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By G. van Aswegen

Large structures in mines (faults, dykes, pillars, abutments) fail when the load exceeds the strength. If the loading system stiffness (LSS, also referred to as the ‘local mine stiffness’) is lower than the stiffness of the structure the failure will be unstable. The greater the difference between these stiffnesses, the greater the energy release during unstable failure. A method has been formulated by which the LSS is established through cost-effective numerical modelling while insight into the structure stiffness (source stiffness - SS) is provided by apparent stiffness, a parameter based on the empirical relation between seismic moment and radiated seismic energy of small seismic events from the area/volume of interest. By plotting LSS vs SS a ‘stiffness diagram’ is constructed that is useful for seismic hazard ranking of different structures. A comparative back-analysis of the Dagbreek fault in Welkom, South Africa, (source of the 1990 Matjhabeng earthquake) and two other nearby faults confirm the applicability of the method. An extension of the method, where ‘hazard magnitude’ is used as a measure of the LSS, allows a ‘stiffness diagram’ to be constructed using seismic data only. Les larges structures dans les exploitations minières (failles, dikes, piliers, culées) s’écroulent lorsque la charge dépasse la résistance. Si la raideur du système de chargement (LSS, aussi appelé la « raideur de la mine locale ») est plus basse que la raideur de la structure, l’éboulement sera instable. Plus la différence est grande entre ces deux raideurs, plus l’énergie dégagée pendant l’éboulement instable est grande. Une méthode a été formulée selon laquelle le LSS est établi par modélisation numérique rentable, tandis que la raideur de la structure (SS – raideur de la source) est établie par la raideur apparente, un paramètre basé sur la relation empirique entre le moment sismique et l’énergie sismique radiée de petits moments sismiques dans l’aire/volume en question. On trace le « diagramme de raideur » en relevant les deux mesures (LSS et SS), ce qui est utile pour classer les risques sismiques de structures différentes. On vérifie l’applicabilité de la méthode en comparant la faille de Welkom, Afrique du Sud (foyer du séisme de Matjhabeng en 1990) avec deux autres failles proches. Une extension de cette méthode, dans laquelle on utilise la « magnitude du risque » comme mesure du LSS, permet de construire le « diagramme de raideur » avec des données sismiques seulement. Große Strukturen in den Gruben (Verwerfungen, Dämme, Pfeiler, Auflager) scheitern, wenn die Last die Stärke übersteigt. Wenn die Steifheit des Ladesystems (LSS, auch bezeichnet als `lokale Grubensteifheit’) niedriger ist als die Steifheit der Struktur wird der Bruch instabil. Je grösser der Unterschied zwischen diesen Steifheiten, desto grösser die Energiefreigabe während des instabilen Bruches. Es wurde eine Methode formuliert, durch die das LSS durch eine kosteneffektive numerisches Modell erstellt wird, während ein Einblick von der offensichtlichen Steifheit in die Struktursteifheit (Quellensteifheit - SS) gegeben ist, ein Parameter der auf der emipirischen Relation zwischen seismischem Moment und ausgestrahlter seismischer Energie von kleinen seismischen Ereignissen vom Interessens-/Volumenbereich basiert. Durch das Kartograpahieren der LSS in Bezug auf die SS wird ein `Steifheitsdiagramm ' konstruiert, welches für seismische Gefahrklassifizierung der unterschiedlichen Strukturen nützlich ist. Eine vergleichende Postanalyse der Dagbreek Verwerfung in Welkom, Südafrika, (Zentrum des Matjhabeng Erdbebens 1990) und in zwei anderen nahe gelegenen Verwerfungen bestätigen die Anwendbarkeit der Methode. Eine Verlängerung der Methode, in der die `Gefahrengröße' als Maß für das LSS verwendet wird, gestattet, daß ein `Steifheitsdiagramm' konstruiert wird, welches nur seismische Daten verwendet.

Jan 1, 2003

"The Australasian Joint Ore Reserves Committee (JORC), which is sponsored by the Australian mining industry and its professional organisations, developed the JORC Code to provide minimum standards for public reporting. JORC was first published in 1989 and later incorporated into the Listing Rules of the Australian and New Zealand Stock Exchanges making compliance mandatory for listing public companies in Australia and New Zealand."

Jan 1, 2003

By Noel A. Warner

Modern steelmaking is based on direct use of oxygen in high intensity batch reactors. A totally new approach is proposed in this paper, based on the view that pursuit of high intensity is unlikely to lead to successful coal-based continuous steelmaking. By substituting carbon dioxide and water vapor as the oxidants rather than using oxygen directly, the intensity is greatly reduced. Accordingly, subsurface formation of carbon monoxide bubbles can be avoided by careful manipulation of the three participating rate processes, gaseous diffusion, interfacial chemical kinetics and liquid phase mass transfer. Steelmaking can then be carried out without explosive ejection of molten droplets and the generation of micro-spray but rather in a controlled and fume less fashion. The vital component is the introduction of generic melt circulation technology. Three melt circulation loops in series are envisaged. Starting with a composite feed of iron ore fines, pulverized coal and lime flux, a metallized solid raft floating on molten iron is propelled out of the ironmaking loop onto the first of two downstream steelmaking loops. In the first, a liquid slag is formed, primary decarburization is undertaken not with oxygen but rather with CO2 and H2O and the melt is desulfurized. The semi-product stream enters the third melt circulation loop, where open-channel decarburization is effected along with dephosphorization to yield a low carbon steel product. Alternatively, the melt leaves the last loop to irrigate a packed tower countercurrent to argon at around 100 mbar to continuously produce ultra-low carbon (ULC) steel.

Jan 1, 2003

By S. Fiore, M. C. Zanetti, C. Clerici

The processes and fluxes of a cast iron foundry plant located in the North of Italy were analyzed in order to determine the amount and kind of wastes produced from the different activities. The main fractions are the molding sands, furnace muds and powders coming from the dust abatement plant, the exhaust lime, the furnace refractory, the metallic shotting and the sludges and powders coming from the dust abatement plant of molding lines for a total production equal to 800 t/d. All wastes were sampled and particle-size and chemically characterized to evaluate the best recycling or reuse solutions. Wastes were sieved and divided in three categories according to the particle-size dimensions: below 0.1 mm, between 0.1 and 0.6 mm and above 0.6 mm. The fraction above 0.6 mm dimension underwent magnetic separation to recover and quantify the potentially available iron fraction. The fraction between 0.1 mm and 0.6 mm was chemically characterized in order to understand if it could be fed to the sand regeneration plant. The below 0.1 mm fraction was characterized to evaluate the following recycling and reuse solutions: additive for molding sands and/or raw material for the concrete industry.

Jan 1, 2003

By J. Simmons, P. Ziemkiewicz

Acid-Base Accounting (ABA) is an analytical procedure that provides values to help assess the acid-producing and acid-neutralizing potential of overburden rocks prior to coal mining and other large-scale excavations. This procedure was developed by West Virginia University scientists during the 1960s. After the passage of laws requiring an assessment of surface mining on water quality, ABA became a preferred method to predict post-mining water quality,and permitting decisions for surface mines are largely based on thevalues determined by ABA. In order to predict the post-mining water quality, the amount of acid-producing rock is compared to the amount of acid-neutralizing rock, and a prediction of the water quality at the site (whether acid or alkaline) is obtained. We gathered geologic and geographic data for 56 mined sites in West Virginia, which allowed us to estimate total overburden amounts, and values for maximum potential acidity (MPA), neutralization potential (NP), net neutralization potential (NNP), and NP/MPA ratios for each site based on ABA. These values were correlated to post-mining water quality from springs or seeps on the mined property. Overburden mass was determined by three methods, with the method used by Pennsylvania researchers showing the most accurate results to actual overburden mass. A poor relationship existed between MPA and post-mining water quality, NP was intermediate, and NNP and the NP/MPA ratio showed the best prediction accuracy. In this study, NNP and the NP/MPA ratio gave identical water quality prediction results. Therefore using NP/MPA ratios, values were separated into categories: <1 should produce acid drainage, between 1 and 2 can produce either acid or alkaline water conditions, and >2 should produce alkaline water. On our 56 surface mined sites, NP/MPA ratios varied from 0.1 to 31, and six sites (11%) did not fit the expected pattern using this category approach. Two of eight sites with ratios <1 did not produce acid drainage as predicted (the drainage was neutral), and four of 40 sites with a ratio >2 produced acid drainage when they should not have. These latter four sites were either mined very slowly, had non-representative ABA data, received water from an adjacent underground mine, or had a surface mining practice that degraded the water. In general, an NP/MPA ratio of <1 produced acid or neutral drainage sites, between 1 and 2 produced mostly alkaline drainage sites, while NP/MPA ratios of >2 produced alkaline drainage with a few exceptions. ABA is a good tool to assess overburden quality before surface mining and to predict post-mining drainage quality after mining. The interpretation from ABA values was correct in 50 out of 52 cases (96%), excluding the four anomalous sites, which had acid water for reasons other than overburden quality.

Jan 1, 2003

By Tsutomu Yamamura

The electrolytic reduction mechanism of rare-earth chlorides such as LaCl3, CeCl3, NdCl3, ` SmCl3 and DyCl3 in alkali chloride baths has been investigated in NaCl, KCI and eutectic LiCI- KCI by means of electrochemical transient methods. The thermodynamic behaviors of rare-earth containing species have been discussed in the frame of Electrode potential - P02- diagram. Low current efficiency found in the case of Nd electro-winning has been attributed to the dissolution of Nd into the bath. The analyses of electrochemical measurement required the elucidation of the effects of the factors such as under-potential deposition, metal dissolution, moisture and oxygen partial pressure.

Jan 1, 2003

By K. Severin, B. Flanigan, P. Marion

"Plutonic-related" gold deposits in Interior and SW Alaska (Tintina Gold Belt) vary significantly in size, grade, vein/deposit morphology, depth of emplacement, distance from causative pluton and metal association. Metal associations such as Au-Bi and Au-As- (Sb-Hg) are a good empirical indicator of the depth of emplacement and distance from causative pluton. These associations have been used successfully in exploration. Results from several analytical techniques also suggest a phenomenological cause for these metal associations. Gold and bismuth have paired mineralogy at high temperatures and, thus, are best correlated at deposits that are deep and/or close to causative intrusions.

Jan 1, 2003

The Acid Drainage Technology Initiative (ADTI) was initiated in 1995 by federal agencies, the National Mining Association (NMA) and the Interstate Mining Compact Commission (IMCC) to identify, evaluate and develop cost-effective and practical acid drainage technologies. In 1999, ADTI was expanded through the addition of the metal mining sector, which is focused on drainage quality issues related to metal mines. ADTI addresses drainage quality issues from abandoned, active, and future coal and metal mines. The guiding principle of ADTI is to build consensus among industry, federal and state regulatory agencies on acid drainage technology development and technology transfer issues. ADTI is focusing its efforts on mine drainage prediction, sampling/monitoring, modelling and avoidance/remediation. ADTI is not a regulatory or policy development program. ADTI includes the Coal Mining Sector (CMS) and the Metal Mining Sector (MMS) under the overall guidance of the ADTI Operations Committee. The Operations Committee consists of representatives from industry, state and federal government and academia. The Coal Mining Sector includes two committees; a prediction committee and an avoidance and remediation committee. The Metal Mining Sector includes steering committee and work groups on prediction, sampling and monitoring, modelling, mitigation, and pit lakes. The Coal Mining Sector has produced two publications on the prediction and prevention of acid drainage. The Metal Mining Sector has workbooks under preparation covering the work group topics. This past winter, the Metal Mining Sector, working with the US Bureau of Land Management, presented a satellite training session on acid drainage. ADTI has evolved in response to changing needs and technologies as evidenced by the addition of the Metal Mining Sector in 1999. The Operations Committee and the members of the Coal and Metal Mining Sectors will guide future direction in response to identified issues.

Jan 1, 2003

By Yutaka Shiraishi

Two methods were developed to measure the viscosity of the slag from the glassy to the liquid states in an ascending temperature process. The first method employs rotating parallel plates within which is placed a solid cylindrical sample in line with a sphere. The second method uses a tube which is pushed into a sample held in a rotating crucible. Both methods were tested using standard glasses, including boron trioxide and NBS standard glass #711. The main difference between these two methods is in sample preparation. Comparative measurements between two methods were performed using a sodium boro-disilicate glass containing 5%mol of alumina. The results showed good agreement in the mid-range of glassy viscosities, 105 to 107 Pa.s. In the liquid state, there were no significant differences between the two methods.

Jan 1, 2003

By Y. H. Liu

Several foaming aluminum samples of different density were prepared in a semi?industrial scale experimental system, Their properties such as the energy absorption characteristics, mechanical properties, heat conductivity and acoustical properties were measured. The results showed that the foaming aluminum with a density of 0.5 to 0.6 g/em3J has the best energy absorption and this makes it suitable as the ensuring bar of the automobiles and also as a cushion material for the engine. The foaming aluminum with a density of 0.25 to 0.4 g/em3 has the best acoustical properties and heat conductivity resistance, which is suitable for the door filling material, the ceiling and the partition or the car engine.

Jan 1, 2003

By Florian Kongoli

"Lime ferrite" slag with limited silica content has proven to be a valuable choice in the modem processes of copper smelting and converting due to several advantages that this slag offers compared to classical silicate slags. Nevertheless the liquidus surface of this slag has been experimentally measured only at low oxygen potentials such as in equilibrium with iron or near it and in air. Although most of the smelting and converting processes that use this slag occur at intermediate oxygen potentials, the liquidus surface of this slag is not known at these conditions and the effect of oxygen potential and silica has not been correctly understood. This has brought some confusion in literature as well as in the industrial practice. In this work the liquidus surface of the calcium ferrite slags has been quantified by the means of a new thermophysicochemical model and a new type of liquidus surface diagrams which are very convenient for any industrial process that uses calcium ferrite slags. These diagrams can be easily used to select the lowest liquidus temperature of calcium ferrite slags at a minimum cost and can help design several fluxing strategies in copper smelting and converting processes. The effect of the oxygen potential and silica is also quantified and important industrially related conclusions are drawn.

Jan 1, 2003

By Tapani Järvinen

Non-ferrous metals and metals in general are considered as being non-renewable natural resources. Metals are needed because of their excellent and irreplaceable properties. The consumption of metals, with the exception of carbon steel, is steadily growing by 1-3 % annually, and that of stainless steel as much as 3-6 %. This is a general trend, which is periodically disturbed by cyclical variations. In recent years so-called "New Economy" has become prominent in the public media and the market value of the traditional industry has been well below its real value and importance. Nevertheless, the modem society requires metals today and also in the future, and the companies using the most modem technology in a responsible way and innovative solutions not only in technology, but also in everything they do will survive. This paper describes the role of Europe as a producer of primary base metals and as a supplier of technologies in the base metals industry. It concentrates on the development and commercialization of technologies and project implementation in the metallurgical industry. As one example of a European approach to these matters the paper presents Outokumpu&apos; s response to the future challenges in the base metals industry. Outokumpu Oyj is one of the leading metals and technology companies in the world of stainless steel, copper, zinc, and sales of technology in metals and minerals businesses. Outokumpu applies its knowledge of metals and processing to generate value for its customers and shareholder. Everything we do, we do in an economically, environmentally and socially responsible way.

Jan 1, 2003

By Joseph Sofra

It has become increasingly evident that sustainable metals production in the 21" century requires producers to balance the needs of cost effective, high value production with that of responsible plant operation. This is becoming more difficult as lower grade and more complex feed materials, including recycled scrap and residues, arc being processed to reduce production costs and decrease exposure to primary metal market fluctuations. One particular facet of the metals industry facing these challenges in the 21 st century arc copper producers. The recent steady decline in the copper price has seen the industry cut expenditure, tighten control on income streams and focus on high returns on capital investment. For these reasons copper producers arc looking towards flexible technologies that can deliver high value products, with minimal environmental impact at low capital and low sustainable operating costs. Ausmelt&apos;s Top Submerged Lancing (TSL) technology for copper production is a low cost, proven technology for the processing of both primary and secondary copper materials. Both the smelting and converting operations introduce significant advantages in environmental performance, improved process efficiencies and high rates of metal recovery. Ausmelt has made significant gains in the past 4 years in establishing a strong market position for its copper technology. New installations in China, South Africa and India as well as existing operations in Zimbabwe and China have demonstrated its effectiveness. This paper reviews the application of Ausmelt Technology for both smelting and converting of primary and secondary sources. It discusses Ausmelt&apos;s design and implementation philosophy, and how this philosophy meshes with the needs of the end user.

Jan 1, 2003

Jan 1, 2003

High precision GPS systems for mining are accurate to within a few centimetres. Typical systems consist of one or more GPS antenna, GPS boards, sensors to detect the position of the blade or bucket of the machine radios to pick up correction signals, a computer to control the system and a display screen to give instructions and information to the operator. GPS systems offer two benefits û they give information to the operator to get his job done faster and more accurately and they can send information to management about how the job was done. On dozers, GPS systems allow the operator to accurately complete earthmoving jobs with no survey pegs. On hydraulic excavators the systems can be used to accurately locate the position of the bucket teeth for selective mining. On blasthole drills the systems can guide the operator to each hole and record accurate as-drilled plans. By reporting the position of the blade or bucket in three dimensions it is possible to continuously upgrade a mapfile of the excavation. From this file it is then possible to report productivity numbers in real time. High precision GPS works best with a minimum of five satellites visible. This may be difficult in a pit. Systems which also access the Russian GLONASSS satellites offer significantly better uptime. GPS systems will become indispensable for efficient mining operations in the future.

Jan 1, 2003

By T. Dlokweni

Several Rockmass classification systems have been developed and used in Civil Engineering design and for underground mining operations. Some of these rockmass classification systems have been modified and used in the South African coal mining industry to quantify descriptive geological information for use in coal mine design and roof support selection. The Coal Mine Roof Rating (CMRR) system developed in the USA has been investigated in detail as part of the study. Advantages and disadvantages of the system have been identified by means of underground and surface borehole testing. Investigations into the rating systems in South Africa found that most of the rating systems used in the South African coal mining industry are for planning purposes, and are conducted on borehole cores. This study also highlighted that the rating systems being used are based on geology, and that the human factor plays a major role in the rating systems. To overcome these problems, all the classification systems used in South African coal mines have been benchmarked against impact splitting technique and documented. The best elements of these systems are combined into a new standard system that will be easily used by all mine geologists and rock mechanics engineers. Plusieurs systèmes de classification de la masse rocheuse ont été développés et utilisés dans le Génie Civil et pour les opérations d&apos;exploitation minière souterraine. Certains de ces systèmes de classification de la masse rocheuse ont été modifiés et utilisés dans l&apos;industrie minière sud-africaine pour quantifier l&apos;information géologique descriptive utilisée dans la conception de mines de charbon et la sélection de soutènement du toit. Le système d&apos;Evaluation de Toit de Mine de Charbon (CMRR) développé aux USA a été examiné en détail, comme part de l&apos;étude présente. Tests en surface de trous de mine ont permis d&apos;identifier les avantages et inconvénients du système. Une étude des systèmes d&apos;évaluation en Afrique du Sud a révélé que la plupart des systèmes d&apos;évaluation utilisés dans l&apos;industrie minière sud-africaine sont utilisés pour la planification, et sont menés sur les carottes de trous de mine. L&apos;étude présente a aussi souligné que les systèmes d&apos;évaluation utilisés sont basés sur la géologie, et que le facteur humain joue un rôle majeur dans les systèmes d&apos;évaluation. Pour surmonter ces problèmes, tous les systèmes de classification utilisés en Afrique du Sud ont été référencés en termes de technique de fissuration sur choc, et documentés. Les meilleurs éléments de ces systèmes sont combinés dans un nouveau système standard qui sera utilisé aisément par tous les géologues de mine et les ingénieurs miniers. Verschiedene Gesteinsmassenklassifikationssysteme wurden entwickelt und kamen im Design für Hoch- und Tiefbau und Untertageabbau zum Einsatz. Einige dieser Gesteinsmassen-klassifikationssysteme wurden modifiziert und sind in der südafrikanischen Kohlebergbauindustrie in Verwendung, um beschreibende geologische Informationen für die Anwendung im Design von Kohlebergwerken und der Firstabstützungsauswahl quantitativ zu beschreiben. Das in den USA entwickelte Kohlengrubenfirstbewertungssystem (CMRR) wurde als Teil der Studie im Detail untersucht. Vorteile und Nachteile des Systems sind mittels der Untergrund- und Oberflächenbohrlochprüfung gekennzeichnet worden. Prüfungen der Bewertungssysteme in Südafrika ergaben, daß die meisten Bewertungssysteme die in der südafrikanischen Kohlebergbauindustrie benutzt werden, Planungszwecken dienen und werden anhand von Bohrlochkernen durchgeführt. Diese Studie hob auch hervor, daß die verwendeten Bewertungssysteme auf Geologie basieren und daß der menschliche Faktor eine Hauptrolle in den Bewertungssystemen spielt. Um diese Probleme zu überwinden, wurden alle in südafrikanischen Kohlengruben benutzte Klassifizierungssysteme vergleichsweise in Hinblick auf Spaltschlagtechnik überprüft und dokumentiert. Die besten Elemente dieser Systeme werden in ein neues Standardsystem kombiniert, das leicht von allen Grubengeologen und von Gebirgsmechanikingenieuren benutzt werden kann.

Jan 1, 2003

By A. González

Arsenic is one of the main contaminants present in Chilean copper concentrates and its abatement represents a challenge for the process metallurgy, particularly under the strong environmental requirements in the global community. The possibility to form ferric arsenate directly from a gas phase by means of a heterogeneous reaction between an arsenic gas bearing and iron oxide was studied at laboratory scale. A thermodynamical analysis for the system Fe-As-O-S has been initially made, in order to obtain the stability conditions for the ferric arsenate or other FeAsyO2 type compounds. Experiments were made using an hematite sample suspended in a thermogravimetric device. AS4O6 gas generated from solid AS2O3 that was passed through the iron oxide sample and its instantaneous weight change was recorded directly. A kinetic study for the AS4O6 volatilization was made to control the gas composition. A chemical control between 300 and 600°C with an apparent activation energy of around 14 Kcal/mol As2O3 was determined. The samples after the reactions were chemically and XRD analysed. Arsenates detected corresponds to complex compounds. Results shows a dependence on temperature and oxygen content in the gas phase. The kinetics for iron arsenates formation is slow, reaching an arsenic capture of 6% after 80 minutes of reaction when an oxygen content of 50% is fed continuously at 800°C and 3,56% As in the gas. Experiences made at the same temperature but under higher oxygen content in a closed reactor, allowed arsenic capture close to 60%. For higher temperatures the capture is considerably lower.

Jan 1, 2003

By J. Postle, Deborah McCombe

"This is the third in a series of articles about the Committee for Mineral Reserves International Reporting Standards (CRIRSCO). The first article was an interview with Niall Weatherstone, Chairman of CRIRSCO (CIM Magazine, February 2008) the second described the background and goals of CRIRSCO (CIM Magazine, March/April 2008). In 2007, CRIRSCO was adopted as the Reserves and Resources Task Force of the International Council on Mining and Metals. This decision by ICMM has resulted in an increased level of funding for CRIRSCO and the ability to advance its objectives. In mid-October 2007, CRIRSCO members met in London England to discuss the status of each of the member countries’ reporting codes and the progress of various CRIRSCO projects. Update on national reporting codes Australia: The last update of the Australian JORC Code was in 2004. While there are ongoing discussions about issues that arise from the application of the latest version of the Code, there are no plans to update JORC in the near future. Canada: The Canadian Securities Administrators revised National Instrument 43-101 in December 2005. At the same time, the Canadian Institute of Mining, Metallurgy and Petroleum published updated Resource and Reserve Definitions that are incorporated by reference in NI 43-101. CIM is continuing work on developing Best Practice Guidelines to assist practitioners in the estimation of Mineral Resources and Reserves. South Africa: The South African Mineral Reserve Committee is currently awaiting an update of the Johannesburg Stock Exchange Limited Listing Rules, which will incorporate both SAMREC and SAMVAL (South African valuation guidelines). The official launch of both codes is expected in 2008. Europe: The Pan-European Reserves Reporting Committee expects to release a consultation draft in 2008. Emphasis is being placed on industrial minerals and aggregates, which constitute a very large industry in Europe. Chile: The Chilean Certification Code was approved in early 2008. As part of the Code, a National Commission is being established to screen and review reports on a random or specific basis. United States: The Society of Mining Engineers updated the SME Reporting Guidelines in 2007. The Securities and Exchange Commission has not accepted these more up-to-date definitions and guidelines. The SME committee will continue to discuss the incorporation of these Reporting Guidelines with SEC. SME has also established a class of membership, a Registered Member, which includes disciplinary measures for non-compliance with the SME guidelines."

Jan 1, 2003

Solid Energy New Zealand Limited (æSolid EnergyÆ) is a state-owned coal mining company, producing 4.0 Mtpa from a number of opencast and underground mines in the Huntly, West Coast and Southland regions in New Zealand. The company currently exports 2.1 Mtpa of coking coal. Exports are expected to grow strongly over the next five year as the company expands production into new semi-soft and thermal coal reserves. Domestic coal demand is also expected to grow strongly, particularly in the North Island, as the Maui gas field reserves diminish, and thermal coal becomes more important for electricity generation and meeting the energy needs of forest processing and other industries. Solid Energy is expanding and developing its risk management practices across all areas of the business: strategic planning û extensive use of scenario analysis and probabilistic modelling over a 20 year period; investment decisions û development and application of a rigorous six stage æProject Assessment GuidelineÆ process for all new mine developments; geological and geotechnical risk assessment techniques û use of best practice techniques including seismic surveys; financial risk management û a dynamic approach to hedging based on effects based analysis of Cash Flow at Risk analysis against preset risk tolerances; risk financing û the use of a captive insurance subsidiary, and the experiences of a small coal company seeking to obtain insurance cover on a æhardÆ international insurance market; and integrated risk management û the challenges of trying to implement a broad integrated risk management approach across the company, that supports implementation of strategic objectives as well as meeting æcompliance or legislative basedÆ risk management requirements.

Jan 1, 2003

By Stephen Semeniuk

Discussion by Stephen Semeniuk Discussion As a valuator and SME member, I view Ross D. Lawrence&apos;s position as based on unproven and faulty assumptions made with regard to the pragmatic evidence presented in his paper. Moreover, his call for the inclusion of all mineral resources in discounted cash flow valuations is redundant, if not irrelevant, as there are procedures that already take all classes of mineralization into consideration for valuation purposes. In my experience as a valuator, I find that Canadian securities regulators are more than accommodating in allowing any valuations of mineral properties to be based on cash flow calculations. In other business areas, the same regulators usually reject discounted cash flow valuations of projects or businesses with no operating history. Instead, the regulators prefer valuations to be based on other transactions tested in the marketplace. Valuations based on actual market transactions are less subjective than discounted cash flow calculations and/or the capitalization of arbitrary, untested or undemonstrated earnings projections. In the mining and minerals sector, such projections may be made by persons not qualified to make such projections. In support of this statement, I direct readers to the article "Valuation of mineral properties which do not contain exploitable reserves" by Lionel C. Kilburn, which appeared in the August 1990 issue of the CIM Bulletin. To quote from the article: "Value of a mineral property depends basically upon metal prices, recoverable grades, mining and metallurgical practices, commodity supply and demand, and political-economic conditions, all of which vary with time. Five fields of expertise influence the value of a mineral property: •geological engineering, •commodity markets, •financial markets, •stock markets and •mineral property markets. The skills of geologists and engineers properly apply to the first field of expertise. Knowledge and consideration of the other four fields is important, but such advice is more properly sought from marketing experts, economists and stockbrokers." Securities regulators have created no hardship for valuators by excluding unsubstantiated resources in discounted cash flow valuations. In the field of engineering, best design practices apply. A margin of safety is built into the design criteria for any new equipment or structure that will exceed normally expected load levels and stresses, even though such considerations imply higher front end costs. In accounting, the comparable operating principle is conservatism. It explains why, for balancesheet presentation purposes, inventory is stated at cost or market, whichever is the lowest value. Similarly, when the engineering or geoscience-based valuator plays in the field of finance, the rules of accounting and applied economics apply. Regulators in their skepticism of income-based valuations are in tune with similar views already expressed in mining literature. To quote H. Van Tingley, in Mining Magazine, July 1996: "... the DCF method has inherent dangers when applied to undeveloped resources. Firstly, it presents an often-undeserved aura of accuracy. A DCF value is no more accurate than the least accurate of the assumptions incorporated into the calculation - and assumptions

Jan 1, 2003