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By Dodd SF

Valuation of mining companies and their underlying assets prepared by brokers' analysts are, by necessity, approximations. The reliability of the valuations is entirely proportional to the quality of available data, the reliability of forecasts and the nature of underlying commodity price assumptions. The latter is perhaps the greatest single cause of gross variations in company and asset earnings estimates and- valuations. Assumptions are often necessary regarding commodity price achievement based on commodity hedge positions. Public disclosure from listed companies provides a sound base from which to project earnings, cashflows and balance sheets. The uncommon disclosure of projected production and cost schedules often reduces the reliability of future estimates. The application of reserve and resource estimates is contentious with practitioners applying differing weightings to importance of resources in estimating mine lives (and therefore cashflow streams). Valuation methods applied in equity markets usually focus on relative value and the identification of pricing anomalies. The commonest ""rules of thumb"" applied in the valuation of mining companies (and therefore their underlying assets) is with the use of year specific price/earnings (P/E) and price/cashflow (P/CF) ratios, with low multiples suggesting undervalued assets, high multiples overvalued situations (but these rules can often be clouded by market expectations of underlying commodity price movements). Another simply applied valuation tool is to examine the examine the value placed on reserves and resources by the market. Inexpensive gold in the ground (expressed as $ of market capitalisation per ounce of reserves or resources) might indicate a buying opportunity, but the market does discount the value of gold in the ground prior to mine development and where development risk is perceived.

Jan 1, 1994

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 D. W. Euler, D. G. Brophey

"In an attempt to address the issue of rising labour costs, and to improve productivity, a laser-based system to guide underground LHDs and trucks has been developed. This comprehensive system is known as the Opti-Trak system.Essentially, the vehicle is equipped with front and rear-mounted lasers which scan a reference strip mounted on the drift back. The vehicle follows this reference strip and in addition, based on reflective bar codes mounted beside the reference strip, initiates certain functions (i.e. dump cycle, speed change, brake check, etc.). Any programming that is drift-specific is handled by the positioning of the reference strips and bar codes. Consequently, the vehicle can easily travel to many different haulageways or branches, providing the reference strip and bar codes are in place.The advantages of this system are an immediate elimination of haulage operator costs and an increase in available hauling time to 7 hours out of an 8-hour shift as compared to the typical 5Y2 out of 8 hours that a manned haulage system offers.This paper describes the Opti-Trak system and the benefits to be realized from automation of mine haulage requirements."

Jan 1, 1994

By Phil A. Keele

"IntroductionGeneralThe Genesee Coal Mine is a joint venture of Fording Coal Limited and the city of Edmonton. The mine supplies thermal coal to the Genesee Generating Station operated by Edmonton Power and is located approximately 75 km southwest of Edmonton (Fig. I).Under the terms of the joint venture agreement, Fording Coal Limited has designed and developed the Genesee Coal Mine. Fording also operates the mine which has a minimum economic life of thirty-five years. Mine development started in the spring of 1987 with the construction of the dragline erection pad and mine service complex. Major development of mining areas was carried out in 1988 with the construction of haul roads, powerlines, topsoil recovery, etc. Mining officially commenced on December 14,1988.The mine produces 1.6 million tonnes of coal per year and employs 65 people. MiningGround conditions have turned out to be very poor, as expected with the majority of the overburden in the first few years a soft lacustrine clay with minor amounts of fine-grained glacial till. To compound matters, what was expected to be a relatively uniform coal subcrop turned out to be a very irregular erosional contact.The coal mined at Genesee is a sub-bituminous Class B thermal coal with approximately 16070 ash, 21% moisture, 8300 Btu/lb and 0.27% sulphur on an as-mined basis.The primary piece of mining equipment used at the Genesee Coal Mine is a M8200 walking dragline. It has an effective operating radius of 100.6 m, a 50.5 m3 bucket, and weighs approximately 3860 tonnes yielding a ground pressure of III KN/m2•Figure 2 illustrates schematically the single pass mining sequence presently employed at the Genesee Coal Mine. The M8200 is used to lift all coal out of the cut, the coal being placed in stockpiles on the prepared pad .This method maximizes coal recovery under the conditions where spoil failures due to poor material would otherwise put men and equipment at risk. The coal is subsequently loaded by the coal shovel operating on the same bench as the M8200 dragline and delivered to the plant as required.All mined areas, as required under Alberta Legislation, are to be returned to an agricultural land capability equal to or better than that which existed prior to mining. Reclamation activities, as a result, are an important and integral part of the mining process. A complete list of the primary mining equipment deployed at the Genesee Operations appears in Table I."

Jan 1, 1994

The ASC has a dual role of business facilitator and law enforcer. Only certain types of expert report are of interest to the ASC. The powers of the old Companies Code and the Corporations law are compared. NCSC Policy Release 149 was dependent on the prescriptive powers given to the NCSC in the Companies Code. The Corporations Law does not give the ASC power to prescribe the contents of expert reports. The requirement now is for all necessary information. Research evidence is that some investors want simpler prospectuses while others need more detail. The ASC's examination of expert reports is after registration of primary documents. This leads to a necessity for experts to maintain adequate records.

Jan 1, 1994

The words ""Uncertainty"" and ""Risk"" pervade every discussion about mining exploration and investment. Perhaps these terms are subjectively understood by industry professionals, but objective portrayal of these concepts outside the industry is a woefully undeveloped science. This paper addresses current industry understanding and practice regarding quantitative risk assessment techniques, and provides examples of the application of three of these techniques. Probabilistic techniques for financial risk assessment are valuable adjuncts to conventional financial analysis, and address a range of issues not assessable by any other means. The value of whole-of-project probabilistic risk assessment is currently debatable for decision-making purposes, but is seen as important as a mechanism to focus attention to the critical issues that ultimately impact on project success. The dissection of project capital into risk and non-risk components provides valuable insights into risk characteristics not readily quantifiable in any other way. This technique also provides a framework for more objective ""what if?"" scenario evaluation and for the capital structure of resource projects. Finally, mechanisms for the valuation of undeveloped reserves are examined, and guidelines suggested. The importance of reliability in production cost estimates is highlighted and the impact of early development on reserve valuations is discussed. The importance of economics throughout all stages of the evaluation process is fundamental.

Jan 1, 1994

By J Kokado, N Hatta, S Yabushita

A theoretical model is described for prediction of the capacity of fines from porous ores, such as cokes and sintered ores, to be removed by a pneumatic, horizontal-type classifier prior to charging into a blast furnace. First, the influence of variation in the apparent density and drag coefficient of porous ores on removal efficiency is analysed from a stochastic standpoint. The effect on efficiency of collisions between particles in the classifying region is then examined analytically in relation to the ratio of the mass flow rates of particles and air (the loading ratio). Finally, a theoretical model is constructed that takes these factors into account. Theoretical and experimental results are compared and classifying efficiency is discussed from both experimental and theoretical viewpoints.

Dec 1, 1993

By G. H. Blackwell

Sequences in open pit mining must be planned and regularly revised to incorporate changes in the variables which affect profitability. Interactive computer planning with colour graphic facilities is an effective tool for this purpose in the short and medium term. An interactive computer planning system for medium-size, low grade porphyry copper-molybdenum open pits is described. The planning system proved especially valuable during the critical stages of pushback mining when deep, inner pit ore was nearly depleted and the erratic grades of the next pushback provided ore and marginal material at a time of depressed metal prices.

Jan 8, 1993

By D. Mireku-Gyimah, R. S. Suglo

Ghana contains auriferous belts which cover 51 800 km2 of its small area of 239 400 km2. From 1493 to 1600 35.5% of the world gold production was from the Gold Coast (renamed Ghana in 1957). This dropped to 8.9% from 1701-1800. For the past fifteen years annual production has averaged less than 2% of the world total. By 1985 only four gold mines were operating, compared with 45 in 1934 and 11 in 1945. Since 1987 Ghana has experienced a boom in gold mining activities. By 1991, 83 new companies had acquired prospecting licences. At least five new companies have started large-scale production. About 650 licensed small-scale mining groups are in operation. The economic and technological factors that have contributed to the decline of gold production in Ghana are discussed. A summary is given of the methods used to mine and recover gold. These cover small-scale workings, dredging, open cast operations and underground mining. The advantages and disadvantages of these technologies and the future of gold mining in Ghana are considered.

Jan 4, 1993

By Dickin FJ

Advances in the development and application of in situ imaging of mineral processing operations using electrical tomography techniques are reviewed and illustrated with case studies relating to pneumatic conveying, mixing and centrifugal separation processes. The potential for applying these methods to full three-dimensional visualisation of the dynamic behaviour of flow in pipelines and separators, and the resulting consequences for process-modelling strategies, are discussed.

Jan 1, 1993

By M R. Stevens

The Kauri Block (Hauraki Hill) andMatawai Valley epithermal vein systems, near Coromandel township, are hosted by hydrothermally altered Miocene andesites and Mesozoic greywackes of the Coromandel VolcanicZone. The hydrological setting of both geothermal systems was probably that of an andesitic volcanic arc. Two types of veins are recognised: 1. Simple veins composed of fine comb quartz, and 2. Complex (breccia) veins composed of vein fragments of sulphide-bearing, chalcedonic silica cemented by saccharoidal and fine comb quartz.   Pyrite, arsenopyrite, marcasite, and gold form the ore minerals. Both deposits historically exploited hypogene and supergene bonanza gold.   At Hauraki Hill, breccia veins up to 7m wide contain abundant fragments of recrystallised colloform banded-crustiform textured quartz veins ('Golden Cross' style) and were probably major channels for ascending deep mineralising fluids. Alteration assemblages are zoned with the higher elevations of Hauraki Hill-Bunkers Hill characterised by strong kaolinite alteration whereas deeper levels are dominated by illitic clays.   At Matawai, complex veins and hydrothermal breccias pinch and swell, and inflect, within a total width of veining and alteration that exceeds 50 m. The greywacke host rocks are altered to an assemblage of illitesmectite, quartz, chlorite and pyrite although there are pockets of kaolinite.   The proposed genesis of veins and ores in both deposits invokes episodic rapid mixing (quenching) of hot mineralising reservoir fluids with cool acid condensate waters, whilst acidification and increased fO2 triggered gold deposition. These hydrothermal systems heated up during their later stages and at Matawai visible gold was deposited from a late mesothermal stage. The main conclusion is that the northwest CVZ has excellent potential for large gold deposits (= 30 tonnes contained gold).

Jan 1, 1993

By Robert B. Parsons

"The Canadian mining industry is not off to a good start in the 1993/94 budget season. Of the five provinces and territories to table budgets as of March 31, 1993, the industry's scorecard shows: one win, one tie, and three losses.IntroductionBy the end of March, five of Canada's twelve provincial and territorial governments had tabled their 1993/94 budgets. The mining industry is off to a bad start. The industry's scorecard shows one win, one tie, and three losses. Only Newfoundland appears to be paying any attention to the industry's concerns about the impact of taxation on competitiveness. It is particularly disconcerting to see that non-profit based taxes continue to increase, at a time when these taxes are the focus of a united attack by the entire industry.NewfoundlandFirst, the good news. On March 18, 1993, Finance Minister Winston Baker announced the following changes to the province's mining tax regime:"

Jan 1, 1993

By James A. Mason

The State of California has instrumented numerous buildings, bridges, and dams throughout the state with earthquake recording devices. These accelerometers are strategically placed to measure the response of the structure to a specific seismic event. This comprehensive program enlightens the field of seismic engineering after each earthquake. The Office of Strong Motion Studies, California Strong Motion Instrumentation Program, a sub-branch of the Division of Mines and Geology, provides a professional service unequalled in the world. Within hours of a local earthquake, a preliminary report with the epicenter / hypocenter, structural damage, and time history records are available to all interested parties. The included partial report in the appendix, see section 5.1, is one of the reports that C.S.M.I.P. produced after the Loma Prieta Earthquake of October 17,1989. The diagram on the cover is even of interest. This is a small portion of San Francisco. The values on the diagram are the recorded maximum horizontal ground accelerations at that location in the city. For example, the acceleration at Yerba Buena Island was 0.06g. (The "g" refers to the acceleration of gravity. Thus, a 0.06g acceleration refers to the force, F=m*a, that the structure would experience. For this case, the force would be six percent, 6 % , of the mass of the structure.) Yet, directly on the other side of the Bay Bridge, at Treasure Island, the acceleration was 0.16g. Yerba Buena Island is a natural island composed of hard granular material. Whereas, Treasure Island is a man-made island of imported filled. Here one can see the absorption / transmission difference between hard material, which interact with short seismic wavelengths, and soft cohesive material, which interact with long seismic wavelengths.

Jan 1, 1993

Jan 1, 1993

By Terry J. Close

At the request of the Idaho Congressional Delegation, the U.S. Bureau of Mines Western Field Operations Center investigated the mineral resources of the 140,000-acre Red Mountain roadless area, located northeast of Lowman, in central Idaho. The area includes U.S. Forest Service Red Mountain RARE II area (4-063). The highly mineralized road less area is underlain mainly by granitic rocks which are transected by a northeast-trending fault system. Associated with the granitic rocks and fault system are gold and black sand mineral resources. At least 1,395 ounces of gold and 858 ounces of silver have been recovered from six lode and placer mines within the roadless area. A total of 525 tons of columbium-tantalum, 2,049 tons of euxenite, 83.5 tons of columbite, and 54,862 tons of ilmenite concentrates have been produced from a nearby black sand mineral placer. Mine workings and facilities in the roadless area consist of two dismantled mills, 15 open and caved underground excavations totaling about 2,900 ft of workings, seven large pits and quarries, over 166 smaller dozer-and hand-dug prospect pits and trenches, and in excess of 66 drill holes. The mineralized sites in the roadless area are covered by about 690 current (1992) mining claims. About 130 individuals are holding the claims. Also within the roadless area are four patented lode mining claims. Twenty-five of the 54 mineralized sites identified during the study of the roadless area have, or likely have, mineral resources. One has gold and three have black sand mineral resources that are marginal or subeconomic. There also are two hot springs with thermal water resources, some veins that could be sources of decorative quartz, and dimension stone which was quarried in the past and could be again.

Jan 1, 1993

The Ministry of Commerce has been carrying out an evaluation of the resources of the Northwest Nelson region. In part this was to revisit the issues covered in the earlier proposal to close part of Northwest Nelson to mining under section 24 of the Mining Act (1971) initiated in 1990. In addition, the option of using GIS to integrate a variety of spatial data sets to aid policy formulation could be tested. The Northwest Nelson assessment would be a useful trial. The subsequent national park proposal provided a major impetus to the project and resulted in the scope of the study being broadened to include all energy and minerals resources.

Jan 1, 1993

By J. P. Earnhardt

Recycling of such municipal solid wastes as glass containers, metal cans, and newspapers has received increasing attention recently. However, municipal solid wastes account for only 1% of the total solid waste stream in the United States. The remainder includes hazardous and non-hazardous industrial wastes. Generators of industrial wastes are facing higher landfill costs. Future liability potential, and public image concerns which are forcing them to seek innovative and often profitable solutions to minimize, reuse, and recycle their waste streams. Opportunities for the mining industry in industrial recycling include recovery of mining wastes and by-products, and utilization of mineral products for treating waste streams.

Jan 1, 1993

This report presents production and delivered costs for coal exports from the five major Western coal-exporting countries: Australia, Canada. Colombia, South Africa, and the United States. Cost data were compiled from visits to 43 mines by U.S. Bureau of Mines engineers between 1985 and 1990. All report costs are in January 1989 U.S. dollars per short ton. Production costs for raw coal are divided into mining and regulatory categories. Costs are broken down by type of cost, type of mine. and country. Scheduled operating and capital costs for raw coal were processed by the Bureau's MINSIM discounted cash flow program to determine total production costs calculated at 0% and 15% discounted cash flow rates of return (DCFROR). Delivered costs are for salable coal delivered to various markets. Costs are broken down by supply country, market, and type of cost. Scheduled operating and capital costs for salable coal were processed by the Bureau's MINSIM discounted cash-flow program to determine total salable coal costs at 0% DCFROR. Added to total salable coal costs were transportation and port costs to get delivered costs. Comparative overview information on the coal industries of the five study countries are appended. This appendix includes information on industry economics and exports, production and reserves, and coal industry issues.

Jan 1, 1993

By J. E. Feddock

To succeed in today's competitive coal market, coal companies must continuously improve production and lower cost. However, the coal industry's historical management practices must change to remain viable? The practices of the current day efficient coal mine manager are reviewed and examined using W. Edwards Deming's definition of management. The statistical tools, including Pareto Charts, Control Charts and Scatter Diagrams, which identify the problems management must approach differently to increase productivity at a coal mine, are discussed.

Jan 1, 1993

By Jennifer Riefenberg

Research efforts by the U.S. Bureau of Mines include running a series of displacement-discontinuity, boundary-element models to simulate the gateroad design at an underground coal mine in northwestern Colorado. The initial mine design is a yield-abutment chain pillar arrangement in a three-entry, longwall gateroad system. Pressure effects from mining the first and second panel were recorded using borehole pressure cells (BPCs). These field data were then compared directly to the model output. Observed yielding in the field was approximated by reducing material property values and/or removing pillar elements in the model. Model results using this calibration technique mirrored the field measurements consistently. Using the calibrated model parameters, a suite of models was run simulating an experimental entry design: exchanging the yield and abutment pillar locations. These model results reflect a 20¬to 33-percent reduction in core stresses in the yield pillar during mining of the second panel. Improved pillar and entry conditions are suggested by these predictive results. The design modifications were then implemented at the mine along a 150-m (500-ft) test section. Field observations and measurements from the experimental design test site compared favorably with trends of the model predictions.

Jan 1, 1993