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By M. F. Handley

This paper covers in situ stresses in the Earth?s crust prior to any man-made disturbances, such as mining. It introduces the Southern African Stress Database, which contains primitive stress measurements obtained from locations spread all over southern Africa. The measured stress data shows large variability without any visible trends, except a relationship with increasing depth. The stress database is reviewed briefly, establishing means to measure the variability or dispersion in the measurements, and showing that the dispersion is not as much a result of experimental error as it is a feature of primitive stress. The paper demonstrates from the beginning that the state of stress in rock is highly variable, but that there are well-defined maximum and minimum limits to all the stress components in rock. Formal error analysis is introduced to check the consistency of the database and to separate out a database of consistent stress measurements for use in a primitive stress model. The aim is to provide a picture of primitive crustal stress based on objective stress measurements together with interpretations of how the primitive stress can be affected by the five main influences; namely, depth, rock mass properties, tectonism, isostacy, and erosion. Four elementary models for primitive stress are introduced and compared with the measured data. It is quite clear that none of the elementary models is sufficient to describe the data. In the absence of a better model, this paper suggests a generic model based on the Hoek-Brown failure criterion and the consistent stress database, since it incorporates the variability in the stress tensor that is likely to be encountered underground all over southern Africa. Rock engineers should take every opportunity to obtain local primitive stress data at every mining operation and civil engineering project, and to adjust the proposed model accordingly Keywords primitive stress, Southern African Stress Database, error analysis, generic primitive stress model.

Jun 1, 2013

By L. M. Tavares, T. M. Campos, P. M. Faria, R. M. Carvalho

Recent advances in mechanistic ball mill modelling are expected to allow for more accurate predictions that overcome the well-known limitations of phenomenological approaches, including their inability to predict the effect of liner geometry and their wear, in grinding. Although able to describe continuous operation, the UFRJ model of ball mills has only been validated in the past in mills that operate in batch mode, either in laboratory or pilot scale. The present work demonstrates the application of the mechanistic UFRJ ball mill model to predict fine grinding of iron ore in a pelletising plant in Brazil, the first application of such a mechanistic modelling in continuous mode. It shows that the model provides accurate descriptions of flows after iterations in a closed-circuit with hydrocyclones. Keywords: Ball mill, iron ore, grinding, modelling, particle breakage

Jan 1, 2020

By S. A. Ghoreishi-Madiseh, F. P. Hassani, H. Rafezi, H. R. Manouchehri, A. Shadic, A. P. Sasmito

Weakening rocks by taking advantage of microwave-induced microcracks is a promising solution for comminution processes. This paper investigates the effects of microwave treatment of the rock/or samples in single and multi-mode cavities. Based on the experimental results of using a 2.45 GHz microwave generator, the performance of different cavity setups and their impact on the energy effectiveness of the microwave irradiation was examined. Physical interpretations were drawn from multiple experiments with a relatively wide range of power rates and exposure times. Both basalt and kimberlite samples were used in experiments, and their results were systematically compared. For single-mode cavity tests, a microwave applicator waveguide antenna was placed at different distances from the samples to evaluate the effects of sample positioning on microwave heating, both numerically and experimentally. Eventually, cavity performance was assessed by using calorimetric test results, and strength decay was documented based on the spallation of the samples. It was found that the singlemode cavity setup has unique properties that can significantly improve the electromagnetic heating and therefore, strength degradation process. Keywords: Microwave, fragmentation, energy effectiveness, calorimetry, mine-to-mill

Jan 1, 2020

By H. E. Bartlett

This paper deals with the sampling and mass measurement for ore delivered from a shaft to a processing plant and the contribution of the data from these measurements to the metal balances from shaft deliveries to final metal production. Accurate measurement of the grade and tonnage of run-of-mine ore is important for four main reasons; ? It enables the measurement of the production from different profit centres to within statistically determined confidence limits for daily, monthly, or annual averages. The profit centres could be individual shafts within a mining complex or ore treated on a toll basis ? The monthly production at shaft head is compared to the grades and tonnage determined from underground sampling and mass measurement in terms of a shaft call factor ? The sum of the production from the shafts is the input to concentrators. This input is a major part of the total input into a complex with concentrators, smelters, and refineries. In terms of the Codes of Practice for Metal Accounting the inputs are compared to outputs and inventory changes to assess the efficiencies and unaccounted losses or gains at the various stages in the flow of metal from source to market ? On a daily or daily moving average basis, the grades and tons from shafts are monitored and compared against these quantities from underground measurements. This acts as a control on off-reef mining, dilution, and other factors underground. Accurate measurement of grade of ore at the shaft head has been a challenge because of the large particle size. The conventional wisdom has been that ore can be sampled accurately only after it has been milled to give a slurry that is sampled as feed to a flotation process. However, when the ore fed to a flotation plant comes from multiple sources each source has to be sampled separately. So, relying on the grades determined using the sampling of concentrator input with cross-stream slurry samplers is not an option for determining the grade from an individual shaft. Impala has developed a system for sampling and weighing run-of-mine ore from multiple shafts. The system involves sampling the inputs to the plants using cross-belt (hammer) samplers and weighing the deliveries using in-motion railway weighing systems. Many samples are taken. Individually they have a high variance but, as a consequence of the averaging effect of large numbers and as shown by statistical analysis, the mean results are fit for the purposes of daily grade control for shafts and for monthly accounting of production from individual shafts. In the metal accounting systems at Impala, the measurement of input, including ore and toll-treated material is compared to the output in the form of final metal and tailings losses, as well as any inventory change that takes place, in order to determine a final metal balance from mill feed to product. The calculated inventory is compared to that measured, and the difference, or unaccounted- for metal, is then reported as a percentage of input. The balances obtained over several years yields balances for platinum that are below 1% imbalanced. Keywords metal balancing, platinum mines, AMIRA codes of practice, metal accounting, sampling, run-of-mine ore, statistical analysis.

Jan 1, 2014

By Z-B. Cheng, X-J. Liu

"Intensive mining of shallow coal seams tends to result in severe subsidence of the ground surface. Surface subsidence is a complex dynamic spatiotemporal process that constantly changes as mining advances. With Liangshuijing coal mine as a case study, 3DEC numerical software was used to simulate the development of the moving subsidence field from open-off cut to full subsidence on the working face. The results demonstrate that the formation of a subsidence field is directly related to the coal seam depth H and the extent of the mine workings. Taking the advance distance of the working face as the unit of scale, the process of surface subsidence can be divided into four stages: micro-change (H/ p), the development of surface subsidence (2H/ p), the formation of a movement subsidence field (3H/ p), and dynamic balance (4H/ p). The changing movement of a subsidence field can be fully described by the characteristics of surface subsidence value, curve slope, and the inflection position. The results provide important technical support for predicting surface subsidence and the temporal–spatial evolution features of mining subsidence. IntroductionChina’s coal output was about 3.52 Gt in 2017 (China National Coal Association, 2018), making it the largest coal producer in the world, accounting for almost half of total world coal production. Coal production and distribution play a vital role in the energy industry of China. However, entire overlying strata, from coal seam to surface, are disturbed as a result of long-term, high-intensity and large-scale mining, causing surface subsidence. This results in groundwater loss, surface desertification, vegetation loss, and mud-rock flows. These issues have become topics of common concern throughout society. According to related research results (Liu 2008), the area of surface subsidence caused by coal mining in China has reached about 600 000 ha, some 0.2 ha (and up to 0.42 ha) of surface subsidence for every 10 000 t of coal produced. Surface subsidence disasters not only damage buildings, water conservancy, transportation infrastructure, and farmland, but also cause adverse effects on individual and community lifestyles, environmental hygiene, and economic development. Deterioration of the ecological environment in mining areas has a long history and is very harmful (Lu, 2015)."

Feb 1, 2019

One of the most critical and complicated steps in mine design is a suitable mining method selection based upon geological, geotechnical, geographical and economical parameters. Since there are many factors involved in mining method selection, the decision-making process is very difficult. In this paper, the Analytical Hierarchy Process, with 13 criteria, is used to develop a suitable mining method for the Golbini No. 8 deposit in Jajarm (Iran). Six alternatives (conventional cut and fill, mechanized cut and fill, shrinkage stoping, sublevel stoping, bench mining, and stull stoping) are evaluated. The studies show that the suitable mining method for this deposit in the present situation is the conventional cut and fill method.

Jan 1, 2008

Jigging is a process of particle stratification in which the particle rearrangement results from an alternate expansion and compaction of a bed of particles by a pulsating fluid flow. The rearrangement results in layers of particles that are arranged by increasing density from top to bottom of the bed. The particles, in addition to the vertically expanded and compacted bed motion, move continuously, horizontally across the supporting screen and helped and influenced by the feed material that is introduced at one end. Following the particle stratification, the particle bed is physically ?cut? at a desired horizontal particle density plane to separate the desired product from the less dense gangue material. The issue of correct pulse characteristics (shape, amplitude and frequency) for the optimal metallurgical stratification of air pulsating jigs has been the subject of much discussion over the years. The accuracy of the dissymmetric stratification depends on the control parameters and the mechanical condition of specific equipment used. This paper will touch on some of the control and mechanical parameters affecting the separation efficiency.

Jan 1, 2010

By B. Yu, M-H. Cao, C. Zhou, X-Z. Zhang

The transient infiltration and lubrication behaviour of slag during continuous casting of steel is important for billet quality. A two-dimensional coupled mathematical mould model was developed to investigate these phenomena. The accuracy of the model was verified by comparing the calculated slag consumption with measurements by the plant. The results show that the liquid slag is consumed from the middle and late period of positive strip time to the next early period of positive strip time, including the entire negative strip time. The maximum downward infiltration velocity and positive pressure in the slag channel is at the middle of the negative strip time. Increasing the positive pressure of the slag channel is conducive to lubrication. The shear stresses acting on the shell surface and at the mould side were determined by the lubrication slag consumption and total slag consumption, respectively, and gradually decreased with increasing slag consumption. The negative strip time was lengthened to increase the slag consumption and prolong the time near the maximum downward shear stress, so as to be conducive to the demould.

Apr 16, 2024

By B. Rezai, Z. Pourkarimi, M. Noaparast, S. Chehreh Chelgani

Nanobubbles (NBs) flotation separation can be an indicator for improving the efficiency of fine particles through the conventional process. Since flotation reagents such as frothers can reduce bubble size, they can potentially be used for the generation of NBs and develop a selective NB flotation separation. This study explored the flotation separation of fine phosphate particles from their associated minerals in the presence of NBs, which were generated by using a phosphate flotation reagent (Flo-YS: collector-frother). The results of flotation tests showed that in the presence of NBs, the flotation efficiency was significantly improved. However, in the presence of NBs, surface chemistry analyses (Fourier Transform Infrared Spectroscopy and High-Performance Liquid Chromatography) illustrated that the collector adsorption on the surface of phosphate particles decreased. A comparison between outcomes of various phosphate flotation conditions indicated that increasing the flotation efficiency in the presence of NBs may be due to the aggregation of fine particles by the generated NBs, and also selective adsorption of NBs (hydrophobisation) on the surface of particles. In other words, generating NBs by selective collectors may increase efficiency and decrease the collector consumption of a flotation process. Keywords: Phosphate, selective separation, fine particles, collector-frother, efficiency, mechanical flotation cell

Jan 1, 2020

By D. J. Stanton

The objective of this study was to develop, install, and test a small underground mobile refrigeration plant (MRP) to deal with some of the real problems associated with mine cooling in an operating mine. The requirement for cooling the underground environment is discussed with particular emphasis on the need for this method of cooling, with the concomitant benefits. The research investigated current methods of cooling and reasons for previous failures in MRP. Both static and dynamic simulations were conducted to increase the confidence level under operating conditions. Implementation and testing, resulted in ?lessons learnt? requiring modifications, which are documented. Actual results have been recorded. These results have proved that significant cooling via MRP is feasible. Main benefits include positional efficiency, cost per kilowatt of cooling and cooling opportunities for remote hot areas of a mine. Finally, a proven technology is now available for large-scale implementation in the mining industry. Now the ventilation engineer has another system of cooling, which can be utilized in the quest to create an occupational environment, which meets the physical and mental health requirements of the worker.

Jan 1, 2004

By P. van der Westhuyzen

Gone are the days of stock-standard diamond beneficiation and final recovery circuits that could, with minor modifications, be adapted to treat any diamond-bearing ore source. A new era has dawned, offering the opportunity to streamline existing diamond processing operations or develop simpler, more efficient, and economical diamond processing plants, with the focus on more efficient comminution, beneficiation, and final recovery. This change in scene has been brought about by: ? The introduction, rapid development, and maturation of multiple comminution, sorting, and recovery technologies ? The need to adapt to a new standard of project approach post the commodity super-cycle phase, where optimizing existing operations and developing scalable, ?fit for purpose? new mines are fast becoming the norm in diamond processing plants in both primary and alluvial operations ? The quest for energy efficiency and lower labour costs ? More remote and inaccessible reserves (under lakes, tops of mountains etc.). This paper serves to identify some technology advances and demonstrates how these could be considered as replacements for or in combination with conventional technologies to arrive at an optimum techno-economic solution. To name a few applications/technologies: ? Comminution: conventional cone crusher, modified/specialized cone crusher, and the high-pressure grinding roll (HPGR). Although significant advances have been made in recent years, this paper only briefly covers comminution within the beneficiation circuit design ? Waste sorting: NIR (near-infrared) sorting, optical (colour) sorting, XRF (X-ray fluorescence) ? Primary concentration by combining dense media separation (DMS) with either XRT (X-ray transmissive), pulsed X-ray, jigs, or pan plants depending on the application, scale, and economics ? Final recovery of diamonds with either conventional X-ray technology, pulsed X-ray technology, or XRT. From recent studies, it can be concluded that there is no longer a standard solution, but rather the ?right? or appropriate solution. Through combining a sound knowledge of the ore source (ore dressing studies or onmine data gathering) and leveraging off the advances in technologies, one is able, through trade-off studies, to arrive at the ultimate techno-economic configuration, the ?right? solution. Emphasis is placed on maximizing diamond recoveries through appropriate technology selection and minimizing the associated costs in an effort to de-bottleneck or improve efficiencies of existing diamond processing plants, or to arrive at the ideal new diamond process plant design..

Jan 1, 2014

The peak in Sulphur price late 2008 caused again intensified investigation into the decomposition of sulphates and spend acid. One option is the recycling of sulphur from spend acid, which already started more than 40 years ago in the field of spend acid from organic processes in refineries and acrylic glass manufacturing. Since this acid couldn't be neutralized and discarded due to high organic contents, another source of SO2 to produce sulfuric acid is the decomposition of metal sulfates. The decomposition of metal sulfates was investigated at the next peak in Sulphur price in the 80?s. The first major scale pilot tests and studies of gypsum decomposition were carried out for clients in Florida. The decomposition of gypsum was quite often mainly influenced by the strategic decision of some countries to get own and independent acid production. In other cases the industry doesn?t have enough space to dump the gypsum. Therefore the company was also forced to convert the gypsum into ?saleable? products to avoid these residues. Other projects were made for the recycling of iron-sulfates from the pigment industry. The motivations for these projects were not only given by acid price. For the German pigment industry it was no longer permitted in the 80?s to dump the iron sulphate residues into the sea. These regulations forced the industry to develop new technology, which allows converting of the FeSO4-residues into iron oxide and acid. Therefore economical and mainly environmental factors influenced the decision of the companies to develop and to build these plants. Beside the above mention iron- and calcium-sulphates many other process exist, which produce metal sulphates as an intermediate product. These cases are not forced by environmental or strategic factors. In cases like Ni, Co or Mn-decomposition the main product of the plant is treated in the decomposition plant and later on used as ferrous-alloys. These final products are higher in price compared to e.g. CaO, which exclude the high-energy consumption for the endothermic chemical decomposition reaction. The reaction of SO2 generation based on acid or sulfate decomposition takes place in the range of 1000°C. The energy demand of the endothermic reaction is considerable and leads due to the high fuel-combustion off-gas stream to a diluted SO2 gas. Energy prices are usually increasing at the same time like sulphur. Sulphuric Acid based on decomposition is therefore more expensive than as acid based on sulphur combustion. The paper describes fluid bed technology and possible process concepts for decomposition plants. Additionally the thermodynamic background of the decomposition process and the main influence factors are provided to receive a better understanding of this technology.

Jan 1, 2009

By Stuart Marsland

"Reference materials have always been important for validating and controlling analytical methods', They have recently become even more important as quality requirements have become more stringent and customer demands for properly verified and controlled results increase. Clients, especially from the resource exploration industry demand critical validation of all results reported. Mintek has been producing geological and semi processed ore references since the early 1970's and recently due to increase in demand other manufactures have entered the South African Market.This paper describes Analytical challenges from the customer's perspective. The customer being the metallurgist, mine geologist, environmental scientist and geologists from resource companies. Reference Materials and their appropriate use and good understanding of them can aid greatly in building confidence in the results, choosing the right Laboratory for a project, deciding which set of results arc correct and providing evidence to the customer's clients that the results obtained are the very best possible.Throughout the world there are hundreds of reference materials produced by over 80 organisations and these are mainly ores, rocks, semi processed ores, metals, and many more. Mintek is one of the top 10 producers with over 75 products. Many of these producers including Mintek and their respective standards organisations belong to the ISO REMCO committee and their respective work groups. This committee's main task is to draw up guide lines for the use, manufacturing and certifying reference materials. In South Africa a mirror committee has recently had its inaugural meeting the function is to give clear mandate to the South African representative on the main ISO REMCO committee, the South African delegate bas an opportunity to influence the contents of the guides.Tile SARM program has since the year 2000 increased its sale three fold, the question is why? There is more accountability needed in our world. That means Analytical results have to be the very best possible and risks associated to them must be well quantified. Consider that the risk of wrong results of wrong decisions made from a result is trivial to laboratory, in comparison to the laboratories customers. The consequence to a laboratory could be a loss of income or some one may lose their job. To the customer he may dig up 1000 of ton's of rock with nothing in it or worse still don't mine it when the grade is high enough. This is seriol1s money."

Jan 1, 2014

Determination of mineral composition is of significant importance for the mineral sands industry as this information is required for orebody evaluation, the control of mineral processing plants and the determination of product quality. Mineral processing is made more difficult by the presence of pseudorutile, leucoxene, altered-ilmenite and particle inclusions. The paper investigates the properties of such elements from a single product stream using an MLA approach.

Jan 1, 2007

By G. J. de Korte

South Africa is reliant on coal for the generation of almost all the electricity used in the country, and several large industrial concerns such as Sasol are also coal based. Research relating to the mining, beneficiation and utilization of coal is important in order to ensure the optimal exploitation and use of coal within the country. The Fuel Research Institute (FRI) of South Africa was established in 1930 to investigate all aspects of coal beneficiation and utilization in South Africa. The FRI went on to conduct world-class research and in 1957 a pilot coal preparation plant was constructed in Pretoria to enable large-scale practical experimentation. The pilot plant played a pivotal role in the establishment of South Africa?s low ash coal export project. Political and economic factors contributed to the eventual closure of the FRI and South Africa experienced a period of about 10 years between 1990 and 1999 during which very little public coal preparation research was done. This changed for the better towards the end of 1999 when Coaltech 2020, a collaborative research program was established. Participants included the CSIR, universities, the government and the major coal producers. Coal preparation research conducted under Coaltech thus far include dewatering and drying of fine coal, size classification of ultra-fine coal and dense-medium fine coal beneficiation. Currently, the Coaltech focus is on the beneficiation of low-grade coal reserves and is investigating existing as well as new techniques that can be utilized to provide cost-effective beneficiation of low-grade raw coals and reject coals.

Jan 1, 2010

By N Morales, G Nelis

Short-term plans must meet the long-term goals while accounting for shovel selectivity, operational space, and scheduling restrictions. There are several approaches that deal with these issues to deliver a feasible short-term schedule. This paper compares two approaches based on mathematical programming to address the short-term mining cut definition and scheduling in an integrated way. They work by scheduling extraction to comply with long-term production goals, but they differ in how mining cuts are modelled. The first approach schedules Selective Mining Units (SMUs) but aggregates them around predefined locations. The second approach does not work on SMUs; it decides directly what mining cuts are to be used from a pre-defined set of shapes. It assigns a destination and schedules the extraction for the selected mining cuts. We applied both approaches in a real case study to compare their results in terms of profit, mining cut design, expertise needed, profit, and optimisation performance.

Sep 1, 2021

By J. H. Cloete, S. M. Bradshaw, D. K. Chibwe

"The primary function of a tundish in the steelmaking industry is to serve as a buffer tank, accepting molten steel from the batch ladle process and allowing it to be cast continuously. However, modern steelmaking has more stringent demands for the quality of the steel product, requiring increased control over the properties of the molten steel before casting. For this reason tundishes have been developed as metallurgical reactors to serve as the final step in refining of the molten steel by removing non-metallic inclusions, preventing the formation of new inclusions, and promoting chemical and thermal homogeneity. In this study the flow behaviour in a four-strand tundish was investigated by means of a half-scale water model as well as numerical modelling. Both the numerical study and physical model were used to characterize residence time distribution (RTD) in the vessel and calculate properties pertaining to the tundish flow regime. Three different tundish configurations were investigated: a bare tundish with no flow control devices, a tundish with a turbulence inhibitor and a tundish with both a turbulence inhibitor and a dam.The physical and numerical models showed that a tundish without flow control devices was prone to significant short-circuiting. A tundish with a turbulence inhibitor was shown to be successful in preventing short-circuiting and provided surface-directed flow, which aids inclusion removal in the slag. Despite the benefits of the use of turbulence inhibitors, it was observed that the upward-directed flow increased the maximum turbulence kinetic energy near to the surface by approximately 120% compared with the bare tundish. Therefore the potential for slag entrainment should be considered during the design and operation of tundishes utilizing turbulence inhibitors."

Jan 1, 2014

By G. T. van Rooyen

In this overview of materials engineering, the author, drawing on his long experience from his student days until the present (emeritus professorship), briefly recounts the main developments in this field: dislocation theory, fracture problems, and the development of alternative materials such as ceramics and polymers. He then takes a look at the future, in which he foresees a greater demand for materials engineers, and leading roles for universities and technikons in collaboration with industry.

Jan 1, 1996

By S. Tu, Y. Yuan, H. Wei, Z. Chen, M. Jia

"To reduce production costs and increase efficiency in ageing coal mines, a system that utilizes two shearers in a fully mechanized longwall working face is proposed. Using theoretical and engineering experience, three issues pertaining to the system were determined: (a) the two-shearer mining technique; (b) matching and modifying the equipment; (c) and coal-cutting task allocation for each shearer. Two mining processes are proposed, with the two shearers travelling in either the same or opposing directions. To avoid breakage of chains and pan extrusion of the armoured face conveyor (AFC), the length of the AFC ‘snake’ was controlled. To ensure continuous cutting and transporting of coal, the cross-sectional dimensions of the AFC were checked and the shearer closer to the head drive was modified. Based on the assumption of equal cutting times for each shearer, the meeting position of the two shearers was obtained by using a theoretical model of mining task allocation. Application of this technique at No. 2 Jining Mine, China, has shown remarkable benefits: daily production capacity was increased by 54% and personnel efficiency was improved by 33 t/d per person. IntroductionAll coal mines aim to increase the unit output of the working face to reduce mining costs and improve the economic efficiency of the operation. To achieve this goal, a production model known as one mining face of the mining area has been adopted by most Chinese coal mines (Hu, Meng, and Zhu, 2008; Zhang, Zhang, and Wang, 2000). Under these conditions, the main technical approaches to maximize the output are increasing the width of the working face (Qu, Xu, and Xue, 2009) and accelerating the advancing speed (Robbins, 2000). In coalfields with shallow seams, the width of a fully mechanized face exceeds 300 m (Ju and Zhu, 2015; Fu, Song, and Xing, 2010); in coalfields with deep seams, the width of the face is usually greater than 240 m (Liu et al., 2016; Li et al., 2013). The term ‘super-long working face’ was proposed to describe working faces with a width of over 240 m (Zhao and Song, 2016; Xu et al, 2007) in China. To support these long working faces with rapid advancing speeds, high-powered mining equipment is required (Kulshreshtha and Parikh, 2001, 2002; Tu et al., 2009; Mishra, Sugla,and Singha, 2013). This is easily achieved in newly built mines, but is not a good choice for ageing mines because of the low return on a high investment on account of the limited remaining resources. It is therefore difficult for ageing mines to significantly increase their unit output with the existing mining equipment. This study focused on this problem: two shearers were applied to a longwall fully mechanized working face (LFMWF) to achieve increased unit output."

Oct 1, 2018

By S. A. Abdel Sabour

Strategic decisions in the mining industry are made under multiple technical and market uncertainties. Therefore, to reach the best possible decision, based on information available, it is necessary to integrate uncertainty about the input variables and model financial risk of the project?s merit measures. However, this provides few useful insights to decision-makers unless accompanied by modelling management responses to uncertainty resolutions. It is widely acknowledged that conventional decision-support methods based on static, no-change, discounted cash flow (DCF) techniques such as net present value (NPV) and internal rate of return (IRR) tend to provide inaccurate value estimates. This could mislead the strategic decision-making process and result in significant value losses. This paper aims to model financial risk related to uncertainty about market variables such as metal prices and foreign exchange rates. Other sources of risk that are related, for example, to geology and production costs are not considered in this work. The article outlines a flexible financial model that integrates uncertainty about market variables and management flexibility to react to uncertainty resolutions into mine project valuation using a real-options valuation technique based on Monte Carlo simulation. Significance of information generated from this simulation-based flexible valuation model to the strategic decision-making process is tested using an illustrative case study of a Canadian mining project. The project is a typical multi-metal, open pit mine that produces copper and gold. In this case, there are three uncertain market variables, which are: copper and gold prices and US$/CAN$ exchange rate. Financial valuations are carried out using both the conventional static DCF method and a flexible real-options model. In the flexible model, management flexibility to decide whether to go ahead with the next expansion or terminate production operations is integrated. Results show how the flexible financial model can enhance the decision-making process.

Jan 1, 2009