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By A Gustafson, D Johansson, K Jonsson

The underground mining process, from in situ characteristics of the unmined rock mass to the final mill product with fully liberated minerals, consists of a chain of unit operations. Some of them influence fragmentation while fragmentation impacts others. From a production point of view, fragmentation is a key parameter for the proper functioning of many unit operations and affects total production; it influences the ability to load, haul and crush the rock later in the process. Fragmentation varies because of rock mass strength, the presence of joints, the chosen explosive, specific charge (kg/m3) and quality of drill holes. The efficiency and result of unit operations such as drilling, blasting, loading and crushing depend on the rock properties, which vary throughout a mine. Generally speaking, operations are not well adapted to the actual rock properties, leading to a non-optimised flow in production. This paper presents the initial part of a project that will build knowledge on the impact of fragmentation on each step of the production chain in an underground mine. It identifies the key parameters of fragmentation, which influence the overall energy consumption and productivity in a mining operation through interviews, mine visits and a literature review. In the subsequent stages of the project, a number of field tests in the case study mine will address important segments of the production process where fragmentation is a major obstacle to improvements. Optimising the entire process, rather than isolated unit operations, will lead to increased productivity, decreased amount of interruptions and lower energy consumption.CITATION:Gustafson, A, Jonsson, K, Johansson, D and Schunnesson, H, 2016. From face to surface – a fragmentation study, in Proceedings Seventh International Conference and Exhibition on Mass Mining (MassMin 2016), pp 555–562 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 9, 2016

By K A. Bunker, A D. Campbell, E Ah Mu, A R. Penney

The Ernest Henry mine is a transverse sublevel cave (SLC), which is relatively unique due to the 45 degree inclination of the orebody. To economically recover ore, each sublevel is horizontally offset from the previous level by around 25 m, depending on the orebody geometry. Mine development, slotting and initial production within this zone occurs in a high stress abutment that increases in magnitude at depth. These areas are seismically active and close to the hanging wall where cave propagation is yet to initiate. High stress conditions and the close proximity to the cave seismogenic zone results in challenging geotechnical conditions in the step out zone of each level and requires management of hazards including stress driven rockfalls, rock bursts and pillar failure.This paper outlines how these hazards were forecast using numerical modelling and geotechnical monitoring. Risk management techniques included dynamic ground support design, development of a new mine layout and extraction sequence as well as delayed re-entry into seismically active areas. Ongoing monitoring, instrumentation measurements and field observations were used to track the effectiveness of the controls.Future production levels are forecast to experience increasing stress and seismicity, which will increase demand on excavations and installed ground support. Ensuring the techniques and controls for monitoring, measuring and mitigating stress and seismic hazards are enforced is essential for continued safe production.CITATION:Campbell, A D, Bunker, K A, Ah Mu, E and Penney, A R, 2016. Managing stress and seismicity in an inclined sublevel cave, in Proceedings Seventh International Conference and Exhibition on Mass Mining (MassMin 2016), pp 319–328 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 9, 2016

By E Ah Mu and C R Lilley, A D. Campbell

Cave propagation is a complex process due to interacting variables such as mine geometry, rock mass heterogeneity and complex structural networks and stress fields. The Ernest Henry sublevel cave (SLC) is directly below an open pit, which provided an opportunity to observe and measure rock mass failure as the cave initiated and propagated through the pit wall. This paper describes interaction between the open pit and SLC as well as rock mass failure mechanisms observed from the start of the SLC to surface breakthrough.Cave propagation and slope failure mechanisms were found to be governed by intermediate structures, while the cave shape was largely controlled by cave-scale faults. The open pit, production-level geometry and production draw strategy were also important factors for cave and subsidence growth. Cave propagation was episodic and asymmetric in shape due to the orientation and relative position of geological structures, combined with the effects of the increasing SLC geometry and drawdown from the underlying production levels. The precursors and failure mechanism of a 2.5 Mt wall collapse are also reviewed in detail.Cave growth was simulated using a 3D, non-linear, discontinuum finite element model coupled with Newtonian Cellular Automata. Model results are compared to field observations and monitoring data to determine the accuracy of forecasts and compared models versus actual rock mass response during cave propagation.CITATION:Campbell, A D, Ah Mu, E and Lilley, C R, 2016. Cave propagation and open pit interaction at the Ernest Henry Mine, in Proceedings Seventh International Conference and Exhibition on Mass Mining (MassMin 2016), pp 311–318 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 9, 2016

By B Mobilio, M Secheny, J Rachocki, G B. Sharrock, A Jäger, J L. Lett, I Brunton, G W. Capes

Establishment of the Cadia East Panel Cave Stage One (PC1S1) commenced with the firing of the first bell in early 2011. Production began with the completion of the undercut in May 2014. PC1S1 used a post-undercut composed of 114 drawbells covering a footprint area of 73 438 m². The extraction level is located at a depth of 1200 m below the surface and is based on a 32 × 20 m El Teniente layout. Cave establishment required the construction of multiple conveyor drifts, a large-capacity jaw-gyratory crusher and ancillary ventilation and pumping infrastructure. Preconditioning via hydraulic fracturing and blasting was implemented at various locations of the cave block height. This paper presents an overview of the key learnings from the commencement of undercutting to surface breakthrough, including rock mass classification and modelling, stress measurements, preconditioning, numerical modelling and cave monitoring.CITATION:Lett, J L, Brunton, I, Capes, G W, Jäger, A, Mobilio, B, Rachocki, J, Sharrock, G B and Secheny, M, 2016. Undercutting to surface breakthrough – Cadia East panel cave (stage 1), in Proceedings Seventh International Conference and Exhibition on Mass Mining (MassMin 2016), pp 65–82 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 9, 2016

By L Olivier, R J. Lowther, J L. Lett, I Brunton

Hydraulic fracturing to precondition the orebody to enhance rock mass cavability is gaining acceptance in underground cave mining applications. Assisting cavability is becoming important as an increasing number of cave mines are being implemented in hard, deep and competent rock masses where clamping stresses are higher and cave column heights may be in excess of 1000 m. Propagating large caves to surface in such conditions can be challenging as risks such as slowed propagation and air gaps can develop during the process.Underground-based hydraulic fracturing is routinely used at Cadia East as a means of preconditioning the orebody to assist in cave propagation, fragmentation and seismicity reduction. This paper presents a summary of a surface-based hydraulic fracture program that was successfully implemented to assist in the propagation of the Cadia East Panel Cave 1 (CE-PC1) cave to surface through competent overlying rock masses. In this case study, the propagation of the CE-PC1 cave slowed as the cave grew past 750 m in height, initiating a Trigger Action Response Plan regarding the cave propagation rate. Surface-based hydraulic fracturing was subsequently used to stimulate the cave to propagate through the final 450 m to surface. The paper details the equipment, strategy, implementation and risk management involved in the program as well as the key learnings.CITATION:Lowther, R J, Olivier, L, Lett, J L and Brunton, I, 2016. Implementation of a surface-based hydraulic fracturing program to successfully propagate a large cave through hard, competent near-surface rock masses to achieve breakthrough, in Proceedings Seventh International Conference and Exhibition on Mass Mining (MassMin 2016), pp 83–96 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 9, 2016

By J. A. Ober

"In 2015, the estimated value of nonfuel mineral production in the United States decreased by 3 percent from that in 2014 (Table 1), mainly as a result of decreased metal and metallic mineral prices, especially iron ore, copper and precious metals. Lower metal prices were attributed to decreased consumption, especially in China and increased global inventories. Several U.S. metal mines were idled in 2015, including the only U.S. rare earths mine at Mountain Pass, CA. Downstream processors also were affected, with smelters and refiners either shutting down or idling production lines. Increases, however, took place in the value and quantity of production of industrial minerals, especially those used in the construction sector, including cement, construction sand and gravel and crushed stone. Trends in mineral-related sectors of the domestic economy, except for iron and steel manufacturing, aluminum manufacturing, coal mining and metals mining, all experienced growth (Table 2).Discussion of mine production is frequently segmented according to the type of materials produced within the broad categories of metals and industrial minerals (also known as nonmetallic minerals). Industrial minerals can be further subdivided as construction aggregates and other industrial minerals. Metals tend to have higher unit values but very low production quantities compared with those of industrial minerals, which have higher production quantities but are lower-valued materials, such as crushed stone or construction sand and gravel. Therefore, for discussion and analysis of the performance of the nonfuel minerals industry, the value of production is used rather than the tonnage produced. Tonnages of construction aggregates are orders of magnitude larger than those for most other mineral commodities thus making direct comparisons based on weight meaningless (Fig. 1).Mineral industry performanceThe estimated value of domestic nonfuel mineral production, including metals ($26.6 billion) and industrial minerals ($51.7 billion), in 2015 declined to a total of $78.3 billion, from $80.8 billion in 2014 (Table 1). However, as shown in Fig. 2, minerals remained fundamental to the United States economy, contributing to the real gross domestic product at several levels, including mining, processing and manufacturing finished products. Net exports of mineral raw materials and old scrap were $14.4 billion. Domestic raw materials, along with domestically recycled materials, were used to produce mineral materials worth $630 billion. These mineral materials, including aluminum, brick, copper, fertilizers and steel, and net imports of processed materials (worth about $32 billion) were, in turn, consumed by downstream industries with a value added to the gross domestic product estimated to be $2,490 billion."

May 1, 2016

By J. Kemeny, J. Lyons-Baral

"Point cloud technology is now an indispensable tool in geological and geotechnical data collection, interpretation and analysis. Open-pit and underground mines of all sizes are regularly collecting point cloud data as laser scanning (LiDAR) and photogrammetry surveying devices have become affordable and the workflows fast and efficient. Past challenges of large data processing and manipulation are gone with recent technological advancements in computer hardware and software. These innovations reduce file sizes, ease rendering requirements and allow for the implementation of real-time 3D viewers and surface meshing tools. With its ability to remotely and safely, rapidly and accurately extract large quantities of georeferenced and 3D-oriented data, point cloud technology provides numerous applications to the geomechanical field. The list of uses is continuously growing. This article specifically focuses on digital outcrop modeling and digital terrain engineering. Point clouds. The high-resolution and increasing availability of point cloud technology is rapidly improving open-pit and underground mines’ investigation, interpretation and characterization of site geology and rock mass properties (Kemeny et al., 2015; Lyons-Baral, 2012). LiDAR and photogrammetry are common remote sensing methods employed to measure the coordinates of surfaces in three dimensions (3D), providing the X, Y and Z locations and typically the reflective intensity and/or the visible three-band color of each point (Fig. 1).LiDAR uses either a time-of-flight or phase-shift measurement of a laser beam reflected off targeted surfaces and received back into the device.Photogrammetry generates point clouds by merging multiple overlapping photographs and uses stereographic plotting to define the locations of object points in 3D space. These methods can be deployed from airplanes, unpiloted aerial systems (UAS or drones), tripods, land vehicles and even in a mobile backpack shown in Fig. 2. RADAR, Total Station-Prism and other remote sensing systems also offer very precise “point clouds,” but this article does not address these due to their higher cost and lower versatility and mobility."

May 1, 2016

By Alberto Ríos Carranza

El presente texto describe la evolución de la cuenca Lancones (Piura) y sus estilos de mineralización en la búsqueda de yacimientos vulcogénicos de sulfuros masivos. Dada las características de la cuenca es considerada el principal objetivo en la prospección de yacimientos vulcagénicos de sulfuros masivos. Así también se revisa el contexto geotécnico, geológico, metalogenia, depósitos magmáticos - hidrometales, tipo Skarn, y vetiformes, estratigrafía y modelo metalogénico.

May 1, 2016

By Arístides Sotomayor

El presente texto señala la importancia del oro a nivel financiero y minero ya que los inversionistas suelen utilizar este metal para obtener ganancias debido al mínimo riesgo existente en la pérdida de su valor comparado con otras divisas. Así, se estima que en el Perú, existen 480 unidades mineras de oro, de las cuales 28 concentran cerca del 90% de la producción nacional, como la Minera Yanacocha, Minera Barrick, Compañía de Minas Buenaventura, Consorcio Minero Horizonte, Aruntani y Aurífera Retamas. Entre las dos regiones que producen mayor cantidad de oro está: Cajamarca y La Libertad ( 38%) y la tercera región es Arequipa, seguida por Madre de Dios (9%).

May 1, 2016

"In the conceptual stages of engineering, benchmarking and empirical ratios are commonly the only references for estimating the production rate of greenfield projects. For underground mining projects, the lack of similar cases often makes the comparison difficult due to each project’s unique geology, rock quality or other singular characteristic. This paper discusses an analytical alternative for determining the maximum achievable production rate for underground stoping mining by modeling production as a continuous process. The results show that long-term maximum capacity depends exclusively on the achievable development rate and the development intensity of the design. In operations constrained by backfill, the development rate could be limited by the backfilling rate. Extraction rate and stope size only have impacts on capacity estimates during the ramp-up period.These findings allow shaping of the maximum capacity profile of a project. They can be used as a tool for quick assessment of conceptual capacities, and sensitivities of mining rates. Benchmarking tests compared favorably with projects, mines in operation and scheduling exercises. IntroductionA key consideration in the value proposition of a mining project is its capacity or production rate (Tatman, 2001). At a conceptual level, it is common practice to refer to empirical references (Taylor, 1986; Long, 2009), rules of thumb (de la Vergne, 2014), benchmark ing studies or consultant experience to estimate or validate a target value. There is, however, a lack of analytical methodology to guide an early estimate of the maximum capacity.Araneda and Gaete (2004) presented an interesting mathematical approach to estimate the capacity of panel caving mines. Using a continuous model, they confirmed that the mine capacity is essentially determined by the rate of area incorporation, in terms of area per period, and ore column height. This simple relationship has been confirmed by multiple detailed scheduling works"

May 1, 2016

By N. A. Karl, D. R. Wilburn

"This summary of international mineral exploration activities for the year 2015 draws upon information from industry sources, published literature, SNL Metals & Mining (SNL) (Charlottesville, VA) database and specialists in the U.S. Geological Survey (USGS) National Minerals Information Center. The summary provides data on exploration budgets by region and mineral commodity, identifies significant mineral discoveries and areas of mineral exploration, discusses government programs affecting the mineral exploration industry, and presents analyses of exploration activities performed by the mineral industry.Three types of information are reported and analyzed in this annual review of international exploration: budgetary statistics expressed in U.S. dollars provided by SNL; regional and site-specific exploration activities that took place in 2015 as compiled by the USGS; and regional events that affected exploration activities including economic, social and political conditions, which were derived from published sources and discussions with USGS and industry specialists. Commodity and regional compilations are presented in this summary. Because multiple sources were used to develop commodity and regional compilations, statistics may vary depending on the source and type of data that are being reported.The SNL data summarize planned company budgets for worldwide exploration activities in 2015 for 24 nonfuel mineral commodities and metal alloys and are based on company surveys. Surveys focused on precious metals (gold, platinum-group metals and silver), base metals, (cobalt, copper, lead, molybdenum, nickel, tin and zinc), bulk commodities (bauxite, chromite, iron ore, manganese, phosphate and potash), and other commodities (diamond, graphite, heavy-mineral sands, lithium, niobium, rareearth elements (REE), tantalum, tungsten and uranium).USGS data compilations and analyses are based on information provided by USGS mineral commodity and country specialists, as well as industry contacts and published trade journals. The USGS data summarize exploration site data collected for more than 80 minerals and materials, with a focus on base metals, diamond and precious metals. The USGS analyzed available information to assess the level of exploration activity in 2015 and to report trends in mineral exploration activity for the period 2005 through 2015. These analyses identify where mineral exploration is occurring by commodity and region and the intensity of activity that is taking place in each region for selected mineral commodities, and determines those factors that most affect changes in exploration activity."

May 1, 2016

By Jorge Alencastre Miranda

El presente artículo es un análisis dinámico estructural de una faja transportadora, (tipo Staker Radial) de una empresa minera a través de modelos conceptuales simplificados y programas computacionales.

Apr 1, 2016

By A. Moergeli, Philip Sander, John J. Reilly

"Estimating and managing the costs of complex infrastructure projects – in the planning/design and construction phases, for both owners and contractors – has been a challenge for decades. The more complex and technologically advanced the project, the greater the uncertainty, including potential risks that are important to owners and contractors, such as:• Cost risks to owners – meeting budget and schedule, maintaining public credibility.• Cost risks to contractors – profit, consequences of loss, impacts to reputation/future work.This concern has been addressed in various ways by the underground construction industry for some time (Reilly, 2001). In particular, while significant advances have been made in cost estimating for the planning and design phases (Reilly et al., 2004), that are important to agencies and political decision-makers, it is not apparent that these advances have been widely adopted for construction cost estimates. The reasons for this may relate to lowbid considerations – any method that tends to increase the contractor’s cost estimate, by including risk or likely costs, could lead to an erosion of the contractor’s competitive position – if others are not similarly required to include such costs.Different cost estimating methods produce different levels of information. Specifically, there is a large difference in the character and depth of information if a deterministic (quantities times price plus a contingency) and risk-based cost methods are used. It is this difference in character and depth of information that is the reason that risk-based cost estimating has potential value for owners and contractors. Figure 1 presents hypothetical cost results from deterministic and risk-based methods and illustrates some of these differences.In Fig. 1, the results for deterministic and risk-based cost estimates are given related to the potential profit or loss for a typical project. As is evident in this example, there is significant potential for costs to be realized that are higher than the proposal/bid value estimated using a deterministic approach, with a 15 percent probability of a loss. There is a 30 percent probability that the project will have a reduced profit. There is a 55 percent probability that the project will return a good profit. Using a risk-based approach, it is possible to better recognize this potential outcome in the bid phase and, as a consequence, develop a strategy to:"

Apr 1, 2016

By Howard Lum, Sergio Valles, John Bednarski, Gordon Enas, Jay Arabshahi

"Water drawn from the Sacramento-San Joaquin Delta provides water supply to 66 percent of California’s population and supports the state’s agriculture industry. The existing through-Delta water system is outdated and unreliable with environmental risk to some fish and wildlife species. The Bay-Delta Conservation Plan (BDCP) has been established to environmentally retrofit and modernize California’s water delivery system through the Delta by restoring habitats, constructing new diversion points in the north Delta and providing a means to transport water supplies under the Delta, rather than through sensitive natural channels.Under BDCP, the Delta Habitat Conservation and Conveyance Program (DHCCP) has developed several alternatives to convey water from the Sacramento River in the north to the existing pumping facilities in the south Delta through an isolated conveyance system. The new conveyance system would become an integral part of the State Water Project (SWP) and the federal Central Valley Project (CVP) by transporting water to the export pumping plants for each of these projects. The DHCCP is managed by the California Department of Water Resources (DWR), while state and federal water contractors provide technical support to the program.The initial conceptual study efforts on the overall program commenced in 2007 and examined various options for the proposed conveyance system. Several conveyance alternatives were analyzed at that time. The Conceptual Engineering Report published on Oct. 1, 2013 identified the modified pipeline/tunnel option (MPTO) as the preferred alternative to be included in the BDCP environmental documents. MPTO includes three river intakes and pump stations along the Sacramento River, various sizes of pipelines and tunnels, junction structures and two forebays that are capable of delivering up to 4 million gpm (9,000 cfs) from the Sacramento River to the SWP and CVP. The river intakes are located near Hood in Sacramento County approximately 64 km (40 miles) from Clifton Court Forebay (CCF) in Contra Costa County. This route would cross portions of Sacramento, San Joaquin and Contra Costa counties. Figure 1 depicts the configuration of the MPTO alternative."

Apr 1, 2016

"During his presentation at the 2016 George A. Fox Conference about the history of public-private-partnerships (PPP) in the tunneling and underground construction industries in New York, Vincent Tirolo, Jr., told a story about how, as a young engineer in the late 1960s, he and others pooled money to purchase a calculator for $75 that had the ability to perform sine and cosine functions. That was a big deal in those days and would make their job much easier. Oh how far things have come. Tunnel and underground construction engineers can now virtually map out and plan entire projects before the first shovel ever breaks ground. And the machines that are used to build the tunnels have advanced in ways that could not have been imagined 50 years ago.The calculator is just one example of innovation in the industry and on Jan. 26, more than 400 industry professionals attended the George A. Fox Conference at the Graduate Center of New York (CUNY) to learn more about the next innovations, new tunneling technologies and what the future might hold for the industry. The conference included sessions on contracting models, rescue and fire life safety and new technological developments as well as an international project spotlight presentation from Nasri Munfah about the Eurasia Tunnel, connecting the European and Asian sides of Istanbul, Turkey.The project, also known as the Istanbul Strait Road Tube Crossing project, was named the 2015 Major Tunneling Project of the Year by the International Tunneling and Underground Space Association.The tunnel boring work for the 3,344-m (11,000 ft) long tunnel under the Istanbul Bosphorus Strait was completed in August, heralding a new era in tunneling.Tunnel boring work was launched in April 2014 with a ceremony with then Prime Minister Recep Tayyip Erdogan in attendance. The work was completed on Aug. 22, 2015 with Prime Minister Ahmet Davutoglu participating in the ceremony."

Apr 1, 2016

By Todd Schrauf, James Scott, Mark Smith

"Cyanide heap leaching of gold ores in areas with extremely low winter temperatures requires special considerations to prevent freezing of the leach solution. Factors that impact the solution temperature include ore temperature at the time of stacking and during operation, burial of drip irrigation lines, use of geomembrane covers and heating of the leach solution. Thermodynamic modeling was performed to simulate expected ore and solution temperatures under different operating strategies for Kaminak Gold’s Coffee gold project in the Yukon Territory. Mean monthly temperatures at the site ranged from a low of -22.5 °C (-8.5 °F) to a high of 13.6 °C (56.4 °F), while in situ ore temperatures ranged from -0.5° to about -1.5 °C (31 ° to 29 °F). The modeling results were used to optimize the operational parameters and indicated that a combination of drip line burial and heating of the leach solution during the winter months was required to maintain solution temperatures above freezing during the initial years of stacking, although as the size of the heap increased, heating was no longer necessary.Modeling objectivesThe successful operation of a cyanide heap leach under extremely cold winter temperatures requires the implementation of operational strategies to prevent freezing of the leach solution and the ore within the heap. Thermodynamic modeling of the heap provides the means to quantify the effectiveness of these different operational parameters on maintaining the required operating temperatures to avoid freezing within the heap. The operational parameters that were evaluated with the model included:"

Apr 1, 2016

By N Cusworth, W R. Mackenzie

"In 2007, the authors presented a framework for the conduct of resource project feasibility studies and provided guidance on minimum standards and best practice (Mackenzie and Cusworth, 2007).This paper will present the authors’ observations in relation to feasibility studies undertaken to support investments made during the unprecedented period of resource project capital investment since 2007. It will also provide comments on general trends in the mining industry’s approach to project assessment and update recommendations on best practice.CITATION:Mackenzie, W R and Cusworth, N, 2016. The use and abuse of feasibility studies – has anything changed?, in Proceedings Project Evaluation 2016, pp 133–148 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 8, 2016

By P McCarthy

"This paper is based on 30 years of involvement in feasibility studies as a participant, study manager and the leader of a firm that provides study components and overall study management. The following topics are discussed:the purpose of feasibility studiesaligning the goals of the study team with those of the ownerthe difference between optimisation and designhow the types and levels of studies affect the organisation of the studythe relative merits of various management structures and contractual arrangementssetting scopes of work and tendering the work outthe selection of a study manager and the study management teamcommunications within the study team and externallythe project management trianglemanaging scope changes and maintaining flexibility to respond to study findingsprogress paymentsmanaging a study crisisinnovation, risk aversion and bankabilityreporting the resultsthe dangers and benefits of value engineering.CITATION:McCarthy, P, 2016. Making studies work – organisation, communication and management, in Proceedings Project Evaluation 2016, pp 20–30 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 8, 2016

By L A. Martinez Tipe, J McKibben, S Barry

"Metal prices are central to a mineral investment decision and have a profound impact on the financial performance of companies in the mining industry. At its most basic level, metal prices are influenced by the disequilibrium between international metal volume supply and demand. That is, the commodity price is a regulator that equates international metal supply and demand where inventories act as a buffer between the emergence of this disequilibrium and its dissolution through a price change.From this viewpoint, mining companies are required to forecast metal and bulk commodity prices when evaluating minerals projects through discounted cash flow (DCF) analysis. While supply-demand models are instructive, many companies use historical prices, spot prices, futures/forward pricing and consensus opinion (or a combination of all of these) to develop price forecasts.This paper discusses the definition, fundamentals and differences between futures/forward and consensus pricing and the appropriateness of each in a DCF model for mine project economic evaluation.Our results demonstrate that great care is required when using either futures/forward or consensus pricing and that the decision to use one rather than the other requires consideration of other important elements in the DCF model (ie the risk-adjusted discount rate).CITATION:Martinez Tipe, L A, McKibben, J and Barry, S, 2016. Metal prices and the differences between forward and consensus pricing – which one is better for use in a discounted cash flow model?, in Proceedings Project Evaluation 2016, pp 149–158 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 8, 2016

"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