government, began extensive studies of it, particularly in respect to its effect and bearing on the development of the great oilfields of the Arctic. Within this large region and but a short distance south of the Arctic circle are the three principal producing placer gold fields in the sub-arctic, whose hubs centre at Nome and Fairbanks in Alaska and at Dawson in Yukon Territory. The geological structure and history of the gold-bearing deposits of Dawson and Fairbanks are very similar and probably closely related. They are typical placer deposits produced by stream action during periods of erosion and inundation and subsequently covered with a thick layer of fine, powdery silt mixed with decayed vegetation which, locally, is termed 'muck'. The depth of muck varies from less than 10 to more than 250 feet, with the greater depth near the lateral edges of the valleys. The gravel underlying it is medium in size, well rounded, and composed mostly of quartz and schist. The proportion of sand or fines is approximately 40 per cent. No large boulders and little clay are found, for those districts, as well as that of Nome, have not been subjected to glaciation. The most common bed-rock found is either decomposed or hard schist, but infrequently it is slate, quartz, diorite, or a porphyry. The vertical concentration of the gold is invariably on bed-rock and in the lower few feet of gravel which overlie it. The horizontal concentration or paystreak is roughly parallel to the trend of the valley but does not ordinarily coincide with the course of the present stream. The width of the paystreak usually expands from a few feet at the head of a creek to several hundred feet near its mouth.

Jan 1, 1947

By Hrayr Agnerian

The fair market value of an exploration property is determined by its potential to host a mineral deposit. This potential is gauged by the results of previous exploration, exploration stage, meaningful past expenditures and remaining targets that are not yet tested. Values of exploration properties can be viewed as distinct points in a three-dimensional space defined by orthogonal axes, namely: Exploration Stage (x-axis); Cumulative Expenditures (y-axis); and Property Value (z-axis). In general, these values are estimated by applying activity factors on previous exploration expenditures, e.g. an activity factor of 100% for an active property with good potential and a factor of 50% for an active property but past expenditures have not upgraded the property. At certain periods, a market factor may also be applied to reflect the activity of mineral property acquisitions. For properties that do not exhibit any exploration potential, only nominal values are applied.

Jan 1, 1996

By W. E. Roscoe

"Mineral exploration properties are those on which an economically viable mineral deposit has not yet been discovered. Such properties are bought, sold, optioned and joint ventured on the basis of their perceived potential for the existence and discovery of a viable mineral deposit. The intrinsic value of an exploration property is therefore based on the exploration potential. One measure of the exploration potential is the amount that can be justified to spend on exploration for a viable deposit.The appraised value method uses a cost approach to value exploration properties. It is based on the premise that an exploration property is worth the meaningful past exploration expenditures plus warranted future costs to test remaining exploration potential. Results of past exploration work are analyzed in order to retain only those past expenditures that are productive in terms of identifying remaining potential. Warranted future costs comprise a reasonable exploration budget to test that potential."

Jan 1, 2002

By William E. Roscoe

"Mineral exploration properties are those on which an economically viable mineral deposit has not yet been discovered. Such properties are bought, sold, optioned and joint ventured on the basis of their perceived potential for the existence and discovery of a viable mineral deposit. The intrinsic value of an exploration property is therefore based on the exploration potential. One measure of the exploration potential is the amount that can be justified to spend on exploration for a viable deposit.The appraised value method uses a cost approach to value exploration properties. It is based on the premise that an exploration property is worth the meaningful past exploration expenditures plus warranted future costs to test remaining exploration potential. Results of past exploration work are analyzed in order to retain only those past expenditures that are productive in terms of identifying remaining potential. Warranted future costs comprise a reasonable exploration budget to test that potential.INTRODUCTIONThe purpose of this paper is to describe a cost approach to the valuation of mineral exploration properties and to provide some valuation examples. The particular cost approach described is the Appraised Value Method, which is best applied to mineral properties at the exploration stage.At present there are no comprehensive regulations or guidelines in Canada which specify what approaches and methods to use for the valuation of mineral properties. In this paper, the Appraised Value Method described is one method that the writer considers to be accepted industry practice for mineral properties at the exploration stage.Mineral properties are valued for a number of reasons, including mergers and acquisitions, non arm's length transactions, pricing of initial public offering of stock, support for property agreements, litigation, expropriation, and insurance claims."

Jan 1, 2003

By Lionel C. Kilburn

"This geological engineering method is based on jour main characteristics of mineral properties, viz; location: inclusion of valuable mineralization; inclusion of geophysical and/or geochemical targets; and inclusion of geological targets. These are subdivided into a total of 19 subcategories, which are used to determine the value of the property.The nineteen subcategories are prioritized and assigned relative value factors from 1.3 to 10. Value of each mineral claim unit is determined by applying the appropriate subcategory factors to a base value of $400per 16.2 hectare unit. Property value is calculated by totalling the values of such individual claim-units.The boundary between ore grade and sub-ore grade must be estimated for each property under valuation, thereby making the method sensitive to mineral commodity prices.A clear and disciplined sequence of decisions based on personal experience forms the basis of this method. The method utilizes all factors normally used to value a mineral property.IntroductionIt is generally accepted in the exploration industry that valuation of exploration properties is a subjective rather than objective process (Roscoe, 1986; Lawrence, 1988; Lawrence, 1989; Woodcock, 1985), and that it is greatly influenced by the experience and qualifications of the person who is doing the valuation. However, the significantly low degree of objectivity in mineral property valuation at this point in time invites effort to achieve a more quantitative engineering basis.Value of a mineral property depends basically upon metal prices, recoverable grades, mining and metallurgical practices, commodity supply and demand , and political-economic conditions, all of which vary with time. Therefore, any valuation is valid for only that point in time when it is made. Mineral deposits can decrease as well as increase in technical value with time."

Jan 1, 1990

By R. D. Lawrence

"Comparable transaction analysis is the best known of the market approaches to valuation of exploration-stage mineral properties. The analysis of option and farm-in agreements can also provide useful guidance to valuators. While such approaches can be distorted by incomplete analysis, market-based methods are capable of providing consistent, credible results when carried out carefully with due consideration paid to all factors which buyers and sellers consider when dealing in the real market. IntroductionMineral properties without defined resources present one of the most challenging tasks to the mineral valuator. This paper will concentrate on market-based approaches to valuation of such properties. Other authors at MM2000 presented papers on cost and income approaches. Sorentino (2000) also provides a useful overview with some provacative commentary on methods.Market based-approaches are based on the principle of substitution and include such techniques as: comparable transaction analysis (sometimes referred to as sales comparison analysis); farm-in commitment (or option agreement) analysis; rules-of-thumb; and comparable market value analysis.Are there any valuation standards available to assist the valuator? In Canada there are none that apply to the valuation of mineral assets or securities. This problem is being addressed, at least in part, by the CIMVal Committee of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM)1. Further, the recently established Canadian Association of Mineral Valuators will be giving consideration to the adoption of valuation standards."

Jan 1, 2002

By Ross D. Lawrence

"Comparable transaction analysis is the best known of the market approaches to valuation of exploration-stage mineral properties. The analysis of option and farm-in agreements can also provide useful guidance to valuators. While such approaches can be distorted by incomplete analysis, market-based methods are capable of providing consistent, credible results when carried out carefully with due consideration paid to all factors which buyers and sellers consider when dealing in the real market.RÉSUMÉRoss D. Lawrence graduated from the University of Toronto with a B.A.Sc. (Applied Geology-1956) and an M.Comm. (Mining Finance-1959). As a student and following graduation, he worked across Canada on a variety of mineral exploration projects.In 1962, he was one of the founders of Watts, Griffis and McOuat, and has practiced as consulting engineer since then. For the past 20 years, Mr. Lawrence has headed up the WGM valuation practice, responsible for a group of professionals which has carried out scores of valuations of mineral properties and mining companies. He is a Certified Minerals Appraiser of the AIMA and an active participant in professional affairs.INTRODUCTIONMineral properties without defined resources present one of the most challenging tasks to the mineral valuator. You will hear from others at this conference about the use of cost and income approaches to the problem of valuing exploration properties. This paper will concentrate on market-based approaches. Market based-approaches are based on the principle of substitution and include such techniques as:??Comparable transaction analysis (sometimes referred to as sales comparison analysis).??Farm-in commitment analysis??Rules of thumbAre there any valuation standards available to assist the valuator? In Canada there are none that apply to the valuation of mineral assets or securities. This problem is being addressed, at least in part, by the CIMVal committee of the Canadian Institute of Mining, Metallurgy & Petroleum (CIM)1. Further, the recently established Canadian Association of Mineral Valuators will be giving consideration to the adoption of valuation standards."

Jan 1, 2003

By William E. Roscoe

"Valuation methods are well established for mineral properties with production or imminent production, and include discounted cash flow and comparable transactions. Valuation methods for non-producing mineral properties, however, are more subjective. Non-producing mineral properties include those at various stages of exploration, properties at the prefeasibility or feasibility stage, properties with currently uneconomic mineral resources, and past-producers. Different valuation methods may be appropriate for different types of mineral properties.Income approach methods such as discounted cash flow and option pricing are generally not applicable to properties at the exploration stage. The market approach is generally appropriate to all types of mineral properties, although it is difficult to find good comparables because of the unique nature of mineral properties and the small number of transactions. Cost approach methods, such as appraised value and geoscience factor, are commonly used for exploration stage properties.Canadian standards and guidelines for valuation of mineral properties are in the process of being finalized by a Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum (CIMVal Committee). The CIMVal Standards are intended to be consistent with National Instrument 43-101, which sets regulatory standards of disclosure for mineral projects, and with International Valuation Standards. The intent of the CIMVal Standards and Guidelines is that mineral property valuation be carried out by appropriately qualified individuals and that all relevant information be disclosed."

Jan 1, 2003

By William E. Roscoe

"Non-producing mineral properties include those at various stages of exploration, properties at the pre-feasibility or feasibility stage, properties with currently uneconomic mineral resources, and past-producers. The market approach is applicable to all these types of non-producing mineral properties. Income approach methods such as discounted cash flow and option pricing are generally not applicable to properties at the exploration stage, but may be applicable to non-producing mineral properties with defined mineral reserves or mineral resources.The value of a non-producing mineral property depends on its perceived potential for the existence and discovery of an economic mineral deposit. The potential, in turn, depends on a number of factors which must be considered when choosing market comparables. These comparability factors include such items as geology, mineralization, stage of exploration and results, mineral resources, location and geography, and political jurisdiction. The date of the market comparables must be within a reasonable time period of the valuation date of the subject property. Although it is difficult to find good market comparables because of the unique nature of mineral properties and the small number of transactions, these difficulties are compensated for by analyzing a number of transactions on similar properties to develop a range of values for the subject property.For valuation purposes, market comparables can be expressed in terms of total property value, value per unit area (e.g., $ per hectare), or value per unit of metal contained in mineral resources (e.g., $ per ounce of gold, or $ per pound of copper). The market comparable value can be used to estimate the value of the subject property by using the total property value, unit area value or contained metal value."

Jan 1, 2003

By A. A. de Gast, R. B. James

"The metal content of ore blocks can be calculated by the use of many different methods. These methods range in sophistication from manual calculation to computer. oriented techniques. In this case a cubic polynomial regression model is developed to depict the grade distribution of an orebody. Mine production, in stope dimensions, is then simulated on a computer to predict the output of metal content. The volume, grade and variance of the grade are estimated by triple integration and matrix algebra. A case study shows reasonable agreement between the results from the mathematical model and the mine geologists' estimate of production and ore reserve grade and tonnage."

Jan 1, 1972

By A. Noël, R. Lapierre, M. Provencher

"Modem aluminum smelters are facing significant operating cost pressure. Key methods used by smelters to manage this pressure are automation and production-information systems to optimize processes, manage quality, anticipate problems and reduce operating costs. In 2002, Aluminerie Alouette Inc. began its Phase II Expansion project, and retained the joint venture of SNC-Lavalin and Hatch (SLH) as its engineering, procurement and construction management (EPCM) team. Alouette had the distinction of being one of the most efficient aluminum smelters in the world. Alouette already understood the importance of systems integration in project delivery. For Phase II, key objectives were identified to ensure ""a state of the art"" integrated architecture that would support Alouette's production goals to integrate the existing facilities with the expansion, to form a single efficient facility and meet project schedule and budget targets. Achieving those objectives within the context of a large project often creates major challenges due to the nature of the traditional EPCM delivery model, which relies on several vendors and third-party-systems integrators. In this case, an integrated Alouette-SLH team was made responsible for all aspects of the systems integration, taking over the task from most suppliers. The integrated team was responsible for delivering an automation system and plant-wide-production IT system for the new facilities while accommodating migration for the existing systems. Through the use of rigorous methodology and advanced state of the art technology, the IT and automation strategy led to significant value creation and is recognized today as one of the key factors of the project's success. The primary results were: fast and efficient start-up of facilities, due to quality programming and implementation; a plant able to operate as a single entity; automation and IT systems delivered before time and under budget; standard programming methods implemented throughout the plant; and reduced and simplified maintenance."

Jan 1, 2006

By J. A. E. Bell

"Inco has shifted part of its traditional extractive research effort at its J..Roy Gordon Research Laboratory in Mississauga toward new, value-added products. Most of the effort is being expended on new Ni powders for batteries and new Ni-coated products which will be produced in Inco's carbonyl nickel refineries. New products under development are Ni-coated powders, Ni-coated fibres and ultra-fine Ni powders. Other new products for advanced material applications include controlled expansion composites, NiGOLD strip, Thermal barrier coatings on Inco alloys, and plasma coatings.Research and Corporate Strategic ThrustsThe newest strategic thru st of the company is to increase the value of the primary metal products. These new products are to be in addition to any new alloys or downstream alloy fabrication.Historically Inco has had the highest research expenditures in the extractive metallurgy field in North America. This has resulted in many new processes including flash smelting , matte separation, fluid bed roasting, pressure carbonyl refining and cobalt electrowinning which have contributed to establishing Inco as the lowest cost nickel producer. The recession of the 1980s caused a restructuring of Inco research and corporate goals .As shown in Figure I, from 1975-1982, i.e. pre-recession, Inco spent around 33 million dollars per year on research. Some 48070 of that sum was spent in Corporate Laboratories in Sterling Forest in the United States and in the United Kingdom , mostly on alloy associated research. A further 10% was spent on alloy research at the alloy production facilities in Hunting- ton, West Virginia, and Birmingham and Hereford in the United Kingdom. On extractive research, 13% was spent by process technology groups at the plant s, 20% at the pilot plants in Port Colborne and 9% at the J. Roy Gordon Research laboratory.The relative research expenditures (Fig. 2) have decreased so that today they are at the same level as 1975-80. The research as a per cent of sales has been cut from 2.2% to 1.2% of normalized sales. A normalized sale price of $4.00/lb Ni was used in the 1988 figures. This was partly achieved by closing Corporate Laboratories. Most of the essential alloy research was moved to producing plants and total alloy research is now 27%.A new thrust initiated in the 80s was mining research which now accounts for 20% of research expenditures. Over a period of the past five years this research has doubled the mining productivity in Inco. The pilot plant expenditures have been cut in half. One entire research station at Port Colborne was converted into a platinum group metals intermediate refinery. The decrease in pilot plant expenditures has been compensated by full scale plant trials devoted to the S02 abatement program at Sudbury."

Jan 1, 1990

By M. H. Moys, J. A. Finch, A. R. Laplante

"A detailed review of ball milling circuit control practices in industry has been carried out. Based on fundamental process performance objectives, a standard system for base-level control of most ball mill installations is presented. This system is simple, inexpensive, and provides the major economic benefits available from contemporary automatic control technology.Value Analysis of Grinding OperationsValue analysis (or engineering, or management), originally developed by Lawrence D. Miles of the General Electric Company (1), focuses on the identification of value (product or process worth versus cost) and provides a systematic procedure for its improvement. A recent research and development project involving the application of the principles of value engineering to grinding operations has provided a basic technoeconomic model of grinding processes (2). The functional objectives of the ball milling process and the means to achieve value based grinding circuit control originate from this study.The Need for Grinding Circuit ControlThe economic effectiveness of a process is determined by the quality or value of the product and the related processing costs. If the inputs (both the raw feed and the applied processing work) are absolutely constant, the product characteristics and the process efficiency will be determined only by the engineering design. The need for and degree of process control is therefore determined by the nature of variations or upsets in the process inputs, and the extent to which these effect product value and operating costs."

Jan 1, 1988

By M. J. Fairweather

"The nature of minor element values and impurities are important both in the assessment of new properties and in the continuing improvement of operating plants. Impurity elements are frequently present as fixed solid solution impurities in association with the constituent minerals of a deposit or process streams in a concentrator. This paper uses five case studies to illustrate the application of simple regression analysis to the evaluation of minor element distribution in both operating mines and new deposits using analytical information readily available. This information maybe used to determine opportunities for improvements to the performance of an operating mine, to the economic assessment of anew deposit, or to the subsequent planning of an experimental study.IntroductionThe nature of minor element values and impurities are important, both in the assessment of new properties and in the continuing improvement of operating plants. Minor element values often contribute appreciable incremental revenue to a complex base metal deposit. Examples of valuable elements include precious metals, but may also include elements such as indium and bismuth which can be recovered at a profit by smelters provided with the necessary recovery circuits. During preliminary metallurgical studies of a new property there is usually a strong incentive to maximize the recovery of such valuable by-product elements. For example, the extent to which the by-product gold in a porphyry copper deposit is associated with chalcopyrite rather than pyrite may determine theeconomics of developing a new property.The nature of impurity elements in base metal concentrates is correspondingly important in minimizing the penalties which may be imposed by smelters in the treatment of such concentrates. Penalty elements include silica, dolomite (magnesia), arsenic, antimony, mercury, nickel and cobalt. The mineralogical association of these minor elements determines the ability of the mine to remove them in the concentrating process. This paper discusses means of assessing the mineralogical nature of such impurities without the use of sophisticated micro-analytical techniques."

Jan 1, 1997

By Michael Samis

NOFLEX valuation results ? CF deviations and net CF risk discount factors ??Cash flow deviations indicate average cash flow variability. ??Net cash flow riskdiscount factors (NCFRDFs) indicate the size of the risk adjustment applied to a cash flow. NCFRDFs profile should change with variations in cash flow uncertainty since the risk adjustments applied to the project cash flow reflect investor sensitivity to uncertainty.?DCF and RO will often produce different NCFRDFs for the same project since they use different methods of risk-adjustment.

May 1, 2006

By Robert T. McKnight

"Traditional techniques for valuing resource projects companies have been primarily based on discounted cashflow methods (DCF) or by comparison to similar projects with an apparent market capitalization. Many resource projects are really forms of options to invest rather than a future cashflow stream. Employing the DCF method to value a resource project which is really an option to invest, can dramatically underestimate the real value of the project. The analytical tools required to evaluate options, while more complicated than the usual spreadsheets used for DCF, are becoming more easily available and usable by managers. This paper will discuss the background of options valuation and some of the tools which will make it easier for managers to estimate the value of projects and companies which have significant real option values.ResumeBob McKnight is a graduate of the University of British Columbia in Geological Engineering, supplemented by an MBA from Simon Fraser University. Following several years in the oil patch with Cities Service and Brascan, Bob returned to Vancouver in 1979 to work for Wright Engineers. He subsequently went on to work for Cassiar Mining, Getty Resources and Endeavour Financial before joining Pincock Allen & Holt Ltd. in 1998. His experience ranges from exploration to feasibility studies, financial evaluations of mining and oil & gas projects, due diligence, project finance, valuations and mergers and acquisitions. He has extensive international mining experience pertaining to such countries as Chile, Mexico, Uruguay, Thailand, Indonesia, Angola, Papua New Guinea, Kazakhstan.What are Options?Options have been around for centuries. They were familiar to Roman and Phoenician traders who were shipping cargoes from Mediterranean seaports. In the financial world, options are types of contracts that generally include the right, but not the obligation, to buy or sell a share, currency or commodity. The underlying commodity price or share price changes are assumed to be lognormally distributed. In this context, options are of two general types, ""call"" options and ""put"" options. Call options have the characteristic of having the right to buy a tradable commodity or currency at a predetermined price for a specified period of time. For the owner of call options, they become more valuable as the price of the underlying commodity increases. For the seller of call options, these options become an increasing liability as commodity prices rise, since there is the obligation to sell the commodity at a predetermined (perhaps lower-than-market) price. This characteristic of call options recently became high profile with the sharp rise in gold prices last year. The value of gold call options sold by certain producers increased their associated liabilities to the point where margin calls were made."

Jan 1, 2003

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