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Marrying Resource and Processing Asmara Mining Conference 2014 1 October 2014 Mark Chesher Marrying resource and process www.amcconsultants.com 2 The professional circle Geology Metallurgy Mining Enviro / Social www.amcconsultants.com Engineering Project Proposal Financial 3 Topics for today • Reporting Standards • The planning cycle • How geology data is used • 3D modelling • Some examples www.amcconsultants.com 4 Reporting Standards - Resources A ‘Mineral Resource’ is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. JORC 2012 www.amcconsultants.com 5 Reporting Standards – Why have them? 1. There were notable frauds 2. Non performance Standards now linked to the listing rules of several stock markets around the world – so we have to take notice. www.amcconsultants.com 6 Topics for today • Reporting Standards • The planning cycle • How geology data is used • 3D modelling • Some examples www.amcconsultants.com 7 The Planning Cycle RELATIVE STUDY COST X 5X - 10X 25X - 100X Improving Confidence www.amcconsultants.com 8 The Planning Cycle – Study Manager 1. Ensure material risks to the project are identified early 2. Project scope and schedule should be comprehensive and well managed 3. Avoid rework 4. Progressively improve the confidence in the outcomes 5. Ultimately Minimize study cost for an optimal result www.amcconsultants.com 9 Why Do Feasibility Studies Fail? Mill Throughput (% of Design) A study of the start-up performance of nine Australian underground base metal mines found that only 50% achieved design throughput by Year 3 and 25% never achieved it at all. 120% 100% 80% 60% Base Metal Mine Start-ups 40% 20% McCarthy and Ward 1999 0% 1 2 3 4 5 6 7 8 9 Year Since Start Up www.amcconsultants.com 10 Why Do Feasibility Studies Fail? SECOND STUDY WITH 56 MINES ANNOUNCED 1988/89 ONLY 20% EXCEED EXPECTATIONS; 25% FAILED Area of Problem Frequency Geology, resource and reserve estimation Geotechnical analysis Mine design and scheduling Mining equipment selection Metallurgical test work, sampling and scale-up Process plant equipment design and selection Cost estimation Hydrology 17% 9% 32% 4% 15% 12% 7% 4% www.amcconsultants.com 11 Why Do Feasibility Studies Fail? Geology, resources & reserves estimation Inadequate attention to local variability Inadequate attention to dilution and ore loss Statistics & modelling override common sense. Metallurgical test-work, sampling and scale up Metallurgical domains not understood. Testing done on unrepresentative composites Failure to identify process contaminants Inability to handle ore types as per mining schedule Process water chemistry differs with laboratory www.amcconsultants.com 12 Why Do Feasibility Studies Fail? A review of nearly 50 North American projects showed that only 10% achieved their commercial aims with 38% failing within about one year (Harquail, 1991). www.amcconsultants.com 13 Why Do Feasibility Studies Fail? In the 1980s, a study of 35 Australian gold mines found that 68% failed to deliver the planned head grade (Burmeister, 1988) In the 1970s, a study for the World Bank showed that in the first year of operation after commissioning, 60% of the mines and 70% of the treatment plants surveyed achieved a production rate of less than 70% of design capacity. www.amcconsultants.com 14 Topics for today • Reporting Standards • The planning cycle • How geology data is used • 3D modelling • Some examples www.amcconsultants.com 15 What to collect and how is it used? The Concept Study: a. Generally supports the request for additional funding b. Prepares for PFS stage where leverage is greatest for process flowsheet and value optimisation c. Often involves non-development professionals (as the funding is not yet assured) d. Can be a lonely place for a geologist. But all you need to do is seek some help from those who have been there before www.amcconsultants.com 16 What to collect and how is it used? • • • • • • • • • Economic element analysis (grade) Deleterious element analysis (S, F, As, Hg, etc) Lithology Alteration Weathering/Oxidation (Ox, Pox, Primary) Mineralogy including gangue minerals Grain size and texture Rock strength, hardness and breakage Water levels and quality www.amcconsultants.com 17 What to collect and how is it used? www.amcconsultants.com 18 What to collect and how is it used? Metallurgical Testing: • Comminution behaviour • Metallurgical responses • Smelter characteristics • Throughput and recovery relationships www.amcconsultants.com Metallurgical data needs: • Reagent consumption • Throughput rates by Ore Type • Deleterious minerals by Ore type • Product recovery by Ore Type 19 What to collect and how is it used? Mining Interest: • • • • • Hardness Fragmentation Diesel / power Sulphur - ARD Water table www.amcconsultants.com Geotechnical Interest: • • • • • Rock strength Rock hardness Rock breakage Structure Fracture count 20 What to collect and how is it used? Potential to exclude coarse fraction Potential to reduce fine fraction www.amcconsultants.com 21 What to collect and how is it used? www.amcconsultants.com 22 What to collect and how is it used? www.amcconsultants.com 23 What to collect and how is it used? www.amcconsultants.com 24 What to collect and how is it used? www.amcconsultants.com 25 What to collect and how is it used? 1. Factors need to be assessed at some time 2. Initial transition between exploration and development 3. Get some data early and then rely on people who have been there before. 4. Without some initial tests the process considerations will go straight to the top of risk list www.amcconsultants.com 26 Topics for today • Reporting Standards • The planning cycle • How geology data is used • 3D modelling • Some examples www.amcconsultants.com 27 Resource modelling - Considerations 1. Try to get into 3D as soon as possible. 2. Processing parameters also vary within a deposit. 3. Models for process considerations just as important as resource models. 4. Include assessment of all waste materials likely to fall within the pit www.amcconsultants.com 28 Resource modelling – how much data? 1. Possible to create block models with limited data 2. Use sensitivity to provide limits on the outcomes 3. Use simulation methods to populate from limited data www.amcconsultants.com 29 Resource modelling - Grade www.amcconsultants.com 30 Resource modelling – Rock Type www.amcconsultants.com 31 Resource modelling - Weathering www.amcconsultants.com 32 Resource modelling - Hardness www.amcconsultants.com 33 Resource modelling - Value www.amcconsultants.com 34 Resource modelling - Strategy Hill of Value Concept: • • • • www.amcconsultants.com Iterative process Assess multiple options Focus on costs Across all disciplines 35 Resource modelling - PAF www.amcconsultants.com 36 Topics for today • Reporting Standards • The planning cycle • How geology data is used • 3D modelling • Some examples www.amcconsultants.com 37 Examples of what can go wrong? Some notable disasters from Australia a. Mt Todd Gold Mine (still closed) b. Beenup Mineral Sands Mine (still closed) c. Bulong Nickel Cobalt Mine (running with mods) d. Ravensthorpe Nickel Cobalt Mine (running with mods) e. Port Hedland hot briquetted iron plant (still closed) www.amcconsultants.com 38 Examples of successful marriages Colluli Potash Project • Had a false start and returned to Scoping level • Involved mining and processing at scoping study • Mine and strategic planning done several times already • Direction for current drilling set by results • Aim to mitigate all material risks at PFS • Goal to report a resource and reserve www.amcconsultants.com 39 Conclusions 1. Geologist / metallurgist relationship is one of many 2. Involve all professions early to find threats / opportunities 3. Gather a variety of early data wherever possible 4. Use Scoping Study to define data needed for PFS 5. PFS cost < FS cost – get the data to get PFS right 6. Study Manager needs to know studies not just management 7. We can model anything 8. Get into 3D as soon as possible 9. Think about waste as well as ore www.amcconsultants.com 40 So why am I here?? www.amcconsultants.com 41