Week 2 of Sr Design 2013

Diamond People• Begin Building your Geologic Model

– Right now your data limits you to assuming that each pipe is a single grade of material over a specific depth interval

– Estimate the Gross Value Per Ton of Ore• In many cases you have a bort diamond value per caret and a caret

per ton value – multiplied this will provide a value per ton for bort diamonds

• You can do a similar calculation for industrial stones• For your large industrial diamonds you reported “up to $200 per

caret” but actual prices can be between industrial stones and $200 per caret – pick a reasonable value remembering that $200 per caret is an ideal peak price

• You still need to get prices to use ballas and carbondo

Continue Your Grade Calculation• Look at your gem stones

– Your price data is by gem size and quality– Use 70% of cut price for the value of rough stones– Remember cut stones are only 40% to about 75% the size of

rough stones (good cuts often discard 40% of rough stone – only discarding 25% is likely a fairly poor cut)• Thus a 1 caret rough stone will likely only produce a 0.6 caret cut

stone– If stones of 1 to 1.5 caret size are worth $5000 per caret– And stones of 0.5 to 0.99 carets are worth $1000 per caret– Your one caret rough cut down to 0.6 caret size is valued at $1000 per caret –

not $5,000 per caret• The 0.4 carets of waste rough can almost certainly be sold for bort.

Another Omission in Your Data

• You have colored diamonds in some places but right now you have no price data for colored diamond gem stones– You need to get values to proceed with your

calculations.

The Problem of Lack of Grade

• Some of your drill holes encountered some number of large and rare stones but no grade per ton was given– The size of these stones relative to drill hole volume was

considered to great to make a grade estimate• The problem is called nugget effect – the chance that you did or did

not hit something big• The random chance range is bigger than the predicted grade – you

can’t statistically quantify anything– You can guess there may be some very high values but you

would need to mine bulk samples to know what• Don’t include value per ton for a few isolated large stones but note

that very rich stones may be present.

Document How You Got Your Estimated Value Per ton

• Show the full estimating calculation• Now assign values per ton.– Assuming an entire pipe between say 500 and 750

feet depth is made of $10,000 per ton ground – how many tons of ore do you have?

• Create estimates of your ore tonnage by value• Create an initial geologic model of your ore

deposit.

Continue Development of Your Background Information

• You indicated you would get water from Cheyenne’s reservoirs– How much would you pay per unit for water at Cheyenne prices?

• You indicated you had 120,000 people within 30 minutes of the mine and none of them have mining training– What will it likely cost you to train a miner? What is that based

on?– What will you likely pay?– Your engineers and managers will likely have to be “imported” –

what salaries will you likely have to offer? What is that based on?

Begin Writing Sections Your Final Report

• Write section on value of diamond and garnet– Indicate whether your research indicates likely upward or

downward movement of prices– Indicate the values you are going to assume in your economic

analysis• Write the section on workforce available in the area and what

you expect to have to pay, train, or import workers• Write the section on water supply and the likely cost of water.• These sections will likely range in size from about ½ a page to

maybe as much as 3 to 5 pages for diamond and garnet values

Planning Your Mine Concept

• What Mining Methods Would You Consider Using on this Deposit?– What kind of recovery would each method

achieve– What kind of dilution would each method have– What kind of cost per ton does each method have– Consider the tonnage of ore you have available• Are any of the methods not practical for that size

deposit?

Consider Limitations on Mining Method

• Diamond Mining often considers Block Caving– Are your estimated rock strengths and RQDs conducive to block caving?

• Diamond Mining Often considers Open Pit– Open pit depth is usually limited by economics

• As you go deeper the stripping ratio increases– If I dig a 500 ft deep pit about what will my stripping ratio be?– If I go to 1000 ft what is my incremental stripping ratio?– If I go to 1500 ft (still common for open pit)– What if I go all 3500 ft down to the know pipe bottoms?

• As you go deeper the haul distance to the surface increases– About what would the cost be of trucking a ton of rock out of a 500 ft deep pit– What would the cost be if it were 3500 ft deep?

– Are there rock mechanics constraints that make a 3500 ft deep pit infeasible?– Are there land area constraints that make a 3500 ft deep pit infeasible?– Will the wind, snow, snow drifts, cold, or limited hours of daylight make Open Pit

infeasible• Is the limitation year round or only seasonal?

Mining Methods

• What other mining methods are practical?– Open Stoping Methods?– Cut and Fill Methods?– Shrinkage methods?

• Kimberlite degrades and weathers badly– How will this impact the methods you are

considering.

Consider Your Mining Rate• If you mine your deposit in 10 years what will your production rate be?

– What about 15 years?– 20 years– 25 years– 33 years– 40 years– 50 years

• Are any of these rates particularly favorable or unfavorable to the mining rates you are considering

• Look at your road network for people, supplies, and product– Are any of the rates impractical for the geography

• What is the size of the current market for your products– Are any of your production rates high enough to be a major part of the total market

• If so will you end up with product you cannot sell?• Will you alter the price for which things sell from flooding the market?

Make a Draft Proposal

• How will you mine?• What will be your mine life?• What will be your production rate?

COPPER

Build a Block Model

• Take the new file and get a block model• Estimate the amount and grade of ore in place– Alteration 6 = oxide what is the tonnage– Alteration 5 = mixed oxide sulfide what is tonnage– Alteration 4 = Secondary enrichment zone sulfide– Alteration 3 = mixed secondary and primary– Alteration 2 = Primary sulfide– Alteration 1 = Primary sulfide refractory gold

Consider Your Mining Method

• What methods make sense for this type of orebody• About what would your mining rate be for– 15 year life– 20 year life– 25 year life– 33 year life– 40 year life– 50 year life

• Are any of these mining rates poor matches for the mining method being considered?

Consider Your Mining Methods

• Propose a mining method and justify why this method is preferable to others

• It is likely that methods considered would include Open Pit and Block Caving– What are the relative costs and recoveries?– Are there environmental considerations that favor

one method or the other?

Begin Developing Economics• For your mining method of choice begin detailing cost details• Example Using Open Pit

– How would you load and haul ore• What equipment?• What would it cost to buy?• What would it cost to operate?

– How would you blast• What equipment would you use?• What would it cost to drill?• What would you spend for supplies and manpower to blast?

– What support services would you require?• What would they likely cost

• You will be trying to get a solid handle on Ore Mining and Waste Mining Cost

Work on Processing and Costs• Assume your mineral grain size is fairly coarse and easily

liberated and your grinding indexes are at the lower end for typical copper ore

• Oxide ore has readily soluble copper and gold. Silver is also in metalic or oxide forms– How could you process such an ore?

• What are the costs likely to be?

• You have a secondary enrichment zone– The copper is mostly chalcocite and covellite– The gold is metallic without without carbon– The silver is typical silver sulfides

More on Your Processing• You have a zone that is 50% oxide and 50% secondary

sulfide• You have two primary sulfide zones

– The Copper is 70% calcopyrite 30% Boronite– #2 zone gold is metallic without carbon, silver is sulfide– #1 zone gold has extensive carbon, silver is sulfide

• You have a 50% secondary, 50% primary transition zone– Gold is not encumbered by carbon

• Your goal is to determine the processing method and costs– You already are partially calibrated for size

Follow Up

• Get price histories from 1975 to the present for copper, gold, and silver– Adjust old prices to current dollars using inflation

indexing– Look at what drove past price swings– Look at current conditions– Determine and justify 3 prices• Most likely reasonable price• Low end scenario price• High end scenario price

More Follow Up• Pick the two closest copper smelters

– If you were going to ship concentrates to those smelters how would you do it?• Are the roads capable of handling the traffic you are proposing?• Is it practical to upgrade roads or extend new routes into the area?

– If you had a copper concentrate at 30% copper what would the cost per pound of contained copper be for shipping

– What would you likely pay in smelter and refining charges per lb of copper to have your copper refined?

• If you mined your ore body in 33 years what would it cost to build a smelter and refinery sized for that production?

Do It Right

• Where do people live in the area– What do those people do for a living in those places– What is your plan for getting a workforce?

• Check elevation and Climate to make sure that Silver City weather data is a good surrogate for your mine site– Detail seasonal temperature, rain, and other weather ranges– Do any of your findings impact your mining method or plan?

• Provide a concrete plan for where water would come from – how it would get to your site – and what it would likely cost.

COAL

Initial Work• Consider what you need to put together a geologic model of

your mine– Remember to look at the new geophysical data

• If you need additional drill hole data it would likely be for one or more of the following– Nail down displacement on the fault (a drill hole on each side would

likely work best. You might want to check more than one place if you suspect that the displacement might not be uniform)

– Trace the washout zones (you should look at where you have found washout zones and guess at where things might go so washout drilling is based on something)

– If you can’t get a handle on how coal is thinning or thickening or changing quality in an area you might need drill holes.

Drill Work

• Thursday preferred – Friday in class acceptable• Determine whether you need additional

drilling and what the drilling would be looking for.– Identify where the drilling needs to be and why

• You can have 8 drill holes if you can explain why – if you want more you must make the case.

For Presentation on Tuesday

• Build a computer based model of your coal reserve– The Model should address issues• What do you believe is the displacement on the fault• Where do you believe the washout channels go or exist

– (Remember that washout channels represent streams – they are usually continuous and do not appear and disappear in various spots)

– How have you or how are you addressing the uncertainty for these things.

From Your Model– Show representations of the following

• The coal thickness of the #7 seam• Based on the elevation of the bottom of the #7 coal which direction

will water run if you open workings• The coal thickness of the #6 seam• Based on the elevation of the bottom of the #6 coal which direction

will water run if you open workings• The coal thickness of the #5 seam• Based on the elevation of the bottom of the #5 coal which direction

will water run if you open workings• The coal thickness of the #2 seam• Based on the elevation of the bottom of the #2 coal which direction

will water run if you open workings

Mine Planning

• Based on your model and allowing for coal losses from washout channels or baking around intrusive dikes – how many tons of each coal do you believe you have now?– Are you still meeting your investors hopes for coal

reserve size.• Considering depth, roof conditions, floor

conditions, seam thickness, and continuity of the coal bed what method would you suggest for mining each coal seam? Explain why.

Begin Laying Out Minable Areas• For each coal seam

– What areas are unminable because the coal is too thin?– What areas are unminable because the coal has been cooked by intrusive

dikes– What areas are unminable because you cannot find an economically

attractive way to control the roof– What areas are unminable because you cannot find an economically

attractive way to control the floor– What areas are unminable because they represent pockets of coal that are

too small to be worth getting to• This might be small areas isolated from the rest of the reserve by a fault• It might be a small area isolated from the rest of the reserve by a washout channel

– What areas are unminable because of the proximity to geologic hazards– Are there any areas that are unminable because of another reason?

Estimate Recoverable Tonnage• You now have “minable areas” and known thicknesses for the coal in

the minable areas. How many minable tons of each coal do you have?

• Most mining methods achieve less than 100% recovery of the “minable” in situ resource. What percentage of the in situ resource do you believe you will get? Now how many really mined tons do you have from each seam?

• Most mining methods suffer from “out of seam dilution”. Based on your mining methods how many tons of dilution rock do you expect to add?

• Now applying reasonable preparation plant yields to your out of seam diluted coal how many mined and washed tons of each coal seam do you expect to get.

Get a Feel for Your Operation Scale

• You know the company’s goals for tons of coal reserve, production rate and mine life. You know the surrounding market. You know how many clean tons of coal you may produce. You know how many raw tons of diluted coal you will mine.– What will you target for your annual clean ton

production rate (by coal type)– What will you target for your coal preparation plant

capacity?

What Type of Mine Access Do You Want?

• For production and supply access what will you use?– Slopes?, Drifts out of boxcuts?, Shafts?

• Where would you put these openings to start out with?

• What direction would you likely mine?• Where would you put out mains and

submains?

Start Writing Report Sections

• Section on Mine property and access to market– What will transport to market cost?

• Coal Prices– You had a fairly good breakdown with expected

price, boom price and bust price– Be sure to document your sources and how you

reached your conclusions