CHAPTER 13 PRODUCTION CYCLE PREVIEW

• Jurisdiction: United States

Mining Exploration Technology for Lawyers and Landmen
(Apr 1980)
CHAPTER 13
PRODUCTION CYCLE PREVIEW
Charles E. Stott, Jr.
General Manager Mount Tolman Project AMAX Inc.
Grand Coulee, Washington

I. The Decision to Develop and Mine — The Feasibility Study Process.

A. Geologic Information.

B. Grade Information — Assays & Location.

C. Grade Boundary Interpolation.

D. Mining Information.

1. Rock Mechanics — Slope Stability.

a. Core Recovery.

b. "RQD Data".

c. Number of Pieces.

d. Maximum Length.

e. Strength Tests.

2. Hydrology.

a. Groundwater.

E. Metallurgical Information.

1. Mineralogical Investigation.

2. Bench Tests.

3. Bulk Sample.

4. Pilot Plant Tests.

a. Metallurgy.

b. Grindability.

5. Tests for Further Upgrading or Refining.

F. Geologic Reserves.

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G. Ore Reserves — ("minable" reserves) — An Economic Analysis.

1. Assumptions re. Commodity Values.

2. Extraction Costs.

3. Cut-off Grade.

H. The Mine Plan.

1. The "Ultimate" Pit (or mine).

2. The Mining Plan — Results in a schedule expressed in tonnage and grade for extracting the ultimate pit or mine.

3. The influence of Economics — The Changing Mine Plan.

I. Operating Cost Estimates.

1. Mining.

2. Metallurgy.

3. G & A

4. Refining.

5. Other Costs (eg., Royalities).

J. Capital Cost Estimates.

1. A Comment on Recent Cost Trends.

2. Types of Estimates.

3. Time Required to Make the Estimate.

4. Accuracy — Include a contingency; you can't think of everything.

K. Feasibility Analysis.

1. Cash Flow Models.

2. DCF-ROI.

3. Cost of Producing the Commodity.

A. Is it Competitive Over the Life of the Orebody?

4. Sensitivity Analysis.

L. Environmental Permitting.

II. A Mining Project Overview.

A. What a Mining Project Requires:

1. Ore.

2. Water.

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3. Power.

4. Manpower.

5. Reagents.

6. Capital.

B. What a Mining Project Produces:

1. Concentrate.

2. Metal or Other Refined Products.

3. By-Products.

4. Waste.

5. Tailings.

6. Operating Profit.

III. Project Execution — The Construction Phase.

A. Who Does What:

1. Activities generally undertaken by the "owner".

2. Activities generally undertaken by the Contractor or Contractors.

B. Arrangements with the Contractor.

1. Engineering Only.

2. Construction Only.

a. Construction — General Contractor.

b. Construction Management — All Subcontractors.

c. Owner Acts as His Own General Contractor.

d. Combinations of the Above.

3. Engineer & Construct.

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