Mine Studies

Ore Dilution – An Underground Perspective

Date: March 11, 2019 Author: Ken Kuchling Comments: 1 Reply
Previously I posted a blog about different approaches that mining engineers use to forecast dilution in an open pit setting. You can read the blog at this link. Since that time I have been in touch with the author of a technical paper on dilution specifically related to underground operations. Given that my previous blog was from an open pit perspective, an underground discussion might be of interest.
The underground paper is titled “Mining Dilution and Mineral Losses – An Underground Operator’s Perspective” by Paul Tim Whillans. You can download the paper at this link.

Here is the abstract

For the underground operator, dilution is often synonymous with over-break, which mining operations struggle to control. However, there are many additional factors impacting dilution which may surpass the importance of overbreak, and these also need to be considered when assessing a project. Among these, ore contour variability is an important component of both dilution and mineral losses which is often overlooked.  Mineral losses are often considered to be less important because it is considered that they will only have a small impact on net present value. This is not necessarily the case and in fact mineral losses may be much higher than indicated in mining studies due to aggregate factors and may have an important impact on shorter term economics.

My key takeaways

I am not going into detail on Paul’s paper, however some of my key takeaways are as follows. Download the paper to read the rationale behind these ideas.
  • Over-break is a component of dilution but may not be the major cause of it. Other aspects are in play.
  • While dilution may be calculated on a volumetric basis, the application of correct ore and waste densities is important. This applies less to gold deposits than base metal deposits, where ore and waste density differences can be greater.
  • Benchmarking dilution at your mine site with published data may not be useful. Nobody likes to report excessively high dilution for various reasons, hence the published dilution numbers may not be entirely truthful.
  • Ore loss factors are important but can be difficult to estimate. In open pit mining, ore losses are not typically given much consideration. However in underground mining they can have a great impact on the project life and economics.
  • Mining method sketches can play a key role in understanding underground dilution and ore losses, even in today’s software driven mining world.
  • Its possible that many mine operators are using cut-off grades that are too low in some situations.
  • High grading, an unacceptable practice in the past, is now viewed differently due to its positive impact on NPV.
  • Inferred resources used in a PEA can often decrease significantly when upgraded to the measured and indicated classifications. If there is a likelihood of this happening, it should be factored into the PEA production tonnage.
  • CIM Best Practice Guidelines do not require underground ore exposure for feasibility studies. However exposing the ore faces can have a significant impact on one’s understanding of the variability of the ore contacts and the properties of minor faults.

Conclusion

The bottom line is that not everyone will necessarily agree with all the conclusions of Paul’s paper on underground dilution. However it does raise many issues for technical consideration on your project.
All of us in the industry want to avoid some of the well publicized disappointments seen on recent underground projects. Several have experienced difficulty in delivering the ore tonnes and grades that were predicted in the feasibility studies. No doubt it can be an anxious time for management when commissioning a new underground mine.
Note: previously I had shared another one of Paul’s technical papers in a blog called “Underground Feasibility Forecasts vs Actuals”. It also provides some interesting insights about underground mining projects.
If you need more information, Paul Whillans website is at http://www.whillansminestudies.com/.
Note: You can sign up for the KJK mailing list to get notified when new blogs are posted. Follow me on Twitter at @KJKLtd for updates and other mining posts.   The entire blog post library can be found at https://kuchling.com/library/
For some free mining calculator apps, including project timelines and a simplified cashflow modeller, check out this website https://sites.google.com/view/drillingdown
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Mining Due Diligence Checklist

Date: February 25, 2019 Author: Ken Kuchling Comments: 41 Replies
It doesn’t matter how long you have worked in the mining industry, at some point you will probably take part in a due diligence review. You might have been asked to help create a data room. Perhaps your company is looking at a potential acquisition. Maybe you’re a consultant with a particular expertise needed by a due diligence team. It’s likely that due diligence has impacted on many of us at some point in our careers.
The scope of a due diligence can be exceptionally wide. There are legal, marketing, and environmental aspects as well as all the technical details associated with a mining project. The amount of information provided can be overwhelming.

Checklists are great

Checklists are great and can be very helpful in a due diligence review. A detailed technical scope checklist is a great way to make sure things don’t fall through the cracks. A checklist helps keep a team on the same page and clarifies individual roles and tasks. Checklists bring focus and minimize sidetracking down unnecessary paths.
Recognizing this, I have created a personal due diligence checklist for these exercises. A screen shot of it is shown below. The list is mainly tailored for an undeveloped mining project still at the study stage, but it still has over 230 items that might need to be considered.

Every mining due diligence is unique

Not all of the items in the checklist are required for each review. Maybe you’re only doing a high level study to gauge management’s interest in a project. Maybe you’re undertaking a detailed review for an actual acquisition or financing event. It’s up to you to create your own checklist and highlight which items need to be covered off. The more items added the less risk of missing something in the end.
You a create your own checklist but if you would like a copy of mine just email me at KJKLTD@rogers.com and let me know a bit about how you plan to use it (for my own curiosity). Specify if you would prefer the Excel or PDF versions.
Please let me know if you see any items missing or if you have any comments.

Due Diligence isn’t for everyone

Mining due diligence exercises can be interesting and great learning experiences, even for senior people that have seen it all. However they can also be mentally taxing due to the volumes of information that one must find, review, and comprehend, all in a short period of time.
Some people are better at due diligence than others. It helps if one has the ability to quickly develop an understanding of a project. It also helps to know what key things to look for, since many risks are common among projects.
Further on the topic of mining due diligence, I have a previous blog post triggered by my frustrations with some poorly set up data rooms.  You can read that at “Due Diligence Data Rooms – Help!”  My request is that when setting up a mining data room, please think about the people who will be using it.
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
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Hydrogeology At Diavik – Its Complicated

Date: February 11, 2019 Author: Ken Kuchling Comments: 2 Replies
From 1997 to 2000 I was involved in the feasibility study and initial engineering for the Diavik open pit mine in the Northwest Territories. As you can see from the photo on the right, groundwater inflows were going to be a potential mining issue.
Predictions of mine inflow quantity and quality were required as part of the project design and permitting. Also integral to the mine operating plan were geotechnical issues, wall freezing issues, and methods for handling the seepage water.
This mine was going to be a unique situation. The open pit is located both within Lac de Gras and partly on exposed land (i.e. islands). The exposed land is underlain by permafrost of various depth while the rock mass under the lake was unfrozen. The sub-zero climate meant that pit wall seepage would turn into mega-icicles.
Phreatic pressures could buildup behind frozen pit walls. Many different factors were going to come into play in this mining operation so comprehensive field investigations would be required.

A good thing Rio Tinto was a 60% owner and the operator

Open Pit Slope

open pit wall

At no time did the engineering team feel that field budgets were restricted and that technical investigations were going to be limited. Unfortunately in my subsequent career working on other projects I have seen cases where lack of funds does impact the quantity (and quality) of technical field data.
The Golder Associates Vancouver hydrogeologcal team was brought on board to help out. Hydrogeological field investigations consisted of packer testing, borehole flowmeter testing, borehole temperature logging, and borehole camera imaging. Most of this work was done from ice level during the winter.
A Calgary based consultant undertook permafrost prediction modelling, which I didn’t even know was a thing at the time.
All of this information was used in developing a three-dimensional groundwater model. MODFLOW and MT3DMS were used to predict groundwater inflow volumes and water quality. The modelling results indicated that open pit inflows were expected to range up to 9,600 m3/day with TDS concentrations gradually increasing in time to maximum levels of about 440 mg/ℓ.
The groundwater modelling also showed that lake water re-circulating through the rock mass would eventually comprise more than 80% of the mine water handled.

Modelling fractured rock masses is not simple

Groundwater modelling of a fractured rock mass is different than modelling a homogeneous aquifer, like sand or gravel. Discrete structures in the rock mass will be the controlling factor on seepage rates yet such structures can be difficult to detect beforehand.
As an example, when Diavik excavated the original bulk sample decline under the lake, water inflows were encountered associated with open joints. However a single open joint was by far the most significant water bearing structure intercepted over the 600-metre decline length.
It resulted in temporary flooding of the decline, but was something that would be nearly impossible to find beforehand.

Before (2000) and After (2006) Technical Papers

Interestingly at least two technical papers have been written on Diavik by the project hydrogeologists. They describe the original inflow predictions in one paper and the actual situation in the second.
The 2000 paper describes the field investigations, the 1999 modeling assumptions, and results. You can download that paper here.
The subsequent paper (2006) describes the situation after a few years of mining, describing what was accurate, what was incorrect, and why. This paper can be downloaded here.
In essence, the volume of groundwater inflow was underestimated in the original model.  The hydraulic conductivity of the majority of the rock mass was found to be similar.  However a 30 metre wide broken zone, representing less than 10% of the pit wall, resulted in nearly twice as much inflow as was predicted.
The broken zone did not have a uniform permeability but consisted of sparely spaced vertical fractures. This characteristic made it difficult to detect the zone using only core logging and packer tests in individual boreholes.

Groundwater Models Should Not be Static

The original intent during initial design was the Diavik groundwater model would not be static.  It would continued to evolve over the life of the mine as more knowledge was acquired.
Now that Diavik has entered their underground mining stage, it would be interesting to see further updates on their hydrogeologcal performance. If anyone is aware of any subsequent papers on the project, please share.
One way to address excess amounts of pit wall seepage is through the use of pit perimeter depressurization wells.   In another blog post I discussed a new approach that allows direction drilling of wells to be done.  You can read that article at this link “Directional Drilling Open Pit Dewatering Wells – Great Idea“.
The entire blog post library can be found at this LINK with topics ranging from geotechnical, financial modelling, and junior mining investing.
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
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Mining Dilution Prediction – Its Not That Simple

Date: December 18, 2018 Author: Ken Kuchling Comments: 2 Replies
mining reserve estimation
Over the years of working on studies and reviewing them, ore dilution often does not see much discussion but it is one of the most important technical and operational issues. It plays a key role in the success of a mining operation, particularly underground operations.  In studies, it can be too low or too high, too optimistic or too pessimistic.
Project economics (NPV, IRR) can see significant impacts depending on the applied dilution factor.  They are numerous instances where mines have been put into production, and excess dilution has subsequently led to their downfall. At the West Red Lake Madsen mine, gold head grades  were forecast to be around 7-8 g/t (2025 PFS Table 22-1) but in reality production head grades are closer to 3.5-4.3 g/t (July 15, 2026 NR).  Is this due to dilution or a change in mining plans – I don’t know – but dilution could be part of the reason.
Hence mine designers need to take the time to think about what dilution will be applied in the production forecast and the basis for that decision.

Everyone has a preferred dilution method.

Dilution is the mixing of waste with ore during mining, sometimes by design and sometimes unavoidable, but never desired. It must be applied in the mine plan to forecast the head grade that the processing plant will see.   Over the years I have seen several different approaches for modelling and applying dilution in a mining study.
It seems that engineers and geologists have their own personal favorites and tend to stick with them.   Here are some common dilution approaches that I have seen (and used myself).
1. Pick a Number:
This dilution approach is quite simple and sometimes used in very early stage assessments.  Just pick a number that sounds appropriate for the orebody and the mining method.  There might not be any solid technical basis for the dilution value, but as long as it seems reasonable, it might go unchallenged.  Possibly one uses a dilution value commonly seen in other studies.
2. SMU Regularization:
This dilution approach takes each resource model percent block (e.g.  a block is 20% waste and 80% ore) and mathematically regularizes it into a single Selective Mining Unit (“SMU”) block with a weighted average grade.  The SMU compositing approach will dilute the ore in the block with the contained waste.  Ultimately this step might convert some highly diluted ore blocks to waste once a cutoff grade is applied.  Internal ore blocks that are 100% ore would not be diluted.  Some engineers may apply an additional dilution factor beyond this SMU compositing to be safe, while others will consider the block model fully diluted at this step and move onto scheduling.
3. Diluting Envelope:
This dilution approach assumes that a 1 to 3 metre wide waste envelope surrounds the ore zone.  It assumes that the envelope will be mined along with the ore.  The width of the waste envelope may be based on the blast hole spacing used to define ore and waste contacts for mining.
The diluting grade of the waste envelope can be estimated or one may simply assume a more conservative zero-diluting grade.   In this approach, an average dilution factor can be applied to the final production schedule to arrive at the diluted tonnages and grades sent to the process plant.
With this approach, narrow orebodies would be diluted more heavily than bulk orebodies.
4. Diluted Block Model:
This dilution approach uses more complex logic to look at individual blocks in the block model.  One determines how many waste contact sides each block has, and then mathematically applies dilution based on the number of those contacts.  A block with waste on three sides would be more heavily diluted than a block with waste only on one side an edge block).   Usually this approach relies on a direct swap of ore with waste being neighboring blocks.  If a block gains 100 m3 of waste, it must then lose 100 m3 of ore to maintain the volume balance.   The production schedule derived from such a “diluted” block model usually applies no subsequent dilution factor.   Sometimes it can be complex to quantify the % dilution from this approach.
5. Using UG Stope Modelling
I have also heard about, but not yet used, a method of applying open pit dilution by adapting an underground stope
modelling tool.  By considering an SMU as a stope, automatic stope shape creators such as Datamine’s
Mineable Shape Optimiser (MSO) can be used to create wireframes for each mining unit over the entire
deposit. Using these wireframes, the model can be sub-blocked and assigned as either ‘ore’ (inside the
wireframe) or ‘waste’ (outside the wireframe) prior to optimization.

 

When is the Cutoff Grade Applied?

Depending on which dilution approach is used, the cutoff grade will be applied either before or after dilution.   When the dilution approach requires adding dilution to the final production schedule, then the ore / waste cutoff grade will be applied to the undiluted block model (approach #1 and #2).
When dilution is incorporated into the block model itself (#3 and #4), then the cutoff grade is applied to the diluted blocks.
The timing of when the cutoff grade is applied to the model will have an impact on the ore tonnes and head grade being reported.

Applying dilution in pit optimization?

Another occasion when dilution may be applied is during pit optimization.  In the optimization software, there are normally input fields for both a dilution factor and an ore loss factor.   Some engineers will apply an estimated dilution at this step while others will leave the factors at zero.  There are valid reasons for either approach.
My preference is use a zero dilution factor for pit optimization since the character of the ore zones will be different at different revenue factors; hence dilution would be unique to each.   It would be good to examine the impact that the dilution factor has on pit optimization by running with and with to see the results.

Conclusion

The goal of dilution estimation is not to demonstrate fancy mathematics, but to forecast what it will actually be.  My personal experience is that people tend to focus on the value of the dilution percentage and whether it seems reasonable in the end.   There seems to be less focus on the logic for the dilution approach used.  It is not easy to forecast dilution yet it can be an incredibly important number.
Regardless of which approach is being used, ensure that one can quantify the percent dilution being applied – is it 5%  or 20% dilution?
Others may yet have different dilution methods in their toolbox and it would be interesting to hear about them.
Another blog post discusses dilution from an underground mining perspective in a bit more detail.  This discussion was written by another engineer who permitted me to share their paper.    You can read that blog at “Ore Dilution – An Underground Perspective“.
Note: You can sign up for the KJK mailing list to get notified when new blogs are posted. Follow me on Twitter at @KJKLtd for updates and other mining posts. The entire blog post library can be found at https://kuchling.com/library/
For some free mining calculator apps, including project timelines and a simplified cashflow modeller, check out this website https://sites.google.com/view/drillingdown

 

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The Mining Bank or eBay for Mining Properties

Date: September 20, 2017 Author: Ken Kuchling Comments: Leave a reply
mining properties
I recently attended the Money Show here in Toronto to learn a bit more about personal finanace, investing strategies, and to check out  the latest stock analysis software.
There was also a trade show, but only one mining company booth was present.  This definitely wasn’t the PDAC.  Interestingly there were about five marijuana company booths, so that is where the promotion is today.
The lone mining company was Globex Mining, here is their website.  They referred to themselves as a “mining bank”, so that was something that peaked my interest.

Mining bank

Speaking with their president, Jack Stoch, he gave me an overview on their business model.  As I understood it, GLOBEX’s model is to acquire a portfolio of mineral properties.  They would try to enhance their value by undertaking some limited geological work.  Finally they would option, JV, or sell the property while retaining an NSR royalty.
Mr. Stoch told me that Globex currently has over 140 land packages in their inventory.  Their properties will be at different stages.  Some have resource estimates, others only mineralized drill intersections, mineral showings, untested geophysical targets, or combinations of these.
They are focusing their acquisitions on lower risk jurisdictions like Quebec, Ontario, Nova Scotia, New Brunswick, Tennessee, Nevada, Washington, and Germany.  They try to acquire historical mines that have old shafts, following the adage the best place to find a new mine is next to an old mine.   They also have some industrial mineral properties.

 

Globex’s only NSR revenue property right now is a zinc project in Tennessee that can generate a seven-figure royalty each year, when that operation is up and running.  Unfortunately for Globex the zinc operation has not been in consistent operation the last few years.

Its a good concept

I like the concept that Globex are promoting.  I like the idea of having a one-stop shop that acquires and options out exploration properties to mining companies looking for new projects.
I also like the idea of trying to consolidate land packages in an area,  minimizing the patchwork of multiple ownership claims that can hinder advanced development.
Globex hope that by putting time and effort into a bunch of properties a few of them will pay off.  If they can generate sufficient NSR revenues, the company may get to the self-sustaining stage.

Its not a new idea

The idea of companies involving themselves in a portfolio of early stage prospects isn’t new.  This has been being done by EMX Royalty Corp (formerly Eurasian Minerals) for properties around the globe.    Abitibi Royalties is also doing something vaguely similar, whereby they would help fund prospectors in exchange for a long term royalty on a property. There are likely others.
There is a high risk to being successful but the cost of entry is relatively low.
It will be interesting to watch Globex over the longer term to see how many properties they can acquire and how many of these will pay off. Spending a bit of money on mapping and exploration on a property may benefit them by increasing value in the eyes of potential partners.
Statistically, mineral exploration is a high risk game but by limiting expenditures and diversifying the portfolio, some of that risk can be mitigated.
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Underground Feasibility Forecasts vs Actuals

Date: January 28, 2017 Author: Ken Kuchling Comments: Leave a reply
underground costing
I recently attended a CIM Management and Economics Society presentation here in Toronto discussing the differences between actual underground production versus the forecast used in the feasibility study. The presenter was Paul Tim Whillans from Vancouver Canada.
His topic is interesting and relevant to today’s mining industry.  Paul raised many thoughtful points supported by data. He gave me permission to share his information.
The abstract for his paper is inerted below.  The paper can be downloaded at this LINK and here are the presentation slides.

ABSTRACT

“An underground mining study that is done in accordance with NI43-101, JORC or similar reporting code is generally assumed by the public to be representative, independent and impartial. However, it has been well documented by academics and professionals in our industry that there is a sharp difference between the forecasts presented in these underground studies and the actual costs when a mine is put into production.
For underground mines, the risks associated with obtaining representative information are much greater than for surface mining and the cost of accessing underground ore is also proportionally much greater. There is a pressing need to align expectations, by improving the accuracy of projections. This will result in reduced risk to mining companies and investors and provide more reliable information to government agencies, the public, and more importantly, the communities in which the proposed mine will operate.
The objective of this article and an article currently being written titled “Mining Dilution and Mineral Losses” is to:
– Discuss the dynamics of intention that lead to over-optimism;
– Provide simple tools to identify which studies are likely to be more closely aligned with reality;
– Identify some specific points where underground mining studies are generally weak;
– Discuss practices currently in use in our industry that lead to a composite or aggregate effect of over optimism;
– Describe the effects of overly optimistic studies;
– Outline specific changes that are necessary to overcome these challenges; and
– Stimulate discussion and awareness that will lead to better standards.”

Conclusion

I agree with many of the points raised by Paul in his study. The mining industry has some credibility issues based on recent performance and therefore understanding the causes and then repairing that credibility will be important for the future.
Credibility ultimately impacts on shareholder returns, government returns, local community benefits, and worker health and safety; so having a well designed mine will realize benefits for many parties.
If you need more information Paul’s website is at http://www.whillansminestudies.com/
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Ore Stockpiling – Why are we doing this again?

Date: April 28, 2016 Author: Ken Kuchling Comments: 3 Replies
ore stockpile
In many of the past mining studies that I have worked, stockpiling strategies were discussed and usually implemented. However sometimes team members were surprised at the size of the stockpiles that were generated by the production plan. In some cases it was apparent that not all team members were clear on the purpose of  stockpiling or had preconceived ideas on the rationale behind it. To many stockpiling may seem like 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.  The discussion focuses on the reasons for stockpiling and why stockpiles can get large in size or numerous in quantity.
In my experience there are four main reasons why ore stockpiling might be done. They are:
1. Campaigning: For metallurgical reasons if there are some ore types that can cause process difficulties if mixed  with other ores. The problematic ore might be stockpiled until sufficient inventory allows one to process that ore (i.e. campaign) through the mill. Such stockpiles will only grow as large as the operator allows them to grow. At any time the operator can process the material and deplete the stockpile. Be aware that mining operations might still be mining other ore types, then those ores may need to be stockpiled during the campaigning.  That means even more ore stockpiles at site.
2. Grade Optimization: This stockpiling approach is used in situations where the mine delivers more ore than is required by the plant, thereby allowing the best grades to be processed directly while lower grades are stockpiled for a future date. Possibly one or more grade stockpiles may be used, for example a low grade and a medium-low grade stockpile. Such stockpiles may not get processed for years, possibly until the mine is depleted or until the mined grades are lower than those in the stockpile. Such stockpiles can grow to enormous size if accumulated over many years.  Oxidation and processability may be a concern with long term stockpiles.
3. Surge Control: Surge piles 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 to the plant to provide a steady feed rate. These stockpiles are also available as short term emergency supply 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 simply used for 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 within a consistent range. Such stockpiles may not be large individually; however there could be several of them depending on the nature of the orebody.
There may be other stockpiling strategies beyond the four listed above but those are the most common.

Test Stockpiling Strategies

Using today’s production scheduling software, one can test multiple stockpiling strategies by applying different cutoff grades or using multiple grade stockpiles. The scheduling software algorithms determine whether one should be adding to stockpile or reclaiming from it. The software will track 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).
ore stockpile
Stockpiling in most cases provides potential benefits to an operation and the project economics. Even if metallurgical blending or ore campaigning is not required, one should always test the project economics with a few grade stockpiling scenarios.
Unfortunately these are not simple to undertake when using a manual scheduling approach and so are a reason to move towards automated scheduling software.
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.
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.   Follow us on Twitter at @KJKLtd for updates and insights.
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Pre-Concentration – Savior or Not?

Date: April 13, 2016 Author: Ken Kuchling Comments: 2 Replies
pre-concentration
Can pre-concentration become a savior for the mining industry by lowering metal production costs?
Pre-concentration is a way of reducing the quantity of ore requiring higher cost downstream processing, i.e. grinding in particular.  One can attain significant cost savings in energy consumption and operating expenses by using a low cost method to pre-concentrate minerals into a smaller volume. A previous blog “Remote Sensing of Ore Grades” discussed one new pre-concentration method currently under development.

Pre-concentration isn’t new

Pre-concentration has been around for many years.  However the techniques available are generally limited.  Hence many ore types are not amenable to it..unfortunately.
The main methods available are:
Ore sorting, which can be done using automated optical, electrical, or magnetic susceptibility sensors to separate ore particles from waste. The different sensors can rely on colour recognition, near infrared radiation, x-ray fluorescence, x-ray transmission, radiometric, or electromagnetic properties. The sensors can determine if a particle contains valuable mineral or waste, thereby sending a signal to activate air jets to deflect material into ore and waste bins.
Density separation, or specific gravity differences are another property that some pre-concentration methods can use. Gravity based systems such as dense media separation (DMS), jigs, or centrifugal concentrators are currently in commercial production.
Scrubbing, another very simple pre-concentration method is scrubbing, whereby simply separating fines or coatings may remove deleterious materials prior to final processing.   Blue Sky Uranium is a recent project that I was involved in where a simple scrubbing step resulted in 4-5 times increase in grade and volume reduction.

 BenefitsJig Plant 1

Pre-concentration provides several benefits:
  • If done underground or at satellite mine site, the ore hoisting or ore transport costs can be reduced.
  • If the pre-concentration rejects can be used as mine backfill, this can reduce backfilling costs.
  • Processing of higher grade pre-concentrated mill feed can reduce energy costs and ultimately reduce the cash cost of metal produced.
  • Grinding costs can be reduced if waste particles are harder than the ore particles and they can be scalped.
  • Minimizing waste through the process plant will reduce the quantity of fine tailings that must be disposed of.
  • Lowering operating costs may potentially allow lowering of the cutoff grade and increasing mineral reserves.
  • Higher head grades would increase metal production without needing an increase in plant throughput.

Limited ore types are suited for pre-concentration

Not all ore types are amenable to pre-concentration and therefore a rigorous testing program is required. In most cases a pre-con method is relatively obvious to metallurgical engineers but testing is still required to measure performance.
Testing is required to determine the waste rejection achieved without incurring significant ore loss. Generally one can produce a higher quality product if one is willing to reject more ore with the waste.  It becomes a trade-off of metal recovery versus processing cost savings.
Fine particles generated in the crushing stage might need to bypass the pre-con circuit. If this bypassed material is sent to downstream processing circuits, one may need to examine crushers that minimize fines to avoid excessive material bypassing the pre-con circuit.

Reject waste or reject ore?

One must decide if the pre-con system should reject waste particles from the material stream or reject ore particles from the stream.  The overall metal recovery and product quality may be impacted depending on which approach is used.

Conclusion

The bottom line is that the mining industry is continually looking for ways to improve costs and pre-concentration may be a great way to do this.   Every process plant design should take a look at it to see if is feasible for their ore type.
While the existing pre-concentration methods have their limitations, future technologies may bring in more ways to pre-concentrate.  This is probably an area where research dollars would be well spent.
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
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Tailings Disposal Method Risk

Date: March 8, 2016 Author: Ken Kuchling Comments: 4 Replies
mine tailings
After the Mt Polley and Samarco tailings failures, there have been ongoing discussions about the benefits of filtered (dry stack) tailings as the only way to eliminate the risk of catastrophic failure. Mining companies would all like to see risk reductions at their projects.

Filtered tailings stack

However what mining companies don’t like to see are the capital and operating costs associated with dry stacking.
The filtering cost and tailings transport cost are both higher than for conventional tailings disposal. Obviously this cost increase gets offset against improved environmental risk and simpler closure.

What should a mining company do?

In my experience, when designing a new mining project, all companies will complete a trade-off study for different tailings disposal methods and disposal sites. Contrary to some environmental narratives, mining companies really do want to know what are their tailings disposal options.  They would likely all adopt the dry stack approach if it was the most advantageous and least cost method.
The mining companies are fully aware of the benefits but the dilemma is the cost and being able to somehow justify the technology. Complicating their decision, companies also have other ways for reducing tailings risk.

The tailings decision gets complex.

In a tailings risk analysis, people will use a risk-weighting approach to assign an expected economic impact to their tailings plans. For example, if the cost of a failure is $200 million and the risk is 0.1%, then the Expected Cost is $200,000. The problem with this is its based on a theoretical calculation on an assumed likelihood of failure.
In reality either the dam will fail or it won’t.  So failure remediation money will be spent ($200M) or it won’t be spent ($ zero), it won’t be partially spent ($200k).
The accepted tailings risk therefore becomes a subjective factor.
While implementing a dry stack may reduce the risk of catastrophic failure to near zero, implementing a $100,000 per year monitoring program on a conventional tailings pond will reduce its risk to a degree.
Implementing a more expensive $500,000 per year monitoring program would reduce that risk even further.
Installing in a water treatment plant to enable periodic water releases may further lower the tailings risk.
The company can look at various mitigation options to keep lowering their risk, although none of the options would necessarily bring the risk down to zero. Ultimately the company could compare the various risk mitigation options against the dry stack costs in order to arrive at an optimal path forward.  At that point the costs for dry stack may be competative.

What level of risk is acceptable?

So the question ultimately becomes how low does one need to bring the tailings risk before it is acceptable to shareholders, regulators, and the public. I don’t think the answer is that one must lower the risk down to zero. There are not many things in today’s world that have zero risk. Driving a car, air travel, shipping oil by ocean tanker, having a gas furnace in your house.. none of these have zero risk yet we accept them as part of life.
Environmental groups continually discuss ways of forcing regulators and mining companies to take action against the risk of tailings failure. This is commendable.
However they generally fail to provide any guidance on what level of risk would be acceptable to them or to the public. It is difficult for these groups to actually define what an acceptable risk level is. They offer no solutions, other than its either zero risk or shut down all mining.

Conclusion

We know that mining is here to stay so we all should work together towards solutions.
The solutions need to be realistic in order to be taken seriously and to play a real role in redefining tailings disposal. Dry stack may not be the only solution and we should be looking for more ways to improve tailings disposal.
Since these other options don’t seem to be available yet, dry stack tends to offer the best solution in most circumstances.  I have written another blog on this topic where I suggest the industry just bite the bullett and go to dry stack in all new projects.  The trend appears to be going that way but no where near 100% acceptance.   You can read that post at this link  “Fluid Tailings – Time to Kick The Habit?”

 

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Higher Metal Prices – Should Miners Lower the Cut-Off Grade?

Date: February 23, 2016 Author: Ken Kuchling Comments: 7 Replies
When metals prices are high, we are generally told that we should lower the cutoff grade. Our cutoff grade versus metal price formula tells us this is the correct thing do. Our grade-tonnage curve reaffirms this since we will now have more metal in the mineral reserve.

But is lowering the cutoff grade the right thing?

Books have been written on the subject of cutoff grades where readers can get all kinds of detailed logic and calculations using Greek symbols (F = δV* − dV*/dT). Here is one well known book by Ken Lane, available on Amazon HERE.
Recently we have seen a trend of higher cash costs at operating mines when commodity prices are high. Why is this?
It may be due to higher cost operating inputs due to increasing labour rates or supplies. It may also be partly due to the lowering of cutoff grades.  This lowers the head grade, which then requires more tonnes to be milled to produce the same quantity of metal.
A mining construction manager once said to me that he never understood us mining guys who lower the cutoff grade when gold prices increase. His concern was that since the plant throughput rate is fixed, when gold prices are high we suddenly decide to lower the head grade and produce fewer and higher cost ounces of gold.

Do the opposite

His point was that we should do the opposite.  When prices are high, we should produce more ounces of gold, not fewer. In essence, periods when supply is low (or demand is high) may not be the right time to further cut  supply by lowering head grades.
Now this is the point where the grade-tonnage curve comes into play.
Certainly one can lower the cutoff grade, lower the head grade and produce fewer ounces of gold.  The upside being an extension in the mine life.  A company can report more ounces in reserves and perhaps the overall image of the company looks better (if it is being valued on reserves).   To read more about the value of grade-tonnage curves, you check out this blog post “Grade-Tonnage Curves – Worthy of a Good Look“.

What if metal prices drop back?

The problem is that there is no guarantee that metal prices will remain where they are and the new lower cutoff grade will remain where it is. If the metal prices drop back down, the cutoff grade will be increased and the mineral reserve will revert back to where it was. All that was really done was accept a year of lower metal production for no real long term benefit.
This trade-off  contrasts a short term vision (i.e. maximizing annual production) against a long term vision (i.e. extending mineral reserves).

Conclusion

The bottom line is that there is no simple answer on what to do with the cutoff grades.  Hence there is a need to write books about it.
Different companies have different corporate objectives and each mining project will be unique with regards to the impacts of cutoff grade changes on the orebody.
I would like to caution that one should be mindful when plugging in new metal prices, and then running off to the mine operations department with the new cutoff grade. One should fully understand both the long term and short term impacts of that decision.
In another blog post on the cutoff grade issue, I discuss whether in poly-metallic deposits the cutoff should be based on metal equivalent or block NSR value.  Neither approach is perfect, but I prefer the NSR option.  You can read that post at “Metal Equivalent Grade versus NSR for Poly-Metallics“.

 

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