Articles tagged with: Mining

Hard Rock Continuous Cutting – Reducing Drill & Blast

Date: December 20, 2021 Author: Ken Kuchling Comments: 3 Replies

Several years ago I worked in the Saskatchewan potash industry where I grew my appreciation for continuous mining systems. Some of the key benefits were the high productivity per man-hour and the safe operating conditions. On a 12 hour nightshift, with a crew of 16 people we could mine over 9,000 tonnes of ore. Productivity is likely even higher now with the larger machines. Therefore, since that time, I have always kept an eye out for when similar technology can be applied in hard rock mining.

One of the research areas we are seeing these days is the development of continuous cutting technology for hard rock mine development. The idea is to replace the conventional drill & blast approach with something more efficient and safer. No need to deal with explosives, noxious gases, shatter the wall rock, or have personnel scale their way under loose conditions.

Recently I was contacted by someone associated with Robbins asking if I was aware of their MDM5000 mine development technology. I wasn’t aware of it, but I wondered if there finally is a light at the end of the tunnel.

4-rotor miner

In Saskatchewan potash the entire mining operation relies on track-mounted continuous miner technology. The miners are connected directly to the shaft area using a network of conveyors, up to 10 km worth of conveyor.

The potash miners are able to undertake both development work and production mining whilst connected to conveyor.

From time to time they will rely on shuttle cars, scooptrams, or grasshopper conveyors for small development tasks. A roadheader may also be available for localized ground stabilization.

All of this mechanical cutting is done in potash (sylvinite rock), considered a soft rock with a compressive strength of 20-40 MPa. For comparison, hard rock can have compressive strengths exceeding 250 MPa.

Two approaches in hard rock

Hard rock piloting trials are underway at a few operations, using different vendors with different equipment. These trials include companies like Komatsu, Robbins, Sandvik, and Epiroc. Each are testing their own equipment and cutting technologies.

The hard rock cutting approaches generally fall into two camps.

Roadheader style

There are the track mounted roadheader style cutters, typically with a movable arm used to shape the excavation. Any excavation shape is possible.

Tunnel Borer Style

Then there are the tunnel borer styles, where the machine propels itself with hydraulic shoes and the opening shape is based on the machine configuration. Normally a circular shaped opening is the result.

The roadheader style cutter is normally restricted to softer rock (< 50 MPa) while the tunnel borer is capable of much harder rock (200-250 MPa).

Robbins MDM5000

One system that peaked my interest is the Robbins MDM5000 because it can both cut hard rock and create a rectangular opening. Speaking with the vendor, this unit uses shoes to propel itself while cutting a rectangular shaped opening about 5m x 4.5m in size (see image). A rectangular shape is preferred to the circular opening whereby the floor invert must be backfilled to provide a level operating surface.

MDM5000 opening shape

The MDM5000 configuration and advance rate allows the installation of ground support and utilities behind the advancing face. Water sprays and dust collectors help to maintain visibility and air quality at the working face.

The Robbins unit is best suited for long straight drives although reportedly it can turn curves with 450-m radius. Tighter turns may be feasibility in the future by tweaking the machine design. Interestingly driving a drift uphill is easier than driving downhill due to the more efficient cuttings removal capability.

The MDM5000 unit can be linked to a Robbins conveyor system, which includes a head drive and an extensible belt storage unit that can feed out the conveyor belt as the machine advances forward. This operation is similar to that used in the Saskatchewan potash industry.

Robbins MDM5000

A Robbins machine has been in operation at the Fresnillo mine for several years with favorable results (check out the link here).

One nice thing about disc cutters is that they can accommodate variable rock types (softer and harder) while road headers can be hindered by hard rock zones. Roadheaders require a bit more consistency in rock quality.

Continuous cutting systems, such as the MDM5000, can be combined with vertical conveying technology, leading to safe and rapid development (>200m per month) in the right situation.

Conclusion

No doubt that we will eventually see more application of hard rock continuous cutting technology in the right situations. The Stillwater Mine in Montana has been using a Robbins tunnel borer for years for development tasks.

No matter how well these new systems perform, there will still be some limitations. This means the conventional drill and blast development will always be around. However, keep your eyes on this mining technology sector as improvements in cutter head design and equipment mobility continue to evolve.

Coincidentally International Mining (Nov-Dec 2021) recently published an in-depth article on the various systems being looked at. The link is here.

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Mining Financial Modeling – Make it Better!

Date: October 20, 2021 Author: Ken Kuchling Comments: Leave a reply

In my view one thing lacking in the mining industry today is a consistent approach to quantifying and presenting the risks associated with mining projects. In a blog written in 2015 titled “Mining Cashflow Sensitivity Analyses – Be Careful” I discussed the limitations of the standard “spider graph” sensitivity analysis often seen in Section 22 of 43-101 reports.

This blog post expands on that discussion by describing a better approach. A six-year time gap between the two articles – no need to rush I guess.

This blog summarizes excerpts from an article written by a colleague that specializes in probabilistic financial analysis. That article is a result of conversations we had about the current methods of addressing risk in mining. The full article can be found at this link, however selected excerpts and graphs have been reprinted here with permission from the author.

The author is Lachlan Hughson, the Founder of 4-D Resources Advisory LLC. He has a 30-year career in the mining/metals and oil gas industry as an investment banker and a corporate executive. His website is here 4-D Resources Advisory LLC.

Excerpts from the article

Mining can be risky

“The natural resources industry, especially the finance function, tends to use a static, or single data estimate, approach to its planning, valuation and M&A models. This often fails to capture the dynamic interrelationships between the strategic, operational and financial variables of the business, especially commodity price volatility, over time.”

“A comprehensive financial model should correctly reflect the dynamic interplay of these fundamental variables over the company life and commodity price cycles. This requires enhancing the quality of key input variables and quantitatively defining how they interrelate and change depending on the strategy, operational focus and capital structure utilized by the company.”

“Given these critical limitations, a static modeling approach fundamentally reduces the decision making power of the results generated leading to unbalanced views as to the actual probabilities associated with expected outcomes. Equally, it creates an over-confident belief as to outcomes and eliminates the potential optionality of different courses of action as real options cannot be fully evaluated.”

Monte Carlo can be risky

“Fortunately, there is another financial modeling method – using Monte Carlo simulation – which generates more meaningful output data to enhance the company’s decision making process.”

Monte Carlo simulation is not new. For example @RISK has been available as an easy to use Excel add-in for decades. Crystal Ball does much the same thing.

“Dynamic, or probabilistic, modeling allows for far greater flexibility of input variables and their correlation, so they better reflect the operating reality, while generating an output which provides more insight than single data estimates of the output variable.”

“The dynamic approach gives the user an understanding of the likely output range (presented as a normal distribution here) and the probabilities associated with a particular output value. The static approach is relatively “random” as it is based on input assumptions that are often subject to biases and a poor understanding of their potential range vs. reality (i.e. +/- 10%, 20% vs. historical or projected data range).”

“In the case of a dynamic model, there is less scope for the biases (compensation, optionality, historic perspective, desire for optimal transaction outcome) that often impact the static, single data estimates modeling process. Additionally, it imposes a fiscal discipline on management as there is less scope to manipulate input data for desired outcomes (i.e. strategic misrepresentation), especially where strong correlations to historical data exist.”

“It encourages management to consider the likely range of outcomes, and probabilities and options, rather than being bound to/driven by achieving a specific outcome with no known probability. Equally, it introduces an “option” mindset to recognize and value real options as a key way to maintain/enhance company momentum over time.”

Image from the 4-D Resources article

“In the simple example (to the right), the financial model was more real-world through using input variables and correlation assumptions that reflect historical and projected reality rather than single data estimates that tend towards the most expected value.”

“Additionally, the output data provide greater insight into the variability of outcomes than the static model Downside, Base and Upside cases’ single data estimates did.”

The tornado diagram, shown below the histogram, essentially is another representation of the spider diagram information. ie.e which factors have the biggest impact.

“The dynamic data also facilitated the real option value of the asset in a manner a static model cannot. And the model took less time to build, with less internal relationships to create to make the output trustworthy, given input variables and correlation were set using the @RISK software options. This dynamic modeling approach can be used for all types of financial models.”

To read the full article, follow this link.

Conclusion

image from 4-D Resources article

Improvements are needed in the way risks are evaluated and explained to mining stakeholders. Improvements are required given increasing complexity in the risks impacting on decision making.

The probabilistic risk evaluation approach described above isn’t new and isn’t that complicated. In fact, it can be very intuitive when undertaken properly.

Probabilistic risk analysis isn’t something that should only be done within the inner sanctums of large mining companies. The approach should filter down to all mining studies and 43-101 reports.

It should ultimately become a best practice or standard part of all mining project economic analyses. The more often the approach is applied, the sooner people will become familiar (and comfortable) with it.

Mining projects can be risky, as demonstrated by the numerous ventures that have derailed. Yet recognition of this risk never seems to be brought to light beforehand.

Essentially all mining projects look the same to outsiders from a risk perspective, when in reality they are not. The mining industry should try to get better in explaining this.

Management understandably have a difficult task in making go/no-go decisions. Financial institutions have similar dilemmas when deciding on whether or not to finance a project. You can read that blog post at this link “Flawed Mining Projects – No Such Thing as Perfection“

UPDATE: For those interesting in this subject, there is a follow up article by the same author published in January 2022 titled “Using Dynamic Financial Modeling to Enhance Insights from Financial Reports!“.

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Gold Exploration Intercepts – Interesting or Not?

Date: July 7, 2021 Author: Ken Kuchling Comments: Leave a reply

As a mining engineer, I am not usually called in to review a project that is still at the exploration stage. This is normally the domain of the geologist. However from time to time I have an interest in better understanding the potential of an early stage mining project. This could be on behalf of a client, for investing purposes, or just for personal curiosity.

At the exploration stage one only has drill interval data from news releases to examine. A resource estimate may still be unavailable.

The drill data can consist of long intervals of low grade or short intervals of high grade and everything in between. What does it all mean and what can it tell you?

The following describes an approach I use for examining early stage gold deposits. The logic can be expanded to other metals but would take more effort.

My focus is on gold because it has been the predominant deposit of interest over the last few years, and it is simpler to analyze quickly.

We All Like Scatter Plots

My approach relies on a scatter plot to visual examine the distribution of interval thicknesses and gold grades. Where these data points cluster or how they are distributed can provide some prediction on the overall economic potential of a project. Its not a guarantee, but only an indicator.

I try to group the analysis into potential open pit intervals (0 to 200 metres from surface) and potential underground (deeper than 200m) intervals. This is because a 20m wide interval grading 2.0 g/t is of economic interest when near surface, however of less interest if occurring at a 300m depth.

Using information from a news release, I create a two column Excel table of highlighted intervals and assay grades. The nice thing about using intervals is that the company has provided their view of the mineable widths.

If one is provided with raw 1-metre assay data you would have to make that decision, which can be a significant task. The company has already helped make those decisions.

Normally I tend to use the highlighted sub-intervals and not the main intervals since issues with grade smoothing can occur.

A large interval containing multiple high grade sub-intervals may see some grade smoothing.This happens if the grade between sub-intervals is very low grade or even waste. It takes a fair bit of effort to assess this for each drill hole, hence it is easier to work with the sub-intervals.

I have an online calculator (Drill Intercept Calculator) that lets you assess if grade smoothing is occurring.

When inputting the interval thickness, I prefer to use the true thickness and not the interval length. If the assay information does not specify true thicknesses, then I simply multiple the interval length by 0.70 to try to accommodate some possible difference in width. Its all subjective.

The assays can consist of Au (g/t) or AuEq (g/t) if more metals are present. If very high grades are encountered (greater than 10 g/t) I simply input 9.9 g/t into the Excel table so they fit onto my scatter plot. Extremely high grades can be sporadic and localized anyhow.

Finally I need to decide whether the project is located in a region of high operating cost, low cost or about average costs. High costs could be with a fly in/ fly out, camp operation, with diesel power, and seasonal access.

A low cost operation could be in temperate climate, with good access to local infrastructure, water, labour, and grid power. An average operation would be somewhere in between the two. Its just a gut feel.

Results

The following charts describe how it works, using randomly generated dummy assay data in this example.

In the Average cost scenario (left chart) the points are equally scattered both above and below the Likely Economic line. As one moves to a high-cost situation (middle chart) the curve moves upwards and more drill intervals now fall below the economic line.

This would give me an unfavorable impression of the project. The third graph is the Low-Cost scenario and one can see that more assays are now above the line. Hence the same project located in a different region would yield a different economic impression.

The economic boundaries (dashed lines) presented in the plots are based on my personal experience and biases. Other people may have different criteria to define what they would view as economic and uneconomic intervals.

Conclusion

There is not much that a layperson person can do with the multitude of exploration data provided in corporate news releases. However, by aggregating the data one can get a sense of where a gold project positions itself economically. The more data points available, the more that one can gather from the plot.

One should prepare separate plots for shallow and deep mineralization or for different zones and deposits on a property rather than aggregate everything together.

It may be possible to undertake a similar analysis with different commodities if one can summarize the assays into a single equivalent value or NSR dollar value. Unfortunately, exploration news releases don’t often include the poly-metallic interval equivalent grade or NSR value. Calculating these manually would add an extra step in the process, however it can be done.

If you want to try out the concept, I have posted the online spreadsheet to my website at the link Drill Intercept Potential where you can input Au exploration data of interest. Unfortunately, you cannot save your input data so it’s a one time event. Anyone can do this – its not rocket science.

Let me know your thoughts, suggestions, or other ways to play with news release data.

If your project contains metals other than gold, then the rock (or ore) value will be based on the revenue from a combination of metals. How to approach this in discussed in another blog post titled “Ore Value Calculator – What’s My Ore Worth?“

Great Bear Resources Example

Interesting the Great Bear Resources website allows one to download a data file with all their exploration intervals. I have not seen another company provide this level of transparency. I download their data file of over 1300 intervals and sub-divided them into major intervals and sub-intervals (more ore less). The two plots below show the outcome.

The graph on the left is the sub-intervals showing that many points are above the “economic” line. There are numerous data points along the top axis, indicating many sub-intervals at >10 g/t at widths ranging from 1 to 15 metres. The graph on the right shows the major intervals. While there are still many along the top axis, there are now more along the 40m width but at grades ranging from 1 g.t to 6 g/t.

One would surmise from these plots that overall there are many intervals above the line in the economic zone, showing the potential of the project. It also shows that GBR have encountered many intervals likely sub-economic, but that’s the exploration game.

Great Bear Resources data

Examining polymetallic drill results in a similar manner isn’t as simple as this. The mutiple metals of interest make the calaculations a bit more complex. Another blog post discusses the approach I use for polymetallic, at this this link “Polymetallic Drill Results – Interesting or Not?“

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Potash Stories from 3000 Feet Down – Part 2

Date: December 9, 2020 Author: Ken Kuchling Comments: 2 Replies

This is Part 2 of my story about working at a potash mine in Saskatchewan. If you haven’t read Part 1, here is the link to it “Potash Stories from 3000 Feet Down – Part 1“. It’s best to read it first.

Flooded Russian Potash Mine

As mentioned in Part 1, water seepage and potential leaks were always an operational concern. There were essentially two main fears; (i) that a borer would tunnel into an unforeseen collapse zone (i.e. an ancient sink hole) or (ii) that long term deformations in the mine would result in cracking of the overlying protective salt layer resulting in water inflow.

Any time wet spots were seen on the roof, the mining engineers or geologists were called out to take a look.

Sometimes the wet area was due to pockets of interstitial moisture. Other times it might have just been oil from a blown hydraulic hose on the borer. Wet spots all look the same when covered in dust.

Water ingress was such a concern in that an unmined pillar of 100 ft. would be left around all exploration core holes. These 3,000 ft. holes were supposedly plugged after drilling but you could never be certain of that. Furthermore, you couldn’t be certain of their location at potash depth. Hence, we didn’t want to mine anywhere close to them.

The process plant also had several water injection wells whereby excess water was injected into geological formations deep below the potash level. We left a 700 ft. pillar around these injection wells.

Carnallite is a magnesium salt that we encountered in some areas of the mine. It was weaker than the halite, resulting in more rapid room closure and deteriorating ground conditions. It was also hydroscopic and could absorb moisture out of the air. Sometimes we would water the underground travel ways to mitigate dust issues. With the resulting high humidity sometimes the carnallite areas might start to drip water. This resulted in another call to the engineers to come out and investigate.

Working on a production crew brings new learnings.

My period as a production foreman was great. When first assigned to this role, I was less than enthusiastic but when it was over 6 months later, I appreciated the opportunity. As a production foreman, we had a crew of 15 to 20 people responsible for mining 9,500 tons over a 12 hour shift. There was one foreman in the underground dispatch room and one face foreman travelling around supervising the borers and inspecting conveyors.

Ore grade control was a key responsibility of both the borer operator and mine foreman. The goal for the borer operator was to cut the roof even with the top of the high grade potash bed. The goal for the foreman was to ensure the operator was maintaining his goal. However, when looking at the potash face all the beds generally looked the same, especially when they are dusty.

Feel the glow

One key distinction was that the middle low grade bed had a higher percentage of insol clays. It was used as a marker bed. You would take your hardhat lamp and run it down against the wall. In the upper high grade potash bed, the cap lamp would have a halo, not unlike like the glowing salt rock lamps you see in stores. In the marker bed the halo would disappear, like putting a lamp against a rock wall.

Thus using the lamp you could identify the top of the marker bed, which was supposed to be kept 3.5 to 4 ft. off the floor. If borer operators were consistently more than 12 “ inches off optimal level, they could be written up (i.e. reprimanded). This was one of my tasks as foreman and I always hated doing it.

Lasers were used to guide the borer in a straight line but the marker bed was used for vertical control. Nowadays the use of machine mounted ore grade monitors is an option. By the way, if you’re looking at a potash project, be aware of the grade units being reported. A previous blog discusses this “Potash Ore Grades – Check the Units”.

The underground conveyor network consisted of 32” conveyors, feeding onto 42” conveyors, feeding on to 48”or 54” conveyors. Typically the length of the larger conveyors was in the range of a mile (5,000-6,000 ft.). The conveyors were all roof mounted, allowing for easy clean up underneath. Roof mounting was critical. Even some of the 600 hp conveyor drive stations were roof mounted, structure and all.

Conveyors were the reason for my one and only safety incident.

4-rotor borer side pass

First a little background. The underground ore storage capacity at K1 was about 3,000 tons. If the underground bins were filled anytime during a shift, the entire conveyor system would automatically trip off; all 10 miles of it. If you happened to have a mile long conveyor shut off while it was loaded to the brim with ore, good luck starting it up again.

If this happened, there were two choices. You could bring in the operators from the borers to start shovelling off the conveyor until it was unloaded enough to re-start. This option went over like a lead balloon with the crew.

The other not so great option was to use a scooptram to lift the belt counterweight up to reduce the belt tension. This allows the drive pulleys to start spinning. Then by lowering the counterweight back down perhaps the drives can inch the belt along. The idea being that possibly the momentum of the moving mass of potash would keep it moving. The downside is that you could break the belt. There was nothing worse than having to tell the cross shift they have both a stalled conveyor and a broken belt. Have a good shift people.

At 4 a.m. working as night shift face foreman, I knew the underground bins were nearing full. Driving along I saw that the mainline conveyor was full and spilling over the sides. A worst case conveyor shutdown was imminent. I called the dispatch office to ask why he hasn’t been shutting down borers and conveyors but there was no answer.

After several unanswered calls I started to hustle back to dispatch. I remember driving alongside the conveyor thinking “don’t shut off, don’t shut off”. Just then a heavy duty service vehicle pulled out of a cross-cut and I plowed right into it. I wasn’t going very fast (~20 km), but when a Toyota Land Cruiser hits a steel plate truck, the Toyota is the loser. The front end crumpled, and I later was told that there was major frame damage.

I’m not sure why the other driver didn’t see my lights. I’m also certain his lights were not on. Nevertheless, I did get written up for this incident with a reprimand for my personnel file. The reprimander had become the reprimandee. I still insist that the incident wasn’t my fault.

The Land Cruiser laid around the shaft for a few days until it could be hoisted up to surface. Everyone coming on shift got to see it . Once it was hoisted up, it laid outside the headframe for a few more days for all the surface workers to see. Ultimately, this incident resulted in the underground miners giving me the nickname “Crash”.

This is where I’ll end the potash story.

Conclusion

Saskatchewan potash is a unique mining situation. It has its own history and mining method. The people are great and it’s a great place to learn the difference between engineering school and real life.

Mine Engineering Dream Team

By the way, I also learned that small town Saskatchewan loves their senior hockey league (20-30 year age range). The local towns compete all winter; sometimes combatively. It was Esterhazy vs. Langenburg vs. Whitewood vs. Rocanville vs. Stockholm vs. Moosomin.

One of the first questions asked in my job interview at Mosaic was if I played hockey. You see, the ideal candidate for the job would have been an ex-NHL player, preferably an enforcer, who is also a mining engineer. Gotta stack the local team.

If you enjoy reading these types of stories about working as an engineer, there is an entire book on the subject, written by a former colleague of mine. You can learn a bit more about this civil engineer’s experiences working around the global at this link “Life as an Engineer – Read All About It”

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Two Mining Innovations – Load Scanning & Vehicle Tracking

Date: October 29, 2020 Author: Ken Kuchling Comments: 4 Replies

The mining industry is always on the lookout for new innovations as it strives to keep up with other industries. In that light, periodically I like to highlight new technologies that I become aware of. I’m trying to help spread the word about them, which in turn may assist them in their on-going growth and development.

In this article I want to briefly describe two hardware / software companies that are working on technologies related to mine equipment productivity. In no particular order, the two companies are Loadscan and SedimentIQ. SedimentIQ is more of a startup than Loadscan which has a longer operating track record.

These technology companies are both targeting the open pit and underground markets, looking to provide simpler and less costly productivity solutions. Their technologies may be well suited for small to mid tier mines that cannot afford or don’t require the comprehensive Minestar type fleet management systems.

For the record, I get no fee or commission for promoting these companies; I just like what they are doing.

Loadscan

Loadscan has been around for a few years, but I only became aware of it recently. It is a technology that allows the rapid assessment of the load being carried in truck. It does not rely on the use of load cells or weigh scales to measure the payload.

Instead Loadscan uses a laser scanner and proprietary software to three dimensionally map the surface of the truck payload and then calculate its volume. The results will indicate how consistent and optimal truck loading is volumetrically. One can then calculate the payload tonnage by applying a bulk density.

The Loadscan technology will assess whether trucks are being over or under loaded, whether the loads are off-centre, or whether there is excess carryback on the return trip.

Successive truck payloads can be tracked manually or with RFID tags. A cloud based database and web based dashboard are used to store the data and summarize it. The output can include an image of each individual load.

What is interesting about this technology is that it is simple to install in an operation. It does not require retrofitting of a truck.

Results are immediate. Loadscan provided an example where a message readout board can let the shovel operator immediately know how well each truck was loaded, resulting in improved education and better performance efficiency.

One can also assess how much better shovel bucket factors are in well blasted rock versus in blocky rock.

The Loadscan system is already in use in several mines globally. The vendors can provide more technical data if you need it.

Their website is https://www.loadscan.com/

SedimentIQ

SedimentIQ is a new smartphone vehicle tracking platform that is trying to establish itself. Their proposed technology makes use of a phone’s built-in GPS, Bluetooth, and accelerometer to track vehicle operation. The phone’s sensor can measure vibrations produced by an operating truck or loader.

Vibration is a fingerprint of a vehicle’s activity. Therefore using machine learning, the SedimentIQ app can produce an “activity score” that decides whether a machine is parked, idling, or performing productive work. The phone is not connected to the machine diagnostics system, so its very easy to install, only needing a power source.

The system will be able to be used on any vehicle, including trucks, drills, loaders, graders, dozers, etc. The system has the capability to monitor equipment location and speed.

In an open pit environment it uses the phone’s GPS to monitor vehicle location. In an underground setting the phone reads inexpensive Bluetooth beacons mounted along the side walls to track location.

The app will identify delay and downtime based on equipment vibration levels. The system currently requires no interaction with the operator, working in the background. Hence it will not identify the cause of delay (i.e. blasting delay, breakdown, inter-equipment delay, etc). I would expect that in the future they could add a feature for the operator to tag delay types on the touch screen.

The SedimentIQ software will aggregate the cycle time and delay information and upload it in real time to a cloud based database. A web-based dashboard allows anyone with access to view the real time production data graphically or export it to Excel.

The SedimentIQ platform is less expensive than high end fleet management software. Although it may not provide all the bells and whistles of the high end software, it may deliver just what you need to monitor productivity in your mining operation. It relies on relatively inexpensive smart phones that are locked to the application.

I recall as a mining student doing time studies. I rode the shift crew bus with pencil in hand, timing the travel from the mine dry to the various shovels to measure start up times. I recall sitting with a stopwatch timing shovel buckets and truck loading times. Both of these tasks can be done for every shift, every truck by equipping the crew bus and mine trucks with the SedimentIQ tech.

The platform is currently being tested at a couple of trials mines and the founders are looking for more mines willing to adopt and further refine their technology. Lets hope they can make a successful go of it.

The website is https://sedimentiq.com/.

Conclusion

Both of these innovative technologies can provide useful information to open pit and underground mine operations. They are in the growth stage, looking for wider adoption. Input from users, whether positive or negative, will assist them with on-going development and enhancements. Their websites obviously have more on what their technology offers, including presentations, white papers, and case studies.

It would be nice to meld these two technologies in some way to allow the SedimentIQ cycle times to also track payloads.

Check them out. Try them out.

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Are Engineers Too Pessimistic

Date: September 16, 2020 Author: Ken Kuchling Comments: 1 Reply

Geological colleagues have often joked that engineers are a pessimistic lot; they are never technically satisfied. The engineers will fire back that geologists are an overly optimistic lot; every speck of mineralization makes them ecstatic. Together they make a great team since each cancels the other out.

In my opinion engineers are often pessimistic. This is mainly because they have been trained to be that way. Throughout my own engineering career I have been called upon many times to focus on the downsides, i.e. what can happen that we don’t want to happen.

It starts early and continues on

This pessimism training started early in my career while working as a geotechnical engineer. Geotechnical engineers were always looking at failure modes and the potential causes of failure when assessing factors of safety.

Slope failure could be due to the water table, excess pore pressures, seismic or blast vibrations, liquefaction, unknown weak layers, overly steepen slopes, or operating error. As part of our job we had to come up with our list of negatives and consider them all. The more pessimistic view you had, the better job you did.

This training continued through the other stages of a career. The focus on negatives continues in mine planning and costing.

For example, there are 8,760 hours in a year, but how many productive hours will each piece of equipment provide? There will delays due to weather conditions, planned maintenance, unplanned breakdowns, inter-equipment delays, operator efficiency, and other unforeseen events. The more pessimistic a view of equipment productivity, the larger the required fleet. Geotechnical engineers would call this the factor of safety.

In the more recent past, I have been involved in numerous due diligences. Some of these were done for major mining companies looking at acquisitions. Others were on behalf of JV partners, project financiers, and juniors looking at acquisitions.

When undertaking a due diligence, particularly for a major company or financier, we are not hired to tell them how great the project is. We are hired to look for fatal flaws, identify poorly based design assumptions or errors and omissions in the technical work. We are mainly looking for negatives or red flags.

Often we get asked to participate in a Risk Analysis or SWOT analysis (Strengths-Weaknesses-Opportunities-Threats) where we are tasked with identifying strengths and weaknesses in a project.

Typically at the end of these SWOT exercises, one will see many pages of project risks with few pages of opportunities.

The opportunities will usually consist of the following cliches (feel free to use them in your own risk session); metal prices may be higher than predicted; operating costs will be lower than estimated; dilution will be better than estimated; and grind size optimization will improve process recoveries.

The project’s risk list will be long and have a broad range. The longer the list of risks, the smarter the review team appears to be.

Investing isn’t easy

After decades of the training described above, it becomes a challenge for me to invest in junior miners. My skewed view of projects carries over into my investing approach, whereby I tend to see the negatives in a project fairly quickly. These may consist of overly optimistic design assumptions or key technical aspects not understood in sufficient depth.

Most 43-101 technical reports provide a lot of technical detail; however some of them will still leave me wanting more. Most times some red flags will appear when first reviewing these reports. Some of the red flags may be relatively inconsequential or can be mitigated. However the fact that they exist can create concern. I don’t know if management knows they exists or knows how they can mitigate them.

It has been my experience that digging in a data room or speaking with the engineering consultants can reveal issues not identifiable in a 43-101 report. Possibly some of these issues were mentioned or glossed over in the report, but you won’t understand the full extent of the issues until digging deeper.

43-101 reports generally tell you what was done, but not why it was done. The fact I cannot dig into the data room or speak with the technical experts is what has me on the fence. What facts might I be missing?

Statistics show that few deposits or advanced projects become real mines. However every advanced study will say that this will be an operating mine. Many projects have positive feasibility studies but these studies are still sitting on the shelf. Is the project owner a tough bargainer or do potential acquirers / financiers see something from their due diligence review that we are not aware of? You don’t get to see these third party reviews unless you have access to the data room.

My hesitance in investing in some companies unfortunately can be penalizing. I may end up sitting on the sidelines while watching the rising stock price. Junior mining investors tend to be a positive bunch, when combined with good promotion can result in investors piling into a stock.

Possibly I would benefit by putting my negatives aside and instead ask whether anyone else sees these negatives. If they don’t, then it might be worth taking a chance, albeit making sure to bail out at the right time.

Often newsletter writers will recommend that you “Do your own due diligence”. Undertaking a deep dive in a company takes time. In addition I’m not sure one can even do a proper due diligence without accessing a data room or the consulting team. In my opinion speaking with the engineering consultants that did the study is the best way to figure things out. That’s one reason why “hostile” due diligences can be difficult, while “friendly” DD’s allow access to a lot more information.

Conclusion

Sometimes studies that I have been involved with have undergone third party due diligence. Most times one can predict ahead of time which issues will be raised in the review. One knows how their engineers are going to think and what they are going to highlight as concerns.

Most times the issue is something we couldn’t fully address given the level of study. We might have been forced to make best guess assumptions to move forward. The review engineers will have their opinions about what assumptions they would have used. Typically the common comment is that our assumption is too optimistic and their assumption would have been more conservative or realistic (in their view).

Ultimately if the roles were reversed and I were reviewing the project I may have had the same comments. After all, the third party reviewers aren’t being hired to say everything is perfect with a project.

The odd time one hears that our assumption was too pessimistic. You usually hear this comment when the reviewing consultant wants to do the next study for the client. They would be a much more optimistic and accommodating team.

To close off this rambling blog, the next time you feel that your engineers are too negative just remember that they are trained to be that way. If you want more positivity, hang out with a geologist (or hire a new grad).

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Vertical Conveyors Give Mining a Lift

Date: August 24, 2020 Author: Ken Kuchling Comments: 2 Replies

There are not many things that are novel to me after having worked in the mining industry for almost 40 years. However recently I came across a mining technology that I had heard very little about. It’s actually not something new, but it has never been mentioned as a materials handling option on any project that I am aware of.

That innovative technology is vertical conveying. Not long ago I read about a vertical conveyor being used at the Fresnillo underground mine, hoisting 200 tph up from a depth of 400 metres and had a capital cost of $12.7 million.

I was aware of steep angle conveyors being used in process plants. However they tended to be of limited height and have idlers and hardware along their entire length. Vertical conveyors are different from that.

After doing a bit of research, I discovered that vertical conveyors have been used since the 1970’s. Their application was mainly in civil projects; for example in subway construction where one must elevate rock from the excavation level up to street level. The mining industry is taking vertical conveyors to the next level.

I have never personally worked with vertical conveyors. Therefore I am providing this discussion based on vendor information. My goal is to create awareness to readers so that they might consider its application for their own projects.

How vertical conveying works

The background information on vertical conveying was provided to me by FKC-Lake Shore, a construction contractor that installs these systems. FKC itself does not fabricate the conveyor hardware. A link to their website is here.

The head station and tail station assemblies are installed at the top and bottom of a shaft. The conveyor belt simply hangs in the shaft between these two points. There is no need for internal guides or hardware down the shaft. The conveyor belting relies on embedded steel cables for tensile strength and pockets (or cells) to carry the material.

The Pocketlift conveyor system is based on the Flexowell technology. This has been advanced for deep underground applications with a theoretical lift height of 700 metres in one stage. The power transfer is achieved by two steel cord belts that are connected with rigid cross bars. The ore is fed into rubber pockets, which are bolted onto the cross bars. The standard Pocketlift can reaches capacities up to 1,500 m3/h and lift heights up to 700 m, while new generations of the technology may achieve capacities up to 4,000 m3/h.

The FLEXOWELL®-conveyor system is capable of running both horizontally and vertically, or any angle in between. These conveyors consist of FLEXOWELL®-conveyor belts comprised of 3 components: (i) Cross-rigid belt with steel cord reinforcement; (ii) Corrugated rubber sidewalls; (iii) transverse cleats to prevent material from sliding backwards. They can handle lump sizes varying from powdery material up to 400 mm (16 inch). Material can be raised over 500 metres with reported capacities up to 6,000 tph.

The benefits of vertical conveying

Vendors have evaluated the use of vertical conveying against the use of a conventional vertical shaft hoisting. They report the economic benefits for vertical conveying will be in both capital and operating costs.

Reduced initial capital cost due to:

Smaller shaft excavation diameter,
Reduced cost of structural supports vs a typical shaft headframe,
Structural supports are necessary only in the loading and unloading zones and no support structures in the shaft itself since the belt hangs free.

Lower operating costs due to:

Significantly reduced power consumption and peak power demand,
Lower overall maintenance costs,
No shaft inspections required,
The belt is replaced every 8 – 10 years.

Conclusion

I consider vertical conveying as another innovation in the mining industry. There may be significant energy and cost benefits associated with it when compared to conventional shaft hoisting or truck haulage up a decline.

With raise boring, one can develop relatively low cost shafts for the vertical conveyor. Hardware installation would be required only at the top and bottom of the shaft, not inside it.

The vendors indicate the conveying system should be able to achieve heights of 700 metres. This may facilitate the use of internal shafts (winzes) to hoist ore from even greater depths in an expanding underground mine. It may be worth a look at your mine.

As stated earlier, I have no personal experience with vertical conveying. Undoubtedly there may be some negative issues associated with the system that I am currently unaware of.

I would appreciate anyone sharing their experience with these conveyors either in a civil application or a mining environment. I will gladly update this blog article with additional observations or comments.

Update: for those interested in open pit applications for high angle conveyors, here is a recent article. This is a 37 degree angle 3,000 tph sandwich belt, which is different than the vertical conveyors discussed above.

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A Mining Career or a Travel Club

Date: August 5, 2020 Author: Ken Kuchling Comments: 3 Replies

There have been some LinkedIn discussions about why the mining industry needs to attract more young people. One of the selling points often mentioned is how mining gives a person the opportunity to experience the world.

Based on my own career, mining has definitely provided me with a chance to travel the world. It will also help anyone overcome their fear of travel. One will also learn that both international and domestic travel can be as equally rewarding. There is nothing wrong with learning more about your own country.

The main purpose for my mining travel was due to either being a QP on a 43-101 study or visiting a site as a member of a due diligence team. Other reasons have been to provide engineering support at a mine site or to meet with management teams for risk or strategy planning sessions.

Over the last year I haven’t traveled as much as in the past. One reason is that not every QP working on a 43-101 report has to make a site visit. Fortunately, even when one doesn’t make a site visit, one still learns something about the local politics, legal system, infrastructure, and socio-economic situation in that country.

The map below shows places where I have been in my travels. It also shows the locations of studies I was involved it. Mining really is a global business. My map isn’t as cluttered as that of some geologists I know. Exploration and resource geologists will visit many more destinations that an engineer will. After all, every project needs exploration drilling and a resource estimate, but not all projects advance to the engineering stage.

For those thinking of getting into mining, here is my list of pros and cons based on my own travel experience. Not everything is great about travel but some aspects of it can be fantastic.

What’s Good

I had the opportunity to visit many places for which there is a zero probability that I would have ever gone as a tourist.
Typically long duration long distance flights are in business class. You get lounge access and the perks associated with executive travel. Less onerous short flights might be economy only, so be aware of your company policy.
All travel expenses, hotels, taxis, meals, etc. are paid for. Just don’t get too exorbitant when wining and dining. That’s the job of the senior person you are travelling with.
Upon arrival, often there will be a company representative to meet you at the airport. They speak the local language and will take you where you need to go. This saves you scrambling around an airport looking for a safe taxi to use.
You will get to meet local employees, go to dinner with them, travel around their country, and chat in the evenings. It’s a great way to learn about the people in the country you are visiting.
You will get to meet other technical people from around the world. They might be expats working at a mine site or simply part of a multidisciplinary engineering team on the same visit.
You will be whisked away from tourist traps and thus have an opportunity to see the real countryside.
You will hit the ground running, get to visit mine sites, see some real live rocks, drill core, pit walls, equipment at work, and things happening. You won’t get to see that while sitting in your downtown office.

What’s not so good

Unfortunately business trips are mostly of a very short duration since you’re not going there as a tourist. You’re being paid for your time and expertise.

Mining trips are usually not to majors centers, so once arriving in the country you really haven’t arrived yet. There might be more air flights or long pickup truck rides to get to the final destination. There can be a lot of waiting and the days can be long (and frustrating). I remember on trip in northern Russia where four of us with luggage were jammed into a Volkswagen Rabbit in a snowstorm. That two hour trip took five hours, but we were just happy to make it back to the hotel.
Sometimes your accommodations will be less than stellar, i.e. one star hotels or tents. So you’ll need to learn how to appreciate the charm of those places and not complain that it isn’t the Four Seasons Hotel.
Some travel locations can be potentially unsafe and require travelling security. That can lead to a bit of uneasiness. I recall a trip to northern Mexico where we had two armed guards travelling with us. I’m not sure if they were really needed and it was strangely more calming without them once they left.
Long east-west trips can leave you jet lagged and dog-tired. However the expectation is that at 7 am next morning you’re ready for breakfast and then head straight into the office. You’re being paid to get to work, not to sleep.
The site visits will be focused on collecting or reviewing data and then immediately travelling back home to write your report. Sightseeing opportunities can be limited other than what you will see during the course of your work. Sometimes you’ll get back home and think that you never really saw the place.

Conclusion

Business travel has always been one of the best parts of my mining career. I can remember the details about a lot of the travel that I did. Unfortunately the project details themselves will blur with those of other projects.

When I do travel now, it’s a nice change if just one flight gets you to your final destination.

During this Covid period, international travel is greatly restricted. It will be interesting to see how soon things can return to normal, if they ever do. To miss out on the travel aspect of a mining career would be a shame, unless the only travel you want to experience is sitting on public transit for a few hours each day.

By the way, my all time favorite place for a mining trip is…..Argentina. It’s a long way from Toronto, but well worth it.

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Heap Leach or CIL or Maybe Both

Date: July 14, 2020 Author: Ken Kuchling Comments: 1 Reply

Typically gold mines consist of either a heap leach (HL) operation or a CIL type plant. There are a few projects that operate (or are considering) concurrent heap leach and CIL operations. Ultimately the mineral resource distribution determines if it makes economic sense to have both. This blog discusses this concept based on past experience.

A CIL operation has higher capital and operating costs than a heap leach. However that higher cost is offset by achieving improved gold recovery, perhaps 20-30% higher. At higher gold prices or head grades, the economic benefit from improved CIL recovery can exceed the additional cost incurred to achieve that recovery.

Some background

Several years ago I was VP Engineering for a Vancouver based junior miner (Oromin Expl) who had a gold project in Senegal. We were in the doldrums of Stage 3 of the Lassonde Curve (read this blog to learn what I mean) having completed our advanced studies. Our timeline was as follows.

Initially in August 2009 we completed a Pre-Feasibility Study for a standalone CIL operation. Subsequently in June 2010 we completed a Feasibility Study. The technical aspects of Stage 2 were done and we were entering Stage 3. Now what do we do? Build or wait for a sale?

The property’s next door neighbor was the Teranga Sabodala operation. It made sense for Teranga to acquire our project to increase their long term reserves. It also made sense for a third party to acquire both of us. The Feasibility Study also made the economic case to go it alone and build a mine.

While waiting for various third-party due diligences to be completed, the company continue to do exploration drilling. There were still a lot of untested showings on the property and geologists need to stay busy.

Two years later in 2013 we completed an update to the CIL Feasibility Study based on an updated resource model. Concurrently our geologists had identified seven lower grade deposits that were not considered in the Feasibility Study.

These deposits had gold grades in the range of 0.5 to 0.7 g/t compared to 2.0 g/t for the deposits in the CIL Feasibility Study. We therefore decided to also complete a Heap Leach PEA in 2013, looking solely on the lower grade deposits.

These HL deposits were 2-8 km from the proposed CIL plant so their ore could be shipped to the CIL plant if it made economic sense. Test work had indicated that heap leach recoveries could be in the range of 70% versus >90% with a CIL circuit. The gold price at that time was about $ 1,100/oz.

Ultimately our project was acquired by Teranga in the middle of 2013.

Where should the ore go?

With regards to the Heap Leach PEA, we did not wish to complicate the Feasibility Study by adding a new feed supply to that plant from mixed CIL/HL pits. The heap leach project was therefore considered as a separate satellite operation.

The assumption was that all of the low grade pit ore would go only to the heap leach facility. However, in the back of our minds we knew that perhaps higher grade portions of those deposits might warrant trucking to the CIL plant.

For internal purposes, we started to look at some destination trade-off analyses. We considered both hard (fresh rock) and soft ore (saprolite) separately. CIL operating costs associated with soft ore would be lower than for hard ore. Blasting wasn’t required and less grinding energy is needed. The CIL plant throughput rate could be 30-50% higher with soft ore than with hard ore, depending on the blend.

I have updated and simplified the trade-off analysis for this blog. Table 1 provides the costs and recoveries used herein, including increasing the gold price to $1500/oz.

The graph shows the profit per tonne for CIL versus HL processing methods for different head grades.

The cross-over point is the head grade where profit is better for CIL than Heap Leach. For soft ore, this cross-over point is 0.53 g/t. For hard ore, this cross over point is at 0.74 g/t.

The cross-over point will be contingent on the gold price used, so a series of sensitivity analyses were run.

The typical result, for hard ore, is shown in Table 2. As the gold price increases, the HL to CIL cross-over grade decreases.

These cross-over points described in Table 2 are relevant only for the costs shown in Table 1 and will be different for each project.

Conclusion

It may make sense for some deposits to have both CIL and heap leach facilities. However one should first examine the trade-off for the CIL versus HL to determine the cross-over points.

Then confirm the size of the heap leach tonnage below that cross-over point. Don’t automatically assume that all lower grade ore is optimal for the heap leach.

If some of the lower grade deposits are further away from the CIL plant, the extra haul distance costs will tend to raise their cross-over point. Hence each satellite pit would have its own unique cross-over criteria and should be examined individually.

Since Teranga complete the takeover in mid 2013, we were never able to pursue these trade-offs any further.

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Mining’s Lassonde Curve – A Wild Ride

Date: June 24, 2020 Author: Ken Kuchling Comments: 11 Replies

Normally I don’t write about mining stock markets, preferring instead to focus on technical matters. However I have seen some recent discussions on Twitter about stock price trends. For every stock there are a wide range of price expectations. Ultimately some of the expectations and realizations can be linked back to the Lassonde Curve.

The Lassonde Curve has been touted by many as a realistic representation of the life stages of a junior mining company. The curve can sometimes be a roller coaster ride for company management.

Pierre Lassonde, was one of the founders of Franco-Nevada, the first gold royalty company. Thirty years ago he created his curve, that has now become a foundation in the junior mining business. The Lassonde Curve outlines the company life stages, beginning at exploration and ending at production. It shows the perceived value (i.e. stock value) that investors may assign at each life stage.

The stock price trend illustrated by the curve can, knowingly or unknowingly, impact on a company’s decision making process. So in effect, there are some technical ramifications from it.

People may have differing opinions on what factors are driving the curve. Take a look at it and decide for yourself. Typically people define the curve into four life stages, but I tend to view it in five stages.

Mining Company Stages 1 to 5

Stage 1 Climb

Stage 1 is the earliest stage, consisting of exploration. This period generates rising anticipation from promotion and exciting press releases. The stock value climbs as the perceived value of the insitu geology increases. Great Bear is an example of company currently in Stage 1 (as of June 2020), and appears to be in no hurry to exit from Stage 1.

Stage 2 is when the prospect moves into technical evaluation. In other words, the engineers now climb aboard the ride. This stage encompasses the PEA, PFS, and FS studies. Each of these can take months to complete, meantime new information releases may be lacking.

If the stock value declines, perhaps its because the engineers bring reality into the picture. Investors may see that the project isn’t as easy or great as they anticipated during Stage 1.

Companies can also lose some presence in the market with no new news. Investors may begin looking at other companies that are still in Stage 1 and hence sell their shares.

Some companies may try to shorten Stage 2 and even skip over Stage 3 by going from a PEA directly into Stage 4 construction.

Stage 3 is the period when the studies have largely been completed and a production decision is pending. At this time the company will be seeking strategic partners and project funding. Permitting is also underway. Unfortunately a lack of financing or poor permitting efforts will extend the time in Stage 3, which can extend for decades or even perpetuity. It’s easy to rattle off the names of companies sitting in Stage 3; for example Donlin Creek, Casino, KSM, and Galore Creek. It seems that once locked in a prolonged Stage 3, it can be difficult to get out of it. Company promotion and marketing can be difficult.

Stage 4 begins when the financing is done and construction begins. This is a sign that the project has been figured out, permits approved, and third-party due diligence found no fatal flaws. The stock value may increase on this positive news, especially if construction is on time and on budget. Its even better news if it’s a period of rising commodity prices.

Stage 5 is the start-up and commercial production period, possibly nerve-racking for some investors. This is where the rubber hits the road. The stock price can fall if milled grades, operating costs, or production rates are not as expected.

Investors may need to decipher press releases to figure out if things are going well or not. Some investors may now bail out at this time to companies in Stage 1 for greater upside (the 10 bagger).

Companies Staying front and center

Companies know that investors can move elsewhere at any time, so they will try to address the Stage 2 and Stage 3 doldrums in different ways. They can:

Find new exploration prospects elsewhere while the engineering work is underway.
Undertake a series of optimization studies on the same project to keep up the news flow.
Continue step out drilling on the same property to expand resources and generate new excitement.
Have management appear regularly on podcasts, webinars, conferences, and keep promoting on LinkedIn, Twitter, and with newsletter writers.

Ideally one would like to stagger multiple prospects at different stages of the Curve. While this makes sense, it also takes a fair bit of funding to do it. It also may bring criticism that the company is losing focus on their flagship project. Generally if the stock price is improving, you don’t see this complaint.

Conclusion

In closing, I just wanted to present the Lassonde Curve for those who may not have seen it before. For those playing the junior stocks, it may help explain why their prices fluctuate for essentially the same project. For some companies, the curve can be a wild ride.

Some corporate presentations will highlight the Lassonde Curve, particularly when they are rising in Stage 1. You are less likely to see the curve presented when they are rolling along in Stages 2 or 3.

Some say the Curve relates to the de-risking of a project as it advances, with risks shifting from exploration related to development related. That may be true, but I suggest the curve is simply based on investor perception and impatience.

The ability to promote oneself and stay relevant in the market plays a key role in defining the shape of a company’s curve.

As a final note, people looking at the Lassonde curve often focus on the rise and dip in the middle part. There is less focus on what happens on the far right side of the graph as it trends into the future. There is an often (but forgotten) dip there too.

Another interesting aspect of the junior mining industry is how the herd mentality and fear of missing out is standard operating policy. Companies will rush into areas, acquire whatever ground they can, as long they can tout it as being a certain commodity project. And its not only commodities that generate excitement; its also locations and technologies. Read more at the blog post “Mining Fads and the Herd Mentality“.