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RME has a vision for a new grinding plant operational paradigm made possible by RMEÆs fast, safe Mill Relining System. Some new liner designs can degrade SAG mill performance because of mill volume loss, ball strike (rotational speed limitations) and other issues often brought about by modifying liner design for maximum life and without a backward glance at metallurgical consequences. Freshly relined mills can initially produce as little as 80 per cent of their maximum throughput, that maximum occurring toward the end of the linersÆ wear life. RMEÆs proposition is to see new liners designed for maximum commercial performance. This may mean more frequent mill relines but with liners designed to yield optimum grinding, metallurgical and profitability performance, not maximum life. In other words, mill liner profiles and mill relining speed become key operational controls and not simply æmust doÆ maintenance functions. Taken to the extreme, liner profiles may prove capable of ætuningÆ a grinding plant for maximum profitability in any metal price environment. Following the introduction, the first section of this paper provides an update describing recent and significant developments within RMEÆs range of Mill Relining Systems, the enabling technologies which permit more frequent liner exchange without incurring additional downtime imposts. The second section outlines RMEÆs vision of a æliner profile versus profitabilityÆ commercial model, developed either intuitively or by using a combination of new measurement and modelling technologies. These new measurement and modelling tools provide the opportunity to predict the optimum commercial outcome, off-line in the virtual world, before committing to an expensive liner experiment.

Jan 1, 2007

By R Wolff

One critical factor in open pit mining projects is the estimation of the recoverable reserves. The reason for this is that at the valuation stage there is a lack of information about future metal prices and production costs. Consequently, the estimation of the recoverable reserves needs to be done based on a fixed break-even cut-off grade (BECG), in which fixed expected metal prices and production costs are assumed throughout the operating life of the mine (OLM). In this paper, an alternative technique for estimating the recoverable reserves of an open pit mining project is presented and explained in detail. The main characteristic of this technique is that it estimates the recoverable reserves of the project using mining costs as reference: this is done due to the fact that mining costs are easier to model than metal prices. Another important characteristic of this technique is that it uses the uncertainty of the geology of the orebody, given by simulations of the deposit, to make final strategic decisions, such as the selection of the operating life of the mine and the optimal production rate, which minimise the risk of not achieving future production targets while maximising the upside potential of future rewards. As it will be shown, the final outcome of the proposed technique is the generation of a robust open pit design, that include cutbacks and ultimate pit limits, called the marginal open pit mine design (MOPMD). One characteristic of the MOPMD is that, at each production period, it will be characterised by their respective geological uncertainty, given as probability distributions of ore, waste and metal quantities, and by marginal economical project indicators, such as cut-off grades and metal prices, among others. The details follow in the paper.

Jan 1, 2006

By G J. Lyman

The theory of sampling has progressed slowly over the last century. The concepts of correct sampling were known to mining engineers such as D W Brunton in the 19th century. It was recognised early in the 20th century that the Poisson distribution of particles carrying the target analyte was the key to the uncertainties between samples of a given mass. However, no efforts were made until the 1980s to determine the entire sampling distribution as a function of sample mass. The variance of sampling was made clear by Gy and others, but none attempted to determine the entire sample assay density function until J H Venter in South Africa applied the method of characteristic functions to the problem.Venter applied the method to a specific case of very low analyte concentrations in samples of very fine particle size where his assumption of constant sample mass was justified. When his general methodology is applied to the more general problem, it can be shown that the assumption of constant sample mass is no longer justified and leads to some anomalous results for sampling variance. Venter’s method can be expanded to allow for a statistically variable sample mass and to take into account the size distribution of particles that carry no analyte.This paper presents the basis of Venter’s work and shows how the approach can be easily modified to yield results for the variance that are consistent, for example, with the work of Gy. It is also demonstrated that the entire sampling distribution can be determined without undue computational burden when sufficient information on the material heterogeneity has been collected.CITATION:Lyman, G J, 2014. Determination of the complete sampling distribution for a particulate material, in Proceedings Sampling 2014 , pp 17–24 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 29, 2014

Barrick Gold Granny Smith Mine is currently undergoing conversion from an open cut operation to an underground mine at the Wallaby deposit. The underground project commenced in 2005 with the development of the reserves immediately below the pit and is now currently entering a production ramp-up phase for mining of these two initial surfaces below the pit. With increasing gold prices the owner has been forced to re-evaluate the underground project and has decided to investigate the potential of a deep level mine. This deep level underground mine presents a collection of challenges with the most notable being exploitation of a series of well separated near horizontal lodes ranging in thickness from less than 1 to 20 m. A variety of room and pillar mining methods are employed for extraction with careful consideration to resource recovery and pillar design for long-term stability. Compounding these deep level challenges is a need to accelerate mine level development to maintain the production profile of the mine. This paper describes the challenges, key learnings and outcomes of the studies undertaken to date associated with this project.

Jan 1, 2008

By T J. McGavin

This paper examines the fire life systems implemented in two existing tunnels and discusses whether the standards used were appropriate. It focuses on the Terrace Tunnel as this upgrade and refurbishment is complete.The New Zealand Transport Agency (NZTA) manages six tunnels on the State Highway network with two of these built in the last seven years. The Terrace Tunnel, opened in 1978, was refurbished with modern fire life safety systems in 2010–2012. An interim upgrade of the Mt Victoria Tunnel, opened in 1931, was also carried out at this time.In present times, few existing tunnels have undergone significant upgrades and refurbishments. The Terrace Tunnel required: new power supplies, control buildings, lighting, wall panels and jet fans, a deluge system, emergency exit lights and way-finding lights, a public address (PA) system, a radio rebroadcast system, lane control sign (LCS) and variable message sign (VMS), an over-height detection system (OHD) and a new tunnel management system.In the absence of suitable guidelines, various standards were used to carry out the refurbishment. The Austroad Guide to Road Tunnels and AS4825 Tunnel Fire Safety, although designed for new tunnels and not specifically intended for existing tunnels, provided a framework. A multi-criteria assessment of risk (MCAT) was carried out to determine the systems to be provided.The Terrace Tunnel has perhaps set a benchmark for refurbishing existing tunnels as few projects of this type have been completed recently. This paper examines the process and the outcomes.CITATION:McGavin, T J, 2014. The refurbishment of the Terrace and Mt Victoria Tunnels, Wellington, New Zealand, in Proceedings 15th Australasian Tunnelling Conference 2014 , pp 87–94 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Sep 17, 2014

By McKay AD

The bulk of Australia's uranium resour- ces was delineated in the last 18 years when a total of $563 million (1984 dollar values) was spent on uranium exploration. Australia's share of the low-cost Reasonably Assured Re- sources in the World Outside the Centrally Planned Economies Area (WOCA) increased from 1.5% in 1967 to 29% by the end of 1984 and its share of the low-cost Estimated Additional Resources (Category I) then stood at 25%. As of December 1984, Australia's uranium resour- ces were estimated by the BMR to be: Cost range US$80/kg U (US$30/lb U301) Reasonably Assured Resources 463 000 t U Estimated Additional Resources(I) 251 000 t U Cost range US$80-130/kg U (US$30-50/lb U308) Reasonably Assured Resources 63 000 t U Estimated Additional Resources(I) 126 000 t U The increases in Australia's resources was sustained by a group of large and rela- tively high-grade deposits which were disco- vered during the period 1969 to 1975. Austra- lia's share of the low-cost resources was also enhanced by a contraction of WOCA's low-cost resource base due to escalation of production costs for smaller low-grade deposits. Most of Australia's uranium resources are contained in the Proterozoic unconformity- type deposits of the Alligator Rivers uranium field and the stratabound deposit at Olympic Dam on the Stuart Shelf. Most of the remain- der of Australia's uranium resources is con- tained in calcrete-type deposits. Less than 10% of Australia's uranium resources are in sandstone-type deposits. Total Australian production to the end of 1984 amounted to 26 241 t U, representing 3.4% of WOCA's cumulative production. Aus- tralia's share of WOCA's annual production has steadily increased from 1.3% in 1977 to 11.2% in 1984 (4390 t U). The increases in Austra- lian production took place in the face of reductions of production in WOCA countries, principally the US, from a record level of 43 988 t U in 1980 to about 39 000 t U in 1984. New low-cost production centres, mainly in Australia and Canada, have partly compen- sated the decline in US production. The Department of Resources and Energy (1985) reported that Australian exports of yellowcake are expected to reach 10 000 t U308 (8480 t U) by 1993/94, representing an in- crease of about 13% oer annum.

Jan 1, 1986

By C Bie, S Li, P Xiao, P Zhao, H Lin

"Based on solid simulation material research, the simulation conditions for methane and coal solid-gas coupling were obtained using solid-fluid coupling theory. Using sand as the aggregate and paraffin and oil as the cementing agents, a material suitable for solid-gas coupling simulation was developed. A permeability testing instrument was also developed, and the compressive strength, brittleness parameters and seepage velocity of material were tested with different aggregates. The results showed that as the paraffin content increased, the compressive strength of the material increased but the permeability decreased. The oil removed the drawback of intensely changing material compressive strength. By setting a different ratio of aggregate to cementing agent, it can simulate rocks with different strengths and permeability. Applying the material to a mining simulation experiment revealed a relationship between methane seepage velocity and overlying strata movement. By extracting pressure relief gas from Shanxi Tianchi coalmine drainage, the authors found that the mining fissure zone was a storage area of pressure relief gas, and a gas drainage system can be placed to achieve good results. CITATION: Li, S, Zhao, P, Lin, H, Bie, C, Pan, H and Xiao, P, 2015. Character of simulation material of coal – rock and gas solid-gas coupling and engineering application, in Proceedings The Australian Mine Ventilation Conference, pp 105–110 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Aug 31, 2015

By D M R Stone

Failings di,posal presents many challenges at metal mines in Peru where the extreme relief yields very little useable land area. These challenges are amplified by other hazards such as the high seismic environment, high rainfall, and frequent debris torrents down the steep hillsides. As a result many mining operations have resorted to in-river disposal of mill tailings. This paper presents a case history of one underground metal mine located in the high Andes mountains of Peru where in-river disposal of tailings has been used for some 30 years. The paper outlines a comprehensive engineering study that was aimed at increasing the utilisation of tailings disposal underground. The scope of this study included modifications to the grinding and flotation circuits to produce a high sulphide and low sulphide tailings for underground and surface disposal respectively: mapping and cataloguing of abandoned stopes for hackfilling: modifications to the existing backfill system to improve icliahility and throughput, and a preliminary evaluation of alternatives Such as silicated and paste fills.

Jan 1, 1998

It is a commonplace of our industry that prices of most minerals have been historically weak during the 1980s. The International Monetary Fund's index of prices of metals fell 25 per cent between 1980 and 1982, rose slightly in 1983, and has since fallen further. In December last year it was 37 per cent below its 1980 average. The few temporary exceptions to the mineral industry's malaise highlight the excess capacity, which largely explains the weakness of prices. The industry has painfully come to recognise that more satisfactory prices will not be restored until supply capability and demand move back into better balance. Mine capacity was installed in the expectation of much faster growth of demand than has occurred. For a variety of reasons mine and plant closures have been insufficient to restore equilibrium to the market-place. The industry may, therefore, have to resign itself to continued weak prices for some years more, at least by the yardstick of the 1970s. Growth rates of demand have slackened off in line with economic activity, and in response to continuing substitution and technological improvements. To the extent that the recent weakness of oil prices stimulates the industrial countries' activity, demand for non-fuel minerals may grow faster than most forecasters now predict. It is, however, much too early to say how long the weaker oil prices will persist, and even more difficult to estimate their probable effects. In typical post-war business cycles the usual response to recession was to batten down the hatches, and ride out the storm. Sooner or later, and probably sooner, demand resumed its previous trend path, and prices recovered. The market, in effect, bailed mines out of trouble; the more efficient could make attractive pre-tax profits whilst even the poor to mediocre could earn a satisfactory living. Prices rose at least as fast as general inflation, and in the early 1970s much faster. In retrospect those price rises of the early 1970s were historically abnormal but they did not appear so in the prevailing inflationary climate of the time. When the market failed in the early 1980s many of the hardest hit companies looked for scapegoats.

Jan 1, 1986

By J A. van Niekerk, J G. Jardine, J W. Olivier

The Runruno Gold Project is located on the island of Luzon, approximately 200 miles north of Manilla in the Philippines. The mine is an open cut operation and uses the proven BIOX® and carbon-in-leach (CIL) processes to recover gold, and the ASTER™ process for detoxification of the CIL residue prior to discharge to the Residue Storage Impoundment (RSI). Work to date has defined a mineral resource of 1.39 million ounces (Moz) of gold, and the operation will produce 96 700 oz of gold per annum over a mine life of 10.4 years. The BIOX circuit is designed to treat 140 000 t/y of concentrate with a design capacity of 404 t/d of concentrate at a design sulfide sulfur grade of 17% S2-.The Runruno BIOX Plant is the first application of the Outotec BIOX Generation III design principles, focussing on ease of operation and maintainability. During development and implementation, the project team focussed on identifying opportunities to optimise the capital efficiency while not compromising on the operability or overall efficiency of the process or the equipment. The BIOX plant also incorporates the latest developments in the design of the BIOX agitators for more efficient mixing and gas dispersion. This paper will discuss some of the critical aspects and decisions taken during the development and implementation of the BIOX Process at the Runruno Gold Project. The paper will highlight some of the factors affecting the commissioning process as well as the improvements seen through the introduction of the Generation III BIOX design principles. CITATION:van Niekerk, J A, Olivier, J W and Jardine, J G, 2017. Implementation of the BIOX® process at the Runruno Gold project, in Proceedings MetPlant 2017, pp 218–228 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Sep 11, 2017

Mine pit slopes in the Pacific Rim are a geotechnical challenge because of the complex geology in which they are developed. Mines are currently being fast-tracked to meet the increase in commodity prices, often resulting in some reduction in ground studies and short-cutting of design procedures. In addition, the resources boom means that skilled personnel are in relatively short supply. At a time when mine pits are getting bigger and deeper, and the engineering is getting more demanding, there is an increased demand on managers to effectively implement the work.   Experience both in New Zealand and the Philippines, display the complex range of geological environments in which pits are being excavated. Working in these conditions has shown that successful geotechnical design requires a strong geotechnical model based on sound geology. An appropriate level of investigation and analyses results in a certain level of understanding for the mine design. There is a point where additional expenditure (on investigation and analyses) is not warranted based on the expected minimal impact on decreasing the level of perceived risk on the project. For most projects in our experience the analytical methods and complexity of geotechnical assessment changes increases as the level of knowledge grows.

Jan 1, 2006

By T A. J Hopper, B J. Birt, K K. Trofimczyk

Nuclear magnetic resonance (NMR) has been utilised in the oil and gas industry for over 60 years. The technology was recently identified as having potential value in iron ore, where latent bound moisture may affect ore handling even after dewatering and extraction. The first step in introducing this technology to iron ore involved laboratory tests on drill core samples. These results established the parameters for a downhole borehole magnetic resonance (BMR) tool for iron-rich environments, which was subsequently developed. A major challenge involved shrinking what is a very large tool in the oil industry to a slimhole, lightweight, 1-man deployable mining tool.Of primary concern was the ability to measure the very fast transverse relaxation times (T2s) seen in the lab results on iron ore samples. Iron creates local field gradients that significantly decrease the T2 times. As a result, the BMR tool had to be able to measure T2s in the range of hundreds of microseconds, a level not required in clastic sedimentary formations. The choice of T2 cut-offs in iron ore is critical to successfully separating the free and bound fluids. The industry has typically focused on T2 cut-offs in clastics and carbonates, but not in systems with high iron content. Using core analysis results (poro-perm and NMR) we were able to verify the BMR response. The T2 cut-offs were determined from NMR core analysis and then applied to the logs so as to provide a continuous, calibrated permeability log.Field results that highlight the challenge involved in logging in iron-rich environments are presented, as well as some minimum requirements for a successful BMR log. Examples from boreholes in an active iron ore mine in the Pilbara iron ore province in Western Australia are presented, as well as explanations for how NMR data can be combined with bulk density logs to provide a continuous dry weight density log based on the original density-porosity equation from Alger et al (1963).CITATION:Hopper, T A J, Trofimczyk, K K and Birt, B J, 2017. Development of a slimhole downhole nuclear magnetic resonance tool for iron ore – some applications and limitations, in Proceedings Iron Ore 2017, pp 473–480 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 24, 2017

With commodities suffering dramatically low real prices, mining business margins are under intense scrutiny. Unfortunately, management systems developed early this century for manufacturing are driving counterproductive behaviours that choke productivity. The paper and presentation will explain this and present a proven methodology for increasing productivity. This will be supported by operational examples from Australian and American mining management to demonstrate the importance of modern business performance measurement and analysis systems. It will explain the importance of management systems in driving organisational change to sustain superior productivity and margins. The paper will explain why many executives and managers confuse production (a measure of volume) with productivity (which measures efficiency and effectiveness). It will explain how this and other counterproductive managerial and operator behaviours and attitudes are driven by traditional business management systems exacerbated by managerial and consulting fads. The paper will begin with the simple principle that to improve results one needs to first improve the process producing the result û and will show how this is often violated. Improving productivity then boils down to:accurately identifying opportunities using sound, modern measurement, analysis and reporting systems; methodically improving operating and commercial processes, and changing peopleÆs behaviours and attitudes to sustain changes in practices. The paper will include fundamentals of applying sound measurement and analysis to:processes directly, eg cycle time charts and their impact in cyclical (non-continuous) operations commonly used in rock breakage; drivers of productivity; and process results themselves since correct analysis identifies opportunities accurately. The paper will cover the importance of practical leadership and the need to follow a simple, solid plan for changing systems that drive behaviour. Overall, it will highlight use of modern performance Measurement, Analysis and Reporting systems to drive behaviours and improve margins - without capital investment û and make executive and managerial work easier and more effective.

Jan 1, 1999

Waihi Gold Mining Company Limited, a wholly owned subsidiary of Normandy Mining Limited, operates the Martha gold mine, located in the township of Waihi, New Zealand. The operation, an unincorporated joint venture, comprises Normandy Mining Limited (67.070/0) and Otter Gold Mines (32.94%). Since gold was first discovered at Waihi in 1878, it has formed a key part of the region's economy. In 1909 the Waihi mine was described in a report to Parliament as æthe most important gold mine in Australasia and one of the greatest in the world.Æ That was a record year for production, with 416,813 tons of ore mined and some 1,120 men employed. Today the mine produces up to 1,250,000 tonnes of ore annually, and the project employs some 234 men and women. In 1999 the value of the gold and silver produced ($59 million) made up 47% of Waihi's estimated GDP. Waihi Gold has made significant contributions to the Waihi economy, community and the Hauraki region as a whole. Since the mine was re-opened in 1987, thousands of local people have benefited from the mine. In 1999, consents were granted allowing an extension to the mine life (the Extended Project) and this will result in a further seven years of economic benefits resulting from mining activity. The Company has undertaken extensive consultation throughout project planning, construction, operations and rehabilitation. Ongoing liaison and involvement with all community sectors, including Tangata Whenua and Iwi, local residents, recreational groups and schools remains an integral part of the operation. Throughout the life of the modern Martha Mine, the Company has actively supported the local community in the form of donations, sponsorships, the provision of amenities, and by participating in community events. A well established environmental team exists at the site. Environmental and community performance is measured by an independent five-assessment process, and the Company is committed to achieving excellence through ongoing improvement programmes and staff awareness. When the mine is closed, the open pit area will be transformed into a recreational lake, and the tailings storage facilities will be rehabilitated to become a combination of wetlands, grassed areas and ponds. Resources will be provided by the Mine to ensure the rehabilitated site remains in a safe and self-sustaining, stable condition in perpetuity. The mine is regarded as a showcase on a world standard of how a modem mining operation can successfully coexist with the nearby community.

Jan 1, 2000

The Mt Lyell Mine at Queenstown, Tasmania was re-opened in 1995 by Copper Mines of Tasmania Pty Ltd, a wholly owned subsidiary of Mt Lyell Mining Co Ltd. The re-opening followed over 100 years of copper and gold mining at Mt Lyell. Major changes in practice were implemented across the site. Preventing further damage to an already disturbed environment was a major priority. Sublevel caving, at a lower cut-off grade, replaced open stoping for the deep underground mining. Development and later stoping are handled by a contractor, National Mine Management Pty Ltd, in the largest underground contract awarded at the time. Large scale sublevel caving was new to Mt Lyell and not widely practised in Australia, requiring studies and systematic development of the method, particularly in drilling and blasting. Rehabilitation and upgrading of mine infrastructure have been and will continue to be a challenge. The mine has, since 1995, returned to being a stable producer with potential for growth.

Jan 1, 1998

By K C. Runge, E Tabosa, A Jankovic

Flotation recovery in geometallurgical modelling is usually predicted based on relationships developed from batch flotation testing of different ore types. These batch flotation tests are usually performed at a constant set of operating conditions and at a fixed feed grind size P80. Usually the laboratory feed grind P80 is that which is expected to be produced in the full-scale flotation circuit for that particular ore type.Flotation recovery will be a strong function of the valuable mineral particle size distribution, with lower recovery of ultra-fines due to poor flotation kinetics, optimum recovery for the intermediate sized particles and lower recovery for the coarser particles due to poorer liberation of this fraction. This valuable mineral particle size distribution is not characterised by the solids P80 parameter alone. The proportion of material in each class will also be a function of the slope of the size distribution and the degree of preferential grinding of the valuable mineral in comparison to the total mass of the ore.This paper will demonstrate (through example) how these other size distribution parameters can change with a change in grinding technology, the size and operating conditions used in a grinding unit and the characteristics of the classification technology used in conjunction with the grinding unit. Case studies will be presented that demonstrate how this can result in these parameters being very different in laboratory testing to that produced in the full-scale comminution circuit. A rule of thumb that laboratory rod milling rather than ball milling produces a size distribution most similar to that of the full-scale grinding circuit will be challenged. These differences can result in a significant change in flotation recovery. It is therefore important to consider these parameters when developing a laboratory geometallurgical program, to enable more accurate prediction of the flotation recoveries that will be achieved in the full-scale process.CITATION:Runge, K C, Tabosa, E and Jankovic, A, 2013. Particle size distribution effects that should be considered when performing flotation geometallurgical testing, in Proceedings The Second AusIMM International Geometallurgy Conference (GeoMet) 2013 , pp 335-344 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Sep 29, 2013

By Jankola W. A, Delong O. J

Historically, the silica content of zinc concentrates treated at Cominco's Trail Operations has been low. Silica in the roaster calcine seldom exceeded 1.5 per cent because of the low silica content of concentrate from Cominco's Pine Point mine. With the shutdown of Pine Point, alternate sources of concentrate were required and it was anticipated that calcines containing greater than two per cent silica (with excursions above three per cent) would have to be treated. Previous experience indicated that the existing leaching circuit could not tolerate such high levels. Therefore, a research program was undertaken to identify the key factors affecting silica precipitation; to compare different process alternatives; and to make recommendations for modifications to the existing plant. A project to modify and upgrade the leaching circuit has now been completed. Calcines with higher silica contents are successfully treated, but the upper limit of the circuit is unknown. The results of the research work will be discussed and the new leaching plant will be described. Recent operating results will also be presented.

Jan 1, 1993

By R Stefansen

Stockyard operations are governed by the interaction between the different disciplines required to successfully schedule and control the supply chain of raw material through the stockyard in combination with the effectivity of the operation of the stockyard equipment. The system demonstrates a proven technology for implementing a centralised operation of full unmanned stockyard equipment, using a high precision absolute positioning system based on a Real-Time Kinematic (RTK) Global Navigation Satellite System (GNSS) receivers in combination with 3D rangefinders. The system implementation maps the surface profile of the stockyard inventory and allows in combination with proprietary algorithms for full operation of the stockyard machines without on-board operators. The operational impact of delayering the process by moving to a centralised operation is examined, together with the combined effect on the overall safety in the stockyard as a result of a change in reliance on operator skill dependencies. Average performance gains range from 10–20 per cent. The performance of the automation system is related to a consistency and reliability of uniform operation, which has an impact on the life expectancy and the effectiveness of the equipment. The effects of having instantaneous and correct information about the stockyard inventory volume measurement are investigated in relation towards spot price trading in current fast reacting markets.CITATION:Stefansen, R, 2017. Advanced automation for centralised stockyard operations, in Proceedings Iron Ore 2017, pp 105–110 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 24, 2017

The 1981 Review: In the late 1970s there was an upsurge of interest in the prospecting and mining of this countryÆs mineral resources. That upsurge of interest was accompanied by a mounting public concern over the damage mining operations might do to the environment. Concern was also expressed about what some people perceived as inadequacies in the legislation which regulates mining and the grant of mining privileges, and inconsistencies in the relationship of that legislation to other legislation regulating land use and the use of resources.

Jan 1, 1984

By J Gould, T Elkington

Mine operation strategies are commonly optimised with a net present value (NPV) maximisation objective. There are well known properties of a typical mining project optimised for NPV, including high production rates and declining cut-off grade schedules. In practice, however, frequently there are operations that diverge from such NPV-maximising properties. Although a range of reasons for this can be at play, one possible explanation is that operators intuitively adjust their strategies to compensate for the flaws inherent to NPV maximisation. In particular, NPV analysis does not reflect the benefits of managerial flexibility inherent in a mining plan. Real options valuation (ROV) is an alternative approach that addresses this issue. We compare the properties of NPV and ROV optimisation solutions generated for the same scenario. Our simple case study demonstrates that the presence of real operating options in the optimisation model not only entails increased project value as expected, but also tends to encourage lower processing capacity (with lower associated capital cost), higher cut-off grades and greater use of stockpiles.CITATION:Elkington, T and Gould, J, 2012. Real option value optimisation, in Proceedings Project Evaluation 2012 , pp 35-40 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012