53. Ore Stockpiling – Why are we doing this again?

In many of the past mining studies that I have worked, stockpiling strategies were discussed and eventually implemented. Sometimes study team members were surprised at the size of the stockpiles that were generated by the production plan. It became apparent that not all members of the team were clear on the purpose of the stockpiling strategy or else they had preconceived ideas on the rationale. To them stockpiling may have seemed to be a good idea until they saw it in action.
Mine Stockpile
In this blog I won’t go into all the costs and environmental issues associated with stockpile operation but will focus simply on the reasons for stockpiling and why stockpiles may get large or numerous .
In my experience there are four main reasons why stockpiling might be done at an operation. They are:
1. Campaigning: For metallurgical reasons, there may be certain ore type(s) that can cause process difficulties if mixed in with other ores. Therefore the problematic ore(s) might be stockpiled until sufficient inventory is built up until it makes sense to process that ore (i.e. campaign) through the mill. Such stockpiles will only grow as large as the operator allows them to, before processing the material and eliminating the stockpile. Be aware that if the mine operations are still delivering different ore types to the crusher area, then those ores may need to be stockpiled during the campaigning period.  More different ore types may mean more stockpiles.
2. Grade Maximization: This stockpiling approach is used in situations where the mine delivers more ore than is required by the plant, thereby allowing the best material to be processed directly and the lower grade material to be stockpiled for a future date. Possibly one or more low grade stockpiles may be used, for example a low grade and a medium-low grade stockpile. Such stockpiles may not be processed for years, possibly remaining in place until the mine is depleted or until the mined head grades are lower than those in the stockpile. Such stockpiles can grow to enormous size if accumulated over many years.
3. Surge Control: stockpiling may be used in cases where the mine may have a fluctuating ore delivery rate and on some days excess ore is produced while other days there is underproduction. The stockpile is simply used to make up the difference and provide a steady primary crusher feed rate. These stockpiles are also available as short term emergency feed if for some reason the mine is shut down (e.g. extreme weather). In general such stockpiles may be relatively small in size since they are mainly used for operational surge control.
4. Blending: blending stockpiles may be used where a processing plant needs a certain quality of feed material with respect to head grade or contaminant ratios (silica, iron, etc.). Blending stockpiles enables the operator to ensure the plant feed quality to be consistent and uniform. Such stockpiles may not be large individually; however there could be several of them depending on the orebody character.
There may be other stockpiling strategies beyond the four listed above but those four capture the bulk of the situations.
Using today’s automated production scheduling software, one can test multiple stockpiling strategies by applying different cutoff grades or using multiple grade stockpiles. The scheduling software will have algorithms to determine whether one should be adding to the stockpile or drawing from it. It will track the grades in the stockpile and sometimes be able to model stockpile balances assuming reclaim by average grade, or first in-first out (FIFO), or last in-first out (LIFO).
Stockpiling in most cases will provide some potential benefits to an operation and the project economics. Even if metallurgical blending or campaigning is not required, one should always test the production schedule and project economics with a few grade stockpiling scenarios. Unfortunately these are not simple to undertake when using a manual scheduling approach and so are another reason to move towards automated scheduling software. Also make sure everyone on the team understands the rationale for the stockpiling strategy and what the stockpiles might ultimately look like. They might be surprised.
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41. Resource Estimates – Are Independent Audits A Good Idea?

Question: how important is the integrity of a tailings dam to the successful operation of a mine?   Very important; so much so that in some jurisdictions regulators may soon be stipulating that mining companies must have third party independent review boards or third party audits done on their tailings dams.  The feeling is that although a team of capable engineers may be doing the dam design, there is still a need for some outside oversight to get another perspective.  Differences in interpretation, experience, and errors of omission are always a possibility regardless of who does the work.  Hence a second set of eyes can be beneficial.
Next question is how important is the integrity of the resource and reserve estimate to the successful operation of a mine?   Very important; the mine life, project economics, and shareholder value all depend on it.     So why aren’t a second set of eyes or third party resource audits commonly done?
In the years prior to 43-101, junior mining companies could produce their own resource estimates and disclose the results.  With the advent of NI 43-101, a second set of eyes was introduced whereby an independent QP  could review the company’s internal resource estimate and/or prepare their own estimate and ultimately take legal responsible for the estimate.
Nowadays most small companies do not produce their own in-house resource estimates and the task is generally awarded directly to an independent QP.   Maybe companies don’t prepare their own in-house resource estimates due to the specialization needed in modelling and geostatistics, and the knowledge needed to use today’s block modeling software.   Maybe they feel doing their own internal resource estimate is a waste of time since an independent QP will be preparing an estimate for them anyway.
Given that, in many cases the project resource estimate is prepared solely by the QP or a team of QP’s.   In many cases this resource gets published without any other oversight, in other words without a second set of eyes taking a look at it.   The assumption is that QP doing the work is a qualified expert, their judgement is without question, and their work is error free.

Exploration Program in Andes

As we have seen recently, some resources estimates have been mishandled and disciplinary actions have been taken against some QP’s.   I guess one can conclude that maybe not all QP’s are perfect.  Just because someone meets the requirements to be a Competent Person or a Qualified Person does not automatically mean that they are competent or qualified. Geological modeling is not an exact science and will be partly based on the person’s experience and what they have seen in the past.
My question is whether it wouldn’t be good practice for companies to have a second set of eyes take a look at their maiden resource estimates produced by independent QP’s?   For example, where I have been involved in mining mergers or takeovers, often one side will tend to rebuild the resource model using their own team.  They don’t put 100% confidence in the original resource model handed over to them.  “Just give me the database” they ask.
One downside to a third party review is the additional cost.  Another downside is that when one consultant reviews another consultant’s work there is a tendency to list numerous concerns that are not really that material, which then can muddle the conclusion of the review.  On the other hand, a third party review may identify serious interpretation or judgement issues that could be fatal if they impact on the viability of the resource.
If tailings dams are so important to require a second set of eyes, why not the resource estimate that is the foundation of the project?
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40. Integra Gold Rush Challenge – Watch for it at PDAC

Has everyone heard about the Gold Rush Challenge contest being held by Integra Gold Corp?  If not, I’d like to provide some information on it.  It’s another innovative event happening in the mining industry, following along on the footsteps of the Goldcorp Challenge held in 2001.

Gold Rush Challenge

The Integra Gold Rush Challenge is a contest whereby entrants are given access to a geological database and they are asked to prepare submissions presenting the best prospects for the next gold discovery on the Sigma/Lamaque properties.  Winners can get a share of the C$1 million prize.   Entrants will be given access to a database built from six terabytes of historical information that has been consolidated down to roughly 25 GB.
Integra Gold hopes that the contest will expand their access to quality people outside their company enabling their own in-house geological team to focus on other exploration projects.  Integra hope that they can get cutting-edge, innovative ideas not just from people in the mining industry but also from anyone proficient at analyzing big data.
From a recent press release update (Jan 6, 2016) here is what is currently happening.  It’s turning into quite the corporate event at PDAC.
In total 1,342 entrants from over 83 countries registered to compete in the challenge, resulting in 95 teams and over 100 proposals. Integra Gold is currently in the process of selecting the top 20 submissions which will be given to the Challenge’s technical judging panel.  The Challenge’s technical judging panel is made up of Neil Adshead, Andrew Brown, Benoît Dubé, James Franklin, David Rhys, and Brian Skanderberg.
By February 15th the judging panel will narrow the field down to the top five finalists.  These five teams will present to panel of industry leaders in a “shark-tank” style live finale at PDAC 2016.  Proceeds from the evening will go to a variety of Val-d’Or based charities.  The PDAC panel has been nominated and consists of Brent Cook, Chantal Gosselin, Rob McEwen, Sean Roosen, and Randy Smallwood.   It’s good to see the interest and participation from so many industry experts.
At PDAC there are always a lot of things to do, from visiting corporate booths, the tradeshow, gala award events, and hospitality suites.  Now the Integra Gold Rush Challenge brings another function to add to your PDAC agenda.
By the way, regarding the 2001 Goldcorp Challenge, it has been reported that it resulted in $CAD 575,000 being split amongst several teams and it having identified deposits were worth more than $6 billion and saved two to three years off the company’s exploration time.
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39. Measured vs. Indicated Resources – Do We Treat Them the Same?

One of the first things we look at when examining a resource estimate is how much of the resource is classified as Measured / Indicated (“M&I”) versus the tonnage classified as Inferred.  It’s important to understand the uncertainty in the estimate and to a large degree the Inferred proportion gives us that.   At the same time I think we tend to focus less on the split between the Measured and Indicated tonnages.
We are all aware of the study limitations imposed by Inferred resources.  They are speculative in nature and hence cannot be used in the economic models for feasibility and pre-feasibility studies. However Inferred resource can be used for production planing in Preliminary Economic Assessments (“PEA”).
Inferred resources are also so speculative that one cannot add them to the Measure and Indicated tonnages in a resource statement, although that is what just about everyone does when looking at a project.   I don’t think I fully understand the concerns with a resource statement if it included a row that adds M&I tonnage with Inferred tonnes as long as everything is open and transparent.   When a PEA production schedule is presented, the three resource classifications are combined into a single tonnage number but in the resource statement itself the M&I&I cannot be totaled.  A bit contradictory I feel.
With regards to the M&I tonnage, it appears to me that companies are most interested in what part of their  resource meets the M&I threshold but are not as interested in how the tonnage is split between Measured and Indicated.   It seems that M&I are largely being treated the same.  Since both Measured and Indicated resources can be used in the feasibility economic analysis, does it matter if the split is 100% Measured (Proven) or 100% Indicated (Probable)?   The NI 43-101 and CIM guidelines provide definitions for Measured and Indicated resource but do not specify any different treatment like they do for the Inferred resources.

 

CIM Resources to Mineral Reserves

Relationship between Mineral Reserves and Mineral Resources (CIM Definition Standards).

 

In my past experience with feasibility studies, some people used the rule-of-thumb that the tonnage mined during the payback period must largely consist of Measure resource (i.e. Proven reserve) and then the rest of the production schedule could rely on Indicated tonnage (Probable reserve).  The idea was that a way to reduce project risk was to ensure that the production tonnage providing the capital recovery should be based on the resource with the highest certainty.   Nowadays I generally do not see this same requirement for Measured resources, although I am not aware of what everyone is doing in every study.   I realize there is a cost, and possibly a significant cost, to shift Indicated resource to Measured so there may be some hesitation. Hence it may be simpler for everyone to simply regard the Measured and Indicated tonnages in roughly the same way.
NI 43-101 specifies how the Inferred resource can and cannot be utilized.  Is it a matter of time before the regulators start specifying how Measured and Indicated resources can be used?  I see some potential merit to this idea but adding more regulation and cost to an already burdened industry is not helpful.
Perhaps in the interest of increased transparency, feasibility studies just need to add two rows to the bottom of the production schedule showing how the annual processing tonnages are split between Proven and Probable reserves.  One can get a better sense of the resource risk in the early years of the project.  Given the mining software available today, it likely isn’t difficult to provide such additional detail.
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37. 3D Model Printing – Who To Contact?

One of the technologies that’s still getting a lot of press lately is 3D printing; it seems new articles appear daily describing some fresh and novel use. Everything from home construction, food preparation and industrial applications, 3D printing continues to find new applications in a wide range of disciplines. Mining engineering is no exception.
In a previous blog “3D Printing – A Simple Idea”, I discussed the helpfulness of printing 3D topographic models for the team members of a mining study. I was recently contacted by a consulting firm from Texas that, amongst other things, specializes in the 3D printing of mining models. Here is their story and a few model images as provided to me by Matt Blattman of Blattman Brothers Consulting. (www.blattbros.com/3dprinting)
Their 3D printed models are used in the same way geologists and mining engineers have employed models for decades. We’ve all seen the physical models made of stacked mylar or plexi-glass maps, wood or foam core. We all recognized that there is value in taking two dimensional sections or plan maps and making a 3D representation which provides more that those viewed on a computer screen. Physical models convey scale, interactions and scope in ways that no other method can. 3D printing improves the model-making process by allowing for the addition of high definition orthophotos, reducing the model building cost, increasing its precision, and its delivery time.
The current 3D models can be made in a variety of materials but the primary three are extruded plastic, gypsum powder, or acrylics.
  • Plastic models (ABS or PLA) are cheap, fast and can created on relatively inexpensive, hobbyist printers. The downside to these models is that the number of colors available in a single model are limited, typically a single color.
  • Powder-based printers can typically print in 6.5M colors, allowing for vibrant, photo-realistic colors and infinite choices for title blocks, logos and artistic techniques. However, gypsum models can be as fragile as porcelain and require some care in handling.
  • Acrylic models allow for translucent printing (“looking into the ground to see the geological structure”) and are more durable than the gypsum. Nevertheless, acrylic models are significantly more expensive than the other two types and the color palettes are limited.
Here are some example models.
Leapfrog 3D Geological Model
Acrylic Based Geological Model
3D Mine Model - Powder based
3D Mine Site Model
Besides having another toy on your desk next to the stress ball, why print your mine plan, the geology shapes or the topographic surface? It’s all about “communicating highly technical data to a non-technical audience”, whether that audience is a permitting authority, the general public, or company management.
The ability to understand a map or technical drawing is a learned skill and not everyone has it. If you’ve just spent $20M on a feasibility study, why trust in the assumption that the attendees in a public consultation meeting will fully appreciate the scale and overall impact of your proposed project? That message can be better conveyed with a model that is easily understood. One of Blattman’s clients, Luck Stone, recently described how they use their 3D printed models in this video.
Blattman’s models are created from the same 3D digital data already in use by most companies involved in geological modeling and mine designs. Other than the units (meters versus millimeters), the triangulated surfaces created by mining software are theoretically no different than those created by mechanical or artistic 3D modeling programs.
While many 3D printing services are available on the market, not all of them are able to speak “mining”. They may not be able to walk the skilled geologist or mining engineer through the process of creating the necessary digital formats and that’s where Blattman comes in. With more than 20 years of mining experience and having already gone through the 3D printing learning curve, they can assist any natural resource company through the process, either as a full-service/turn-key project or just to advise the client on how to prepare their own files.
Recently, Blattman announced a contest to give away a custom model of the winner’s own data, a $5000 value. Not every data set is ideal for printing, so each entry must be accompanied by a screenshot of the model (no need to upload the actual data). Anyone is eligible to enter; the entry form can be found here: www.blattbros.com/contest/. They will announce the winner just after PDAC, in mid-March 2016.
My bottom line is that 3D printing is here to stay, so go ahead and check out the technology. Maybe enter the Blattman 3D model contest if you have something worth modelling.
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