Articles tagged with: Study Management

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

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

Who is the audience

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

Everyone likes geology

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

Suggestions

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

Conclusion

Improving the quality of information presented to investors is one key way of maintaining trust with investors. Accordingly we should look to improve the description of the mineable ore body for everyone. In many cases it is the key to the entire project.
I am not suggesting that one needs to remove the statistical plots since they do have their purpose and audience. I am simply suggesting that we should not forget about everyone else try to figured out the viability of the project.
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For those interested in reading other mining blogs, check out the Feedspot website at the link below. They have over 50 blog sites you check out. https://blog.feedspot.com/mining_blogs/
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70. 43-101 and the Shrinking Feasibility Study

There is current sense that advanced mining studies are suffering from a lack of credibility with investors. Curiously it seems to me that many feasibility study documents are getting smaller at the same time. Might there be some link between the two?
My personal exposure to feasibility studies extends from managing them, participating in them, and undertaking due diligence reviews of them. Earlier in my career mining feasibility studies typically consisted of comprehensive documents, often contained in several binders of information. The study could generate a lot of paper. However currently it seems that often (not always) the 43-101 Technical Report can be the “final” feasibility study document.
In the past there would be binders with detailed calculations and backup for the different parts of the study. Typically there was a binder for the Executive Summary and separate sections (i.e. binders) for Geology, Mining, Processing, Infrastructure, Capital Cost, Operating Cost, Environmental, Project Execution, and Economic Analysis, etc.
The comprehensive report normally had both the report text and the details of the work done. This might include hand sketches, haul cycles, vendor price quotes, spec sheets, email correspondences, the WBS cost estimate detail, and so on.
The section appendices also included 3rd party reports like pit slope geotechnical studies, hydrogeological analysis, tailings dam designs, etc. The feasibility document might have included CD’s with the entire study in electronic format.
Generally all the supporting information for the study was in that comprehensive document. They were great. You knew you were somebody if you were given a personal copy of the entire report for your office.

43-101 Technical Report

The original intent of the 43-101 Technical Report was for it to be a summary document, only about 80-150 pages in length. The intent was to simplify all the technical work for the benefit of non-technical investors. Currently I have noticed that in many cases the 43-101 report is now the entire feasibility study document.
These 43-101 reports contain a fair amount of detail and they can exceed 400 pages in length. I’m not sure how many non-technical people actually read them beyond the Executive Summary or even read them at all.
Unfortunately if one is undertaking a due diligence review of a project, the 400 page Technical Report won’t contain the detail needed for a proper technical review. When more detail is requested, we are usually provided with a series of production and cost spreadsheets that need to be deciphered.  Furthermore the spreadsheets themselves don’t give the sources or basis for all the input data.
In my view the 400 page Technical Report is too confusing for the investing public and not detailed enough for technical review, thereby really satisfying no one.
Why aren’t the comprehensive feasibility study documents being completed all the time? I would suggest it is because of the effort and cost. It takes time to properly document all aspects of a study, creating legible tables, scanning files, and merging it all into a single PDF document. Preparing a 43-101 Technical Report can be a chore, as many of us have experienced in trying to meet the 45 day deadline. So who wants to take on the task of preparing an even larger document?

Recommendation

My recommendation is that, where budgets permit, mining companies return to the days of preparing the comprehensive feasibility study document. It’s the right thing to do.
One doesn’t need to print the entire report on paper since PDF files will work fine. Scanning of some sketches, vendor quotes may add an extra step, but that is hardly a momentous chore. Most 3rd party documents are already been submitted in PDF format so coordinating and merging will be the main task.
The 43-101 Technical Report could return to being a more investor friendly summary style document rater than a full study report.
This comprehensive document approach would apply to both pre-feasibility and feasibility studies that are used for advanced financing purposes.  The re-adoption of the comprehensive report format should be consistent among both large miners and juniors.

What about the PEA

The preliminary economic assessment (PEA) likely does not warrant a comprehensive report. The PEA is not definitive. I have also heard that the PEA is losing some credibility with investors, with some people referring to it as mainly a sales document. I don’t necessarily agree with that sentiment, but I understand why some see it that way.
As an aside, an interesting panel discussion might be whether the PEA has actually lost credibility, and if so, how can we restore credibility. My thoughts on PEA’s were summarized in a previous blog “Not All PEA’s Are Created Equal”.

Conclusion

If any mining industry credibility has been lost, re-establishing it should be important. One way to start doing this is to focus on creating the type of reports that best serve the needs of the industry stakeholders.
Some may say returning to comprehensive reports are a step backwards while mining needs to move forward. In my opinion, moving forward is going from less documented studies towards well documented studies.
One of the most technically detailed feasibility studies that I worked on was for the Diavik diamond project. This was a one-of-a-kind project operated by a well run risk-averse company (Rio Tinto). Every aspect of the project was documented to the upmost extent, although the company had the deep pockets to do that.  Funny thing though, as part of the internal Rio Tinto engineering team I don’t recall ever producing a final report document there (perhaps my recollections have been blurred since 20 years ago).
Once you have established the type of report you want, make sure your consultants clearly understand the expected deliverable. I recommend that someone on your team prepares an RFP document to lay out your wish list, even if sole sourcing the study. A previous blog was written on this topic at Request For Proposal (“RFP”) – Always Prepare One
As an aside, it would be interesting to know if those undertaking due diligence’s in the UK or Australia (i.e. not under 43-101 domain) have seen any changes in the quality of feasibility study documentation.
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For those interested in reading other mining blogs, check out the Feedspot website at the link below. They have over 50 blog sites you check out. https://blog.feedspot.com/mining_blogs/
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69. Power Generation & Desalinization – An Idea that Floats

Access to a fresh water supply and a power supply are issues that must be addressed by many mining projects. Mining operations may be in competition with local water users for the available clean water resources. In addition, the greenhouse gas emissions from mine site power plants are also an industry concern. If your project has both water and power supply issues and it is close to tidewater, then there might be a new solution available.
I recently attended a presentation for an oil & gas related technology that is now being introduced to the mining industry. It is an innovative approach that addresses both water and power issues at the same time.
The technology consists of a floating LNG (liquefied natural gas) turbine power plant combined with high capacity seawater desalinization capabilities. MODEC is offering the FSRWP® (Floating Storage Regasification Water-Desalination & Power-Generation) system.
MODEC also has associated systems for power only (FSR-Power®) and water only (FSR-Water®)

FSRWP capabilities

The technology is geared towards large capacity operations that have access to tidewater. It provides many tangible and intangible operational and environmental benefits.  It can:
  • Generate fresh water supply (10,000 – 600,000 m3 /day)
  • Generate electrical power (80 to 1000 MW) using LNG
  • Can provide power inland (>100 km) from a tidewater based floating power plant
  • Can provide natural gas distribution on land via on-board re-gasification systems
  • Has LNG storage capacity of 135,000 cu.m
  • Has a refueling autonomy of 20 to 150 days
  • Allows low cost marine delivery of bulk LNG supply

Procurement & Application

The equipment can be procured in several ways. For instance it can be contracted as an IPP (Independent Power Producer), purchased as an EPCI (Engineering, Procurement, Construction and Installation), BOO (Build, Own and Operate) or BOOT (Build, Own, Operate and Transfer).
Typically it takes 18-24 months of contract award to deliver to the project site, although temporary power solutions can be provided within 60-90 days.
From a green mining perspective, the FSRWP produces clean power with the highest thermal efficiency and lowest carbon foot-print.
See the table for a comparison of different power generation efficiencies and carbon emissions per kW.
Gas turbines are not new technology to MODEC.  They currently own & operate 42 such generators, which can produce roughly 43 MW (each) in combined-cycle mode.

Mooring options

Currently there are three mooring options for the floating system that should fit most any tidewater situation.
Jetty or Dolphin mooring is suitable for protected areas or near-shore applications where the water depth is in the range of 7 to 20 meters.
Tower Yoke mooring is ideal for relatively calm waters where the water depth is between 20 to 50 meters.
External Turret mooring is similar to a Tower-Yoke and is ideal for water depths exceeding 50 meters or where the seabed drops off steeply into the ocean.

Power transmission

Twenty years ago it was impractical to transmit AC power long-distances and subsea power cable technology was not as advanced as it is today. Hence an offshore power plant like a FSRWP was not technically viable. Due to R&D efforts over the last 15 years it is now possible to economically transmit AC. For example it is possible to transmit up to 100 MW over 100 miles through a single subsea cable. In addition, it is also viable to transit 200 MW at 145 kV from a vessel to shore.

Water treatment

Modern FSRWP’s use reverse osmosis membrane technology to produce industrial or potable water.  This is similar to most conventional onshore desalination plants.
The main benefits of floating offshore desalination are increased overall thermal efficiency if both power and water production are combined on a single vessel. In addition, seawater sourced offshore and rejected brine discharged offshore minimizes risk to coastal marine life.

Conclusion

The bottom line is that if your mining project is near shore, and has both water supply and power issues, take a look at the FSRWP technology. One might say it is greener technology by using LNG (rather than coal, heavy fuel oil, or diesel) to generate power.  At the same time it avoids competition with locals for access to fresh water.
This technology won’t be suitable for all mining situations, but perhaps your mine site fits the model. Reportedly rough costs for power are in the range of $0.10-$0.14/kwh with a capital cost of $1M-$1.5M per MW.
There will be minimal closure costs associated with dismantling the power plant.  One just floats it away at the end of the mine life.
Check out the MODEC website if you wish to learn more: https://www.modec.com/fps/fsrwp/index.html
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
For those interested in reading other mining blogs, check out the Feedspot website at the link below. They list 60 mining related blog sites that you check out. https://blog.feedspot.com/mining_blogs/
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65. Flawed Projects – No Such Thing as Perfection

Recently I read a post on LinkedIn where somebody was asking what key metrics companies are looking for in order to develop (or provide financing to) a new mining project. It’s more than just a project having a good NPV or IRR.  They are also looking at how difficult it is to achieve the targeted NPV.
Mining companies are always on the hunt for new projects to grow their cashflows. They would all like to find the “perfect” project; one with ideal conditions and great attributes. However those perfect projects likely don’t exist anymore, if they ever even did.
Consequently companies must be willing to accept some potential flaws (or risks) in their go-forward projects. The question is what flaws are they willing to accept and how far away from the ideal situation are they willing to go.

What makes a perfect project?

If one could envision a perfect mining project, what might it look like?   Here are some attributes that one would want to see (in random order). If a project had 100% of these, it would be a fantastic project.
    • A high grade ore orebody
    • A large reserve and long mine life to ride out commodity price cycles
    • Low operating cost
    • Low cash cost, in the bottom quartile of costs
    • Well defined ore zones, allowing simple mining with low dilution
    • A geotechnically competent rock mass
    • Clean and straightforward metallurgy
    • Consistent and straightforward permitting regulations
    • A stable government and stable fiscal regime
    • Safe security conditions for site personnel
    • High NPV and high IRR
    • No acid runoff issues from waste products
    • Stable tailings disposal conditions
    • Readily available local workforce / local power supply / good water supply
    • Favorable local community and stakeholder support
Other readers may have more attributes that they would like to see if asked to theorize “What constitutes a perfect mining project?”

Take off the promoter hat

backhoe on soft claysNow take an honest look at some recent (or past) projects that you have been involved with. How many of the perfect attributes listed above would be represented? It would be surprising to see them all checked off. Unfortunately that means certain flaws (risks) must be accepted when developing a project.
Each company (or financier) will have their vision as to which attributes are “must have” and which ones are “nice to have”.

But we have risk tools

There are many risk tools available to help in evaluating the potential flaws in a project. Unfortunately these tools don’t make the decisions for management.
Risk based Monte Carlo analysis requires management to pre-define the magnitude of the risks and then decide upon what probability of success is acceptable. Real option analysis or decision trees or Kepner-Tregoe are examples of other tools that can help in the decision making process.
Ultimately risk is risky.  Management must make the go/no-go decision regardless of how many probabilistic histograms and tables they have generated. A 90% chance of success still means there is a 10% chance of failure. The probability of failure may be low, but it is not zero.
It would be interesting to examine recent failed projects to define the cause(s) of failure. One could then see if the cause was something that was pre-determined as a risk, either as a small risk or a large risk. Perhaps the cause was something that management felt could be mitigated or perhaps it was something viewed as highly unlikely. No doubt that successful projects also had risks, which were either mitigated or which (luckily) never occurred.

Conclusion

The bottom line is that 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.
In my career I have sat in on such management discussions and it’s never been a simple process, mainly because no project is perfect. Management know all the flaws (at least they think they do) and thus have to decide whether to push forward knowing the flaws exist.
I fully expect that future mining project risk will increase due to the complexity of project designs and broadening of stakeholder dynamics. Hence decision making in the mining industry isn’t going to get any easier regardless of the decision tools being used.  Look at your own situation, are your projects getting easier or harder?
Perhaps this is one reason we are seeing the flight of investment capital from mining into software/cannabis businesses. The risk/reward profile may be viewed more favorably in these investments.
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
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60. Mining Due Diligence Checklist

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

I’m a big fan of checklists

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

Each due diligence is unique

Not all of the items in the checklist are required for each review. Maybe you’re only doing a high level study to gauge management’s interest in a project. Maybe you’re undertaking a detailed review for an actual acquisition or financing event. It’s up to you to create your own checklist and highlight which items need to be covered off. The more items added the less risk in the end; however that requires a longer review period and greater cost.
You a create your own checklist but if you would like a copy of mine just email me at KJKLTD@rogers.com. Specify if you would prefer the Excel or PDF versions.
Please let me know if you see any items missing or if you have any comments.
Now that we have an idea of what information we need to examine in a due diligence, the next question is where to find it.
Previously I had written a blog titled “Due Diligence Data Rooms – Help!” which discussed how we can be overwhelmed by a poorly set up data room. My request is that when setting up a data room, please consider the people who will be accessing it.

Due Diligence isn’t for everyone

Due diligence exercises can be interesting and great learning experiences, even for senior people that have seen it all. However they can also be mentally taxing due to the volumes of information that one must find, review, and understand all in a short period of time.
Some people are better at due diligence than others. It helps if one has the ability to quickly develop an understanding of a project. It also helps to know what key things to look for, since many risks are common among projects.
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
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56. Does the Mining Industry Employ Interns?

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

Why hire interns?

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

Its the right thing to do

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

Its a win-win

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

Conclusion

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

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

ABSTRACT

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

Conclusion

I agree with many of the points raised by Paul in his study. The mining industry has some credibility issues based on recent performance and therefore understanding the causes and then repairing that credibility will be important for the future.
Credibility ultimately impacts on shareholder returns, government returns, local community benefits, and worker health and safety; so having a well designed mine will realize benefits for many parties.
If you need more information Paul’s website is at http://www.whillansminestudies.com/
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48. Online Collaboration and Management Tools (Part 2)

networking
This blog is the Part 2 continuation of a prior post regarding collaboration software tools that mining teams should consider.   Here are a few more ideas I’d like to share, having found that these are great to have in your toolbox.

Zoom (for conferencing)

A great tool for video conferencing is zoom (https://support.zoom.us/hc/en-us).  Its similar to Skype but has added features.
It allows video conferencing, screen sharing, screen swapping.
There is a free version that provides some great functionality.

 

 

 

G-suite and miningG-Suite

Is the family of Google Drive, Docs, Sheets, and Slides online services.
Group collaboration can be frustrating using spreadsheets or text documents.  We typically end up with different versions of the same document floating around.  No one is sure whether they are editing the most recent version or which version they should be editing.
With G-Suite (Google Sheets and Google Docs) you can create online spreadsheets and documents and allow multiple team members to review and edit them in real-time online at the same time.
Writing reports gets simpler since there is only one working version of the document. A “track changes” option is there (called “Suggesting”) and everyone can see the edits as they are being made. No more asking “who has the most current version?”  This type of collaborative editing is also great for Design Criteria Documents that are regularly being updated by different team members.
I have used both DropBox and Google Drive, but my preference is using Google Drive since it integrates well with G-Suite.

Foxit Reader:  

This is an alternative to Adobe Reader and can be used for reviewing PDF documents, whether text documents or drawings.
Foxit provides great editing and commenting tools like highlighting text, adding comments, drawing lines and boxes, adding comment balloons, cut & pasting images into the PDF file, and then saving the commented version.
For the most part I have stopped using Adobe Reader and have now switched over to Foxit due to commenting capability that it provides.

Google Hangouts:  

This is an online and mobile application for team conference calling.  It allows screen sharing, online group video conversations, sends out meeting reminders, and it will call participants at the require time.
While Hangouts has many of the same features as Skype, it integrates with Google Calendar and Gmail.   Most of the tech world uses Hangouts instead of Skype, but I’m not sure if the mining industry is ready to move away from Skype.
An honorable mention for video-conferencing goes to Zoom. Some tech developers have been switching to Zoom, they feel it has more capabilities than Hangouts and better video resolution. I have never used it however.

Other Software

Those are a few of the software tools that I have found useful and so now you’re probably wondering “what else is out there for me?” The website The Freelance Stack lists many of different tools that exist. Check them out and some of the others may be of value to you. :

Geology & Mining Software

One of the standard marketing approaches used by tech software is to provide a fully functional product for free and then charge money to access the enhanced features. The goal is to get future users familiarized and trained on the product.  They hope that they will get hooked on the product and decide to upgrade their plan for the full product suite.
I’m not sure whether any geology or mining software  is available for free in a fully functional format with optional upgrading. By functional, I don’t mean simply providing a “viewer” to view the work of others or a 30-day free trial period.  I mean actual software that provides some useful capability for free in order to get you hooked. Please let us know if this software marketing approach exists in the mining industry.

Conclusion

The bottom line is that there is a lot of interesting collaboration software out there.  Its readily available, much of it is free, and can make managing your remote project teams easier. Just because the software is used by the tech industry and millennials, don’t assume it won’t have a benefit to the mining industry.
The downside is the need to train and learn the new software, and the mining industry may not be so receptive to that.
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47. Online Collaboration and Management Tools (Part 1)

networking
Update:  This blog was originally published March 2016.   However like all things, the online world keeps evolving. So I have updated Part 1 and Part 2 of the blog (Dec 2018).  I added new software suggestions and removed some.
As part of a side business, I have been working alongside a team of software developers. It has been a good learning experience for me to see how the tech world does things compared to how the mining industry likes to work. We see a lot of private equity flowing into tech and less into mining, so they must be doing something right.
The tech start-up industry has developed its own set of jargon.  Common terms are agile management, lean start-ups, disruption, minimum viable products, pings, fail fast, and sprints.
Some of their work approaches do not make sense for the mining industry where one doesn’t have the luxury of using trial-and-error and customer feedback to help complete a project.
For software, the attitude is get it out the door fast and your customers will then tell you what fixes are needed. In mining you want to get it right the first time.  Having said that, some mining people will say they have seen 43-101 technical reports that follow the “wait for customer feedback” model.
Now where the tech industry can provide us with some guidance is in the implementation of collaboration tools. It is becoming more common for software developers to work remotely.  To collaborate they use the technology available or they develop new technology to meet their needs.  Mining teams are also working more and more from remote offices these days.

What are the collaboration software available

The following is a partial list (Part 1) of free software tools that I have used, mainly because I was forced to. With some hesitation at first, I have subsequently found the tools easy to use.  Many of them can definitely be applied in the mining industry with remote and diverse study teams.
There are a lot more tech tools out there but my list includes some that I have personally used. Most of these are free to begin with, and enhanced features are available at a minimal cost. However even the free versions are functional and can be used to build a comfort level in the team. Most of them provide both web based access and mobile access so even when you’re on the road you can still use them and contribute.

Trello

Trello: If you want to create a “to-do list” or task list for your team, this is the software to use. Imagine a bunch of  post-it notes that you can place under different categories, assign persons to each note, attached a file to the note if you wish, and then have back and forth discussions within each note.   Once a task is done, just drag the note to another category (e.g. “In Progress”, “Completed”). Anyone on the team can be invited to the Trello Board and can collaborate. See the image below for an example Trello screenshot.   This is a great tool for helping to manage tasks in a mining study.

 

Trello screenshot

Slack

Slack: If you want to maintain a running dialogue of group discussions that invited team members can follow and join in on, then Slack (a Canadian company) is for you. It can replace the long confusing back-and-forth emails that we commonly see.  If someone forgets to “reply all” the rest of the team is out of the loop. See the image below for an example Slack screenshot. It’s great for discussions among the team.  You can also have private one-on-one discussions or wide open team discussions.  You can attach files too and you can get pinged when something new is added. It provides permanent record of conversations and decisions.

Slack Screenshot

Mural

Mural:  Mural is a recent innovation to solve the issue that remote teams have of not sitting in the same room and writing ideas down on a whiteboard.   For that last while, there was no good white boarding software out there but I understand that Mural fills the gap.  i have not used it so cannot vouch for its simplicity, however it seems to be catching with the tech developers.  The screenshot below shows the type of inter-actions possble.  Each person has access to write on the whiteboard.
Basecamp: is similar program to Slack that incorporates features from both the above and some people swear by this tool. I have not personally used it so cannot vouch for it, but some say it is very good.

Conclusion

The bottom line is that there is a lot of good stuff out there, readily available, much of it free, and can facilitate collaboration among your teams. Just because its tech industry related, don’t assume it wouldn’t have an application in the mining world.  As millennials enter the mining workforce, these tools may gain a foothold.
To read about even more collaborative tools, take a look at Part 2 of this blog.  Comments on any of the discussions or software are appreciated.
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41. Resource Estimates – Are Independent Audits A Good Idea?

mining reserves
Question: How important is the integrity of a tailings dam to the successful operation of a mine?
Answer: Very important.
Tailings dam stability is so important that in some jurisdictions regulators may be requiring that mining companies have third party independent review boards or third party audits done on their tailings dams.  The feeling is that, although a reputable consultant may be doing the dam design, there is still a need for some outside oversight.
Differences in interpretation, experience, or errors of omission are a possibility regardless of who does the design.  Hence a second set of eyes can be beneficial.

Is the resource estimate important?

Next question is how important is the integrity of the resource and reserve estimate to the successful operation of a mine?
Answer: Very important.  The mine life, project economics, and shareholder value all rely on it.     So why aren’t a second set of eyes or third party audits very common?

NI 43-101 was the first step

In the years prior to 43-101, junior mining companies could produce their own resource estimates and disclose the results publicly.  With the advent of NI 43-101, a second set of eyes was introduced whereby an independent QP  could review the company’s internal resource and/or prepare their own estimate.  Now the QP ultimately takes legal responsible for the estimate.
Nowadays most small companies do not develop their own in-house resource estimates.  The task is generally awarded to an independent QP.

Resource estimation is a special skill

Possibly companies don’t prepare their own resource estimates due to the specialization needed in modelling and geostatistics. Maybe its due to the skills needed to operate block modeling software.   Maybe the companies feel that doing their own internal resource estimate is a waste of time since an independent QP will be doing the work anyway.

The QP is the final answer..or is it?

Currently it seems the project resource estimate is prepared solely by the QP or a team of QP’s.   In most cases this resource gets published without any other oversight. In other words no second set of eyes has taken a look at it.  We assume the QP is a qualified expert, their judgement is without question, and their work is error free.

Leapfrog Model

As we have seen, some resources estimates have been mishandled and disciplinary actions have been taken against QP’s.   The conclusion is that not all QP’s are perfect.
Just because someone meets the requirements to be a Competent Person or a Qualified Person does not automatically mean they are competent or qualified. Geological modeling is not an exact science and will be based on their personal experience.

What is good practice?

The question being asked is whether it would be good practice for companies to have a second set of eyes take a look at their resource estimates developed by independent QP’s?
Where I have been involved in due diligence for acquisitions or mergers, it is not uncommon for one side to rebuild the resource model with their own technical team.  They don’t have 100% confidence in the original resource handed over to them.   The first thing asked is for the drill hole database.
One downside to a third party review is the added cost to the owner.
Another downside is that when one consultant reviews another consultant’s work there is a tendency to have a list of concerns. Some of these may not be material, which then muddles the conclusion of the review.
On the positive side, a third party review may identify serious interpretation issues or judgement decisions that could be fatal to the resource.
If tailings dams are so important that they require a second set of eyes, why not the resource estimate?  After all, it is the foundation of it all.
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39. Measured vs. Indicated Resources – Do We Treat Them the Same?

measured and indicated
One of the first things we normally look at when examining a resource estimate is how much of the resource is classified as Measured or Indicated (“M+I”) compared to the Inferred tonnage.  It is important to understand the uncertainty in the estimate and how much the Inferred proportion contributes.   Having said that, I think we tend to focus less on the split between the Measured and Indicated tonnages.

Inferred resources have a role

We are all aware of the regulatory limitations imposed by Inferred resources in mining studies.  They are speculative in nature and hence cannot be used in the economic models for pre-feasibility and feasibility studies. However Inferred resource can be used for production planing in a Preliminary Economic Assessment (“PEA”).
Inferred resources are so speculative that one cannot legally add them to the Measure and Indicated tonnages in a resource statement (although that is what everyone does).   I don’t really understand the concern with a mineral resource statement if it includes a row that adds M+I tonnage with Inferred tonnes, as long as everything is transparent.
When a PEA mining schedule is developed, the three resource classifications can be combined into a single tonnage value.  However in the resource statement the M+I+I cannot be totaled.  A bit contradictory.

Are Measured resources important?

It appears to me that companies are more interested in what resource tonnage meets the M+I threshold but are not as concerned about the tonnage split between Measured and Indicated.  It seems that M+I are largely being viewed the same.  Since both Measured and Indicated resources can be used in a feasibility economic analysis, does it matter if the tonnage is 100% Measured (Proven) or 100% Indicated (Probable)?
The NI 43-101 and CIM guidelines provide definitions for Measured and Indicated resources but do not specify any different treatment like they do for the Inferred resources.
CIM Resources to Mineral Reserves

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

Payback Period and Measured Resource

In my past experience with feasibility studies, some people applied a  rule-of-thumb that the majority of the tonnage mined during the payback period must consist of Measure resource (i.e. Proven reserve).
The goal was to reduce project risk by ensuring the production tonnage providing the capital recovery is based on the resource with the highest certainty.
Generally I do not see this requirement used often, although I am not aware of what everyone is doing in every study.   I realize there is a cost, and possibly a significant cost, to convert Indicated resource to Measured so there may be some hesitation in this approach. Hence it seems to be simpler for everyone to view the Measured and Indicated tonnages the same way.

Conclusion

NI 43-101 specifies how the Inferred resource can and cannot be utilized.  Is it a matter of time before the regulators start specifying how Measured and Indicated resources must be used?  There is some potential merit to this idea, however adding more regulation (and cost) to an already burdened industry would not be helpful.
Perhaps in the interest of transparency, feasibility studies should add two new rows to the bottom of the production schedule. These rows would show how the annual processing tonnages are split between Proven and Probable reserves. This enables one to can get a sense of the resource risk in the early years of the project.  Given the mining software available today, it isn’t hard to provide this additional detail.
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37. 3D Model Printing – Who To Contact?

One of the technologies that is still getting a lot of press is 3D printing.  It seems new articles appear daily describing some fresh and novel use. Everything from home construction, food preparation, medical supplies, and industrial applications, 3D printing continues to find new applications in a wide range of disciplines.

Mining can take advantage of 3D printing

In a previous blog “3D Printing – A Simple Idea”, I discussed the helpfulness of printing 3D topographic models for the team members of a mining study. I was recently contacted by a consulting firm in Texas that specializes in printing 3D mining models. Here is their story and a few model images as provided to me by Matt Blattman of Blattman Brothers Consulting. (www.blattbros.com/3dprinting)

Blattman Brothers Consulting

Their 3D printed models are used in the same way geologists and mining engineers have employed models for decades. In the past we saw the physical models made of stacked mylar or plexi-glass maps, wood or foam core. We recognized that there is value in taking two dimensional sections or plan maps and making a 3D representation.  This provides more information than those viewed on a computer screen.
Physical models convey scale, interactions and scope in ways that no other method can. Technology like 3D printing improves the model-making process by allowing the addition of high def orthophotos, reducing the model cost, increasing its precision and delivery time.
Currently 3D models can be made in a variety of materials, but the primary three are extruded plastic, gypsum powder, or acrylics.
  • Plastic models (ABS or PLA) are cheap, fast and can created on relatively inexpensive, hobbyist printers. The downside to these models is that the number of colors available in a single model are limited, typically a single color.
  • Powder-based printers can typically print in 6.5M colors, allowing for vibrant, photo-realistic colors and infinite choices for title blocks, logos and artistic techniques. However, gypsum models can be as fragile as porcelain and require some care in handling.
  • Acrylic models allow for translucent printing (“looking into the ground to see the geological structure”) and are more durable than the gypsum. Nevertheless, acrylic models are significantly more expensive than the other two types and the color palettes are limited.
Here are some examples.
Leapfrog Model

Leapfrog Model

Geological Model in Acrylic

Acrylic Model

Powder Based 3D Model

Powder Based 3D Model

Powder Based 3D Model

Powder Based 3D Model

Besides having another toy on your desk beside your stress ball, why not print off your mine plan, or print the geology shapes and topography? It’s all about communicating highly technical data to a non-technical audience, whether that audience is a permitting authority, the general public, or maybe even company management.
The ability to grasp a map or technical drawing is a learned skill and not everyone has it. If you’ve just spent $20M on a feasibility study, why assume that the attendees in a public meeting will fully appreciate the scale and overall impact of your proposed project with 2D maps?
That message can be better conveyed with a model that is easily understood. One of Blattman’s clients, Luck Stone, recently described how they use their 3D printed models in this video.

Blattman’s models are created from the same 3D digital data already in use by most companies involved in geological modeling and mine design. Other than the units (meters versus millimeters), the triangulated surfaces created by the software are no different than those created by mechanical or artistic 3D modeling programs.
While many 3D printing services are available on the market, not all of them are able to speak “mining”. They may not be able to walk the skilled geologist or mining engineer through the process of creating the necessary digital formats and that’s where Blattman comes in. With more than 20 years of mining experience and having already gone through the 3D printing learning curve, they can assist any natural resource company through the process, either as a full-service/turn-key project or just to advise the client on how to prepare their own files.

Conclusion

The bottom line is that 3D printing is here to stay and its getting better each year.   Go ahead and check out the technology to see if it can advance your path forward .
We would be interested in hearing about any experiences your have had with 3D modelling, pro’s and con’s.
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