The new H-W orebody-cutoff grades and mine economics

"The new H-W orebody was evaluated by considering its production at three technically feasible rates. Capital and operating costs were estimated f or each rate and production sequences were established using mining cutoff limits generated by an ore value algorithm. The viability of the project was then examined by conducting economic and financial analyses of each of the three production cases under various world economic scenarios. These analyses employing standard profitability measures demonstrated all three cases would be economically viable; the production case which maximized the Net Present Value of the project was the one selected for development and production.IntroductionWestmin Resources Limited and its predecessor company, Western Mines Ltd., has been continuously carrying out mining operations near Myra Falls in Central Vancouver Island since December 1966. The mining operation, whose current production rate is approximately 830 tonnes / day (t/d), based on ore derived from the Myra and Lynx Mines, produces copper, lead and zinc concentrates which contain significant quantities of gold and silver in addition to the base metals.In the late 1970s, with Lynx and Myra ore reserves slipping to unacceptably low levels, a major increase in mine-site exploration was initiated, with outside geological staff brought in to complement the efforts of the mine's geological staff. By the end of 1979, this program had resulted in the discovery of a significant new orebody on a deeper horizon some 300 metres below the one which hosts the Lynx and Myra deposits. Throughout the period 1980-1982, major drilling was carried out to evaluate the new H-W deposit and by the end of 1982, drill-indicated mineral inventory for the deposit compared with Myra, Lynx and Price ore reserves was as shown in Table I. During this same three-year period, a major development and evaluation program was underway comprising environmental monitoring and control programs, shaft sinking test mining, bulk sampling and mill testing, rock mechanics studies and preparation of the Stage I and II reports for the multidisciplinary Environmental Land Use Committee (ELUC).As a result of the preliminary engineering work and exploration drilling, it became rapidly apparent that the H-W deposit could support a considerably higher production rate than the current one. Accordingly, engineering studies including scheduling of development and production as well as capital and operating cost estimates, were focused on three possible production rates: 1350, 1800 and 2700 t/d. Our task was to select the optimum one of these three rates."