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By Michael Samis

The real option valuation method is often presented as an alternative to the conventional discounted cash flow (DCF) approach because it is able to recognize additional project value due to the presence of management flexibility. However, these two valuation methods can be separated on a more fundamental level by their differences in risk discounting. Real option valuation applies the risk-adjustment to the source of uncertainty in the cash flow while the DCF method adjusts for risk at the aggregate level of net cash flow. This seemingly small difference is the reason why the real option method is able to differentiate between projects according to each project?s unique risk characteristics while the conventional DCF approach cannot. This paper provides an overview of the real options and DCF valuation frameworks and discusses the differences in risk discounting that exist between the two methods. Using grade-school mathematics, this paper clearly demonstrates how, with real options, a unique project risk discount can be calculated which is directly linked to the project?s unique risk profile. It also highlights why the DCF method fails in this regard and shows why a call to ?increase the Risk-Adjusted Discount Rate? is an incomplete solution at best. Finally, a heap-leach project and satellite reserve development project are valued with both techniques and the difference in investment conclusions is explained in terms of the risk-discounting concepts discussed here.

May 1, 2003

By Miguel Rutti

El presente trabajo señala la geología, litología y mineralización del yacimiento minero El Tapado del distrito Yanacocha, situado al norte de Cajamarca. Este se encuentra conformado por diferentes depósitos auríferos epitermales de alta sulfuración, los cuales se desarrollan dentro de un vulcanismo calco-alcalino de composición andesítica a dacítica de edad Mioceno y son correlacionables con la Formación Porculla del Grupo Calipuy. La geología del depósito está conformada por rocas porfiríticas (intrusiones) y flujos piroclásticos tales como tufos de cristales, tufos líticos y brechas piroclásticas afectados por eventos eruptivos de brechas freáticas - freatomagmáticas. Todas estas rocas han sufrido posterior alteración hidrotermal con ensambles típicos de sistemas tipo ácido-sulfato. La mineralización económica está controlada por procesos hidrotermales y se encuentra asociada a sílice masiva y sílice vuggy ( 1-10 g/t Au y estructuras de hasta 136 g/t Au ) y en menor grado sílice alunita y sílice granular (moderada a baja ley).

Apr 22, 2003

By Shaw Bill

The paper describes of the JORC Code in terms its background working environment and reasons for success, and provides references to papers which cover the subject in more detail. It then discusses the two major developments in Australasian reporting standards in the last two years: the revision of the 1999 Code, and the introduction in early 2003 of the “ROPO” (Recognised Overseas Professional Organisation) initiative. The purpose of the JORC Code is to provide a minimum standard for reporting of Exploration Results, Mineral Resources and Ore Reserves in Australasia, and to ensure that public reports on these matters contain all the information which investors and their advisers would reasonably require for the purpose of making a balanced judgement regarding the results and estimates being reported.

Apr 22, 2003

By Leandro Echavarría

El presente texto describe el sistema epitermal de Arcata, situado en Arequipa, Perú. Arcata es un distrito epitermal de sulfuración intermedia rico en plata y metales base, cuya mineralización se hospeda en vetas de rumbo predominante noroeste y movimiento principal paralelo a la inclinación que forman una estructura de fosa (graben). Las vetas poseen texturas de relleno de espacios abiertos como bandeados costriformes, en cucarda, crecimientos en peine y brechas, con ganga de cuarzo, calcita, rodonita y rodocrosita. Por su parte, los minerales de mena más comunes son galena, esfalerita, calcopirita, con los metales preciosos hospedados en sulfosales de plata (pirargirita y tetrahedrita). Asimismo, se ha identificado una compleja secuencia paragenética con varios pulsos responsables de la mineralización económica.

Apr 22, 2003

By Louis Gariepy

El presente trabajo describe las características geológicas actualizadas de Cerro Lindo como yacimiento del tipo de sulfuros masivos volcanogénicos (SMV) y propone un modelo genético de su formación que apunta a una deposición en parte -sobre el fondo marino y por debajo de él-, controlada por fallas sinvolcánicas dentro de un graben intra-cuenca volcánico-sedimentaria.

Apr 22, 2003

By Lise Chénard

El presente texto señala los lineamientos del proyecto REFORMIN, así como su repercusión en la dinámica de promoción de la industria minera. REFORMIN surge en el 2001 como un proyecto bilateral entre Canadá y Bolivia, cuyo financiamiento proviene de la Agencia Canadiense de Desarrollo Internacional (ACDI). Su finalidad es apoyar al Viceministerio de Minas, facilitándole el acceso a la pericia canadiense para lograr una gestión más sana y eficaz de los recursos minerales del país. Para ello, se basa en los principios fundamentales tales como: mejora de la gestión del medioambiente minero, apoyo a la prevención y gestión de conflictos sociales en las comunidades mineras, a los mineros artesanales y a la promoción de los recursos minerales del país, -en tanto benefician al desarrollo de la industria minera en un contexto de mercado globalizado.

Apr 22, 2003

By Martin Williams

During the coming decade, many of the first generation of ‘super-pit’ gold and base metal mining operations in North and Latin America will reach the end of their economic lives. The closure of such pits in a manner which is environmentally sustainable presents a considerable challenge to the minerals industry. Pit closure often results in the partial or total inundation of formerly dewatered mining operations, and the resultant formation of lakes. The development of techniques for predicting, and controlling, the chemistry, groundwater discharge characteristics and long term hydrospheric impact of these lakes has become a critical aspect of pit closure planning. In this sense, the paper point out that Sleeper Mine was the first of a new generation of open pit gold mines developed in Nevada, USA. The closure of the Sleeper pit exemplifies the use of a range of pragmatic approaches to pit flooding, with applicability to mine closure at many other sites throughout the Américas.

Apr 22, 2003

By Frederick Felder

The paper point out the Angostura deposit is located in Colombia. The Angostura deposit, located within the Eastern Cordillera of Colombia is hosted by Triassic-Jurassic quartz monzonite and quartz diorite porphyries emplaced into Precambrian gneisses of the Bucaramanga Group. Silicification, pyritization, sericitization, alunite and pyrophyllite and other alteration and indicator minerals suggest a high sulfidation origin for the strong hydrothermal alteration. Major faults and shear zones occur in the area with NE, E-NE, E-W, WNW, NW and N-S directions. Analysis of geological results and structural modeling has also demonstrated that there is potential for additional high-grade ore shoots within the presently known mineralized structures. Delineating these structures should result in an increase of overall grade and contained ounces.

Apr 22, 2003

By Eric Nelson

The paper point out the structural openings and the localization of ore bodies. Structural openings in rocks constitute the primary permeability network for the formation of most hydrothermal ore deposits. The distribution, geometry, density, and orientation of ore bodies in structural openings are controlled by two primary factors: the far and near field stresses and the mechanical properties of rock. When stress controls the orientation and kinematics of faults and fractures in the absence of pre-existing weaknesses, ore shoot orientation is perpendicular to the fault slip vector and can be predicted by kinematic analysis. However, when structural openings form along pre-existing weaknesses, ore shoot orientation cannot always be predicted by kinematic analysis. Because we can classify ore bodies based on the types of geological structures discussed above and the variations that naturally occur from material property heterogeneity, exploration for hydrothermal ore deposits should include analysis of geologic structure and evolution, rheological variations, pre-existing weakness, and fault kinematics to evaluate structuralcontrols on localization of ore bodies.

Apr 22, 2003

It is now widely accepted that horizontal stress is present nearly everywhere underground. Often it is more severe than the vertical stress. It is a major cause of roof control problems in underground mines. The AHSEM computer program contains two modules to improve mine layouts for control of horizontal stress. For development, the user specifies the orientations of the maximum horizontal stress, the entries, and the crosscuts. Angled crosscuts may be used, and the angles may be different for the right- and left-hand crosscuts. AHSEM then shows the user how the stress condition would vary as the entry and crosscut orientations are changed. The second module is for longwall mining. Severe stress concentrations can make headgate conditions hazardous when the entries are improperly oriented. AHSEM shows whether a particular longwall orientation and extraction sequence places the headgate corner in a stress concentration or in stress relief. It also estimates the magnitude of the stress concentration.

Apr 1, 2003

By D. Berkley

The competitive pressure, the increasing energy costs and the environmental regulations impose substantial challenges to the definition of power plants serving industrial facilities. Primary mining and metallurgical facilities have even greater challenges because they are often located remotely, where the fuel supply can be a problem. The absence of a power grid imposes challenges on the reliability and quality of the electrical energy supply. In addition, the facilities usually require thermal energy too, not only electricity. This paper outlines these types of issues that have to be considered when defining a cogeneration plant integrated with a remote located industrial facility. It is addressed to the ?users? of cogeneration facilities rather than to ?generators.? The focus is on analyzing various site-specific design considerations to pre-screen the feasible cogeneration alternatives and minimize the number of options to be analyzed from the economics viewpoint. This approach could substantially reduce the engineering effort and schedule during the feasibility phase of the project. Part 1 of this paper (Berkley, 2003) provides a basic understanding of cogeneration plants of various types to establish a common language. Part 2 outlines and analyzes specific issues that could be of help in the definition of cogeneration installations for remotely located industrial facilities, with a focus on mining and primary metallurgical plants.

Mar 1, 2003

Develop tools that mine personnel can use to comply with 30 CFR,Part 47. Background The new MSHA rule, 30 CFR, Part 47 (also known as the HazCom rule), requires all mines to develop a written program to track hazardous chemicals at their sites. More specifically, the rule requires that mines list all chemicals and determine which are hazardous; develop a written Hazard Communication Program; label all containers used to store hazardous chemicals; obtain or develop Material Safety Data Sheets (MSDS) for all chemicals stored or produced; provide miners with training in working around hazardous chemicals; and make information about hazardous chemicals available to all workers. All mines with six or more employees must have complied with the new rule by September 23, 2002, and mines with five or fewer employees will have to be in compliance by March 21, 2003.

Mar 1, 2003

By Peter Yen

This session consists of five papers. Three involved research on the properties of grout materials, specifically ultrafine cements and polyurethane grouts. Two papers present the development of soil grouting technology and monitoring methods. Of great interest are the papers on ultrafine grout penetrability testing focusing on the pressure filtration effects encountered in permeation grouting applications (Ericksson, Stille and Mittag, Savidis). The comparison testing of hydrophilic and hydrophobic polyurethane grouts submitted by Vrignaud, Ballivy, Perret and Fernagu assessed the long-term performance of these materials for repairing saturated cracks in concrete, subject to thermal expansion and contraction. Two very practical papers present the development of soil grouting, where permeation, fracture, replacement, jetting and other grouting techniques are utilized. The papers by Lees with Chuaqui and Warner present experience with ultrafine and other commonly used grout materials. Methods to measure and monitor the injection process and verify production progress are discussed.

Feb 10, 2003

By Stephan A. Jefferis

I presume that the questioner is not asking about the reduction of sulfate in groundwater to hydrogen sulfide as a result of biological activity promoted by organics in the grout hardener and that the question relates to sulfate attack on cementitious grout systems. For the project in Spain presented in my paper, we used a very high pulverized fuel ash (PFA) content in the cementitious material. This gives good sulfate resistance and indeed the chemical interaction will actually cause the permeability to drop for about 50 years without any question of sulfate attack and damage to the whole thickness of the grout - of course there will be attack at the exposed face of the grout where it is in contact with the contaminated groundwater. The mix had over 75% PFA, and also a very high overall cementitious content. The mix was the contractor's design and showed excellent behavior in laboratory proving trials. In grouts as distinct from concrete, PFA gives significantly better sulfate resistance than ground granulated blast furnace slag which is often used in Europe as a component of bentonite-cement mixes for slurry trench cut-off walls.

Feb 10, 2003

By Lois G. Schwarz

I did a project (Sungai Piah) as a consultant to your firm in Malaysia, where we were faced with a similar situation as sketched out in your question. The following is what we did for the grouting of the primary holes, which were both located upstream of the plug as well as downstream: We used a hydrophobic MDI based semi-rigid polyurethane prepolymer in the first phase of the grouting operation when grouting under water flow conditions. Then in the second phase and also for the contact grouting we used a two component water compatible polyurethane elastomer. And then for deeper formation grouting, when all the water flow had been stemmed in the vicinity of the plug, we used a regular (balanced stable) cement based grout. So it may not exactly answer your question, but we first used hydrophobic grout because it is very efficient to grout a formation through which water flows. We didn't stop all the leaks day-lighting downstream of the plug or all water running through the formation near the plug, but the flow of water through the rock formation adjacent to the plug was reduced by 99.9%, after completing the urethane grouting. This facilitated the placement of cement based suspension grouts without wash-out.

Feb 10, 2003

Workers in underground stone mines have a high fatality rate caused by falls of ground from the mine roof or rib. NIOSH recommendations to reduce ground fall injuries and deaths address baskets, mechanical scalers, mechanical bolters, drill steel changing, personal protective equipment, and training. Description of Exposure An informal National Institute for Occupational Safety and Health (NIOSH) review in 1998 identified approximately 17 new underground limestone operations in vari¬ous stages of planning; as many as 35 new underground stone mines are expected by 2005. Many of these new underground stone mines will employ new or inexperienced workers with minimal knowledge of the hazardous conditions that exist underground. Workers in underground stone mines have a fatality rate nearly 20 times that of workers in the manufacturing sector. Three quarters of the fatalities in underground stone mines are caused by falls of ground from the mine roof or rib (Figure 1) [Statistical Abstract of the United States 1985-1999; MSHA 1983-1999]. During 1983-1999, nonfatal ground falls resulted in 140 injuries, or 15% of all underground, lost time stone mine injuries. These nonfatal ground fall injuries resulted in more than 13,800 lost workdays (one third of all lost workdays). Ground falls generate more disabling injuries and time away from work than any other type of incident. [ ]

Jan 11, 2003

By Gregory M. Molinda

The U.S. underground coal miner faces a continuing hazard from the fall of roof. At the root of many injuries and fatalities are weak or defective roof strata. Throughout mining history, millions of miles of entry have provided exposure of every conceivable geologic roof hazard. This report describes the geologic origin, association, and potential danger from the most common hazards. Discussions of weak rock include drawrock, rider coals, head coal, stackrock, and stream valley effects. Discontinuities, or roof defects, are described including, clay veins, slickensides, joints, and paleochannels. A number of examples from U.S. coalfields are used to document geologic structure and associated hazards. Roof fall analysis is a methodology used by NIOSH for hazard recognition and prevention; its application and benefit to the industry are discussed.

Jan 10, 2003

In This Chapter [Finding the dust source Ventilation and dust collector malfunctions Upgrading the dust controls Design stage ventilation planning ] This chapter explains how to reduce respirable dust76 in hard-rock tunnels during excavation by using tunnel boring machines (TBMs). The first steps in combating a dust problem are to take dust samples to pinpoint the source, check the ventilation system, and check the dust collector. If the ventilation system and dust collector are operating properly, then other dust controls such as water sprays and conveyor belt scrapers must be upgraded. For tunnels in the design stage, recommended air quantities are provided. FINDING THE DUST SOURCE AND LOOKING FOR VENTILATION MALFUNCTIONS [The first steps in fighting a dust problem are to take dust samples to pinpoint the source, check the ventilation system, and check the dust collector. Without knowing the exact source, efforts to reduce dust are hit-and-miss (mostly miss).] Taking samples to pinpoint the dust source. In tunnels with high levels of airborne dust, the first task is to pinpoint where the dust enters the airstream. Most dust originates from rock breakage at the tunnel face, but the location where this dust enters the airstream can vary. Dust can leak from behind the TBM face shield, from gaps in the ventilation duct, or from a mal-functioning dust collector. It can be entrained into the air from the muck on a moving conveyor belt. It can even be shaken loose from the underside of the belt as it passes over the idlers. As a start, to locate the dust source, dust samples and air quantity measurements should be taken at the following locations:

Jan 6, 2003

By Steven J. Page, Andrew B. Cecala, John A. Organiscak

In This Chapter [Drill dust control: wet and dry Enclosed cabs on drills and mobile equipment Haul road dust control] Overburden drilling generates most of the respirable dust that affects workers at surface mines. Both wet and dry methods are available to reduce this drill dust. Overburden removal by mobile excavation equipment such as bulldozers, front-end loaders, and haulage trucks can be dusty, particularly under dry and windy conditions. Tightly enclosed cabs with dust filtration systems can substantially lower the dust exposure of both drill and mobile equipment operators. Haul road dust control can be achieved by water application or chemical application. DRILL DUST CONTROL [Drill dust is controlled with wet or dry systems. Wet systems can be more efficient, but may freeze in the winter. Dry systems require careful maintenance of the drill deck shroud. An improved deck shroud is shown.] Wet Suppression. Wet drilling systems pump water into the bailing air from a water tank mounted on the drill. The water droplets in the bailing air trap dust particles as they travel up the annular space of the drilled hole, thus controlling dust as the air bails the cuttings from the hole [Page 1991]. In wet drilling systems, typical water flow rates are 0.1 to 2.0 gpm depending on the size and type of drill and the moisture level of the overburden. The drill operator controls the flow using a control valve located in the cab. Some drills are equipped with a flow meter to give the opera-tor a visual sign of the flow rate. Raising the water flow will improve dust capture, but too much water causes operational problems. Because of this, the drill operator must exercise care in find-ing the best water flow rate.

Jan 6, 2003

By Jon C. Volkwein

In This Chapter [Instruments for measuring dust How to calculate the amount of dust from a source How to get a valid concentration measurement Sampling to assess control technology effectiveness] When there is more than one source of dust, sampling may be required to find which dust sources are most significant. Then, efforts to reduce dust can be concentrated where they will have the most impact. This chapter explains how to perform dust source sampling. It describes two kinds of instruments that are available and discusses their limitations. It explains how environmental variables such as concentration gradients, dust dilution, and production changes can impact dust measurements. It also suggests practical ways to improve the validity of dust source measurements under adverse conditions, such as high-velocity airflow or the presence of water mist in the air. [Dust source sampling at coal mine longwalls and at tunnels is more complicated. Chapters 3 and 7 have more information on sampling in those circumstances.] TWO KINDS OF INSTRUMENTS FOR MEASURING DUST Gravimetric samplers. The conventional gravimetric sampler is a good device for measuring dust because it is the instrument used for compliance measurements. This dust sampler consists of an air pump, a small cyclone that separates out the respirable size fraction of the dust cloud, and a filter to collect the respirable dust. In coal mines, the Mine Safety and Health Administration (MSHA)-approved gravimetric sampler uses a 10-mm Dorr-Oliver cyclone operating at an airflow of 2.0 L/min [30 CFR78 74 (2002)]. A correction factor of 1.38 is applied to make the results consistent with the U.K. MRE sampler, the instrument on which the 2.0 mg/m3 coal dust standard is based.

Jan 6, 2003