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By M A. Wells

A new approach to more reliably predict the Ni (and Fe, Mg) composition of Ni laterites was tested for RC samples from the (siliceous) oxide–style, Siberia North deposit, Kalgoorlie Nickel Project (KNP), in the north-eastern Yilgarn (WA) using partial least squares regression (PLSR) analysis of diffuse reflectance spectra over the 380 - 2500 nm wavelength range with a multi–element chemistry data set. PLSR cross-validation models were developed to predict FeO, MgO and Ni contents in composite samples with bulk composition limits of >0.08 wt per cent Ni and <6 wt per cent MgO. Calibration and validation models showed a strong, linear trend for predicting FeO and, to a lesser extent, Ni content, whereas PLSR models for predicting Mg content were less reliable. This reflected the prevailing mineralogy and associated element deportment within the oxide laterite profile. For example, Fe and Ni distribution is controlled by relatively few minerals, predominantly goethite and, to a lesser extent, the Fe3+-bearing smectite, nontronite. Magnesium is associated with a range of Mg-bearing minerals, some of which are compositionally complex (eg serpentine, talc, chlorite, smectite and carbonates). Magnesium chemistry alone does not reflect the varied mineralogy of samples with relatively high (5 - 6 wt per cent) MgO contents, which can be spectrally distinct. Hence, samples with similar Mg contents, though comprising Mg-bearing minerals with distinct reflectance spectra, were difficult to model (eg smectite versus Mg-carbonates). The findings of this study demonstrate that characterisation of Ni laterite composition may be achieved as part of routine logging of either drill chips or diamond drill core using PLSR analysis, but that a detailed understanding of the mineral-element association is essential for reliable predictive analysis. This has particular relevance to characterising the geometallurgy of Ni laterites, especially where deposits may be classed as the same type, but have distinct compositional and mineralogical differences.

Sep 5, 2011

By A Simmons, R Longey, D Brett

The South Deposit Tailings Storage Facility (SDTSF), located at Grange Resources Pty Ltd’s (Grange) Savage River mine in north west Tasmania, has recently begun construction. The facility will provide storage for approximately 37 million cubic metres of tailings, equating to approximately 20 years’ tailings storage.The SDTSF embankment will be constructed entirely out of waste rock won from mining operations, and will feature a flow-through drain constructed from alkaline, non-acid forming (NAF) waste rock. This provides Grange with an economical storage solution for waste management (both tailings and waste rock) and maximises available space on site. The outflows discharged through the alkaline rock ‘flow-through’ will provide a long-term source of alkalinity to Main Creek, subsequently feeding into Savage River. This will provide environmental benefits to the downstream ecology that has long been degraded due to the effects of legacy acid and metalliferous drainage (AMD), caused by historical mining operations.CITATION:Longey, R, Brett, D and Simmons, A, 2015. Integrated mine waste management – South Deposit Tailings Storage Facility, Savage River mine, Tasmania, in Proceedings Tailings and Mine Waste Management for the 21st Century , pp 343–352 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 27, 2015

The tankhouse of the electrolytic zinc plant at Nordenham is operating with a very high operating efficiency of 99 per cent. This has been achieved not only by strict control of the quality of the zinc sulphate cell feed solution but also by all the improvements in housekeeping in the tankhouse developed during the past years: aluminium cathode specification, cathode stripping cycle, edge strips, copper contacts, anode isolators, cell cleaning, fittings and washing devices. During 1987 to 1992 the casting department was completely remodelled in order to improve the quality of the zinc products, the safety of the operations and the flexibility. The remodelling includes the enlargement of the area for the casting shop, the storage buildings and the five casting lines on the same ground level. New lines for alloying products and for SHG25 kg zinc ingots have been constructed. The line for galvanising products has new equipment in some parts and the other lines have been modified.

Jan 1, 1993

By T Niitti, J Turunen, P B, A Rinne

In todayÆs marketplace, with high metals prices, many operations are faced with the challenge of improving recovery in the particle size ranges which are normally difficult to recover. This presentation focuses on the various methods used to alter the flow dynamics in a mechanical flotation cell, thereby improving metallurgical results. Modern computational fluid dynamics (CFD) tools have been used in the design phase, with subsequent validation at the plant. Some of the validated variables include mixing profile, power draw and local air hold-up. This presentation underlines how modern CFD analysis can be used to screen and select different approaches before commencing costly trial-and-error experiments at plant scale. Two methods of affecting flow dynamics are discussed û firstly, by altering the geometry of the rotor-stator area and, secondly, by fitting additional features in the tank. The rotor-stator area can be modified to provide more concentrated turbulent kinetic energy or, respectively, to provide more pumping efficiency with less attrition. The tank can be fitted with various additional features, aimed to create different particle suspension profiles. The benefit of both methods is that they can be applied not only to newly installed flotation technology, but also to existing plant cells, thus enabling potential improvement in the mixing profiles, solids suspension, tank sanding and metallurgical performance. Results of several sitesÆ tests are discussed in terms of flow variables measurement as well as metallurgy. This paper demonstrates the effects of different flow dynamics on the mixing profiles and metallurgical results of existing mechanical flotation cells.

Jan 1, 2006

By A Tsang, D La Rosa, L Julian, W Hunt, R Pratama

Mineral extraction is facing the twin challenges of finite resources and increasing environmental and economic costs. Society’s growth is matched by an increase in demand for the earth’s resources. It is incumbent on us as contemporary mining professionals to promote and facilitate ethical and efficient practices. Technological developments have and will continue to allow a decrease in viable cut-off grades, creating new economic opportunities from deposits that were previously uneconomic. Mining low-grade deposits however, even with perfect recoveries, will have a significant environmental cost for the metal won. The greatest opportunity to increase metal with the least environmental cost is to increase the metal yield from existing mines. The determination of mining polygons is a critical juncture where rock is typically subjected to the binary grading of either ore or waste. This is undertaken using a number of factors, such as the mining equipment being used and the recovery in the processing plant. Traditionally, mining polygons were generated on the in situ grade control model. This ignores the complex differential blast dynamics that occur during blasting. Two opportunities exist to improve metal yields: optimise the blast design to achieve the post-blast muck pile that will support the greatest outcome; and generate optimised polygons on the post-blast muck pile. A data set from a Canadian Gold deposit is used to demonstrate the potential benefit of iterative blast movement modelling and grade control polygon optimisation on metal yield. The impact of blasting on the total recoverable metal is presented, highlighting blast design as a critical process in the mining value chain.

Sep 1, 2024

By W Patton

Investment decisions in the mineral resources sector are made on the basis of an assessment of the economic potential for a mineral deposit. Given the supporting information for the location, scale, and quantity of the commodity of interest, miners and investors aim to make risk-informed decisions when considering further investment. The objective of resource classification is the synthesis of various types and quantities of geologic information used in resource model construction to assign confidence categories to the estimated mineral resources, which can then be used to support informed economic decisions. In this paper a risk-based classification scheme for iron ore mineral resources using conditional simulations is presented. The method involves categorisation of each block according to a confidence level, considering expected recoveries from a kriging model over mining production volumes. The realisations of the simulated model are used to assign risk-based confidence categories to zones of the ore deposit. One motivation for this work is to assess the sensitivity of the scheme to geologic uncertainties. Specifically, that which uncertainty in the layout of mineralising alterations and weathering overprints influence variabilities of associated rock properties and the likelihood of obtaining expected ore recoveries. It is shown these risks have material implications for a project’s economic potential. How the scheme can be extended to the grade control context and the value subsequent grade control activities is also quantified.

May 24, 2023

By P Toor

Due to the high energy consumption of milling, it is desirable to improve the efficiency of this process. One alternative to reduce energy and material consumption while optimising production yield in mill operation is through balanced design and selection of liners. Over-design of liners leads to increased life but at a cost to grinding performance, a relationship which to date has not been studied closely. This paper provides a description of this process of liner life cycle optimization and presents initial results from the first of two life cycles being studied for a 32 foot (ft) SAG mill. The use of commercially proven high resolution laser scanning based liner shape information provided by the MillMapper® software correlated with well controlled site surveys at various points in the liner life was used as the basis for comparison. The survey data was modelled in JKSimMet to provide direct comparisons of mill performance. This potentially provides a methodology for the design of liners that maintain a favourable shape for the majority of liner life, yielding desirable production parameters such as lower specific energy consumption and higher throughput, while at the same time maintaining practical liner life cycles.

Aug 8, 2011

By W Newns

This paper describes laboratory and in situ tests and determines a set of parameters for stiffness and strength properties for a weak sedimentary rock mass, the East Coast Bays Formation of Auckland. The parameters derived are discussed in relation to peak strength and in respect of deformation limits associated with sequential excavate and support (SEM) or conventional tunnelling.

Mar 8, 2011

By J Samosir, L A. Snyman

Northparkes is located 27 km north of the township of Parkes in central New South Wales, Australia. The operations consist of underground block cave mines and an ore processing plant that produces high-grade copper and gold concentrate. Production is currently sourced from the E48 Lift 1 block cave mine and open cut stockpiles. Mining commenced at Northparkes in 1994 as an open cut operation. Underground block cave mining began in 1997. Northparkes was the first mine in Australia to use the highly efficient block cave mining method, which relies on gravity and natural rock stresses to fragment the ore.An issue affecting production in 2011 was the stability of the E48 mine. A small portion of the drives on the extraction level began to deteriorate as the ground support system failed. The problem was temporarily fixed by stopping production in three extraction drives and tight filling selected areas within these drives (and drawpoints) with low-strength concrete. This action provided immediate support and stability whilst allowing time to investigate potential ground support remedies. From these investigations it was decided to use resin injection technology and additional ground support to stabilise the rock in the aforementioned extraction drives as the concrete plug was excavated in a controlled advance and sequence. This made the area safe and ensured the ongoing safe operation of the E48 mine. The redevelopment of one of these drives began late in 2011, with the remainder being progressively redeveloped over the next two years in order to maintain the extraction level stability.This paper looks at the strategies employed to safely re-open previously converged drawpoints and associated extraction drives that were subject to high abutment loading that was possibly associated with premature cave breakthrough.CITATION:Samosir, J and Snyman, L A, 2014. Redevelopment at Northparkes following significant drive closure, in Proceedings AusRock 2014: Third Australasian Ground Control in Mining Conference , pp 87–92 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 5, 2014

By P Audet, D Doley

The mining industry often embraces mine closure criteria that require the reinstatement of predisturbance or even presettlement (ie historic) ecosystems. However, the extent and severity of disturbance associated with most mining activities mean that critical physical and biological characteristics are irreversibly altered. Consequently, it is rare that a reconstructed landscape can support ecosystems even close to the historic condition, and this rarity is reflected in the small number of mine leases that have been extinguished by attainment of such completion criteria. Novel ecosystems are defined as those in which some or all physical and biotic components are irreversibly different from the historic condition. Recognition of the concept of novel ecosystems allows mine closure criteria to be set according to attainable physical and biological conditions that provide safe, stable and manageable environments with acceptable ecological functions. We propose that a landscape that first maximises physical stability and economy yet will provide a range of environments for vegetation communities and fauna habitats that may be very different from those existing prior to a disturbance should be considered suitable alternatives to, eg targeting idealised historic environments. As a result, mine closure criteria should be established by detailed description of the best attainable physical conditions, with negotiated identification and testing of the most appropriate biological systems for the various parts of the reconstructed landscape. As a general practice, revegetation would use native, but not necessarily local species if the new physical environment is not conducive to the survival and growth of local species. These new ecosystems would need to be managed in perpetuity, although the intensity of management might be low if landscape design and engineering are combined with appropriate species introductions. Here, we suggest an abbreviated procedure that may be adapted in light of local conditions and circumstances for guiding decisions influencing the physical and biological properties of reconstructed landscapes that will enable novel ecosystems to meet realistic closure criteria.CITATION:Doley, D and Audet, P, 2014. Changing restoration priorities in the 21st century – opportunities for novel ecosystem design in mine closure, in Proceedings Life-of-Mine 2014 , pp 649–662 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 16, 2014

By R M. Yanamandra, M Kumar, S K. Tripathy, N Mangadoddy, P Sudikondala

Spiral concentrators are one of the flowing film gravity concentration devices used to beneficiate coal and mineral ores. The aim of the current study is to understand the particulate flow and separation performance of an LD9 spiral concentrator using a multi-phase Computational Fluid Dynamics (CFD) model. The CFD model utilises the Algebraic slip mixture model to simulate particulate flows. The model employs the Renormalisation group (RNG) k-ɛ turbulence models to resolve the fluid turbulence. Initially, the volume of fluid method was adopted to track the water-air interface. Simulations were then carried out at low (0.3 and 3 wt.%) and moderate (15 wt.%) solids concentrations. Multiple particle-phase representing particles of poly sizes (75–1400 µm) and multi-densities (1450–2650 kg/m3 ) were simulated to study the particle segregation on the spiral trough surface. The numerical predictions are compared with the literature performance data at a diluted pulp flow rate of 6 m3 /hr. The results were found in close agreement. Further, the same CFD model is used to study the change in pulp velocity, streamflow rates, and separation performance at increasing solids concentration. For the same density particles, Fine particles mostly show higher volume concentration in the middle and outer trough regions, whereas coarse particles show higher volume concentration in the interior and central trough regions. It implies that the fine particles mostly segregate towards the outer region, and dense particles segregate towards the axial column.

Aug 24, 2022

By A Valero, G M. Mudd

There is active debate and research around the most suitable indicators to assess the sustainability of mining. The most common approach is to report a range of data for a given mine site (or less preferably, a company total), such as inputs, outputs, benefits and potential costs. The most popular protocol in use (and growing rapidly) is the Global Reporting Initiative (GRI). However, these measures are numerous and still do not allow a single over-arching indicator to be developed. Other measures, such as known mineral resources over time, do not account for critical challenges such as declining ore grades, increasing wastes and poorer quality ores or more difficult mineralogy. By adopting a thermodynamic approach to sustainability, through the concept of æexergyÆ, it is possible to incorporate into a single measure the effective quality of mineral resources. Exergy involves the assessment of the minimum energy costs involved in producing a mineral resource with a specific chemical composition and concentration from common materials in the environment. The exergy of a mineral resource is evaluated from mineralogic composition, concentration (or ore grade) and, of course, quantity, by multiplying the unit exergies with the tonnes of the resource produced (or consumed). Since exergy is a thermodynamic quantity (ie energy or joules), it is additive across different minerals, such as iron ore to gold to copper or even oil and gas or coal û making it an ideal indicator to assess mineral resource sustainability at the industry scale rather than the individual mine scale. This paper briefly outlines the theoretical basis for exergy, and then presents a range of commodity case studies showing the application of exergy to the Australian mining industry. Overall, the usefulness of exergy is clearly demonstrated for use as a broad indicator of the sustainability of mineral resources at the national or even global scale.

Jan 1, 2009

The main aim of the conference is to work towards improved useage of steelplant slags which have largely been considered waste mater- ials, This paper summarised investigations carried out on the suitability of air cooled blast furnace slag, blast furnace granulated slag and basic oxygen steelmaking slag as road base materials. All slag samples were obtained from the PortòKembla Works of Australian-Iron and Steel Pty Ltd. Since road making materials are increas- ingly being characterised by use of resilient moduli, the compressive strengths and resilient moduli were determined for road base of the following slags. 1 Air cooled crushed blast furnace slag 2 mixes of air cooled blast furnace slag, granulated slag, and lime 3 mixes of air cooled blast furnace slag,-granulated slag and basic oxygen steelmaking slag. Evaluation of a local dacite (dense medium grained igneous rock, classification rhyolite), generally considered an excellent road base course material, was carried out for use as a reference material.

Jan 1, 1979

By V Srinivasan, P Knights, C T. Farrelly

By 2025, with the widespread industry adoption of remote operation centres and advanced analytics, mining companies will find themselves making better, more informed decisions across the value chain. Process automation will drive significant business integration and reorganisation. Better collaboration between functions will make cross value chain optimisation a reality. Wherever possible decisions will be automated, based on analytical models and embedded in an enterprise decision management (EDM) architecture. This will take care of many of the minor day-to-day or the minute-to-minute decisions that consume operators and managers today. More flexible information technologies and architectures derived from the extensions to Web 2.0 and service oriented architecture (SOA) will solve many of the integration issues of today. The ongoing business imperatives for doing more with less people will make true collaboration with partners such as mining contractors, equipment vendors, transport providers, suppliers and maintenance contractors commonplace throughout the industry. All these organisations will be linked in and share common goals and objectives in real-time while providing visibility of internal constraints and available capability, allowing optimised decisions to be made across the extended enterprise. Humans will increasingly move to a more supervisory role and will use advanced collaboration to quickly solve complex abnormal issues that span the value chain out to the extended enterprise. The open collaboration and communication models instilled in the workforce through the widespread use of social networking technologies will drive thought leadership far beyond current æbest practiceÆ thinking. This will encourage the mining industry to extract the business value from rapidly converging fields of study such as environmental sciences, neuroscience, psychology, engineering, information technology and business finance. The future of mining will see a more uniform distribution of data savvy workers between the ages of 20 - 40, forcing a change in current operations. This group will drive the adoption of ubiquitous computing, augmented reality, presence and digital labelling. The enterprise will shift from a relatively static disparate set of functions to a digitally aware, integrated and interactive environment with information available, in context and just in time, to those who need it. The networked virtual enterprise will therefore be a reality.

Jan 1, 2008

Xstrata CopperÆs Mount Isa Copper Operations is located in mineral rich north-west Queensland and is one of the largest sources of copper in the world. This world-class underground operation is planned to produce over 6.6 million tonnes of copper ore in 2007 from the X41 and Enterprise Mines. With an underground mining history of over 50 years and underground reserves of over 83 million tonnes at 2.6 per cent copper, mine planning for the future becomes an exciting challenge for the technical team due to the older nature of certain areas. The 1100 Orebody of the X41 mine was one of the first places that copper mining occurred, with its discovery in 1953 - 1954 and mining commencing in the 1960s. Sublevel open stoping mining methods have been employed since that time as the means of extraction, using a primary-secondary sequence to maximise stope turnaround time. Large Transverse Pillars within the 1100 orebody were not mined out in order to provide access for ventilation, power, orepasses and other services. The Panel Pillar, 4180XC and 4010XC pillars are three such Transverse Pillars in the 1100 orebody that will be mined as a final retreat. This paper discusses the technical challenges and issues associated with the extraction of Q390 stope, one of the stopes located in the Panel Pillar, and the design solutions to overcome these issues. Managing the exposure of backfilled stopes of variable fill strength, ensuring the stability of the crown, stope walls and drawpoints, managing vertical openings, re-establishing service networks, and stope filling are the critical issues given consideration for the final design of Q390 stope and other such stopes within a Transverse Pillar. Communication and coordination between the different departments in the mine are essential for the necessary work to be completed in a timely manner to bring pillar stopes into production.

Jan 1, 2007

By F van de Venter, J Monama, T Kale

For a multitude of years fine iron ore, -1 mm, across the world has been deposited as discard material in tailings facilities. This contributes to environmental problems, decreases plant yield and increases the cost of processing. Fine iron ore recovery processes are often deemed unfeasible or uneconomical, due to the complexity of the reclamation thereof in comparison with high-grade ores. However, recent advances in the recovery of fine iron ore using the Optima Classifier® has shown great promise. The Optima Classifier® is a new hindered settling separator that makes use of an upward current of water for density separation. It’s unique design combines three different separating zones for increased efficiency and recovery. In this study the potential of the Optima Classifier® to produce a +63 per cent Fe concentrate from -1 mm feed material was evaluated from a standalone and process perspective. It was found that a +63 per cent Fe product can be produced from a single stage, using the Optima Classifier®. Fine iron ore feed with an average head grade of 50 per cent Fe was upgraded to average concentrate grades of 63.2 per cent Fe. Displaying upgrade ratios of up to 1.26 in a single stage. A three-stage, rougher, cleaner and scavenger system did however show the best performance with recoveries of up to 70 per cent, yielding 56 per cent of a 63 per cent Fe product. Furthermore, the dewatering of the product and tailings was evaluated using the UltraG ultra-fine dewatering screen ensuring dry, stackable material. The tailings could be used in codisposal, while loads on thickeners and filter presses are significantly reduced. The high throughput of the Optima Classifier® ensures a small plant footprint, minimal civil and structural requirements and low operating utility consumption such as electricity, minimising the carbon footprint of a fines beneficiation plant. The Optima Classifier® in combination with the UltraG dewatering technology has provided a platform for economical recovery of fine iron ore, both current arising and historical. Providing opportunity to lower plant operating costs, reduce environmental liability of tailings facilities and increasing immediate process water recovery

Sep 18, 2023

By H Utama, hi, A Suw

PT. Indo Muro Kencana (PT.IMK) is gold and silver mine located in Central Kalimantan province, Indonesia. Mining activities in PT.IMK is conducted in Bantian pit area by applying surface mining method and using combination of excavator and hauler (articulated dump truck and rigid haul truck) as the transportation for ore to the crushing plant and waste material to the waste dump. Current blasting practice is ore-waste blasting. Ore-waste blasting is the term where the ore and waste rock are blasted in the same blasting process. Blasting is conducted by using nonel initiation system. By multiple pits operation, monthly powder factor is varied from 0.23 kg/t to 0.27 kg/t. Emulsion blend with density 1.15 g/cc is used as bulk explosive. At this stage, the concept of geoblast is proposed as an engineering tool for Drill and Blast engineering practice in PT.IMK. In addition, there is a need to maintain rock fragmentation by blasting, to maintain monthly powder factor, and to maintain excavator’s productivity. Next, the concept of scaled depth of burial (Chiappetta and Treleven, 1997) and the concept of blastability index (Lilly, 1986) are proposed as geoblast’s tools to improve blasting practice in PT.IMK. It is expected that rock fragmentation by blasting, explosive consumption and excavator’s productivity will be maintained by integration of geoblast and drill and blast engineering. Furthermore, the objective of this paper is to integrate geoblast and drill and blast engineering in order to create an engineering guideline in PT.IMK. Additionally, blasting trials with air decking application is proposed in order to support the geoblast’s improvement. It is planned that these blasting trials will be conducted in 2022. In conclusion, it can be seen that integration of geoblast and D&B engineering in PT.IMK is relevant to improve current drill and blast current practice and applicable to maintain rock fragmentation by blasting.

Nov 29, 2022

By H Wen

LongWangGou coalmine auxiliary inclined shaft heading face has a large section, fast heading speed, and large dust production. The problems of high concentration and wide distribution of dust in the roadway air are very prominent. To improve the efficiency of roadway ventilation and dustremoval, long-compression and short-suction (after this referred to as LCSS) are adopted. The dust concentration and airflow field distribution in the roadway are numerically simulated by FLUENT. The change of the position between the pressure duct and the exhaust duct and the different pressure-extraction ratios affect the distribution of airflow velocity, the formation of vortex zone, and the distribution of dust concentration in the roadway. When Ly = 25 m, Lc = 5.0 m, W = 1.2, a wind curtain is formed at 5 m in front of the heading face to prevent dust from spreading deeper into the roadway.

Oct 12, 2022

By M R. Asef

Although generation of environmentally harmful hydrogen sulfide is considered to be related to sour gas fields, sweet gas reservoirs and waste fluids, travertine springs and geothermal fields may also produce acid gas (H2S and CO2) under certain conditions. The potential parameters influencing such a possibility need to be fully investigated to evaluate the extent of the consequences and predict hydrogen sulfide generation accordingly. Reports on hydrogen sulfide production at different regions and fields were gathered worldwide for the cases when some of them did not have such a problem previously. In order to inspect different aspects of these case studies, some other regions with no hydrogen sulfide content were selected as control. In all cases water samples were taken carefully for chemical analysis in the laboratory. Besides, mineral compositions were characterised in some cases for better evaluation. In order to give a thorough prospect of hydrogen sulfide production, a geochemical model was prepared. In situ engineering geological conditions, especially pressure and temperature, were assigned in the model to investigate the possibility of H2S generation using PHREEQC software. The results of modelling revealed that although many similarities existed between mineral compositions of the cases, certain formations were particularly prone to hydrogen sulfide generation. For better evaluation, important exchangeable cation ratios such as potassium/sodium, calcium/magnesium and ion proportions like sulfate and chloride were calculated as trends of the formations. As expected, the model could successfully monitor a higher ratio of SO42- and Cl- in potential H2S generator formations. Wide variation in percentage of HCO3- was considered as a secondary observatory parameter for better estimation. In addition, it was noticed that higher anion content created an environment ready to absorb any cations and this makes H2S generation easier. Finally, using correlations between predictors and estimators for low depth and deep samples defined the degree of effectiveness for every sample.

Sep 26, 2011

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