Articles tagged with: Mining

Spying on Tailings Using Satellites

Date: June 28, 2024 Author: Ken Kuchling Comments: Leave a reply

There have been recent heap leach pad failures in the Yukon and Turkey and tailings dam failures in Chile and the Philippines. As a result I have been seeing more posts on LinkedIn about the application of satellite based InSAR deformation monitoring. Prior to that I had never heard of InSAR, so thought a little bit of background study might be worthwhile.

The following are my observations on what InSAR is and where it may be going. I am by no means an expert in this technology. I am merely viewing it from the perspective of a mine design engineer.

What is InSAR

InSAR is satellite-based “Interferometric Synthetic Aperture Radar”. It can measure the distance from a satellite to a ground feature. With repeated imaging it is used to detect changes in distance and measure displacements to within 5-10 millimetre accuracy. Hence it can be used as a potentially cost-effective slope monitoring tool, albeit it cannot be the only tool, as discussed later.

The relevant satellite images have been available for years. Currently the availability of analytical software to interpret the satellite data is improving. It can detect millimeter-scale displacements, however only in the line-of-sight (LOS) direction of the satellite. Using two or more satellites in different orbits, displacements in horizontal and vertical directions can be defined.

An example of a satellite being used is the Sentinel-1, launched in mid-2015 by the European Space Agency. This satellite information is open-source data. It will have a 6 to 12 day revisit cycle in many locations.

The results of an InSAR displacement survey are typically shown as a series of colored data points, typically coloured green for the stable points, trending to yellow and red for points that are moving.

This blog has some example images.

Some Limitations With InSAR

There are some limitations with InSAR, so it can only be part of a monitoring program. These limitations are:

The displacement direction is only measured in the direction of the satellite. Hence one may not know in which direction the movement is occurring. The magnitude of displacement could be underestimated depending on the apparent angle of measurement.
The movement being measured could consist of vertical settlement due to material consolidation and may not be horizontal and related to impending failure.
The displacement magnitude measured on opposite sides of a facility may have different accuracy, depending on the slope orientation versus the line-of-sight.
Areas with heavy vegetation may be difficult to monitor
Areas with heavy or persistent cloud cover can be difficult to monitor.
Areas with snow cover will be difficult to monitor.
The satellite return period may be weekly or every two weeks, so one is not able to analyze daily movements if a situation is critical. If the return visit day has cloud cover, there will be no new satellite data collected.
Areas with on-going construction or tailings deposition will lead to erroneous results.
Due to the line of sight, not all slope failure modes may be detectible (for example piping failure).

Regardless of these limitations, InSAR can still play a role in any monitoring program since it is able to monitor large areas quickly. Consider it as a pre-screening tool, being aware that not all failure modes may be detectible with it.

Discussion

On LinkedIn, one can see numerous posts where independent experts are examining historical InSAR data for recent failures to see whether early movement should have been detected. The results seem to be quite positive in that areas that have failed might have been red-flagged prior to failure.

There are also zones that showed critical displacements but have not failed.

Typically, there are four ways to monitor displacement in pit slopes, tailings dams, heap leach pads, and waste dumps. They are:

Insitu monitoring using embedded instruments, for example slope indicators, extensometers, and settlement gauges. These instruments provide information on what is happening internally within a slope, where actual movement is occurring, and they can be used in warning alert systems.
Surface monitoring using radar (ground based InSAR) systems and survey prisms. These tools measure only surface movements in selected areas, can be monitored as frequently as needed on an automated basis, and integrated into warning alert systems.
Drone or aerial surveys can be used to measure topography and monitor movements over large areas. This method requires a data processing delay (not real time) to derive the movement information, but such surveys can be done as frequently as needed.
InSAR from satellite can be used over very large regions to highlight areas with movement. That should trigger the implementation of one or more of the other monitoring approaches (if not already in place).

Conclusion

A mining site consists of numerous constructed embankments and slopes of all types and heights. Many of these slopes may be creeping and moving all the time – it’s a living beast.

The operator’s awareness about their site will be better the more monitoring tools they use. This awareness is important given the critical role that slope stability plays. We will see if InSAR technology achieves much wider adoption in the mining industry as a first phase of a stability monitoring programs.

Since InSAR monitoring is done from space, it does not require access to a property. Hence it can be used by third parties or NGO’s to “spy” on facilities of concern anywhere.

Possibly over the next few years we will see independent donor-funded organizations monitoring tailings facilities around the globe. They will be able to notify the public and mine operators “Hey, there is some movement on this mine site that needs to be addressed”. An organization called World Mine Tailings Failures has started some discussions on this concept. Check it out.

Finally, it is great for a mine site to collect a lot of displacement data, hopefully to forewarn of movement, displacement acceleration, and imminent failure. However, this assumes that someone experienced is interpreting the data and its not just generating graphs for the file cabinet. Perhaps AI can play a role here in the future, if the technical personnel to do this are lacking.

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/

Junior Mining Shams and Scams – Part 2

Date: June 3, 2024 Author: Ken Kuchling Comments: Leave a reply

This is Part 2 of the blog post discussing junior mining scams and the sanctioning of those responsible. Part 1 can be found at this link “Junior Mining Shams and Scams – Part 1” and can be read first to get some background.

Part 2 provides examples involving professional Qualified Persons (QPs). We may have the feeling that QP’s are never held accountable for their work, but that is not always the case. There are numerous instances of QP’s being hauled off in front of their professional organizations for unprofessionalism. This blog will highlight some of those cases.

The lesson is that QP’s signing off on technical information for clients should be proficient in the nature of their work and need to know the reporting rules very well. Some of these incidents involve error and poor judgment, not outright fraud.

These examples involve in-house QP’s that work for a company while others involve independent QP’s that have been contracted by the company.

In most of these cases, any sanctions, if applied, were mainly doled out by the professional engineering or geological associations. The legal courts are often not involved.

Examples (Part 2)

Inaccurate QP Resource Estimate: This example relates to the Barkerville Gold Mines resource estimate complete in 2012. The mineral resource estimate had numerous errors and issues related to assays, capping, cutoff grades, etc. The allegation was the QP had demonstrated incompetence, unprofessional conduct, and negligence. The sanctions on the QP included a $15,000 fine, $20,000 legal costs, re-training, and license suspension.

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Link 2:

False QP Statements: Here is an example from 2011. The QP / company Director was charged with multiple allegations, including stating the mine was in commercial production (when it wasn’t), leaving the impression there were mineral resource (which there weren’t any), and generally approving information that was not accurate. Ultimately the allegation was demonstrating incompetence, unprofessional conduct, and negligence. The resulting sanctions included 2 year license suspension, re-training, payment of $80,000 to the professional association.

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False QP Statements: This is case were a resource QP failed to comply with the NI43-101, Form 43-101F1, CIM Standards, and CIM Guidelines. The Panel concluded that the Member was guilty of non-compliance with the standards and hence guilty of professional misconduct. Its not clear what specifically was not complied with, but this illustrates that QP’s will be held accountable for their work. The two reports in question were either amended or withdrawn to address the concerns of the regulator in British Columbia, although there had been no intentional non-compliance and no economic impact. The penalty was 2 months suspension (deferred), and the QP had to work under a mentor for 9 months and pay a maximum $10,000 for the mentor’s fees.

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False QP Statements: Here is another example of sanctioning a QP in 2018. The person was charged with unprofessional conduct and incompetence. He stated that he was responsible for the preparation of the technical report, had no prior involvement in the project, and was independent of the issuer. This was false. Sanctions included three month license suspension, taking some re-training, require peer review of the report. In 2022, further sanctions consisted of a $75,000 penalty, further sanctioned along with an executive in the company for insider trading issues (see Link 3 below).

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False QP Statements: This is an example for 2017 when an independent QP took responsibility for the resource estimation work in section 14 of the report, yet they did not have the experience to take responsibility. They also misrepresented that the Report complied with 2014 CIM standards, yet it didn’t, resulting in an overestimation of the mineral resource in both confidence and magnitude. Other claims include relying on non-QP experts but not stating that, failing to adequately discuss the nature of sample quality control procedures as required. The sanctions included license suspension of 3 months, must work with a technical supervisor, re-training, and $7,500 in legal fees.

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False QP Statements: This is another example from 2019, when the QP / Director permitted the disclosure of information to the public in multiple news releases where they should have known that that information was misleading. An example is the disclosure of inferred reserves when there were no reserves and “inferred” is not even a classification of reserves. The sanctions were a license suspension of 4 months, $5,000 legal costs, re-training, and requirement not to act as a QP again.

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QP Resource Estimate Error: This occurred in 2012 when a QP and consulting firm delivered a incorrect resource estimate and reportedly withheld negative opinions on the project from the client. The company spent $3 million on a feasibility study during which the resource estimate error was discovered. The “corrected” resource made the project uneconomic, meaning the feasibility study should not have been done. The mining company sought compensation from the consulting firm, ultimately receiving $1.25 million. The Link 3 references is interesting in that it states “As this case demonstrates, it is critically important for professional service firms to be forthcoming about any reservations they may have regarding the work they are being employed to undertake.” Whatever that really means?

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Disclaimers

Many QP’s realize the legal responsibility and liability they have. Hence in 43-101 reports QP’s sometimes attempt to mitigate this by putting in broad disclaimers to limited that liability. If the securities commission notices such disclaimers, they will require that they be removed.

For example, sometimes the QP of a chapter may have other geologists or engineers (i.e. experts) assisting them. They may then put in disclaimers saying “They disclaim responsibility for such expert content” for the work done by the others. A QP essentially has to sign off on the work of others in the sections they are responsible for. A recent example is a Generation Mining technical report prepared by G-Mining, that had to be amended from (March 31_2023 to May 31_2024) removing several QP liability limiting disclaimers.

43-101 regulations state that “An issuer must not file a technical report that contains a disclaimer by any qualified person responsible for preparing or supervising the preparation of all or part of the report that

(a) disclaims responsibility for, or limits reliance by another party on, any information in the part of the report the qualified person prepared or supervised the preparation of;

or (b) limits the use or publication of the report in a manner that interferes with the issuer’s obligation to reproduce the report by filing it on SEDAR.“

” These disclaimers are also potentially misleading disclosure because, in certain circumstances, securities legislation provides investors with a statutory right of action against a qualified person for a misrepresentation in disclosure that is based upon the qualified person’s technical report.

That right of action exists despite any disclaimer to the contrary that appears in the technical report. The securities regulatory authorities will generally require the issuer to have its qualified person remove any blanket disclaimers in a technical report that the issuer uses to support its public offering document.“

Conclusion

This ends Part 2 of this blog post. It hopefully highlights the importance of QP’s being knowledgably on the disclosure rules and the technical aspects of what they are hired to do.

Companies should always ensure that only qualified QP’s are used for their project work, even if some of the others might be less expensive. The potential headaches and costs afterwards may override the higher upfront cost.

It should be noted that this Sham and Scam blog does not discuss the other less than desirable junior mining traits seen from time to time. These relate to; insider trading; abuse of micro-penny founder shares; and the ever present “pump & dump” schemes.

In closing, if anyone is aware of other good examples of QP issues, please provide any links to any publicly disclosed information. I can add them to the blog post.

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/

Junior Mining Shams and Scams – Part 1

Date: May 30, 2024 Author: Ken Kuchling Comments: Leave a reply

Recently (in April 2024) Red Pine Exploration issued several press releases highlighting that some assays in their geological database were found to have been manipulated. Numerous assays input into their database did not match the original lab certificates. Is this another mining scam?

The Red Pine event led me to ask some colleagues about similar situations that have occurred and whether the personnel responsible were ever sanctioned. Their feedback provided me with several past examples of such incidents, which I have attempted to summarize in this two-part blog post. Big thanks to my colleagues that took the time to provide these examples.

Raise the Red Flag

The focus of this blog is on the types of activities that raised the red flags in the past. I am less interested in naming the people responsible, although the associated web links do provide more detail on the events.

Not all of the examples listed in these two blogs are scams or deliberate falsification of results. Some may be incompetence, faulty reporting, or lack of diligence and care. Some of these involve company executives, in-house Qualified Persons (QPs), and independent QP’s working for the companies.

Part 1 has examples mainly involving company management or in-house QPs. Part 2 will provide other examples where QP’s have been held to account for their poor quality of their work.

Examples (Part 1)

The following are presented in no particular order. Some of these may still be at the allegation or investigation stage. This blog post can be updated when the issue is eventually resolved.

Tampering with Samples: Bre-X salting of samples is the number one example of a well orchestrated scam. I’m not sure if anyone was ever officially convicted of anything at Bre-X, but it warranted several books, recent podcasts, and even a loosely-based Hollywood movie (Gold). As an aside, I had spoken with the Bre-X team in 1995 about consulting work while I was living in Calgary. However, they were still far from needing mine engineering services at that time. That would have been a wild ride, although with my luck, I would have ended up being the only one in jail. For further information here is an interesting story from Warren Irwin on the Bre-x story. https://redcloudfs.com/25-years-after-bre-x-by-the-man-who-made-a-fortune-going-long-short-of-the-biggest-ever-mining-fraud/

Falsifying QP Signature: The B.C. Securities Commission (BCSC) is alleging that a B.C.-based mining company and its CEO made false or misleading statements about an Idaho mineral deposit in a report that it filed. In 2019, Multi-Metal filed a technical report which contained an electronic signature of a qualified person – a professional engineer – and listed him as an author. The BCSC alleges the qualified person did not review, sign, or consent to filing Multi-Metal’s report. At this time, the BCSC’s allegations have not yet been proven.
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Falsifying Assay Data: The Ontario Securities Commission approved a settlement agreement between a geologist with 30 years of experience and the Qualified Person for Bear Lake Gold Ltd. Between 2007 and 2009 the QP altered certain assay results and transferred these results into the company’s assay database; prepared draft press releases that contained incorrect and inflated data, then provided Independent QP’s with the altered data, and also replaced core and modified a drill core log. In the settlement, the QP agreed to a permanent ban from acting as a Director and Officer of any issuer, an administrative penalty of $750,000, $50,000 in costs, and a prohibition from trading.
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Falsifying Assay Data: In 2024 Red Pine Exploration Inc. reported that there were 382 assay inconsistencies out of a total of 60,000 assay results for the 2019-2024 Period, representing 95 intersections contained within 69 drill holes as follows. An independent investigation is underway, however at the time of this blog, the investigation is still on-going. A link will be provided here once their final report is disclosed publicly.
Link 1

Tampering with Samples: This example goes back to 1981, involving New Cinch Uranium. They published test results that showed significant gold and silver at their New Mexico property. After the stock jumped, third party tests showed that samples did not contain any significant amount of precious metals. The New Cinch samples were “salted”. The Vancouver Stock Exchange was sued for not verifying the company’s test results. In response, the VSE made it compulsory for companies to issue a disclaimer on each press release stating that the VSE “neither approves nor disapproves of their contents”. This case goes back 40 years, so limited information is available on it. A bit more discussion on this case and discussing the VSE is found at the link below. While the VSE no longer exists, the TSX has taken over.
Link 1

Falsifying Assay Data: This example involves Southwestern Resources, a company with the Boka Project in China. The former CEO and President, John Paterson, was the company’s QP. In 2007, a month after Paterson’s resignation, Southwestern announced there were errors in previously reported assay results. As a result, Southwestern withdrew all of its previously disclosed results for that project. Sounds familiar? An independent investigation by Snowden led to a revised resource estimate that was substantially less than previously reported and identified 433 discrepancies in gold grades reported in dozens of 2003 and 2007. The original assay certificates were sent to Paterson and he was the sole recipient. Instead of transferring the true assay certificate data, Paterson transferred data containing discrepancies into the database. There was 6 years of jail time involved with this case.
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Falsified Resource Estimate: This one goes back to 1997, although sanctioning of parties was only done in 2007. The company geologist was accused of several things, including not having adequate data to support the findings in his 1997 resource report; the methods used to calculate resources were not appropriate; the report portrayed the project as more advanced than it was; the $129 projected share value was based on “unsubstantiated tonnage and grade information and data.”. Exotic assaying methods and duping accredited investors was also part of this operation.
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Using Exploration Targets in Economic Analysis: This event goes back to 2012 and involves a company breaking the rules by disclosing the results of an economic analysis that included a target for further exploration (pie-in-the-sky) of the company’s gold mining operation. The economic analysis was not based on a current resource estimate. The punishment was the proponents had to pay to the commission $20,000 and complete a course of study on the requirements of Canadian mining rules.
Link 1

Conclusion

This ends Part 1 of this blog post. Part 2 will continue with a few more examples, specifically involving Qualified Persons, and can be found at this link Junior Mining Shams and Scams – Part 2

Discipline is typically rendered in two ways; the Security Commission may prosecute; or the professional associations will provide sanctions. Typically, the professional association penalties are more lenient, consisting of a temporary license suspension and the payment of legal fees.

If readers have any other examples of such junior mining stories, email them to me at kjkltd@rogers.com and I can add them to this blog.

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/

The Anatomy of 43-101 Chapter 16 – Mining (Part 2)

Date: March 22, 2024 Author: Ken Kuchling Comments: Leave a reply

Part 2 of this blog post will focus on the remaining engineering work to finish Chapter 16 of the Technical Report. We only wrote about half of it in Part 1. The mining engineer can generally handle the rest of these tasks without requiring a lot of external input. You can read Part 1 at this link “The Anatomy of 43-101 Chapter 16 – Mining (Part 1)”.

The pit design and phases were completed at the end of Part 1, and we can move on to scheduling.

4. Production Scheduling

Once the pit design is complete, everyone will be calling for the production schedule as soon as possible. Others on the team are waiting for it. The tailings engineers need the production schedule for the tailings stage design. The process engineers need the scheduled head grades to finalize sizing the plant components. The client wants the schedule to plug into their internal cashflow model for a quick peek at the economics.

However, before the mine engineer can start scheduling, the dilution approach needs to be selected. Dilution is waste that is mixed in with ore during mining. A high amount of dilution can dramatically lower the processed head grades. There may be a desire to “low ball” the dilution to make the grades look better, but the engineer should base the dilution on what they would expect to see.

Two dilution approaches are common. One can either construct a diluted block model; or one can apply dilution afterwards in the production schedule. I have used both approaches at different times.

The production schedule must be on a diluted basis, since that represents what the processing plant will actually see.

Generally, two different production schedules must be created: (i) a Mining schedule, and (ii) a Processing schedule. In some instances, they may be one and the same schedule. However, if any ore stockpiling is done, then the Mining schedule will be separate from the Processing schedule.

The Mining schedule shows ore going directly to the plant and ore going into the stockpiles. The Processing schedule will show ore delivered directly from the mine and ore reclaimed from stockpiles. Building stockpiles and pulling ore from stockpiles are two independent activities.

Sometimes lower grade stockpiles are built up by the mine each year but only processed at the end of the mine life. Periodically the ore mining rate may exceed the processing rate and other times it may be less. This is where the stockpile provides its service, smoothing the ore delivery to the plant.

Scheduling can be done with variable time periods. Perhaps the schedule is generated using monthly time periods, or quarters, or years.

The 43-101 report will normally show the annual production schedule, but that does not mean it was generated that way. I prefer to use short time periods (monthly or quarterly) for the entire mine life, to ensure ore is always available to feed the plant. A 10 year mine life would result in 120 monthly time periods, so output spreadsheets can get large.

Scheduling can be done manually (in Excel) or by using commercial software, like Datamine’s NPVS. The commercial software is better in that it allows one to run different scenarios more quickly, and it does a lot of the thinking for the engineer. It also does a good job of stockpile tracking. It also decides when it is necessary to transition to mining in satellite pits.

Once the schedules are finalized, they are normally reviewed by the client for approval. The strip ratio and ore grade profile by date are of interest. One may then be asked to look to at different stockpiling approaches to see if an NPV (i.e. head grade) improvement is possible.

One can stockpile lower grade ore and feed the plant with better grade by mining at a higher rate with more equipment. One might need to examine iterative schedules of that type.

Sometimes one must take two steps backwards and re-design some of the initial pit phases to reduce waste stripping or improve grades. Then one would run the schedules again until getting one that satisfies everyone.

Now that the schedule is complete, we can write up the Chapter 16 text up to page 15. We’re getting closer to the end.

5. Site Layout Design

With the pit tonnages and mining sequence from the schedule, the mine engineers can start to look at the site layout (waste dumps and haul roads). Normally the tailings engineers will be responsible for the tailings layout. However, if there is no tailings engineer on the PEA team, the mining engineer may look after this too.

First there is a need for a waste balance. This defines how much mined overburden or waste rock will be needed to build haulroads, laydown pads, and tailings dams. Then the remaining waste volume must be placed into waste dumps.

Hopefully the tailings engineers have finished their tailings dam construction sequence by this time to provide their rockfill needs (although unlikely if you only gave them the production schedule two days ago).

The geotechnical engineers will provide the waste dump design criteria; for example, 3:1 overall side slope using 15m high dump lifts. Ideally it is nice to have soil and foundation information beneath the waste dump sites, but at PEA stage most often this isn’t available. The dump locations are only being defined now.

The mining engineers will size the various waste dumps to their required capacity. Then they can lay out the mine haulroads from the pit ramps exits to the ore crusher, the ore stockpiles, and to each waste dump.

That’s it for the site layout input. Add another 2 pages to Chapter 16. Now the mining engineers can look at the mining equipment fleet.

6. Fleet Sizing and Mining Manpower

The last task for the mine engineer in Chapter 16 is estimating the open pit equipment fleet and manpower needs. The capital and operating costs for the mining operation will also be calculated as part of this work, but the costs are only presented in Chapter 21.

The primary pieces of equipment are the haul trucks. They can range in size from 30 tonnes to 350 tonnes and anywhere in between.

Typically, the larger the equipment is, the lower the unit cost ($/t), especially in jurisdictions where labor costs are high. One doesn’t want a mine fleet with only 5 trucks nor one with 50 trucks. So where is the happy medium?

Once the schedule and site layout are complete, the mine engineers can run the truck haul cycles, in minutes. They need to estimate the time to drive from the pit face, up the ramp, to the waste dump, to the ore crusher, and return back into the mine. Cycle times determine the truck productivity, in tonnes per hour per truck and include the time to load the truck. Some destinations may have long cycle times (to a far off crusher) while others may be quick (to an adjacent waste dump).

The cycle time must be calculated for each material type going to each destination. As the pit deepens, the cycle times increase.

Very simplistically, if a 100 tonne truck has a 20 minute cycle time, it can do three cycles in an hour (300 tph). If one has to mine 10 million tonnes of ore per year, then that would require 33,300 truck hours. If a single truck provides 6500 operating hours per year, that activity would require a fleet of 5 trucks. The same calculation goes for waste.

The total trucking hours will vary year to year as waste stripping tonnages change or haul cycle times increase in deeper pits. The required truck fleet may vary year to year. Keeping haul distance short and haul cycles quick is the key to a lower cost mine.

The mine engineers undertake the productivity calculations for loading equipment to estimate annual operating hours, and the required shovel / loader fleet size.

The support equipment needs (dozers, graders, pickups, mechanics trucks, etc.) are typically fixed. For example, 2 graders per year regardless if the annual tonnages mined fluctuate.

The support equipment needs are normally based on the mining engineer’s experience. Hence the benefit of actually working at a mine at some point in your career.

Blasting includes both the blasthole drilling activity and hole charging. The mining engineer estimates drill productivity and specifications based on the bench height, the expected rock mass quality, and the power factor (kg/t) need to properly demolish the rock.

Finally, the mine operation manpower is estimated based on all the equipment operating hours as well as the fixed number of personnel to support and supervise the mine.

This essentially concludes the mining information presented in Chapter 16 of a typical 43-101 open pit report.

Conclusion

These two blog posts hopefully give an overview of some of the things that mining engineers do as part of their jobs. Hopefully the posts also shed light on the amount of work that goes into Chapter 16 of a 43-101 report. While that chapter may not seem that long compared to some of the others, a lot of the effort is behind the scenes.

Some will say PEA’s are not very accurate documents that should be taken with a grain of salt. One should understand that engineers are working with a limited amount of information at this early stage while forming the concept for the proposed operation.

The subsequent study stages are where more accurate costs are expected and can be demanded.

I don’t know if this overview makes one want to sign up to be a mining engineer or learn to code instead. None of this is rocket science; it just requires practical thinking.

If young people want to get into mining, but not sure into which aspect, I suggest go read through a 43-101 report. There are sections describing exploration, resource modelling, mine engineering, metallurgy, geotechnical engineering, environmental, and financial modelling. Its all in one document. See if any of these areas are of interest to you. Universities should use 43-101 reports as part of their mining engineering curriculum.

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/

Top Ten Mining Podcasts

Date: March 12, 2024 Author: Ken Kuchling Comments: 1 Reply

Podcasts. There are thousands of them out there, free for anyone to access. I regularly listen to them on all sorts of topics ranging from sports, politics, and even mining. This blog post is about my top mining podcasts that I find entertaining and/or educational. There are likely others missing from this playlist, but one only has so much time in a day.

On YouTube, there are also a lot of educational videos related to mining. Some of the same audio podcast episodes are also available on the YouTube platform. Given an option, I prefer the audio-only podcast format over YouTube.

One doesn’t need to sit there focusing on a video screen. With podcasts, you can do other things at the same time, like exercise, walk the dog, drive a car, etc. One has freedom to multi-task, something that the video format doesn’t allow.

When listening to podcasts, I used the Android phone app called Podcast Addict. However, most likely there are plenty of other smartphone apps to use.

Mining Podcast Categories

In my experience, mining podcasts typically fall into one of two categories; Mining Investment; and Technical Discussions.

Mining Investment: These are the investor targeted interviews, chatting with corporate executives or newsletter writers. They discuss what is new with their companies or what is happening in the industry. From an engineer’s perspective (not as an investor), I listen to a few of these to catch up on projects that I worked on in the past, or to learn how different executives strategize. These interviews are often paid for promotions by the company, so sometimes the interview questions can be the softball type. I’m not sure how often the interview questions are actually provided in advance.

Technical Discussions: There are also a few podcasts related to technical discussions on geology, exploration methods, resource modelling, mining software, and mining services. I have not found any podcasts specifically related to mine engineering or mineral processing. Most are geared towards the geological and exploration aspects of the industry.

Pick and choose. One can’t listen to all the podcast episodes available or else you wouldn’t have time to do anything else in life. You would also become bored since much of it can be repetitive.

Therefore, I follow multiple podcasters, get updates on their new episodes, and then pick and choose from there. I probably only listen to 10%-20% of the episodes, i.e. only those that are of real interest to me.

Sometimes, especially with investor presentations, the same executives will appear on multiple podcasts. You only need to hear the story once. As well, some executives will be returning frequently to the same podcast with not a lot new to say from their last interview. They need to catch the eyes of investors.

The podcast host will have a lot to do with the style of discussion. Some are better than others. Sometimes the interviewing style is dull and unexciting, even through the topic itself may be great. The following are some of the mining podcasters that I follow.

Mining Investment Podcasts

This list are my favorites, in order of preference. They are the only ones I follow
Mining Stock Education (680 episodes) https://www.miningstockeducation.com/ This podcast can have some lively discussion that focus on both the positives and negatives of mining investment. Some guests definitely provide great learnings on the inner workings of the industry.
Crux Investor (2500 episodes) https://www.cruxinvestor.com/ Matthew and Merlin have an engaging interview style, and sometimes will have a hard edge, putting interviewees on the spot. They say they “…exist to cut through the jargon, bias and bluster.”
Mining Stock Daily (2800 episodes) Mining Stock Daily, hosted by Trevor Hall, provides a daily 8 minute overview of overnight mining news and will also have long form discussions on finance, macro economics, and corporate exploration news.
Global Lithium Podcast (130 episodes) is hosted by Joe Lowry, known as “Mr Lithium” who is a 30 plus year industry veteran. For me, this podcast is the “go to” on everything lithium, whether brines or hard rock production.
Money of Mine (170 episodes) This Aussie mining podcast focusses mainly on Aussie companies, but the three hosts have an interesting style and not afraid to say what they think. Listening to their Aussie accents always makes me think of the Crocodile Dundee movies.

Technical / Informational Mining Podcasts

These are podcasts on the informational and technical side of mining. Unfortunately for we engineers, they mainly focus on geology.

Fresh Thinking by Optiro-Snowden (53 episodes) This podcast is hosted by Snowdon – Optiro consultants. They typically focus on resource modelling and grade reconciliation aspects. The episodes are fairly short (15 mins), which is nice. Although I am not a resource modeller, I can always learn more about the black art of resource modelling.
The Northern Mining Podcast (400 episodes) This podcast provides general industry news, as the Northern Miner newspaper does. It also has interviews with key industry players, but generally avoids the company investor relation interviews.
Discovery to Recovery (50 episodes) This is a podcast produced by the Society of Economic Geologists (SEG), brings geoscience and technology stories from the world of ore deposits. This podcast can be harder to listen to, getting heavy into geology discussions beyond my expertise.
Exploration Radio (73 episodes) This is a podcast focusing on the past, present and future of exploration. They don’t seem to post very often, but can have interesting topics, even for an engineer.

That is the end of my list.

To the best of my knowledge, there are a lack of podcasts related to mine engineering, for topics such as pit optimization, mine design, scheduling, equipment selection, and costing.

There is one podcast on mine scheduling by Mark Bowater, author of “Crimes Against Mine Planning”, but I cannot find it on any podcast platform.

Another honorable mention is Antonio at https://www.youtube.com/@ResourceTalks/ who does a great job at interviewing executives. The downside is that I don’t think he is on audio-podcast format and his episodes are over 1 hour, or 3600 seconds as he likes to present it. That’s beyond my normal attention span.

Update: A follower of my blog posts has suggested a mining investing site on YouTube called “Junior Resource Investing“. The host is Matthew Mick, seems to have a preference for Ni and base metal projects, interviews are up to 50 minutes each with well prepared questions. Check it out. I can’t find it on a podcast platform as of yet.

Conclusion

There is no shortage of material in the podcast world about the mining industry. It all depends on what interests you the most. There is even more mining information available on YouTube, if you have the time to sit and watch videos. Nevertheless the audio-only platform is great, although you don’t get to see the charts being discussed. That’s fine with me, particularly if they take a few seconds to describe the chart.

Let us know what mining podcasts you enjoy and would recommend. I have room to add one more to my list of 9 mining podcasts. I don’t actually have 10 favorites yet.

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/

Mine Builders vs Mine Vendors

Date: October 15, 2023 Author: Ken Kuchling Comments: Leave a reply

Normally when Major or Intermediate miners advance their projects through the study stages, they usually have the intent to build the mine at some time. Sometimes they may decide to sell the project if it no longer fits in their corporate vision or if they desperately need some cash. However, selling the project was likely not their initial intent.

On the other hand, Junior miners tend to follow one of two paths. They are either on (a) the Mine Builder path, or (b) the Mine Vendor path (i.e. sell the project). In this article, I will present some examples of companies on each path. There will also be some discussion on whether the engineers undertaking the early stage studies (e.g., PEA’s) should be considering the path being followed.

The Mine Builder Path

The Mine Builder generally follows a systematic approach, as sketched out in the image below. The project advances from drilling to Mineral Resource Estimate (MRE), scoping study (PEA), then through the Pre-Feasibility Study (PFS) and/or Feasibility Study (FS) stages. Environmental permitting is normally proceeding in conjunction with the engineering. Once the FS is complete, the next hurdles for the Mine Builder are financing and construction. The path is fairly orderly.

The amount of the exploration drilling is only needed to define an economic resource to the Measured and Indicated classifications. There is no requirement to delineate the mineral resource on the entire property since there will be time to do that during production. Demonstrating an economic resource, with some upside potential, is often sufficient for the Mine Builder.

Three examples of companies on the Builder path are shown below; Orla Camino Rojo gold project (in operation), SilverCrest Las Chispas gold project (in operation), and Nexgen Rook uranium project (financing stage). Although the duration of each timeline is different due to different project complexities, the development paths are consistent. Most junior miners would not consider themselves on the Builder path.

The Mine Vendor Path

Mine Vendor type organizations have the primary goal of selling their project. These companies may consist of management teams that don’t have the desire, comfort, or capability to put a mine into production. For example, this is often the case with companies founded by exploration geologists, whereby their plan is to explore, grow, and sell all (or part) of the project. In other cases the Junior miner realizes their project is large with a high capital cost. That capital cost is beyond the financial capability of the company. Hence a deep-pocket partner is required or an outright sale is preferred.

The Mine Vendors tend to follow a different development path than the Mine Builders. They don’t have the same long term objectives. Vendors want out at some point.

The Vendor path can be more irregular, with multiple studies undertaken at different levels of detail, sometimes stepping back to lower level of studies as more information is acquired. Their object is to make the project look good to potential buyers, and look better than their junior miner competitors also for sale. Often this ongoing project improvement process is termed “de-risking”.

Not only must the Vendors demonstrate an economic resource, they must demonstrate a highly valuable resource to maximize the acquisition price for the shareholders. They will try to do this through multiple drill campaigns followed by multiple studies, each one looking better than the prior one.

Sometimes you will see a management team indicate that, if the project isn’t sold, they are going to put it into production themselves. This may be true in some cases, or simply part of the negotiating game to try to maximize the acquisition price.

Two quick examples of companies on the Vendor path are shown below: Western Copper Casino project and Seabridge KSM project. The durations of these development timelines are extensive and expensive, while waiting for an interested buyer. During these periods, the companies may continue to spend money de-risk the project further. The hope is that the company can eventually make the project attractive or that changing market conditions will make it attractive for them. Unfortunately, there is always the possibility that no buyer will ever come along.

Engineer’s Perspective

One question is whether the independent geologists and engineers working on the advanced studies should be aware of the path the company is following. Is the company a Builder or a Vendor?

Some may feel that the technical work should be independent of the path being followed. Based on my experience as both an owner’s representative and independent study QP, I have a somewhat different opinion. The technical work should be tailored to the intended path.

The Engineer on the Mine Builder Path:

If an engineer understands that a Mine Builder’s project will move from PEA to PFS to FS in rapid succession, then there is more incentive to ensure each study is somewhat integrated.

For example, a PEA will use Inferred resources in the economics. However, if the project will advance to the PFS stage, where Inferred cannot be used, then it is important for the PEA to understand the role that Inferred plays in the economics. How much drilling will be needed to upgrade Inferred resource to Indicated for the PFS, if needed at all?

Typically, capital costs tend to increase as advancing studies get more accurate due to greater levels of engineering. A Builder wants to avoid large cost increases when moving from PEA to PFS to FS. Therefore, when costing at the PEA stage, one may wish to increase contingency or use conservative design assumptions. After all, one is not trying to sell or promote the project internally, but rather move it towards production.

There is no value to the Mine Builder by fooling themselves with low-balled cost estimates. (Although some may argue there is still a desire to low ball costs to get management to approve the project). Conversely Mine Vendors do have some incentive to low ball the costs.

Perhaps some of the recent project capital cost over-runs we have seen is that the Vendor mentality was used at the PEA stage to optimistically set the capital cost baseline. Subsequent studies were then forced to conform to that initial baseline. Ultimately construction will be the arbiter on the true project cost. Hence there is no real value in underestimating costs, ultimately making management appear incompetent if costs do over-run.

The Mine Builder will also be advancing environmental permitting simultaneously with their advanced studies. Hence at the early stage (PEA) it is important to properly define the site layout, processing method, production rate, facility locations, etc. since they all feed into the permitting documents.

Changing significant design details in the future will set back the permitting and construction timelines. Hence, for the Mine Builder, the engineers should focus on getting the design criteria mostly correct at the PEA stage. For the Mine Vendor, this is not as important since multiple studies are being planned for in the future anyway.

The Engineer on the Mine Vendor Path:

The objective of the Mine Vendor is to make the project attractive to potential buyers. There is less urgency in fast tracking detailed engineering and permitting.

It is not uncommon to see multiple drilling programs, followed my multiple studies of scenarios with different size, production rate, and layout. The degree of engineering conservativeness in design and costing is less critical since future studies may be on substantially different sized projects.

The role that the Inferred resource plays in the economics is also less important at this time, since a lot more drilling may be coming. The Vendor’s objective tends to be on maximizing resource size not necessarily optimizing resource classification.

While the Mine Vendor may also be advancing environmental permitting as another way to de-risk the project, the project design may still be in flux as the resource size changes. Major modifications to the plan may cause permitting to stop and re-start, leading to an extended project timeline and wasted money.

There is also risk in starting the permitting with a project definition that isn’t of economic interest to future buyers. Sometimes the Vendor may be making regulatory commitments that constrain the operating flexibility of future mine operators. Its easy to commit to things when you aren’t the one having to live up to them.

The Mine Vendor will also de-risk the project by moving from PEA to PFS and even to FS. The caution with completing a FS is that it is a costly study and essentially brings one to the end of the study line. What does the company do next if there is still no buyer?

Feasibility studies also have a shelf life, with the cost estimates and economics becoming inaccurate after a few years. Some companies may re-examine the project, re-frame it, and jump back to the PEA or PFS stages. There can be an on-going study loop, requiring continued funding with no guarantee of a sale in sight. Often feasibility studies have the dual role of trying to boost the share price and market cap, as well as frame the project for potential buyers.

Conclusion

As an engineer, it is helpful to understand the objectives of the project owner and then tailor the technical studies to meet those objectives. This does not mean low balling costs to make the study a promotional tool. It means focusing on what is important. It means recognizing the path, and what doesn’t need to be engineered in detail at this time. This may save the client time, money, and improve credibility in the long run.

In many cases, the precise size of the deposit is less important than understanding the site, access, water supply, local community issues, the environmentally acceptable location for dumps and tailings, etc.. It can be more important to focus on these issues rather than having a detailed mine plan with multiple pit phases that immediately becomes obsolete in a few months after the next drilling campaign.

Potential buyers will have their own technical team that will develop their own opinions on what the project should be and what it should cost. Just because a Mine Vendor has a feasibility study in hand, doesn’t mean a potential buyer will believe it.

This post is just a brief discussion of mining project timelines. For those interested, there a few additional project timelines for curiosity purposes. Each path is unique because no two mining projects are the same. You can find these examples at this link “Mining Project Timelines”.

Let me know about other interesting projects that have interesting paths to learn from. I can add them to the list.

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/

Don’t Cut Corners, Cut Cross-Sections Instead

Date: October 4, 2023 Author: Ken Kuchling Comments: Leave a reply

This article is about the benefit of preparing (cutting) more geological cross-sections and the value they bring.

Geological sections are one of the easiest ways to explain the character of an orebody. They have an inherent simplicity yet provide more information than any other mining related graphic.

Some sections can be simple cartoon-like images while others can be technically complicated, presenting detailed geological data.

Cartoon-stylized sections are typically used to describe the general nature of the orebody. The detailed sections can present technical data such as drill hole traces, color coded assays intervals, ore block grades, ore zone interpretations, mineral classifications, etc.

Sections provide a level of clarity to everyone, including to those new to the mining industry as well as those with decades of experience.

This article briefly describes what story I (as an engineer) am looking for in sections. Geologists may have a different view on what they conclude when reviewing geological sections.

I will describe the three types of geological sections that one can cut and what each may be describing. The three types are: (1) longitudinal (long) sections; (2) cross-sections; (3) bench (level) plans. Each plays a different role in helping to understand the orebody and mining environment.

There is also another way to share simple geological images via3D PDF files. I will provide an example later.

Longitudinal (Long) Sections

Long sections are aligned along the long axis of the deposit. They can be vertically oriented, although sometimes they may be tilted to follow the dip angle of an ore zone.

Long sections are typically shown for narrow structure style deposits (e.g. gold veins) and are typically less relevant for bulk deposits (e.g. porphyry).

The information garnered from long sections includes:

The lateral extent of the mineralized structure, which can be in hundred of metres or even kilometers. This provides a sense for how large the entire system is. Sometimes these sections may show geophysics, drilling to defend the basis for the regional interpretation.
Long sections will often highlight the drill hole pierce points to illustrate how well the mineralized zone is drilled off. Is the ore zone defined with a good drill density or are there only widely spaced holes? As well, long sections can show how deep ore zone has been defined by drilling. On some projects, a few widely spaced deep holes, although insufficient for resource estimation purposes, may confirm that the ore zone extends to great depth. This bodes well for potential development in that a long life deposit may exist.
Sometimes the long section drill intercept pierce points can be contoured on grade, thickness, or grade-thickness. This information provides a sense for the uniformity (or variability) of the ore zone. It also shows the elevations of the higher grade zones, if the deposit is more likely an open pit mine, an underground mine, or a combination of both.

Cross-Sections

Cross-sections are generally the most popular geological sections seen in presentations. These are vertical slices aligned perpendicular to the strike of the orebody. They can show the ore zone interpretation, drill holes traces, assays, rock types, and/or color-coded resource block grades.

As an engineer, my greatest interest is in seeing the resource blocks, color coded by grade. Sometimes open pit shells may be included on the section to define the potential mining volume. The engineering information garnered from block model cross-sections includes:

Where are the higher-grade areas located; at depth or near surface?
If a pit shell profile is included, what will the relative strip ratio look like? Are the ore zones relatively narrow compared to the size of the pit?
How will the topography impact on the pit shape? In mountainous terrain, will a push-back on pit wall result in the need to climb up a hillside and create a very high pit slope? This can result in high stripping ratios or difficult mining conditions.
Does the ore zone extend deeper and if one wants to push the pit a bit deeper, is there a high incremental strip ratio to do this? Does one need to strip a lot of waste to gain a bit more ore?
Are the widths of the mineable ore zones narrow or wide, or are there multiple ore zones separated by internal waste zones? This may indicate if lower-cost bulk mining is possible, or if higher cost selective mining is required to minimize waste dilution.
How difficult will it be to maintain grade control? For example, narrow veins being mined using a 10 metre bench height and 7 metre blast pattern will have difficulty in defining the ore /waste contacts.
Cross-sections that show the ore blocks color coded by classification (Measured, Indicated, Inferred), illustrate where the less reliable (Inferred) resources are located and how much relative tonnage may be in the more certain Measured and Indicated categories.

When looking at cross-sections, it is always important to look at multiple cross-sections across the orebody. Too often in reports one may be presented with the widest and juiciest ore zone, as if that was typical for the entire orebody. It likely is not typical.

Stepping away from that one section to look at others is important. Possibly the character of the ore zones changes and hence its important to cut multiple sections along the orebody.

Bench (Level) Plans

Bench plans (or level plans) are horizontal slices across the ore body at various elevations. In these sections one is looking down on the orebody from above.

Level plans are typically less common to see in presentations, although they are very useful. The level plans may show geological detail, rock types, ore zone interpretations, ore block grades, and underground workings.

The bench plan represents what the open pit mining crews would see as they are working along a bench in the pit. The information garnered from bench plans that include the block model grades includes:

Where are the higher-grade areas found on a level? Are these higher grade areas continuous or do they consist of higher grade pockets scattered amongst lower grade blocks?
Do the ore zones swell or pinch out on a bench? A vertical cross-section may give a false sense the ore zones are uniform. The bench plan gives an indication on how complicated mining, grade control, and dilution control might be for operators.
Do the ore zones on a bench level extend out beyond the pit walls and is there potential to expand the pit to capture that ore?
On a given bench what will the strip ratio be? Are the ore zones small compared to the total area of the bench?

As recommended with cross-sections, when looking at bench plans, one should try to look at multiple elevations. The mineability of the ore zones may change as one moves vertically upwards or downwards through a deposit.

Never mind cross-sections – give me 3D

While geological sections are great, another way to present the orebody is with 3D PDF files to allow users to view the deposit in three-dimensions. Web platforms like VRIFY are great, but I have been told they sometimes can be slow to use.

3D PDF files can be created by some of the geological software packages. They can export specific data of interest; for example topography, ore zone wireframes, underground workings, and block model information. These 3D files allows anyone to rotate an image, zoom in as needed and turn layers off and on.

You can also create your own simplistic cross-sections through the pdf menus (see image).

A simple example of such a 3D PDF file can be downloaded at this link (3D DPF File Example). It only includes two pit designs and some ore blocks to keep it simple.

The nice thing about these PDF files is that one doesn’t need a standalone viewer program (e.g. Leapfrog viewer) to view them. They are also not huge in size. As far as I know 3D PDF files only work with Adobe Reader, which most everyone already has. It would be good if companies made such 3D PDF files downloadable along with their corporate PowerPoint presentations.

Conclusion

The different types of geological sections all provide useful information. Don’t focus only on cross-sections, and don’t focus only on one typical section. Create more sections at different orientations to help everyone understand better.

In 2019 I wrote an article describing the lack of geological cross-sections in many 43-101 technical reports. The link to that article is her “43-101 Reports – What Sections Are Missing?”

Geological sections are some of the first items I look for in a report. Sometimes they can be hidden away in the appendices at the back of the report. If they are available, take the time to actually study them since they can explain more than you realize.

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/

Polymetallic Drill Results – Interesting or Not?

Date: June 30, 2023 Author: Ken Kuchling Comments: Leave a reply

A while ago I posted an article about how one can evaluate the economic potential of a gold deposit using early-stage exploration intercepts. That article can be found at this link. Doing the same evaluation for a polymetallic deposit is a bit more challenging. There will be different metals of interest, with variable grades, prices, and process recoveries.

When disclosing polymetallic drill results, many companies will convert the multiple metal grades into a single equivalent grade. I am not a big proponent of that approach.

I prefer using the rock value, whether calculated as a recoverable “NSR dollar value per tonne” or as an “insitu value per tonne”. Either rock value is fine for my purposes.

Interestingly NI 43-101 prohibits the disclosure of insitu rock value but allows the use of metal-equivalents. In my view this is a bit counter-intuitive since the equivalent grade can be more misleading than rock value.

What can drill intercepts show

The three aspects that interest me the most when looking at early-stage drill results are:

The economic value of the rock (in $/t tonne). This can either be “insitu value” (assuming 100% recovery, 100% payable) or the “NSR value” incorporating recovery and payable factors (if available). Personally, the 100% insitu value is simpler to calculate and assess.
The depth to the top of the economic zone, which indicates if this deposit would be a lower cost open pit mine or must be a higher cost underground mine.
The length of the economic intervals, which indicates whether bulk mining approaches are viable versus the need to selectively mine narrow ore zones. The economic interval lengths also give a sense for the potential tonnage size (i.e. is it a big deposit or a small one).

There are two types of early-stage exploration data that can be examined with respect to the three items of interest described above. They are (i) the drill hole assay data and (ii) the drill hole "intercepts of interest". I will show an example of each in this post using sample data from an actual exploration program.

One can examine individual drill hole assays to calculate the rock value profile along each drill hole. One can also examine the rock values for the major and minor intervals of interest reported in company news releases.

I normally like to examine both, but the intervals of interest data is publicly disclosed and more readily available. Drill hole assays are often a bit harder, if not impossible, to track down.

Economic Parameters

In a polymetallic deposit, the insitu rock value is simply the summation of value of the individual metal, based on their respective assay grades. An NSR rock value would apply an adjustment for metal recoveries and smelter payables, thereby lowering the insitu rock value somewhat. However the insitu value is fine if there is no metallurgical or process data to rely upon.

Next one must determine what insitu rock value is deemed potentially economic, i.e. the breakeven cutoff.

One can estimate a processing cost and G&A cost. In an open pit scenario, one doesn’t include the mining cost since the goal is to decide whether to send a truck to the waste dump or to the crusher. Only the processing and G&A cost musts be recovered by the ore value. In an underground mining scenario, one would include the mining cost in the cutoff calculation.

In our example, lets assume a unit processing cost of $12/t and a G&A cost of $$2/t, for a combined cost of $14/t. If we envision a metal recovery range of 75%-95%, we can assume 85% for now.

If we envision a smelter payable range of 75% to 95%, we will assume 85% for that also.

The “NSR factor” would now be 85% x 85% or 75%. Therefore, if the breakeven cost is $14/t, then one should target to mine rock with an insitu value greater than $20/tonne (i.e. $14 / 0.75). This would be the approximate ore vs waste cutoff. It is still only ballpark estimate at this early stage, but good enough for this type of review.

Normally it would be nice to see the average head grade (or rock value) at 3 to 4 times greater than the cutoff grade. This is not a necessity but it is a positive factor.

For example, in a gold deposit with a 0.3 g/t cutoff, one would like to see average head grades at least 0.9 to 1.2 g/t or more. If the average head grade is close to the cutoff grade, then possibly the orebody tonnage may be very sensitive to changes in cutoff. This may not be a good thing.

In our example, with a breakeven cutoff rock value of $20/t, one would like to see some ore zones with insitu values 3-4x higher, or above $60 - $80/t. We can target >$70/t rock as a "nice to have" with $20/t as the cutoff.

So far, its all pretty simple. Let’s look at some actual exploration data to see how to apply this approach.

Our example will be a polymetallic deposit containing four metals of interest; copper, gold, cobalt, and iron. One can examine a few drill holes as well as the intervals of interest.

Metal prices used in this example are Cu = $4/lb, Au = $1980/oz, Co = $15.50/lb, Fe concentrate = $100/tonne, assuming 100% recovery and 100% payable for everything.

Drill Hole Assays Examples

The following three graphs show down hole profiles for Drill Holes A, B, C. For each hole there are two plots. One plot shows the insitu rock values down the hole. The second plot is the same, except the x-axis minimum has been set to the breakeven cutoff value of $20/t. This is done simply to highlight the potentially economic zones.

Normally I would not spend a lot of time examining holes with little to no grade. Some may consider this as a biased view. However, every orebody has its limits, and what is occurring along the edges isn’t that critical in my view.

My objective is to understand what is happening in the core of the orebody, since that is what will dictate the overall economics. Is the core of the orebody marginal value, or does it consist of high value rock? Ultimately it will be the exploration company's task to keep drilling to define if there is sufficient tonnage of this higher value rock to justify a mine. However this shows that at least the grades are there.

Intervals of Interest Example

The next series of plots examines the insitu rock values over drill intervals typically published in a company news releases. The intervals of interest will composite the individual assays over larger widths based on the company’s technical judgement.

It is interesting to see whether the larger intervals have good economic potential. The following charts combine both major intervals with minor zones, often referred to as “including” in news releases. Both major and minor intervals can provide useful information.

Insitu Rock Value vs Depth:

This chart shows the rock values for multiple report intervals versus their depth (top) along the hole.

One can see multiple intervals at open pit depths (<250 m) with insitu values above the $20/t cutoff and above the $70/t threshold.

Within the upper 250 metres, we are seeing multiple intervals with good value. That is a positive sign.

Note that these depths are not depths from surface, but distance along the drill hole. In reality the intervals may be slightly closer to surface, depending on the hole inclination.

Insitu Rock Value vs Interval Length:

The next question to ask is whether the higher value zones are narrow or wide?

In the example here one can see some wide zones (70 to 90m) with rock values in the range of $40-70/t. These are good open pit mining widths.

There are numerous higher grade zones ($70-$200/t) in the 5m to 20m width range. These widths are still fine for open pit mining.

Some intervals are quite narrow (<5m), being a bit more difficult to mine. Since many of these are higher grade, they will tolerate some mining dilution.

Conclusion

Although publishing insitu rock values is prohibited by NI-43-101, I find them important in my understanding the economic potential of a deposit. Reviewing the insitu rock values spatially is not difficult and can shed light on what is there. Even at a very early stage, one can get a sense of economic character of the orebody. This is a great approach to use when doing an acquisition due diligence on an exploration stage project consisting mainly of drill hole data.

In my view, it would be beneficial if all polymetallic drill results were reported with the individual grades and using a standardized industry wide insitu rock value formula. Then one could compare projects (or even different zones on the same project) on an equal basis. The cutoff to be applied to different projects would vary but the insitu value is what it is.

This might be better than each company applying their own unique equivalent grade calculation to their exploration results.

The equivalent grade calculation still requires assumptions on the metal prices and recoveries. The result is, unfortunately, presented as a grade value rather than a dollar value.

The intervals of interest published in news releases are usually not available for download. Great Bear is (was) one example where the data was available. It would be nice if more companies followed suit by releasing their interval data in CSV or Excel format. It worked out well for Great Bear!

Perhaps the detailed hole assay data may be too complex or voluminous to release. Maybe this level of information is not useful except to the more technically driven investors. Nevertheless it would still be nice to have access to this drill data in electronic form, at least in the core of the orebody.

For further light reading, the two previous articles referenced above are “Gold Exploration Intercepts – Interesting or Not?" and "Metal Equivalent Grade versus NSR for multi-metals – Preference?"

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/

Mining Under Lakes – Part 2: Design Issues

Date: June 11, 2023 Author: Ken Kuchling Comments: 3 Replies

This is Part 2 of a blog post related to open pit mining within bodies of water. Part 1 can be found at this link “Mining Under Lakes – Part 1“, which provides a few examples where this has been done successfully. Part 2 focuses on some of the social and technical issues the need to be considered when faced with the challenge of open pit mining within a water body.

The primary question to be answered is whether one can mine safely and economically without creating significant impacts on the environment.

The answer to this question will depend on the project location and the design of the water retaining structure.

I have worked on several projects where dike structures were built. I have also undertaken due diligence reviews of projects where dikes would be required. Most recently I have participated in some scoping level studies where mining within a lake or very close to a river were part of the plan.

In some instances, the entire orebody is located in the lakebed. In others, the orebody is mainly on land but extends out into the water. Each situation will be unique. In northern Canada, given the number of lakes present, it would be surprising if a new mining project isn’t close to a river or lake somewhere.

Dike concepts consider many factors

Different mining projects may use different styles of dikes, depending on their site conditions. Some dikes may incorporate sheet piling walls, slurry cutoff walls, low permeability fill cores, or soil grouting. There are multiple options available, and one must choose the one best suited for the site.

The following is list of some of the key factors and issues that should be examined.

ESG Issues

One’s primary focus should be on whether building a dike would be socially and environmentally acceptable. If it is not, then there is no point in undertaking detailed geotechnical site investigations and engineering design. One must have the “social license” to proceed down this path.

Water Body Importance: Is there a public use of the water body? It could be a fresh water source for consumption, used for agricultural or fishery purposes, or used as a navigable waterway, etc. Would the presence of the dike impact on any of these uses? Does the water body have any historical or traditional significance that would prevent mining within it?

Lake Turbidity: Dike construction will need to be done through the water column. Works such as dredging or dumping rock fill will create sediment plumes that can extend far beyond the dike. Is the area particularly sensitive to such turbidity disturbances, is there water current flow to carry away sediments?

At Diavik, a floating sediment curtain surrounding the dike construction area was largely able to contain the sediment plume in the lake.

Regional Flow Regime: Will the dike be affecting the regional surface water flow patterns? If the dike is blocking a lake outflow point, can the natural flow regime be maintained during both wet and dry periods?

Location Issues

If there are no ESG issues preventing the use of a dike, the next item to address is the ideal location for it.

Water depth: normally as the dike moves further away from land, both the water depth and dike length will increase. The water depth at the deepest points along the dike are a concern due to the hydraulic head differential created once the interior water pool is pumped out. The seepage barrier must be able to withstand that pressure differential, without leaking or eroding. A low height dike in shallow water may be able to use a simpler seepage cutoff system than a dike in deep water.

Islands: Are there any islands located along the dike path that can be used to shorten the construction length and reduce the fill volumes? Is there a dike alignment path that can follow shallower water zones?

Pit wall setback: Given the size and depth of the open pit, how far must the dike be from the pit crest? Its nice to have 200 metre setback distance, but that may push the dike out into deeper water.

If the dike is too close to the pit, then pit slope failures or stress relaxation may result in fracture opening and increase the risk of seepage flows or catastrophic flooding. The pit wall rock mass quality will be the key determining factor in the setback distance.

Maximizing ore recovery: If the ore zone extends further out into the lake, maximizing ore recovery may require using a steep pit wall along the outer sections of the pit. This may require positioning haulroads with switchbacks along other sides of the pit rather than using a conventional spiral ramp layout.

At Diavik (see image), the A154 north open pit wall was pushed to about 60 metres of the dike to access as much of the A154N kimberlite ore as possible. Haulroads were kept to the south side of the pit.

It may be possible to recover even more ore by pushing out the dike even further. However, this may result in a larger and costlier dike or even require a different style of dike. There will be a tradeoff between how much additional ore is recovered versus the additional cost to achieve that. There will be a happy medium between what makes both technical sense and economic sense.

Design Issues

Once the approximate location of the dike has been identified, the next step is to examine the design of the dike itself. Most of the issues to be considered relate to the geotechnical site conditions.

Lakebed foundation sediments: What does the lakebed consist of with respect to soft sediments? Soft sediments can cause dike settlement and cracking, or mud-waving of fill material.

Will the soft sediments need to be dredged prior to construction, and if so, where do you dispose of this dredge slurry, and what impact will dredging have on the lake turbidity?

Lakebed foundation gravels: Are there any foundation gravel layers that can act as seepage conduits beneath the dike? If so, will these need to be sub-excavated, or grouted, or cut off with some type of barrier wall? Sonic drilling, rather than core drilling, is a better way to identify the presence of open gravel beds.

Upper bedrock fracturing: Is the upper bedrock highly fractured, thereby creating leakage paths? If so, then rock grouting may be required all along the dike path to seal off these fractures.

Major faults: Are there any major faults or regional structures that could connect the open pit with the lake, acting as a source of large water inflow?. At Diavik, we attempted to characterize such structures with geotechnical drilling before construction. Upon review, I understand there was one such structure not identified, which did result in higher pit inflows until it was eventually grouted off.

Water level fluctuations: In a lake or river one may see seasonal water level fluctuations as well as storm event fluctuations. The height of the dike above the maximum water level (i.e. freeboard) must be considered when sizing the dike.

Ice scouring: In a lake or river that freezes over, ice loads can be an important consideration. During spring breakup as the ice melts, large sheets of ice can be pushed around and may scour or damage the crest of the dike. The dike must be robust enough to withstand these forces.

Construction materials available on site: Is there an abundance of competent rock for dike fill? Is there any low permeability glacial till or clay that can be used in dike construction? If these materials are available on site, the dike design may be able to incorporate them. If such materials are not available, then a alternate dike design may be more appropriate, albeit at a cost.

Conclusion

Each mine site is different, and that is what makes mining into water bodies a unique challenge. However many mine operators have done this successfully using various approaches to tackle the challenge.

Even at the exploration stage, while you are still core drilling the orebody through the ice, you can start to collect some of this information to help figure it all out.

The bottom line is that while mining into a water body is not a preferred situation, it doesn’t mean the project is dead in the water. It will add capital cost and environmental permitting complexity, but there are proven ways to address it.

On the opposite side, I have also seen situations where a dike solution was not feasible, so ultimately there are no guarantees that engineers can successfully address every situation. Lets hope your project isn’t one of them.

There could be a 3rd part to this post that discusses issues associated with underground mining beneath bodies of water; however that is not my area of expertise. I would be more than happy to collaborate on a article with someone willing to share their knowledge and experience on that subject.

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Mining Under Lakes – Part 1: Examples

Date: May 28, 2023 Author: Ken Kuchling Comments: 2 Replies

Springpole Project

I recently saw an investor presentation from First Mining Gold about their Springpole Project. The situation is that their open pit is located within a lake and will require the construction of a couple of small cofferdams to isolate the pit area from the lake. The concept is shown in this image.

Over the last couple of years I have been involved in a few early-stage studies for mining projects in which nearby bodies of water play a role in the design. In Canada’s north there are thousands of lakes and rivers, so its not surprising to find mines next to them.

That got me thinking about how many other mines are in the same situation, i.e. projects that may be located very close to, or within, a lake, river, or ocean. Hence I have compiled a short list of a few such mines.

I have been directly involved with some of those in the list, while others are only known to me with limited detail. Some mines I had never heard of before, but their names were provided to me by some Twitter colleagues.

My observation is that building a mine within, or adjacent to, a body of water is nothing new and this has been done multiple times successfully.

Some of these projects may refer to the dams as “dikes”, “cofferdams”, “sea walls” but I assume they are all providing roughly the same function of holding back water for the life of the project. They are not viewed as permanent dams.

This is Part 1 of a two-part blog post. Part 1 provides some examples of projects where water bodies were involved in the design. Part 2 provides a discussion on specific geotechnical and hydrogeological issues that would normally have to be examined with such projects.

Some Lake Mining Examples

The following are some examples of operating mines involving lakes. I have captured a few Google Earth images, unfortunately some have only low resolution vintage satellite imagery.

This is a project I was working on with in 1997 to 2000 while it was still at the design and permitting stage. My role focused on pit hydrogeology and geotechnical as well as mine planning.

The project would require the construction of three dikes in sequence to mine four lakebed kimberlite pipes.

The three dikes were named after the associated kimberlite pipe being mined inside it; A154, A418, and A21.

The first dikes were built in 2002 and the last dike (A21) was completed in 2018.

The total dike length for the three dikes is about 6.2 km.

For those interested in learning a bit more about Diavik, I have posted an earlier article about the open pit hydrogeology there, linked to at " Hydrogeology At Diavik – Its Complicated".

This is a project I was involved with several years ago. The bauxite deposit extends beneath the Suriname River and the goal was to mine as much ore as possible.

Given the flow rates in the river, especially during the wet season, it would be difficult to maintain a cofferdam out into the river.

The shoreline overburden consisted of sands and soft clays, so the decision as made to construct a sheet piling wall along the river bank to protect the pit from river erosion. This was mined out successfully and eventually reclaimed.

Conclusion

As one can see, the idea of mining into a body of water is nothing new. Its not a preferred situation, but it can be done economically and safely. The technical challenges are straightforward, and engineers have dealt with them before. However there also are instances where the design could not economically address the water issue, and thus played a role in the mine not getting built.

If you know of other mines not listed above that have successfully dealt with a water body, please let me know and I can update this blog post.

This concludes Part 1. Part 2 can be read at this link " Mining Under Lakes – Part 2: Design Issues" discusses some of the concerns that engineers need to consider when building a mine in these situations.

Finally, the worst-case scenario is shown in this grainy video of a tin mine (Pantai Remis Mine) pit slope failure. It seems they mined too close to the ocean. Watch to the end, its hard to believe. Its looks like something out of a Hollywood disaster movie.

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The following are my observations on what InSAR is and where it may be going. I am by no means an expert in this technology. I am merely viewing it from the perspective of a mine design engineer.

What is InSAR

An example of a satellite being used is the Sentinel-1, launched in mid-2015 by the European Space Agency. This satellite information is open-source data. It will have a 6 to 12 day revisit cycle in many locations.

The results of an InSAR displacement survey are typically shown as a series of colored data points, typically coloured green for the stable points, trending to yellow and red for points that are moving.

This blog has some example images.

Some Limitations With InSAR

There are some limitations with InSAR, so it can only be part of a monitoring program. These limitations are:

The displacement direction is only measured in the direction of the satellite. Hence one may not know in which direction the movement is occurring. The magnitude of displacement could be underestimated depending on the apparent angle of measurement.

The movement being measured could consist of vertical settlement due to material consolidation and may not be horizontal and related to impending failure.

The displacement magnitude measured on opposite sides of a facility may have different accuracy, depending on the slope orientation versus the line-of-sight.

Areas with heavy vegetation may be difficult to monitor

Areas with heavy or persistent cloud cover can be difficult to monitor.

Areas with snow cover will be difficult to monitor.

The satellite return period may be weekly or every two weeks, so one is not able to analyze daily movements if a situation is critical. If the return visit day has cloud cover, there will be no new satellite data collected.

Areas with on-going construction or tailings deposition will lead to erroneous results.

Due to the line of sight, not all slope failure modes may be detectible (for example piping failure).

Regardless of these limitations, InSAR can still play a role in any monitoring program since it is able to monitor large areas quickly. Consider it as a pre-screening tool, being aware that not all failure modes may be detectible with it.

Discussion

On LinkedIn, one can see numerous posts where independent experts are examining historical InSAR data for recent failures to see whether early movement should have been detected. The results seem to be quite positive in that areas that have failed might have been red-flagged prior to failure.

There are also zones that showed critical displacements but have not failed.

Typically, there are four ways to monitor displacement in pit slopes, tailings dams, heap leach pads, and waste dumps. They are:

Insitu monitoring using embedded instruments, for example slope indicators, extensometers, and settlement gauges. These instruments provide information on what is happening internally within a slope, where actual movement is occurring, and they can be used in warning alert systems.

Surface monitoring using radar (ground based InSAR) systems and survey prisms. These tools measure only surface movements in selected areas, can be monitored as frequently as needed on an automated basis, and integrated into warning alert systems.

Drone or aerial surveys can be used to measure topography and monitor movements over large areas. This method requires a data processing delay (not real time) to derive the movement information, but such surveys can be done as frequently as needed.

InSAR from satellite can be used over very large regions to highlight areas with movement. That should trigger the implementation of one or more of the other monitoring approaches (if not already in place).

Conclusion

A mining site consists of numerous constructed embankments and slopes of all types and heights. Many of these slopes may be creeping and moving all the time – it’s a living beast.

Since InSAR monitoring is done from space, it does not require access to a property. Hence it can be used by third parties or NGO’s to “spy” on facilities of concern anywhere.

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This is Part 2 of the blog post discussing junior mining scams and the sanctioning of those responsible. Part 1 can be found at this link “Junior Mining Shams and Scams – Part 1” and can be read first to get some background.

The lesson is that QP’s signing off on technical information for clients should be proficient in the nature of their work and need to know the reporting rules very well. Some of these incidents involve error and poor judgment, not outright fraud.

These examples involve in-house QP’s that work for a company while others involve independent QP’s that have been contracted by the company.

In most of these cases, any sanctions, if applied, were mainly doled out by the professional engineering or geological associations. The legal courts are often not involved.

Examples (Part 2)

Disclaimers

Many QP’s realize the legal responsibility and liability they have. Hence in 43-101 reports QP’s sometimes attempt to mitigate this by putting in broad disclaimers to limited that liability. If the securities commission notices such disclaimers, they will require that they be removed.

43-101 regulations state that “An issuer must not file a technical report that contains a disclaimer by any qualified person responsible for preparing or supervising the preparation of all or part of the report that

(a) disclaims responsibility for, or limits reliance by another party on, any information in the part of the report the qualified person prepared or supervised the preparation of;

or (b) limits the use or publication of the report in a manner that interferes with the issuer’s obligation to reproduce the report by filing it on SEDAR.“

Conclusion

This ends Part 2 of this blog post. It hopefully highlights the importance of QP’s being knowledgably on the disclosure rules and the technical aspects of what they are hired to do.

Companies should always ensure that only qualified QP’s are used for their project work, even if some of the others might be less expensive. The potential headaches and costs afterwards may override the higher upfront cost.

It should be noted that this Sham and Scam blog does not discuss the other less than desirable junior mining traits seen from time to time. These relate to; insider trading; abuse of micro-penny founder shares; and the ever present “pump & dump” schemes.

In closing, if anyone is aware of other good examples of QP issues, please provide any links to any publicly disclosed information. I can add them to the blog post.

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Recently (in April 2024) Red Pine Exploration issued several press releases highlighting that some assays in their geological database were found to have been manipulated. Numerous assays input into their database did not match the original lab certificates. Is this another mining scam?

Raise the Red Flag

The focus of this blog is on the types of activities that raised the red flags in the past. I am less interested in naming the people responsible, although the associated web links do provide more detail on the events.

Part 1 has examples mainly involving company management or in-house QPs. Part 2 will provide other examples where QP’s have been held to account for their poor quality of their work.

Examples (Part 1)

The following are presented in no particular order. Some of these may still be at the allegation or investigation stage. This blog post can be updated when the issue is eventually resolved.

Conclusion

This ends Part 1 of this blog post. Part 2 will continue with a few more examples, specifically involving Qualified Persons, and can be found at this link Junior Mining Shams and Scams – Part 2

Discipline is typically rendered in two ways; the Security Commission may prosecute; or the professional associations will provide sanctions. Typically, the professional association penalties are more lenient, consisting of a temporary license suspension and the payment of legal fees.

If readers have any other examples of such junior mining stories, email them to me at kjkltd@rogers.com and I can add them to this blog.

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The pit design and phases were completed at the end of Part 1, and we can move on to scheduling.

4. Production Scheduling

Two dilution approaches are common. One can either construct a diluted block model; or one can apply dilution afterwards in the production schedule. I have used both approaches at different times.

The production schedule must be on a diluted basis, since that represents what the processing plant will actually see.

Generally, two different production schedules must be created: (i) a Mining schedule, and (ii) a Processing schedule. In some instances, they may be one and the same schedule. However, if any ore stockpiling is done, then the Mining schedule will be separate from the Processing schedule.

The Mining schedule shows ore going directly to the plant and ore going into the stockpiles. The Processing schedule will show ore delivered directly from the mine and ore reclaimed from stockpiles. Building stockpiles and pulling ore from stockpiles are two independent activities.

Scheduling can be done with variable time periods. Perhaps the schedule is generated using monthly time periods, or quarters, or years.

Once the schedules are finalized, they are normally reviewed by the client for approval. The strip ratio and ore grade profile by date are of interest. One may then be asked to look to at different stockpiling approaches to see if an NPV (i.e. head grade) improvement is possible.

One can stockpile lower grade ore and feed the plant with better grade by mining at a higher rate with more equipment. One might need to examine iterative schedules of that type.

Sometimes one must take two steps backwards and re-design some of the initial pit phases to reduce waste stripping or improve grades. Then one would run the schedules again until getting one that satisfies everyone.

Now that the schedule is complete, we can write up the Chapter 16 text up to page 15. We’re getting closer to the end.

5. Site Layout Design

First there is a need for a waste balance. This defines how much mined overburden or waste rock will be needed to build haulroads, laydown pads, and tailings dams. Then the remaining waste volume must be placed into waste dumps.

Hopefully the tailings engineers have finished their tailings dam construction sequence by this time to provide their rockfill needs (although unlikely if you only gave them the production schedule two days ago).

The mining engineers will size the various waste dumps to their required capacity. Then they can lay out the mine haulroads from the pit ramps exits to the ore crusher, the ore stockpiles, and to each waste dump.

That’s it for the site layout input. Add another 2 pages to Chapter 16. Now the mining engineers can look at the mining equipment fleet.

6. Fleet Sizing and Mining Manpower

The last task for the mine engineer in Chapter 16 is estimating the open pit equipment fleet and manpower needs. The capital and operating costs for the mining operation will also be calculated as part of this work, but the costs are only presented in Chapter 21.

The primary pieces of equipment are the haul trucks. They can range in size from 30 tonnes to 350 tonnes and anywhere in between.

Typically, the larger the equipment is, the lower the unit cost ($/t), especially in jurisdictions where labor costs are high. One doesn’t want a mine fleet with only 5 trucks nor one with 50 trucks. So where is the happy medium?

The cycle time must be calculated for each material type going to each destination. As the pit deepens, the cycle times increase.

The total trucking hours will vary year to year as waste stripping tonnages change or haul cycle times increase in deeper pits. The required truck fleet may vary year to year. Keeping haul distance short and haul cycles quick is the key to a lower cost mine.

The mine engineers undertake the productivity calculations for loading equipment to estimate annual operating hours, and the required shovel / loader fleet size.

The support equipment needs (dozers, graders, pickups, mechanics trucks, etc.) are typically fixed. For example, 2 graders per year regardless if the annual tonnages mined fluctuate.