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By D. C. Carter, J. P. Anderle

"Exploration drilling of evaporite sequences in eastern Canada has undergone significant changes in equipment, techniques and philosophy since the early 1970s. The result has been the recovery of full-size cores from properly conditioned and stabilized holes, high quality open hole geophysical logs, and high quality metallurgical samples. The majority of modifications have resulted from the necessity to preserve the integrity of the evaporite deposit, and thus ensure the potential development, combined with the need for cost-effective high quality information. This is particularly evident in the priority placed on the development of non-erosive drilling fluids, casing and cementing procedures. The results are applicable to diamond drilling exploration of evaporite deposits anywhere in the world.IntroductionThe majority of current technical and scientific literature and expertise available on such subjects as drilling fluids or cementing procedures is applicable to large diameter, deep (several thousand metres) oil-field type drilling . The differences between oil-field drilling and wire-line core diamond-drilling are dramatic: large diameter, deep holes drilled with a low rpm tricone bit using large volumes of fluid pumped through a large annulus versus small diameter, shallow (less than 600 m) holes drilled with a high rpm diamond-set core bit using small volumes of fluid pumped through a small annulus. Exploration drilling of evaporite sequences in eastern Canada in the early I970s was conducted using oil-field equipment and techniques to complete holes of moderate (1000 m to 1500 m) depth . The prohibitive cost of these operations has necessitated that subsequent exploration drilling employs modified diamond-drilling equipment and techniques developed as part of a transition away from oilfield methodology. The result has been full size core, recovery approaching 1000/0 and the ability to run open hole geophysical logs; a combination of factors enhancing the collection of high quality information (Carter, I989a)."

Jan 1, 1990

By Y. S. Sun, Northeastern University, W. B. Li, P. Gao, Z. Y. Zhang, J. W. Yu

"The boron-bearing iron concentrate was extracted from ludwigite ore by the process of magnetic-gravity separation. In order to fully utilize the refractory ore and meet the boron consumption of China, a novel process for separation of boron from iron in boron-bearing iron concentrate was proposed in this paper. In particular, laboratory scale experiments of improving boron reactivity were performed. Fine boron-bearing iron concentrate briquettes were reduced by bituminous coal completely at 1125 °C for 150 min. The effect of sodium carbonate, which was used as an additive in the roasting process, was investigated. The addition of sodium carbonate decreased the boron reactivity and facilitated the volatilization of boron. The influence of diverse cooling methods of the reduced samples on the boron reactivity was studied. The results indicated that boron reactivity could reach up to 80.76% when the reduced samples were cooled by rapid water quenching. In addition, the magnetic material containing 92.71 % Fe with a recovery of 95.11 % and boron-rich non-magnetic material containing 14.51% B2O3 with a recovery 88.85% could be obtained by low-intensity magnetic separation. The magnetic material and boron-rich non-magnetic material were good raw materials for steel-making and borax production, respectively.INTRODUCTION Ludwigite ore is abundant in Liaoning province of China, with 28.43 Mt B2O3 accounting for 57% of the boron resources of the country (Liu et al., 2006). However, it has not yet been utilized on an industrial scale due to its complex mineralogy and fine mineral dissemination (Wang, Wang, Ding, Ma & Xue, 2012). At present, boron-bearing iron concentrate and boron concentrate can be obtained from ludwigite ore using magnetic-gravity separation. The boron concentrate contains B2O3 12%~16%, which can be used as a high-quality raw material for the boron chemical industry after activated roasting, but the B2O3 content in the iron concentrate reaches up to 4%~6%. In order to further separate boron and iron from boron-bearing iron concentrate, a blast furnace and a solid pre-reduction followed by electric arc furnace melting have been proposed (Liu, Cui & Zhang, 1998; Wang et al., 2012). However, both of these two current routes face the same crucial problem that molten boron-rich slag has to be cooled slowly to obtain the alkali-dissolution activity of boron, which affects the yield of boron resource."

Jan 1, 2016

Lonmin RoM ball mills are treating two types of feed ore produced by conventional mining and mechanised mining methods. It was reported that reduction in mill throughput was observed when treating the mechanised mining ore. Detailed grinding surveys were conducted for troubleshooting. Ore samples were collected for breakage characterisation using a JKRBT based on different particle density components. XRD analysis was conducted to investigate the association of minerals with density components. The plant surveys and the breakage characterisation tests all suggested that the two mining methods did not significantly affect either the ore breakage properties or the RoM mill performance. Instead, the mill discharge open area exerted a remarkable influence on mill throughput. The RoM ball mill operated at Lonmin K4 Concentrator has been proven to be a versatile mill that performed stably with variations in feed size distribution and feed ore changes by different mining techniques. The reasons are elucidated by the multi-component breakage characterisation and the plant surveys data.

Jan 1, 2012

By A. Warczok, T. A. Utigard

"Slags from smelting of copper concentrates contains from 1 to 15% of copper. Copper is present in the form of copper or copper matte inclusions of size from 2 to 1000 micro, and as dissolved cuprous oxide. Removal of the copper requires the slag reduction, primarily reduction of magnetite and co-reduction of cuprous oxide. Thus, the kinetics of the slag reduction play an important role in copper recovery. Instantaneously, at the contact of carbon and a slag the gaseous film is formed. The magnetite and cuprous oxide reduction is going through a gaseous film, separating the slag and carbon of a coke or electrodes. The thickness of a gaseous film grows to a critical value and gas bubbles, containing CO and CO2, are created and rise up in the slag. Results of measurements of kinetic of the slag reduction with graphite showed high value of activation energy, close to the value of activation energy of Boudouard reaction. Strong temperature dependence of the reaction rate points out the thermal instability of the reacting system. It was found that the slowest process in the reduction stages determines the loop of CO and CO2 transfer and magnetite diffusion to the slag/gas film boundary. Strongly endothermic Boudouard reaction seems to cause thermal instability on the reaction surface. So, heat transfer to the reaction surface is very important. Due to low thermal conductivity of a slag the convection dominates in the heat transfer. So, any slag stirring accelerates the rate of reduction and coalescence of metallic copper or copper matte inclusions."

Jan 1, 2015

By M. W. Wadsley

"Physical and chemical property models are widely used in process engineering. There exist, in the published literature, completely empirical models of ''thermodynamic properties"", that is, property models that are not consistent with the laws of thermodynamics. There also exist property models that purport to be thermodynamically consistent but are flawed in their implementation. There are also published property models that are consistent with the laws of thermodynamics but that do not reproduce property values with an acceptable accuracy. A practicing engineer might be asked to assess very different property models for which there are a variety of claims. This paper discusses features of thermodynamic and empirical property models that may assist in their practical evaluation and implementation."

Jan 1, 2005

By J. Butra

The underground research presented in this paper was carried out in the two Polish copper mines: Rudna and Polkowice-Sieroszowice. The aim of the research was to determine stress field parameters. The measurement method and measuring positions are described as well as the measuring technique adapted to the geological and mining conditions of the Rudna mine and the Polkowice-Sieroszowice mine. The identified values and directions of principal stresses and horizontal stresses and their importance for optimization of mining operation and safety improvement are discussed.

Aug 1, 2013

By D. V. Dorling, J. T. Bowker, J. A. Gianetto

Over the last few years, interest in the development and construction of large diameter, high pressure pipelines from the Mackenzie Delta in northern Canada and Alaska's North Slope has steadily increased as a result of the projected decline in recoverable natural gas from existing reserves in western Canada. The success of such enormous pipeline projects, which will require utilization of a strain-based design approach, is largely based on successful application of high strength line pipe steels, such as X80 and X100. To fully realize the economic benefits of high strength steels, welding processes and procedures must be developed to ensure that the requirements for high strength and good low temperature toughness are confidently obtainable in field girth welds used in the construction of such pipelines. This study aims to provide a better understanding of the factors that control weld metal strength and toughness for a series of mechanized X100 girth welds produced using a range of narrow-gap gas-metal arc welding procedures. The attainment of high yield strength (> 810 MPa) is considered to be an important target to ensure overmatching strength relative to the longitudinal property distribution of X100 line pipe steel. Some factors that have been considered in this evaluation include influences of gas-metal arc welding process variants (single and multi-wire) and changes in welding procedure specifications, including joint preparation. Key components of this work relate to the reliable measurement of weld metal strength variation through-thickness and as a function of position around the circumference of a given girth weld.

Jan 1, 2005

By R. W. Boyle

"PREFACEThis paper comprises two parts. The first part discusses lithochemical surveys based on major, minor and trace elements in whole-rock samples from primary enveloping halos. The second part continues with discussions of surveys based on leakage halos, zonation of elements, stable and radioactive isotopic distributions, geothermometric, geobarometric, thermolumin escent, pedochemical, hydrochemical, atmochemical and biogeochemical methods. A selected bibliography follows the second part of the paper.ABSTRACTAreal (two-dimensional) geochemical surveys, based mainly on secondary dispersion halos and trains in media such as surface waters, soils and drainage sediments, have proven particularly successful in recent years and have greatly assisted in the discovery of a large number of varied mineral deposits. Three-dimensional surveys based on primary halos and leakage halos have received relatively little attention by research organizations and the mineral industry. Such surveys offer many novel approaches for discovering blind mineral deposits deeply buried below overburden or within their host bedrocks. This paper reviews detailed methods for the discovery of blind mineral deposits based on sampling rocks (lithochemical methods), soils and other types of overburden (pedochemical methods), waters (hydrochemical methods), gases (atmochemical methods) and biological materials (biogeochemical methods) . All are applicable to the discovery of blind deposits; the efficacy of each or in combination depends essentially on the type of mineralization, the extent of the development of the primary and secondary dispersion halos, and the finances available for sampling techniques employing overburden drilling, bedrock drilling, and sophisticated water, gas and vegetation collection."

Jan 1, 1982

By E. O. Magnusson

THE orebodies of the Preston East Dome mine show a considerable variation in size,? shape, dip, and ground condition. They vary from small and large irregular masses being mined by shrinkage, cut-and-fill, and square set-and-fill mining methods to narrow veins being mined by open stoping. Standardization of mining operations has necessarily been difficult. This considerable variation in mining condition prompted the development of a bonus system which would give more equitable bonus payments through-out the mine than those obtained by the usually accepted methods of calculating mine bonus. PRINCIPLES ON WHICH THE SYSTEM IS BASED Under an incentive bonus system, performance (efficiency) and a price per unit of work done are inter-related. It is in the application of this? principle to working conditions .in the Preston East Dome mine that the system to be described differs from the standard methods of calculating mine bonus. It was found that the method of paying a fixed price per unit of work done, under the 'contract' system, gave satisfactory results in development, less satisfactory results in timbering, and results which were not satisfactory in stoping. Under the fixed price system, bonus payments, in timbering and stoping particularly, were very erratic and did not necessarily represent fair payment for the work done. A fixed price in development is satisfactory because the work done, and the conditions under which the work is done, are uniform. The drilling and blasting cycle is completed in one shift, the size of heading is con-trolled, and a minimum number of holes are required in order to obtain a satisfactory break. The performance possible under these conditions has been found to be confined to a fairly narrow range. By performance in development is meant the efficiency of the working crew as expressed in terms of the two variables of feet of advance per round and pounds of ex-plosives consumed per foot of advance. A change in rock formation, how-ever, may alter to a marked degree the performance possible, quite independent of the skill and energy of the working crew. The changes in working conditions that affect development performance from the standpoint of bonus calculation are usually easily apparent and are satisfactorily met by establishing several fixed prices.

Jan 1, 1944

By Alfred E. Pugsley

PAYMASTER CONSOLIDATED MINES, LIMITED, began an investigation into the economy and use of detachable bit drill-steel in June, 1937. This investigation has continued to the present time, and was made necessary by transportation and distribution difficulties that had arisen through the use of standard steel in three widely separated mine areas serviced by a central steel-sharpening shop. Detachable bit drill-steel performance was first studied in the workings of No. 2 mine, where the rock being drilled was composed mainly of porphyry or tourmaline, and where standard drill-steel transportation costs had been excessive. The results obtained in this early work definitely established the economy of detachable bit drill-steel at No. 2 mine. This conclusion was reached when the 're-grind' system of re-sharpening dulled detachable bits was 1n use. Preliminary observations on the performance of detachable bit drill-steel in the quartz-carbonate veins of No. S and No. 6 mines gave encouraging results, and warranted a large-scale investigation under practical mining conditions. All drilling operations were gradually changed over to use of detachable bit drill-steel. This change was completed by February, 1938.

Jan 1, 1939

By V. P. Mehrotra, D. W. Fuerstenau, A. -Z. M. Abouzeid

The use of pulverized coal for electric power generation results in the production of vast amounts of fly ash. One potential use for waste fly ash is the production of pellets for lightweight aggregates. This paper is concerned with the role of the physical and chemical characteristics of two different fly ashes in governing their agglomeration or pelletization behavior and their strength characteristics. In batch balling experiments, fly ash pellet growth was found to be extremely sensitive to the amount of moisture added. One ash (Mohave) exhibits marked pozzolanic activity whereas the other (Jim Bridger) does not. The pozzolanic activity has a very pronounced effect on pellet growth kinetics, moisture requirements, and the effect of various additives on growth kinetics. Slow drying under ambient conditions produces strong pellets from Mohave ash whereas Jim Bridger ash pellets lacking in pozzolanic activity are weak. Rapid drying at high temperatures results in weak pellets because water necessary for hardening is driven out of the pellet. Steam curing enhances pellet strength. Locked-cycle pelletizing experiments exhibit expected oscillation in pellet production rates and attendant fluctuations in pellet green strength.

Jan 1, 2004

By O. Herstad, J. M. Toguri, K. Grjotheim

DURING the last three years, investigations on the aluminum reduction of magnesium-bearing compounds have been initiated at the Institute of Inorganic Chemistry, The Technical University of Norway. The results of these investigations are reported in this paper. Very little information exists in the literature on the reaction between magnesium compounds and metallic aluminum. The available information itself is conflicting, and, to clarify the existing discrepancy, the reactions between aluminum and magnesium oxide (MgO), caJcined dolomite (CaO . MgO) and olivine (Mg2SiO.) were studied. The logical approach for the study of these reactions between condensed states with the formation of a gaseous phase is, ( 1) the measurement of the equilibrium vapour pressure of the gas, in this case magnesium, associated with the respective reactions and, (2) the identification of the end products of the reaction in order to establish the re-action scheme.

Jan 1, 1962

By R. Hendricks

"IT IS a pleasure for me to appear before yon today and to have this opportunity of reviewing with you recent developments in the world lead and zinc industry. To provide essential background material, I propose reviewing the period from 1950 to the present, a period which has undoubtedly been the most hectic in the long history of the industry.In capsule form, the pattern for this period is one of repeating cycles of boom and recession, of failure through research to develop adequately new markets and new uses for lead and zinc, of surplus production and growing inventories, of price instability, and lastly, of an abdication in some sections of the industry of responsibility for control of its own destiny by turning to governments for support in time of stress. This is not a pretty picture but, as the 1950 decade ends, there are signs of a new maturity and of a growing determination on the part of the industry to put its own house in order.The difficulty suffered by the world's lead and zinc industry in the current decade originated with the support extended to it in 1950 by the U.S. Government at the time of the Korean conflict. Recalling the shortage of base metals in World War II and fearing that the Korean conflict might develop into World War III, the U.S. Government in 1950 adopted a policy to encourage the production of lead and zinc, both domestically and abroad by means of development loans and long-term floor priced purclu.se contracts."

Jan 1, 1960

By Carlos Alberto Spier

The Águas Claras and Pico mines are two world-class, iron-ore mines hosted within Lower- Proterozoic banded iron-formations (locally known as itabirites) of the Minas Supergroup located in the Quadrilátero Ferrífero District, Minas Gerais, Brazil. The Águas Claras orebody consists of a 2,500 m long roughly tabular-shaped lens hosted within the dolomitic itabirite of the Cauê Formation. Dolomitic itabirite is the protore of the soft high-grade iron ore, which is the main ore type of the Águas Claras orebody, and represents more than 85% of the 284 Mt mined since 1973. Hematite is the main constituent of the iron ores. It occurs as martite, granular hematite and, locally, as specularite. Magnetite appears subordinately as relicts within martite and hematite crystals. Gangue minerals are very rare. These consist of dolomite, chlorite, talc and apatite and are especially common close to the contact with the protore. This virtual absence of gangue minerals is reflected in the chemistry of ores which are characterized by very high Fe contents (an average of 68.2% Fe). The Pico orebody is a continuous ~3,000 m long body of lenticular shape hosted within quartz itabirite, which is the protore of the soft high- and low-grade ores at the Pico mine. The soft high-grade ores, together with the low-grade ores, called iron-rich itabirite, are the main types of ores at the Pico mine, respectively representing approximately 51 % and 29 % of the reserves within the pit. The iron oxide mineralogy is the same as that of the Águas Claras mine, but in different proportions. Gangue minerals are very rare in the high-grade ores, but are slightly more common in the iron-rich itabirite. Quartz is the dominant gangue mineral, and is found with minor quantities of chlorite. The chemistry of the high-grade ores is characterized by high Fe contents (an average of 67.0 %) and low P, Al2O3, and SiO2 which are concentrated in the fines. Iron rich itabirites average 58.6% Fe and 13.5% SiO2.

May 1, 2003

By F. Tanaka

Copper losses to discard slag have long impacted on the profitability of copper smelters. Businesses based on the treatment of secondary materials have also revealed that copper losses are indices of precious-metals losses. Many custom smelters are thus required to obtain more reliable controls for reducing copper losses than ever before. Mitsubishi Materials Corp. has cooperated with academic research institutes in conducting research projects on the pyrometallurgical fundamentals of copper smelting systems, including mutual evaluation of magnetite behavior between synthetic and industrial slags. The state-of-the-art pyrometallurgy has subsequently been introduced to Naoshima smelter for controlling the Mitsubishi process. The revised controls function successfully and the operational results demonstrate that avoiding the discharge of solid magnetite from the S-furnace is quite effective to reduce copper losses. Magnetite behavior has been controlled over the Mitsubishi process so as to reduce copper losses while satisfying the needs of recycling businesses growing in Japan. In-situ estimation of magnetite behavior using the absorbed heat from the melts to cooling water will also be discussed.

Jan 1, 2007

By Dani J. Alldrick, Alastair J. Sinclair, Colin I. Godwin

"Abstract - The Stewart mining camp has a long history of precious and base metal mining. The camp is abundantly mineralized, with more than 200 widespread, varied, vein prospects, deposits and orebodies. These show wide variations in the mineralogy of ore, gangue and alteration assemblages, and wide variations in textures and structural settings. This report establishes the timing of the different metallogenic epochs and suggests a specific exploration application for systematic lead isotope analyses.Galena lead isotope ratios from a range of mineral occurrences indicate that all these varieddeposits formed during two main mineralizing events. Lead isotope data from the Stewart mining camp do not provide absolute ages for the formation of mineral deposits, but the relative distributions of data are consistent with dates determined in other studies. One ore-forming episode occurred in the Barly Jurassic and the other in the Middle Eocene. Both metallogenic epochs were brief, regional-scale phenomena. Sorne deposits from the younger mineralizing episode were em­ placed adjacent to or superimposed on the older deposits.Field and laboratory studies show that the two metallogenic epochs are characterized by different base and precious metal suites: Barly Jurassic gold-silver-zinc-lead-copper; and Middle Eocene silver-lead-zinc. Therefore, showings of different ages have different base and precious metal potentials and deserve different exploration emphasis. Lead isotope studies provide a reliable, cost-effective method for evaluating the age and commodity potential of small or recently discovered mineral showings and for setting exploration priorities on properties with several varied mineral occurrences . The determination of the age and metal potential of a prospect at an early stage of exploration may govern the urgency, intensity or even the necessity for further exploration work."

Jan 1, 1993

By Joel Werner

Weak metal prices, declining head grade, and increased operational costs are forcing many open pit mining companies to look to their balance sheets for significant cost reductions in order to remain competitive. Maintenance continues to represent a significant proportion of the total operating costs in the mining industry. Compared with the other major cost components of the mining process very little effort has gone into maintenance optimization. The potential payoff from maintenance optimization on the cash cost of the commodity is enormous. A large percentage of these costs are incurred in unscheduled maintenance events, which typically cause serious disruptions to the production process. These maintenance induced production losses can be a significant contributor to the overall operating costs. A structured proactive maintenance approach using the latest advances in technology can achieve dramatic cost reductions and productivity improvements. Remote condition monitoring systems are becoming increasingly commonplace and have the potential to identify problems prior to failure. Detection of equipment degradation prior to failure will enable repairs to be scheduled thereby reducing costs and interruptions to production. Remote condition monitoring technology has evolved rapidly in recent years, with a host of new tools becoming available to assist mine operators in improving their maintenance operations. These tools have capabilities such as: remote real-time vital signs and performance monitoring, alarm/event handling, trend analysis, and maintenance workflow management. When these monitoring tools are used in conjunction with a mine management system the vital signs data can be integrated and associated with maintenance history, predictive maintenance data, operational information, and geographical information. This integrated approach to the management of vital maintenance data will help shift the mobile equipment maintenance paradigm from reactive to proactive. This paper will introduce a proactive approach to the management of the maintenance process and the tools required to facilitate this process.

May 1, 2003

By L. J. Han, Y. J. Zong, S. Y. Wen, J. J. Wei

"Stress strain curves characteristics, deformation and strength properties, and failure process and characteristics of sandstone samples under different stress states were analyzed through triaxial compression tests carried on using TAW-2000 microcomputer control electro-hydraulic servo rock triaxial test system. The experimental results reveal that peak strength, residual strength, elasticity modulus and deformation modulus increase linearly with confining pressure, and failure models transform from fragile failure under low confining pressure to ductility failure under high confining pressure. Macroscopic failure forms of samples under uniaxial compression was split failure paralleling to the axis of samples, while macroscopic failure forms under uniaxial compression was shear failure, the shear failure angle of which decreased linearly with confining pressure. There were significant volume dilatation properties in the loading process of sandstone under different confining pressure, and then based on acoustic emission damage and volumetric dilatation damage the damage evolution properties of samples were analyzed, and damage constitutive model were established, realizing the real-time quantitative evaluation of samples damage state in loading process. INTRODUCTIONDamage is a phenomenon that micro defects in material under monotonic loading or reloading will lead to progressive decrease of the cohesion and damage of volume units. Many scholars at home and abroad have carried out systematic researchers on damage evolution characteristics and constitutive model of rock, and have achieved a series of remarkable results in this field. Lu Y.D. (2004) studied the complete stress-strain curve’s characteristics of marble under triaxial compression, and established the bilinear elastic-linear strain softening-residual ideal plastic damage constitutive model. Ren J.X. (2001) studied the damage evolution laws of coal and rock mass by computerized tomography triaxial loading system, realizing the quantitative evaluation of damage state. Zhang Z.L. (2011) studied the deformation and failure mechanism of strong weathered sandstone by triaxial compression test, and analyzed the damage evolution processes and established the damage evolution equations based on the density method. Li X.J. (2012) studied the microscopic damage characteristics of siltstone under triaxial compression by scanning electron microscope and digital image technology, and analyzed the statistical distribution characteristics of cracks azimuth angle, length, width. Zhou J.W. (2012) studied the strength, deformation and fracture damage characteristics of sandstone by uniaxial cyclic loading and unloading tests, and defined damage variable based on linear damage mechanics theory and acoustic emission (AE). Cao W.G. (2006) established a new damage model and a statistical damage constitutive model of rock under specific confining pressure according to the force of damaged part and undamaged part in rock on the base of statistical damage theory. Li S.C. (2014) studied the damage evolution characteristics in the whole uniaxial compression process of sandstone by electrical resistivity and AE, and proposed a status qualitative criterion for rock damage."

Jan 1, 2015

By K. Shen, A. J. Sinclair, N. Champigny

"Fluid inclusion studies from the Cinola deposit indicate low salinities and low C01 contents of the ore fluid. This supports a suggestion that the mineralizing fluids originated from pore water in the fluviatile host rock (mid-Miocene Skonun Formation). Bimodal distribution of filling temperatures suggests the existence of at least two temperature regimes centred on 160°C and 270°C during mineral deposition. Independent age and stratigraphic evidence indicates that depth of mineralization is between 1.1 and 1. 8 km, corresponding to a hydrostatic load of between 110 and 170 bars.RESUMELes donnees sur les inclusions fluides du gisement Cinola indiquent de basses salinites et basses teneurs en C01 . Ceci confirme que les fluides mineralisants ont ete derives de l'eau interstitielle prise dans les sedimentsfluviatiles hates. La distribution bimodale des temperatures d'homogenisation implique !'existence de deux regimes de temperature concentrees vers 160°C et 270°C pendant Ia mineralisation. La profondeur alaquelle le gisement s'est forme est evaluee d'etre entre 1.1 et 1.8 km a partir d'informations stratigraphiques independantes: ceci correspond a des pressions hydrostatiques de 110 a 170 bars."

Jan 1, 1982

By Robert T. McKnight

"Traditional techniques for valuing resource projects companies have been primarily based on discounted cashflow methods (DCF) or by comparison to similar projects with an apparent market capitalization. Many resource projects are really forms of options to invest rather than a future cashflow stream. Employing the DCF method to value a resource project which is really an option to invest, can dramatically underestimate the real value of the project. The analytical tools required to evaluate options, while more complicated than the usual spreadsheets used for DCF, are becoming more easily available and usable by managers. This paper will discuss the background of options valuation and some of the tools which will make it easier for managers to estimate the value of projects and companies which have significant real option values.ResumeBob McKnight is a graduate of the University of British Columbia in Geological Engineering, supplemented by an MBA from Simon Fraser University. Following several years in the oil patch with Cities Service and Brascan, Bob returned to Vancouver in 1979 to work for Wright Engineers. He subsequently went on to work for Cassiar Mining, Getty Resources and Endeavour Financial before joining Pincock Allen & Holt Ltd. in 1998. His experience ranges from exploration to feasibility studies, financial evaluations of mining and oil & gas projects, due diligence, project finance, valuations and mergers and acquisitions. He has extensive international mining experience pertaining to such countries as Chile, Mexico, Uruguay, Thailand, Indonesia, Angola, Papua New Guinea, Kazakhstan.What are Options?Options have been around for centuries. They were familiar to Roman and Phoenician traders who were shipping cargoes from Mediterranean seaports. In the financial world, options are types of contracts that generally include the right, but not the obligation, to buy or sell a share, currency or commodity. The underlying commodity price or share price changes are assumed to be lognormally distributed. In this context, options are of two general types, ""call"" options and ""put"" options. Call options have the characteristic of having the right to buy a tradable commodity or currency at a predetermined price for a specified period of time. For the owner of call options, they become more valuable as the price of the underlying commodity increases. For the seller of call options, these options become an increasing liability as commodity prices rise, since there is the obligation to sell the commodity at a predetermined (perhaps lower-than-market) price. This characteristic of call options recently became high profile with the sharp rise in gold prices last year. The value of gold call options sold by certain producers increased their associated liabilities to the point where margin calls were made."

Jan 1, 2003