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"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

Successfully managing project development and construction has often been a challenge in the mining industry. This is reflected in the number of projects that have taken longer to build, exceeded their budgets and then struggled to achieve the performance targets so confidently predicted beforehand. This paper outlines the fundamental elements of project management necessary to deliver mining projects on time and on budget, and performing as originally intended. It looks at areas such as the study process, project planning, team selection and structure, project controls, types of contracts used and approaches to contract management.

Jan 1, 2006

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

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 D. M. Slavich

"In today's operating and investment climate, project evaluation is both more important and more difficult. It is more important because economic and financial analyses of a proposed project provide a basis for judgment of a project's commercial viability by equity participants, lenders and, in some cases, other participants such as off takers and governments. It is more difficult because these analyses must, of necessity, be based on estimates, projections and evaluations which must be made in a period remarkable for its economic and political uncertainty.Project evaluation starts with the analysis of the engineering, commercial and financial information available. Beginning with the preliminary design and capital cost estimates, alternative financing plans can be developed outlining possible sources of funds, terms and security arrangements. Pro-forma financial statements can also be developed, including sources and uses of funds, cash flow schedules, income statements and balance sheets. With these results, various profitability measures can be determined.Subsequently, in an effort to deal with uncertainty, these results can be tested by measuring the impact on project viability and profitability of changes in project and external variables such as product process, mining and processing rates, operating and financing costs, currency exchange rates and other factors.The results are a number of financial projections reflecting different assumptions for key project parameters. The projections can be used to structure the project to achieve the maximum financial performance. Projects, the financial viability and profitability of which can be demonstrated under varying market conditions, will be the most competitive in capital markets."

Jan 1, 1982

By John A. Wells, Leticia Conca, Kenneth G. Thomas

"Since about 2002 there has been significant capital cost escalation, not inflation, in the mining industry causing turmoil for successful project completion. Project capital costs have more than doubled and some cases tripled in this time period. This has rendered many projects to be economically challenged and in some cases not viable. In addition higher than expected operating costs have further adversely affected project metrics such as NPV and IRR. Capital cost increases for projects have been widely reported globally. This current paper reviews three items. Firstly, why such capital increases and the various components that make up capital estimates. Secondly, it looks at reasons why preliminary estimates, for example at scoping and pre-feasibility level, have been lower than the ultimate constructed costs. Such increases and differences in estimates have caused major problems for mine builders and have led to a general nervousness on the part of those providing project finance. Thirdly, what discipline is needed in project execution in an attempt to mitigate such capital increases. The paper will hopefully give a better understanding of the various issues and factors involved for those in the mining industry.INTRODUCTION The years 2012 and 2013 were a turbulent time for the mining industry. The European economic crisis, politics, metal price volatility and a wave of changes of CEO´s in some of the major mining companies all contributed to a challenging couple of years. Two issues stood out. First, the huge increases reported in the capital costs of projects, where increases of 100% - 300% were not uncommon and in some cases exceeded that during the first decade of the 21st century. Second, company write downs related to takeovers during the boom and the stabilization/correction in commodity prices. These have led to great uncertainty, made it difficult (or impossible) to raise project financing costs, contributed to the changes at CEO level and placed many projects either on hold or cancelled altogether. It is commonplace now to read of companies talking of reduced capital expenditure and making a complete review of their projects and operations to contain costs."

Jan 1, 2014

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 D Macdougall, J Otto

The financing of large mining projects in developing countries is often achieved, at least in part, by limited-recourse financing methods. Financing agreements are affected by the basic accord that is struck between the host government and the sponsors of the project. It is concluded that governments and project sponsors should take into account the requirements of lenders when structuring such mineral development agreements to maximise the potential for attracting project financing. Lenders are likely to be most interested in aspects such as fiscal arrangements, calculation of taxable income and general accounting rules, royalties, transferability of payments/dividends overseas, corporate structure and control, staged development, financing, loan support and state guarantees/approvals, political risk, provisions for default, product marketing, settlement of disputes and environmental issues

Aug 1, 1994

By Wi11iam I. Rau

In the recent past, there have been numerous projections of the capital requirements for additional mine and processing capacities required to meet projected non-Communist World demand for minerals during the next 15 years. A consensus judgment would place this currently at $14 billion per year, with the largest expenditures required for increases in aluminum and copper production. Until the early 1960's, internally-generated funds were used to finance nearly all of the large mining companies' capital requirements. Since that time, however, the enormous rise in capital costs per ton of capacity, accompanied by a relative stagnation in the financial condition of many of the major mining companies, have caused the industry to begin to rely on external sources for financing expansion, most notably, project financing from commercial banks and institutional lenders. Seven years ago, it was estimated that, in the five-year period 1972-1976,75% of the total capital requirements of $10 billion per year would come from internally-generated funds, with the balance to be provided by external sources. l There is little doubt that, in the coming decade, the percentage provided by external sources will increase. There should be little difficulty in attracting the necessary investment within the U.S., particularly in view of the expected continuation of companies in diverse industries seeking mineral investment opportunities. The more serious question lies in the availability of internal and external sources of funds for the expansion of mine and smelting capacity in the developing countries. Recently, R. F. Mikesell projected an average annual investment of $4.7 billion (in 1977 prices) over the 1977-1990 period would be required from foreign sources to expand metal producing capacity in developing countries. Mikesell concluded that external financing of mining projects in the developing world has averaged less than $1 billion per year over the past five years, thereby requiring more than a quadru1ling of this financing over the next decade.

Jan 1, 1978

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 T Ireland

The Project Hobson tunnel excavation was the first use in New Zealand of an earth pressure balance (EPB) tunnel boring machine (TBM). The tunnelling on the project was very successful and break-through was achieved three weeks ahead of program, demonstrating that tunnelling can be undertaken in Auckland with a high degree of cost certainty.Project Hobson involved the replacement of an existing 90 year old above ground sewer that crosses Hobson Bay in Auckland, New Zealand, and which had reached the end of its economic life, with a 3 km long, 3.7 m internal diameter segmentally lined bored tunnel. The NZD$ 118 M project has provided several environmental benefi ts to the Owner, Watercare Services Ltd and the local community:· provide capacity to meet projected growth in the region,· virtually eliminate wastewater overflows into Hobson Bay and the Waitemata Harbour, and· remove an obtrusive visual feature and open up the bay for recreational purposes.Auckland’s bedrock is a weak sandstone/siltstone (East Coast Bays Formation), subject to infilled paleovalleys. The geology in the region has been significantly influenced by volcanic activity; 49 volcanoes are present within 20 km of the city centre.The paper describes the design and construction challenges for the projects, including TBM performance, ‘sticky spoil’ management, and risks associated with basalt lava flows and two paleovalleys. The paper also highlights the reasons for the success of the project, including a rigorous approach to risk management during design, and effective planning during construction. Other useful data such as the effect on the watertable caused by closed face tunnelling, and ‘faceloss’ estimates derived from settlement arrays are included in the paper.Project Hobson also saw the successful implementation of a Geotechnical Baseline Report – one of the first uses of this type of document in Australasia.

Mar 8, 2011

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 W. R. Hibbard

Emerging from discussions of U.S. energy policy: from the Project Independence Blueprint; from President Ford's statements to Congress; and from several independent appraisals of the situation; there is a clear objective to achieve an appropriate balance of supply and demand in the near term future (1) by developing more efficient ways of using energy and (2) by extending domestic sources of energy. More specifically, the strategy for achieving this goal has three parts (1) Conservation of energy through greater efficiencies in automobiles, appliances, lighting, heating, and industrial processes. (2) Increased domestic production of oil and gas through new sources such as the outer continental shelf and new efficiencies such as tertiary recovery. (3) Substitution of coal and uranium for oil and gas in utility power plants and industrial heating. The goal of energy research and development is to help achieve these goals and to help minimize the economic, environmental and social impact of our shift from imported energy to domestic sources. The focus of this paper is the implications of the expanded use of coal, and the research and development which may help achieve the above goals in so far as coal is concerned.

Jan 1, 1975

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 C Johnstone

Project management is not a task to be undertaken lightly. Mining projects generally present even more challenges due to ChinaÆs remoteness and complexity. Having experiences in project management in the West is certainly an asset, but China can present the uninitiated with any number of headaches. To undertake a project there can have many problems that are unique to China. For the last 15 years, China has seen an increasing number of foreign capital investment projects in the mining industry. Practices involved in mining project development have experienced/are experiencing an evolution. Since 1996, Sino Gold Mining Ltd has delivered three mines in China, ie Jianchaling Gold Mine, Jinfeng Gold Mine and White Mountain Gold Mine. Through the work, Sino Gold has established a solid knowledge base and a capable and skilful workforce in effectively undertaking mining projects in China. This paper is concerned with the experiences accumulated so far by Sino Gold in project management in China. An overall review is conducted regarding the reform of the mining project development in China. Opportunities and challenges are highlighted within the political, economic and culture context. Brief summaries of the development of the three gold mines are presented.

Jan 1, 2009

By J. Herhold, S. Plaum

"Increasing worldwide energy demands, coupled with desires for cleaner energy, have led to greater research of renewable energies. Strongly weather-dependent energy sources, e.g. solar and wind energy, are unable to provide a constant control energy to withstand the fluctuation of the extensive power systems during peak hours. The pump storage plant Nant de Drance in Switzerland will not only have the capacity of a nuclear power plant, producing 900 MW, but will also combine the environmental aspect and the demand for controlled energy. Nant de Drance is one of the pioneer projects for upcoming energy challenges and serves as a model for future pump storage plants. This paper focuses on the planning process and the project execution of interdisciplinary large-scale projects such as Nant de Drance, including project related data handling, communication systems and project handling skills. Furthermore, the paper discusses mining excavation in the context of large scale projects and their regional environmental challenges, e.g. high alpine rock mass on the site of Nant de Drance. PROJECT BACKGROUND Project Overview Nant de Drance is a 900 MW pump storage plant located in the Swiss Alps. To provide such a high energy storage, six turbines (reversible Francis type), each with a capacity of 150 MW, were installed. Due to the efficiency factor of 80% the pump storage plant is able to provide an energy production of 2500 GWh per annum. Construction of the pump storage plant, which has been selected as “Major Tunneling Project of the Year” in 2014 by NCE and ITA-AITES, will be completed over 10 years. Therefore, the project has been divided in six major phases outlined below: - Launch: 2008 - Access Gallery: 2010 – 2012 - Excavation KMA, KTR: 2011 – 2014 - Concreting KMA, KTR: 2014 – 2016 - Installation of HEM equipment: 2014 – 2018 - Tests & entry into service: 2017 – 2018 Figure 1 outlines the single process phases of the project. For the construction of the shafts, galleries and caverns, 1.7 million m³ of metamorphic rock with sedimentary origin (mica schist & paragneiss of the massif „Aiguilles Rouges“) were excavated. A tunnel network with a total length of 15 km was created. The machine cavern measures 194 m long, 32 m wide and 52 m tall."

Jan 1, 2016