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By A Chandra, P Guj

Only a few complex real options can be valued using closed-form equations, such as the Black and Scholes formula, because these algorithms are restrictive and prevent the construction of practical project evaluation models. Although a binomial lattice method paired with the ærisk-neutral probabilityÆ provides an easier and flexible modelling of exploration and mining projects, it has limitations when projects are complex, long-lived and influenced by the interplay of various market and private uncertainties. In order to overcome these limitations, modern decision tree software using dynamic programming capability can be used for real option valuations. This is a powerful computational tool in which the impact of various sources of uncertainties can be differentiated, so that the optimal decision path can be explicitly displayed visually. There has been significant academic controversy surrounding whether different real option (RO) valuation methods would lead to different real option values (ROV). This paper, using a realistic copper mining example, demonstrates that as long as the same degree of subjectivity and consistency are used in different real option valuation methods, they yield the same result. This conclusion is valid irrespective of whether the cash flow volatility generated by various sources of uncertainties is handled in an aggregated or in an explicit and differentiated manner. This paper compares two choices for an investor either to æbuy now and developÆ a project or to enter into a ætwo-year option to purchaseÆ after the proponents have developed it. It also shows how significantly different net after-tax operating cash flows may be generated by these different choices on the same underlying asset represented by the project. This is due to the difference in the amount and timing of the relevant capital investments affecting the depreciation and amortisation charges and as a consequence, the income tax paid. CITATION:Guj, P and Chandra, A, 2012. Real option valuation of mineral exploration/mining projects using decision trees - Differentiating market risk from private risk, in Proceedings Project Evaluation 2012 , pp 177-188 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By J Gould, T Elkington

Mine operation strategies are commonly optimised with a net present value (NPV) maximisation objective. There are well known properties of a typical mining project optimised for NPV, including high production rates and declining cut-off grade schedules. In practice, however, frequently there are operations that diverge from such NPV-maximising properties. Although a range of reasons for this can be at play, one possible explanation is that operators intuitively adjust their strategies to compensate for the flaws inherent to NPV maximisation. In particular, NPV analysis does not reflect the benefits of managerial flexibility inherent in a mining plan. Real options valuation (ROV) is an alternative approach that addresses this issue. We compare the properties of NPV and ROV optimisation solutions generated for the same scenario. Our simple case study demonstrates that the presence of real operating options in the optimisation model not only entails increased project value as expected, but also tends to encourage lower processing capacity (with lower associated capital cost), higher cut-off grades and greater use of stockpiles.CITATION:Elkington, T and Gould, J, 2012. Real option value optimisation, in Proceedings Project Evaluation 2012 , pp 35-40 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

By E. Tulcanaza

Mining companies normally establish exploration and research programs originated with actions in embryonic stage. At their early stages of development, these exploration and technological activities are subject to uncertainties that need, first, to be resolved, deciphered or, at least, mitigated for information reporting; and later, for valuation reporting. Under these circumstances, these exploration activities follow a sequence of development phases that range from exploration work to the profile, conceptual, and finally to basic engineering phases and construction. For information reporting, the International Template for Reporting of Exploration Results, Mineral Resources and Mineral Reserves integrates the minimum standards being adopted by the relevant professional bodies in Australia, Canada, South Africa, Chile, USA, UK, Ireland, and other European countries which set up the Committee for Mineral Reserves International Reporting Standards (CRIRSCO, www.crirsco.com). These standards are based on the progressive collection of relevant information to reduce present and future uncertainties over time under a context of transparency, materiality, and technical competence. For valuation reporting several procedures have been disclosed and applied. However, in the last decades financial instruments such as real options, decision analysis, and games theory have developed into a niche of great potential for mine valuation applications. The objective of this paper is to provide a summary of the information reporting standards prepared by the Chilean National Commission for the Qualification of Competent Persons in Mineral Resources and Mineral Reserves and show a procedure and an application of real options to the valuation of the sequential development phases of a mine asset from the exploration stage through up to full development.

Jan 1, 2007

By J. A. Botín

NPV is a static measure of project value which does not discriminate between levels of internal and external risk in project valuation. Due to current investment project?s characteristics, a much more complex model is needed: one that includes the value of flexibility and the different risk levels associated with variables subject to uncertainty (price, costs, exchange rates, grade and tonnage of the deposits, cut off grade, among many others). Few of these variables present any correlation or can be treated uniformly. In this context, Real Option Valuation (ROV) arose more than a decade ago, as a mainly theoretical model with the potential for simultaneous calculation of the risk associated with such variables. This paper reviews the literature regarding the application of Real Options Valuation in mining, noting the prior focus on external risks, and presents a case study where ROV is applied to quantify risk associated to mine planning.

Jan 1, 2012

By Edgar Peña

La efectividad de un equipo en la planta de la industria minera es importante en tanto se opere con eficiencia y efectividad. Empero, es necesario conocer el método de cálculo que se ha empleado para determinar la tasa de efectividad del equipo y sobre qué datos se han hecho los cálculos. En esta perspectiva, el presente trabajo describe las herramientas utilizadas en Southern Perú Cooper Corporation para el logro de la calidad de trabajo a través del incremento de la productividad y control de los costos. Para ello, se han utilizado herramientas como: la recolección de datos, visualización de datos, diagramas de Pareto y análisis de beneficios. Asimismo, para una óptima efectividad del equipo deben mantenerse registros precisos de la operación del equipo.

Sep 13, 2001

By Doug Lockhart

The Marine Minerals Technology Center has taken advantage of recent price and performance .improvements in PC hardware and software to upgrade its seismic acquisition system. In the past, single channel, high resolution, seismic data was displayed on an analog plotter and stored on tape. Associated navigation data was logged by hand or on a chart plotter. The navigation and seismic data were synchronized with time so that they could be cross referenced. The Center's new system uses PC's for the acquisition of both seismic and navigation data. Off the shelf software products were purchased for each task. Elics Delphl performs the seismic acquisition and processing, and GeoResearch, Inc. Geolink provides the navigation interface. A navigation string is sent from the navigation PC to the seismic PC via an RS232 line. This string consists of a time and location fix, as well as speed and heading data. The navigation string is then imbedded in the header of the seismic record. The Geolink software is capable of monitoring other devices in addition to the GPS used for positioning. Device inputs are attributed to the location data to provide easy construction of a navigation GIs. Currently the Center is logging fathometer data along with the navigation. As a result, a map of bathymetry along the tracklines can be available shortly after completion of the cruise.

Jan 1, 1992

By H. Powell

"This paper discusses how elemental analysis of conveyed bulk flows in real time using PGNAA (Prompt Gamma Neutron Activation Analysis) technology has resulted in significant improvements in advancing plant control in mineral processing operations. PGNAA through belt, full stream, continuous, multi-elemental, real time analysis technology is explained. Capabilities and limitations in plant operating environments are discussed including comparison with other real time, on-line technologies through review of published information available for on-conveyor minerals applications. Case studies include an iron ore and copper-gold company, both of which consider the technology an essential component in advanced plant control necessary in new process flow sheet designs, rather than an optimisation tool.INTRODUCTION Process operators rely on supply of a reasonable ore quality and consistency from the mine. Unfortunately neither the mining nor process operators have much control over the ore quality once it has been put into the crusher. Grade control typically stops once the material is designated as ore and the process plant operator needs to process it irrespective of quality. Plant control is most effective when technologies measure process streams directly and preferably in real time. Measuring sampling streams that are not representative of the primary flow will result in incorrect plant control decisions. Sampling coarse conveyed flows is expensive and impractical at many operations, however, this does not mean those flows cannot be measured. Investigations to find techniques suitable for real time elemental analysis have focussed on the application of known laboratory techniques to process streams. For conveyed applications, development of neutron irradiation techniques were most promising and early studies indicated potential success for bauxite measurement (Beurton et al, 1995). Tran & Evans (2001) concluded there was no equivalent technology to PGNAA in terms of material penetration power and that the technology was eminently suitable for basic industries such as cement. Nelson and Riddle (2003) evaluated PGNAA for possible use in the phosphate industry by using a unit installed in a cement plant to test performance on phosphate samples and ultimately recommended its use for further characterisation of the mine’s various ore types to improve stockpile allocation and grade control"

Jan 1, 2014

Real Time and In Situ Measurement of Elemental Composition Using Lasers

Sep 13, 2010

By D Joshi, J Rostami, M Karakus, A Eustes

The first target of mining activities on the surface of the moon is to find and extract water from the icy regolith on the moon. A test drilling unit was designed and fabricated under a NASA Early Stage Innovation (ESI) grant. A high-frequency data acquisition system was used to record drilling responses at 1000 Hz. Parameters like weight on bit (WOB), torque, rev/min, rate of penetration (ROP), mechanical specific energy (MSE), field penetration index (FPI), and the uniaxial compressive strength (UCS) were recorded for 40 boreholes in the analog samples made of regolith simulant and specialised cement. Development of the AI system and machine learning (ML) algorithms for analysis of data to evaluate strength and hence water content of icy regolith required a large data set. In this case, the data set comprising of more than one billion data points recorded while drilling into various analogue samples and cryogenic lunar formations to optimise power consumption and make bit wear adjustment during drilling operations. The tests were also repeated in the samples of icy regolith at various water content at -190C to verify the ability of the algorithms to analyse the data and to estimate the strength of the frozen formation and hence water content. The paper will discuss the objectives and methodologies used in the project and reviews the testing program and the machine learning (ML) algorithms ability to identify various formations along the exploration boreholes.

Sep 1, 2024

By O. A. Bascur

Applying the latest information technologies in mining and metallurgical complexes has become a serious challenge to management and technical teams. Emerging component design is changing the way the user relates to the desktop. Connectivity between mining and metallurgical process operations and their business systems has become a reality. Expanded use of plant information on the desktop is a standard tool for revenue improvement, cost reduction and adherence to production constraints. The industrial component desktop support access to information for continuous improvement and innovation by staff personnel and engineers. Collaboration between groups enables the implementation of an overall process effectiveness index based on losses due to equipment availability, production recovery and quality rate. The integration of information from mining, mineral processing and metallurgical performance monitoring increases production efficiency, even when many elements cannot be measured directly. Three case studies of large mining/metallurgical complexes are highlighted.

Jan 1, 1999

By Simon W. Houlding

This paper summarizes recent developments in computer modelling and estimation technology. Significant improvements in computational and modelling efficiencies have advanced technical computing to the stage where, for the first time, it can be realistically applied to short-term mine planning and production control. Real-time interactive grade estimation of complex shapes, volumes and grade distributions, based on immediate turn-around of production sample grades, is now possible. An added benefit is the ability to produce complete geostatistical estimates which include confidence limits. These can be incorporated into the decision making and risk assessment processes of production control. Why the need for new technology? What is wrong with the conventional methods which have sufficed for the last thirty years? The response is manyfold. They suffer from inefficient computational processes and conflicts with geostatistical theory. They are responsible for constricting the flow of information between the disciplines involved in the mine production process. Finally, it is illogical to approximate irregular geological and mining volumes with orthogonal sets of rectangular blocks. Geological materials do not occur in block formation; and mining methods which excavate rectangular blocks have yet to be developed. Other computer based technologies have evolved out of the dark ages of rectangular approximations and have successfully dealt with irregular three-dimensional geometries. It is time for computing in the mining industry to follow this example and take full advantage of available technology. To provide the necessary background, consider the basic requirements for successful implementation of technical computing within the mine production process.

Jan 1, 1992

By Osvaldo A. Bascur

This paper presents a real time software infrastructure with people tools that gives the users the ability to sift through available data, transform data into information for business continuous improvement and optimization. In this sense, the paper introduce a simple collaborative tool to add context to business areas or assets for getting things done in an industrial complex

Sep 12, 2011

By O. A. Bascur

The lack of integration of mining and metallurgical information with sufficient detail for analysis causes inefficient operation and hence sub-optimal energy and water use. It is difficult to analyze the performance of mining and metallurgical processes without an integrated view of mine transactions, stockpile inventories, process flows and assays. To take action requires real time information from manufacturing assets, corrected for gross errors from trucks, shovels, conveyors, faulty sensors, bad instrument calibration. This paper presents an infrastructure with advanced tools that sift through available data, identify and eliminate gross errors, and transform the data into business information for continuous improvement and optimization. Collaboration is a key component of improving efficiency of energy and water use, and the evolution of Web technology enables collaboration and troubleshooting of plant information to more quickly act on issues to reduce wasteful operation. Keywords: Mine Concentrator Optimization, Real Time Performance Management, Data Unification, Integration of Operational and Business systems, Mass and Energy Balances, Real Time Web Services, Equipment Availability, Efficiency.

Jan 1, 2009

By S N. Donaldson, B L. Hollis, K Wynn, L Potts, M Evans

A real-time load-haul-dump (LHD) dispatch optimisation tool has been deployed at Panel Cave 1 and Panel Cave 2 at Newcrest’s Cadia Valley Operations. The tool, known as ORB, is the first known successful implementation of an optimisation-based, autonomous, real-time dispatch tool, custombuilt for underground mining operations. ORB can co-ordinate the optimal dispatch of LHD’s in a block cave to achieve a range of objectives while adhering to draw compliance and geotechnical constraints. It is an example of highly automated short-term interval control. This paper starts by outlining the pre-existing business planning process, detailing the simple logic that produced the daily draw order. Next, the motivations for a real-time dispatch tool are presented, drawing comparison to the limitations in existing planning processes and how these can be overcome through an optimisation-based, autonomous, real-time dispatch tool. Subsequently, the paper details the Ratio Bogging Draw Strategy, through which tonnes targets are expressed continuously on draw bells or draw points as a ratio of total cumulative cave draw. This signifies artificial planning boundaries are removed and that draw targets are linked within a cave; such that tonnes are unlocked by bogging other parts of the cave, instead of as a function of time. This creates incentive within the target mechanism for fixing and bogging struggling draw areas whilst allowing uncapped progress if all draw targets are progressing within compliance. Furthermore, the optimisation tool developed is outlined, including the data it uses and the objectives it optimises. Finally, detail on the improvements to operations the implementation of this tool has brought, and the business process change it has facilitated are presented using Newcrest’s Cadia Valley Operations as a case study.

Mar 15, 2021

The Macquarie Dictionary defines `information' as: knowledge communicated or received concerning some fact or circumstance; (in communicating theory): a quantitative measure of the contents of a message. For mining companies investing in data capture and information processing technology for operations management is a key issue. Beyond producing performance related information that employees can relate to it is being able to deliver that information into the workplace when it is required, to the employees that can utilise it. To be effective the data needs to be received and understood as `information'. The technology is now available and proven to enable `information' to be delivered into the mining workplace adding value to the activities performed by mine employees. The application of computers and information technology in the mining industry has typically been limited to the resource definition and planning stages, accounting and administration and the process plants that treat the ores and minerals. The mining extraction processes that consume expenditure and determine output in a mining operation occur in an environment dominated by unpredictable events and variable conditions. The mining operation has long been regarded as an inexact science conducted in unpredictable circumstances with many independent variables affecting the output and resultant cost of production. Financial accountants keep track of expenditure and management accountants analyse the cost of production usually on a weekly or monthly basis but all this effort can't affect the outcome, that was determined by the real time events and variations of circumstances over a week ago. Such reporting and analysis can result in conclusions being drawn about what improvements can be made and how you might do better next time, but generally the data is not detailed enough, is inaccurate or misrepresents the real issues. The capital investment required for any mining operation is substantial and comparable to other industries such as manufacturing. The performance and utilisation of manufacturing plants is usually closely monitored down to the lowest level of detail. Many modern plants are controlled and optimised using programmable intelligent devices and monitors display real time performance to the operators and prompt them to make informed decisions to maximise production and minimise wastage. Technology suitable for the mining industry is now widely available and has proven to be a reliable and powerful tool for the optimisation of mining operations. This paper focuses on the latest information technology developed by Modular Mining Systems that has been implemented in mining operations worldwide. The benefits reported by the mining companies utilising real time information technology over the past 15 years have generally related to optimisation of truck fleet allocation and material blending. Some mining operations have reported improvements in equipment utilisation of greater than 20 per cent. With the development of real time graphical display screens in the operators cabins the benefits of information delivery can be harnessed to make employees more effective in the workplace.

Jan 1, 1995

By K. H. McDaniel, K. G. Wallace

This paper describes the development of a Windows-based interactive mine ventilation simulation software program at the Waste Isolation Pilot Plant (WIPP). To enhance the operation of the underground ventilation system, Westinghouse Electric Corp. developed a program called WIPPVENT. While WIPPVENT includes most of the functions of the commercially available simulation program VNETPC from Mine Ven- tilation Services Inc. and uses the same subroutine to calculate airflow distributions, the user interface was completely rewritten as a Windows application with screen grap-hics. WIPPVENT is designed to interact with WIPP ventilation-monitoring systems through the sitewide central monitoring system. Data (e.g., air quantity and differential pressure) can be continuously collected from the underground ventilation remote-monitoring and control system and from the mine's weather stations (psychrometric data). Furthermore, WIPPVENT incorporates regulator characteristic curves specific to the site. The program utilizes this data to create and continuously update a real-time ventilation model. This paper discusses the design, the key features and the interactive capabilities of WIPPVENT.

Jan 1, 1998

By K. H. McDaniel

This paper describes the development of a Windows-based interactive mine ventilation simulation software program at the Waste Isolation Pilot Plant (WIPP). To enhance the operation of the underground ventilation system, Westinghouse Electric Corp. developed a program called WIPPVENT. While WIPPVENT includes most of the functions of the commercially available simulation program VNETPC from Mine Ventilation Services Inc. and uses the same subroutine to calculate airflow distributions, the user interface was completely rewritten as a Windows application with screen graphics. WIPPVENT is designed to interact with WIPP ventilation-monitoring systems through the sitewide central monitoring system. Data (e.g., air quantity and differential pressure) can be continuously collected from the underground ventilation remote-monitoring and control system and from the mine's weather stations (psychrometric data). Furthermore, WIPPVENT incorporates regulator characteristic curves specific to the site. The program utilizes this data to create and continuously update a real-time ventilation model. This paper discusses the design, the key features and the interactive capabilities of WIPPVENT.

Jan 1, 1997

By Sanjiv Dhanjal

"Often mineralogy dictates the physical properties of a material rather than chemistry. This in turn affects how that material behaves in a process plant, and whether optimum conditions for refining one mineral are different to those for refining another. For example how does refining copper from chalcopyrite differ to refining copper from bornite?Minerals are naturally occurring inorganic solids that have a definite chemical composition and an ordered atomic (crystalline) structure. X-ray diffraction is a common and highly developed method to identify and quantify minerals. X-rays are fired onto a material and the mineral is identified by the angles where the diffracted X-rays are in phase.Most X-ray analyzers are laboratory based. A sample is prepared and analyzed by a detector that travels in an arc to collect the diffraction pattern. COSMA has a curved detector which picks up the complete x-ray pattern instantaneously. Therefore, material is collected and transported through the machine where is it is analyzed continuously.COSMA measures about 0.5 tons of material per day, while laboratory analyzers measure a few grams at a time. Real time data trends are produced allowing for improved process evaluation and automatic control. The COSMA on-line system has taken X-ray diffraction out of the laboratory into the field.There are a number of systems in operation in cement production. It is recognized that on-line mineral analysis has a role in many other processes. This paper presents the technology and invites further discussion should the technology be beneficial to members of the audience.INTRODUCTIONThis article describes COSMA, a system that provides direct and continuous on-line mineral analysis using X-ray diffraction in the field. While X-ray diffraction is a common technique used in mineral analysis, the time from sampling to analysis can be hours and plant operators typically do not get the data in time to control a process or respond to an upset. COSMA provides rapid measurement, analysis and feedback of data, in real time. This provides powerful information that can be used to optimize operation, thereby reducing costs and increasing quality."

Jan 1, 2009

Real Time Monitoring of Cemented Paste Backfill Introduction Methods ?how to instrument a Long Hole stope Key Results from 2 case studies: barricade pressures and displacement, in-stope pressures Importance of Real Time Monitoring How binder, rise rate, cement content affect fence pressures

May 1, 2010

By Gerhard Meyer

A new instrument for the determination of iron., zinc, calcium, and other metals independently directly in the fumes emitted from steelmaking processes is described. Based on the well- accepted method of X-ray fluorescence, the instrument can detect numerous metals simultaneously in the fume as well as report their concentration on a mass per unit time basis real time to a control room computer. The instrument mounts on the wall of the fume duct and can., via a small opening, directly view the hot exhaust plum inside the duct. The concentration of metal in the fume over time has been shown to change dramatically depending on process variables. Variables such as oxygen flow rate, lance height and nozzle configuration., slag condition., and episodic scrap addition can affect the presence of metal particles and fume in the exhaust. An analysis response time of 6 seconds enables better control of the steelmaking process thereby conserving primary resources and reducing environmental impact.

Jan 1, 2001