the bankers are turning nasty v3
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"The Bankers are Turning Nasty"
How new Due Diligence requirements are changing design and scope of mining operations
Simon Michaux
April 2013
Mining is about making money
• Mining cannot function without investor finance
• The investor finance sector has had a low opinion of mining for the last few decades. This opinion has degraded substantially in the last 10 years
• The most voracious complaint is that promised engineering targets are not met in the agreed time frame
• A company that doesn’t deliver on the agreed terms in its contract has its reputation burned in investment circles
• Banks think in terms of “if they don’t deliver on their contracts we can take over their operation…”
Global demand for mining resources can be tracked with steel consumption
Steel consumption is a good proxy for industrialisation
Controlled by economic crashes and geopolitical events
China is dominating the rest of the planet
China now dominates manufacturing and resource consumption
Why have the last 5 years in particular been very difficult?
• Things have gotten really difficult for mining operations to get investment since 2008 (GFC)
• It has been really hard to get available credit from banks since they themselves have been put under pressure to be solvent
• You could have a robust business case shown in a FS that pre-2008 would have easily attracted investment, but banks won’t touch it
• There are now structural volatility risks that did not exist 15 years ago (e.g. sovereign debt default or a credit freeze)
Basis for CAPEX credit loan
• Based on company reputation
• Based on the business plan. If it is a clear one with easy milestones then its considered low risk
• Tier Ones still need to get finance like everyone else from time to time
• In the 1980’s and 1990’s project based finance was the usual way to get a mine operation funded
• Since 2008, this has gone out of favour and now company based finance is more common
• Companies strong enough might issue bonds
Bankers really do rule the world!
• Plan the flight
• Then fly the plan
• Or get your money from someone else
Mining Company
Finance Investors
Mine Operation
These guys couldn’t care less about technical
problems, they want their money with a very ruthless
hard nosed attitude
Authority
Pressure
Investor confidence in the mining industry is becoming strained
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h C
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/oz)
Gold Producers -(what they when raising captial to fund venture)
Reported cash costs ($/oz)
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Gold Producers -(what they said vs. what they did)
Reported cash costs ($/oz)
Estimated total cash costs ($/oz)
Source: Bell Potter 2011
An average blowout of 54% of original cost of production estimate
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Cost of Producing Au (per oz) Blowout
Investors are starting to become more street savvy with all this
Why did this happen?
• Underestimating costs
• Overestimating revenue
• Underestimating mining schedule
• Underestimating metal price
• Not accounting for certain risks
• Wearing rose tinted glasses when signing off
Busang – the largest mining fraud in history
• Thousands of investors were duped by the small Calgary-based mining company (Bre-Ex) that falsely claimed to have struck gold in Indonesia
• The estimate of the site's worth increased over time; in 1997 it was 200 million troy ounces of gold
• At its peak it had a market capitalization equal to US$4.4 billion, equal to US$6.3 billion in current terms adjusted for inflation
• Busang ore samples had been salted with gold dust
• Toronto Stock Exchange lost billions of dollars as a direct result
How did the investment sector respond?
• Banks would add 2-4% IRR on the hurdle rate
• Toronto Stock Exchange took action
– National Instrument 43-101 (the "NI 43-101" or the "NI")
– The NI is a strict guideline for how public companies can disclose scientific and technical information about mineral projects on bourses supervised by the Canadian Securities Administrators
– It requires a ‘qualified’ person to take personal responsibility for the outcome, which if disproven will face fraud charges
• A standard used for the public disclosure of information relating to mineral properties in Canada
• Most ventures now require this document to raise finance
What companies quote to share markets
• Royalties and mining taxes not included
• CAPEX cost (often just quote OPEX)
• Numbers quoted based on a particularly successful phase of operation where grade is particularly high
• Value of whole deposit but quoting only first phase of design, ignoring later expansion phases of construction
• Low discount rate for Discount Cash Flow (DCF) calculation
Remember the operation’s priority has been to get finance to start
Often what is quoted is missing important details
So what is missing and often not quoted?
• Royalties and mining taxes
• CAPEX cost (often just quote OPEX)
• Numbers quoted based on a particularly successful phase of operation where grade is particularly high
• Value of whole deposit but quoting only first phase of design, ignoring later expansion phases of construction
Remember the operation’s priority has been to get finance to start
Recent major mining project CAPEX overruns
ProjectCompany
Feasibility
budget cost
Actual/forecast
cost overrun
Ravensthorpe/Yabilu
ExpansionBHP Billiton A$1.4 billion 30%
Spence (Chile) BHP Billiton US$990 million 10%
Telfer Mine Newcrest A$1.19 billion 17.50%
Stanwell Magnesium AMC A$1.3 billion 30%
Boddington Newmont A$866 million 100%
Goro Project
(Indonesia)Inco US$1.45 billion 15%
Prominent Hill Oxiana A$350 million 51%
Source: Noort and Adams 2006
Public-Private Project(PPP) Business Analysis of Mining Project Ventures
• 86% of publicly procured projects had capital cost over runs
• The average CAPEX overrun was 28%
• These metrics had not changed in the prior 90 years
Bent Flyvberg (2002) Project database of 258 projects drawn from a surveyed
population of 806 mining projects
Public-Private Project(PPP) Business Analysis
• The average CAPEX overrun was 22%
• There was no correlation between who complied the original estimate
• Problems with in-house as well as ‘blue chip’/’highly reputed’ consultants
• Upper-tier operators were no better than ‘juniors’
• No influence from project size/location
• Bank consultants (due diligence audits) routinely failed to identify ‘red flags’ or CAPEX overruns
Chris Gypton (2002) - Project database of 60 projects drawn from a surveyed population of 380 projects, over 21 years
Categories of study • Mine completed on time?
• Mine completed at budget?
• Produced at design capacity?
• Producing expected cash flows?
Conclusions • 12 of 18 had construction delays
– 5 more than 2 years late
– 2 never satisfied their ‘option’ test
• 12 of 18 had CAPEX overruns
– 10 mines had greater than 20%
• 14 of 18 had difficulty operating at capacity
– 6 persisted for more than 3 years
• 12 of 18 yielded cash flow below original estimate
– 3 mines never achieved budgeted operating levels
– 5 had negative cash flows
– 6 had lower commodity prices
Gary Castle (1985) – Chemical Bank (now part of JP Morgan Chase) Project database of 18 mining projects
A mine is a hole in the ground with…
• a liar at the bottom • and a lawyer at the top
• a lawyer at the bottom • and a liar at the top
Or worse
This is how the mining industry is viewed by finance investors, upon which mining depends.
If this is the way of things for the last 90 years or so, why is a change in mining
practice being ‘suggested’ from the finance sector now?
Multifactor Productivity
The big squeeze and technology solutions Technology – extraction
Andrew Mackenzie, Group Executive and Chief Executive Non-Ferrous Slide 25
0.0%
0.5%
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1.5%
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1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
Cu production
Run of Mine grade
Flotation
Acidic leach, solvent extraction,
electrowinning
Central Africa Copper Belt peak
Copper production
(million tonnes per annum)
Run of mine grade
(Cu %)
Source: US Geological Survey (1900-83), Brook Hunt (1984 onwards).
Bacterial leaching
Bulk open pit mining
Flash furnace
Direct ore Reverberatory
furnace
In pit crushing
The next technological paradigm change is needed now
Copper Heap Leach SX-EW Operation
• Study done to provide an estimate of the grade required to support an operation of a given resource size
• Based on a 10 year mine life
• Typical reverse economics cost curve at a 10% IRR
Mining OPEX is creeping up and industry does not know why
(they must keep it under $10/tonne)
Typical Leaching recovery vs. deposit size
Comparison of proposed/existing operations with typical reverse
economics cost curves
Economies of scale have carried the industry
Mining has gotten bigger • Size of process plant in 2013
– Large 50 million tonnes/year
– Small 10 million tonnes/year
• Standard truck size has increased – 1940 10 tonne truck
– 2013 300 tonne truck
• Installed grinding power has increased – 1940 ½ MW
– 2013 28MW
It all costs money
Mine Development, 2.1
Mine Dewatering, 0.2 Mine Building & Services, 1.0 Contractor
Mob/demob, 1.0
Waste Dump Rehab, 0.5
Crushing & Screening, 2.5
Pond & solution clarifiaction, 1.4
Cu SX, 1.5
Cu EW, 8.2
Reagents, 0.7
Laboratory, 1.5
Plant Buildings, 2.0
Plant Services,
3.1
Plant Mobile Equipment, 1.0Environment
and Rehab, 0.3
Site Roads, 3.3
Service Roads and Links, 2.0
Power and Water, 6.4Communications, 0.3
Airport, 0.5
Plant Control System, 0.5
Accommodation & Facilites, 3.9
Construction Facilites, 3.0
EPCM, 7.4
Owner Costs,
3.5
Typical Heap Leaching CAPEX distribution
Total CAPEX US$M 57.5
MINE $US 4.8M
PROCESS PLANT $US 15.9M
ADMIN $US 4.7M
PLANT CONSTRUCTION $US 12.7M
Contractor , 2.3
Pad, 0.7Laboratory/Assayi
ng, 0.1
Environment and Rehab, 0.2
Mine Salaries, 0.4
Water, 0.02 Areil mapping, 0.1
Supplies, 0.1
Computing, 0.1
Consultants, 0.2
Other, 0.2
Plant Salaries, 0.4
Maintenance, 0.8Plant Power & Water, 2.2
Reagents, 1.4Head
Office/Admin, 0.5
Site Salaries
, 1.3
FIFO tarvel, 1
Catering, 1.6
Site Power/Water Services, 2.8
Typical Heap Leaching OPEX distribution
Total OPEX US$M 16.42
MINE $US 4.42M
PROCESS PLANT $US 4.8M
ADMIN $US 7.2M
Economic goal posts are shifting for future deposits
• Huge low grade deposits
• Penalty minerals more prominently present in deposit that prevent efficient processing
• Ever decreasing grind sizes (close size 10-20mm)
• Operating on an economy of scale never been seen before (4MT blasted rock a day, 60% of which is ore!)
• To stay economically viable, economics of scale have to be applied. Operations will double and triple in size.
All of this based on the assumption that there is no energy or water shortage
The word from London…
NPV
CAPEX
If this ratio is too low, then the project doesn’t start
Projects are paid for by net profit from high grade parts of the deposit processed in the
short term.
There seems to be no Plan B if there are no high grade parts!
So how did this happen?
Why should I give you my money?
What they are really asking:
The Phases of an Effective Mining Project
• Scoping study SS (eliminate phase)
– Accuracy +/-30-50%
• Prefeasibility study PFS (select phase)
– Accuracy +/-20-25%
• Definitive feasibility study FS (refine phase)
– Accuracy +/-10-15%
• Design and construction
• Operations
Often what is called Feasibility Study is misused
A feasibility study is a detailed study to determine the economic variability of a project. Thus sometimes the answer is NO, the project is not economically feasible. Adding ‘bankable’ to the title does not guarantee it is
feasible, but merely dictates the level of accuracy.
Sample feasibility costs
Source: MacKenzie and Cusworth 2007
Operation Type Project Estimated
Cost A$ M Cost of Feasibility
study A$ M Percentage of
total cost
Brownfields Smelter $197 $4.2 2.1%
Brownfields OP mine/refinery $235 $8.7 3.7%
Brownfields UG mine $250 $3.0 1.2%
Brownfields Mine/materials handling $593 $10.5 1.8%
Brownfields Smelter $680 $14.0 2.1%
Greenfields OP mine/concentrator $750 $12.9 1.7%
Greenfields OP mine/refinery/new technology $750 $23.0 3.1%
Greenfields OP mine/refinery/new technology $901 $12.7 1.4%
Greenfields OP mine/rail/port $1,950 $74.0 3.8%
Min 1.2%
Max 3.8%
Average All Projects 2.3%
Average Brownfields 2.2%
Average Greenfields 2.5%
The Leverage of Early Work
Source: MacKenzie and Cusworth 2007
The ability to create or add value
Source: MacKenzie and Cusworth 2007
Degree of definition in study phases
Source: MacKenzie and Cusworth 2007
Source: MacKenzie and Cusworth 2007
What is this thing called risk?
Risk = Hazard + Outrage
Risk = (Hazard*Outrage)P(Force Majeure)
Now
Perceived future model
Useless or vague risk descriptors
• Economic
• Business
• Project
• Development
• Elemental
• Global
• External
• Debt (servicing)
• Systemic/system
• Commercial
• Financial
• Construction
• Physical
• Competition
• Local
• Internal
• Bankers
• Network
Many proposals are written around this structure and the result has been vague recommendations an uncertain financial risk
There are six standard due diligence reports expected on every deal
• Reserves
• Engineering/technical
• Environmental
• Insurances
• Tax
• Accounting Sometimes combined
First steps are to be sure that the risk categories are clear and that the overlaps of risks are thoroughly analysed in each report
Supp
ly/i
nput
s/or
e re
serv
e
Mar
ket
Fore
ign
exch
ange
Ope
rati
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echn
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Ope
rati
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ost
Ope
rati
ng: m
anag
emen
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Envi
ronm
enta
l
Infr
astr
uctu
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Forc
e m
ajeu
re
Com
ple
tion
Engi
neer
ing
Polit
ical
Part
icip
ant
Fund
ing/
inte
rest
repa
ymen
ts
Synd
icat
ion
Lega
l
Insurance ●
Ore Reserves ●
Engineering ●
Environmental ●
Tax ● ●
Accounting ●
6 s
tan
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dili
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ep
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eal
Impact of 16 risks on due diligence reporting
50 is too many, 5 too few 12-20 risk categories is about the right balance
There are serious independence issues
• An insurance broker is not independent of companies providing the insurances
• Tax and accounting/financial audit should be two separate disciplines
• The people doing the technical review are often somehow involved in the feasibility process or construction
• Environmental studies often draw heavily form a (cut and paste) of nearest/adjoining area. That earlier scope of work often colours the present one
The consulting game also has issues
• Some firms are too committed to their industry sector or are beholden to that large sponsor. They cannot afford to be black-balled. (for example they can’t tell BHP ‘they are wrong’)
• Some engineers know only their own sector and tend to be ‘one-eyed’ about anything else (SILO)
• Another variety of consultant is the ‘loss leader’. The initial study (probably at a steep discount in study costs) is a marketing precursor to continued work provided the project goes ahead.
• Some firms rest on their names and reputations as a way to earn money for their Seal of Approval without doing as much as they should
The consulting game also has issues
• Some consultants are for hire. Unfortunately they spell this ‘h-i-g-h-e-r’. The more they are paid, the more favourable the report
• Some firms simply repackage earlier studies done for others
• Some consultants are too busy and cannot really focus on the detail required
• Other consultants find anything outside their 25-30 year career experience simply cannot be done
• Some consultants have their hobby horse opinions, methods or equipment, which may not be the best option
Common procedural issues
• Mineral resource/reserve
– The most likely technical reason for project failure
• Mining rates
• Skipping steps (eg. PFS or SS)
• Over simplifying the level of complexity in modelling in the early phases of project
• Doing things in the wrong order
– Doing experimental test work to validate the process flow sheet – Doing EO last instead of closer to the beginning
This is what upsets investors the most
NPV makes the first few years critical to successful operation
Plant design
capacity
Fast run up to full capacity
Slow run up to
partial capacity
At a mine site somewhere in West Australia…
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Mill Feed (tph) Mill Power (kW)
Process economics probably based on a steady state throughput
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Ernest Henry
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Sudbury Phase 1
Fitted Energy Breakage Curves
(T10 of RBT Product -11.2+9.5mm)
Prediction of
SAG mill behaviour
What
variability
would this
translate to in
the circuit?
A*b Impact Breakage Parameter
(Ore hardness defines mill size and installed power)
Rock is variable…
50
T10 (%)
0.2 0.5 1.0 2.0
38.1
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A*b =23 (hard ore) JKJKRBTRBTJKJKRBTRBT
Breakage Energy (kWh/t) 0
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Energy (kWh/t)
Bingham
Fitted Energy Breakage Curves
(T10 of RBT Product -11.2+9.5mm)
Prediction of
SAG mill behaviour
What
variability
would this
translate to in
the circuit?
A*b Impact Breakage Parameter
(Ore hardness defines mill size and installed power)
Rock is variable…
51
T10 (%)
0.2 0.5 1.0 2.0
38.1
19.8
10.4
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A*b =23 (hard ore) JKJKRBTRBTJKJKRBTRBT
Breakage Energy (kWh/t) 0
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Energy (kWh/t)
Boddington
Fitted Energy Breakage Curves
(T10 of RBT Product -11.2+9.5mm)
Prediction of
SAG mill behaviour
What
variability
would this
translate to in
the circuit?
A*b Impact Breakage Parameter
(Ore hardness defines mill size and installed power)
Rock is variable…
52
T10 (%)
0.2 0.5 1.0 2.0
38.1
19.8
10.4
4.4
A*b =23 (hard ore) JKJKRBTRBTJKJKRBTRBT
Breakage Energy (kWh/t) 0
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Energy (kWh/t)
Aqqaluk
Fitted Energy Breakage Curves
(T10 of RBT Product -11.2+9.5mm)
Prediction of
SAG mill behaviour
What
variability
would this
translate to in
the circuit?
A*b Impact Breakage Parameter
(Ore hardness defines mill size and installed power)
Rock is variable…
53
T10 (%)
0.2 0.5 1.0 2.0
38.1
19.8
10.4
4.4
A*b =23 (hard ore) JKJKRBTRBTJKJKRBTRBT
Breakage Energy (kWh/t) 0
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Cadia East
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0 2 4 6 8 10 12
T1
0
Energy (kWh/t)
Ernest Henry
Fitted Energy Breakage Curves
(T10 of RBT Product -11.2+9.5mm)
Prediction of
SAG mill behaviour
What
variability
would this
translate to in
the circuit?
A*b Impact Breakage Parameter
(Ore hardness defines mill size and installed power)
Rock is variable…
54
T10 (%)
0.2 0.5 1.0 2.0
38.1
19.8
10.4
4.4
A*b =23 (hard ore) JKJKRBTRBTJKJKRBTRBT
Breakage Energy (kWh/t) 0
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0 2 4 6 8 10 12
T1
0
Energy (kWh/t)
Cadia East
Fitted Energy Breakage Curves
(T10 of RBT Product -11.2+9.5mm)
Prediction of
SAG mill behaviour
What
variability
would this
translate to in
the circuit?
A*b Impact Breakage Parameter
(Ore hardness defines mill size and installed power)
Rock is variable…
“if Mungo wants to bang rocks together and call it engineering, then there is nothing we can do about that…”
S. Walters (2009)
Also known as the FES (Flat Earth Society)
Old school blues
To design one of these, disciplined and sophisticated ore characterisation is required
Much more has to be put into initial ore body knowledge and risk mitigation in design due to scale and complexity
Project Optimisation
Process/Infrastructure
Engineering
Mine/Process Operation Schedule
Block model generation
Mine Engineering
Enterprise Optimisation
Geometallurgy
Strategic Options Analysis
The geomet questions
• What mineralogy/lithology controls process behaviour
• Why?
• What controls that mineralogy?
• What are the process defined domains
• In spatial terms where are those domains in the deposit
Development of a geomet block model
• What process attributes need to be put in the block model?
– Comminution/recovery/penalty elements/etc.
• Are they additive?
• Should the process attributes go in or should the foundation data go in so the attributes are calculated separately on demand?
• The 3D variogram ellipsoid, nugget and range of inputs
• Does each block have a data value for each kind of process attribute or is a multi-shelled block model appropriate
The block model is decisive for the effectiveness of EO
Where many current geomet programs fall over
Data Collection
• Samples collected without spatial coordinates in the ore body
• Tests done on parcel of rock in non-representative way
• Not enough samples collected
• Test work based on composites that mask variability
• Different tests done on wildly separate parcels of rock with very few or no rock samples with more than one test type (for example A*b and BMWi)
• The wrong hypothesis used to collect data
• No assay data collected with metallurgical testing
• Tests done years apart by different people and laboratories
Where many current geomet programs fall over
Analysis
• Test data not related to phenomenon being modelled
• Too many things being modelled at once, confusing the outcome
• Analysis done in isolation to the rest of mining process due to mining culture limitations (SILO effect)
Geological Assays Petrophysical Equotip Comminution
Multi-disciplinary data collection
Geometallurgy interacting with engineering
Geological Assays Petrophysical Equotip Comminution
Multi-disciplinary data collection
Class Group
Copper Domain
Throughput Domain
Recovery Domain
Group C Group B
Group B Group C
Group A Group D
Group A Group D
Group C Group A
Group D Group A
Geometallurgical domains in block model
Geometallurgy interacting with engineering
Geological Assays Petrophysical Equotip Comminution
Multi-disciplinary data collection
Class Group
Copper Domain
Throughput Domain
Recovery Domain
Group C Group B
Group B Group C
Group A Group D
Group A Group D
Group C Group A
Group D Group A
Geometallurgical domains in block model
Geometallurgy interacting with engineering
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Ore Domain 2 Ore Domain 4 Ore Domain 7
Geological Assays Petrophysical Equotip Comminution
Multi-disciplinary data collection
Class Group
Copper Domain
Throughput Domain
Recovery Domain
Group C Group B
Group B Group C
Group A Group D
Group A Group D
Group C Group A
Group D Group A
Geometallurgical domains in block model
Geometallurgy interacting with engineering
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Ore Domain 2 Ore Domain 4 Ore Domain 7
Geological Assays Petrophysical Equotip Comminution
Multi-disciplinary data collection
Class Group
Copper Domain
Throughput Domain
Recovery Domain
Group C Group B
Group B Group C
Group A Group D
Group A Group D
Group C Group A
Group D Group A
Geometallurgical domains in block model
Geometallurgy interacting with engineering
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Ore Domain 2 Ore Domain 4 Ore Domain 7
Geological Assays Petrophysical Equotip Comminution
Multi-disciplinary data collection
Class Group
Copper Domain
Throughput Domain
Recovery Domain
Group C Group B
Group B Group C
Group A Group D
Group A Group D
Group C Group A
Group D Group A
Geometallurgical domains in block model
Geometallurgy interacting with engineering
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Process Attribute Ore Domain 1 Ore Domain 2 Ore Domain 3 Ore Domain 4
Ore Value
Valuable metal 1 (Au) grade 0.6g/t - - 1.1g/t
Valuable metal 2 (Cu) grade 1.20% - - 0.50%
Valuable metal 3 (Ag) grade - 2.2g/t 1.3g/t -
Valuable metal 3 (Mo) grade - 0.99% 0.47% -
Valuable metal x (?) grade
Penalty elements Yes (High As content) No No Yes (Low As content )
Ore Charatersiation
Mineral liberation size 75 micron 30 mciron 160 micron 212 micron
Property deportment siganture Yes (Upgrade factor 2.1) No No Yes (Upgrade factor 1.6)
Ore sorting feasible Yes No No No
Energetic conditioning feasible No No No No
Impact breakage energy consumption High High Very High medium
Low energy abrasion energy consumption High High High Low
Bed breakage energy consumption Medium Medium Medium High
Grinding Energy consumption High Medium High Low
Fine grinding energy consumption - Medium High -
Separation Process
Flotation recovery - High Medium -
Flotation kinetics - Medium Medium -
Leaching recovery Medium - - Low
Leaching kinetics Medium - - Low
Gravity Au recovery Yes - - No
Pressure oxidisation required for Au recovery No - - Yes
Engineering Design Request
Floation circuit? - Yes Yes -
Concetrate regrind circuit? - Yes No -
Leach dump? No - - Yes
Leach heap? Yes - - No
Leach tank? No No No No
CiL carbon and leach circuit? Yes - - No
Ore sorting technology? Yes - - No
Energetic conditioning technology? No No No No
Crushing? Yes Yes Yes Yes
Grinding? No Yes Yes No
HPGR? No No Yes No
Fine grinding? No Yes No No
Ore Domain 2 Ore Domain 4 Ore Domain 7
Process attribute to engineering
Axb
BMWi
Mineralogy
Recovery Model
Grind Size
Recovery
Throughput Estimate recoverable Ni per hour
Estimate cost of
production Penalty Elements
Use of the block model • Those who build the block
model often don’t understand how engineering works
• Those who might use the block model often don’t understand how it works
The block model
Engineering using data from the block model
Dyn
amic
Lin
k
(Tra
dit
ion
ally
se
en a
s st
atic
)
This is where many past efforts have not worked so well
Strategic management of time and money
Definition of NPV
• Net Present Value (NPV) is the difference amount between discounted sums: cash inflows and cash outflows
• It compares the present value of money today to the present value of money in the future at a discounted rate to account for inflation and returns
• A fundamental tool in Discounted Cash Flow analysis (DCF)
• NPV window is 5-8 years, after which cash flows are disregarded
NPV window = (1/5 CAPEX) + OPEX for 1 year (rule of thumb)
Its all about the rock
Some ore blocks are:
• Higher grade than others
• Have harder ore than others
• Poorer recovery than others
• Have more penalty elements
So mining them in a different schedule could bring in much more revenue at the most effective time
in the NPV window.
BMWi-Predicted Values
Result: some blocks will produce much higher revenue than others.
What order we do things in makes all the difference in the world
The consequences of getting this wrong is not just haemorrhaging revenue but could be failure of business model for investor return
GeM Model
Economic Models
LS
LC
ROM
Leach
Crushers ProcessMine
LS
LC
ROM
Leach
Crushers ProcessMine
Family of Solutions
Data Collection
Mining Sequences
Mine Plan
Feedback to improve model
Constraints Constraints
LS
LC
ROM
Leach
Crushers ProcessMine
LS
LC
ROM
Leach
Crushers ProcessMine
LS
LC
ROM
Leach
Crushers ProcessMine
LS
LC
ROM
Leach
Crushers ProcessMine
Slope Models
1 1.5 2 2.5 3 3.5 4
x 108
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
X
Probability Distribution of Expected Cash Flow @ PP-1
2.6 2.7 2.8 2.9 3 3.1 3.2 3.3 3.4 3.5 3.6
x 109
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
x
F(x
)
Empirical CDF
Cash flow stream
Cap
it al
Inv e
stm
e nt
Cur
rent
Min
eP r
ojec
tV
alu e
Production Period
Milli
onof
$
V
I
0t 1t 2t 3t 4t
()711tiiitWACCCFR==+
7t5t 6t
1 1.5 2 2.5
x 108
0
0.02
0.04
0.06
0.08
0.1
0.12
X
Probability Distribution of Expected Cash Flow @ Last PP
Simulation
Confidence Model
0 5 10 15 20 25 30-1
0
1
2
3
4
5
6
7x 10
8 Stochastic Expected Cash Flow
Production Period
Casf
Flo
w
1 1.5 2 2.5 3 3.5 4
x 108
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
X
Probability Distribution of Expected Cash Flow @ PP-1
1.5 2 2.5 3 3.5 4 4.5
x 108
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
X
Probability Distribution of Expected Cash Flow @ PP-2
1 1.5 2 2.5
x 108
0
0.02
0.04
0.06
0.08
0.1
0.12
X
Probability Distribution of Expected Cash Flow @ Last PP
Probability of cash flow can be assessed for each year.
Project Optimisation – Intelligent Engineering
Data transfer technology now makes this possible early in the design process
• All engineering sectors can now be optimised together
• The key is to do this in an iterative loop several times to ensure overall operational efficiency
So what is the most cost effective option?
Options Analysis & Theory of Constraints
Decision Tree for the Simple Capital Budgeting Example
Looking at bottlenecks in operations. These will change over the life of a mine
• Truck concentrate or build a pipeline to the port • For the LOM:
• Pipe is cheaper but is a bottle neck • Trucking is more costly, may not be a bottle neck • Pipeline and trucking is an option
• Trucks are very flexible (an optimisation value add) allowing cash
to be moved up-front, improving NPV
• Optimise whole project for 3 options: pipe, truck, pipe and truck
• Choose the option with the best NPV, progress outcome to next study phase
Typical options and scenarios
Summary of the process of applying real options when valuing a mine project
This process has the potential for a Green fields study to be useful in a Brown fields corporate decision making context
Professional SILOS must continue to be broken down
This works best when all stake holders concerned have no choice
Back to the word from London…
NPV
CAPEX
So what is the real NPV?
(optimised EO)
What is the real needed operation design?
(without CAPEX blowouts)
As grade is decreasing this is not going to get easier any time soon. INDUSTRY STANDARD PRACTICE WILL CHANGE
If you wish to dodge bullets, understand what you really are looking at, or be good enough where you simply don’t have to
Project optimisation for small and large studies
pit design, production plan & schedule design criteria, flowsheet, mass balance etc
block model geomet data (mill, float, leach, geomechanical test data)
option and scenario analysis
AMDAD/Ausenco LiteO Whittle/Ausenco EO
PFS
FS
best possible optimised outcome
Ausenco now has access to this expertise
Project optimisation for small and large studies
pit design, production plan & schedule design criteria, flowsheet, mass balance etc
block model geomet data (mill, float, leach, geomechanical test data)
option and scenario analysis
AMDAD/Ausenco LiteO Whittle/Ausenco EO
PFS
FS
best possible optimised outcome
Ausenco now has access to this expertise
Ausenco Project Optimisation
• When industry is in a growth cycle
• How can we help your business make more money most efficiently
• When industry is in a contraction cycle
• How can we help your business to survive in a challenging environment
• Flexible decisions can now be made in a defendable form, fit for purpose to the macro business environment
Engineering expertise merges with corporate decision making
The platform is burning – the industry doesn’t see it yet and is trying to enforce ‘business as usual’
• The investment community are now demanding more credible FS plans that deliver what they promise
• Conventional methods of estimation simply aren’t good enough any more for the more marginal deposits
• Decreasing grade (among other things) demonstrate that this difficult environment is only going to get worse
• New technology and integrated systems of analysis have the potential restore investor confidence
• Industry will be forced to change its standard practice
A business opportunity for those at the right place at the right time
The problem is not the problem. The problem is your attitude to the problem. Do you understand?
Captain Jack Sparrow (some time ago)
Questions?
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