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By G. A. Bezuidenhout, J. P. T. Kapusta, D. K. Chibwe

"Peirce-Smith converters (PSCs) are extensively used in the copper, nickel, and platinum group metals industries. The typical converting operation involves lateral purging of air into molten matte through a bank of tuyeres. This blowing operation occurs at low pressure from the blowers, resulting in a bubbling regime that is considered inefficient from both a process and an energy utilization perspective. Inherent drawbacks also include recurrent tuyere blockage, tuyere punching, and low oxygen efficiency.Western Platinum embarked on a full-scale industrial evaluation of generating a jetting regime by using sonic injection. Prior to industrialscale tests, a numerical assessment to ascertain the feasibility of implementing sonic injection into a PSC was conducted. The work included flow characterization at high-pressure injection achieving sonic velocity at the tuyere exit. The 2D and 3D simulations of the three-phase system were carried out using the volume of fluid method together with the RKE turbulence model to account for the multiphase and turbulent nature of the flow.This paper discusses the key findings in understanding plume extension, velocity distribution, shear wall stress analysis, and phase distribution characteristics in the system. Plant trials are also discussed with reference to the commercial aspects of a full-scale implementation of sonic injection in the smelter."

Jan 1, 2015

By R. J. Dippenaar, J. C. van den Berg

This paper describes an investigation into the prereduction of hematite fines in a fluidized-bed reactor as a means by which they can be prepared for direct smelting in a transfered-arc plasma furnace. A single-stage fixed fluidized bed reactor using the in situ gasification of coal was employed. It is shown that the hematite is reduced to magnetite at 1000 QC, the degree of reduction being limited by the inherent shortcomings of a single-stage reactor in which both the gasification and the reduction reactions have to occur. Methods by which the degree of reduction can be increased are suggested. The gasification process was studied in some detail, and three different reducing agents are compared. The dominating effect of the Boudouard reaction on the behaviour of the fluidized bed is clearly illustrated. Non-coking coals of high reactivity are best suited to this process, a finding that would complement the trend away from coke as a metallurgical reducing agent.

Jan 1, 1989

By G. J. Wright, M. J. Neale

As machines become more complex and vital to our way of life, any disturbance or failure of their proper functioning tends to have serious consequences. To prevent such failures, increasing attention is being paid to techniques for the monitoring of machinery condition or 'health'. Of the many methods available, examination of the lubricant and any particles it contains forms a basis for interpretation of the conditions of operation, and the rate and severity of degradation of the moving parts, in a machine. Many techniques of wear-debris analysis, such as spectrographic oil analysis and ferography, are available indicate the composition, shape, size, and concentration of contaminants in a lubricant. This paper reviews the important aspects of wear-debris analysis as an integral component of machinery condition monitoring, and gives an insight into the selection of appropriate techniques and the information that can be obtained from each.

Jan 1, 1987

By S. Carter

this paper describes an innovation in computer software that permits mining professionals to collaborate on exploration and mining projects regardless of geographic location. Growth of mining companies through merger and acquisition has created a greater need for mining professionals to collaborate, especially as projects and project participants are becoming geographically remote. Surpac NetVision, the name given to this new collaboration technology, satisfies this need by deploying interactive 3D graphics sessions across computer networks. It achieves this by using common web browser technology as the deployment medium. A plug-in architecture that supports diverse file formats permits transparent read and write of foreign data to further enhance the collaboration process. Surpac NetVision supports any number of connections from web browsers on remote computers using existing networks. Software components required to enable the collaboration session are deployed to the remote computer as required and cached for future sessions. The collaboration session at each computer is characterized by a fully functional replica of the user interface for Surpac NetVision from which any function can be executed by any client, at the owners discretion. All geometry and display attributes deployed to remote clients to render 3Dgraphics are highly compressed to reduce bandwidth requirements. The key benefits of this collaboration technology is improved communication in regard to exploration and mining projects leading to: •More informed decision making •Improved deployment of project objectives and plans beyond the technical planning group to project management and operations staff •Improved technical support for software users. Keywords: 3D graphics, project collaboration, interactive graphics, internet 3D graphics, mining software

Jan 1, 2003

By G. C. Howell, H. A. D. Kirsten

The mining-induced effects around narrow tabular stopes have traditionally been evaluated in terms of elastic continuum analyses. An understanding of the phenomenological behaviour of the rock surrounding deep-level gold mines has accordingly been developed on the basis of such analyses. However, elastic analyses do not afford reliable representations of the behaviour of rock in which failure may occur on discontinuities. This paper describes investigations that show how the stress and stiffness characteristics of a rockmass are affected under such circumstances for representative ranges of values for the relevant parameters (depth, span, support stiffness, field stress ratio, and discontinuity strength). These investigations afford a substantially different understanding of the mechanical behaviour of rock that is subject to failure. Instead of forming an arch across the abutments, the rock in the hangingwall bears directly across the stope onto the footwall and, instead of being subjected to tension, the nether hangingwall is clamped in compression in the horizontal direction.

Jan 1, 1993

The spatial distribution of copper grades at the Mansa Mina project is highly variable due to the presence of high grade copper/silver/arsenic breccia bodies. Copper grades within the breccia bodies tend to average about 4.5% copper while grades in the surrounding stockwork average about 1.0%. The breccia is known to occur in the vicinity of significant controlling structures, however, the outline and therefore the thickness of the bodies are far from regular. Due to the high grade of these bodies a significant proportion of the value of the project is derived from the breccia tonnages. The irregularity in the outlines/thickness translates into an uncertainty in the breccia tonnage and therefore in the value of the project. Acknowledging the economic importance of the breccia bodies and the risk associated with the breccia tonnage uncertainty, significant additional drilling has been proposed to both understand the spatial distribution of the breccias and reduce project risk. The costs associated with this additional drilling are not inconsequential; thus, a reasonable question is ‘what value is derived from this additional drilling’? To obtain an answer to this important question, a simulation approach is applied. First the deposit is simulated using the existing drilling and the uncertainty in the resource is defined. Next the proposed drilling program is simulated and the simulated data are added to the existing data. Using this expanded data set a second simulation of the deposit is created and once again the uncertainty in the resource is defined. Using this approach, the reduction in the uncertainty in the resource can be determined. To convert this reduction in uncertainty (or reduction in risk) in the stated resource into a dollar value, a method of defining the increase in the project rate of return necessary to account for risk is presented. Using the two different rates of return, the difference in project NPV and hence the value of additional drilling is determined.

Jan 1, 2003

By B. P. Watson

The first crush pillars on the Bushveld platinum mines were introduced at Union Section in 1978. Before the introduction of crush pillars, serious problems were experienced when stoping advanced to a point 30 m to 40 m on both sides of the centre gully. At least three to four stopes were collapsing per month. The introduction of the pillars stopped the stope collapses in the mining area where they were introduced. The residual stresses of these pillars were never measured; however, the successful elimination of the ?back-break? problem suggests that the original pillars had a residual strength of at least 8 MPa. Apart from back analyses, very little work has been done to determine the residual strength of crush pillars and only very recently have any measurements been made. The lack of knowledge in this field has resulted in pillars being designed based on experience. Concerns about stope collapses, similar to the Coalbrook disaster, have led to larger pillars being cut in more recent times. If such pillars were cut in brittle quartzites they would always fail violently but the ductile nature of the Merensky Reef generally allows large pillars to fail without bursting. Occasionally, however, one would burst in a working area. Increased incidence of bursting has been reported on some mines at deeper levels but most of these bursts occur in the back areas. Nevertheless, the incidence of bursting increases the risk of falls of ground in already dangerous areas, and the larger pillars decrease the extraction ratio. This paper describes the evaluation of stress measurements conducted in two boreholes over a crush pillar with dimensions 2.5 m x4.0 m, and a height of 1.2 m. Boussinesq equations for vertical and shear stress were used to analyse the original measurements and provide a stress profile across the pillar as well as the residual strength of the pillar. The results showed an unexpectedly high peak stress of 280 MPa at the centre of the pillar and a residual strength of 48 MPa. The reason for the high residual strength is suspected to be the result of the stiff environment under which the pillar failed and the small height of the siding on the up-dip edge of the pillar. More measurements should be conducted on several mines to establish a range of residual strengths for narrow crush pillars.

Jan 1, 2008

By E. Harris

Frithia humilis is an endangered succulent plant species. Its distribution range overlaps with the coal fields of Mpumalanga and it is therefore threatened by opencast mining activities in particular. One of the 11 known populations of F. humilis was translocated from a licensed coal mining site to three suitable receptor sites within the species? distribution range. A longterm monitoring programme was initiated to track the progress of the newly established populations. Temporal trends in population demography, size classes, and fecundity were recorded. Population numbers of size classes fluctuated annually. However, flower frequency increased over time and seedling recruitment contributed significantly to population growth. Receptor sites with similar geological conditions to the donor site had more persistent cohorts, which suggest that such sites should receive priority during the translocation of endangered edaphic specialists. This study not only confirms that a Frithia humilis population can successfully establish after a translocation, but also serves as an important baseline for future comparative purposes to gauge the long-term success of the translocation effort.

Jan 1, 2014

By S. Northey, N. Haque, S. Stoddart, W. Bruckard

Development of new technologies and procedures for managing mineral residues and wastes may benefit from a clear understanding of existing tailing management practices. There is a considerable variability in tailing management techniques used in the Australian copper and gold operations, with associated differences and flow-on effects for the mine site water balance. A database was created, capturing a total of 41 copper and gold processing operations in Australia. The database provides information on tailing generation rates, tailing properties (solids contents and particle size distributions) and tailing storage facility (TSF) types and configurations (e.g. total TSF surface area and wetted surface area). Significant variability was found for the above-mentioned parameters. The solid tailing generation rates ranged from 0.5-37 Mt per annum in 2015. Furthermore, both the solids contents and particle size ranges of the tailing were highly site-specific, and largely dependent on the processing flowsheets. Solids contents of tailings ranged from 45-74% by weight whilst P80 sizes of the concentrator (flotation) feed varied from 75-185 μm. The estimated pumping distance was up to 15 km. The presented data can potentially be used to better tailing management strategies by estimating the potential recoverable water and recycling it, thereby thus reducing tailing footprints. Keywords: Tailing management, tailing storage facility, water balance, mine site, flowsheeting

Jan 1, 2020

By F. F. Roxborough, P. King, E. J. Pedroncelli

This paper describes tests on the performance of a continuous miner in cutting South African coal. Although coal cutting has been investigated extensively overseas, the results have not led to significant changes in machine design because these machines find little difficulty in cutting the softer overseas coals at a fast rate. In general, the results of the tests show that cutting efficiency improves markedly as the depth of cut per revolution of the drum increases, and that the best spacing of picks on the drum is twice the depth of cut. Pick shape is of secon¬dary importance in terms of cutting efficiency, only small differences having been found between the performances of conical- and chisel-shaped tools.

Jan 1, 1981

By R. Lombard

"Water is a very important component in the production process at underground coal mines. Current unfavourable economic conditions have forced the coal mining industry to identify and address every possible bottleneck preventing optimal production. An increase in water-related downtime was identified as one of the bottlenecks at Goedehoop Colliery’s Vlaklaagte Shaft. The purpose of this project was to identify the various causes that contributed to the high downtime (501 hours in 2013, which led to a potential profit loss of R12.9 million) and to suggest possible solutions.After a thorough investigation the main causes of water-related downtime were identified as low water pressure and low water flow caused by pipe leakages and bursts. The main root cause for the low water flow and pressure was identified as being the low pressure resistance (1600kPa) of the thin-walled galvanized steel pipes used in the underground inbye water reticulation system. The pipes were selected according to the previous 1000 kPa pressure requirement for the continuous miner. However, the pressure requirement changed to 1500 kPa, which resulted in the pipes being exposed to much higher pressures than designed for.The water reticulation system was reviewed and current and future underground pipe layout and water requirements were determined for the shaft. The time frame in which the water consumption would be the highest was determined to be between 1 January 2014 and 7 September2014. Machine and sprayer specifications were used to determine theater consumption at the shaft. Three different solutions were considered to solve the water-related downtime problem and to ensure the efficient supply of water to the newly open sections. Permanent underground concrete dams, semi-mobile dams, or new pipe columns with a higher pressure resistance of 3200 kPa were considered. A trade-off study (taking into consideration cost, time to completion and ease of implementation, maintenance requirements, safety, and flexibility) was completed to determine which of these solutions would be most viable.Paper written on project work carried out in partial fulfilment of B. Eng. (Mining Engineering)"

Jan 1, 2015

By N. Fardin, O. Stephansson, L. Jing

A pair of silicon rubber replicas of size 250 mm by 250 mm, from a natural rock joint, was used to produce several high strength concrete fracture replicas of different sizes, from 50 mm by 50 mm to 200 mm by 200 mm. The morphology of the concrete fracture replicas were digitized at the laboratory using a 3D-laser-scanning machine with high accuracy and resolution. The scale dependency of the geometrical properties, including surface roughness and aperture, of the samples were investigated using fractal method. The investigation was extended to study the scale effect on the mechanical properties of the concrete fracture replicas. Four concrete replicas having same geometry from each sampling size were sheared under four different normal loads. The results show that normal and shear stiffness and peak shear strength decrease with increasing sample size and decreasing normal stress. It is concluded that for accurate determination of geometrical and mechanical properties of rock joints in the laboratory and field scales, samples with size equal to or larger than stationarity limit are required. Silikongummiabdrücke der Größe 250 mm x 250 mm einer natürlichen Kluft dienten als Vorlage für mehrere Hochfestbeton Rissreplikas verschiedener Größe. Die Morphologie der Beton Rissreplikas wurde mittels eines 3D-Laserscanners hoher Genauigkeit und Auflösung im Labor digitalisiert. Die Skalenabhängigkeit der geometrischen Eigenschaften, dies inklusive Oberflächenrauhigkeit und Öffnungsweite, wurden mittels Fraktalen bestimmt. Die Studie wurde durch die Untersuchung der mechanischen Eigenschaften der Betonrepliken erweitert. Hierbei wurden vier Betonrepliken der selben Geometrie jeder Probengrösse unter vier verschiedenen normalen Belastungen abgeschert. Die Ergebnisse zeigen das sowohl Normal- und Schersteifigkeit als auch die Spitzenscherfestigkeit mit zunehmender Probengrösse und abnehmender Normalspannung abnehmen. Es hat sich gezeigt, daß für eine genaue Bestimmung der geometrischen und mechanischen Eigenschaften von Felsklüften im Labor und im Feld Proben einer Größe gleich oder größer des stationären Limits verlangt werden. Deux répliques en gomme de silicone d’une fracture naturelle, de dimension 250 mm par 250 mm, ont été utilisées pour produire des répliques en béton de haute résistance de dimensions allant de 50 mm par 50 mm à 200 mm par 200 mm. La morphologie de ces répliques a été digitalisée au laboratoire à l’aide d’un laser-scanner 3D haute résolution et haute précision. L’influence de l’échelle des propriétés géométriques, incluant rugosité et ouverture, a été étudiée en utilisant la méthode des fractales. Des essais complémentaires ont été réalisés afin d’étudier l’effet d’échelle sur les propriétés mécaniques des répliques de fracture en béton. Quatre répliques béton de même géométrie pour les différentes tailles d’échantillons ont été cisaillées sous quatre valeurs de contrainte normale. Les résultats montrent que la rigidité normale et tangentielle ainsi que la résistance de pic diminuent en proportion de l’augmentation de la taille de l’échantillon et de la diminution des contraintes normales. On peut en conclure que, pour une détermination précise des propriétés géométriques et mécaniques des fractures au laboratoire et sur le terrain, des échantillons de taille égale ou supérieure à la limite stationnaire sont nécessaires.

Jan 1, 2003

By A. Nkolele

Paper written on project work carried out in partial fulfilment of B. Tech (Metallurgical Engineering) degree Fine coal of the Goedehoop Colliery is dewatered by centrifuging before being sold. Full-scale plant tests were carried out to reduce residual cake moisture by the addition of surfactants. It is believed that by modifying the interface between the coal surface and the adherent surface water, as well as the water occluded in the cake voids, drainage is improved. Two anionic surfactants at concentrations up to 150 g/t were tested on coal of <0.5 mm size. The results demonstrate that quite high additions of surfactant (80 g/t)were needed to reduce moisture from 20 to about 17?18%. It was observed that when increasing surfactant additions at low levels, within a very narrow concentration range, the retained moisture first increased sharply only to decrease sharply immediately thereafter; this effect points to a critical surfactant concentration. Based on the obtained results, the use of surfactants cannot be recommended at this stage; further investigations under more controlled conditions are required.

Jan 1, 2004

By M. Bwalya, L. Mabokela, L. C. Woollacott

This paper presents a study on the ability of the King stratification modelto describe density stratification patterns that are achieved under idealizedconditions. Tests were conducted in a batch jig using artificial particles inseven density classes. All particles in a density class had essentially thesame density, size, and shape. Tests were conducted for particle systemsinvolving from two to seven components. Good agreement was obtainedbetween measured and modelled data to an extent that gave strongendorsement of the mathematical appropriateness of the core equation inthe King model. Somewhat ambiguous results were found with regard toclaims about the independencies of the single experimentally-determinedparameter required by the model.

Jan 1, 2015

By S. Plaatjie, L. Linzer, M. S. D. Manzi, M. Sihoyiya

Fiber-Optic Sensing and UAV-Platform Techniques for Innovative Mineral Exploration (FUTURE) is a joint European Union and South African consortium project funded under ERA-NET Cofund ERA-MIN3. The project aims to develop cost-effective and novel seismic methods to image geological structures ahead of the mine face, ultimately leading to improved decision-making and safer mining practices. In this study we present results from numerical simulations conducted at South Deep Gold Mine for active in-mine seismic surveys. The study uses a finite differencing code known as WAVE3D, which models models the propagation of a seismic wave generated by stress pertubations that are applied to a defined grid. The numerical simulation model included two major ore bodies (Black Reef and Ventersdorp Contact Reef) and mine tunnels. The model was constrained using laboratory physical property measurements from underground borehole samples such as seismic velocities (e.g., compressional and shear waves) and bulk densities. Two case studies were created, one modelled the active shots and receivers on surface, and the other modelled the shots at depth (in a mine tunnel at ~4000 m depth) with receivers on surface. In both cases, the objective was to investigate the wavefield propagation through the rockmass between the mine tunnel and surface. The simulated wavefield produced by the source located along the mine tunnel was successfully recorded on surface. The surface-recorded wavefield exhibits clear one-way P-wave arrival times at approximately 450 ms to 500 ms, which can be used to calculate the surface-tunnel P-wave refraction tomogram. The results from the study were used to constrain the design, and for the acquisition and processing of the real surface and in-mine seismic surveys acquired under the FUTURE project.

Jan 12, 2025

By P. J. Rider

Diamond Value Management?s objective is to achieve $/ton revenue improvement across De Beers group mines. The respective %improvement contributions are measured against targets set by each of the operations. Degree of target achievement is measured via a maturity model at each operation. DVM comprises seven elements. It spans several value chain facets and various collaborative projects are conducted under its umbrella. New technologies in De Beers are also evaluated from a DVM perspective.

Jan 1, 2003

By P. Valicek, M. Farren, R. G. B. Pickering, G. Harrison, P. van Dorssen, W. Joubert, H. J. van Rensburg

Introduction In South African metalliferous mines, stoping operations are largely confined to narrow, tabular orebodies making mechanization extremely difficult. Limited flexibility in terms of stope width has necessitated drilling by means of hand held, pneumatic rock drills at most of our operations. As the largest producer of platinum in the world, we drill in excess of forty million stope blast holes per annum. Cleaning of the broken ore is also done by conventional means—utilizing scrapers and scraper winches. Conventional methods such as these carry high costs in terms of risk exposure as well as labour intensity. The purpose of this paper is to describe the development of a long hole stoping system suitable for the narrow platinum reefs. The new system had to be substantially safer and more cost effective than conventional mining. We selected a site that was conducive to mechanized mining and set out the parameters that we considered would meet our requirements. We then conducted a feasibility study to evaluate the conceptualized long hole stoping system in terms of specific goals. An analysis of the proposed system identified the Key Performance Indicators (KPIs). One of the most critical goals was to be able to create a man-freestope. This would mitigate the safety risk associated with normal stoping operations, as well as the inefficiency cost previously referred to. Other challenges included setting targets for long hole accuracy, stoping width reduction and specific blasting system performance for long hole stoping. We also modelled a critical span that we considered to be inherently safe and to ensure hangingwall stability, throw-blastcleaning and overall system productivity. Anglo Platinum Research and Development and Sandvik Tamrock entered into an agreement for the supply of a specialized long hole-drilling machine. The system was implemented and tested by the mine with the support of the other participants. The results achieved met our expectations. It was demonstrated that with this method of mining it is possible to have a man-free/support-free stope face and to achieve a reduction in shaft head cost per ton whilst reducing dilution. Key performance indicators assessed during the trial •Safety targets •Mining layout •Drill rig •Production targets •Support requirement •Explosives requirement •Services requirement •Ore removal and cleaning requirement •Training requirement Safety targets All persons involved with the project had to adhere to the mine’s safety programme including the zero-tolerance campaign, and were required to report all hazards observed immediately. Mine personnel and Tamrock carried out a full risk assessment on the drill rig before transporting underground. A further risk assessment was carried out when the machine was in position underground. Mining layout See Figure 1 and Figure 2 for a detailed description. Drill rig The drill rig was a combination of a Secoma P-Low LC 10long hole feed and an Axera low profile carrier. The choice of this equipment was made through consultation with Tamrock Sandvik. All relevant design perimeters of the area to be mined were taken into consideration. Production targets

Sep 1, 2001

By X. Ndlovu

Underground observations in a coal mine have indicated failure oft he immediate roof above the bords. Careful observations and photographic recording of occurrences of these roof failures, termed ?roof guttering?, have been made. The occurrence of guttering results directly in roof instability, and indirectly, due to the interaction of the guttering with natural planes of weaknesses in the immediate roof rock. In this paper, relevant observations of roof guttering, possible mechanisms of formation of roof gutters, laboratory testing for determination of material strength and deformation properties, and numerical analyses to explain underground observations are described. Mapping of roof failures showed that these took place mainly towards the centre of the roadways. Roof guttering was observed often to occur violently and with little warning. Occurrence of roof guttering has a negative impact on production?some panels are abandoned, production times are increased and safety of workers is compromised. The numerical stress analyses showed that, although none of the constitutive behaviour criteria used predicted the observed underground failures correctly, the extension strain criterion gave the best agreement.

Jan 1, 2007

Interpretation of Leached Outcrops, by Roland Blanchard. Published by Nevada Bureau of Mines, University of Nevada, Reno, Nevada, 89507, 1968, 188 pages. Price $7.50 (R5.40). This book contains a summary of the author&apos;s knowledge of leached outcrops, derived from some 30 years&apos; experience as a geologist operating mainly in the United States of America and Australia. Part 1 of the book provides a comprehensive coverage of the various processes and substances involved in the oxidation of many minerals, under different climatic conditions, to form the final leached products. In Part 2, details are given of the appearance and composition of the oxidation products of the following minerals: pyrite, pyrrhotite, arsenopyrite, cha1copyrite, cha1cocite, bornite, tetrahedrite, oxidized copper minerals, galena, cerussite, sphalerite, molybdenite, chromite, hematite, magnetite, manganite, pyrolusite, calcite, siderite, fluorite, salite and supergene silica. The illustrations, the black and white photographs and the colour plates of oxidation products are of a high standard. The material is presented in a logical order and in terms which are not over-technical; hence it is useful to persons other than trained geologists. Despite the advances in geophysical and geochemical prospecting, the location and interpretation of gossans remains an important method of discovering ore bodies, particularly so since the correct interpretation of a leached material can prevent the fruitless and expensive prospecting of an underlying body of uneconomic concentration. Therefore it is considered that this volume will be a valuable addition to the libraries of universities, exploration companies and geologists. It is of interest to note that the author, who died in 1966, presented a paper, under the same title as this book, to the Chemical, Metallurgical and Mining Society of South Africa in 1939. For this work he was awarded the Society&apos;s Gold Medal. W.T.S.

By S. A. Abdel Sabour

Strategic decisions in the mining industry are made under multiple technical and market uncertainties. Therefore, to reach the best possible decision, based on information available, it is necessary to integrate uncertainty about the input variables and model financial risk of the project?s merit measures. However, this provides few useful insights to decision-makers unless accompanied by modelling management responses to uncertainty resolutions. It is widely acknowledged that conventional decision-support methods based on static, no-change, discounted cash flow (DCF) techniques such as net present value (NPV) and internal rate of return (IRR) tend to provide inaccurate value estimates. This could mislead the strategic decision-making process and result in significant value losses. This paper aims to model financial risk related to uncertainty about market variables such as metal prices and foreign exchange rates. Other sources of risk that are related, for example, to geology and production costs are not considered in this work. The article outlines a flexible financial model that integrates uncertainty about market variables and management flexibility to react to uncertainty resolutions into mine project valuation using a real-options valuation technique based on Monte Carlo simulation. Significance of information generated from this simulation-based flexible valuation model to the strategic decision-making process is tested using an illustrative case study of a Canadian mining project. The project is a typical multi-metal, open pit mine that produces copper and gold. In this case, there are three uncertain market variables, which are: copper and gold prices and US$/CAN$ exchange rate. Financial valuations are carried out using both the conventional static DCF method and a flexible real-options model. In the flexible model, management flexibility to decide whether to go ahead with the next expansion or terminate production operations is integrated. Results show how the flexible financial model can enhance the decision-making process.

Jan 1, 2009