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Banks' focus in using cash flow methods can differ markedly from that of equity investors. This paper attempts to explain and describe bankers' approach by: ò outlining the fundamental difference between banks' and investors' risk / return profiles. ò describing lenders' consequent use of cash flow methods in mineral valuation. areas. explaining lenders' specific treatment of key risk Fundamental to understanding banks' appraisal of mineral projects is the appreciation that lenders have a basically different risk profile and outlook from those familiar to equity investors. Lenders do not normally participate in any project upside. The economics of lending dictate that banks can only accommodate a low probability of loan default and consequently banks' principal focus in mineral ""valuation"" is ensuring an acceptably comfortable probability of debt repayment. A simple conceptual explanation of lenders' risk / return position is outlined.

Jan 1, 1994

By A A. Ndiaye, A Galli

In a companion paper on current hedging practices in the mining industry (Armstrong et al, 2009) we showed that contrary to popular belief, mining groups are still using financial derivatives to hedge against foreign exchange risk and interest rate risk, and more recently against adverse changes in energy prices, notably the oil price. This paper presents a case study on a hypothetical gold mine to illustrate the impact that hedging policies could have on its profitability by reducing the downside risk due to adverse changes in the exchange rate and increases in fuel prices. The characteristics of the hypothetical mine have been set to reproduce those of a real gold deposit, the Kisladag mine that is currently being exploited by open pit methods in Turkey. This mine was selected because its feasibility study was available to the public. Geostatistical simulations are used to reproduce the inherent uncertainty on the recoverable reserves û stochastic simulations are used to generate the variability of the other three key sources of uncertainty: the gold price, the cost of energy and the exchange rate. A simple strategy based on straightforward vanilla options (puts and calls) was developed for hedging the last two risks, on the assumption that the company sells its production at the prevailing spot price.

Jan 1, 2009

DCF Valuations are very important to individuals and companies involved in the mining industry. Such valuations are critical to investment decisions in relation to new and existing projects. In particular they provide fundamental information to shareholders in the event of a capital raising or takeover and to financiers supporting mining companies and projects. Also, DCF Valuations are often used to support asset carrying values in the financial statements of mining companies. This paper presents a Chartered Accountant's (CA's) perspective on the main issues to be considered in preparing, analysing and relying upon DCF methods in mineral valuations and provides some practical examples relating to key issues. The paper makes the important point that DCF methods involve making assumptions about future events and circumstances that inherently contain uncertainty which results in a valuation prepared on a DCF basis providing a range of values that are not perfect or accurate. In order that DCF valuations provide meaningful information the underlying methodology used and assumptions made must be consistent, sound and well supported. Credibility of those involved in preparing mineral valuations is vital and this paper supports the adoption of sound practices by all concerned.

Jan 1, 1994

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

By B Reid

"Since the commencement of mining operations at the Cowal Gold Operations (CGO) in 2005, reverse circulation (RC) drilling has been the preferred method for grade control (GC) sample collection. This method was selected because it allowed:for multibench drilling (20 m hole depths for two benches of mining) to aid mine planning increased data density for comparison against the wide spaced ore reserve model angled drill holes to intersect perpendicular to the strike and dip of the shallow dipping mineralisation ability to take two metre sample intervals to enhance the understanding of the mineralisation’s short-scale variability and provide the ability to flitch mine.From June 2008 to December 2013, RC GC was performed using a UDR rotary cone splitter. The field duplicate data over the period displayed strong precision, with a correlation coefficient of 0.94 and an average relative per cent difference (RPD) of 21 per cent for gold. Up to 66.1 per cent of field duplicate data greater than 0.1 g/t fell within ±20 per cent RPD. This is within limits of industry best practice. The Mine to Mill reconciliations over the same period showed the estimated GC grade was 7.7 per cent lower than the calculated head grade (CHG).In December 2013, the Progradex sampling system (PGX) was introduced at CGO due to its advertised ability to capture 100 per cent of the drill cuttings for the complete sample interval, inclusive of fines. Analysis of field duplicate data indicates that since the introduction of the PGX, the sample precision has drifted. From January 2014 to February 2016, the correlation coefficient was 0.92 and up to 51.2 per cent of field duplicate data, greater than 0.1 g/t fell within the ±20 per cent RPD. Over the same 26 month period, the Mine to Mill reconciliation improved to one per cent lower than the CHG. Granulometric analysis of the RC samples collected from the PGX indicated the fines material(<212 µm) averaged up to 22 per cent of the samples mass and following assay determination, the fines material represented a weighted average of 31 per cent of the total gold content within the sample.This paper highlights the:importance of the complete capture of all drill cuttings during an RC drill programinfluence of fines material on the sample quality and accuracyimpact sampling of the fines material has on the Mine to Mill reconciliation performancechallenges experienced in commissioning a PGX system.Citation:Reid, B, 2016. A Fine Looking Sample - the Importance of Fines in Grade Control Sampling to Mine to Mill Reconciliation, in Proceedings Ninth AusIMM Open Pit Operators' Conference 2016, pp 28–38 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Nov 15, 2016

By A R. Sale

This paper highlights two aspects of the mineral sands industry in Australia: the development of the industry from approximately 1870 through to 1980, and the author’s experience in the industry from 1966 to date.The first real heavy mineral (HM) mining in Australia started in 1870 with the mining of heavy mineral slicks on the beaches along the east coast of Australia. The real potential of Australian heavy minerals was however only realised in the 1920s with the first production of a heavy mineral concentrate that was shipped to Canada for processing. Post WW 11 and the Korean War, Australia was the largest producer of mineral sands products in the world as well as a significant developer of associated separation equipment and technology. The number of producing companies in the east coast peaked at 33 in 1957, was reduced to ten by 1965, and subsequently further reduced to five in 1980 as a result of potential mining areas being declared National Parks or Conservation Reserves. Today there is one company, Unimin Australia Pty Ltd (formally Consolidated Rutile Ltd) operating on the east coast. In contrast there were three companies on the west coast in 1965, four companies in 1980, and four companies today (albeit not the same companies).There have been considerable ups and downs for the industry in Australia, however world wide it was renowned in the past as being an industry that attracted numerous interesting and innovative characters that played a major role in developing it into the vibrant industry that it is today. This, given the current climate, is predicted to continue into the future.The author has been continuously involved in the industry for over 45 years from 1966, initially as an electrician at Consolidated Rutile Ltd culminating in the role of General Manager/President of Iluka Resources Limited USA, prior to his retirement in 2009. His exposure has been world wide and has covered all aspects of the industry but in the main focused on project development and operational areas. During this time there have been significant technological advances, yet to some extent the basic principles have not changed at all. Some of the most noteworthy advances include the development of the Wright Spiral in 1977, the development of the Reading High Intensity Wet Magnet (WHIMS), the rare earth magnets, the CRL floating thickener and the improvement of analytical techniques. From a safety, health and environmental perspective there has been significant advances that the industry has much to be proud of. These include wetland restoration both in Australia and in the US, the restoration of farmland in Virginia and Capel, and the re-establishment of native species, for example at Eneabba and Richards Bay to name but a few.

Oct 5, 2011

When perusing articles which treat of mining geology, and when talking with miners on the field, one is at times unable to follow the exact thoughts intended to be expressed, owing to the introduction of occasional technical words, the meanings of which are not thoroughly understood either by the speaker or by the hearer, or possibly by both and laymen at times accuse their technical brethren of attempting to confuse them by employing unusual words in their conversations and writings. Technical words are necessary adjuncts to all arts and sciences. They creep into our language, frequently unnoticed by those who employ them, as being more concise and convenient than longer sentences to explain frequently recurring expressions. In many cases these words give the finest shades of meaning, such as aglomerate and congzomerate, but in others they are extremely ambiguous, for instance black sand, which in some places means ilmenite, in others, chromite, tourmaline, cassiterite, in fact, any black mineral occurring in the form of sand. Then, again, much confusion is cansed by the same rock or mineral having different names, e.g, jlu01'spa'i', which is known as cand, cann, cauk, kawk, blue-John, Derbyshire spar, &c. The multiplicity of local names is of course chiefly found among the more common minerals, which are widely distributed some people have a propensity for using words the meanings of which they understand as little as' they do how to pronounce them. We have heard such persons speak 'of vughs as "bugs," and oxides as "ox hides," and to show that there was no mistake in their intentions, we have seen these and other words written in the same way as they were pronounced. Then, again, some persons, relying more on examples than definitions, get a very vague idea as to what the true meaning of a term may be the word dimite is an example in point, which we have frequently heard applied to any dyke rock that the miner was unable to recognise as granite in fact, he uses the word in a general sense, just as the field geologist provisionally employs the word " greenstone " for certain rocks, until he has an opportunity of thoroughly investigating their character.

By E Garbarino, P Molina, V Badino

Given the ever increasing quantity of construction and demolition waste (C&DW), one of the most challenging issues presently facing policymakers and public administrators in Italy concerns how to organise and manage collection and recycling and to understand whether and to what extent recycled aggregate can complement natural building aggregates in a sustainable supply mix (SSM). The paper presents the results of a research aimed at analysing energy and environmental implications of the C&DW recycling chain in the administrative territory of Provincia di Torino in northern Italy. In respect of a population of about 2.25 million inhabitants, the annual production of C&DW in the area under study is 1.8 Mt. A combined geographical information system (GIS) and Life Cycle Assessment (LCA) model was developed, paying attention to the geographical location, land use, transportation network and avoided landfill: crucial issues for sustainable planning and management. Around 90 recycling plants were classified according to the size, typology (stationary, semi-mobile and mobile) and physical- mechanical characteristics of the recycled aggregate. Under different assumptions relevant to the delivery distance, and considering the typology and grade of recycled aggregate, as well as local availability of natural aggregates, it was possible to evaluate the geographical coverage of aggregates demand and to use LCA in order to identify and quantify energy and environmental indicators.

Jan 1, 2009

By M Nehring, M Kizil, P Knights, A Mousavi, F Sotoudeh

A cut-off grade is used to distinguish an economically viable block of ore from non-economical ones in mining operations. In order to obtain a high Net Present Value (NPV), a strategic and precise determination of cut-off grades (mill feed/marginal, marginal/waste) is required. In recent years, the significant depletion of feed grades and increasing mining operating costs have affected the viability of new and existing mining operations. Hence, the introduction of a pre-concentration system to process ore before sending it the main processing plant has gained increasing attention for its potential improvements in resource exploitation processes, mineral processing, energy consumption and environmental impacts. The primary potential advantage of implementing a pre-concentration system is the improvement of resource utilisation and increased reserves as a result of a reduction in cut-off grade. The objective of this paper is to present a new cut-off grade method, which can be used in the presence of a pre-concentration system for underground metalliferous mining operations. The results of this study illustrate the potential economic benefits of using a pre-concertation system prior to a mineral processing operation as a result of the reduced cut-off grade and increased NPV.

Nov 10, 2020

By McMahon D

The approach to valuations at the Normandy Poseidon Group is a measured and methodical process that utilises skills sourced from a number of different disciplines. Whilst being subject to a strict set of guidelines, it is also sufficiently flexible to be able to cope with the considerable variety across the resources industry. The group uses Discounted Cash-Flow (DCF) techniques extensively in order to develop a base valuation. Other external factors (eg the market) are, however, also taken into account when forming a view on value. Other methods of valuation are used in tandem or as alternatives depending on the task. DCF techniques are an important tool but would never be used in isolation. Considerable care must be given to developing the DCF analysis as its components (eg discount rate) are prone to misuse. Whilst the valuation process is quite detailed and scientific, it is really only as good as the inputs or assumptions (technical, financial, etc) that are used. The methodology used remains consistent whether the group is undertaking the corporate planning process or making an acquisition.

Jan 1, 1994

By J MacNeil, R Dimitrakopoulos

As open pit mining of a deposit deepens, the cost of extraction may increase up to a threshold where transitioning to mining through underground methods is more profitable. This paper provides an approach to identifying an optimal depth at which a mine should transition from open pit to underground mining. The value of a set of candidate transition depths is investigated by optimising the production schedules for each depth’s unique open pit and underground operations. By considering the sum of the open pit and underground mining portions’ value along with the cost of transitioning corresponding to each candidate transition depth, the optimal transition depth can be identified. The optimisation model presented is based on a stochastic integer program that integrates geological uncertainty. As an input, the stochastic integer program utilises a set of several stochastic simulations that represent equally probable scenarios of the mineral resource. This group of simulations describes the uncertainty in the deposit, while the optimiser aims to maximise value based on discounted profits of both the open pit and underground components of the deposit.CITATION:MacNeil, J and Dimitrakopoulos, R, 2014. A stochastic optimisation formulation for the transition from open pit to underground mining within the context of a mining complex, in Proceedings Orebody Modelling and Strategic Mine Planning Symposium 2014, pp 363–368 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 24, 2014

By P Revell, B Adair, D King, L Keeney

Grade Engineering®, integrated across the mine value chain, has a pivotal role to play in achieving step change reductions in energy and water usage in mine operations. High levels of gangue rejection in the mine can significantly improve mineral head grades and overall productivity. A highly successful example is described at the Minera San Cristóbal (MSC) operation. The nature of the mineralisation in their “intrusive” ore domains in particular has facilitated high rejection rates (75 % of the mass), with significant upgrading of metal to the “accepts” streams (equating to a 2.6 times upgrade in the intrinsic Nett Smelter Return). Results from a series of production trials have confirmed these strong upgrades, resulting in the transformation of mineralised “marginal wastes” to high grade ore feedstocks. If new approaches to more energy and water efficient comminution and separation technologies can also realise gangue rejection at finer sizes in the concentrator, then preconcentration strategies across the value chain also offer the promise of no wet tailings treatment facilities and greatly reduced volumes of waste streams. This “No Tails” strategy is discussed, along with the integrated technologies needed to realise its effect. The work suggests a pathway and insights of a sustainable future for the Minerals Industry, unconstrained by Energy and Water, along with no requirement to produce problematic disposal streams. This strategy has the potential to significantly reposition the social, environmental, financial, and regulatory context of existing and new mining opportunities.

Nov 10, 2020

In this paper, three types of value-adding in the minerals industry are discussed: downstream processing, improving the efficiency of existing processing and increasing the knowledge base and expertise of the staff. It is shown that, while downstream processing seems to offer a good way of improving Australia's trade position, there are a number of impediments to such development, notably, limited access to the appropriate technology and overseas markets. Transport costs can also be a problem. To reverse the situation will require more positive policies by government. In the meantime, something can be done towards adding value by increasing the efficiency of existing processes. Examples are given, showing how it might be possible to make economies in reagent costs in the gold industry, how innovative technology has led to more complete processing of a tailings dump, how research might lead to an increase in the throughput in the production of synthetic rutile and how it is possible to leach selectively from gold/copper ores.

Jan 1, 1995

By T King

This paper reviews the changes in the coal industry over the past 30 years and attempts to predict the trends over the next ten years. The last 30 years have seen a steady concentration of production into fewer, larger mines, which operate on 3: more continuous basis, and a major increase in productivity per employee. Coal exports have increased from zero to almost half the country's total production. As well as major changes in exploration and mining equipment and the increasing use of computer tools, the industry now operates in a relatively new regulatory and commercial environment.   Safety legislation now requires the writing and enforcement of policies and procedures by the mining companies, rather than adherence to inflexible regulations enforced by an Inspector. Accident rates have decreased dramatically. The transition from coal mining licences to permits, requiring landowner consent and resource consents, is well under way. Environmental controls are now an essential aspect of the industry.   Equipment suppliers now offer maintenance services, production guarantees and flexible financing.  Contract miners offer mine design and restoration as part of the contract. In a similar approach, Solid Energy now offer an ash disposal service and assistance with resource consents to their customers as well as investment in technology to ensure a consistent product to demanding specifications. Solid Energy has proposals for energy centres which install and operate the coal burning appliances and simply sell energy to the customers. The next 10 years should see an intensification of these trends of bigger mines, more exports and greater technology and a 'package' approach to customer service.

Jan 1, 1997

The mining industry is quite often faced with declining selling prices for its products in the face of rising prices for the input cost resources that it uses. Blasting is a key activity within the mining system and has a vital role to play within the Mine to MillTM concept. It is therefore important that blasting makes a positive contribution to mine profit and productivity. There are several variables involved in considering the profitability and productivity of blasting. The rock types and structures, the bench height, the blast hole drill rig specifications, hole diameter, spacing and burden, explosive loading and initiation and blast size fragmentation. Productivity accounting is a methodology which is used elsewhere to give additional insights into the productivity and pricing factors that drive the financial performance of a business. Miners know intuitively that productivity and pricing influence costs and profit, but only with productivity accounting can the dollars involved be calculated. Drilling and blasting are part of a chain of unit operations in a mine. For an owner-miner, drilling and blasting would be considered as cost centres and a productivity accounting cost model approach would be relevant. On the other hand a contractor is likely to consider drilling and blasting as a profit centre, in which case a productivity accounting profit model approach would be appropriate. Both of these will be explained. The paper provides a basic outline of deterministic productivity accounting and demonstrates its application to blasting. Drilling and blasting data from a mine was obtained for a two-month period. The change in productivity and prices was calculated to obtain the dollar contributions from them towards the change in cost. It was determined that although there had been productivity dollar gains these were offset by larger pricing dollar losses, the net effect being that total drilling and blasting costs increased. The productivity accounting analysis gives the facts and the mine is in a position to establish priorities based on knowing the dollar contributions of each input used.

Jan 1, 2001

Principal component analysis of the variation of Cu, Ni, Zn, Pb, Mn, and Cr in a control group of 96 samples of surface ironstone from the Yilgarn Block, Western Australia, was used to derive a simple graphical method, based on only Cu, Ni, and Cr, for discriminating between massive nickel gossans and other ironstones.When the graph was tested by plotting 400 control samples, it failed to correctly classify only nine out of 176 gossans and 11 out of 224 other ironstones.

Jan 1, 1974

An Innovative Process for Comprehensive Utilisation of Clay-Vanadium Ores By adopting conventional processing technologies such as flotation, gravity concentration, and magnetic separation, it is difficult to enrich vanadium mineral effectively. At present, vanadium extraction process usually has not the mineral processing enrichment procedure, but rather uses direct hydrometallurgical process: roasting - leaching - precipitating vanadium for obtaining high quality V2O5 product. But it results in problems, for instance, high consume of auxiliary materials like acid and alkali, serious pollution and high cost of vanadium extraction. In the project study on the ore of a certain clay vanadium mineral, by adopting the test process: scrubbing raw ore with reagents added in - dispersing and segregating with reagents - grading enrichment, vanadium concentrate product with higher grade was made by virtue of reagent's selective inhibiting, and the purpose of upgrading the raw material used for vanadium extraction with hydrometallurgical process is achieved. The process technology obtained from project study features simple process structure, low equipment investment, low cost of mineral processing and pollution-free to environment. It provides high efficient and practical technology for the comprehensive utilisation of clay vanadium mineral, and has a prominent prospect for its popularisation and application.

Sep 13, 2010

Atlas Copco is one of the worldÆs leading providers of industrial productivity solutions (Atlas Copco, 2009). Furthermore, the company spans 160 markets and held 34 000 employees at the end of 2008. The company is organised under three ætechniquesÆ whereby the Construction and Mining TechniqueÆs business division is located within +rebro, Sweden. This paper is aimed at briefly facilitating information on how the company and more specifically, the Construction and Mining Technique is run. Also, by sharing my experiences, this paper is intended to encourage and motivate students currently studying for a degree relevant to the minerals industry, to apply for this extremely beneficial scholarship. Through a number of presentations relating to the various divisions, products and aftermarket services of the company, I came to realise that Atlas Copco extends beyond simply selling equipment suitable for the mining and civil industries. This tour through Sweden also contained highlights of visiting the Underground Rock Excavation factory, Surface Drilling Equipment factory and Secoroc divisions. I was also fortunate enough to participate in a tour of the LKAB mine in Kiruna. In addition, time was allocated to less industry related activities, and I was able to go dog sledging, sip vodka cocktails out of ice glasses at the Ice Hotel and enjoy traditional Swedish foods of moose and reindeer. Most important and memorable to me; however, was the ability for employees of Atlas Copco to speak of the company and their products with such passion and enthusiasm, which truly made this a motivational and unforgettable experience.

Jan 1, 2009

Terramin Australia LimitedÆs Angas Lead and Zinc Mine operates in the unique and picturesque environment of Adelaide Hills, 60 km South East of the Adelaide city centre itself. The mine was granted approval for construction by the South Australian Government in April 2007 and the Process Plant was constructed and commissioned in July 2008. This paper outlines the background to the plant design and the approval process given the close proximity to the local town of Strathalbyn, with a major focus on the commissioning learnings from the Concentrator startup for future reference and a review of the operational performance of the Concentrator throughout the first year of successful production versus design and expectations.

Jan 1, 2009

By W R. Adamson

"Optimisation of drill and blast design and engineering can deliver a significant positive impact on the profitability of any mining operation; however, true engineering of the blasting process is less common than might be thought. The paper that follows explores this gap and suggests a process control-based approach to the challenge.The concept of applying modifications to drill and blast designs in order to achieve efficiency improvements in downstream mining processes is far from new. However, the author suggests that the practical application has become less than rigorous in a number of different sectors of the mining industry in a wide range of countries.There is a common tendency for the design process to become simplified to the point where the objective is merely the communication of instructions to field implementers (drillers, explosive suppliers, blasters, etc). In effect ‘design’ often degrades to ‘cut and paste’ with consequences that vary from mild to critical, with respect to the profitability of the business.Engineering of the drill and blast process involves the design function, not on a one-off basis but rather as a component of a more complete cyclical process that includes a statement of objectives, a design based on a suggested hypothesis, field measurement of results, comparison with the target ‘set point’ and the application of control measures followed by new measurement, including interpretation of the results in financial terms.When applied in this fashion, engineering provides practitioners with the means to optimise the drill and blast impact on the full spectrum business result of the mining activity.These concepts are discussed with reference to a surface gold mining operation applying run-of-mine heap leach extraction. Engineering optimisation by adapting process control and measurement techniques is demonstrated to be a key component of the solution set applied to generate enhanced operations productivity and stakeholder value. It is shown that a combination of rigorous measurement, model calibration and hands-on quality assurance/quality control facilitates the creation of a road map to profitability, stressing the need to consider economic trade-offs between operational expense (investment) and measurement of enhanced value (return on investment).The process, however, does not cease at this point. Implementation of true design practices, incorporating innovation and discipline in implementation or execution can drive the process to deliver demonstrable, technically validated outcomes. Furthermore, these technical results can be related to financially quantifiable impacts. However, this accomplishment does not guarantee that these gains or savings will reach the bottom line of those mining, quarrying and construction companies that begin the process with such high hopes.CITATION:Adamson, W R, 2015. Application of engineering discipline and a full-process optimisation focus – productivity to profitability without profuse pruning, in Proceedings 11th International Symposium on Rock Fragmentation by Blasting, pp 3–12 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Aug 24, 2015