GeoE 498Introduction to Mining and Mineral Processing Engineering

Lecture Notes

Fall2010

Geological EngineeringCivil & Geological Engineering

University of Saskatchewan

University of SaskatchewanUniversity of Saskatchewan

Geological EngineeringGeological EngineeringGEOE 498.3GEOE 498.3

Introduction to Mineral EngineeringIntroduction to Mineral Engineering

Lecture 8 – Mineral Processing 1Lecture 8 – Mineral Processing 1

Lorne SchwartzLorne Schwartz

Chief MetallurgistChief MetallurgistTechnical ServicesTechnical Services

Cameco CorporationCameco Corporation

Course StructureCourse StructurePart A (7 Lectures) Mine EngineeringPart A (7 Lectures) Mine EngineeringPart B (6 Lectures) Metallurgical Part B (6 Lectures) Metallurgical

EngineeringEngineering

GradingAssignments – 20%Assignments – 20%Mid – term – 35%Mid – term – 35%Final – 45%Final – 45%

These course notes are a compilation of work conducted by many people.

Notes have been taken from the following Edumine courses:

The Mill Operating Resource 1&2

Process Mineralogy for Metals

Extractive Metallurgy 1 & 2

Hydrometallurgy 1,2,3,4

Economic Evaluation and Optimization of Mineral Projects

Mineral Processing OverviewMineral Processing Overview

Mineral Processing Terminology, Mineral Processing Terminology, EconomicsEconomics

Comminution and ClassificationComminution and Classification

Physical processing methodsPhysical processing methods

Chemical processing methodsChemical processing methods

Waste products Waste products treatment and treatment and disposaldisposal

Process plant Process plant flow sheets: flow sheets: uranium and potashuranium and potash

Importance of Mineral ProcessingImportance of Mineral Processing

““No substance has been as important as metal in No substance has been as important as metal in the story of man's control of his environment. the story of man's control of his environment.

Advances in agriculture, warfare, transport, even Advances in agriculture, warfare, transport, even cookery are impossible without metal. So is the cookery are impossible without metal. So is the

entire Industrial Revolution, from steam to entire Industrial Revolution, from steam to electricity.”electricity.”

Read more: Read more: http://www.historyworld.net/wrldhis/PlainTextHishttp://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyidtories.asp?historyid

=ab16#ixzz13XSEyvNz=ab16#ixzz13XSEyvNz

Importance of Mineral ProcessingImportance of Mineral Processing

Bronze Age-Bronze Age- Bronze is in use Bronze is in use in Sumer, at Ur, in around in Sumer, at Ur, in around 2800 BC2800 BC

Iron Age - from the 11th century - from the 11th century BC onwards, steel replaces bronze BC onwards, steel replaces bronze weapons. It becomes essential, weapons. It becomes essential, from now on, to have a good steel from now on, to have a good steel blade rather than a soft and blade rather than a soft and indifferent one.indifferent one.

Lecture 8Lecture 8

Mineral Processing Overview:Mineral Processing Overview:

Geology-Mining-Processing RelationshipGeology-Mining-Processing Relationship

Mineral Processing TermsMineral Processing Terms DefinitionsDefinitions

Mineral Economics reviewMineral Economics review

Project StagesProject Stages

Lecture 9Lecture 9

Comminution & classification circuitsComminution & classification circuits

Comminution MethodsComminution Methods PrinciplesPrinciples CrushingCrushing GrindingGrinding

Classification MethodsClassification Methods PrinciplesPrinciples HydrocycloneHydrocyclone ScreeningScreening

AssignmentAssignment

Lecture # 10Lecture # 10

Physical Processing MethodsPhysical Processing MethodsGravityGravityMagneticMagneticElectrostaticElectrostaticRadiometricRadiometricFroth FlotationFroth FlotationSolid/liquid separationSolid/liquid separation

AssignmentAssignment

Lecture 11Lecture 11

Chemical ProcessingChemical ProcessingBasic CircuitsBasic CircuitsLeachingLeachingSolvent ExtractionSolvent ExtractionPrecipitationPrecipitationDryingDrying

Downstream – Purified ProductDownstream – Purified ProductElectrowinningElectrowinningSmeltingSmelting

AssignmentAssignment

Lecture #12Lecture #12

Waste Stream Management:Waste Stream Management:

Tailings DisposalTailings DisposalSurfaceSurfaceUndergroundUnderground

Effluent TreatmentEffluent TreatmentChemical PrecipitationChemical PrecipitationMembrane TechnologyMembrane Technology

Assignment Assignment

Lecture # 13 Lecture # 13

Saskatchewan Mill Saskatchewan Mill Process FlowsheetsProcess Flowsheets

UraniumUranium

PotashPotash

AssignmentAssignment

Geology – Mining – ProcessingGeology – Mining – Processing

•All 3 aspects must be favorable to make a deposit All 3 aspects must be favorable to make a deposit economically viableeconomically viable

• Geology: Find it. Is it big enough to be economic?Geology: Find it. Is it big enough to be economic?•Mining: Dig it. Is it economically recoverable from the Mining: Dig it. Is it economically recoverable from the ground?ground?•Processing: Extract it. Is it economically separable Processing: Extract it. Is it economically separable from the host rock?from the host rock?

Prevalence of mineral processingPrevalence of mineral processing

In Saskatchewan as of 2009 there were: In Saskatchewan as of 2009 there were: 3 uranium mills3 uranium mills8 potash mine/mills8 potash mine/mills1 gold mine/mill1 gold mine/mill coal mines (thermal)coal mines (thermal)Salt mineSalt mineAn identified diamond deposit (Fort a la An identified diamond deposit (Fort a la

Corne)Corne)An identified rare earth element deposit An identified rare earth element deposit

(Hoidas Lake)(Hoidas Lake)

Prevalence of mineral processingPrevalence of mineral processing

Mining is all around us!Mining is all around us! In Alberta there are: In Alberta there are:

Oil sands process plants (uses mining and mineral Oil sands process plants (uses mining and mineral processing techniques)processing techniques)

Coal plantsCoal plants Industrial minerals (limestone)Industrial minerals (limestone) Nickel/cobalt metallurgical complexNickel/cobalt metallurgical complex

In Manitoba there are:In Manitoba there are: Many copper/zinc mines and mills, feeding the Flin Many copper/zinc mines and mills, feeding the Flin

Flon metallurgical complexFlon metallurgical complex Nickel mines nearby Thompson smelterNickel mines nearby Thompson smelter

In the Northwest Territories there are:In the Northwest Territories there are: 3 operating diamond mines3 operating diamond mines Gold minesGold mines

Scope of mineral Scope of mineral

processingprocessing

Definitions Definitions

EconomicsEconomics

Project StagesProject Stages

Introduction to Mineral ProcessingIntroduction to Mineral Processing

Mining Terminology - Mining Terminology - Review Review

Miners send their products to their customer – the mill.Miners send their products to their customer – the mill. Ore :Ore : Rock that contains a mineral or minerals in sufficient Rock that contains a mineral or minerals in sufficient

quantities as to make commercial extraction (mining – quantities as to make commercial extraction (mining – milling) profitable.milling) profitable.

Grade :Grade : A measure of concentration of a mineral/metal contained A measure of concentration of a mineral/metal contained in rock (or ore). Gold and other precious metals – g/t or oz/t, base in rock (or ore). Gold and other precious metals – g/t or oz/t, base metals - %, uranium – kg/tonne, rare earth elements – ppm…metals - %, uranium – kg/tonne, rare earth elements – ppm…

Cut off Grade :Cut off Grade : The minimum concentration or grade of The minimum concentration or grade of mineral that is required for rock to be considered ore.mineral that is required for rock to be considered ore.

Waste :Waste : Not Ore. Not Ore.

Ore Body:Ore Body: A mineralized deposit (resource) whose A mineralized deposit (resource) whose characteristics have been examined and found to be characteristics have been examined and found to be commercially viable. The extents of the ore body are commercially viable. The extents of the ore body are determined by the cut-off grade.determined by the cut-off grade.

Host Rock:Host Rock: The rock containing an ore deposit. Typically The rock containing an ore deposit. Typically composed of 2 or more minerals.composed of 2 or more minerals.

Gangue:Gangue: Minerals in the ore body that are not of economic Minerals in the ore body that are not of economic interest interest

Mineral ProcessingMineral Processing

Is the recovery of valuable minerals from oreIs the recovery of valuable minerals from ore

Takes place in a mill, aka concentrator - because it Takes place in a mill, aka concentrator - because it concentrates valuable minerals by removing unwanted concentrates valuable minerals by removing unwanted material. material.

The two main products are the concentrate streams The two main products are the concentrate streams (valuable minerals) and the tailings streams (rejects).(valuable minerals) and the tailings streams (rejects).

Disciplines related to mineral processingDisciplines related to mineral processing

Fields of Metallurgical EngineeringFields of Metallurgical EngineeringField

Description Example of topics

Mineral Processing

Beneficiation or Mineral Dressing

Theory and practice of liberation of minerals from ores and their separation by physical methods at ambient conditions

Crushing and grinding, magnetic and electrical methods, flotation, etc.

Extractive metallurgy

Chemical methods sometimes at high temperature and pressure for treating ores to recover their metal values in a pure form

Leaching, precipitation, electrolysis, oxidation, reduction, etc.

Metal Processing

Physical metallurgy

Study of physical properties of metals and alloys, preparation of alloys

Crystal structure, effect of impurities, metallography, heat treatment, etc.

Engineering metallurgyProcessing of metals in the molten state

Casting, welding, etc.

Mechanical metallurgyProcessing of metals in the solid state

Forging, rolling, extrusion, piercing

Powder metallurgyProcessing of metal powders into finished products

Preparation of metals in powder form, hot pressing, etc.

Engineering Terminology in Mineral Engineering Terminology in Mineral ProcessingProcessing

Circuit:Circuit: The path that the ore that is being The path that the ore that is being processed takes as it proceeds from one processed takes as it proceeds from one processing point to another.processing point to another.

Flow SheetFlow Sheet - Drawing that indicates the path - Drawing that indicates the path that the mineral takes within a process. that the mineral takes within a process. Several circuits are often contained within a Several circuits are often contained within a flow sheetflow sheet

RecoveryRecovery Rate Rate – The percentage of valuable – The percentage of valuable metal/mineral, by mass, in the concentrate metal/mineral, by mass, in the concentrate from the feed from the feed

Mineral ProcessingMineral Processing

The goals of mineral processing are to:The goals of mineral processing are to:

separate economic mineral particles from separate economic mineral particles from waste or ganguewaste or gangue

subject minerals to processes in order to subject minerals to processes in order to concentrate them or to extract metals from concentrate them or to extract metals from themthem

Many forms of mineral processing

Depends on feed material and desired product

Mineral Processing Mineral Processing Terminology Terminology

Concentration:Concentration: Another word for grade Another word for grade Heads:Heads: A term that is used to denote the mineral A term that is used to denote the mineral

found in the FEED to a circuit.found in the FEED to a circuit. Head Grade:Head Grade: aka feed concentration aka feed concentration Concentrate:Concentrate: a purified mineral. May require a purified mineral. May require

further downstream processing to convert for end further downstream processing to convert for end uses. Examples: Copper and nickel sulfidesuses. Examples: Copper and nickel sulfides

TailingsTailings - Material rejected from a mill after - Material rejected from a mill after the recoverable valuable minerals have been the recoverable valuable minerals have been extracted.extracted.

Industrial mineral:Industrial mineral: is used for end purpose is used for end purpose without chemical alteration. Examples: gravel, coalwithout chemical alteration. Examples: gravel, coal

Mineralogy: Mineralogy: Description of mineral contentsDescription of mineral contents

What is mineral processing?What is mineral processing?

Mineral: Mineral:

a)a)A solid naturally-occurring compound having A solid naturally-occurring compound having a definite chemical composition.a definite chemical composition.

b) b) Inorganic substance that are extracted from Inorganic substance that are extracted from the earth for use by man. the earth for use by man.

c) A naturally occurring inorganic element or c) A naturally occurring inorganic element or compound having an orderly internal structure compound having an orderly internal structure and characteristic chemical composition, and characteristic chemical composition, crystal form, and physical properties.crystal form, and physical properties.

Mineral classificationMineral classification

Nonmetallic processing has some commonalities with metal processing, but lots of differences

Examples of mineralsExamples of minerals

Examples of mineralsExamples of minerals

Mineralogy determines recoverability

Impact of mineralogyImpact of mineralogy

We mine rocks but we concentrate minerals.

Gangue minerals also important

Understanding mineralogy allows design of processes

Important for feasibility studies

What is mineral processing?What is mineral processing?

Processing – Processing –

Extract values, reject wasteExtract values, reject waste

Conversion of mined ore into usable productConversion of mined ore into usable product

More expensive/challenging with lower More expensive/challenging with lower grade oresgrade ores

Numerous processing methodsNumerous processing methods

Mineral Processing Methods = Mineral Processing Methods = beneficiation + extractive metallurgybeneficiation + extractive metallurgy

Beneficiation aka Mineral DressingOverlap of physical and chemical methods, depending on productWhere extractive metallurgy leaves off, metal processing begins

Mineral Processing Mineral Processing Terminology Terminology

BeneficiationBeneficiation: : enrichment of ores and separation of unwanted gangue enrichment of ores and separation of unwanted gangue mineralsminerals

subsequent metals extraction more efficient. subsequent metals extraction more efficient. Can be divided into two distinct steps:Can be divided into two distinct steps: LiberationLiberation: the rock is broken down by mechanical means, mineral : the rock is broken down by mechanical means, mineral

components become independent of each other, detached components become independent of each other, detached SeparationSeparation: valuable minerals are separated by means of physical : valuable minerals are separated by means of physical and physico-chemical methods making use of differences in specific and physico-chemical methods making use of differences in specific gravity, magnetic properties, etc.gravity, magnetic properties, etc.

Extractive metallurgyExtractive metallurgy:: Chemical reactions of the processes Chemical reactions of the processes equipment where reactions take placeequipment where reactions take place Flowsheets – combinations of processesFlowsheets – combinations of processes

Typical Beneficiation Typical Beneficiation StepsSteps

Beneficiation Terminology Beneficiation Terminology

Comminution:Comminution: Reduction of particle size Reduction of particle size

Starts at mine with blastingStarts at mine with blasting

Two basic types of equipment used:Two basic types of equipment used:

Crushing – breakage by compressionCrushing – breakage by compression

Grinding – breakage by abrasion and Grinding – breakage by abrasion and impactimpact

Shaft

Comminution EquipmentComminution Equipment

Shaft

Comminution EquipmentComminution Equipment

Beneficiation Terminology Beneficiation Terminology

ClassificationClassification : Separation based mainly on : Separation based mainly on particle sizeparticle size

Behavior affected by size, shape, and Behavior affected by size, shape, and density of the particlesdensity of the particles

Two common types of classifiers:Two common types of classifiers:

Screens – dry method, coarser particlesScreens – dry method, coarser particles

Hydrocyclones – wet method, finer Hydrocyclones – wet method, finer particlesparticles

Classification EquipmentClassification Equipment

Beneficiation Terminology Beneficiation Terminology

Separation Techniques Separation Techniques take advantage of the take advantage of the

differences in characteristics between mineralsdifferences in characteristics between minerals::Flotation: Flotation: Attachment of minerals to air Attachment of minerals to air

bubbles - hydrophibicitybubbles - hydrophibicityMagnetic Separation: Magnetic Separation: Apply magnetic Apply magnetic

fieldfieldGravity Separation:Gravity Separation: differences in specific differences in specific

gravity of materialsgravity of materials

Electrostatic Separation:Electrostatic Separation: Apply Apply electrostatic polarityelectrostatic polarity

Particle size distribution has large influence on Particle size distribution has large influence on resultsresults

Separation EquipmentSeparation Equipment

Flotation cellFlotation cell

Separation EquipmentSeparation Equipment

Magnetic Magnetic separatorseparator

Separation EquipmentSeparation Equipment

Gravity separation - jigGravity separation - jig

Separation EquipmentSeparation Equipment

Electrostatic Electrostatic separatorseparator

Beneficiation Terminology Beneficiation Terminology

Dewatering:Dewatering: To remove water from a substance. To remove water from a substance. Also refers to the circuit where this takes place. Also refers to the circuit where this takes place.

Dewatering Techniques:Dewatering Techniques:Thickener: Thickener: Allow gravity settlingAllow gravity settlingFilter: Filter: Apply air pressure to draw water Apply air pressure to draw water

outoutCentrifuge: Centrifuge: Apply centrifugal forceApply centrifugal forceDryer: Dryer: Apply heat to evaporateApply heat to evaporate

Slurry Density:Slurry Density: The amount of solids in a slurry, The amount of solids in a slurry, expressed as a percentage by weight.expressed as a percentage by weight.

Dewatering EquipmentDewatering Equipment

ThickenerThickener

Dewatering EquipmentDewatering Equipment

Disc filterDisc filter

Dewatering EquipmentDewatering Equipment

Rotary kiln dryerRotary kiln dryer

Beneficiation Terminology Beneficiation Terminology

Waste Disposal - Waste Disposal - "Mining is waste management ..." "Mining is waste management ..." The majority of tonnage mined must be disposed of The majority of tonnage mined must be disposed of

as tailingsas tailings Water used must be treated and released Water used must be treated and released

Tailings Dam:Tailings Dam: Built from ground waste rock discharged after Built from ground waste rock discharged after processing from the mill processing from the mill

Acid Mine Drainage: Acid Mine Drainage: produced by exposing sulfide minerals to produced by exposing sulfide minerals to air and water, resulting in oxidation that generates acid.air and water, resulting in oxidation that generates acid.

Waste Rock: Waste Rock: Unprocessed non-mineralized / low grade Unprocessed non-mineralized / low grade mined materialmined material

Water Balance: Water Balance: Accounting of water inputs and outputs Accounting of water inputs and outputs from a mine/mill site.from a mine/mill site.

Water Treatment:Water Treatment: The removal of harmful contaminants from The removal of harmful contaminants from waterwater

Waste DisposalWaste Disposal

Tailings DamTailings Dam

Waste DisposalWaste Disposal Waste Rock PileWaste Rock Pile

Waste DisposalWaste Disposal Acid Mine DrainageAcid Mine Drainage

Waste DisposalWaste Disposal

Water BalanceWater Balance

Mineral Processing Methods = Mineral Processing Methods = beneficiation + extractive metallurgybeneficiation + extractive metallurgy

Beneficiation aka Mineral DressingOverlap of physical and chemical methods, depending on productWhere extractive metallurgy leaves off, metal processing begins

Extractive Metallurgy Extractive Metallurgy Terminology Terminology

HydrometallurgyHydrometallurgy Leaching - the process of extracting a soluble Leaching - the process of extracting a soluble

constituent from a solid by means of a (water based) constituent from a solid by means of a (water based) solventsolvent

• Water changes solubility, by making it acidic or basic, oxidizing or reducing

Solvent Extraction – transfer between immiscible Solvent Extraction – transfer between immiscible fluidsfluids

Ion Exchange – solid resins that adsorb/desorb Ion Exchange – solid resins that adsorb/desorb dissolved chemical speciesdissolved chemical species

Precipitation – convert dissolved into solidPrecipitation – convert dissolved into solid• Crystallization via evaporation• Ionic precipitation - addition of a reagent to a

solution creates a metal compound whose solubility is so low that precipitation takes place immediately

Hydrometallurgy EquipmentHydrometallurgy Equipment

Tank leach circuitTank leach circuit

Hydrometallurgy EquipmentHydrometallurgy Equipment

Solvent extraction mixer-settlersSolvent extraction mixer-settlers

Hydrometallurgy EquipmentHydrometallurgy Equipment

Ion ExchangeIon Exchange

Hydrometallurgy EquipmentHydrometallurgy Equipment

Vacuum Vacuum crystallizercrystallizer

Extractive Metallurgy Extractive Metallurgy Terminology Terminology

Pyrometallurgy – use of heat to induce a Pyrometallurgy – use of heat to induce a chemical transformationchemical transformation

Roasting – convert to oxide form. Roasting – convert to oxide form. Example: 2 CuS2 + 5 O2 → 2 CuO + 4 Example: 2 CuS2 + 5 O2 → 2 CuO + 4 SO2SO2

Smelting - uses reducing substances Smelting - uses reducing substances that will combine with those oxidized that will combine with those oxidized elements to free the metal. Example: elements to free the metal. Example: 2 Fe2O3 + 3 C → 4 Fe + 3 CO2 2 Fe2O3 + 3 C → 4 Fe + 3 CO2

Pyrometallurgy EquipmentPyrometallurgy Equipment

SmelterSmelter

Extractive Metallurgy Extractive Metallurgy Terminology Terminology

Electrometallurgy – use of electrical Electrometallurgy – use of electrical energy to induce a chemical energy to induce a chemical transformationtransformation

Electrowinning – to precipitate a metal Electrowinning – to precipitate a metal from solution using electric potentialfrom solution using electric potential

Electrorefining – to purify a metal by Electrorefining – to purify a metal by dissolving it, then re-precipitating it dissolving it, then re-precipitating it

Electrometallurgy EquipmentElectrometallurgy Equipment

Alternating anodes and cathodes in a Alternating anodes and cathodes in a tankhouse for electrowinningtankhouse for electrowinning

Flowsheet examplesFlowsheet examples

Aluminum:Aluminum: from bauxitefrom bauxite

Copper:Copper: from chalcopyritefrom chalcopyrite

Iron:Iron: from hematitefrom hematite

GoldGold – – Placer, sulphide and oxide Placer, sulphide and oxide

Oil SandsOil Sands – – Fort McMurrayFort McMurray

AluminumAluminum

CopperCopper

IronIron

GoldGold

Oil SandsOil Sands

Mineral Processing Mineral Processing Recovery Recovery

Recovery : Recovery : Potential for loss every step of the way, Potential for loss every step of the way, in each circuit!in each circuit!

Tonnage vs. Recovery: Tonnage vs. Recovery: A processing circuit pushed A processing circuit pushed beyond its capacity will induce recovery lossbeyond its capacity will induce recovery loss

Feed Grade vs. Recovery Feed Grade vs. Recovery : : A higher feed grade tends A higher feed grade tends to have higher processing recoveryto have higher processing recovery

Concentrate Grade vs. Recovery: Concentrate Grade vs. Recovery: A higher A higher concentrate grade tends to result in lower processing concentrate grade tends to result in lower processing recovery (= rejection of lower quality minerals to recovery (= rejection of lower quality minerals to tailings)tailings)

Concentrate Grade vs. Price:Concentrate Grade vs. Price: A higher quality A higher quality concentrate will fetch a higher price (have lower concentrate will fetch a higher price (have lower impurity penalties) impurity penalties)

Revenue = Production (tonnes) x grade x recovery Revenue = Production (tonnes) x grade x recovery x pricex price

Mining EconomicsMining Economics

Typical product grade vs. recovery Typical product grade vs. recovery curve for a Cu sulphide flotation millcurve for a Cu sulphide flotation mill

Mining EconomicsMining Economics

Relation between cost and particle size Relation between cost and particle size

Mineral Economics - ReviewMineral Economics - Review

Discounted Cash Flow (DCF)Discounted Cash Flow (DCF) NPV (net present value) is a means of comparing a NPV (net present value) is a means of comparing a

dollar today to the value of the same dollar in the dollar today to the value of the same dollar in the future. For mining projects, we apply NPV to future. For mining projects, we apply NPV to determine if a project is worth more than it costs.determine if a project is worth more than it costs.

Free Cash Flow (FCF) is the operating cash flow minus Free Cash Flow (FCF) is the operating cash flow minus capital includes Taxes, Dividends, Royalties, capital includes Taxes, Dividends, Royalties, Depreciation and Amortization. I.e. the amount of Depreciation and Amortization. I.e. the amount of money left after the bills are paidmoney left after the bills are paid

Discount Rate is rate that future cash flows are Discount Rate is rate that future cash flows are discounted to determine present value. This is discounted to determine present value. This is different than interest. different than interest.

IRR (internal rate of return) is the discount rate that IRR (internal rate of return) is the discount rate that results in an NPV of 0.results in an NPV of 0.

Mineral Economics - ReviewMineral Economics - Review

Net Present Value is common way to evaluate a project

Value = Free Cash Flow

Rate = Discount Rate

n=Total number of periods

i=Period

Payback period - the time required for the operating revenue to pay back all the costs, including the initial capital investment used to construct the project.

Mineral EconomicsMineral Economics

Typical mining project annual cash flow patternTypical mining project annual cash flow pattern

R = revenue, C = costs, T = taxes, A = annual R = revenue, C = costs, T = taxes, A = annual loan payment (principal + interest), F = cash loan payment (principal + interest), F = cash flow and K= capital costs.flow and K= capital costs.

Mining Project Economics Mining Project Economics

What happens when project parameters are What happens when project parameters are changed?changed?

Must start with a reasonable base case scenario Must start with a reasonable base case scenario (technically feasible) before economic (technically feasible) before economic optimization (fine tuning) optimization (fine tuning)

Strong inter-relationships between:Strong inter-relationships between: TonnageTonnage GradeGrade Capital costsCapital costs Operating costsOperating costs

Has effects on:Has effects on: Mine lifeMine life Cutoff gradeCutoff grade

Capital and Operating Cost Estimation vs. TonnageCapital and Operating Cost Estimation vs. Tonnage

Work by OHara (1980), OHara and Suboleski (1992) and Work by OHara (1980), OHara and Suboleski (1992) and USBM (1987) suggest that the curves for capital and USBM (1987) suggest that the curves for capital and operating costs can be reasonably approximated by operating costs can be reasonably approximated by exponential equations, with the general form:exponential equations, with the general form:

Cost = K tCost = K txx

Where:Where:K = a constant specific to the particular costK = a constant specific to the particular costt = production rate in tonnes per dayt = production rate in tonnes per dayx = an exponentx = an exponent

Capital costs typical range: 0.5 to 0.7Capital costs typical range: 0.5 to 0.7 0.6 is a reasonable first estimate0.6 is a reasonable first estimate

Operating costs in $/t typical range -.3 to -.1Operating costs in $/t typical range -.3 to -.1 -0.2 -0.2 is a reasonable first estimateis a reasonable first estimate

WARNING: These equations should not be used for WARNING: These equations should not be used for detailed estimating, although they can give guidance for detailed estimating, although they can give guidance for order of magnitude estimating.order of magnitude estimating.

If a cost is known accurately, this relationship can be used to factor the cost up or If a cost is known accurately, this relationship can be used to factor the cost up or down for differing production rates, within reasonable limits:down for differing production rates, within reasonable limits:

Cost at t1 = C1 = K t1xCost at t1 = C1 = K t1xCost at t2 = C2 = K t2xCost at t2 = C2 = K t2x

Then:Then:

C1 / C2 = (K t1x) / (K t2x)C1 / C2 = (K t1x) / (K t2x) = t1x / t2x (because K is common it can be eliminated) = t1x / t2x (because K is common it can be eliminated) = (t1 / t2)x = (t1 / t2)x

Simplified:Simplified:C1 / C2 = (t1 / t2)xC1 / C2 = (t1 / t2)x

Then:Then: C2 = C1 (t2 / t1)x C2 = C1 (t2 / t1)x For a capital cost or annual operating cost, if C1 and t1 are known, and x can be For a capital cost or annual operating cost, if C1 and t1 are known, and x can be

estimated from experience then C2 can be estimated for a given t2. estimated from experience then C2 can be estimated for a given t2. Example: Example: For capital cost at 20,000 t/d is $30 million, then at 25,000 t/d can be estimated at:For capital cost at 20,000 t/d is $30 million, then at 25,000 t/d can be estimated at: C2 = $30000000 (25000 / 20000)0.6C2 = $30000000 (25000 / 20000)0.6

= $30000000 (1.1433) = $30000000 (1.1433) = $34,298,000 = $34,298,000

For operating cost of $10.00/tonne, and an exponent of -.2 the unit cost at the For operating cost of $10.00/tonne, and an exponent of -.2 the unit cost at the higher tonnage will be:higher tonnage will be:C2 = $10.00 (25000 / 20000)-0.2C2 = $10.00 (25000 / 20000)-0.2 = $10.00 (0.9564) = $9.56 = $10.00 (0.9564) = $9.56

Capital and Operating Costs vs. TonnageCapital and Operating Costs vs. Tonnage

Capex and Opex vs. Production RateCapex and Opex vs. Production Rate

NPV CurveNPV Curve

An NPV curve is theoretical, always check An NPV curve is theoretical, always check that the inputs are realistic!that the inputs are realistic!

Mineral Economics – Operating CostsMineral Economics – Operating Costs

Overall operating costs are broken down into 3 basic Overall operating costs are broken down into 3 basic areas for economic analysis:areas for economic analysis:

MiningMining – determine mine plan input costs, production – determine mine plan input costs, production rate and fully diluted (Run-of-Mine = ROM) grade rate and fully diluted (Run-of-Mine = ROM) grade

MillingMilling – determine process flowsheet input costs, – determine process flowsheet input costs, recovery rate, product qualityrecovery rate, product quality

General and AdministrativeGeneral and Administrative (G & A) – determine (G & A) – determine overhead costs :overhead costs :

• Administration (HR, payroll)• Management (site + head office)• Safety & Health• Environment• Quality ManagementG&A tends to be fixed REGARDLESS of

production rate!

Milling Operating CostsMilling Operating Costs

Typical relative cost of beneficiating an ore

Operation%

Crushing 5 - 20

Grinding 25 - 75

Flotation 25 -45

Dewatering and drying

10 -20

Other operations 5 - 10

Project StagesProject Stages

Idea stageIdea stage

Conceptual stageConceptual stage

Pre-feasibility stagePre-feasibility stage

Market StudiesMarket Studies

Feasibility studiesFeasibility studies

Financial analysisFinancial analysis

Preliminary designPreliminary design

Final design and construction Final design and construction

Commissioning and start up Commissioning and start up

Closing reportsClosing reports

Typical Project StagesTypical Project Stages

Idea StageIdea Stage :: identify the need for a project to be started or identify the need for a project to be started or conceptualized conceptualized

philosophic - decide whether this is the type of project that philosophic - decide whether this is the type of project that they would like to pursue they would like to pursue

Discussions of cost and schedule at the idea stage are Discussions of cost and schedule at the idea stage are normally limited to a broad definition normally limited to a broad definition

Informal - sometimes mentioned to get a reaction Informal - sometimes mentioned to get a reaction Ideas can begin with anyone in the organization Ideas can begin with anyone in the organization

Conceptual StudyConceptual Study: : establish the shape of the project, and get a establish the shape of the project, and get a better feel for its scope and size better feel for its scope and size

Costs can be put to a concept. However, the accuracy of Costs can be put to a concept. However, the accuracy of investment costs may be wildly out, probably +/-50%.investment costs may be wildly out, probably +/-50%.

Rough estimate based on experience and judgment Rough estimate based on experience and judgment Estimate's usefulness is in establishing an idea of the costs Estimate's usefulness is in establishing an idea of the costs

commensurate with the aims of the projectcommensurate with the aims of the project

Resource and Reserve CategorizationResource and Reserve Categorization

Mineral Reserve: This is where things start to get Mineral Reserve: This is where things start to get realreal

Typical Project StagesTypical Project Stages

Pre-feasibility StudyPre-feasibility Study :: comprehensive study of viability of a comprehensive study of viability of a mineral project mineral project

mining method has been establishedmining method has been established effective method of mineral processing has been determinedeffective method of mineral processing has been determined financial analysis based on financial analysis based on reasonable assumptionsreasonable assumptions of of

technical, engineering, legal, operating, economic, social, and technical, engineering, legal, operating, economic, social, and environmental factors environmental factors

determine if all or part of the mineral resource may be determine if all or part of the mineral resource may be classified as a mineral reserve classified as a mineral reserve

Feasibility StudyFeasibility Study: : comprehensive study of a mineral depositcomprehensive study of a mineral deposit all geological, engineering, legal, operating, economic, social, all geological, engineering, legal, operating, economic, social,

environmental and other relevant factors are considered environmental and other relevant factors are considered in in sufficient detailsufficient detail

could reasonably serve as the basis for a final decision by a could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit financial institution to finance the development of the deposit for mineral production.for mineral production.

Typical Project StagesTypical Project Stages

Detailed design and construction:Detailed design and construction: Engineering design and Engineering design and construction are inseparable, even though two distinct groups construction are inseparable, even though two distinct groups normally perform the work. normally perform the work.

Preliminary design - establish a definite time frame for Preliminary design - establish a definite time frame for freezing the process and plant designs so that cost and freezing the process and plant designs so that cost and schedule upsets are minimized effective method of mineral schedule upsets are minimized effective method of mineral processing has been determinedprocessing has been determined

definitive estimate to an accuracy of 10 to 15% to control the definitive estimate to an accuracy of 10 to 15% to control the job – requires about 20 percent of the total engineering must job – requires about 20 percent of the total engineering must be done, as measured by completion of drawings. be done, as measured by completion of drawings.

be leery of both steam-rolling a design freeze prematurely, vs. be leery of both steam-rolling a design freeze prematurely, vs. allowing people to continuously change their minds allowing people to continuously change their minds

Commissioning: Commissioning: checkout period prior to starting the plant checkout period prior to starting the plant Sometimes the entire plant is run for a period of time without Sometimes the entire plant is run for a period of time without

material material Startup usually begins on a reduced output basis, gradually Startup usually begins on a reduced output basis, gradually

increasing until planned output capacity is reached increasing until planned output capacity is reached

Typical Project StagesTypical Project Stages

Project emotional stages:Project emotional stages:EuphoriaEuphoriaWandering off trackWandering off trackCatch up and controlCatch up and controlThe BoggsThe BoggsProject Manager panicProject Manager panicFrantic catch up and controlFrantic catch up and controlLoose endsLoose endsSign offSign off