Good practices in mineral resource & ore reserve estimation – AusIMM webinar Mono 30.

This was an excellent medium for industry leaders to pass on some of their many years of professional experience. The webinar was a first step in providing Asian AusIMM members with a broader opportunity to participate in professional industry seminars.  The Adelaide based webinar was held on Thursday 10 December 2015 with participants from Asia, including 17 of the 250 AusIMM members registered in Indonesia. The presentations were selected in support of the new Monograph 30 and reflect a current view of good industry practices. Some quick notes follow;

• Overview – Risk in Resource and reserve estimation – Chris De Vitry.
  • Included a review of 258 Australian mining projects over the last 50 years (mostly Au) where most had a capital overrun of >25% while the stated precision of the Feasibility Study was +/- 10%.
  • The level of accuracy of various studies range of accuracies varies from stated [Scoping 24%, Prefeasibility 17% Feasibility 13%, Detailed Engineering 9% ] to actual [Scoping 50-30%, Prefeasibility 27-30%, Feasibility 20-27%, Detailed Engineering 12-20%].
  • However 20% of Australian projects did better than target (mostly Australian gold mines in the 90’s).
• Validity of XRF data – Michael Gazley.
  • Good introduction to the workings of the XRF machine, and notes on calibration & operational cross checks.
• Managing risk in Feasibility Studies – Peter McCarthy.
  • The study process typically progresses from Scoping Study (what could it be?) à Prefeasibility study (what should it be?) à Feasibility study (what will it be?) à Project procurement / project execution / operations (where things often change between study & implementation).
  • Studies are often supported by ambitious management, while reality or different management objectives often sets in with operation.
  • Contingency will be spent – it is a matter of where & when. Average of many studies contingency Scoping 24%, Prefeasibility 17%, Feasibility 13%, detailed engineering 9%.
• Case Study 1- Managing risk Baroness – Paul Leevers.
• Collecting Geotechnical Data from drill holes – Andre van As.
  • Geotechnical data is typically collected far too late in a projects development, and is typically far too little. Geotechnical data collection should be part of the mainstream data collection from the beginning of a project – with similar project value to that of resource volume & grade. Certainly well before mine design.
  • Geotechnical data should be sourced through data collection – Geotechnical logging, out crop / open pit mapping, down hole geophysics plus modeling of geotechnical provinces, hydrology modeling etc.
  • There is no qualification on geotechnical data (as resources have inferred, indicated , measured etc) wherein geotechnical data may be categorized with levels of confidence such as “implied, justified, verified”.
• Geometallurgy guidelines – Dean David.
  • “Geometallurgy is a scientific discipline in which geological data, mining data and processing data is co-analyzed to generate useful information and knowledge to optimize resource profitability”.
  • Good example where geologists had not adequately modeled one geology type, but neglected to model different hardness that ultimately had a big impact on the process plant throughput.
• Environmental constraints on resource to reserve conversion – Corrine Unger.
  • The “Modifying Factors” for resource to reserve categorization may include environmental factors, particularly land access, mining & process, waste disposal, access to water, long term sustainability of waste dumps & mine closure.
  • There are historic examples where long term mine closure costs (typically to government) outweigh the financial benefit from the mine. Modern mines may need to consider a metaliferous mine closure cost of around $200-300 million, though shallow bauxite & lateritic Ni may be much cheaper.
  • Mine closure is typically handled by separate engineers after the geologist & miner have left the project – thus feed back into the Feasibility study or mine operation is not so good.
• Case Study 2- Modifying Factors at Olympic Dam – Don Grant.
• Confidence in reporting & converting resources to reserves – Mark Noppe.
  • Why Feasibility studies or mine projects fail à Ore grade, processing, schedule too aggressive. Technical factors resulting in feasibility study failure include; Geology & resource / reserve estimation 17%, geotechnical 9%, metallurgy 15%, geo-hydrology 4%, mine design & scheduling 32%, mine equipment selection 4%, process plant design 12%, cost estimation 7%.
  • Accuracy and confidence levels are not provided for in reporting codes.
  • No two deposits are the same, thus emphasize on competent persons meaning of resource and reserve.
  • Note that more data is not same as better data, low confidence in one of the modifying factors is the weakest link in the confidence of the resource / reserve. Accuracy and confidence must be assessed over a particular scale of time.
• Planning strategies to increase project value – Tarrant Elkington.
  • Geologists incorrectly often leave development of modifying factors till latter stages in the project. Typically after 10 holes we may introduce bulk sampling, mineralogical reviews etc such that the following 350 holes can be targeted to collect the relevant data.
• Industrial Minerals – markets & modifying factors – Sue Border.
  • Broadly speaking industrial minerals is anything we mine that is not ore or coal. It can high value (diamonds) or low value (sand). The overriding key factor is there is no value without consumers, brand power is important, specifications depend on end use, specific tests for each use, transportation & purity etc.
  • If a project owner states they have the world’s largest deposit of XXX, then watch out for failure, as more product leads to lower price – and market adsorption is typically very limited.
• Case Study 3 – developing competence at Olympic Dam – Andrew Robertson.
• Issues in reporting under JORC 2012 – Steve Hunt.
  • Most complaints and questions received by the AusIMM committee on JORC relate to – 1) reasonable prospects for eventual economic extraction, 2) industrial minerals to report on industry specifications rather than on mineralogy, 3) ore reserve economics & balance / alignment of modifying factors, 4) potential conflict of interests in reporting.
  • Other concerns about the language of reporting, such as “JORC compliant, JORC standard” etc.
  • JORC is linked (legally) to the ASX, with a different sense of authors reporting “risk” for private or international reporting.
  • A number of common failures in adequate reporting were outlined (from about 1 year ago), including;-
    • Some discussion where JORC requires drill hole coordinates & results to be published, but some owners (particularly in Asia) are concerned the subsequent lack of confidentiality will be of use to illegal miners.
    • If not why not à “not applicable” is not acceptable.
    • More maps & charts typically required.
    • The use of referring back to another part of the report is to be limited in certain circumstances.
    • More care in cautionary statements recommended.

There were opportunities for questions & discussion at various points through the 1 day program.