Baixe Open Pit Mine - Planning and Design-3rd Edition e outras Notas de estudo em PDF para Engenharia de Minas, somente na Docsity! W, HUSTRULID, M. KUCHTA ano R. MARTIN OPEN PIT MINE PLANNING & DESIGN 3%0 EDITION 1. FUNDAMENTALS Gaia, eua so OPEN PIT MINE PLANNING & DESIGN VOLUME 1 - FUNDAMENTALS Cover photo credit: Bingham Canyon mine, courtesy of Kennecott Utah Copper Library of Congress Cataloging-in-Publication Data Applied for 1st edition, 1st print: 1995 2nd print: 1998 Revised and extended 2nd edition: 2006 Revised and extended 3rd edition: 2013 Copyright © 2006 Taylor & Francis pic., London, UK Typeset by MPS Limited, Chennai, India Printed and bound in Great Britain by CPI Group (UK) Ltd, Croydon, CR0 4YY. All rights reserved. No part of this publication or the information contained herein may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, by photocopying, recording or otherwise, without written prior permission from the publishers. Although all care is taken to ensure the integrity and quality of this publication and the information herein, no responsibility is assumed by the publishers nor the authors for any damage to property or persons as a result of operation or use of this publication and/or the information contained herein. Published by: CRC Press/Balkema P.O. Box 11320, 2301 EH, Leiden, The Netherlands e-mail: Pub.NL@taylorandfrancis.com www.crcpress.com - www.taylorandfrancis.com Paperback edition Complete set of two volumes plus CD-ROM: ISBN: 978-1-4665-7512-7 Contents PREFACE xv ABOUT THE AUTHORS xix 1 MINE PLANNING 1 1.1 Introduction 1 1.1.1 The meaning of ore 1 1.1.2 Some important definitions 2 1.2 Mine development phases 5 1.3 An initial data collection checklist 7 1.4 The planning phase 11 1.4.1 Introduction 11 1.4.2 The content of an intermediate valuation report 12 1.4.3 The content of the feasibility report 12 1.5 Planning costs 17 1.6 Accuracy of estimates 17 1.6.1 Tonnage and grade 17 1.6.2 Performance 17 1.6.3 Costs 18 1.6.4 Price and revenue 18 1.7 Feasibility study preparation 19 1.8 Critical path representation 24 1.9 Mine reclamation 24 1.9.1 Introduction 24 1.9.2 Multiple-use management 25 1.9.3 Reclamation plan puipose 28 1.9.4 Reclamation plan content 28 1.9.5 Reclamation standards 29 1.9.6 Surface and ground water management 31 1.9.7 Mine waste management 32 1.9.8 Tailings and slime ponds 33 1.9.9 Cyanide heap and vat leach systems 33 1.9.10 Landform reclamation 34 v vin Open pit mine planning and design: Fundamentals 1.10 Environmental planning procedures 35 1.10.1 Initial project evaluation 35 1.10.2 The strategic plan 37 1.10.3 The environmental planning team 38 1.11 A sample list of project permits and approvals 40 References and bibliography 40 Review questions and exercises 43 2 MINING REVENUES AND COSTS 47 2.1 Introduction 47 2.2 Economic concepts including cash flow 47 2.2.1 Future worth 47 2.2.2 Present value 48 2.2.3 Present value of a series of uniform contributions 48 2.2.4 Payback period 49 2.2.5 Rate of return on an investment 49 2.2.6 Cash flow (CF) 50 2.2.7 Discounted cash flow (DCF) 51 2.2.8 Discounted cash flow rate of return (DCFROR) 51 2.2.9 Cash flows, DCF and DCFROR including depreciation 52 2.2.10 Depletion 53 2.2.11 Cash flows, including depletion 55 2.3 Estimating revenues 56 2.3.1 Current mineral prices 56 2.3.2 Historical price data 64 2.3.3 Trend analysis 75 2.3.4 Econometric models 91 2.3.5 Net smelter return 92 2.3.6 Price-cost relationships 99 2.4 Estimating costs 100 2.4.1 Types of costs 100 2.4.2 Costs from actual operations 101 2.4.3 Escalation of older costs 126 2.4.4 The original O'Hara cost estimator 131 2.4.5 The updated O'Hara cost estimator 134 2.4.6 Detailed cost calculations 152 2.4.7 Quick-and-dirty mining cost estimates 167 2.4.8 Current equipment, supplies and labor costs 168 References and bibliography 175 Review questions and exercises 181 3 OREBODY DESCRIPTION 186 3.1 Introduction 186 3.2 Mine maps 186 3.3 Geologic information 201 Contents ix 5.6 Modification of the Lerchs-Grossmann 2-D algorithm to a 2V2-D algorithm 459 5.7 The Lerchs-Grossmann 3-D algorithm 462 5.7.1 Introduction 462 5.7.2 Definition of some important terms and concepts 465 5.7.3 Two approaches to tree construction 468 5.7.4 The arbitrary tree approach (Approach 1) 469 5.7.5 The all root connection approach (Approach 2) 471 5.7.6 The tree 'cutting' process 475 5.7.7 A more complicated example 477 5.8 Computer assisted methods 478 5.8.1 The RTZ open-pit generator 478 5.8.2 Computer assisted pit design based upon sections 484 References and bibliography 496 Review questions and exercises 501 6 PRODUCTION PLANNING 504 6.1 Introduction 504 6.2 Some basic mine life - plant size concepts 505 6.3 Taylor's mine life rule 515 6.4 Sequencing by nested pits 516 6.5 Cash flow calculations 521 6.6 Mine and mill plant sizing 533 6.6.1 Ore reserves supporting the plant size decision 533 6.6.2 Incremental financial analysis principles 537 6.6.3 Plant sizing example 540 6.7 Lane's algorithm 548 6.7.1 Introduction 548 6.7.2 Model definition 549 6.7.3 The basic equations 550 6.7.4 An illustrative example 551 6.7.5 Cutoff grade for maximum profit 552 6.7.6 Net present value maximization 560 6.8 Material destination considerations 578 6.8.1 Introduction 578 6.8.2 The leach dump alternative 579 6.8.3 The stockpile alternative 584 6.9 Production scheduling 590 6.9.1 Introduction 590 6.9.2 Phase scheduling, 602 6.9.3 Block sequencing using set dynamic programming 608 6.9.4 Some scheduling examples 620 6.10 Push back design j 626 6.10.1 Introduction 626 6.10.2 The basic manual steps 633 6.10.3 Manual push back design example 635 vin Open pit mine planning and design: Fundamentals 6.10.4 Time period plans 647 6.10.5 Equipment fleet requirements 649 6.10.6 Other planning considerations 651 6.11 The mine planning and design process - summary and closing remarks 653 References and bibliography 655 Review questions and exercises 666 7 REPORTING OF MINERAL RESOURCES AND ORE RESERVES 670 7.1 Introduction 670 7.2 The JORC code - 2004 edition 671 7.2.1 Preamble 671 7.2.2 Foreword 671 7.2.3 Introduction 671 7.2.4 Scope 675 7.2.5 Competence and responsibility 676 7.2.6 Reporting terminology 678 7.2.7 Reporting - General 679 7.2.8 Reporting of exploration results 679 7.2.9 Reporting of mineral resources 680 7.2.10 Reporting of ore reserves 684 7.2.11 Reporting of mineralized stope fill, stockpiles, remnants, pillars, low grade mineralization and tailings 687 7.3 The CIM best practice guidelines for the estimation of mineral resources and mineral reserves - general guidelines 688 7.3.1 Preamble 688 7.3.2 Foreword 688 7.3.3 The resource database 690 7.3.4 Geological interpretation and modeling 692 7.3.5 Mineral resource estimation 695 7.3.6 Quantifying elements to convert a Mineral Resource to a Mineral Reserve 698 7.3.7 Mineral reserve estimation 700 7.3.8 Reporting 702 7.3.9 Reconciliation of mineral reserves 706 7.3.10 Selected references 709 References and bibliography 709 Review questions and exercises 713 8 RESPONSIBLE MINING 716 8.1 Introduction 716 8.2 The 1972 United Nations Conference on the Human Environment 717 8.3 The World Conservation Strategy (WCS) - 1980 721 8.4 World Commission on Environment and Development (1987) 724 Contents xi 8.5 The 'Earth Summit' 726 8.5.1 The Rio Declaration 726 8.5.2 Agenda 21 729 8.6 World Summit on Sustainable Development (WSSD) 731 8.7 Mining industry and mining industry-related initiatives 732 8.7.1 Introduction 732 8.7.2 The Global Mining Initiative (GM3) 732 8.7.3 International Council on Mining and Metals (ICMM) 734 8.7.4 Mining, Minerals, and Sustainable Development (MMSD) 736 8.7.5 The U.S. Government and federal land management 737 8.7.6 The position of the U.S. National Mining Association (NMA) 740 8.7.7 The view of one mining company executive 742 8.8 'Responsible Mining' - the way forward is good engineering 744 8.8.1 Introduction 744 8.8.2 The Milos Statement 744 8.9 Concluding remarks 747 References and bibliography 747 Review questions and exercises 754 9 ROCK BLASTING 757 9.1 General introduction to mining unit operations 757 9.2 Rock blasting 758 9.2.1 Rock fragmentation 758 9.2.2 Blast design flowsheet 759 9.2.3 Explosives as a source of fragmentation energy 761 9.2.4 Pressure-volume curves 762 9.2.5 Explosive strength 765 9.2.6 Energy use 766 9.2.7 Preliminary blast layout guidelines 767 9.2.8 Blast design rationale 768 9.2.9 Ratios for initial design 774 9.2.10 Ratio based blast design example 775 9 . 2 . 1 1 Determination of K B 7 8 0 9.2.12 Energy coverage 782 9.2.13 Concluding remarks 788 References and bibliography 788 Review questions and exercises 792 10 ROTARY DRILLING 796 10.1 Brief history of rotary drill bits 796 10.2 Rock removal action 800 10.3 Rock bit components 808 10.4 Roller bit nomenclature 810 10.5 The rotary blasthole drill machine 816 10.6 The drill selection process 823 10.7 The drill string 824 Preface to the 3rd Edition The first edition of Open Pit Mine Planning and Design appeared in 1995. Volume 1, the "Fundamentals", consisted of six chapters 1. Mine Planning 2. Mining Revenues and Costs 3. Orebody Description 4. Geometrical Considerations 5. Pit Limits 6. Production Planning totaling 636 pages. Volume 2, the "CSMine Software Package" was written in support of the student- and engineer-friendly CSMine pit generation computer program included on a CD enclosed in a pocket inside the back cover. This volume, which contained six chapters and 200 pages, consisted of (1) a description of a small copper deposit in Arizona to be used for demonstrating and applying the mine planning and design principles, (2) the CSMine tutorial, (3) the CSMine user's manual, and (4) the VarioC tutorial, user's manual and reference guide. The VarioC microcomputer program, also included on the CD, was to be used for the statistical analysis of the drill hole data, calculation of experimental variograms, and interactive modeling involving the variogram. The main purpose of the CSMine software was as a learning tool. Students could learn to run it in a very short time and they could then focus on the pit design principles rather than on the details of the program. CSMine could handle 10,000 blocks which was sufficient to run relatively small problems. We were very pleased with the response received and it became quite clear that a second edition was in order. In Volume 1, Chapters 1 and 3 through 6 remained largely the same but the reference lists were updated. The costs and prices included in Chapter 2 "Mining Costs and Revenues" were updated. Two new chapters were added to Volume 1: 7. Reporting of Mineral Resources and Ore Reserves 8. Responsible Mining To facilitate the use of this book in the classroom, review questions and exercises were added at the end of Chapters 1 through 8. The "answers" were not, however, provided. There were several reasons for this. First, most of the answers could be found by the careful reading, and perhaps re-reading, of the text material. Secondly, for practicing mining engineers, the answers to the opportunities offered by their operations are seldom provided in advance. The fact that the answers were not given should help introduce the student to the real world of mining problem solving. Finally, for those students using the book under the guidance of a professor, some of the questions will offer discussion possibilities. There is no single "right" answer for some of the included exercises. xv vin Open pit mine planning and design: Fundamentals In Volume 2, the CSMine software included in the first edition was written for the DOS operating system which was current at that time. Although the original program does work in the Windows environment, it is not optimum. Furthermore, with the major advances in computer power that occurred during the intervening ten-year period, many improvements could be incorporated. Of prime importance, however, was to retain the user friendliness of the original CSMine. Its capabilities were expanded to be able to involve 30,000 blocks. A total of eight drill hole data sets involving three iron properties, two gold properties and three copper properties were included on the distribution CD. Each of these properties was described in some detail. It was intended that, when used in conjunction with the CSMine software, these data sets might form the basis for capstone surface mine designs. It has been the experience of the authors when teaching capstone design courses that a significant problem for the student is obtaining a good drillhole data set. Hopefully the inclusion of these data sets has been of some help in this regard. The second edition was also well received and the time arrived to address the improve- ments to be included in this, the 3rd edition. The structure and fundamentals have withstood the passage of time and have been retained. The two-volume presentation has also been maintained. However, for those of you familiar with the earlier editions, you will quickly notice one major change. A new author, in the form of Randy Martin, has joined the team of Bill Hustrulid and Mark Kuchta in preparing this new offering. Randy is the "Mother and Father" of the very engineer-friendly and widely used MicroMODEL open pit mine design software. As part of the 3rd edition, he has prepared an "academic" version of his software package. It has all of the features of his commercial version but is limited in application to six data sets: o Ariz_Cu: the same copper deposit used with CSMine (36,000 blocks) • Andina_Cu: a copper deposit from central Chile (1,547,000 blocks) o Azul: a gold deposit from central Chile (668,150 blocks) • MMdemo: a gold deposit in Nevada (359,040 blocks) o Norte_Cu: a copper deposit in northern Chile (3,460,800 blocks) o SeamDemo: a thermal coal deposit in New Mexico (90,630 blocks). Our intention has been to expose the student to more realistic applications once the fundamentals have been learned via the CSMine software (30,000 block limitation). The MicroMODEL V8.1 Academic version software is included on the CD together with the 6 data sets. The accompanying tutorial has been added as Chapter 16. Our idea is that the student will begin their computer-aided open pit mine design experience using CSMine and the Ariz_Cu data set and then progress to applying MicroMODEL to the same set with help from the tutorial. The new chapter makeup of Volume 2 is 14. The CSMine Tutorial 15. CSMine User's Guide 16. The MicroMODEL V8.1 Mine Design Software 17. Orebody Case Examples Volume 1, "Fundamentals", has also experienced some noticeable changes. Chapters 1 and 3 through 8 have been retained basically as presented in the second edition. The prices and costs provided in Chapter 2 have been revised to reflect those appropriate for today (2012). The reference list included at the end of each chapter has been revised. In the earlier About the Authors William Hustrulid studied Minerals Engineering at the University of Minnesota. After obtaining his Ph.D. degree in 1968, his career has included responsible roles in both mining academia and in the mining business itself. He has served as Professor of Mining Engineering at the University of Utah and at the Colorado School of Mines and as a Guest Professor at the Technical University in Lulea, Sweden. In addition, he has held mining R&D positions for companies in the USA, Sweden, and the former Republic of Zaire. He is a Member of the U.S. National Academy of Engineer- ing (NAE) and a Foreign Member of the Swedish Royal Academy of Engineering Sciences (IVA). He currently holds the rank of Professor Emeritus at the University of Utah and manages Hustrulid Mining Services in Spokane, Washington. Mark Kuchta studied Mining Engineering at the Colorado School of Mines and received his Ph.D. degree from the Technical University in Lulea, Sweden. He has had a wide-ranging career in the mining business. This has included working as a contract miner in the uranium mines of western Colorado and 10 years of experience in various positions with LKAB in northern Sweden. At present, Mark is an Associate Professor of Mining Engineering at the Colorado School of Mines. He is actively involved in the educa- tion of future mining engineers at both undergraduate and graduate levels and conducts a very active research program. His professional interests include the use of high-pressure wateijets for rock scaling applications in underground mines, strategic mine planning, advanced mine production scheduling and the development of user-friendly mine software. Randall K. "Randy" Martin studied Metallurgical Engineering at the Colorado School of Mines and later received a Master of Science in Mineral Economics from the Colorado School of Mines. He has over thirty years of experience as a geologic modeler and mine planner, having worked for Amax Mining, Pincock, Allen & Holt, and Tetratech. Currently he serves as President of R.K. Martin and Associates, Inc. His company performs consulting services, and also markets and supports a variety of software packages which are used in the mining industry. He is the principal author of the MicroMODEL® software included with this textbook. XIX t CHAPTER 1 Mine planning 1.1 INTRODUCTION 1.1.1 The meaning of ore One of the first things discussed in an Introduction to Mining course and one which students must commit to memory is the definition of 'ore'. One of the more common definitions (USBM, 1967) is given below: Ore: A metalliferous mineral, or an aggregate of metalliferous minerals, more or less mixed with gangue which from the standpoint of the miner can be mined at a profit or, from the standpoint of a metallurgist can be treated at a profit. This standard definition is consistent with the custom of dividing mineral deposits into two groups: metallic (ore) and non-metallic. Over the years, the usage of the word 'ore' has been expanded by many to include non-metallics as well. The definition of ore suggested by Banfield (1972) would appear to be more in keeping with the general present day usage. Ore: A natural aggregate of one or more solid minerals which can be mined, or from which one or more mineral products can be extracted, at a profit. In this book the following, somewhat simplified, definition will be used: Ore: A natural aggregation of one or more solid minerals that can be mined, processed and sold at a profit. Although definitions are important to know, it is even more important to know what they mean. To prevent the reader from simply transferring this definition directly to memory without being first processed by the brain, tire 'meaning' of ore will be expanded upon. The key concept is 'extraction leading to a profit'. For engineers, profits can be expressed in simple equation form as Profits = Revenues — Costs (1.1) The revenue portion of the equation can be written as Revenues = Material sold (units) x Price/unit (1.2) The costs can be similarly expressed as Costs = Material sold (units) x Cost/unit (1.3) Combining the equations yields Profits = Material sold (units) x (Price/unit — Cost/unit) (1.4) 1 4 Open pit initie planning and design: Fundamentals - Indicated. Quantity and grade and/or quality are computed from information similar to that used for measured resources, but the sites for inspection, sampling, and measurements are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for measured resources, is high enough to assume geological continuity between points of observation. - Inferred. Estimates are based on geological evidence and assumed continuity in which there is less confidence than for measured and/or indicated resources. Inferred resources may or may not be supported by samples or measurements but the inference must be supported by reasonable geo-scientific (geological, geochemical, geophysical, or other) data. Reseive. A reserve is that part of the resource that meets minimum physical and chemical criteria related to the specified mining and production practices, including those for grade, quality, thickness and depth; and can be reasonably assumed to be economically and legally extracted or produced at the time of determination. The feasibility of the specified mining and production practices must have been demonstrated or can be reasonably assumed on the basis of tests and measurements. The term reserves need not signify that extraction facilities are in place and operative. The term economic implies that profitable extraction or production under defined invest- ment assumptions has been established or analytically demonstrated. The assumptions made must be reasonable including assumptions concerning the prices and costs that will prevail during the life of the project. The term 'legally' does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, there should not be any significant uncertainty concerning issuance of these permits or resolution of legal issues. Reserves relate to resources as follows: - Proven reserve. That part of a measured resource that satisfies the conditions to be classified as a reserve. - Probable reserve. That part of an indicated resources that satisfies the conditions to be classified as a reserve. It should be stated whether the reserve estimate is of in-place material or of recoverable material. Any in-place estimate should be qualified to show the anticipated losses resulting from mining methods and beneficiation or preparation. Reporting terminology The following terms should be used for reporting exploration information, resources and reserves: 1. Exploration information. Terms such as 'deposit' or 'mineralization' are appropriate for reporting exploration information. Terms such as 'ore,' 'reserve,' and other terms that imply that economic extraction or production has been demonstrated, should not be used. 2. Resource. A resource can be subdivided into three categories: (a) Measured resource; (b) Indicated resource; (c) Inferred resource. The term 'resource' is recommended over the terms 'mineral resource, identified resource' and 'in situ resource.' 'Resource' as defined herein includes 'identified resource,' but excludes 'undiscovered resource' of the United States Bureau of Mines (USBM) and United Mine planning 5 States Geological Survey (USGS) classification scheme. The 'undiscovered resource' clas- sification is used by public planning agencies and is not appropriate for use in commercial ventures. 3. Reserve. A reserve can be subdivided into two categories: (a) Probable reserve; (b) Proven reserve. The term 'reserve' is recommended over the terms 'ore reserve,' 'minable reserve' or 'recoverable reserve.' The terms 'measured reserve' and 'indicated reserve,' generally equivalent to 'proven reserve' and 'probable reserve,' respectively, are not part of this classification scheme and should not be used. The terms 'measured,' 'indicated' and 'inferred' qualify resources and reflect only differences in geological confidence. The terms 'proven' and 'probable' qualify reserves and reflect a high level of economic confidence as well as differences in geological confidence. The terms 'possible reserve' and 'inferred reserve' are not part of this classification scheme. Material described by these terms lacks the requisite degree of assurance to be reported as a reserve. The term 'ore' should be used only for material that meets the requirements to be a reserve. It is recommended that proven and probable reserves be reported separately. Where the term reserve is used without the modifiers proven or probable, it is considered to be the total of proven and probable reserves. 1.2 MINE DEVELOPMENT PHASES The mineral supply process is shown diagrammatically in Figure 1.2. As can be seen a positive change in the market place creates a new or increased demand for a mineral product. In response to the demand, financial resources are applied in an exploration phase result- ing in the discovery and delineation of deposits. Through increases in price and/or advances in technology, previously located deposits may become interesting. These deposits must then be thoroughly evaluated regarding their economic attractiveness. This evaluation pro- cess will be termed the 'planning phase' of a project (Lee, 1984). The conclusion of this phase will be the preparation of a feasibility report. Based upon this, the decision will be made as to whether or not to proceed. If the decision is 'go', then the development of the mine and concentrating facilities is undertaken. This is called the implementation, invest- ment, or design and construction phase. Finally there is the production or operational phase during which the mineral is mined and processed. The result is a product to be sold in the marketplace. The entrance of the mining engineer into this process begins at the planning phase and continues through the production phase. Figure 1.3 is a time line showing the relationship of the different phases and their stages. The implementation phase consists of two stages (Lee, 1984). The design and construction stage includes the design, procurement and construction activities. Since it is the period of major cash flow for the project, economies generally result by keeping the time frame to a realistic minimum. The second stage is commissioning. This is the trial operation of the individual components to integrate them into an operating system and ensure their readiness 6 Open pit initie planning and design: Fundamentals Ej jp lora t iom Discovery D e l i n e a t i o n / D e m a n d for .m i ne r a l p roduc t Changes ins marke t / e \ a> u a > < „Occur rence o f O R E depos i t ^DeveSojj m i n e ex t r a c t i on f ac i l i t i es M ine and process M I N E R A L S U P P L Y P R O C E S S Figure 1.2. Diagrammatic repre- sentation of the mineral supply process (McKenzie, 1980). PHASE PLANNING IMPLEMENTATION PRODUCTION STAGE CONCEPT STUDY FEAS STUDY DESIGN & CONSTRUCTION COMM. STARTUP OPERATION MILESTONES INVESTMENT ^ DECISION Figure 1.3. Relative ability to influence costs (Lee, 1984). for startup. It is conducted without feedstock or raw materials. Frequently the demands and costs of the commissioning period are underestimated. The production phase also has two stages (Lee, 1984). The startup stage commences at the moment that feed is delivered to the plant with the express intention of transforming it into product. Startup normally ends when the quantity and quality of the product is sustainable at the desired level. Operation commences at the end of the startup stage. Mine planning 15 7. Rock type - overburden and ore (a) Submit sample for drillability test (b) Observe fragmentation features Hardness Degree of weathering Cleavage and fracture planes Suitability for road surface 8. Locations for concentrator - factors to consider for optimum location (a) Mine location Haul uphill or downhill (b) Site preparation Amount of cut and/or fill (c) Process water Gravity flow or pumping (d) Tailings disposal Gravity flow or pumping (e) Maintenance facilities Location 9. Tailings pond area (a) Location of pipeline length and discharge elevations (b) Enclosing features Natural Dams or dikes Lakes (c) Pond overflow Effect of water pollution on downstream users Possibility for reclaiming water (d) Tailings dust Its effect on the area 10. Roads (a) Obtain area road maps (b) Additional road information Widths Surfacing Maximum load limits Seasonal load limits Seasonal access Other limits or restrictions Maintained by county, state, etc. (c) Access roads to be constructed by company (factors considered) Distance Profile Cut and fill Bridges, culverts Terrain and soil conditions 10 Open pit initie planning and design: Fundamentals 11. Power (a) Availability Kilovolts Distance Rates and length of contract (b) Power lines to site Who builds Who maintains Right-of-way requirements (c) Substation location (d) Possibility of power generation at or near site 12. Smelting (a) Availability (b) Method of shipping concentrate (c) Rates (d) If company on site smelting - effect of smelter gases (e) Concentrate freight rates (f) Railroads and dock facility 13. Land ownership (a) Present owners (b) Present usage (c) Price of land (d) Types of options, leases and royalties expected 14. Government (a) Political climate Favorable or unfavorable to mining Past reactions in the area to mining (b) Special mining laws (c) Local mining restrictions 15. Economic climate (a) Principal industries (b) Availability of labor and normal work schedules (c) Wage scales (d) Tax structure (e) Availability of goods and services Housing Stores Recreation Medical facilities and unusual local disease Hospital Schools (f) Material costs and/or availability Fuel oil Concrete Gravel Borrow material for dams Mine planning 11 (g) Purchasing Duties 16. Waste dump location (a) Haul distance (b) Haul profile (c) Amenable to future leaching operation 17. Accessibility of principal town to outside (a) Methods of transportation available (b) Reliability of transportation available (c) Communications 18. Methods of obtaining information (a) Past records (i.e. government sources) (b) Maintain measuring and recording devices (c) Collect samples (d) Field observations and measurements (e) Field surveys (f) Make preliminary plant layouts (g) Check courthouse records for land information (h) Check local laws and ordinances for applicable legislation (i) Personal inquiries and observation on economic and political climates (j) Maps (k) Make cost inquiries (1) Make material availability inquiries (m) Make utility availability inquiries 1.4 THE PLANNING PHASE In preparing this section the authors have drawn heavily on material originally presented in papers by Lee (1984) and Taylor (1977). The permission by the authors and their publisher, The Northwest Mining Association, to include this material is gratefully acknowledged. 1.4.1 Introduction The planning phase commonly involves three stages of study (Lee, 1984). Stage 1: Conceptual study A conceptual (or preliminary valuation) study represents the transformation of a project idea into a broad investment proposition, by using comparative methods of scope definition and cost estimating techniques to identify a potential investment opportunity. Capital and operating costs are usually approximate ratio estimates using historical data. It is intended primarily to highlight the principal investment aspects of a possible mining proposition. The preparation of such a study is normally the work of one or two engineers. The findings are reported as a preliminary valuation. Stage 2: Preliminary orpre-feasibility study A preliminary study is an intermediate-level exercise, normally not suitable for an investment decision. It has the objectives of determining whether the project concept justifies a detailed 14 Open pit mine planning and design: Fundamentals Table 1.1. (Continued). features. Many countries, particularly those with federal constitutions, impose multiple levels of taxation by various authorities, but a condensation or simplification of formulae may suffice for early studies without involving significant loss of accuracy. Cashflow schedules: Present (if information permits) one or more year-by-year projections of cash movements in and out of the project. These tabulations are very informative, particularly because their format is almost uniformly standardized. They may be compiled for the indicated life of the project or, in very early studies, for some arbitrary shorter period. Figures must also be totalled and summarized. Depending on company practice and instructions, investment indicators such as internal rate of return, debt payback time, or cash flow after payback may be displayed. Table 1.2. The essential functions of the feasibility report (Taylor, 1977). 1. To provide a comprehensive framework of established and detailed facts concerning the mineral project. 2. To present an appropriate scheme of exploitation with designs and equipment lists taken to a degree of detail sufficient for accurate prediction of costs and results. 3. To indicate to the project's owners and other interested parties the likely profitability of investment in the project if equipped and operated as the report specifies. 4. To provide this information in a form intelligible to the owner and suitable for presentation to prospective partners or to sources of finance. Table 1.3. The content of a feasibility study (Taylor, 1977). General. - Topography, climate, population, access, services. - Suitable sites for plant, dumps, towns, etc. Geological (field): - Geological study of structure, mineralization and possibly of genesis. - Sampling by drilling or tunnelling or both. - Bulk sampling for checking and for metallurgical testing. - Extent of leached or oxidized areas (frequently found to be underestimated). - Assaying and recording of data, including check assaying, rock properties, strength and stability. - Closer drilling of areas scheduled for the start of mining. - Geophysics and indication of the likely ultimate limits of mineralization, including proof of non-mineralization of plan and dump areas. - Sources of water and of construction materials. Geological and mining (office)'. - Checking, correcting and coding of data for computer input. - Manual calculations of ore tonnages and grades. - Assay compositing and statistical analysis. - Computation of mineral inventory (geological reserves) and minable reserves, segregated as needed by orebody, by ore type, by elevation or bench, and by grade categories. - Computation of associated waste rock. - Derivation of the economic factors used in the determination of minable reserves. Mining: - Open pit layouts and plans. - Determination of preproduction mining or development requirements. - Estimation of waste rock dilution and ore losses. (Continued) Mine planning 15 Table 1.3. (Continued). - Production and stripping schedules, in detail for the first few years but averaged thereafter, and specifying important changes in ore types if these occur. - Waste mining and waste disposal. - Labor and equipment requirements and cost, and an appropriate replacement schedule for the major equipment. Metallurgy (research): - Bench testing of samples from drill cores. - Selection of type and stages of the extraction process. - Small scale pilot plant testing of composited or bulk samples followed by larger scale pilot mill operation over a period of months should this work appear necessary. - Specification of degree of processing, and nature and quality of products. - Provision of samples of the product. - Estimating the effects of ore type or head grade variations upon recovery and product quality. Metallurgy (design): - The treatment concept in considerable detail, with flowsheets and calculation of quantities flowing. - Specification of recovery and of product grade. - General siting and layout of plant with drawings if necessary. Ancillary services and requirements: - Access, transport, power, water, fuel and communications. - Workshops, offices, changehouse, laboratories, sundry buildings and equipment. - Labor structure and strength. - Housing and transport of employees. - Other social requirements. Capital cost estimation: - Develop the mine and plant concepts and make all necessary drawings. - Calculate or estimate the equipment list and all important quantities (of excavation, concrete, building area and volume, pipework, etc.). - Determine a provisional construction schedule. - Obtain quotes of the direct cost of items of machinery, establish the costs of materials and services, and of labor and installation. - Determine the various and very substantial indirect costs, which include freight and taxes on equipment (may be included in directs), contractors' camps and overheads plus equipment rental, labor punitive and fringe costs, the owner's field office, supervision and travel, purchasing and design costs, licenses, fees, customs duties and sales taxes. - Warehouse inventories. - A contingency allowance for unforeseen adverse happenings and for unestimated small requirements that may arise. - Operating capital sufficient to pay for running the mine until the first revenue is received. - Financing costs and, if applicable, preproduction interest on borrowed money. A separate exercise is to forecast the major replacements and the accompanying provisions for postproduction capital spending. Adequate allowance needs to be made for small requirements that, though unforeseeable, always arise in significant amounts. Operating cost estimation: - Define the labor strength, basic pay rates, fringe costs. - Establish the quantities of important measurable supplies to be consumed - power, explosives, fuel, grinding steel, reagents, etc. - and their unit costs. - Determine the hourly operating and maintenance costs for mobile equipment plus fair performance factors. - Estimate the fixed administration costs and other overheads plus the irrecoverable elements of townsite and social costs. (Continued) 16 Open pit mine planning and design: Fundamentals Table 1.3. (Continued). Only cash costs are used thus excluding depreciation charges that must be accounted for elsewhere. As for earlier studies, post-mine costs for further treatment and for selling the product are best regarded as deductions from the gross revenue. Marketing'. - Product specifications, transport, marketing regulations or restrictions. - Market analysis and forecast of future prices. - Likely purchasers. - Costs for freight, further treatment and sales. - Draft sales terms, preferably with a letter of intent. - Merits of direct purchase as against toll treatment. - Contract duration, provisions for amendment or cost escalation. - Requirements for sampling, assaying and umpiring. The existence of a market contract or firm letter of intent is usually an important prerequisite to the loan financing of a new mine. Rights, ownership and legal matters: - Mineral rights and tenure. - Mining rights (if separated from mineral rights). - Rents and royalties. - Property acquisitions or securement by option or otherwise. - Surface rights to land, water, rights-of-way, etc. - Licenses and permits for construction as well as operation. - Employment laws for local and expatriate employees separately if applicable. - Agreements between partners in the enterprise. - Legal features of tax, currency exchange and financial matters. - Company incorporation. Financial and tax matters'. - Suggested organization of the enterprise, as corporation, joint-venture or partnership. - Financing and obligations, particularly relating to interest and repayment on debt. - Foreign exchange and reconversion rights, if applicable. - Study of tax authorities and regimes, whether single or multiple. - Depreciation allowances and tax rates. - Tax concessions and the negotiating procedure for them. - Appropriation and division of distributable profits. Environmental effects: - Environmental study and report; the need for pollution or related permits, the requirements during construction and during operation. - Prescribed reports to government authorities, plans for restoration of the area after mining ceases. Revenue and profit analysis: - The mine and mill production schedules and the year-by-year output of products. - Net revenue at the mine (at various product prices if desired) after deduction of transport, treatment and other realization charges. - Calculation of annual costs from the production schedules and from unit operating costs derived previously. - Calculation of complete cash flow schedules with depreciation, taxes, etc. for some appropriate number of years - individually for at least 10 years and grouped thereafter. - Presentation of totals and summaries of results. - Derived figures (rate of return, payback, profit split, etc.) as specified by owner or client. - Assessment of sensitivity to price changes and generally to variation in important input elements. Mine planning 19 1.7 FEASIBILITY STUDY PREPARATION The feasibility study is a major undertaking involving many people and a variety of specialized skills. There are two basic ways through which it is accomplished. 1. The mining company itself organizes the study and assembles the feasibility report. Various parts or tasks are assigned to outside consultants. 2. The feasibility work is delegated to one or more engineering companies. Contained on the following pages is an eleven step methodology outlining the planning (Steps 1^4) organizing (Steps 5-10) and execution (Step 11) steps which might be used in conducting a feasibility study. It has been developed by Lee (1984, 1991). Phase A. Planning Step 1: Establish a steering committee. A steering committee consisting of managers and other individuals of wide experience and responsibility would be formed to overview and evaluate the direction and viability of the feasibility study team. One such steering committee might be the following: - Vice-President (Chairman); - General Manager, mining operations; - Vice-President, finance; - Chief Geologist, exploration; - Vice-President, technical services; - Consultant(s). Step 2: Establish a project study team. The criteria for selection of the study team members would emphasize these qualities: - Competent in their respective fields. - Considerable experience with mining operations. - Complementary technical abilities. - Compatible personalities - strong interpersonal qualities. - Commitment to be available through the implementation phase, should the prospect be viable. The team members might be: - Project Manager; - Area Supervisor, mining; - Area Supervisor, beneficiation; - Area Supervisor, ancillaries. Step 3: Develop a work breakdown structure. The Work Breakdown Structure (WBS) is defined by the American Association of Cost Engineers (AACE) as: a product-oriented family tree division of hardware, software, facilities and other items which organizes, defines and displays all of the work to be performed in accomplishing the project objectives. The WBS is a functional breakdown of all elements of work on a project, on a geographical and/or process basis. It is a hierarchy of work packages, or products, on a work area basis. The WBS is project-unique, reflecting the axiom that every project is a unique event. A WBS is a simple common-sense procedure which systematically reviews the full scope of a project (or study) and breaks it down into logical packages of work. The primary 20 Open pit initie planning and design: Fundamentals challenge is normally one of perspective. It is imperative that the entire project be visualized as a sum of many parts, any one of which could be designed, scheduled, constructed, and priced as a single mini-project. There are a number of categories which can be used to construct a work breakdown structure. These include: (1) Components of the product; (2) Functions; (3) Organizational units; (4) Geographical areas; (5) Cost accounts; (6) Time phases; (7) Configuration characteristics; (8) Deliverables; (9) Responsible persons; (10) Subpurposes. It is not a rigid system. WBS categories can be used in any sequence desired, including using the same category several times. A sample WBS is shown in Figures 1.4 and 1.5. An alternative to this is the Work Classification Structure (WCS). This commodity-based classification of goods and services is commonly used by construction contractors and consulting engineering firms as the primary cost-collection system. The specific intent of the WCS is to provide a consistent reference system for storage, comparison and evaluation of technical, man-hour and cost data from work area to work area within a project; and from project to project; and from country to country. The WCS may have different names in different organizations, but it is the 'original' costing system. It is the basis for virtually all of the estimating manuals and handbooks which identify unit costs for commodities such as concrete, or piping, or road construction, or equipment installation. The WCS provides a commodity based method to estimate and control costs. The key to the success of the WCS system within an organization is the absolute consistency with which it is used. The WBS is of primary interest to owners and project managers - both of whom are interested in tracking cost and schedule on a work area basis. The WCS is primarily of interest to construction contractors and engineering consultants, who measure actual performance against forecast performance on a commodity basis. Professional project managers and cost engineers normally use cost coding systems which encode both the commodity and the work package. This allows them to evaluate job-to-date performance, then forecast cost or productivity trends for the balance of the project. Step 4: Develop an action plan for the study. An action plan in its simplest form, is just a logical (logic-oriented) time-bar plan listing all of the activities to be studied. Figure 1.6 is one example of such a time-bar graph. A more general action plan would have these characteristics: 1. Purpose: the action plan serves as a control document during the execution of the feasibility study. It functions as a master reference, against which change can be measured and resolved. It provides a visual communication of the logic and progress of the study. 2. Methodology: it may be possible for one person, working in isolation, to develop an action plan. However, it is substantially more desirable to have the project study team develop their plan on a participative, interactive basis. (Texas Instruments' Patrick Haggerty insisted that 'those who implement plans must make the plans'). This interaction OPEN-PIT MINE PROJECT .0 OFFSITES .1 MINE DEVELOPMENT .2 MINE SERVICES MINE PRODUCTION EQUIPMENT .4 MILL SERVICES .5 MILL SERVICE BUILDINGS . 6 CONCENTRATION .01 1 Access Road .04 • Primary Power .05 • Fresh Water .11 - Haul Roads .12 Equipment Erection Pad .13 • Mine Clearing .14 • Overburden Stripping .15 • Waste Rock Stripping .16 Waste Dump Development .17 Ore Stockpile Development .19 Dump Drainage Control .21 Service Roads .22 Service Equipment .23 Communications .24 Mine Power .25 Mine Shops .26 Mine Offices .27 ANFO Facility .28 Mine Dewatering .29 Drainage Treatment .32 Production Drills .33 Shovels .34 Dragline .35 Haulage Trucks .36 F/E Loaders .37 Dozers .38 In-Pit Crusher .41 Mill Site Roads .42 Service Vehicles .43 Communications .44 Mill Power .45 Service Piping .46 Reclaim Water System .47 Emergency Equipment .48 Tailings Pond .49 Effluent Treatment .51 Administration Building .52 Warehouse .53 Dry & First Aid .54 Emergency Power .55 Mill Shops .56 Core House & Lab .61 Services .62 Buildings .63 Crushing .64 F.O. Storage .65 Grinding .66 Flotation .67 Tails .68 T - F - D .69 Cone. Storage Figure 1.4. Typical work breakdown structure (WBS) directs for an open pit mining project (Lee, 1991). 24 Open pit initie planning and design: Fundamentals the job which require special expertise. Such items may be packaged as separate Requests For Proposals (RFP's), and forwarded to pre-screened consultants on an invitation basis. The scope of work in each RFP should be clearly identified, along with the objectives for the work. A separate section provides explicit comments on the criteria for selection of the successful bidder; this provides the bidder with the opportunity to deliver proposals which can be weighted in the directions indicated by the project team. Step 10: Evaluate and select consultants. Evaluation of the consultant's bids should be thorough, objective, and fair. The evaluations and decisions are made by the use of spread sheets which compare each bidder's capability to satisfy each of the objectives for the work as identified in the RFP. The objectives should be pre-weighted to remove bias from the selection process. Phase C. Execution Step 11: Execute, monitor, control. With the project study team fully mobilized and with the specialist consultants engaged and actively executing well-defined contracts, the primary challenge to the project manager is to ensure that the study stays on track. A number of management and reporting systems and forms may be utilized, but the base-line reference for each system and report is the scope of work, schedule and cost for each activity identified in the action plan. The status-line is added to the schedule on a bi-weekly basis, and corrections and modifications made as indicated, to keep the work on track. 1.8 CRITICAL PATH REPRESENTATION Figure 1.7 is an example of a network chart which has been presented by Taylor (1977) for a medium sized, open pit base metal mine. Each box on the chart contains: - activity number, - activity tide, - responsibility (this should be a person/head of section who would carry the responsi- bility for budget and for progress reports), - starting date, - completion date, - task duration. The activities, sequential relationships and critical/near critical paths can be easily seen. Figure 1.8 is the branch showing the basic mining related activities. This progression will be followed through the remainder of the book. 1.9 MINE RECLAMATION 1.9.1 Introduction In the past, reclamation was something to be considered at the end of mine operations and not in the planning stage. Today, in many countries at least, there will be no mine with- out first thoroughly and satisfactorily addressing the environmental aspects of the proposed Mine planning 25 project. Although the subject of mine reclamation is much too large to be covered in this brief chapter, some of the factors requiring planning consideration will be discussed. In the western United States, a considerable amount of mineral development takes place on federal and Indian lands. The Bureau of Land Management (BLM) of the U.S. Depart- ment of the Interior has developed the Solid Minerals Reclamation Handbook (BLM, 1992) with the objective being 'to provide the user with clear guidance which highlights a log- ical sequence for managing the reclamation process and a summary of key reclamation principles.' The remaining sections of this chapter have been extracted from the handbook. Although they only pertain directly to those lands under BLM supervision, the concepts have more general application as well. Permission from the BLM to include this material is gratefully acknowledged. 1.9.2 Multiple-use management Multiple-use management is the central concept in the Federal Land Policy and Management Act (FLPMA) of 1976. FLPMA mandates that 'the public lands be managed in a manner that will protect the quality of scientific, scenic, historical, ecological, environmental, air and atmospheric, water resource and archeological values.' Multiple-use management is defined in FLPMA (43 USC 1702(c)) and in regulations (43 CFR 1601.0-5(f)) as, in part, the 'harmonious and coordinated management of the various resources without permanent impairment of the productivity of the lands and the quality of the environment with con- sideration being given to the relative values of the resources and not necessarily to the combination of uses that will give the greatest economic return or the greatest unit output.' In addition, FLPMA mandates that activities be conducted so as to prevent 'unnecessary or undue degradation of the lands' (43 USC 1732 (b)). The Mining and Minerals Policy Act of 1970 (30 USC 21(a)) established the policy for the federal government relating to mining and mineral development. The Act states that it is policy to encourage the development of 'economically sound and stable domestic mining, minerals, metal and mineral reclamation industries.' The Act also states, however, that the government should also promote the 'development of methods for the disposal, control, and reclamation of mineral waste products, and the reclamation of mined land, so as to lessen any adverse impact of mineral extraction and processing upon the physical environment that may result from mining or mineral activities.' In accordance with the National Environmental Policy Act (NEPA), an environmental document will be prepared for those mineral actions which propose surface disturbance. The requirements and mitigation measures recommended in an Environmental Assess- ment (ERA) or Environmental Impact Statement (EIS) shall be made a part of the reclamation plan. It is a statutory mandate that BLM ensure that reclamation and closure of mineral opera- tions be completed in an environmentally sound manner. The BLM's long-term reclamation goals are to shape, stabilize, revegetate, or otherwise treat disturbed areas in order to provide a self-sustaining, safe, and stable condition that provides a productive use of the land which conforms to the approved land-use plan for the area. The short-term reclamation goals are to stabilize disturbed areas and to protect both disturbed and adjacent undisturbed areas from unnecessary or undue degradation. 26 Open pit initie planning and design: Fundamentals Figure 1.7. Activity network for a feasibility study (Taylor, 1977). Mine planning 29 and/or changes in federal/state regulations. Specific requirements are given in the next section. In preparing and reviewing reclamation plans, the BLM and the operator must set rea- sonable, achievable, and measurable reclamation goals which are not inconsistent with the established land-use plans. Achievable goals will ensure reclamation and encourage opera- tors to conduct research on different aspects of reclamation for different environments. These goals should be based on available information and techniques, should offer incentives to both parties, and should, as a result, generate useful information for future use. 1.9.5 Reclamation standards An interdisciplinary approach shall be used to analyze the physical, chemical, biological, climatic, and other site characteristics and make recommendations for the reclamation plan. In order for a disturbed area to be considered properly reclaimed, the following must be complied with: 1. Waste management. All undesirable materials (e.g. toxic subsoil, contaminated soil, drilling fluids, process residue, refuse, etc.) shall be isolated, removed, or buried, or other- wise disposed as appropriate, in a manner providing for long-term stability and in compliance with all applicable state and federal requirements: (a) The area shall be protected from future contamination resulting from an operator's mining and reclamation activities. (b) There shall be no contaminated materials remaining at or near the surface. (c) Toxic substances that may contaminate air, water, soil, or prohibit plan growth shall be isolated, removed, buried or otherwise disposed of in an appropriate manner. (d) Waste disposal practices and the reclamation of waste disposal facilities shall be conducted in conformance to applicable federal and state requirements. 2. Subsurface. The subsurface shall be properly stabilized, holes and underground workings properly plugged, when required, and subsurface integrity ensured subject to applicable federal and state requirements. 3. Site stability. (a) The reclaimed area shall be stable and exhibit none of the following characteristics: - Large rills or gullies. - Perceptible soil movement or head cutting in drainages. - Slope instability on or adjacent to the reclaimed area. (b) The slope shall be stabilized using appropriate reshaping and earthwork measures, including proper placement of soils and other materials. (c) Appropriate water courses and drainage features shall be established and stabilized. 4. Water management. The quality and integrity of affected ground and surface waters shall be protected as a part of mineral development and reclamation activities in accordance with applicable federal and state requirements: (a) Appropriate hydrologic practices shall be used to protect and, if practical, enhance both the quality and quantity of impacted waters. (b) Where appropriate, actions shall be taken to eliminate ground water co-mingling and contamination. 30 Open pit initie planning and design: Fundamentals (c) Drill holes shall be plugged and underground openings, such as shafts, slopes, stopes, and adits, shall be closed in a manner which protects and isolates aquifers and prevents infiltration of surface waters, where appropriate. (d) Waste disposal practices shall be designed and conducted to provide for long-term ground and surface water protection. 5. Soil management. Topsoil, selected subsoils, or other materials suitable as a growth medium shall be salvaged from areas to be disturbed and managed for later use in reclamation. 6. Erosion prevention. The surface area disturbed at any one time during the development of a project shall be kept to the minimum necessary and the disturbed areas reclaimed as soon as is practical (concurrent reclamation) to prevent unnecessary or undue degradation resulting from erosion: (a) The soil surface must be stable and have adequate surface roughness to reduce run-off, capture rainfall and snow melt, and allow for the capture of windblown plant seeds. (b) Additional short-term measures, such as the application of mulch or erosion netting, may be necessary to reduce surface soil movement and promote revegetation. (c) Soil conservation measures, including surface manipulation, reduction in slope angle, revegetation, and water management techniques, shall be used. (d) Sediment retention structures or devices shall be located as close to the source of sediment generating activities as possible to increase their effectiveness and reduce environmental impacts. 7. Revegetation. When the final landform is achieved, the surface shall be stabilized by vegetation or other means as soon as practical to reduce further soil erosion from wind or water, provide forage and cover, and reduce visual impacts. Specific criteria for evaluating revegetation success must be site-specific and included as a part of the reclamation plan: (a) Vegetation production, species diversity, and cover (on unforested sites), shall approximate the surrounding undisturbed area. (b) The vegetation shall stabilize the site and support the planned post-disturbance land use, provide natural plant community succession and development, and be capable of renewing itself. This shall be demonstrated by: - Successful on-site establishment of the species included in the planting mixture and/or other deshable species. - Evidence of vegetation reproduction, either spreading by rhizomatous species or seed production. - Evidence of overall site stability and sustainability. (c) Where revegetation is to be used, a diversity of vegetation species shall be used to establish a resilient, self-perpetuating ecosystem capable of supporting the postmining land use. Species planted shall includes those that will provide for quick soil stabi- lization, provide litter and nutrients for soil building, and are self-renewing. Except in extenuating circumstances, native species should be given preference in revegetation efforts. (d) Species diversity should be selected to accommodate long-term land uses, such as rangeland and wildlife habitat, and to provide for a reduction in visual contrast. (e) Fertilizers, other soil amendments, and irrigation shall be used only as necessary to provide for establishment and maintenance of a self-sustaining plant community. Mine planning 31 (f) Seedlings and other young plants may require protection until they are fully estab- lished. Grazing and other intensive uses may be prohibited until the plant community is appropriately mature. (g) Where revegetation is impractical or inconsistent with the surrounding undisturbed areas, other forms of surface stabilization, such as rock pavement, shall be used. 8. Visual resources. To the extent practicable, the reclaimed landscape should have charac- teristics that approximate or are compatible with the visual quality of the adjacent area with regard to location, scale, shape, color, and orientation of major landscape features. 9. Site protection. During and following reclamation activities the operator is responsible for monitoring and, if necessary, protecting the reclaimed landscape to help ensure reclamation success until the liability and bond are released. 10. Site-specific standards. All site-specific standards must be met in order for the site to be properly and adequately reclaimed. 1.9.6 Surface and ground water management The hydrologic portion of the reclamation plan shall be designed in accordance with all federal, state, and local water quality standards, especially those under the Clean Water Act National Pollutant Discharge Elimination System (NPDES) point source and non point source programs. The baseline survey should be conducted to identify the quantity and quality of all surface and subsurface waters which may be at risk from a proposed mineral operation. All aspects of an operation which may cause pollution need to be investigated, so that every phase of the operation can be designed to avoid contamination. It is better to avoid pollution rather than subsequently treat water. The diversion of water around chemically reactive mining areas or waste dumps must be considered during the planning stage. Site selection must be considered during the planning stage. Site selection for waste dumps should be conducted to minimize pollution. Reclamation plans should be prepared to include a detailed discussion of the proposed surface water run-off and erosion controls including how surface run-off will be controlled during the ongoing operations, during interim shutdowns, and upon final closure. Reclamation plans should also include a properly designed water monitoring program to ensure operator compliance with the approved plan. The purpose of the monitoring program is to determine the quantities and qualities of all waters which may be affected by mineral operations. Operators should consider controlling all surface flows (i.e. run-on and run-off) with engineered structures, surface stabilization and early vegetative cover. Where the threat to the downstream water quality is high, the plan should provide for total containment, treatment, or both, if necessary, of the surface run-off on the project site. Sediment retention devices or structures should be located as near as possible to sediment source. The physical control of water use and routing is a major task for mining projects. The analysis includes the need to: - Minimize the quantity of water used in mining and processing. - Prevent contamination and degradation of all water. - Intercept water so that it does not come in contact with pollutant generating sources. - Intercept polluted water and divert it to the appropriate treatment facility. 34 Open pit initie planning and design: Fundamentals range from 300 to 500 ppm for heap leach operations to 2000 ppm (0.2%) for vat leach systems. Low-grade ores can be economically leached in heaps placed on impermeable pads where a cyanide solution is sprinkled onto the ore. The solution preferentially collects the metals as it percolates downward and is recovered at the bottom of the heap through various means. Other metals besides gold and silver are mobilized by cyanide solutions. Higher grade ores may be crushed, ground and agitated with cyanide solution in vats or tanks. The solids are then separated from the gold or silver-bearing (pregnant) solution. The precious metals are recovered from the pregnant solution and the solids are transferred to a tailings impoundment. The tailings are often deposited in a slurry form and may contain several hundred parts per million of cyanide. Part of the overall mine reclamation plan includes cyanide detoxification of residual process solutions, ore heaps, tailings impoundments, and processing components. A key to reclamation of cyanide facilities is planning for the solution neutralization pro- cess. The first step is to set a detoxification performance standard. This will have to be site specific dependent on the resources present and their susceptibility to cyanide and metal con- tamination. A minimum requirement would have to be the specific state standard. BLM may need to require more stringent standards if sensitive resources are present. Other considera- tions include the health advisory guideline used by EPA of 0.2 mg/1 for cyanide in drinking water; and the freshwater chronic standard of 0.0052 mg/1 for aquatic organisms. Some species of fish are especially sensitive to cyanide. Likewise metals, and other constituent levels, should be specified for detoxification of cyanide solutions. There are a variety of methods for achieving detoxification of cyanide solutions. These range from simple natural degradation, to active chemical or physical treatment of process waters. A thorough understanding of the metallurgical process generating the waste, and of the chemistry of the waste stream is necessary to select the most effective cyanide destruction technique. 1.9.10 Landform reclamation Shaping, grading, erosion control, and visual impact mitigation of an affected site are important considerations during review of the reclamation plan. The review process not only ensures that the topography of the reclaimed lands blend in as much as possible with the surrounding landforms, natural drainage patterns, and visual contrasts, but also enhances the success of revegetation. The final landform should: - be mechanically stable, - promote successful revegetation, - prevent wind and water erosion, - be hydrologically compatible with the surrounding, landforms, and - be visually compatible with the surrounding landforms. Pit backfilling provides an effective means for reclamation of the disturbed lands to a pro- ductive post-mining land use. However, development of some commodities and deposit types may not be compatible with pit backfilling. Open pit mine optimization is achieved by extending the pit to the point where the cost of removing overlying volumes of unmineralized 'waste' rock just equal the revenues (includ- ing profit) from the ore being mined in the walls and bottom of the pit. Because there Mine planning 35 is usually mineralization remaining, favorable changes in an economic factor (such as an increase in the price of the commodity or new technology resulting in a reduced operat- ing cost) can result in a condition where mining can be expanded, or resumed at a future time. This economically determined pit configuration is typical of the open pit metal mining industry and is of critical importance in efforts to maximize the recovery of the mineral resource. To recover all the known ore reserves the entire pit must remain exposed through progressively deeper cuts. Backfilling where technologically and economically feasible, can not begin until the ore reserves within the specific pit are depleted at the conclusion of mining. Additionally, some waste material is not suitable for use as backfilling material. Depending upon the size of the open pit, backfilling can extend the duration of operations from a few months to several years. Final highwall configuration, including consideration of overall slope angle, bench width, bench height, etc., should be determined during the review of the plan. The maximum height of the highwall should be determined using site-specific parameters such as rock type and morphology. In most cases, the maximum height is regulated by various state agencies. The normal procedures are to either leave the exposed highwall or to backfill and bury the highwall either totally or partially. Appropriate fencing or berming at the top of the highwall is necessary to abate some of the hazards to people and animals. It is important that the backfill requirements be determined during the plan review process and included in the approved plan. 1.10 ENVIRONMENTAL PLANNING PROCEDURES As described by Gilliland (1977), environmental planning consists - Initial project evaluation, - The strategic plan. The components involved in each of these as extracted from the outlined below. 1.10.1 Initial project evaluation 1. Prepare a detailed outline of the proposed action. This should include such items as drawings of land status, general arrangement of facilities, emission points and estimates of emission composition and quantities, and reclamation plans. It is also helpful to have information on the scope of possible future development and alternatives that might be available which could be accommodated within the scope of the proposed action. For example, are there other acceptable locations for tailings disposal if the initial location cannot be environmentally marketed? A schedule for engineering and construction of the proposed action and possible future development should also be available. 2. Identify permit requirements. Certain permits can take many months to process and must be applied for well in advance of construction. Further, some permits will require extensive data, and very long lead times may be encountered in the collection of such data. For example, biotic studies for environmental impact statements require at least a year, and sometimes longer, to evaluate seasonal changes in organisms. Are there points of conflict between permit requirements and the nature of the proposed action? Can the proposed action be altered to overcome these discrepancies or to avoid the need for permits that could of two distinct phases: Gilliland paper will be 36 Open pit initie planning and design: Fundamentals be particularly difficult or significantly time-consuming to obtain? For example, a 'zero' effluent discharge facility could well avoid the Federal Water Pollution Control Action requirement for an Environmental Impact Statement (EIS). 3. Identify major environmental concerns. This includes potential on-site and off-site impacts of the proposed action and from possible future development. Land use and socio- economic issues as well as those of pollutional character must be taken into account. Although there may be little concern about the impacts of an exploratory activity itself, when bulldozers and drill rigs begin to move onto a property, it becomes apparent to the public that there may indeed ultimately be a full development of the property. Public concern may surface from speculation about the possible impacts of full development, and this could result in considerable difficulty in obtaining even the permits necessary to proceed with the proposed activity. 4. Evaluate the opportunity for and likelihood of public participation in the decision- making process. Recent administrative reforms provide for expanded opportunity for public participation in the decision-making process. Projects to be located in areas of minimal envi- ronmental sensitivity may stir little public interest and permits will not be delayed beyond their normal course of approval. A project threatening material impact to an area where the environmental resources are significant, however, will probably receive careful public scrutiny and may be challenged every step in the permit process. 5. Consider the amount and effect of delay possibly resulting from public participation during each state of the project. This could also be called intervention forecasting. When can a hearing be requested? When would it be possible for a citizen to bring suit? How long would it take to secure a final court action? Could the plaintiffs enjoin work on the project during the pendency of litigation? Can the project tolerate such delays? Can the project schedule be adjusted to live with such delays? 6. Evaluate the organization and effectiveness of local citizens groups. Attitudes are also part of this evaluation. Local citizen groups can be a powerful ally in positive communications with the public. They can also be effective adversaries. This evaluation should be extended to all groups which could have a significant voice in opinion making within a community. The working relationship of local groups with state or national counterpart groups should also be assessed. 7. Determine the attitudes and experience of governmental agencies. Identify any inter- agency conflicts. New ventures face an intricate web of federal, state, and local laws and regulations which are often complicated by inconsistencies in the policy goals which underlie these laws, and overlapping jurisdiction of the regulatory agencies. Sometimes you must deal with personnel who have little knowledge of the business world or of the nature of operations being proposed. A company must be prepared, therefore, to dedicate considerable time and effort in promoting and understanding of the project. Further, it is imperative for a company to recognize that government agency personnel have a public responsibility to see that the various laws and regulations within their juris- diction are complied with. They may not always agree that the requirements of the law are practical, fair or equitable, but it is their job to ensure their applicability. Sometimes areas of apparent frustration or conflict will resolve themselves by re-evaluating your position with regard to the role that must be performed by regulatory personnel. Mine planning 39 Table 1.4. Types of permits and approvals which may be required for the Kensington Gold Project (Forest Service, 1990). 1. Federal government Forest Service 1. NEPA compliance and record of decision on EIS 2. Plan of operations 3. Special use permits Environmental Protection Agency 1. National Pollutant Discharge Elimination System (NPDES) 2. Spill Prevention Control and Countermeasure (SPCC) plan 3. Review of section 404 Permit 4. Notification of hazardous wages activity 5. NEPA compliance and record of decision on EIS (cooperating agency) Army Corps of Engineers 1. Section 404 Permit - Clean Water Act (dredge and fill) 2. Section 10 Permit - Rivers and Harbor Act 3. NEPA compliance and record of decision on EIS (cooperating agency) Coast Guard 1. Notice of fueling operations 2. Permit to handle hazardous materials 3. Application for private aids to navigation Federal Aviation Administration 1. Notice of landing area and certification of operation 2. Determination of no hazard Federal Communications Commission 1. Radio and microwave station authorizations Treasury Department (Dept of Alcohol, Tobacco & Firearms) 1. Explosives user permit Mine Safety and Health Administration 1. Mine I.D. number 2. Legal identity report 3. Miner training plan approval U.S. Fish and Wildlife Service 1. Threatened and endangered species clearance 2. Bald Eagle Protection Act clearance National Marine Fisheries Services 1. Threatened and endangered species clearance 2. State of Alaska Alaslca Division of Government Coordination 1. Coastal project questionnaire 2. Coastal management program certification Alaska Department of Environmental Consen'ation 1. Air quality permit 2. Burning permit 3. Certification of reasonable assurance 4. Solid Waste Management permit 5. Oil facilities approval of financial responsibility 6. Oil facilities discharge contingency plan 7. Water and sewer plan approval 8. Food service permit Alaska Department of Natural Resources 1. Water rights permits 2. Tidelands lease 3. Right-of-way permit 4. Permit to construct or modify a dam 5. Land use permit Alaska Department of Fish and Game 1. Fishway or fish passage permit 2. Anadromous fish protection permit Alaska Department of Public Safety i 1. Life and fire safety plan check Alaska Department of Labor 1. Fired and unfired pressure vessel certificate 2. Elevator certificate of operation Alaska Department of Revenue 1. Affidavit for non-resident business taxation 2. Alaska business license 3. Alaska mining license Alaska Department of Health and Social Services 1. Health care facilities construction license 2. Certificate of need (townsite with health care facilities) 3. Local government City and Bureau of Juneau 1. Mining permit 2. Grading permit 3. Building permits 4. Burning permits 5. Explosive permits 40 Open pit initie planning and design: Fundamentals The team members include such personnel as the project manager, project engineers, attorneys, environmental specialists, technical and public relations experts. 1.11 A SAMPLE LIST OF PROJECT PERMITS AND APPROVALS The 'Final Scoping Document, Environmental Impact Statement' for the Kensington Gold Project located near Juneau, Alaskawas published by the U.S. Forest Service (Juneau Ranger District) in July 1990 (Forest Service, 1990). To provide the reader with an appreciation for the level of effort involved just in the permitting process, a listing of the various federal, state, and local government permits/approvals which may be required for this underground gold mine/mill, is given in Table 1.4. REFERENCES AND BIBLIOGRAPHY Anonymous. 1976. Principles of the Mineral Resource Classification System of the U.S. Bureau of Mines and U.S. Geological Survey. Geological Survey Bulletin 1450-A.Washington: U.S. Government Printing Office. Anonymous. 1980. Principles of a Resource/Reserve Classification for Minerals. Geological Survey Circular 831. Arlington, VA: U.S. Geological Survey. Anonymous. 1998. A heavy metal harvest for the millennium. E/MJ. 199(11): 32YY-32ZZ. AusIMM. 1995. Code and guidelines for technical assessment and/or valuation of mineral and petroleum assets and mineral and petroleum securities for independent expert reports (The VALMIN Code). http://www.ausimm.com.au/codes/valmin/valcodeO.asp. AusIMM. 1998a. The revised and updated VALMIN Code: Code and guidelines for technical assessment and/or valuation of mineral and petroleum assets and mineral and petroleum securities for independent expert reports (The VALMIN Code), http://www.ausimm.com.au/codes/valmin. AusIMM. 1998b. The revised VALMIN Code and guidelines: An aide memoire to assist its interpretation. http://www.ausimm.com.au/codes/valmin/eexp 11 .asp. AusIMM. 2004. JORC information, www.jorc.org/main. AusIMM. 2005. Australasian Code for the reporting of exploration results, mineral resources and ore reserves: The JORC Code - 2004 Edition, www.jorc.org/pdf/jorc2004print.pdf. Banfield, A.F. 1972. Ore reserves, feasibility studies and valuations of mineral properties. Paper presented at the AIME Annual Meeting, San Francisco, CA February 20-24, 1972. Society of Mining Engineers of AIME, Preprint 72-AK-87. Banfield, A.F., and J.F. Havard. 1975. Let's define our terms in mineral valuation. Mining Engineering 27(7): 74-78. Barfoot, G. 2007. Challenges for project management on long-term iron ore expansion projects. Iron Ore 2007 Conference, Proceedings, AusIMM Publication Series 6/2007. Australasian Institute of Mining and Metallurgy, Carlton, Victoria, pp. 223-224. BLM (Bureau of Land Management) 1992. Solid Minerals Reclamation Handbook (BLM Manual Handbook H-3042-1). U.S. Department of the Interior. Bode, K. 1999. KUBUS - Estimating and controlling system for project management in the construction and construction-related industry. 28th International Symposium on Application of Computers and Operations Research in the Mineral Industry: 155-164. Colorado School of Mines:CSM. Bourgouin, F. 2011. The politics of large-scale mining in Africa: domestic policy, donors, and global economic processes. JSAIMM. l l l (07):525-529. Brennan, J., and A. Lawrence. 2005. Taking it to the bank - Making your mining project bankable. E/MJ. 206(7):80-83. September. Bullock, R.L. 2011. Accuracy of feasibility study evaluation would improve accountability. Mining Engineering. 63(4):78-85. April. Camus, J. 2011. Value creation in the mining business. Mining Engineering. 63(3):43—52. March. Mine planning 41 Cawood, F.T. 2011. Threats to the South African minerals sector - an independent view on the investment environment for mining. JSAIMM. I l l (7):469-474. Chow, J. 2007. Cadia East open pit project mining study, AUSIMM Conference Proceedings, Large Open Pit Mining Conference Perth, WA, September 2007, pp. 37-44. CIM. 2000. Exploration Best Practice Guidelines. Aug 20. www.cim.org/definitions/explorationBEST PRACTICE.pdf. CIM. 2003a. Standards and guidelines for valuation of mineral properties. February, www.cim.org/ committees/CIMVal_final_standards.pdf. CIM. 2003b. Guidelines for the reporting of diamond exploration results. M a r 9. www.cim.org/committees/ diamond_exploration_final.cfm. CIM. 2003c. Estimation of mineral resources and mineral reserves: Best practice guidelines. Nov 23. www.cim.org/coinmittees/estimation.cfm. CIM. 2004. Definition Standards - On mineral resources and mineral reserves, www.cim.org/committees/ StdsAppNovpdf. CIM. 2005. Standards and guidelines. www.cim.org/committees/guidelinesStandards_main.cfm. Clegg, A.M. 2005. Risk in project preparation - 'Determining the project needs and the effects on the management strategy'. JSAIMM. 105(2):81-94. Danilkewich, H., Mann, T., and G. Wahl. 2002. Preparing a feasibility study request for proposal in the 21st century. Pre-print Paper 02-101. 2002 SME Annual Meeting, Feb 26-28. Phoenix, AZ. Danni, J.W. 1992. Mineral Hill Mine - A case study in corporate environmentalism. Mining Engineering. 44(1): 50-53. Davis, G. 1994. U.S. share of world mineral markets: Where are we headed. Mining Engineering. 46(9): 1067-1069. Dessureault, S., Scoble, M., and S. Dunbar. 2002. Activity based costing and information engineering: Formulation of an annual budget. 30th International Symposium on Application of Computers and Operations Research in the Mineral Industry: 601-614. Alaska:SME. De Voto, R.H., and T.P. McNulty. 2000. Banning cyanide use at McDonald - an attack on open-pit mining. Mining Engineering. 52(12): 19-27. Evans, D. 2008. Analyzing the risk of bankable feasibility studies in today's mining supercycle. E/MJ. 209(7):92-94. September. Forest Service (Juneau Ranger District) 1990. Kensington Gold Project, Alaska: Final Scoping Document, Environmental Impact Statement. U.S. Department of Agriculture (7). Francis, D. 1997. Bre-X: The Inside Story. Key Porter Books, Toronto. 240 pp. Gavelan, Z., and S. Dessureault. 2006. Probabilistic approach to project-specific political risk analysis for mineral projects. Mining Engineering. 58(l):43-49. January. Gilliland, J.C. 1977. The environmental requirements of mine planning. Mineral Industry Costs. Northwest Mining Association: 57-65. Goold, D„ and A. Willis. 1997. Bre-X Fraud. McClelland & Stewart. 272 pp. Grace, K.A. 1984. Reserves, resources and pie-in-the-sky. Mining Engineering 36(10): 1446-1450; 1985. Discussion. Mining Engineering 37(8): 1069-1072. Halls, J.L. 1975. Personal communication. Kennecott Copper Company. Hatton, R. 2005. Computer simulations to enable continuous blending to two plants at Sishen mine From the medium-term point of view, Iron Ore 2005 Conference, Proceedings, AusIMM Publication Series 8/2005. Australasian Institute of Mining and Metallurgy, Carlton, Victoria, pp. 281-289. Heuberger, R. 2005. Risk analysis in the mining industry. JSAIMM. 105(2):75-80. Hickson, R.J. 2000. Project management for dummies, or "How to improve your project success ratio in the new millennium". Paper 00-133. SME Annual Meeting. Feb 28-Mar 1. SLC, UT. Hustrulid, W. 2002. 2002 Jackling Lecture: You can't make a silk purse out of a sow's ear. Mining Engineering. 54(9): 41-48. Hutson, H. 2009. Application of the best available technology to reclamation design and integration with mine planning. Paper 09-085. SME Annual Meeting. Feb 22-25. Denver, CO. Jacus, J.R., and T.E. Root. 1991. The emerging federal law of mine waste: administrative, judicial and legislative developments. Land and Water Law Review, University of Wyoming, vol. XXVI, n. 2, 1991. Johnson, K.R. 2011. Visual computing and mine design. Proceedings of the 35th APCOM. Wollongong NSW, Australia. September 24-30. pp. 39—46. 44 Open pit initie planning and design: Fundamentals 4. Discuss the changes that have occurred between the SME 1991 and SME 1999 guide- lines regarding the 'Reporting of Exploration Information, Resources and Reserves.' See the Reference section of this chapter. 5. Distinguish the meanings of 'Resource' and 'Reserve.' 6. Using Figure 1.1 discuss the basis upon which 'Resources' and 'Reserves' change category. 7. The U.S. Securities and Exchange Commission (SEC) have their own guidelines regarding the public reporting of resources and reserves. Referring to the website provided in the References, summarize their requirements. How do they compare to the SME 1991 guidelines? To the 1999 guidelines? 8. The most recent version of the USGS/USBM classification system is published as USGS Circular 831. Download the Circular from their website (see References). What was the main purpose of these guidelines? Who was the intended customer? 9. What is meant by 'Hypothetical Resources'? 10. What is meant by 'Undiscovered Resources'? 11. In the recent Bre-X scandal, the basis for their resource/reserve reporting was indicated to be USGS Circular 831. In which of the classification categories would the Bre-X resources/reserves fall? Explain your answer. See the References for the website. 12. Compare the 1999 SME guidelines with those provided in the JORC code included in Chapter 7. 13. Compare the 1999 SME guidelines with those provided in the CIM guidelines included in Chapter 7. 14. Discuss the relevance of the Mineral Supply Process depicted in Figure 1.2 to iron ore for the period 2002 to 2005. 15. Discuss the relevance of the Mineral Supply Process depicted in Figure 1.2 to molybdenum for the period 2002 to 2005. 16. Discuss the relevance of the Mineral Supply Process depicted in Figure 1.2 to copper for the period 2002 to 2005. 17. Figure 1.3 shows diagrammatically the planning, implementation and production phases for a new mining operation. What are the planning stages? What are the implementation stages? What are the production stages? 18. Does the 'Relative Ability to Influence Cost' curve shown in Figure 1.3 make sense? Why or why not? 19. What is the fourth phase that should be added to Figure 1.3? 20. In the initial planning stages for any new project there are a great number of factors of rather diverse nature that must be considered. The development of a 'checklist' is often a very helpful planning tool. Combine the items included in the checklist given in section 1.3 with those provided by Gentry and O'Neil on pages 395-396 of the SME Mining Engineering Handbook (2nd edition, Volume 1). 21. How might the list compiled in problem 20 be used to guide the preparation of a senior thesis in mining engineering? 22. What is the meaning of a 'bankable' mining study? 23. Summarize the differences between a conceptual study, a pre-feasibility study and a feasibility study. 24. Assume that the capstone senior mine design course extends over two semesters each of which is 16 weeks in duration. Using the information provided in Tables 1.3 and 1.4 regarding the content of an intermediate valuation report (pre-feasibility study) and a Mine planning 45 feasibility study, respectively, develop a detailed series of deliverables and milestones. It is suggested that you scan the two tables and cut-and-paste/edit to arrive at your final product. 25. Assume that the estimated capital cost for an open pit project is $500 million. How much would you expect the conceptual study, the preliminary study and the feasibility study to cost? 26. Section 1.6 concerns the accuracy of the estimates provided. These are discussed with respect to tonnage and grade, performance, costs, and price and revenue. Summarize each. 27. Discuss what is meant by the contingency allowance. What is it intended to cover? What is it not meant to cover? 28. In section 1.6.4 it is indicated that both probable and average metal prices expressed in present value dollars need to be provided. The 'conservative' price is considered to be that with an 80% probability of applying. Choose a mineral commodity and assign a probable price and a conservative price for use in a pre-feasibility study. Justify your choices. 29. What are the two common ways for accomplishing a feasibility study? 30. Summarize the steps involved in performing a feasibility study. What is the function of the steering committee? Who are the members? 31. Who are the members of the project teams? 32. What is meant by a Work Breakdown Structure? What is its purpose? 33. What is the difference between a Work Breakdown Structure and a Work Classification Structure? 34. Construct a bar chart for the activities listed in the project schedule developed in problem 24. It should be of the type shown in Figure 1.6. 35. What is meant by an RFP? How should they be structured? 36. What is the goal of a Critical Path representation? 37. Section 1.9 deals with mine reclamation. What is the rationale for including this material in Chapter 1 of this book and not later? 38. What is the concept of multiple use management? What is its application to minerals? 39. What is the practical implication of the statement from the Mining and Minerals Policy act of 1970? 40. What is the U.S. National Materials and Mineral Policy, Research and Development Act of 1980 (Public Law 96-479)? Is it being followed today? 41. Define the following acronyms: a. BLM b. FLPMA c. CFR d. NEPA e. EA f. EIS g. NPDES h. EPA 42. Summarize the purposes of a reclamation plan. 43. What should a reclamation plan contain? 44. For a disturbed area to be properly reclaimed, what must be achieved? Summarize the major concepts. 46 Open pit initie planning and design: Fundamentals 45. Discuss the most important concepts regarding surface and ground water management. 46. Discuss the important concepts regarding mine waste management. 47. Tailings and slime ponds. What is the difference between them? What are the engineering concerns? 48. What means are available for the detoxification of cyanide heap and vat leach systems? 49. What is meant by landform reclamation? 50. Do open pit mines have to be refilled? Discuss the pro's and con's regarding the backfilling of open pit mines. 51. In section 1.10 'Environmental Planning Procedures' Gilliland divided environmental planning into two distinct phases: (1) Initial project evaluation and (2) The strategic plan. Summarize the most important aspects of each. 52. What members would be part of an environmental planning team? 53. In section 1.11a list of the project permits and approvals required for the Kensington Gold project in Alaska has been provided. List the permits and approvals required for a new mining project in your state/country. Mining revenues and costs 49 Applying the formula in this case yields (1.10)5 - 1 PV = $1 = $3.791 _(0.10)(1.10)5_ The difference in the results is due to roundoff. 2.2.4 Payback period Assume that $5 is borrowed from the bank today (time = 0) to purchase a piece of equipment and that a 10% interest rate applies. It is intended to repay the loan in equal yearly payments of $1. The question is 'How long will it take to repay the loan?' This is called the payback period. The present value of the loan is PV (loan) = —$5 The present value of the payments is r ( l . i o ) " - i i PV (payments) = $1 F J [ 0 . 1 0 ( 1 . 1 0 ) " . The loan has been repaid when the net present value Net present value (NPV) = PV (loan) + PV (payments) is equal to zero. In this case, one substitutes different values of n into the formula "(1.10)" - 1 ' NPV = —$5 + $1 0.10(1.10)" _ For n = 5 years NPV = -$1.209; for n = 6 years NPV = -$0.645; for n = l years NPV = -$0.132; for n = 8 years NPV = $0.335. Thus the payback period would be slightly more than 7 years (n = 7.25 years). 2.2.5 Rate of return on an investment Assume that $1 is invested in a piece of equipment at time = 0. After tax profits of $1 will be generated through its use for each of the next 10 years. If the $5 had been placed in a bank at an interest rate of i then its value at the end of 10 years would have been using Equation (2.2). FW = PV(1 + if = $5(1 + O10 The future worth (at the end of 10 years) of the yearly $1 after tax profits is FW = A,„ ———t———— " (2.5) 50 Open pit mine planning and. design-. Fundamentals where Am is the annual amount and [(1 + i)n — 1 ]/i is the uniform series compound amount factor. The interest rate i which makes the future worths equal is called the rate of return (ROR) on the investment. In this case $5(1 +1)10 = $ l [ ( 1 + °1 0 ~ 1 i Solving for i one finds that i = 0.15 The rate of return is therefore 15%. One can similarly find the interest rate which makes the net present value of the payments and the investment equal to zero at time t = 0. "(1.10)10- NPV = —$5 + $1 i = 0.15 1 K1 + 0 10 = 0 The answer is the same. The process of bringing the future payments back to time zero is called 'discounting'. 2.2.6 Cashflow (CF) The term 'cash flow' refers to the net inflow or outflow of money that occurs during a specific time period. The representation using the word equation written vertically for an elementary cash flow calculation is Gross revenue — Operating expense = Gross profit (taxable income) -Tax = Net profit — Capital costs = Cash flow A simple example (after Stermole & Stermole, 1987) is given in Table 2.1. In this case there is a capital expense of $200 incurred at time t = 0 and another $100 at the end of the first year. There are positive cash flows for years 2 through 6. Table 2.1. Simple cash flow example (Stermole & Stermole, 1987). Year 0 1 2 3 4 5 6 Revenue 170 200 230 260 290 - Operating cost - 4 0 - 5 0 - 6 0 - 7 0 - 8 0 - Capital costs - 2 0 0 - 1 0 0 - Tax costs - 3 0 - 4 0 - 5 0 - 6 0 - 7 0 Project cash flow - 2 0 0 - 1 0 0 + 100 + 110 + 120 +130 + 140 Mining revenues and costs 51 2.2.7 Discounted cash flow (DCF) To 'discount' is generally used synonymously with 'to find the present value'. In the previous example, one can calculate the present values of each of the individual cash flows. The net present value assuming a minimum acceptable discount rate of 15% is Year 0 NPV0 = - 2 0 0 = -200.00 - 1 0 0 Year 1 NPVj = = -86.96 100 Year 2 NPV2 = — — = 75.61 (1.15)z Year 3 NPV3 = ^ ^ = 73.33 120 Year 4 NPV4 = - 68.61 130 Year 5 NPV5 = — — ? = 64.63 (1-15) 140 Year 6 NPV6 = = 60.53 Discounted cash flow = $55.75 The summed cash flows equal $55.75. This represents the additional capital expense that could be incurred in year 0 and still achieve a minimum rate of return of 15% on the invested capital. 2.2.8 Discounted cashflow rate of return (DCFROR) To calculate the net present value, a discount rate had to be assumed. One can however calculate the discount rate which makes the net present value equal to zero. This is called the discounted cash flow rate of return (DCFROR) or the internal rate of return (ROR). The terms DCFROR or simply ROR will be used interchangeably in this book. For the example given in Subsection 2.2.6, the NPV equation is 100 100 110 120 130 140 Solving for i one finds that i = 0.208 In words, the after tax rate of return on this investment is 20.8%. 54 Open pit mine planning and. design-. Fundamentals Table 2.3. Percentage depletion rates for the more common minerals. A complete list of minerals and then- percentage depletion rates are given in section 613(b) of the Internal Revenue Code. Deposits Rate Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22 % Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15 % Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14 % Coal, lignite, and sodium chloride 10 % Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or bumed lightweight aggregates IVi % Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5 % IRS 2011. Depletion. Ref: www.irs.gov/publications/p535/ch09.html Once the initial cost of the property has been recovered, the cost depletion basis is zero. Obviously, the cost depletion deduction will remain zero for all succeeding years. The percent depletion deduction calculation is a three step process. In the first step, the percent deduction is found by multiplying a specified percentage times the gross mining income (after royalties have been subtracted) resulting from the sale of the minerals extracted from the property during the tax year. According to Stermole & Stermole (1987): 'Mining' includes, in addition to the extraction of minerals from the ground, treatment processes considered as mining applied by the mine owner or operator to the minerals or the ore, and transportation that is not over 50 miles from the point of extraction to the plant, or mill in which allowable treatment processes are applied. Treatment processes considered as mining depend upon the ore or mineral mined, and generally include those processes necessary to bring the mineral or ore to the stage at which it first becomes commercially marketable; this usually means to a shipping grade and form. However, in certain cases, additional processes are specified in the Internal Revenue Service regulations, and are considered as mining. Net smelter return or its equivalent is the gross income on which mining percentage depletion commonly is based. Royalty owners get percentage depletion on royalty income so companies get percentage depletion on gross income after royalties. As shown in Table 2.3, the percentage which is applied varies depending on the type of mineral being mined. In step 2, the taxable income (including all deductions except depletion and carry forward loss) is calculated for the year in question. Finally in step 3, the allowable percentage depletion deduction is selected as the lesser of the percent depletion (found in step 1) and 50% of the taxable income (found in step 2). With both the allowable cost depletion and percentage depletion deductions now calcu- lated, they are compared. The larger of the two is the 'allowed depletion deduction'. The overall process is summarized in Figure 2.1. Mining revenues and costs 55 Percent Depletion The smaller is the 'Allowed Percent Deduction" Depletion 50% Limit on The Larger is the 'Allowed Depletion Deduction" Percent Depletion Cost Depletion Deduction Figure 2.1. Flow sheet for determining the depletion deduction (Stermole & Stermole, 1987). 2.2.11 Cashflows, including depletion As indicated the depletion allowance works exactly the same way in a cash flow calculation as depreciation. With depletion the cash flow becomes: Gross revenue — Operating expense — Depreciation — Depletion — Taxable income — Tax = Profit + Depreciation + Depletion — Capital costs = Cash flow The following simplified example adapted from Stermole & Stermole (1987) illustrates the inclusion of depletion in a cash flow calculation. Example. A mining operation has an annual sales revenue of $ 1,500,000 from a silver ore. Operating costs are $700,000, the allowable depreciation is $100,000 and the applicable tax rate is 32%. The cost depletion basis is zero. The cash flow is: (1) Preliminary. Calculation without depletion. = Taxable income before depletion $700,000 (2) Depletion calculation. Since the depletion basis is zero, percentage depletion is the only one to be considered. One must then choose the smaller of: (a) 50% of the taxable income before depletion and carry-forward-losses (b) 15% of the gross revenue Gross revenue — Operating expense — Depreciation $1,500,000 -700,000 -100,000 56 Open pit mine planning and. design-. Fundamentals In this case the values are: (a) 0.50 x $700,000 = $350,000 (b) 0.15 x $1,500,000 = $225,000 Hence the depletion allowance is $225,000. (3) Cashflow calculation. Gross revenue $1,500,000 — Operating expense -700,000 — Depreciation -100,000 — Depletion -225,000 = Taxable income $475,000 - Tax @ 32% -152,000 = Profit $323,000 + Depreciation +100,000 + Depletion +225,000 = Cash flow $648,000 The cash flow calculation process is expressed in words (Laing, 1976) in Table 2.4. Laing (1976) has summarized (see Table 2.5) the factors which should be considered when making a cash flow analysis of a mining property. The distinction between the 'exploration' and 'development' phases of a project is often blurred in actual practice. However from a tax viewpoint a sharp distinction is often made. The distinction made by the U.S. Internal Revenue Service (1988a) is paraphrased below. 1. The exploration stage involves those activities aimed at ascertaining the existence, loca- tion, extent or quality of any deposit of ore or other mineral (other than oil or gas). Exploration expenditures paid for or incurred before the beginning of the development stage of the mine or other natural deposit may for tax purposes be deducted from current income. If, however, a producing mine results, these expenditures must be 'recaptured' and capitalized. These are later recovered through either depreciation or cost depletion. 2. The development stage of the mine or other natural deposit will be deemed to begin at the time when, in consideration of all the facts and circumstances, deposits of ore or other mineral are shown to exist in sufficient quantity and quality to reasonably justify exploitation. Expenditures on a mine after the development stage has been reached are treated as operating expenses. For further information concerning the economic models the interested reader is referred to Stermole & Stermole (2012). 2.3 ESTIMATING REVENUES 2.3.1 Current mineral prices Current mineral prices may be found in a number of different publications. Metals Week, Mining Magazine, Metal Bulletin and Industrial Minerals are four examples. Spot prices Mining revenues and costs 59 Table 2.6. Metal prices (E/MJ, 1993). Aluminum, fl/lb Used beverage cans, 12/24/92 40-42 Comex, 99.7% closing, Mar. 58.00 May 58.00 N.Y. merchant, 99.7%, 1/11/93 57.00-57.25 Antimony, $/lb Merchant, 3/1/90 0.85-0.92 Antimony oxide, 3/1/90 1.10-1.20 Beryllium copper, 9/17/90 Strip (No. 25) 9.25 Rod, bar, and wire (No. 25) 10.24 Bismuth, $/lb, ton lots Merchant, 3/1/92 2.40-2.45 Cadmium, $/lb, ton lots Producers, 6/1/92 1.80-2.00 Chromium, $/lb, 1/1/91 Electrolytic metal, standard 3.75 Cobalt, 99%, $Ab Afrimet, F.O.B. New York Cathodes, etc., 1/1/92 13.00 Powder, 1/27/89 NQ Extra fine, 1/27/89 NQ Shenitt Gordon 'S' power, 12/31/90 NQ Copper, <{,/lb LME, grade A, closing cash bid 100.26 3 mo 100.58 Comex, high grade, Jan. closing 98.35 U.S. producers, cathode 100.00 Warrenton refining, wirebar 110.35 N.Y. merchant, cathodes, Mar. 101.00 Cold, $/tr oz Zurich avg., opg 328.00 Paris, p.m 329.21 London, 3:00 p.m 327.65 Handy & Harman, N.Y. 327.65 Engelhard bullion 328.86 Engelhard fabricated 345.30 Lead, {/lb U.S. and Canadian producers, 11/6/92 32.00-35.00 Secondary fabricated, 11/9/92 36.00-40.00 London fix, $/mt Rudolf Wolff, spot 434.18 Rudolf Wolff, 3 mo 445.88 Lithium, $/lb 99.9%, 1,000 lb lots, 11/2/92 31.80-32.45 Carbonate tech., 11/2/92 1.91-1.96 Magnesium, tf/lb, 5-st lots Ingots, 99.8%, 11/16/91 143-153 Grinding slab, 1/1/91 143 Sticks, 1.3-in.-dia, 1/2/91 223 Manganese, tf/lb Electrolytic, 99.9%, 11/15/90 105 Mercury, 99.9%, $/flask New York prompt, 8/26/92 205-210 C.I.F. European port, 12/8/92 115-130 Molybdic oxide, $/lb Producer, 1/6/92 3.35 Nickel, $/lb Melting briquettes, 10/10/91 3.48-3.52 N.Y. merchant, spot, 1/14/93 2.64-2.68 Platinum, $/troz London p.m. fix 1/14/93 358.75 Comex, 99.9%, Apr. 355.50 Engelhard fabricated 459.00 U.S. merchant, 1/14/93 358.00-359.00 Silver, fltroz Engelhard bullion 368.00 Handy & Harman, N.Y. 397.00 London fix, spot 369.15 3 mo 371.95 6 mo 374.95 12 mo 383.00 Zurich fix 369.70 Tin Kuala Lumpur spot, ringgit/kilo 14.81 Spot exchange, $/ringgit 0.3843 AMM N.Y. ex-dock, $/lb 2.76 Uranium, $/lb U^Os Nuexco, 12/31/92 7.85 Zinc, tf/lb U.S. and foreign producers, slab, delivered in U.S., 1/14/93 High grade 53.76-54.74 Special high grade 51.00-55.24 CGG 51.75-54.49 U.S. producers, die casting alloys No. 3,7/30/91 NQ No. 5,7/30/91 NQ 60 Open pit mine planning and. design-. Fundamentals Table 2.7. Prices for some common non-metallic minerals (Industrial Minerals, December 1992). Copyright 1992. Industrial Minerals, reproduced with permission. Asbestos All prices quoted are F.O.B. mine Canadian chrysotile Group No. 3 C$1,450-1,750 Group No. 4 C$1,080-1,400 Group No. 5 CS645-850 Group No. 6 CS525-575 Group No. 7 CS180-350 South African chrysotile Group No. 5 $360-410 Group No. 6 $300-390 Group No. 7 $180-220 South African amosite Long $660-1,000 Medium $610-700 Short $425-625 South African crocidolite Long $720-880 Medium $645-715 Short $640-695 Benloilite Wyoming, foundry grade, 85% 200 mesh, bagged, 10 ton lots, delU.K £120-130 F.O.B. plants, Wyoming rail hopper cars, bulk st $18.00-35.00 F.O.B. plants, Wyoming, bagged, rail cars, st $33.00-45.00 Fullers' Earth, soda ash-treated, del, U.K. foundry grade, bagged £85-95 Civil engineering grade, bulk £60-70 OCMA, bulk del U.K. £65-70 API, F.O.B. plant, Wyoming, rail cards, bagged, st $34.50 Feldspar Ceramic grade, powder, 300 mesh, bagged, ex-storage U.K £140 Sand, 28 mesh, glass grade, ex-store U.K £65 Ceramic grade, bulk, st F.O.B. Spruce Pine, NC, 170-250 mesh $50.00 F.O.B. Monticello, Ga, 200 mesh high potash $82.50 F.O.B. Middleton, Con, 200 mesh $67.50 Glass grade, bulk, st F.O.B. Spruce Pine, NC, 97.8% > 200 mesh $33.50 F.O.B. Monticello, Ga, 92% > 200 mesh, high potash $64.75 F.O.B. Middleton, Con, 96% > 200 mesh $45.50 Fluorspar Metallurgical, min 70% CaF2, ex-U.K. mine £85-90 Acidspar, dry basis 97% CaFj bagged ex-works £140-150 Acidspar, dry, bulk ex-works tankers £125-135 Acidspar Chinese dry bulk, C.I.F. Rotterdam $100-110 Mexican, F.O.B. Tampico, Acidspar filtercake $122-127 Metallurgical $90-95 South African acidspar dry basis, F.O.B. Durban $110-115 USA, Illinois district, bulk, st acidspar $190-195 Iodine Crude iodine crystal, 50 kg drums 99.5% min, per kg del U.K. $15-16 Phosphates Florida, land pebble, run of mine, st dry basis, unground, bulk, ex-mine, avg. Domestic Export 60-66% BPL $34.99 $30.36 66-70% BPL $25.99 $34.67 70-72% BPL $27.84 $37.38 72-74% BPL $36.24 $41.80 74% BPL $35.10 $50.20 Morocco, 75-77% BPL, FAS Casablanca $48.50 70-72% BPL, FAS Casablanca $46 Tunisia, 65-68% BPL, FAS Sfax $32-38 Nauru, 83% BPL, It, F.O.B - Potash Muriate of potash, bulk, 60% K2O Std, C.I.F. UP port £71-74 Granular, C.I.F. U.K port £81-84 Std, F.O.B. Vancouver $90-100 F.O.B. Saskatchewan, bulk per, st Standard $83 Coarse $87 Granular $89 F.O.B. Carlsbad, bulk, per ton. Coarse $90-100 Granular $95 Salt Ground rocksalt, 15-20 tonne lots, avg. price del U.K £20 Soda ash US natural, F.O.B. Wyoming, Dense, st $80 Sulphur US Frasch, liquid, dark ex-terminal, Tampa, It $88 Canadian, liquid, bright, F.O.B. Rotterdam, tonne $90 French, Polish, liquid, ex-terminal Rotterdam, tonne $105.75 Canadian, solid/slate, F.O.B. Vancouver, spot $65.75 Canadian, solid/slate, F.O.B. Vancouver, contract $65.70 To accord with trade practices, certain prices are quoted in US$ (sterling now floating at around $1.50-1.70 —£1). All quotations are © Metal Bulletin pic 1992. Mining revenues and costs 61 Table 2.8. Prices* for some common non-ferrous ores (Metal Bulletin, 1993). Copyright 1993 Metal Bulletin; reproduced with permission. Antimony Per metric tonne unit Sb. C.I.F. Clean sulphide conc., 60% Sb $14.00-$15.50 Lump sulphide ore, 60% Sb $14.50-$16.00 Chinese conc., 60% Sb, Se typically 60 ppm. Tantalite Per lb Ta205 25/40% basis 30% Ta205 C.I.F., max 0.5% U 3 0 8 and Th0 2 combined $30.00-$33.00 Greenbushes 40% basis $40.00 Hg 30ppm max $12.00-$ 13.00 Beryl Per short ton unit of BeO Cobbed lump min. 10% BeO C.I.F. $75-$80 Chromite Per tonne delivered Transvaal, friably lumpy, basis 40% Cr 20 3 F.O.B $55-$65 Albanian, hard lumpy, min. 42% F.O.B. . $70-$80 Albanian, conc., 51% F.O.B $100-$110 Turkish, lumpy, 48% 3:1 (scale pro rata) F.O.B $160-$180 Russian, lumpy, 40% min. 36% F.O.B. . . . $75-$95 Tin conc. T/C per tonne 20/30% Sn (including deduction) . . ,£400-£530 30/50% Sn (including deduction) . . ,£350-£500 50/65% Sn (including deduction) . . .£300-£600 65/75% Sn (including deduction) . . ,£400-£525 Titanium ores Australian per tonne Rutile conc.min.95% Ti02 bagged, F.O.B./Fid A$550-A$600 Rutile bulk conc.min.95% Ti02 F.O.B./Fid A$500-A$560 Limenite bulk conc.min.54% Ti02 F.O.B A$83-A$90 Columbium ores Per lb pentoxide content Columbite min. 65% C b 2 0 5 + T a 2 0 5 , 10:1 C.I.F. $2.60-$3.05 Tungsten ore Per metric tonne unit WO3 Min. 65% W0 3 C.I.F. $40-$50 Uranium Per lb U3O8 Lead conc. 70/80% Pb $500-550 basis C.I.F. $170-$180 Lithium ores Per tonne Nuexco exchange value December $7.85 Nuexco restricted American market penalty $2.10 Nukem December restricted spot .$9.90-$ 10.35 Nukem December unrestricted spot $7.90-$8.00 Petalite, 3.5-4.5% C.I.F. £135-£140 Spodumene 4-7% Li 2 0 C.I.F. £178-£183 Manganese ore Metallurgical per mtu Mn 48/50% Mn Max. 0.1%P C.I.F. $3.35-$3.55 Molybdenite Per lb Mo in MoS2 Conc. C.I.F. $1.95-$2.05 Conc. C.I.F. U.S $2.80-$3.00 Vanadium Per lb V2Os Highveld, fused min. 98% V 2 0 5 C.I.F. . . . $1.95 Other sources $1.75-$ 1.85 Zinc conc T/C per metric dry tonne Sulphide 49/55% Zn basis $1,000 C.I.F. main port $188-$190 Sulphide 56/61% Zn basis $1,000 C.I.F. main port $190-$194 Monazite Australian per tonne Conc. Min.55% REO + Thoria, F.O.B ./Fid A$300-A$350 Zircon Australian per tonne Std. min. 65% Zr0 2 F.O.B ./Fid . A$230-A$270 Premium max. 0.05% Fe203 F.O.B ./Fid A$250-A$325 •Prices expressed C.I.F. Europe unless otherwise indicated. 64 Open pit mine planning and. design-. Fundamentals Table 2.11. Lake freight tariff rates on iron ore, pellets and limestone (Shillings Mining Re\'iew, 1993c). Lake freight rates from Upper Lake ports to Lower Lake ports Iron ore ($/gross ton) Self unloading vessels Head of Lakes to Lower Lakes $6.50 Marquette to Lower Lakes 5.40 Escanaba to Lake Erie 4.88 Escanaba to Lake Michigan 3.90 Limestone ($/gross ton) Calcite, Drummond, Cedarville and Stoneport to Lower Lake Michigan 3.98 Lake Erie ports 4.10 Note: The above cargo rates apply after April 15 and before December 15, 1993. Winter formulas apply during other periods. Rates are further subject to surcharges, if warranted. Dock, handling and storage charges ($/gross ton) on iron ore at Lower Lake ports RCCR X-088C Ex self-unloading vessels at Cleveland, Ohio Dockage $0.26 From dock receiving area into cars, via storage 1.60 From dock receiving area to cars 1.05 Rail of vessel receiving area to cars 1.16 At Conneaut, Ohio BLE Dockage of self-unloading vessel $0.15 From receiving bin to storage 0.53 From storage to railcars 0.68 Ex bulk vessels at Cleveland C&P From hold to rail of vessel $1.03 From rail of vessel into car 1.26 From rail of vessel via storage into car 2.25 2.3.2 Historical price data Mineral prices as monitored over a time span of many years exhibit a general upward trend. However, this is not a steady increase with time but rather is characterized by cyclic fluctuations. Table 2.15 shows the average yearly prices for 10 common metals from 1900 through 2011 (USGS, 2012a). The monthly and average prices for 11 common metals for the period January 1997 through July 2012 are given in Table 2.16 (Metal Bulletin, 2012). To provide an indication of the price unpredictability, consider the case of copper. In 1900 for example the copper price was about 16.2 ¿/lb (Table 2.15). In 2000,100 years later, the price had risen to 82 ¿/lb. The average rate of price increase per year over this period using the end point values is 1.6 percent. The price dropped to a low of 5.8 ¿/lb (1932) and reached a high of 131 ¿/lb (1989) over this period. Using the average price increase over the period of 1900 to 2000, the predicted price in 1950 should have been 36.4pi/lb. The actual value was 21.2 jz'/lb. A mining venture may span a few years or several decades. In some cases mines have produced over several centuries. Normally a considerable capital investment is required to bring a mine into production. This investment is recovered from the revenues generated over the life of the mine. The revenues obviously are strongly dependent upon mineral price. If the actual price over the mine life period is less than that projected, serious revenue shortfalls would be experienced. Capital recovery would be jeopardized to say nothing of profits. Price trends, for metals in particular, are typically cyclic. Using the metal price data from Table 2.15, Figures 2.2 through 2.6 show the prices for 10 metals over the period 1950 through 2011. The period and amplitude of the cycles varies considerably. For nickel Mining revenues and costs 65 Table 2.12. Recent weekly metal prices (Platts Metals Week, 2012, April 16). Copyright 2012 Platts Metals Week; reproduced with permission. Major Metals NY Dealer/Melting 8.403/8.555 Aluminum NY Dealer/Plating 8.603/8.755 cts/lb cts/lb MW US Market 101.750/102.750 NY Dealer/Cathode 30.000 US Six-Months P1020 9.500 Premium US 6063 Billet Upcharge 10.500/12.500 NY Dealer/Melting 30.000 US UBCs 78.500/80.000 Premium Painted Siding 79.000/80.000 NY Dealer/Plating 50.000 US 6063 press scrap 4.500/5.500 Premium Eur/mt $/mt Alloy 226 delivered 1700.000/ 1750.000 Plating Grade IW R'dam 18324.000/18384.000 European works Plating Grade Prem 200.000/250.000 $/mt IW R'dam ADC12 FOB China 2310.000/2320.000 Russia Full-Plate 18184.000/18214.000 Yuan/mt Russia Full-Plate Prem 60.000/80.000 ADC 12 ex-works China 17400.000/17600.000 IW R'dam Caustic Soda Briquette Premium 200.000/250.000 $/mt IW R'dam FOB NE Asia 422.000/424.000 In-Warehouse S'pore 150.000/160.000 CFR SE Asia 476.000/478.000 Prem Copper m cts/lb $/mt MW No.l Burnt Scrap Disc 19.000 Europe 99.85% IW 22956.000/23094.000 MW No. 1 Bare Bright Disc 3.000 R'dam MW No.2 Scrap Disc 39.000 Europe 99.85% Prem 300.000/400.000 NY Dealer Premium 5.500/6.500 IW R'dam cathodes Europe 99.90% IW 23156.000/23244.000 US Producer cathodes 371.650/379.090 R'dam $/mt Europe 99.90% Prem 500.000/550.000 Grade A Cathode CIF 8253.000/8260.000 IW R'dam R'dam Zinc Grade A Premium CIF 75.000/80.000 cts/lb R'dam US Dealer SHG 98.921 Grade A CIF 8228.000/8240.000 MW SHG Premium 7.250 Livorno/Salerno MW SHG Galv. Prem. 7.000 Grade A Prem CIF 50.000/60.000 MW SHG Alloyer #3 17.000 Livorno/Salerno Prem. Russian Standard CIF 8178.000/8210.000 $/mt R'dam Europe physical SHG 2109.000/2129.000 Russian Standard Prem CIF 0.000/30.000 IW R'dam R'dam Europe physical SHG 105.000/125.000 Lead Prem IW R'dam cts/lb In-Warehouse S'pore 70.000/95.000 North American Market 98.830/101.643 Prem $/mt Precious Metals European dealer European 99.985% Prem IW (R'dam) In-Warehouse S'pore Prem Nickel NY Dealer/Cathode 2072.000/2088.000 20.000/35.000 50.000/80.000 $/lb 8.403/8.555 Iridium MW NY Dealer Osmium MW NY Dealer Palladium MW NY Dealer All PGM figures in $/tr oz 1050.000/1085.000 350.000/400.000 630.000/655.000 (Continued) 66 Open pit mine planning and design'. Fundamentals Table 2.12. (Continued). Platinum MW NY Dealer Rhodium MW NY Dealer Ruthenium MW NY Dealer Minor Metals Antimony MW NY Dealer 99.65% FOB China Arsenic MW Dealer Bismuth MW NY Dealer Cadmium MW NY Dealer Free Market HG Indium Producer: US Prod Indium Corp MW NY Dealer 99.99% CEF Japan Mercury Free Market International U.S. Domestic Rhenium MW NY Dealer Selenium MW NY Dealer Light Metals Magnesium US Die Cast Alloy: Transaction MW US Spot Western MW US Dealer Import Europe Free Market Die Cast Alloy FOB China 99.8% FOB China 1580.000/1630.000 1300.000/1375.000 95.000/115.000 ctsAb 590.000/620.000 $/mt 13000.000/13200.000 ctsAb 60.000/70.000 $Ab 10.400/11.250 $/lb 0.950/1.150 1.000/1.200 $Acg 785.000 540.000/570.000 560.000/570.000 $/fl 1750.000/1950.000 1750.000/1950.000 $Acg 4200.000/4800.000 $Ab 61.000/66.000 cts/lb 200.000/220.000 215.000/230.000 200.000/210.000 $/mt 3100.000/3200.000 3280.000/3340.000 3000.000/3050.000 Silicon 553 Grade Delivered US Midwest 553 Grade, FOB China 553 Grade, CIF Japan 553 Grade, In-warehouse EU Titanium MW US 70% Ferrotitanium Eur. 70% Ferrotitanium MW US Turning 0.5% Eur. Turning .5% Ferroalloys Cobalt MW 99.8% US Spot Cathode 99.8% European 99.3% Russian 99.6% Zambian Ferrochrome Charge Chrome 48-52% in-warehouse US 65% High Carbon in-warehouse US Low Carbon 0.05% in-warehouse US Low Carbon 0.10% in-warehouse US Low Carbon 0.15% in-warehouse US Charge Chrome 52% DDPNWE 65%-68% High-Carbon DDPNWE Low Carbon 0.10% DDP NWE High Carbon 60% FOB China 50-55% Regular CIF Japan 60-65% Spot CIF Japan Ferromanganese High Carbon 76% in-warehouse US cts/lb 127.000/130.000 $/mt 2250.000/2300.000 2280.000/2340.000 Eur/mt 1950.000/2050.000 $/lb 3.600/3.650 $/kg 8.000/8.200 $/lb 2.150/2.300 2.300/2.400 $/lb 15.000/15.750 15.000/15.600 14.800/15.200 14.700/15.000 ctsAb 118.000/122.000 118.000/122.000 235.000/240.000 218.000/222.000 205.000/210.000 103.000/110.000 120.000/123.000 215.000/220.000 100.000/104.000 123.000 109.000/111.000 $/gt 1275.000/1350.000 (Continued) Mining revenues and costs 69 Table 2.16. (Continued). South African., ex-works Fullers' £27-40 earth, soda ash-treated, Cat litter grade, 1-7 mm South African., ex-works Fullers' £60-85 earth, soda ash-treated, foundry grade, bagged Foundry grade, bulk, del Japan $140-215 Borates/Boron minerals Boric Acid, FOB Chile $ 1250-1309 Colemanite, 40% B203, FOB $690-730 Buenos Aires Decathydrate Borax, FOB Buenos $947-979 Aires Ulexite, 40% B 2 0 3 , FOB Buenos $666-697 Aires Ulexite, 40% B 2 0 3 , FOB Lima $620-652 Ulexite, granular 40% B 2 0 3 , $692-734 FOB Chile Borax, PP bags (25 kg & 50 kg), $1200-1310 Boric acid, gran, tech, FOB Latin America Borax, PP bags (25 kg & 50 kg), $910-940 Decahydrate borax, gran, tech, FOB Latin America Boric acid, FOB Buenos Aires $1078-1136 Colemanite, 40-42% B 2 0 3 , ground, $630-690 bagged, FOB Argentina Ulexite 46-48% B 2 0 3 , FOB Lima $650-710 Bromine Purified, bulk, 99.95% Br, domestic $1.6-1.7 destination, tonne lot, ex-works USA Bulk, purified, 99.95% Br, ex works, $1.6-1.65 CIF Europe Large contract, Bulk, European $3300-3500 Calcium carbonate GCC, coated, fine grade,ex-works UK £80-103 GCC, 50-22 microns, FOB USA $21-26 GCC, 22-10 microns, FOB USA $50-105 GCC, 3 microns (untreated), $170-185 FOB USA GCC, stearate coated 1.1-0.7 $270-400 microns, FOB USA GCC, 1.1-0.7 microns (untreated), $200-290 FOB USA PCC, Fine, surface treated $275-375 (0.4-1 microns), FOB USA GCC, coated, chalk, ex-works UK £60-75 PCC, coated, ex-works, UK £370-550 PCC, uncoated, ex-works, UK £340-550 Celestite Turkish, 96%, SrS04, FOB $90-100 Iskenderun Chromite Chemical grade, 46% Cr203 , wet $360-410 bulk, FOB South Africa Refractory grade, 46% Cr203 , wet bulk, FOB South Africa Foundry grade, 46% Cr 20 3 , wet bulk, FOB South Africa South African, Northwest, Metallurgical grade, friable lumpy, 40% Cr 2 0 3 Sand, moulding grade, 98% <30 mesh, del UK Foundry +47% Cr 2 0 3 dried 1 tonne big bags FOB South Africa Foundry, 45.8% min Cr 2 0 3 , wet bulk, FOB South Africa Metallurgical grade, Conc'' Diatomite US, calcined filter-aid grade, FOB plant US, fiux-calcined filter-aid grade, FOB plant Feldspar Turkish, Na feldspar, Crude, - 1 0 mm size bulk, FOB Gulluk Turkish, Na feldspar, Glass grade, —500 microns, bagged, FOB Gulluk (—38 micron, FCL's bagged, >90 Brightness) FOB Durban, South Africa (Na), ceramic grade, 170-200 mesh, bagged, ex-works USA, $/s.ton Na feldspar, floated —150 microns, bagged, FOB Gulluk, Turkey Na feldspar, floated —500 microns, bulk, FOB Gulluk, Turkey Fluorspar Acidsparfiltercake, bulk Mexican, <5 ppm As FOB Tampico Mexican, FOB Tampico Chinese wet filtercake, CIF Rotterdam Chinese, wet filtercake, FOB China South African, dry basis, FOB Durban Chinese dry basis, CIF US Gulf Port Metallurgical Chinese, min 85% CaF2, CIF Rotterdam Mexican, FOB Tampico Chinese, min 80%, wet bulk, FOB China Chinese, min 85% CaF2, bulk, FOB China Chinese bulk, min. 90% CaF2, FOB China $425-500 $390-420 $180-210 £390-450 $450-500 $390-420 $180-210 $575-640 $580-825 $22-23 $70 $168 $150-180 $53-55 $38-40 $540-550 $400-450 $500-530 $450-500 $380-450 $550-650 $355-375 $230-270 $305-325 $355-375 $365-385 (Continued) 70 Open pit mine planning and design'. Fundamentals Table 2.13. (Continued). Graphite Amorphous powder 80-85% Chinese $600-800 del Europe Synthetic fine 97-98% CIF Asia $950-1450 Synthetic fine 98-99% CIF Asia $1000-1500 Crystalline Medium flake 90%C, +100-80 mesh $ 1300-1800 Large flake, 90%C,+80 mesh $1900-2300 Fine, 94-97%C, - 1 0 0 mesh $1900-2300 Medium, 94-97%C, +100-80 mesh $1875-2200 Large flake 94-97% C, +80 mesh CIF $2200-2700 Synthetic 99.95%C, $ per kg, $7-20 Swiss border Ilmenite Australian, bulk concentrates, $250-350 min 54% Ti02 , FOB Australian, spot price, $250-350 min 54% Ti02 , FOB Iodine Iodine crystal, 99.5% min, drums, $60-90 spot, $/kg Iodine crystal, 99.5% min, drums, $60-75 contract, $/kg Iron Oxide Pigment Brown type 868, bagged, FOB China $1015-1075 Red type 130 90% Fe 2 0 3 , bagged, $1434-1637 FOB China Kaolin No 1 paper coating grade, $161-209 Ex-Georgia plant, s.ton No 2 paper coating grade, $107.50-166.70 Ex-Georgia plant, s.ton Kyanite Ex-works USA, 54-60% A1203 , $224-320 raw kyanite, s.ton 54-60% A1203, 22 ton lots, calcined $373-439 Leucoxene min. 91% Ti02 , max. 1% Zr0 2 , A$1450-1550 bagged, FOB West Australia Lithium Lithium carbonate, del continental, $2.5-3 USA large contracts, $ per lb Lithium hydroxide, 56.5-57.5% $6.5-7.5 LiOH, large contracts, packed in drums or bags, del Europe or USA, $/kg Lithium hydroxide, Chinese, $6-6.6 (56.5-57.5% LiOH), packed in drums or bags, large contracts, del Europe $/kg Petalite, 4.2% Li02 , FOB Durban $ 165-260 Spodumene concentrate, $720-770 >7.5% Li20, CIF USA, s.ton Spodumene concentrate, $460-510 5% Li20, CIF USA, s.ton Spodumene concentrate, $750-800 7.5% Li20, CIF Europe Spodumene concentrate, $440-490 5% Li20, CIF Europe Spodumene concentrate, $720-770 > 7.5% Li20, bulk, CIF Asia Spodumene concentrate, $300-400 5% Li20, CIF Asia Magnesia Calcined, 90-92% MgO, lump, $320-360 FOB China European calcined, agricultural grade, €240-350 CIF Europe Dead-burned Lump, FOB China 90% MgO $350-400 92% MgO $430-470 94-95% MgO $410-480 97.5% MgO $560-600 Fused, Lump, FOB China 96% MgO $790-860 97% MgO $930-1050 98% MgO $1080-1210 Magnesite Greek, raw, max 3.5% Si02 , €65-75 FOB East Mediterranean Mica Indian mine scrap green (Andhra $300-400 Pradesh) for mica paper, FOB Madras Indian wet-ground, CIF Europe $600-900 Micronised, FOB plant, USA $700-1000 Wet-ground, FOB plant, USA $700-1300 Flake, FOB plant, USA $350-500 Nitrate Sodium, about 98%, ex-store Chile €550-570 Olivine Olivine, refractory grade, bulk, $75-150 US ex-plant/mine Perlite Coarse (filter aid) €70-75 FOB east Mediterranean, bulk Raw, crushed, grade, big bags $95-100 FOB Turkey Raw, crushed, grade, bulk $80-85 FOB Turkey Potash C&F Western Europe, contract, Std. $400-490 Muriate, KC1, granular, bulk, $515-535 ex-works, North America (Continued) Table 2.25. (Continued). Mining revenues and costs 71 Muriate, KC1, standard, bulk, FOB $460-550 Vancouver Muriate, KC1, standard, bulk, $350-370 FOB Baltic $/tonne Rare earth minerals Min 99%, large purchases, $26-32 FOB China, $/kg Cerium oxide $ 1170-1370 Dysprosium oxide $2590-2990 Europium oxide $26-34 Lanthanum oxide $120-160 Neodymiumoxide $120-140 Praesodymium oxide $88-96 Samarium oxide Refractory clays/Mullite Clay, Mulcoa 47% (sized in bulk $198 bags), for coarse sizing, FOB USA, s.ton Rutile Australian concentrate, min. 95% $2500-2800 Ti02 , bagged, FOB Australian concentrate, min. 95% $2050-2400 Ti02, large vol. for pigment, FOB Salt Australian solar salt bulk CIF $50 Shanghai, Industrial solar salt, ex-works China $27-29 Industrial vacuum salt, ex-works $35-40 China Silica sand Minus 20 micron, FCL, bagged $295 >92 brightness, FOB Durban Glass sand, container, ex-works USA $20-26 Silicon carbide SiC, FEPA 8-220, CIF UK, black, about 99% SiC SiC Grade 1 €1900-2100 SiC Grade 2 €1500-1650 Refractory grade min 98% SiC €1500-1800 min 95% SiC €1350-1450 Soda ash Chinese synthetic soda ash, $295-330 dense & light, CIF Far East Chinese synthetic soda ash, $260-285 dense & light, FOB China Indian synthetic soda ash, dense & $300-348 light, Domestic ex-works India Indian synthetic soda ash, dense & $210-230 light, Export C&F India US natural, large contract, $210-230 FOB Wyoming European synthetic, dense & light, €190-210 Large Contracts ex-works UO2 pigment Bulk volume, per tonne CFR Asia $4300-4850 CIF Northern Europe €3260-3750 CIF USA $3550-4000 CIF Latin America, per lb $1.6-1.9 Vermiculite South African, bulk, FOB Antwerp $400-850 Wollastonite US ex-works, s.ton Acicular minus 200 mesh $210-240 325 mesh $220-250 Acicular (15:-1-20:1 aspect ratio) $444 Chinese, FOB, tonne Acicular minus 200 mesh $80-90 325 mesh $90-100 Zircon FOB Australia, bulk shipments Premium $2500-2640 Standard $2400-2600 FOB USA, bulk shipments Premium $2600-3000 Standard $2550-2750 FOB South Africa, bulk shipments ceramic grade $2300-2650 Micronised zircon 99.5% <4 (X, average particle size $2750-2800 <0.95 |JL, C&F Asia Fused zirconia Monoclinic, refractory/abrasive, $6500-7800 contract, CIF main European port Monoclinic, Ceramic pigment grade, $3800-4800 Contract price, CEF main European port Monoclinic, Structural ceramic/ $4600-6000 electronic grade, Contract price, CIF main European port Monoclinic, Technical ceramic, $ 15900-21000 grade, Contract price, CIF main European port Stabilised, Refractory grade, Contract $6500-7800 price, CIF main European port Stabilised, Technical ceramic grade, $50000-100000 Contract price, CIF main European port Zircon Opacifiers Micronised zircon, 100% <6 microns, $2845-3400 average 1-2 microns, bagged, CFR Asia Micronised zircon, 100% <6 microns, $2770-3400 average 1-2 microns, bagged, ex-works Europe The prices in Table 2.13 appeared in the June 2012 issue of Mineral Price Watch. Published by Industrial Minerals Information, a division of Metal Bulletin pic, U.K. Copyright 2012 Industrial Minerals; reproduced with permission. 74 Open pit mine planning and design'. Fundamentals Table 2.15. (Continued). 1949 17.0 19.5 15.4 12.2 35.00 75 0.72 0.95 0.40 0.99 1950 17.7 21.6 13.3 13.9 35.00 76 0.74 0.98 0.45 0.96 1951 19.0 24.5 17.5 18.0 35.00 93 0.89 1.05 0.54 1.27 1952 19.4 24.5 16.5 16.2 35.00 93 0.85 1.07 0.57 1.21 1953 20.9 29.0 13.5 10.8 35.00 93 0.85 1.10 0.60 0.96 1954 21.8 29.9 14.1 10.7 35.00 88 0.85 1.16 0.61 0.92 1955 23.7 37.5 15.1 12.3 35.00 94 0.89 1.17 0.66 0.95 1956 24.0 42.0 16.0 13.5 35.00 105 0.91 1.23 0.65 1.02 1957 25.4 30.2 14.7 11.4 35.00 90 0.91 1.29 0.74 0.96 1958 24.8 26.3 12.1 10.3 35.00 66 0.89 1.34 0.74 0.95 1959 24.7 31.0 12.2 11.5 35.00 72 0.91 1.37 0.74 1.02 1960 26.0 32.3 11.9 13.0 35.00 83 0.91 1.38 0.74 1.02 1961 25.5 30.3 10.9 11.6 35.00 83 0.92 1.47 0.78 1.13 1962 23.9 31.0 9.6 11.6 35.00 83 1.09 1.50 0.80 1.15 1963 22.6 31.0 11.2 12.0 35.00 82 1.28 1.50 0.79 1.17 1964 23.7 32.3 13.6 13.6 35.00 90 1.29 1.59 0.79 1.58 1965 24.5 35.4 16.0 14.5 35.00 100 1.29 1.66 0.79 1.78 1966 24.5 36.0 15.1 14.5 35.00 100 1.29 1.65 0.79 1.64 1967 25.0 38.1 14.0 13.8 35.00 111 1.55 1.69 0.88 1.53 1968 25.6 41.2 13.2 13.5 40.12 117 2.14 1.74 0.95 1.48 1969 27.2 47.6 14.9 14.7 41.68 124 1.79 1.80 1.05 1.64 1970 28.7 58.1 15.7 15.3 36.39 133 1.77 1.77 1.29 1.74 1971 29.0 52.2 13.9 16.1 41.37 121 1.55 1.82 1.33 1.67 1972 25.0 51.3 15.0 17.7 58.47 121 1.68 1.77 1.40 1.77 1973 26.4 59.4 16.3 20.7 97.98 150 2.56 1.76 1.53 2.28 1974 43.1 77.1 22.5 36.0 159.87 181 4.71 2.12 1.74 3.96 1975 34.8 64.0 21.5 39.0 161.43 164 4.42 2.83 2.07 3.40 1976 41.2 69.4 23.1 37.0 125.35 162 4.35 3.25 2.25 3.80 1977 47.6 66.7 30.7 34.4 148.36 157 4.62 4.85 2.27 5.35 1978 50.8 65.8 33.7 31.0 193.46 261 5.40 9.21 2.04 6.30 1979 70.8 92.1 52.6 37.3 307.61 445 11.09 23.13 2.66 7.35 1980 76.2 101.2 42.5 37.4 612.74 677 20.63 9.39 2.83 8.48 1981 59.9 84.4 36.5 44.6 460.33 446 10.52 6.40 2.71 7.35 1982 46.7 73.0 25.5 38.5 376.35 327 7.95 4.09 2.18 6.53 1983 68.5 76.7 21.7 41.4 423.01 424 11.44 3.65 2.12 6.53 1984 61.2 66.7 25.6 48.5 360.80 357 8.14 3.56 2.16 6.26 1985 49.0 67.1 19.1 40.4 317.26 291 6.14 3.25 2.26 5.94 1986 55.8 66.2 22.0 38.0 367.02 461 5.47 2.87 1.76 3.83 1987 72.1 82.6 35.9 41.9 478.99 553 7.01 2.90 2.20 4.19 1988 110.2 120.7 37.1 60.3 438.56 523 6.53 3.45 6.26 4.41 1989 88.0 131.1 39.4 82.1 382.57 507 5.50 3.37 6.03 5.22 1990 73.9 122.9 45.8 74.4 385.68 467 4.82 2.85 4.02 3.86 1991 59.4 109.3 33.5 52.6 363.91 371 4.04 2.38 3.70 3.63 1992 57.6 107.5 35.1 58.5 345.25 361 3.94 2.20 3.18 4.02 1993 53.5 91.6 31.7 46.3 360.80 375 4.30 2.34 2.40 3.50 1994 71.2 111.1 37.2 49.4 385.68 411 5.29 4.76 2.88 3.69 1995 85.7 138.3 42.3 55.8 385.68 425 5.15 7.89 3.73 4.15 1996 71.2 108.9 49.0 51.3 388.79 398 5.19 3.78 3.40 4.12 1997 77.1 107.0 46.7 64.4 332.81 397 4.89 4.30 3.14 3.81 1998 65.3 78.5 45.3 51.3 295.17 375 5.54 3.40 2.10 3.73 1999 65.8 75.7 43.7 53.5 279.93 379 5.26 2.65 2.73 3.66 2000 74.4 88.0 43.6 55.8 280.24 549 5.01 2.55 3.92 3.70 (Continued) Mining revenues and costs 75 Table 2.25. (Continued). Year Al Cu Pb Zn Au Pt Ag Mo Ni Sn (//lb) (//lb) (//lb) (//lb) ($/tr oz) ($/tr oz) ($/tr oz) ($/lb) ($/Ib) ($/lb) 2001 68.9 76.7 43.6 44.0 272.16 533 4.35 2.35 2.70 3.15 2002 64.9 75.7 43.6 38.6 311.03 543 4.60 3.76 3.07 2.92 2003 68.0 85.3 43.8 40.6 363.91 694 4.88 5.35 4.37 3.40 2004 83.9 133.8 55.3 52.6 410.57 849 6.44 16.65 6.26 5.49 2005 91.2 173.7 61.2 67.1 444.78 900 7.34 31.80 6.67 3.61 2006 121.6 314.8 77.6 158.8 606.52 1144 11.60 24.77 10.98 4.19 2007 122.0 327.9 123.8 154.2 696.72 1308 13.44 30.30 16.87 6.80 2008 120.7 319.3 120.2 88.9 874.01 1578 15.02 28.58 9.57 8.66 2009 79.4 241.3 87.1 78.0 973.54 1208 14.68 11.70 6.62 6.40 2010 104.3 348.3 108.9 102.1 1228.59 1616 20.00 15.80 9.89 9.53 2011 120.0 405.0 124.0 106.0 1600.00 1720 34.50 15.83 10.30 16.40 valuation is generally poor due to the cyclic behavior of the prices. The problem is shown diagrammatically in Figure 2.10. One must decide the base price to be used as well as the trend angle and project the results over the depreciation period as a minimum. Another alternative to the selection of the current price as the base price is to use a recent price history over the past two or perhaps five years. For a valuation being done in July 1989 the price was $1.15/lb. Averaging this value with those over the past three years would yield Years Base value % change 1989 1.15 0 1988-89 1.18 -4 .8 1987-89 1.06 +28.3 1986-89 0.96 +42.5 Inflation has not been accounted for in these figures. The point being that a wide range of base values can be calculated. The same is obviously true for determining the 'slope' of the trend line. This can be reflected by the percent change over the period of interest. These values have been added to the above table. They have been calculated by /Price (1989)-Price Y \ Percent change = 100% V PnceY J The conclusion is that due to the cyclic nature of the prices, several cycles must be examined in arriving at both a representative base price and a trend. There are two approaches which will be briefly discussed for price forecasting. These are: - trend analysis, - use of econometric models. 2.3.3 Trend analysis The basic idea in trend analysis is to try and replace the actual price-time history with a mathematical representation which can be used for projection into the future. In examining 76 Open pit mine planning and design'. Fundamentals Table 2.16. Monthly Metal Prices (Metal Bulletin, 2012). Copyright 2012 Metal Bulletin; reproduced with permission. Al Cu Pb Zn Au Pt Ag Pd Mo Ni Sn Wlb) (¿/lb) {ft!lb) (¿/lb) (S/tr oz) ($/tr oz) (S/tr oz) ($/tr oz) Oxide ($/lb) ($/lb) ($/lb) 1997 Jan. 71 110 31.4 49 355 359 4.77 121 4.51 3.21 2.67 Feb. 72 109 29.9 53 347 365 5.07 136 4.77 3.51 2.67 Mar. 74 110 31.5 57 352 380 5.20 149 4.77 3.58 2.68 Apr. 71 108 29.1 56 344 371 4.77 154 4.77 3.32 2.59 May 74 114 28.0 59 344 390 4.76 171 4.71 3.39 2.59 June 71 118 27.9 61 341 431 4.75 204 4.76 3.20 2.52 July 72 111 28.8 69 324 416 4.37 188 4.73 3.10 2.47 Aug. 78 102 27.6 75 324 425 4.50 215 4.73 3.07 2.46 Sept. 73 96 28.8 74 323 425 4.73 191 4.51 2.95 2.49 Oct. 73 93 27.2 58 325 424 5.03 205 4.23 2.89 2.52 Nov. 73 87 25.5 53 307 293 5.08 208 3.99 2.79 2.57 Dec. 69 80 23.9 50 289 367 5.79 199 3.98 2.70 2.50 Avg. 73 103 28.3 60 331 387 4.90 178 4.54 3.14 2.56 1998 Jan. 67 77 24.1 50 297 375 5.88 226 3.97 2.49 2.36 Feb. 66 75 23.4 47 289 386 6.83 237 4.04 2.44 2.38 Mar. 65 79 25.4 47 296 399 6.24 262 4.49 2.45 2.48 Apr. 64 82 25.9 50 308 414 6.33 321 4.40 2.45 2.59 May 62 79 24.6 48 299 389 5.56 354 4.11 2.28 2.66 June 59 75 23.9 46 292 356 5.27 287 4.09 2.03 2.71 July 59 75 24.8 47 293 378 5.46 307 3.99 1.96 2.56 Aug. 59 73 24.3 47 284 370 5.18 288 3.58 1.85 2.58 Sept. 61 75 23.6 45 289 360 5.00 283 3.11 1.86 2.49 Oct. 59 72 22.3 43 296 343 5.00 277 2.71 1.76 2.46 Nov. 59 71 22.4 44 294 347 4.97 277 2.38 1.87 2.48 Dec. 57 67 22.7 43 291 350 4.88 297 2.75 1.76 2.39 Avg. 62 75 24.0 46 294 372 5.55 285 3.64 2.10 2.51 1999 Jan. 55 65 22.3 42 287 355 5.15 322 2.81 1.94 2.32 Feb. 54 64 23.3 46 287 365 5.53 352 2.85 2.10 2.39 Mar. 54 63 23.0 47 286 370 5.19 353 2.82 2.27 2.43 Apr. 58 66 23.5 46 282 358 5.07 362 2.64 2.31 2.45 May 60 69 24.5 47 277 356 5.27 330 2.61 2.45 2.56 June 60 65 22.5 45 261 357 5.03 337 2.74 2.36 2.39 July 64 74 22.5 49 256 349 5.18 332 2.69 2.59 2.37 Aug. 65 75 22.8 51 257 350 5.27 340 2.73 2.93 2.37 Sept. 68 79 23.0 54 265 -ill 5.23 362 2.91 3.19 2.42 Oct. 67 78 22.5 52 311 423 5.41 387 2.81 3.32 2.46 Nov. 67 78 21.7 52 293 435 5.16 401 2.72 3.61 2.65 Dec. 70 80 21.7 54 284 441 5.16 425 2.71 3.67 2.60 Avg. 62 71 22.8 49 279 378 5.22 359 2.75 2.73 2.45 2000 Jan. 76 84 21.4 53 284 441 5.19 452 2.67 3.77 2.69 Feb. 76 82 20.5 50 300 517 5.25 636 2.65 4.38 2.56 Mar. 72 79 20.0 51 286 481 5.06 667 2.65 4.66 2.48 Apr. 66 76 19.1 51 280 498 5.06 572 2.65 4.41 2.44 May 67 81 18.7 52 275 527 4.99 571 2.69 4.59 2.47 June 68 79 19.0 51 286 560 5.00 647 2.93 3.82 2.48 (Continued)