Articles tagged with: Mine Engineering

72. 43-101 Reports – What Sections Are Missing?

Recently as part of a due diligence I was reviewing a couple of 43-101 technical reports and something jumped out at me. There were pages and pages of statistical plots. The plots included QA/QC and check assay diagrams, variograms, box plots, swath plots, and contact plots. There was no lack of statistical information. However, as a mining engineer, there was something missing that was of interest to me. Good geological sections were missing.
Its seems that most technical reports focus heavily on describing the mathematical aspects of the resource, but spend less time describing the physical aspects of the geology and the mineability.

Who is the audience

It’s always open to debate who these 43-101 technical reports are intended for. Generally we can assume correctly that they are not being written mainly for geologists. However if they are intended for a wider audience of future investors, shareholders, engineers, and C-suite management, then (in my view) greater focus needs to be put on the physical orebody description.
Understanding the nature of the orebody brings greater understanding of the entire project.

Everyone likes geology

Whenever I listen to investor conference calls, many of the analyst’s questions relate to the resource and the mining operation. Essentially the participants want to know if this will be an “easy” mine or a “hard” mine.
One simple way to explain this is with good geological sections. They help everyone understand any potential issues; i.e. a picture is worth a thousand words. Good cross-sections will describe the following aspects.
  • The complexity (or simplicity) of the ore zones,
  • The width of the ore zones,
  • The vertical extent of geological information,
  • The drill spacing and drilling density,
  • The spatial distribution of assay information,
  • The grade distribution laterally and vertically,
  • The waste distribution throughout the mine,
  • The mining block size in relation of the ore zone dimensions
One can learn a lot just by looking at well presented cross-sections.  The nice thing is that they are generally understood by non-technical people.

Suggestions

I would like to suggest that every technical report includes more focus on the operational aspects of the orebody.
My recommendation is that the following information becomes standard in all technical reports.
  1. At least three to five cross sections through the deposit. Don’t just present a best case typical cross-section.
  2. At least one or two longitudinal sections.
  3. At least three level or bench plans, showing the drill hole pierce points.
Each cross section/bench plan should consist of two parts.
Part 1 shows the drill holes with color coded grade intercepts, ore zone wireframes, and lithology or rock types.
Part 2 should be a block model cross section showing the wireframes, drill holes, and color coded block model grades using the ore/waste cutoff grade as one of the clearly defined grade bins.
It doesn’t really matter if the cross- sections are included in Section 14 or Section 16 of the Technical Report. However if they are included in Section 16 then one should overlay the pit design and/or underground stope shapes onto the sections.
I also recommend NOT incorporating these cross-sections in the appendices since they are too important to be hidden away. They should be described in the main report itself.

Conclusion

Improving the quality of information presented to investors is one key way of maintaining trust with investors. Accordingly we should look to improve the description of the mineable ore body for everyone. In many cases it is the key to the entire project.
I am not suggesting that one needs to remove the statistical plots since they do have their purpose and audience. I am simply suggesting that we should not forget about everyone else try to figured out the viability of the project.
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For those interested in reading other mining blogs, check out the Feedspot website at the link below. They have over 50 blog sites you check out. https://blog.feedspot.com/mining_blogs/
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68. Global Risks – Our Fears Are Evolving

Recently I wrote a blog about how the adoption of new technology in the mining industry will increase the risk of cyber crime. However this is just one of many risks the industry faces today.  This raises the question as to what are the main risks impacting all global businesses.  Luckily for us, the World Economic Forum undertakes an annual survey on exactly this subject.
Each year business leaders are queried about what they view as their major risks. The survey results are summarized in the Global Risk Report.
The 2019 report can be downloaded at this link. http://www3.weforum.org/docs/WEF_Global_Risks_Report_2019.pdf.
The study rates risks according to the categories “likelihood” and “impact”. A risk could have a high likelihood of occurring but have a low economic impact. One might not lose sleep over these ones.
Another interesting feature in the report is seeing how the top risks change from year to year.  Some risks from 10 years ago are no longer viewed as key risks today.

2019 risk situation

In 2019 environmental related risks dominate the survey results. They account for 4 of the top 5 risks by “impact” and 3 of the top 5 by “likelihood”. Technology related concerns about data fraud and cyber-attacks were also viewed as highly likely (#4 and #5). See the image below for the top 5 risks in each category.
Although the Global Risk survey wasn’t specifically directed at the mining industry, all of the identified risks do pertain to mining.

 

10 year risk trend

It is also interesting to look at the detailed 10 year  table in the report to see how the risk perceptions have changed over the last decade.
None of the top five “Impact” risks from ten years ago are still in the top five now and only two from 2014 still exist. In the “likelihood” category, a similar situation exists.
It will be interesting to compare the 2024 list with 2019 list to see how risks will continue to evolve.

How about the mining industry

EY Global Mining & Metals also undertake a risk survey, focused on mining only. You can read their article at this link “The Top Risks Facing Mining and Metals”.  Their top 10 risks are listed below, many are different than those from the World Economic Forum ranks. You must read the EY article to fully understand the details around their risk items.
  1. License to operate (difficulty to acquire)
  2. Digital effectiveness (lack thereof)
  3. Maximizing portfolio returns (can this be done)
  4. Cyber security (increasing risk of attack)
  5. Rising costs (can costs be controlled)
  6. Energy mix (acceptable power sources)
  7. Future of workforce (lack of interest in the sector)
  8. Disruption (falling behind competitors)
  9. Fraud (increasing sophistication)
  10. New world commodities (versus reduced demand for some commodities)

Conclusion

My bottom line is that the Global Risk Report is something that we should all read. Download it and then compare with what your company sees as its greatest risks. The only way to mitigate your risks is to know what they are.  The only way to work with others is to know what their issues are.
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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67. Google Earth – Share Your Project in 3D

Google Earth is a great tool and it’s free for everyone to use. No doubt that many of us in the mining industry already use it regularly.
Previously I had written an article about how Google Earth can be used to give your entire engineering team a virtual site visit. It’s cheaper than flying everyone to site. That blog is available at this link “Google Earth – Keep it On Hand”.

What else can Google Earth do for me?

The Investor Relations (IR) department in a mining company can also take advantage of Google Earth’s capabilities. Typically the IR team are responsible for creating a myriad of PowerPoint investor presentations. Their slideshows will include graphics highlighting the project location, showing exploration drilling and planned site facilities for advanced projects. This is where Google Earth can be used to create a more interactive experience for investors.

Google Earth with 3D Buildings

Rather than relying only on PowerPoint, the technical team can create drillhole maps, 3D infrastructure layouts, open pit plans, 3D tailings dams, and import them into Google Earth.
By creating a KMZ file, one can share this information with investors, analysts, and stakeholders. This will provide an interactive opportunity to view the information themselves.
Viewers could fly around the site, zoom in and out as needed, examine things in 3D, and even measure distances. Viewers can even save the project in Google Earth and return back whenever curiosity dictates.
I have been a part of engineering teams where Google Earth has been used to share layout information. However I have not yet seen such information offered as a downloadable KMZ file to external parties. If you know of any companies that are currently doing this, please let me know (kjkltd@rogers.com) and I will share their link here.

There also is VRIFY

VRIFY is a new cloud based platform that provides 3D viewing capability. It provides a map based graphic tool to IR departments for sharing project information. VRIFY can also enhance collaboration among engineering teams by enabling a group to view a virtual project and sketch on the image in real time.

VRIFY desktop screenshot

VRIFY also allows more detailed information to be displayed in the form of hotspots within a project. Click on them to get more information on that topic (see image to the right).
Although I have only been given a demo of VRIFY, it appears to be a nice package that provides more functionality than Google Earth. Unfortunately VRIFY is not free for a company to use. The minimum subscription cost is about $10,000 (plus extras).
In June 2019 VRIFY made a deal with Kirkland Lake Gold whereby interested property vendors can submit their project to Kirkland Lake management for their review.
Here is the link (https://vrify.com/dealroom). In the proposed approach, the project information is submitted using the VRIFY platform. Essentially some of the same information presented in a PowerPoint is now provided in a more interactive fashion. Participating companies must first enter into a client service agreement with VRIFY. We will see how this idea works, since it does add a cost and new complexity for the property vendor.
There is another cloud based service called Reality Check, which offers virtual reality site visits.

Conclusion

The bottom line is that the trend in the mining industry is towards more open data sharing whether you’re connecting with the public or within your own engineering team. New and old cloud based platform tools can be used to do this. It just depends on your budget.
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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66. Cyber Security – Coming to a Mine Near You

The mining industry is being told to take advantage of digitalization. As an example, here is a link to a recent article that discusses this “Can mining decode the opportunities of the future?”. The article says “To achieve sustainable improvements in productivity, mining companies will need to overcome a digital disconnect that has held them back”.
I fully agreement with this sentiment, although there are some cautions when adopting new technology.

Not everything is positive

The mining industry will see positive impacts from digitalization.  Unfortunately more reliance on technology also brings with it significant risks.  These risks are related to cyber security.
I recently attended a CIM presentation here in Toronto that focused on cyber security, specifically related to the mining industry. The potential negative impacts to a company can be significant.
Some mining companies already have experienced these negative impacts, albeit in some cases it may not be well publicized. I will highlight some examples later in this blog.
(By the way, I appreciate that the CIM presenter gave me access to the information in his presentation).

Attackers and threats

There are several ways that mining companies can be attacked via technology channels. The attackers could be foreign governments, anti-mining groups, disgruntled employees, or just your average everyday miscreant. There are several avenues as described below.
  • Hack-tivsm: Where a company website may be defaced and blocked as part of a campaign against the opening of a new operation.
  • Data Breaches: Security breaches on websites resulting in leaked sensitive data including personal identification, credentials, and investor information.
  • Industrial Control Attack: Amending software code on major equipment resulting in shutdown or damage.
  • Business Interruption: Attacking systems so the company must be temporarily disconnected from the internet and forcing replacement of all hard drives and servers.
  • Dependent Business Interruption: Overwhelming servers in order to degrade cloud services and websites.

Examples

The following are some examples of how different attack approaches have been used with success.
  • April 2016 – a Canadian gold-mining firm suffered a major data breach when hackers leaked 14.8 GBs of data containing employee personal information and financial data.
  • May 2015 – a Canadian gold mining company was hacked resulting in 100GBs+ worth of stolen data being released.
  • May 2013 – a large platinum producer experienced a security breach on their website resulting in leaked sensitive data online including personal data, credentials, and investor information.
  • February 2015 – A junior mining company was the victim of a cyber scam that resulted in the company paying a $10M deposit into an unknown bank account intended for a sub-contractor.
  • November 2011 – In an attempt to gain information on bid information about a potential corporate takeover, hackers attacked the secure networks of several law firms and computers of the Government of Canada’s Finance Department and Treasury Board.
  • August 2008 – Hackers were able to gain access to the operational controls of a pipeline where they were able to increase the pressure in the pipeline without setting off alarms resulting in an explosion. Beyond damaging the pipeline, the attack cost millions of dollars and also caused thousands of barrels of oil to spill close to a water aquifer.
  • 2014 – A steel mill was the victim of a phishing attack which allowed attackers to gain access to their office network causing outages of production networks and production machines. The outages ultimately resulted in a blast furnace not being properly shut down causing significant damage to the plant.
  • 2003 – Cyber attackers were able to gain access to the SCADA network of an oil tanker resulting in an 8 hour shutdown.
  • August 2012 – A large state-owned oil and gas supplier, experienced an attack intended to halt their supply of crude oil and gas which resulted in more than 30,000 hard drives and 2,000 servers being destroyed ultimately forcing I.T. systems to be disconnected from the internet for two weeks.
  • 2014 – Malware was used to gain access to a Ukrainian regional electricity distribution company to gain remote access to SCADA systems and remotely switch substations off, leaving 225,000 without electricity for three hours.
How many similar incidents have occurred, being unreported or not as publicly visible as these?  Recently Air Canada had a major computer outage.  Was that a squirrel chewing through a wire or a full-on cyber attack?

Ask yourself if you are ready

As your mining company continues to move into the digital world, you must ask:
  1. If an attacker were to disable your business application or a production facility, how long would it take to recover? How much would it cost you? How would you even measure the cost?
  2. How do you ensure your third party vendors’ security standards are appropriate? What would you do if a key supplier or key customer had a data breach that impacted you or hinder their deliveries? How do you mitigate your exposure to such events?
  3. What type and how much sensitive information are you responsible for? If you learned today that your network was compromised, what is your response plan?  Who would you call to investigate a data breach? What law firm would you use and do they have breach response experts?
A cyber attack can impact on operations, public perception, legal liability, and corporate trust.  This can mirror the legal impact of a tailings dam failure.  So are there any mitigations?

Cyber insurance is available

Companies can now consider the growing cyber insurance industry. Traditional insurance indemnifies property, casualty, crime, errors & omissions, and kidnap & ransom events. Cyber insurance adds additional coverage for breaches related to data confidentiality, operations technology malfunctions, network outages, disruption of 3rd parties, deletion or corruption of data, encryption of data, cyber fraud and theft.
While nobody wants to add another cost burden on their business, the gains from digitalization don’t come without pains.

Conclusion

The bottom line is that there is no stopping the digitalization of the mining industry. It is here whether anybody likes it or not. At the same time, there is likely no stopping the growth of cyber crime.
Likely we will hear more hacking stories as miners adopt more of the new technology.
The first line of defense are your security policies and procedures.  Bring in an expert for a security audit. As an option, you can contact cyber insurance brokers that have the expertise to help.
 Its great to see an executive at the head office operating a scooptram at their underground mine.  Its not so great to see some kid in a basement operating that same scooptram (and setting production records).
Open your doors to technology but at the same time keep them locked.
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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64. Is Insitu Leaching the “Green Mining” Future

It is no surprise to anyone that permitting new open pit mines in today’s environment is getting more difficult and even impossible in some areas.   Underground mines also have their challenges, permitting as well as requiring relatively high grades to be economic.
So where might our future metal supplies come from?  What are the options?

Insitu leaching may be the answer

I recently came across an insitu leaching website, called BIOMore.  This was an initiative sponsored by the EU that looked at insitu leaching technology for metal recovery.    Environmental issues associated with mining in Europe, particularly open pit mining, raised concerns about how ore bodies in the EU might be developed in the future.
Insitu leaching technology was viewed as playing an important role.  This is due to its minimal surface disturbance, ability to operate at great depth, and its potential in urban and developed locations.  Sounds like a nice solution to have on hand.
The EU-funded BIOMOre research project was completed in 2018.  It was designed to develop a new technological framework for the insitu recovering of metals from deep deposits.  The process would rely on controlled stimulation of pre-existing fractures in combination with insitu bio-leaching.  The study mainly focused on the application of existing technologies.

Fracing will be an issue

Insitu leaching essentially relies on exposing mineralized surfaces to leach solutions.  This may require hydro-fracturing (fracing) to enhance insitu bio-leaching using bacteria and acid.   Fracing is currently banned in some European countries so this is going to be a potential issue.  From a leaching perspective, the trade-off would be between no fracing, reduced cost & lower metal recovery against higher cost & higher metal recovery with fracing.
If insitu leaching technology development is successful, it could help exploit European base metals from porphyry deposits (Cu, Au, Mo, Cu, REE, PGE, Re, Pb, Cu, Pt, Au) and other gold and uranium deposits.   Insitu leaching would avoid building a mine, mine infrastructure, and it generates almost no tailings nor waste dumps.  Leaching is expected to be cheaper than traditional mining and more acceptable to the public. Insitu leaching is being touted as “Green Mining”

What did they conclude

This study deliverables included comprehensive documentation, an economic evaluation, and risk analysis of a potential insitu bio-leaching operation.  The basis was a theoretical deposit, looking at different well field set-ups.
The study concluded that accessing potential deposits at depths of around 1000 m is economically feasible only if curved wells are used.  The most relevant operational parameters are sufficient permeability in the ore zone and an adequate contact surface between the ore and leaching solution.   The depth of the deposit is indirectly relevant, but more importantly the well installation cost per volume of deposit is critical.  Hence curved wells are optimal.
One interesting suggestion was combining an insitu leach operation with geothermal energy recovery.  This might result in additional project revenue stream with only a marginal cost increase.
It was suggested that insitu leach operations might be attractive in former mining regions where high grade deposits have been mined out yet nearby low grade deposits are well defined. Social license for insitu leaching may also be more accepting in these areas.
If you are interested in learning more about insitu leaching technology and the chemistry aspect, the BIOMore study deliverables are available for downloading at this site.
In the past, mining engineers like myself were told to learn the basics of crushing, grinding, and flotation to become more well rounded.  I may suggest that future mining engineers may need to learn the basics of directional drilling, hydro-fracing, and chemistry.  Sounds like petroleum engineering.

Some aspects are still uncertain

In practical terms, some things are still not clear to me. For example are how much effort and diligence must go into properly characterizing the permeability of a rock mass.  As well, how complex a task is it to metallurgically characterize the deposit spatially with regards to it being amenable to insitu leaching.  Not all ore types will behave the same and be amenable to leaching.
I am also curious about the ability to finance such projects, given the caution associated with any novel technology.  Many financiers prefer projects that rely on proven and conventional operating methods.
Notwithstanding those concerns, likely insitu leaching technology will continue to advance and show even more promise, and eventually gain greater acceptance.
While some innovators are looking at new ways to drill, blast, and move rock, the real innovators are looking at ways to recover metals without moving any rock at all.
For those interested, Excelsior Mining is looking to open a copper oxide insitu leaching operation in Arizona.  Here is video of how their technology will work.
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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63. Blockchain vs Robotic Process Automation

I recently wrote a blog about how Artificial Intelligence (AI) is now being used by the exploration side of the mining industry. My curiosity was whether the application of AI is going to be real or is it just being used as a buzzword to help promote companies. You can read that blog at this link “AI vs The Geologists”.
With the topic of buzzwords in mind, I was curious about some of other technology advances we hear about. Coincidentally Canadian Mining Magazine (Winter 2019 issue) published two articles on upcoming technologies, the links are provided here; blockchain and robotic process automation. As with AI, I’m still curious about these two, mainly due to the limited number of applications thus far.

Blockchain for supply chain

With regards to blockchain, it seems to me the main benefits are being related to supply chains, whether for purchasing or selling activities. Some of the examples given are that one can verify where the cobalt in your phone was mined or where your engagement diamond is from. Oddly though, I don’t recall ever wanting to know where the metal in my phone is from.
Other example applications of blockchain are for inventory management, shipment number tracking, transport log tracking, and bill of lading management. The advantages are transaction speed, trust, and traceability.
Currently there are many ways shipping and receiving activities are being tracked. Hence I am a bit unclear as to where blockchain will provide a groundbreaking improvement. Can’t well designed cloud database achieve the same thing?
Blockchain reportedly has improved security in that copies of its tracking “ledgers” are simultaneously hosted on multiple servers and hence are hack-proof.
Is blockchain over-hyped?  Here’s an article that seems to think so “5 challenges to getting projects off the ground”.
Thus far in my career I have not yet had any direct experience with a real life application of blockchain. Therefore it is a bit difficult to say whether it is a great business innovation or a great business promotion. Perhaps some of you have had experience with actual blockchain applications in the mining industry. Please let me know and I will follow up. So far I am still on the fence.
On the other hand…

Robotic Process Automation

We have seen in manufacturing that robotics will eliminate repetitive type jobs. Will robotic process automation (rPA) be able to do the same by completing repetitive tasks for us?
The types of tasks being targeted for rPA are real time data analysis, daily- weekly-monthly reporting, tracking real time costs and progress schedules, or in other words, monitoring system wide process inputs and outputs.
Having access to real time data is important and it is a growing trend worldwide in all industries. In my view, mine site wide data integration is a key to the future of mining, especially when combined with AI, data mining, and data analysis. It is great to have the ability to instantly know exactly what is going on everywhere at a mine site. It is also great to know what went on in the previous hour, 24 hours, or 30 days.
Modern sensor technology is such that almost anything can be monitored now in real time. Will an action in one part of the operation trigger an impending impact in another part of the operation? For example can a large blast in the pit result in excess vibrations leading to tailings dam creep at the same time and is someone monitoring something this simultaneously? There are many action-reaction type events that occur in a mining operation, each with operational or cost impact. Only technology is able to instantly monitor all of these activities, assess their impacts, and provide quick decisions.
Collecting hoards of data from a site wide sensor network creates a dilemma in what to do with all the data collected. Smart cities are running into this issue. Who can sort through the data, decide what is important and what is noise, then summarize the data and report on it in real time? A human cannot deal with the amount of data being collected in such networks.
I have seen companies use fleet dispatch systems to collect gigabytes of data but then have difficulty in analyzing and making sense of it all. Sometimes the dispatch data is simply used to produce a month end production report. This is one example of where process automation may play a bigger role.
I don’t see repetitive process automation eliminating many jobs. Rather it may even increase the jobs needed to maintain and operate the virtual networks. Employment aside, I see the benefit of rPA is having a better understanding of the functioning organism called a mining operating. An operation is essentially an organism with lots of moving parts constantly making decisions requiring emotional intelligence.

Conclusion

Regarding the two technologies discussed in this blog, I personally feel robotic process automation will have far greater impact on mining industry future and its profitability.
For many years we have already seen some application of this technology (i.e. just in the mine or just in the plant). With improving sensors, increased computing power, AI, and cloud data storage, I feel that site wide integrated robotic process automation will lead the way.
However the clouds on the horizon may be the high cost of implementation, the risk of hacking (read https://kuchling.com/66-cyber-security-coming-to-a-mine-near-you), and the fact that different vendors may use different data protocols making system wide integration extremely difficult.
In my view blockchain has not yet made the case for itself. No doubt I need more education on blockchain but that will hopefully come naturally as some real life applications are introduced into our daily activities.  Read the Canadian Mining Magazine articles linked to above and see what you think the future holds for mining.
For those interested in remote tailings dam monitoring,here is an interesting CIM article “The internet of tailings“.
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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61. Ore Dilution – An Underground Perspective

A few months ago I wrote a blog about different approaches that mining engineers are using to predict 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 and educational.
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. (Its seems Mark Bristow at Barrick may be putting a stop to this approach).
  • 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: 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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58. Ore Dilution Prediction – Its Always an Issue

mining reserve estimation
Over my years of preparing and reviewing mining studies, ore dilution often seems to be a contentious issue.  It is deemed either too low or too high, too optimistic or too pessimistic.  Everyone realizes that project studies can see significant economic impacts depending on what dilution factor is applied.  Hence we need to take the time to think about what dilution is being used and why.

Everyone has a preferred dilution method.

I have seen several different approaches for modelling and applying dilution.   Typically engineers and geologists seem to have their own personal favorites and tend to stick with them.   Here are some common dilution approaches.
1. Pick a Number:
This approach is quite simple.  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.
2. SMU Compositing:
This approach takes each percent block (e.g.  a block is 20% waste and 80% ore) and mathematically composites it into a single Selective Mining Unit (“SMU”) block with an overall weighted average grade.  The SMU compositing process will incorporate some waste dilution into the block.  Possibly that could convert some ore blocks to waste once a cutoff grade is applied.   Some engineers may apply additional dilution beyond SMU compositing while others will consider the blocks fully diluted at the end of this step.
3. Diluting Envelope:
This approach assumes that a waste envelope surrounds the ore zone.  One estimates the volume of this waste envelope on different benches, assuming that it is mined with the ore.  The width of the waste envelope may be correlated to the blast hole spacing being used to define the ore and waste mining contacts.  The diluting grade within the waste envelope can be estimated or one may simply assume a more conservative zero-diluting grade.   In this approach, the average dilution factor can be applied to the final production schedule to arrive at the diluted tonnages and grades.  Alternatively, the individual diluted bench tonnes can be used for scheduling purposes.
4. Diluted Block Model:
This dilution approach uses complex logic to look at individual blocks in the block model, determine how many waste contact sides each block has, and then mathematically applies dilution based on the number of contacts.  Usually this approach relies on a direct swap of ore with waste.  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 the “diluted” block model usually requires no subsequent dilution factor.
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.   It is not entirely clear to me if this approach creates a diluted block model or generates a dilution factor to be applied afterwards.

 

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 dilution is being added to the final production schedule, then the cutoff grade will have been applied to the undiluted material (#1 and #2).
When dilution is incorporated into the block model itself (#3 and #4), then the cutoff grade is likely applied to the diluted blocks.   The timing of when to apply the cutoff grade will have an impact on the ore tonnes and had grade being reported.

Does one apply dilution in pit optimization?

Another occasion when dilution may be used is during pit optimization.  There are normally input fields for both a dilution factor and an ore loss factor.   Some engineers will apply 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 optimization since the nature of the ore zones will be different at different revenue factors and hence dilution would be unique to each.   It would be good to verify the impact that the dilution factor has on your own pit optimization, otherwise it is simply being viewed as a contingency factor.

Conclusion

My personal experience is that, from a third party review perspective, reviewers tend to focus on the final dilution number used and whether it makes sense to them.   The actual approach used to arrive at that number tends to get less focus.
Regardless of which approach is being used, ensure that you can ultimately determine and quantify the percent dilution being applied.  This can be a bit more difficult with the mathematical block approaches.
Readers may yet have different dilution methods in their toolbox and I it would be interesting to share them.
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56. Does the Mining Industry Employ Interns?

employing interns
Over the couple of years I have been working on a side project in the tech industry.   One of the things that struck me was the hiring of interns, both paid and unpaid.
I’m now aware that interns are being hired in other industries such as legal, politics, journalism, and marketing.  However I have never come across the use of interns within the mining industry.
Intern

Why hire interns?

I was recently talking to a marketing consultant about tips on tech marketing and one of the suggestions she made was to hire an unpaid intern.  They would do much of the legwork of finding sales contacts and establishing contact with them.
My first question was why would anyone work for free?  There are  three main reasons:
  1. For school credit; as part of a course credit in college or university where an internship is part of the program requirement.
  2. For experience; it is difficult to get a real job without experience and so the internship teaches, builds  experience, and establishes a portfolio of work.
  3. Networking; building up industry connections can possibly lead to permanent work down the road.

Its the right thing to do

At first I was taken aback at the thought of asking someone to work for my company for free.  Are we that cheap?
Thinking about it further, if you are paying someone a salary the expectation is that they should be somewhat skilled at their job.  I have come to realize that the internship may actually be a win-win for both parties.

Its a win-win

The company gets a chance to learn about potential employees and also gets productive service from them.
The intern gains employment experience and learns about the realities of the business world.  Students have already paid the schools to teach them.  Now businesses can help teach them more, but at no cost.   It’s a win-win for both.
So how did our unpaid intern search go?  We posted a free ad on indeed.ca.  Within 72 hours we received over ten replies, of which only 2-3 came close to meeting the actual qualifications.  Some of the applicants had no relevant experience at all.
Possibly in today’s job market people are willing to work for free on the hope that they can get some experience, which will hopefully lead to a permanent job in the future.

Conclusion

The question is whether the mining industry can make use of interns in the areas of geology, engineering, marketing, presentation graphics, websites, etc?
There may be many students or recent grads looking for an opportunity and are willing to do whatever it takes to  advance their careers.
Even if your operating budget can’t afford the cost of hiring another person, you may still have a chance to help out someone new in the industry.
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55. Underground Feasibility Forecasts vs Actuals

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

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.
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50. Landslide Blog – If You Like Failures

slope failure blog
For those of you with a geotechnical background or have a general interest in learning more about rock slides and slope failures, there is an interesting website and blog for you to follow.
The website is hosted by the American Geophysical Union the world’s largest organization of Earth and space scientists. The blogs on their site are written by AGU staff along with contributions from collaborators and guest bloggers.

Landslide Blog screenshot

The independent bloggers have editorial freedom in the topics they choose to cover and their opinions are those of their authors and do not necessarily represent the views of the American Geophysical Union. This provides for some leeway on the discussions and the perspectives the writers wish to take.

Landslide Blog

One specific area they cover well in their Landslide Blog are the various occurrences of rock falls and landslides from any location around the globe. They will present commentary, images, and even videos of slope movements as they happen.
Often they will provide some technical opinion on what possibly caused the failure event to occur. The Landslide Blog has a semi-regular email newsletter that will keep you updated on new stories as they happen.
The following links are a few examples of the type of discussions they have on their website.
Here is a description of a small water dam failure in Greece.
Here is some video of the Samarco tailings runout in Brazil.
From time to time the Landslide Blog will examine mine slopes, tailings dams, and waste dump failures, however much of their information relates to natural earth or rock slopes along roads or in towns.
Some of their videos are quite fascinating, illustrating the forces behind some of earth’s natural erosion processes. Check it out for yourself.
The bottom line on all of this is that the less the mining industry is mentioned in the Landslide Blog, the better it is.
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