Search Documents

"Chairman: Professor J. C. Griffiths Rapporteur: Mr J. P. G. PRETORIUSPapers:Mine-mill production scheduling by dynamic programming by R. J. Roman Optimization of a large mining venture by J. C. Paynter, B. K. Loveday and C. G. Robinson Economic surface mining of multiple seams by T. V. Falkie and W. E. PorterIn introducing his paper, Mr Roman said that whereas in manufacturing plants the yearly production levels were usually chosen to produce the largest annual cash flow, in a mining operation, the raw materials (ore) were exhaustible so that the production had to be scheduled to maximize the total net present worth of the operation. This optimum production schedule could be determined by using dynamic programming. The required information was readily available to management at most mines. The 'possible operating range' of production rates lay between the rate with the highest profit per ton. and that with the highest profit per year. The optimum production rate started typically at the top of this range and decreased slowly as the deposit was depleted.Dynamic programming was used to determine several production schedules for a hypothetical mine-mill complex. The effects of changes in the ore grade estimates, size of deposit and acceptable rate of interest on the production schedule were taken into account. Apart from the fact that the net present worth of the overall profits was larger than that obtained by conventional methods, it appeared from the cases studied that the amount of metal recovered was also greater.Dr it P. King commented that this was a very interesting application of dynamic programming. He pointed out, however, that the market price of the metal was likely to vary significantly and randomly during the life of the mine, and he suggested that the problem should, therefore, be reformulated as a stochastic dynamic programming problem.If the price of the metal rose to abnormally high levels, a much higher than normal production rate could be expected. The results of analyses given in Table 5 showed that the production rate was a function of market price. In his view the stochastic problem could be solved just as easily as the deterministic problem.In reply to a question by Dr King as to whether the function relating recovery to production rate (Table I) was based on real data, the author replied that it was based on the results of an analysis conducted at the Union Carbide Corporation's Pine Creek tungsten mine in California.Dr D. M. Hawkins stated that costs were incurred when the production rate was altered, for example, in appointing or laying off staff, and that in practice it may be necessary to take these costs into account in finding the optimum production rate. Mr Roman replied that, while normal administrative costs were accounted for, the additional costs incurred in appointing and laying off staff were not taken into account."

Jan 1, 2014

"Chairman: Mr. K. F. LaneRapporteur: Mr C. T. ShawPapers:Design of crushing plant flow sheets by simulation by T. GurunThe impact of transportation networks upon the potential supply of base and precious metals from Sonora, Mexico by P. de V. Harris and D. E. EurestyProfitability sensitivity analysis of a mining venture by C. A. Beasley and E. P. PfleiderTechnological innovation and its potential effect on the opening of new gold mines in South Africa by N. C. JoughinMr Turgay Gurun, in presenting his paper, indicated that this simulator was no purely theoretical exercise, but that the model had been used in the design of crushing plants of capacities ranging from 3 000 tons per day to 66 000 tons per day, and that recently the design of a plant of capacity of 99 000 tons per day had been studied.The crushing plant simulator was an independent portion of a much more comprehensive simulator for the design of a. complete recovery plant. It would be possible to use each section of this simulator on its own, and simulators would be designed to cover flotation concentrates, cash flow analyses of the entire project, and so on.Each simulator would be backed by a comprehensive data bank. For example, the crushing plant simulator was backed by such a data bank which included the performance and cost data from five manufacturers for an average of 30 items of process and materials handling equipment each. This meant that data preparation involved generally less work than would be required for a manual calculation. On average, data preparation for one run took 30 minutes and three minutes of computer time on an IBM 360/40 completed the run. The model could be valuable as a design tool in that it allowed the designers an opportunity to make a thorough examination of many alternative designs. It was also of value to plant operators as it could be used to predict the consequences of operating decisions.This paper generated much interest and there were numerous questions and contributions, so many, in fact, that the discussion had to be cut short.It was pointed out by Mr K. F. Lane that crushing plants represented a very large capital investment. A plant designed for 40 000 tons per day at 98 per cent efficiency might well in practice be run at 50 000 tons per day at, say, 83 per cent efficiency. He asked how, therefore, their design could be investigated without building economic criteria into the model? The author conceded that this was a tender point. He would have liked to have given facilities for more variability of the metallurgical information. He pointed out, however, that while there was no overdesign for conservatism built into his system, some overdesign was inevitable as the performance characteristics given by the manufacturers were generally conservative. Also, in his system, if lower recovery was allowed for, the system would nut through more tonnage."

Jan 1, 2014

By Randy McMeekin, Chris Twigge-Molecey, J. Peter Blake

The business objectives of a metallurgical project determine targets and constraints, such as the range of products, production capacities, in-service dates, and capital and operating cost parameters. Permitting is usually left to the project team, as are decisions regarding site location, technology, and construction approach. Success requires an orderly methodology, represented in this book by front end loading (FEL) phases: FEL1 examines several alternative approaches; FEL2 ranks and eliminates less economically or technically attractive options; and FEL3 develops the preferred option to the point of major permit completion, with defined scope, schedule, and cost to submit for approval to proceed with implementation in FEL4. Working through FEL1, FEL2, and FEL3, the project definition improves, estimates become more accurate, and project risks are reduced. The project design basis at the end of FEL3 is the control document for project implementation in FEL4.

Jan 1, 2015

By C Pope, M Tannock

Mining exploration and development projects in Australia are being negatively affected by the highly complex regulatory and bureaucratic processes at all levels of government. These processes affect mining companies operating in Australia by impacting on timelines and the cost of developing a mining project. It is not uncommon for the granting of project approvals to take in excess of five years, meaning that mining companies struggle with productivity, efficiency, time frame and cost issues in respect to their projects in Australia. As the mining boom in Australia is moving from the investment to the production phase, it is now more important than ever to maintain a regulatory landscape that facilitates rather than discourages new investment.While one of our key arguments is that there is too much burdensome regulation and red tape in Australia, we are also strongly believe that regulatory intervention is necessary to ensure that appropriate checks and balances are in place to serve the public interest and manage environmental, health and safety, social and other development-related impacts that may arise from a mining project. However, the regulatory intervention in Australia has come to a point where it is excessive and starting to discourage valuable investment in mining projects for nominal return to the public. Excessive regulation or ‘red tape’ impedes productivity and competitiveness, deters investment and innovation and costs jobs, all of which ultimately impact on the growth of Australia and the standard of living of all Australians.This paper aims to examine and compare the federal, state and local regulations that govern mining projects in Australia. It will highlight how these regulations are unnecessarily complex, lengthy and duplicated and how they can be streamlined to reduce red tape. In doing so, the paper will evaluate the recommendations proposed by the Productivity Commission Report on Major Project Assessments released in 2013, which include the recommendation to move to a ‘one project, one assessment, one decision’ regulatory model.CITATION:Pope, C and Tannock, M, 2015. Project development and regulation red tape – a comparative analysis: does it need to be so complex?, in Proceedings Iron Ore 2015, pp 621–630 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 13, 2015

By B. R. Boardman

Project Environmental Approval is a multi-faceted issue. From a mining perspective, it is a costly item because of avoidable time delay. The government perspective is that the approvals are a necessary part of meeting departmental requirements to ensure that the wellbeing of other uses of the environment is maintained. This paper outlines some of the problems inherent in the environmental approvals process and makes recommendations to both the proponent and government about improving the efficiency of the process.

Jan 1, 1978

By L I. Rozman

"There have always been development projects that fall short of expectations. In the last decade, we have seen more than the usual number of mining and oil/gas development projects taking significantly longer to develop and costing materially more than expected. The recent resource-equity market slump proves that investors are now far more cautious about investing new capital in the mineral and petroleum resources sector.What have we learned since 2005? Why have projects missed their targets? Why do investors often feel misled?Valuation of a project and the estimation of value is a more complex process than the evaluation of the merits of project development. The merit of project development can be clear from a prefeasibility evaluation, but this is no reason to skip the rigour of a feasibility study. The valuation of any project that is developed with any added risk should be discounted for this added risk.The development of a project impacts on other stakeholders, and the indirect cost of these impacts can have material implications for the cost structure, time and ultimate valuation of the project for its financial backers. The development of new projects (and thereby supply) can also have an impact on commodity prices, and therefore an impact on returns for financial backers.This paper will provide commentary on the author’s experiences and observations as a project developer and operator for 25 years, before becoming a project financier a decade ago.CITATION:Rozman, L I, 2016. Project evaluation and valuation – an investor’s golden rule, in Proceedings Project Evaluation 2016, pp 31–36 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 8, 2016

The general principles of technical due diligence best practice that are involved in assessing a mineral property in the early stages of its development are described and a bibliography of relevant papers is attached. The issues specific to the evaluation of gold deposits are highlighted. The Australasian Institute of Mining and Metallurgy's (The AusIMM) initiatives in this area, dealing with the proper public reporting of Reserve/Resource information (JORC Code) and property assessment/valuation (VALMIN Code), will be used as a framework against which the illegal tampering with drilling samples to artificially boost their gold content (salting) from the Busang gold deposit (Kalimantan, Indonesia), owned by Bre-X Minerals Limited (Calgary, Canada), will be reviewed. While the Busang saga was based upon fraud, through salting the samples, the general lessons to learn from such a scam are worth documenting. In Australia, most of those working in the mineral industry belong to long established professional institutes and consultant associations (eg The AusIMM or Mineral Industry Consultants Association [MICA]) that require their members to work within their technical limits and to comply with best practice guidelines, or risk being judged and found wanting by their peers in the context of strong Ethics Codes. There is also a strong interface between such representative professional bodies and the corporate and financial market regulators (ASC/ASX), which closes the monitoring loop. Canada has only now seen the wisdom of having this type of early warning system in place. Fraud and deliberate deception will be always possible, but deception on the enormous scale that occurred at Busang is most unlikely with proper surveillance systems in place and the use of accredited technical professionals. There should have been more hard data available about so big and rich a deposit owned by a C$6Bn company.

Jan 1, 1997

By R Knight

"In project evaluation there are two matters of keen interest to non-executive directors: the process by which an investment recommendation is reached, as well as the investment itself, as presented. It is sometimes mistakenly believed that Boards of directors are interested only in the result. That is not so. The process by which project evaluations are derived and socialised with the Board is as important as the result, sometimes more so.Setting aside the gloomy predictions of the doomsayers and looking through short-term volatility in supply and demand, the overall availability of mineral resources more often than not exceeds demand. There are in reality more development projects in prospect at any one time than are needed to meet the market. Only the fittest will prosper, although some others may survive.Optimism springs eternal in the mining industry and every project promoter, executive or entrepreneur has a convincing project development case. Some will create value for shareholders, but the historical evidence suggests that many will fail to meet the expectations set in their evaluation.Boards of directors make the final decision to invest, or not, in a new mine. Knowledge is power, and on that basis the balance of power favours management. Management has the facts (or in some cases, what passes for fact) and the passion to invest. The non-executives have the power of approval – yes or no – but before making a decision directors must demonstrate due diligence, the essential precursor to project approval.Management has a vital part to play in facilitating that due diligence process and in encouraging the independent thought processes of the Board. A closed approach by management fosters a negative, risk-averse attitude on the part of the Board. One that encourages an understanding of the rigour of the project evaluation process and the robustness of the result will allow directors to understand better the implications of their decision.CITATION:Knight, R, 2016. Project evaluation – a non-executive director’s perspective, in Proceedings Project Evaluation 2016, pp 11–19 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 8, 2016

By J Borthwick, M Yusi, M Douge

Feasibility studies form a vital and significant component of the project delivery cycle. They are at the heart of the valuation process. This paper focuses on variables which can affect a project and how these are assessed as part of the decision-making process through feasibility studies. Test work and site selection needs; the degree of engineering required to meet the study requirements and the quality of owner project information are discussed. Also, local factors including permitting needs, social, environmental and government relations are considered. Engineering and site factors are crucial in the estimating process. The interaction of detailed engineering, engineering assumptions and estimating methodologies are therefore examined. The ownerÆs perspective is considered along with risk analysis, which is fundamental in project feasibility study activities. The impact of this is also discussed.

Jan 1, 2009

By B. Morris

This presentation will describe the process by which the Quebrada Blanca (QB) copper project in northern Chile was financed. It will also show how a relatively junior mining company addressed the problems created by its inability to provide its share of the equity funding and the guarantees required by the project lenders. QB is located in the semi-arid Andean highlands of northern Chile, 170 kilometres southeast of the port of Iquique and 30 kilometres west of the border with Bolivia, at an altitude of about 4,300 metres (14,000 feet). Figure 1 depicts the project's location. The QB orebody is a secondarily enriched porphyry copper deposit containing reserves of 85 million metric tons grading 1.3 percent copper. Underlying the enriched zone is a significant primary ore zone containing several hundred million metric tons grading about 0.5 percent copper. In the late seventies and early eighties Falconbridge and its affiliates spent $20-30 million dollars exploring the deposit and conducting feasibility studies. For a variety of reasons they decided not to develop the property which was returned to its owners, Empresa Nacional de Mineria (ENAMI), which is a Chilean state mining corporation. In 1988 ENAMI announced its intention to privatize the property through a public bidding procedure.

Jan 1, 1993

By Gregory A. Hahn

Explorationists and engineers rarely speak the same language. Explorationists are not cognizant of the information that engineers require to make the appropriate choices and decisions. Engineers can- not "translate"geo1ogic parlance and data into information relevant to proper decision making. This often creates a physical and intellectual "rift" between engineers and geologists that inhibits a smooth transition to development. A transition team leader who is grounded in both disciplines can best facilitate integration and communications between the explorationists, who understand the intrinsic attributes of a given deposit, and the engineers, who have to design for extraction and beneficiation of an orebody.

Jan 1, 2001

By Randy McMeekin, Chris Twigge-Molecey, J. Peter Blake

The project implementation phase, FEL4, is generally a complex undertaking. The project has been approved for construction and the capital has been allocated. At this point the project team comes under significant pressure to meet the safety, schedule, cost, and start-up committments. For the design team the principal tasks are to finalize detailed design, complete procurement, and issue construction contracts. Design activities must be closely coordinated with equipment and material procurement. A clear engineering plan should be based on well-defined work packages to meet construction, commissioning, and startup requirements. A range of review processes by discipline, area, and third parties assure quality. Constructability, safety, and hazard reviews are performed throughout the design process. Three-dimensional models that incorporate extensive databases help to maximize efficiency and minimize errors. Well-managed projects have a clearly accountable design team, rigorous change control processes, and well-defined workflows. Key individuals from the design team participate in commissioning, operator training, and startup.

Jan 1, 2015

By O C. Aitken

Mining project developers are committed to taking on all the challenges and obligations of financial risk management. It is interesting that our current models of project finance have not changed markedly in principle for some 700 years, yet the rules which prepare the way for effective project assessment and subsequent loan management still do not seem to be well understood by project or corporate developers. Probability and gravity fill the opposing trays of the golden balance of financial risk. Understanding the relationship between these opposing, but intimately related elements is critically important for successful risk management. It is important to move beyond the qualitative approach and use quantitative methodologies to measure the financial impact of the occurrence of each major risk. We live in a world where the only constant is change and thus it is not surprising that a bankerÆs life is still governed by assessing, measuring and pricing risk. Banks are attracted to funding well managed companies with strong cash flow projects. But we are more risk averse compared with the credit appetites of late last century. This attitudinal shift has resulted in tougher term sheets for the early 21st century, encompassing more conditions, warranties, undertakings and stronger cash sweep provisions. Banks require well balanced portfolios to achieve an acceptable spread of risk, thus there is a more restricted market for small company lending than that available to large multi-project corporate entities with less concentrated risk profiles. Because of this focus, junior company debt finance remains comparatively expensive and especially so for more challenging geographical and political environments.

Jan 1, 2004

By R. J. Hickson

From 1993 through 1999 Cyprus Amax Minerals Company successfully completed eight major construction projects around the world. Six greenfield mines were brought into production, an ongoing operation was completely modernized, and an environmental issue was appropriately remediated. The projects stretched over three continents, from arctic Russia to the Atacama Desert, from 16,000feet to sea level, from city suburbs to remote wilderness, from a low of $130 million to over $1 billion. Open pit and underground; mill and leach; gold, copper, molybdenum, and coal were all encompassed. The breadth of diversity experience from these projects inspired Cyprus Amax to create a “best practices” project management protocol, to steer corporate expansion into the next millenium. This paper summarizes those best practices, while high-lighting project management pitfalls to avoid.

Jan 1, 2000

By R. J. Hickson

From 1993 through 1999, Cyprus Amax Minerals successfully completed eight major construction projects around the world. Six greenfield mines were brought into production, an ongoing operation was completely modernized and an environmental issue was appropriately remediated. The projects stretched over three continents: from arctic Russia to the Atacama Desert, from sea level to an elevation of 4,900 m (16,00Oft), from city suburbs to remote wilderness and from a low of US$130 million to more than US$ 1billion. The operations included open-pit and underground mines, mill and leach facilities and involved gold, copper, molybdenum and coal. The diversity of these projects inspired Cyprus Amax to create a "best-practices” project-management protocol to steer corporate expansion in the new millennium. This paper summarizes these best practices, while highlighting the project-management pirfalls to avoid.

Jan 1, 2000

By P. Tanaskovic

This is presentation of a model which simplifies application of project management in control of the construction procedure of industrial units (mines, power stations etc). The model is made for further referrence of investors. The most demanding problem in large units is to find the best way of locating all activities within a network. The model uses term "line" (which refers to a construction unit) for a serie of activities which are to be sequentially executed (up to 1000 lines, each with 10-20 activities). The lines are coded in advance. Each line is described by a competent expert. Team of experts provide liason between lines on the basis of computer drawings. The method proved to be extremely effective. In order to provide smooth monitoring at all management levels, graphic documentation is given at 4 levels. The initial level is the third one, made based on input data (more than lo listings per one drawing). By condensation of activities along one line, another level is obtainable. Grouping of lines gives the first level (1-2 listing) for the highest management level. More detailed information is given for a limited (shorter) period at the forth level for the purposes of operational management. Each activity has three phases: prior to contracting, post contracting and accomplishment. All phases are presented at all levels, which enables investor to be continually well informed about construction advancement. Model is written in FORTRAN language. Programs comprise: maintenance of data base, calculation of time and costs and elaboration of graphic and other documentation.

Jan 1, 1986

By Ronald B. Stone

This paper describes a proposed solution to the problem of mining a 315 foot diameter unsupported sphere at a depth of 2700 feet in a salt dome by conventional mining methods. The proposed solution utilizes many of the varied technologies available to the mining engineer for solving mining and underground construction problems. The following are reviewed in the paper: A. The location of the sphere within the dome as required by construction criteria. B. The relation of the location of the access shafts to the sphere. C. The rock mechanics theory in relation to the salt dome and large size of the excavation. D. The proposed "honeycomb" method of mining which will be a partial answer to rock mechanics stability requirements. E. The equipment which it is recommended be utilized to accomplish the construction. F. The rock mechanics measuring instruments proposed. G. The methods of disposal of the mined salt. Conclusions and areas of further study are outlined in the final statement.

Jan 1, 1968

By L Lorenzen, H Muller

"Every year a large number of projects are evaluated by small listed and unlisted mining companies that are hoping to find the ideal project, which will catapult them from a mining junior status to that of a mid-tier mining company. Usually this includes finding the æidealÆ or ærightÆ orebody and then developing a process which will allow cost-effective recovery of the valuable metals and the production of a saleable product. These dreams are seldom realised and there are a number of good and obvious reasons for this. Issues that are generally high up on the agenda for the smaller companies are: cost of developing a project before the feasibility study stage finding a suitable, or optimum processing technology financing of the project dealing with risk.The most expensive part of the development process for the small miner is often the exploration side of the business and finding the æidealÆ orebody. However, finding the right orebody will not be discussed in this paper. The æidealÆ orebody does not necessarily solve the problems of the mining junior, as much of the uncertainty lies in the process required to recover and produce the final metal product. Once a mineralised deposit has been identified and the grade at least reasonably qualified, the development of a suitable process becomes the driver to convert the deposit into an orebody. This paper proposes that a small exploration company has a very limited opportunity to succeed if it does not do sufficient homework before it identifies the æidealÆ orebody. The risk profile for the small mining company, by its very nature, has to be different to that of a major company and as a result the opportunities often lie in managing different and often new process options, which may be the key to bring such projects on line successfully.CITATION:Muller, H and Lorenzen, L, 2012. Project selection and process development for mining juniors, in Proceedings Project Evaluation 2012, pp 149-158 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

May 24, 2012

Project-finance risk assessment is mature and approached systematically. Mining industry due diligence remains fragmented with specialists addressing different aspects of the project such as reserves/JORC, environmental impact, commodity market, even financial analysis/ modelling. Each professional has a natural tendency to believe that the risk factors they have examined are the key ones necessary to be reviewed, as if their review will stand in isolation from others in the way a project materialises. By first laying out the project risk categories and risk matrices, this paper examines the due diligence process with a keen eye to the risk assessment and overlap/interaction. Some cross fertilisation of due diligence techniques from other industry sectors is placed into the mining context. Six case studies are then presented with regards to due diligence features in each projectÆs feasibility review or financial information/ offering memorandum. A power case first shows the differences between the due diligence expectations of banks versus bond financings. Then some Australian and Indonesian mining development cases are analysed to see the due diligence learning points. Some of these were project/due diligence failures. The conclusion focuses on the value of a systematic risk assessment for project evaluation, all from the project-finance perspective.

Jan 1, 2007

By G. P. Kundargi

India is one of the fastest growing economies in the world. The role of the Iron & Steel industry is very important for the development of the country. Iron and steel are among the most important components required for the infrastructure development of the country. This is one of the fastest growing sectors. The demand drivers for the Indian Iron & Steel industry are increase in the activities of the manufacturing industry and infrastructure development. Indian Iron & Steel industry with its strong forward and backward linkages contributes significantly to overall growth and development of the economy. The industry today directly contributes 2% of India?s Gross Domestic Product and its weightage in the official Index of Industrial Production (IIP) is 6.2%. Manganese is a main ingredient for production of steel. Almost 90% manganese is being utilized by the steel industry worldwide. Globally, there is no substitute for manganese as on date. There is huge gap between demand and production of manganese ore in the country. To meet this demand gap and to support for growth of national economy, MOIL Limited (formerly Manganese Ore India Limited), a Government Enterprises, producing annually around 1.1 million tonnes (mt) of manganese ore and value added products, has geared up with various infrastructural activities to increase the present production capacity of 1.1?1.5 mt in 2016?2017 and 2.2 mt in 2020?2021. The paper deals with the technological improvements and infrastructural development activities of MOIL; this will help MOIL to become the market leader in manganese ore production globally in the coming years.

Aug 1, 2013