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The blasting process involves a complex interaction of a delayed sequence of moving sources of seismic energy which produce nonlinear behaviour near the blast holes. A deterministic description of this nonlinear behaviour represents a formidable problem. The modelling of blast vibrations remote from the blast source may use some of the primary features of the blast design such as charge type, charge weight and initiation sequence. Such modelling of blast vibrations usually assumes linear behaviour remote from the blast holes. Site specific charge weight scaling laws may be used to predict the blast vibration levels with relatively poor accuracy. An important ingredient which is missing from charge weight scaling laws is the seismic source wavelet emanating from each blast hole. The present paper considers some approaches which may be used to determine a suitable source wavelet. The wavelets are suitable for use in the region where linearity may be assumed. In that region, it is possible to model the attenuation and scattering of the seismic wave as it propagates from the blast source to the measurement location.

Jan 1, 1990

The paper covers the history and develop- ment of electrical and diesel-powered hydrau- lic percussion rock drills. It examines main design aspects and problems encountered in pro- ducing an efficient and reliable machine to fully cover the nominal hole sizes required for underground development, production drill- ing and for general quarry work. The main design features and advantages of a hydraulic rock drill are relatively low input power requirement to energy per blow (this being achieved by the use of an electric or diesel- powered hydraulic system) and a specially con- structed piston using a powered damper cylinder to absorb the recoil forces from the drill steel and reduce stresses on the drill, feed and hydraulic boom. A further important design feature is the anti-jamming device which controls the drill both during manual and automatic operation. This anti-jam device works on feed and rotation press and prevents the drill bit becoming jammed in broken or soft ground. These features and many other mechanical and environmental benefits are highlighted when comparing hydraulic percussion rock drills with current pneumatic machines. The hydraulic rock drill gives an overall high penetration and production rate, with an added bonus for ergonomy and environmental conditions such as lower noise level, no fogging from air and oil exhaust (which naturally gives better air for breathing),plus improved vision when in under- ground situations. Hydraulic rock drills and systems have been fully tested in many mines, quarries and contract sites during the past years. They h6! been improved and modified and are now provi~ to be very reliable and economical piece drilling equipment whò in mines and quarries.

Jan 1, 1978

By A Querzoli, B Williams

In late 2014 the Flinders Power Management Team was executing business improvement plans to ensure continued electricity generation until 2028 and beyond. Six months later, in June 2015, the Board announced the closure of the Flinders Power South Australian business, including the Leigh Creek Coal Mine, the Northern and Playford Power Stations located at Port Augusta and the 250km railway line. The announcement was preceded by a brief period of internal planning. A date was soon set for ceasing coal mining operations, being November 2015. The mine is unique in many ways. Located approximately 550km north of Adelaide the site has over 100 years of history and was formerly operated by the South Australian Government. Privatisation in 2000 saw the mine continue operation under Perpetual Leases from the South Australian Government. The leases included exemptions from multiple sections of the Mining Act 1971, obliging primary regulation under the Mines and Works Inspection Act 1920. The coal, being a low rank sub-bituminous brown coal, is prone to self-heating and spontaneous combustion. The mine and company town Leigh Creek were the economic and cultural heartbeat of the community. Facilities at the mine were shared by the community and vice versa. While many mines across Australia and the world enter periods of care and maintenance, few have been actively closed to the point of relinquishment (Bennett and Lacy, 2016). A swift decision to close, followed by a short mining operations shutdown period, presented significant technical and regulatory challenges for both the mine operator and for Regulators. The subsequent joint risk mapping process employed by Flinders Power and South Australian Mining Regulators was a unique real-world example of collaborative mine closure planning and execution. Lessons learnt are valuable for all mines, production facilities and for Regulators, even for those who may wrongly assume that closure is many years away. CITATION:Williams, B and Querzoli, A, 2018. Risk management for minesite closure planning and execution – start now! Lessons from the closure of the Leigh Creek Coalfield, South Australia, in Proceedings Life-of-Mine 2018, pp 68–72 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 25, 2018

By M Barker, H Li

The total number of tailings accidents has reduced from over 50/decade in the 1960s-1980s to less than 30/decade in the 2000s to 2010s. However, the rate of significant tailings dam failures has not been reduced. The significant tailings dam failures the mining industry experienced in the recent history include: Merriespruit, South Africa, 1994; Los Frails, Spain, 1998; Kolontár, Hungry, 2010; Mount Polley, Canada, 2014; and Samarco, Brazil, 2015. The conventional Factor of Safety approach itself may not be enough to further reduce the rate of significant tailings failures due to its limitations such as uncertainty. For example, the same factor of safety could have a vast range of annual probability of failure for different tailings dams, and insufficient consideration of failure consequence. This paper presents a risk based approach for design with the objective being to minimise tailings dam failures, especially those significant tailings failures with high consequence and low probability. This approach includes risk based design and risk management using bowtie tools. In the risk based design, quantitative analysis will be used to estimate the annual probability of failure and the tolerable failure criteria is linked to the consequence category. Bowtie analyses will be used to understand hazards and risks and identify and select independent controls that are effective in preventing and mitigating catastrophic failures. In this paper, examples of risk based design and bowtie analyses are presented and discussed. CITATION:Li, H and Barker, M, 2018. Risk-based approach for minimising tailings dam failures, in Proceedings Mine Waste and Tailings Stewardship Conference 2018, pp 397–414 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 23, 2018

By F Cesnik

The past few years has seen a concerted effort to improve the recovery of gold along with its co-product copper from the æhigh-gradeÆ Ridgeway concentrator at Newcrest Mining LtdÆs Cadia Valley Operations. A number of initiatives were identified and implemented, culminating in a sustained improvement in recovery of approximately three to four per cent for both metals. The key projects that contributed to this improvement included the installation of a 355 kW Metso stirred media detritor (SMD) to create a regrind circuit, installation of froth crowders on the scavenger circuit, installation of a Falcon SB2500SE gravity concentrator as part of the regrind circuit to improve gold recovered to bullion on-site and the optimisation of the grinding circuit to reduce the 80 per cent passing size (P80) of the primary grind from 160 to 121 ¦m for the same throughput via process control, cyclone and ball charge optimisation. This paper will focus on the supporting test work, where applicable, that was used as the design basis for the project, but more importantly the plant data before and after the changes to clearly identify the improvements to plant recovery.

Jan 1, 2007

By K W. Mills, N R. P Baczynski, J Mylvaganam, D A. Prado, M F. Lee, I A. de Bruyn

"This paper presents the second part of a study of the assessment of rock stress inputs on the performance of various new mining designs at the Ok Tedi large open pit mine in Papua New Guinea. Over the years, four programs of rock stress measurement have been completed at Ok Tedi, each providing different interpretations of the in situ field stresses. Details of three of these programs and interpretations are provided in the precursor to this paper, entitled ‘Rock Stresses at Ok Tedi, Papua New Guinea’ (Lee et al, 2014).This paper explains how the various stress interpretations were utilised in the modelling of the proposed new open pit and underground mining excavations, comparing where possible their expected effects on stability. The modelled performance of three specific mine components have been discussed here as case studies, including: the below-pit drainage tunnel, as the floor of the open pit workings is mined down from 350?m above, to within just 75?m above the crown of the tunnel the stability of the 1000?m high slope of the proposed West Wall cutback the proposed sublevel open stoping extraction sequence in the Gold Coast orebody beneath the East Wall, for which only the likely ‘worst-case’ stress regime was used to assess sequencing and stability issues.The benefits of scheduling the collection of detailed rock stress measurements and other input data from a range of different sources at various stages of the projects are discussed.Alternative in situ stress models have less stability impact on open pit slopes than on underground mine excavations.CITATION:de Bruyn, I A, Baczynski, N R P, Lee, M F, Mills, K W, Mylvaganam, J, and Prado, D A, 2014. The application of rock stress inputs to stability assessments at Ok Tedi Mine, Papua New Guinea, in Proceedings AusRock 2014: Third Australasian Ground Control in Mining Conference, pp 43–54 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Nov 5, 2014

Resue or split face firing has the potential to separate ore and waste rock into separate muck piles within a stope. Thus split face firing has the potential to reduce dilution of the ore stream to be transported to the surface for subsequent processing. It also potentially reduces the total amount of broken rock needing to be transported out of the mine as the waste material is physically separated from the ore as part of the blasting process. Waste can therefore be used directly from the stope to backfi ll other mining areas. This paper reports on the results of split face firing trials at the Hillgrove mine in NSW and analyses the results of these blasts.

Aug 1, 2010

By R Kroukamp, G Rech

CRONIMET Australia in cooperation with Speciality Metals International, the mining lease holder of the Mt Carbine Tungsten mine, have demonstrated the preconcentration and processing of large (>12 million tonnes) tailings and mine waste dumps on site in far north Queensland. The first stage of this project has proven the economic viability of preconcentration using sensor-based particle sorting whilst ensuring high recovery of industry critical tungsten minerals – wolframite and scheelite. Sensor-based sorting technology have enabled the production of a sorter product to feed the existing wet gravity plant ensuring higher recoveries and increasing concentrate production. Processing of 1,000 tonne low grade samples using the TOMRA x-ray transmission (XRT) ore sorter installed on site, has reduced the volume of material entering the downstream wet processing plant by up to 60%. The sorted 10-25mm size range produced the highest upgrade ratio (product/feed) of 24:1 and achieved sorter concentrate grade of 1.52% WO3, sorter waste grades below 0.014% WO3 and metal recoveries of up to 93.4%. The appropriately sized, barren sorter waste material is also sold as aggregate and other quarrying products and thus adding to the overall economic benefit of the project. The utilisation of the sorting technology on site has produced an economically viable project, significantly reduced capital cost, and reduced the time to market of the final tungsten concentrate. The next phase of the project includes design and installation of a larger two sorter plant capable of over 150t/h feedrate.

Nov 10, 2020

By J Ledgerwood

Namakwa Sands is a mineral processing company based on the West Coast of South Africa and is solely owned by Exxaro Resources Limited. Mineral ore is mined and processed, concentrated and both chemical and mechanically upgraded before being sent for electrostatic and magnetic separation units. The final high value mineral products report as Zircon, Rutile and Ilmenite.The recovery of non-magnetic material is largely dependent upon a number of factors, including but not limited to dew point, ambient temperature, feed rate, mineral size distribution, specific gravity and mineral content in head feed. One important limiting factor to recovery in typical dry mill operations is the particle size distribution of the feed. Variance in the particle size has catastrophic consequences for recovery. This is the reason for this study. Until recently large variances in non-magnetic production were viewed to be a function of machine operation. This view was later rejected with the feed size distribution determined as the major driver of low recoveries, for Namakwa Sands orebody 50 per cent variance in particle size distribution can be noticed within one day. This is because of the successive mining blending techniques employed.The predicament is that the two modes were so closely placed together that recovery of a single mode is almost impossible without the consequence of greatly reducing recovery. The second mode was found at 125 µm while the first was at 90 µm. Interestingly, for the mentioned feed type a cumulative size distribution of a unimodal feed type is almost exactly the same as for a bimodal size distribution. Thus a plot of cumulative size distribution will show no difference due to the modes being so close together. This is the reason why this phenomenon was not noticed before.The study also found that, using an high tension roll (HTR) or rare earth roll, a fine stream with a single mode at 90 µm versus a coarse stream with a single mode at 150 µm would yield completely different results interms of yields. Larger conductive particles are thrown from the roll while small particles loose charge faster (entrainment). Results in terms of the bimodal size distribution show that even though 25 per cent of the feed type is greater than 150 µm the yields followed a similar pattern to that of the coarse particles rather than that of the majority (75 per cent) fine particles. This confirms what was published by M Ziemski and P N Holtham in 2005 on charge decay rates; they mentioned that particle bed effects played a major role in recovery.

Oct 5, 2011

By P B. Hills, R J. Walton

Geotechnical instrumentation has been implemented as a key step for monitoring and optimising an engineered mine design for managing seismicity at the Beaconsfield Gold Mine. Measurements of displacement, stress change, ground control element load and seismic response of the rock mass allow for back analysis and calibration of critical parameters for feedback into the engineering design loop. Instrument clusters are installed in strategic locations prior to the commencement of stoping in order to determine the nature of the response of the rock mass to stoping. A selection of instruments including instrumented cable bolts and rod extensometers, resistance wire extensometers, hollow inclusion stress cells, vibrating wire stress meters and resistance wire extensometers are used to gather data through a data logging system. The rate at which data is recorded is adjusted to provide more information during periods of anticipated rapid change such as around stope firings or during periods of high seismic activity, and less information during periods of anticipated quiescence. The twofold purpose of the instrumentation is to calibrate the numerical modelling output which forms the basis of the engineered mine design, and to provide an alert mechanism where the behaviour of the rock mass is not what was anticipated, or where the impact of that behaviour may compromise the integrity of the engineered ground control system. The paper describes the location of instrument clusters with respect to stoping, the type of instruments employed and the method of data acquisition. It provides examples of results obtained and illustrates the way in which that information is used to optimise the mine design and manage seismicity.

Jan 1, 2008

This paper investigates the adequacy of current gas monitoring techniques to adequately detect spontaneous combustion in underground coalmines. Despite being in the 21st century spontaneous combustion continues to occur in underground coalmines sometimes being detected only at a very advanced stage. Control of the incident is often then very expensive and time consuming. The adequacy needs to be assessed not only from the point of view of the analysis technique be it tube bundle, gas chromatograph or real time sensor but also the number, location and sampling frequency of the monitoring locations. Recommendations are made to optimise monitoring processes and recognise limitations of current techniques.

Jan 1, 2005

By R Morrison, R Dunn

In many mineral processing operations, the reported production figures for an accounting period may not make the best use of available data. While most of the mathematical approaches, such as check-in/check-out, mass balancing, used in effective metallurgical accounting strategies are well understood, the sources and magnitude of measurement errors generally are not. As part of the æAMIRA P754-Metal Accounting and ReconciliationÆ project, a study was undertaken at the Northparkes copper/gold concentrator near Parkes, New South Wales to examine the data used in their concentrator metallurgical accounting system. This paper summarises the results of a detailed examination of the mass measurement systems around the concentrator as well as the primary sampling system used for grade estimation. The goal of this work was to develop practical techniques to quantify the error (ie both accuracy and precision) of the measured metal accounting information. With this information, statistical confidence levels for this data can then be calculated. If the errors are small, the effect of error in each piece of measured data can then be propagated to other calculated production figures such as recovery and feed grade using a statistical technique called æthe propagation of errorÆ.

Jan 1, 2007

Contemporary approaches to safety management appear to be failing short of meeting its mark in improving mine safety. This is evidenced by the high workers compensation, high incidence rates and fatalities. Evidence from high-risk and complex organisations points towards safety culture as being important in improving site safety. In more recent years resilience engineering has been touted as a new and innovative way of managing safety. This paper reviews and synthesises previous literature on safety culture and resilience engineering. It then highlights methods that can be used to measure safety culture and resilience engineering, and explores similarities and differences between complex organisations and gold mining to identify opportunities for more innovative approaches to improving safety in gold mining operations through safety culture and resilience engineering.

Aug 1, 2010

By M Warnken

Major cities are not only the focal point for AustralianÆs work, leisure and homes, they also are the focal point for the flow of resources into the built environment, motor cars and transportation and urban consumables. The steady increases in æstockÆ and waste generation, in line with GDP growth, means that cities will become the mine sites of the future if the inherent value is recovered from these materials at end of life. The urban waste stream can be characterised as containing approximately nine per cent hydrocarbon-based materials; 57 per cent biomass-based material; 28 per cent fully mineralised materials that are inert, five per cent metals and less than one per cent of problematic materials that are potentially hazardous and toxic. In order to convert these wastes into value added inputs into the economy, a number of technological interventions are required. These æurban waste mining techniquesÆ revolve around source separation and material streaming. One issue that needs to be overcome when determining which mining technique to implement, is identifying the option that will deliver optimal value, both from a financial and a sustainability perspective. The difference between embodied energy and calorific value is a case in point. Highest net resource value (HNRV) is a concept that can assist in choosing between different resource recovery options. The assessment can be done at a strategic level, or can be used to work out material specific issues. For example, used tyres can be recovered for their energy content at an approximate cost of $120 per tonne, whereas mechanical processing of used tyres can deliver a net benefit of $192.

Jan 1, 2006

By J Channell, G Phillips

"The Chesney deposit, located 4 km south-east of Cobar consists of three copper-gold rich shoots that lie within a larger, copper dominant lode. A fourth gold rich shoot is located adjacent to the main deposit. The deposit exhibits a strong structural control on mineralisation, as brittle deformation during subvertical extension provided the requisite structural traps to precipitate sulfides from solution. It is postulated that the Great Chesney Fault acted as a fluid conduit, conveying fluids to the site of orebody formation. The continual supply of fluids resulted in cyclic brittle deformation when the fluid pressure exceeded the lithostatic pressure and the tensile strength of the Great Cobar Slate.Evidence supports the hypothesis that ore deposit formation was controlled by: a supply of mineralised fluids transported along the Great Chesney Faulta suitable location for the mineralised fluids to accumulate, accommodated by vertical extension and dilation in certain locationsthe creation of suitable structural traps to capture the sulfides. These traps formed as a result of fault-valve behaviour. Understanding the controls on mineralisation enables prediction of the location of other deposits with similar emplacement history, or extensions of current deposits.CITATION:Channell, J and Phillips, G, 2014. Understanding mineralisation controls – a case study of the Chesney deposit, in Proceedings Ninth International Mining Geology Conference 2014 , pp 301–312 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Aug 18, 2014

By T Barto, D Thomson, T Norgate, C Doblin

Collaboration between CSIRO Minerals and SunSalt Pty Ltd, a salt producing company located in rural Victoria, has resulted in a commercial process to recover magnesium sulfate (commonly called Epsom salt) from the saline waters of the Murray Basin. The feed for this process is bittern; the liquor remaining after halite (common salt) has been harvested from the saline water by evaporation.SunSalt produces salt and bitterns from three locations, namely Hattah (Victoria), Mourquong (NSW) and Wakool (NSW). The small size and considerable distances between these operations makes it uneconomic to build a stationary processing plant to extract value-added products, in particular Epsom salt, from the bitterns of the three operations. This fact led SunSalt to build a containerised mobile plant that could be moved to each site to process the bitterns at the end of the salt harvesting period.Epsom salt is extracted from the bittern by further evaporation, refrigeration and recrystallisation. In this process the bittern is diluted with five per cent volume of fresh water to minimise precipitation of residual halite in the bittern. Cooling the diluted bittern to between -5 and -10¦C precipitates up to 70 per cent of the magnesium sulfate, which is recovered as 85 to 96 per cent purity Epsom salt by filtration. This product is marketed as an industrial grade Epsom salt. Higher purity (up to 99.9 per cent) Epsom salt (USP or BP grade refined product) is made from the industrial grade product (raw Epsom salt) by recrystallisation.The containerised mobile plant was commissioned in December 2002. The raw Epsom salt generated in the mobile plant is refined to a higher purity Epsom salt in a separate plant located in Mildura. The Mildura plant was commissioned in December 2003.The CSIRO-SunSalt collaboration has demonstrated that the saline waters can be processed into a useful resource, and in addition could create jobs and a new skill base in regional Australia. The production of Epsom salt locally in Australia, which is worth currently about $A600 per tonne, removes the need to import over 3000 tpa from overseas with a net positive impact of $A2 million on the balance of trade.

Jan 1, 2004

By P Moser, R Ivanova, F Ouchterlony

This paper describes model-scale bench blasts on mortar blocks with distorted drill hole patterns, done in 2013–2014 at the Montanuniversitaet Leoben. The main aim of the project is to see if the fragmentation from and the crack development behind blasts with and without drill hole deviations differ significantly.The dimensions of the test blocks were 660 × 280 × 210 mm (L × W × H). They were mounted inside a yoke that allows the blast waves to escape (see Figure 1). Three rows in each block were shot row by row with a nominal pattern of B × S = 70 × 95 mm. The same nominal delay 73 µs (ie 1 ms per m burden) between holes was used throughout. Blocks with holes of stochastic collar position errors (variations in burden or in burden and spacing but constant row volume) and systematically shifted collar positions (blasts with staggered pattern) were shot. The results were compared to reference blocks without collar deviations.Apart from the sieving analysis, the remaining bench faces were measured with a stereo-photogrammetric method and horizontal roughness profiles for each row were constructed. Sawing slabs from block remains after the third row and use of dye penetrant allowed the study of internal blast damage.The analysis showed that none of the changes in borehole collaring had a significant effect on the sieving curve (median). The sieving results confirm earlier findings though that the fragmentation gets finer with the number of rows shot, implying that blast damage from earlier rows has an influence on the blasting results. The tests demonstrated that the nequiv (equivalent n-value) has increased ten per cent by shooting staggered pattern and decreased by seven per cent by pattern with burden and spacing errors. For the rest of the patterns, the nequiv was roughly the same.The surface roughness investigation showed that a smooth surface was achieved by the staggered pattern. The other deviations patterns did not show a clear trend.The internal blast damage, which was measured in the remaining part of blocks, showed that out of eleven, four crack families seemed to be most affected by blasting. The comparison of the reference and distorted patterns showed that less cracks were apparent for the staggered pattern, ie less damage was introduced.CITATION:Ivanova, R, Ouchterlony, F and Moser, P, 2015. Influence of distorted blasthole patterns on fragmentation as well as roughness of, and blast damage behind, remaining bench face in model-scale blasting, in Proceedings 11th International Symposium on Rock Fragmentation by Blasting, pp 693–706 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Aug 24, 2015

The Fosterville Goldfield has a modest past production (0.3 Moz), but is now emerging as a significant goldfield (2.6 Moz resources, including 1.1 Moz reserves) with implications for exploration within the orogenic gold provinces of the Lachlan Fold Belt in Australia and the Buller Terrane on the West Coast of New Zealand. Fosterville is located 20 km east of the 22 Moz Bendigo Goldfield and is geologically similar to other Victorian goldfields, however the nature of the gold mineralisation differs significantly. Unlike other Victorian goldfields there is no primary free gold at Fosterville. The gold occurs in as sub-SEM resolution particles, in fine grained arsenopyrite and pyrite crystals disseminated through the wall rocks in fault controlled quartz-carbonate vein stockworks. The Fosterville Goldfield comprises several subparallel fault systems striking 340¦ over an exposed strike length of 28 km. The Fosterville Fault system comprises the west dipping (~75¦), reverse Fosterville Fault and several less steeply west dipping splay faults formed in the footwall. The splay faults extend through east dipping beds from the Fosterville Fault across a syncline hinge into stratigraphically controlled positions on the west dipping limb of the syncline. The predominant control on gold mineralisation is the intersection of the bedding on the east dipping limb of the syncline and faulting which, is in turn controlled by the orientation of bedding in the west dipping limb of the syncline. The mineralised shoots are thus subparallel to the plunge of the syncline and show a plunge reversal about a culmination in the footwall syncline. This provides a very powerful exploration tool with bedding û cleavage intersection lineations measured in outcrop and oriented core indicating the plunge of mineralisation. Mineralisation is also, albeit less commonly, controlled by local variations in strike and dip of the host fault and at metre scale by host lithology. As the faults and mineralisation are stratigraphically controlled, detailed stratigraphic interpretations are essential to provide control on structural interpretations for resource modelling. Compared to other Victorian goldfields, the Fosterville Goldfield formed later (385 Ma to 360 Ma cf 440 Ma), at lower temperatures and at shallower depths (fluid inclusion studies of Au associated veins suggest vein formation at ~270¦C (range 140¦C to 385¦C) and at depths of 2.6 - 5.7 km).

Jan 1, 2005

By R Barritt

Remedial options for a waste rock dump (WRD) were considered as part of closure planning studies at an active mine in Western Australia. To minimise the impact of any seepage from the landform it was determined that placement cover system utilising the moisture ‘store-and-release’ concept was appropriate. The purpose of the cover system was to:•Reduce net infiltration of meteoric water to attenuate peak concentrations for contaminants of concern in natural receptors to levels that can be assimilated without adverse impact to the surrounding ecosystem; •Provide a growth medium for establishment of a sustainable vegetation canopy; and •Improve current quality of surface water runoff from waste storage areas.The project comprised several phases of work: materials characterisation, numerical soil-plant-atmosphere (SPA) modelling and finally cover system construction and monitoring equipment installation.CITATION:Barritt, R, 2018. Conclusions from long-term cover system performance monitoring – a case study, in Proceedings Life-of-Mine 2018, pp 101–105 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 25, 2018

"Recognising that the mining industry is wedded to the break-even cut-off grade rather than a cut-off grade that optimises value, the author examines some perils and pitfalls in the use of break-even grades that lead to what the author calls ‘negatively geared ore reserves’.Negatively geared ore reserves occur when a portion of the ore reserves actually has a negative value and is effectively being subsidised by the more profitable portion of the ore reserves. This situation is generally difficult to detect with the level of information available to the public investor. The ore reserves can still be quite profitable in total, but now possess a level of risk that may not be appreciated.The risk profile (financial risk) of a negatively geared ore reserve is far greater than for a non-negatively geared ore reserve. Like a negatively geared investment property in a falling property market (for readers familiar with the Australian tax minimisation investment strategy), when the price of a commodity falls, a company that possesses a negatively geared ore reserve loses value at a magnified rate relative to a company that has a neutral or positively geared ore reserve. In the extreme case of a major commodity price reduction, as happened with the gold price in mid-2013, the negatively geared ore reserve can easily become negative value in total, not just in part.The negatively geared ore reserve is sometimes intentional – for instance in order to increase published ore reserve tonnages and meet the CEO’s key performance indicators – but is also often unintentional, resulting from various errors in the break-even calculation. Common errors in calculating a break-even grade include using fixed metallurgical recoveries, not including allowances for ideal laboratory versus real plant results, ignoring available operational data and using modal rather than mean parameter values in cost and performance calculations.This paper examines a common value distribution profile in many ore reserves and the effect of common break-even grade errors on this profile.CITATION:Poniewierski, J, 2016. Negatively geared ore reserves – a major peril of the break-even cut-off grade, in Proceedings Project Evaluation 2016, pp 236–247 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 8, 2016