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By A Chandra, P Guj

Only a few complex real options can be valued using closed-form equations, such as the Black and Scholes formula, because these algorithms are restrictive and prevent the construction of practical project evaluation models. Although a binomial lattice method paired with the ærisk-neutral probabilityÆ provides an easier and flexible modelling of exploration and mining projects, it has limitations when projects are complex, long-lived and influenced by the interplay of various market and private uncertainties. In order to overcome these limitations, modern decision tree software using dynamic programming capability can be used for real option valuations. This is a powerful computational tool in which the impact of various sources of uncertainties can be differentiated, so that the optimal decision path can be explicitly displayed visually. There has been significant academic controversy surrounding whether different real option (RO) valuation methods would lead to different real option values (ROV). This paper, using a realistic copper mining example, demonstrates that as long as the same degree of subjectivity and consistency are used in different real option valuation methods, they yield the same result. This conclusion is valid irrespective of whether the cash flow volatility generated by various sources of uncertainties is handled in an aggregated or in an explicit and differentiated manner. This paper compares two choices for an investor either to æbuy now and developÆ a project or to enter into a ætwo-year option to purchaseÆ after the proponents have developed it. It also shows how significantly different net after-tax operating cash flows may be generated by these different choices on the same underlying asset represented by the project. This is due to the difference in the amount and timing of the relevant capital investments affecting the depreciation and amortisation charges and as a consequence, the income tax paid. CITATION:Guj, P and Chandra, A, 2012. Real option valuation of mineral exploration/mining projects using decision trees - Differentiating market risk from private risk, in Proceedings Project Evaluation 2012 , pp 177-188 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 24, 2012

In recent years a large number of Horizontal Belt Filters have been installed in the Australian mining and chemical industries. This paper deals briefly with the general background and advantages leading to the selection of this type of filter. Several different applications are described and particular reference is given to the simplification of the fines treatment circuit at the South Bulli Coal Washery.

Jan 1, 1989

Although a small quantity of lc,;v viscosity index ' (L.V.I.) oils are presently manufactured in. Australia, lubricating oil refining methods are assuming gxeater significance since in 1964 Australia will be locally refining the bulk of its requirements and some companies may be exporting a surplus. New plants are ' planned to refine mainly high and medium viscosity index oils from imported crudes and the paper describes typical techniques used òto: produce. thes& oils. .

Jan 1, 1962

By Georgi H, Farquhar J. W, Lorrigan A. N

The potential for major new lenses of Volcanic Hosted Massive Sulphide (VHMS) beneath the existing Rosebery Deposit is extremely high. Recent deep drill hole intersections of massive sulphides, including 22 in true thickness at 24 per cent Zn, may significantly extend the life of the Rosebery Mine. The Rosebery Ore Deposit is located within Australia's most prospective VHMS mining district, the Mount Read Volcanic (MRV) arc of western Tasmania (Figure 1). The MRVs are a 10 - 15 krn wide arcuate belt of lavas, related intrusives and volcaniclastics. Rosebery is a major Cambrian volcanic hosted Zn-Pb-Cu-Ag-Au rich deposit which has been over-printed by Devonian deformation and granitoid alteration resulting in local rcmobilisation of the ore. The Rosebery Mine Sequence is composed of an east dipping and east facing, predominately felsic sequence of rhyo-dacitic volcaniclastics, epiclastics, sediments and shale lenses more than 500 in thick. This sequence is bounded by two, low angle (35 - 40¦), east dipping thrust faults, the Rosebery Fault to the west and the Mount Black Fault to the cast. The Rosebery Mine lithologies are summarised in the following table: Hangingwall (HW) Polymictic, quartz, feldspar-phyric epiclastics. Black Slates Graphitic, pyritic mudstones. Host Rocks Turbiditic mudstones and sandstones. Footwall (FW) Feldspar-phyric, pumiceous, mass-flow breccias. Cambrian, quartz-feldspar, porphyritic sills intrude this sequence at all levels. Thin, Jurassic, dolerite dykes also occur throughout the mine. Widespread quartz, sericite and chlorite alteration occurs in the FW. This alteration is manifested as quartz-augen schists beneath the orebody. The Host Rocks are pervasively altered with silica, sericite, chlorite and pyrite. Intense carbonate alteration occurs within the orebody, whereas chlorite and pyrite alteration is commonly concentrated directly beneath it. Cambrian volcanogenic alteration is over-printed by three major Devonian, granite-derived, assemblages. These are massive to quartz veined tourmaline, pyrrhotite-pyrite and magnetite-chalcopyrite. Though the Devonian granite has not been intersected in deep drill holes or in mine workings, there is good evidence that it exists within a kilometre of the deposit. The Rosebery orebody is structurally complex when compared to many other VHMS deposits. Evidence for Cambrian growth faulting has been found at the North End of the mine (B lens) where displacement of ore lenses occurs without corresponding displacement of the overlying Black Slates. A well defined cleavage exists throughout the mine, dipping at 28 to 50¦E. East dipping shear zones are also obvious in all parts of the mine workings and reverse movement is evident on many of these.

Jan 1, 1993

The Beruang Copper-Gold Deposit is located very near the centre of Kalimantan in Indonesia. It is a dacitic tuff hosted deposit currently being explored by Kalimantan Gold Inc of Canada. Exploration activity to date at Beruang has been focused on the Main Zone, which is defined by a north-south elongate, 1 + 1.5 km zone of anomalous copper and gold, and intense phyllic alteration. The disseminated sulfides responsible for the anomalous copper values produce a moderate to high chargeability signature. Phyllic alteration is overlain at high levels, and on the western edge of the Main Zone, by advanced argillic alteration. The dacite tuffs hosting the mineralisation are cut by post-mineralisation dacite dykes that are delineated by ground magnetics and geological mapping. Base metals, principally zinc and lead, form broad halos around the Main Zone. These metals are incorporated in massive NE-trending, polymetallic mineralisation that outcrops to the north and south of the Main Zone. IP survey results highlight the highly pyritic NNE-trending shear zone, which hosts most of the copper mineralisation in the Main Zone. A high chargeability anomaly at depth in the central-east part of the Main Zone is interpreted to be the source for mineralising hydrothermal fluids. This is suggested by zonations in alteration and mineralisation. A deep chargeability anomaly can be correlated with the downward plunge of a pyritic breccia, encountered at shallow levels in drillholes, and is a potential breccia pipe target. Compilation and inversion modelling of the IP results has yielded some interesting drill targets.

Jan 1, 2004

By V Lickfold, A J. Crawford, A J. Wilson

A total of 12 alkalic porphyry centres of Late Ordovician age have been discovered in two mineral districts within NSW. The alkalic porphyry deposits are hosted within shoshonitic volcanic centres that formed where a major cross-arc basement structure (the Lachlan Transverse Zone) cut the Ordovician Macquarie Arc. The Macquarie Arc was amalgamated with the back-arc basin sediments of the Wagga Marginal Basin and with the proto-Pacific margin of Gondwanaland to form the Lachlan Fold Belt after the cessation of arc magmatism in the Late Ordovician. Within the Ordovician volcanic belts of NSW, the alkalic porphyries are the most significant mineral deposits economically. The combined resource of the Cadia district porphyries (729 Mt @ 0.79 g/t Au and 0.30 per cent Cu) makes Cadia the worldÆs seventh largest known porphyry gold system and the largest known gold resource in an alkalic porphyry system (574 t Au). Hydrothermal alteration in the alkalic porphyries comprises a complex sequence of potassic, calc-potassic, sodic, calc-sodic, propylitic and late-stage, typically fault-controlled phyllic assemblages. Hematite dusting is common in many of these alteration assemblages, giving the intrusions and the altered volcano-sedimentary host sequences a distinctive pink-orange colouration. Intensely developed hydrothermal alteration assemblages are localised to within a few hundred metres of the composite intrusions that sourced the mineralising fluids, making these deposits difficult exploration targets. Sulfides are typically zoned, with several of the deposits having bornite-rich cores, chalcopyrite-dominant annuluses and pyritic outer haloes. Gold is well correlated with bornite in most of the deposits, and with chalcopyrite at Cadia Hill.

Jan 1, 2002

By Warren R

Croesus Shaft is one of two operating shafts on North Kalgurli Mines Limited's Fimiston lease.At the cessation of gold mining in 1974, the workings at Croesus were allowed to flood. Large quantities of deslimed mill tailings used in filled stopes were washed into the shaft and surrounding drives, making re-access very difficult. The shaft has been desludged from the 9 level to the 15 level, and a loading pocket installed below the 14 level. A vacuum lift unit was installed underground to facilitate the removal of the slime and spillage.Stoping at Croesus was hampered by poor drainage, pumping, and shaft availability. These difficulties have been overcome by utilising an open stoping system for the relatively steep, narrow, high grade stopes. Open stoping has proved to be effective and economic.

Jan 1, 1985

Callide Coalfields produces a sub-bituminous, very subhydrous, low rank, steaming coal with good combustion properties, primarily for domestic power generation. Geological input into planning of coal extraction requires expedient production of detailed structural, lithological, analytical, geophysical and geotechnical data. The CSIRO-developed SIROLOG borehole logging software and hardware system allows for detailed spectrometric analysis of coal/interburden. The gamma-gamma and neutron-gamma SIROLOG techniques both provide improved prediction of ash content over other borehole techniques. The neutron-gamma technique also predicts density and some important ash constituents (especially iron, alumina and silica). The software/hardware configuration allows for quick, easy interpretation of coal seam depth and lithology, parting thickness and ash/ash constituent contents immediately after a borehole has been logged. Within certain mine areas in the Callide Basin, the iron content of mined coal is widely variable in both vertical and lateral extent within and between seams. This variability creates problems in predicting the slagging behaviour of æas-receivedÆ coal during combustion, especially where the iron content of the ash exceeds 19 per cent. Using the SIROLOG tool in co-operation with traditional borehole sample laboratory analysis results, patterns in this variability can be determined and related to geological properties and process of formation of the coal seams. Subsequently, areas of high iron can be predicted in advance of mining. Since 1992, on-going collection and interpretation of SIROLOG downhole geophysical log data has significantly contributed to a number of research projects related to gaining a preliminary understanding of the iron distribution and formation during the Coal MeasuresÆ deposition. Because the probe was able to record variations in coal mineral matter content, it was found to complement more conventional techniques such as reflected light petrography, X-Ray Diffraction and SEM techniques that examine the mineralogy of iron species. Additionally, software has been developed to allow integration of SIROLOG data into existing geology databases, enhancing coal quality modelling and daily prediction of parameters such as raw ash, silica and iron contents that are indicators of ash fusion propensity. The correlation of SIROLOG-derived iron geophysical traces between drillholes and other sample points highlighted lithological and structural controls in the iron distribution in the sequence previously not detected. This work has allowed the development of a methodology for predicting iron in advance of mining and reconciling as-sold coal quality to that predicted. Predictions are currently being assessed at the coal face as mining progresses through high-iron zones.

Jan 1, 2000

This paper deals with a few aspects of town planning and town management which affect human relationships within that town. Its scope is limited to the consideration of towns forming an adjunct to a mining operation, and particularly considers these aspects at the Hamersley Iron Pty. Limited, town of Parabur doo, Western Australia. Planning and standards of a new town and amenities are-discussed and related through living comfort to an effect on human relation- ships. Town administration and the promotion of many forms of social activities are dealt with in detail to illustrate the importance of quickly forming a cohesive community from a large number of newly arriving individuals. The results achieved by the planning and administration at Paraburdoo are highlighted by involving many residents by way of answers to a questionnaire.

Jan 1, 1973

By G Giles

One of the main tools used by mining operations to mitigate the risk of rock burst is the installation of a so-called ædynamic resistantÆ support system. Such systems are designed to absorb the impact of shockwaves created by mine-induced seismic events. Dynamic support must be strong and capable of sustaining high loads and, at the same time, they have to be flexible and accommodate large deformation. A dynamic support system is therefore a system capable of absorbing a high quantity of energy. Ground support systems are composed of rock reinforcement (rock bolts or cable bolts) and surface support (mesh or shotcrete). In terms of surface support, fibre-reinforced shotcrete is increasingly seen as the industry preferred solution when difficult ground conditions are experienced, including areas of high seismic hazard. A thick layer of shotcrete is certainly strong but it is by no means flexible. Normal weld-mesh has some flexibility, but it is not very strong. The Australian Centre for Geomechanics (ACG), in collaboration with Onesteel Reinforcing Pty Ltd, is currently working on a new high-energy absorption mesh that combines strength and flexibility. The new mesh can be installed with a jumbo, in a similar way as the widely used sheet of weld-mesh. This paper describes the development of this new mesh system.

Jan 1, 2008

By Armstrong RW, Middlin B

The development, design, construction and operation of the new Solvent Extraction/BCA process plant at Copper Refineries Pty. Ltd., Townsville is described.The process offers substantial savings in electrical power costs, improvements in plant hygiene, and a lowering of materials handling costs compared with conventional electrowinning technology.The solvent extraction process extracts arsenic from copper Tank House electrolyte using a tributyl phosphate (TBP) - kerosene solvent. The plant incorporates fourextraction stages, two scrub stages, and three stripping stages to produce an arsenic-bearing low-acid strip liquor. This strip liquor is mixed with copper sulphate, and neutralized with ammonia to form a copper (II) arsenic (V) crystalline product, bicupric arsenate (BCA). This product is then used in the manufacture of chromated copper arsenate timber preservatives (Royston 1982).

Jan 1, 1985

Gold mineralisation at the Kerimenge-Lemenge prospects is a classical example of myltiple, overprinting events, associated with intrusive-related hydrothermal systems. Repeated emplacement of high level dacitic porphyry bodies (Edie Porphyry; 2.4 - 3.8 Ma) was accompanied by a phreatomagmatic eruption which formed a diatreme-maar complex. Later hydrothermal fluids utilised permeable fault zones and diatreme contacts. Mineralisation took place during two main events. Stage I consists of early quartz - illite/sericite - carbonate phase with associated pyrite-arsenopyrite mineralisation. This phase is zoned from quartz - sericite-pyrite/arsenopyrite in the south at depth, to dominantly manganocarbonate - illitic clay - arsenopyrite- pyrite_s significant base metals in the north and at shallow levels. The majority of known gold (18.1 Mt @ 2.0 g/t Au) at Kerimenge is associated with Stage I activity. The gold occurs primary within the lattice of the sulphides and is metallurgically refractory. Fluid inclusion studies indicate early boiling and progressive cooling and dilution of hydrothermal fluids during the evolution of the Stage I event. Near paleosurface condensation of gases, which evolved off the boiling system at depth, produced abundant low pH bicarbonate fluids. During the waning phases of Stage I activity, these bicarbonate condensate fluids descended down permeable structures and formed banded manganocarbonate veins. High grade non-refractory gold mineralisation during Stage II event is restricted to favourable structures at relatively shallow levels and in the northern regions of the prospect area. Gold in this event exhibits a distinctive Au - Ag - Te -Cu geochemical signature, and is associated with hessite - tennantite - chalcopyrite mineralisation within quartz veining. Alteration and fluid inclusion studies indicate that this style of mineralisation is a result of the quenching of pulses of hot, late magmatic mineralised fluids by the cold condensate waters.

Jan 1, 1997

The geological features of the destructive plate margins of the southwest Pacific favour the formation of porphyry type deposits. The major controlling factor favouring the formation of gold-rich deposits of this type is a dense crust. This results in shallow intrusion of large magma bodies beneath andesite stratovolcanoes. Where the intrusives have near vertical sides, the comparatively low temperature of transfer of volatiles from the solidifying melt favours the partitioning of gold into bubbles of volatiles. They reduce the viscosity and density of the melt, resulting in the upward movement of a mineralised melt. With the drop of pressure with upward movement the bubbles separate into a two phase mixture, triggering freezing of the mineralised melt and the formation of a gold mineralised stockwork.

Jan 1, 1995

By P W. Cleary, M D. Sinnott

Cross-belt cutters are commonly used for sampling coal. They are generally cheaper than falling-stream cutters, particularly when a cutter must be retrofitted. The major mechanisms thought most likely to lead to sample bias are being investigated by discrete element modelling (DEM) in a project funded through the Australian Coal Association Research Program. This paper describes a benchmark run and the current direction of research.

Jan 1, 2008

Electromagnetic methods used in geo- physical prospecting for conductive ore bodies have proved successful in Canada,Sweden and other countries. In Australia however the depth of weathering generally exceeds 30 metres. This introduces a problem of highly conductive overburden and renders equipment useful elsewhere virtually ineffective. A discussion of several EM prospecting techniques is presented and a new system under development at James Cook University using V.L.F. transmissions capable of indicating changes in impedance (not only highly conducting media) is outlined.

Jan 1, 1974

Magnetic Separators have a wide application in dry separation processes, frequently in conjunction with High Tension Separation. Dry processes can frequently be superior to established processes in more commonplace mineral associations. A system of dynamics is postulated and the forces operating ar'e examined, together with a method of evaluating the effect of operating variables. Practical applications of these theories to obtain optimum results on an individual separator, and various separations using a laboratoryroll type separator are described.Practical Flowsheets are of two main types, the first consisting of a series of scalping operations, the second for rougher, cleaner, and scavenger operations with middling recirculation. Some common separation problems with certain mineral associations illustrate the need for different approaches for different mineral associations. A table of mineral separation characteristics is appended, from which amenability may be tentatively estimated.INTRODUCTIONMagnetic separators are widely used, either alone or in conjunction with other wet and dry concentration devices, for the upgrading of a variety of minerals. The high standards of efficiency attainable in dry mills, together with reduced operating and labour costs, are slowly becoming apparent in a wide variety of plants. The combination of wet and dry concentration plant familiar in beach sand mining is finding application for such processes as upgrading a crushed chromite product, and production of clean scheelite,cassiterite, and other concentrates. Other dry beneficiation processes (such as the high tension beneficiation of iron ore, and the benefiGiation of asbestos) avoid the use of wet processes completely.Dry separation processes are likely to be applied more widely as their possibilities become more generally known.

Jan 1, 1958

Characterising the weight percentage of each mineral in base metal ores is an integral part of assessing the quality of an ore in terms of its processing properties. The Rietveld method, which uses X-ray diffraction data, has been applied to routinely quantify the minerals in lead/zinc and copper ores from Mount Isa Mines Limited and supergene copper ores from Ernest Henry Mining as well as their related products from the concentrators. The Rietveld method has been tested by comparing Rietveld mineral data with a standard sample with known mineral weight percentages and comparing Rietveld mineral data with mineral data calculated from elemental assays where the element only exists in one mineral such as lead in galena. Where this latter situation does not occur, the Rietveld method has been checked with both elemental and optical microscope data. In all cases, there is a good correspondence between the Rietveld data and the data it was checked against with absolute differences generally in the range of 0.5 to 3 wt per cent. The Rietveld method generally quantifies all minerals occurring over 1 wt per cent in one analysis and is less expensive and more routine compared to traditional methods such as optical microscope point counting. The Rietveld method can be applied to many stages of the mining cycle such as exploration, feasibility studies, mining, minerals processing and for environmental studies.

Jan 1, 1998

By F Pothitos, S Hewson

The geological and geotechnical conditions at the Cadia Hill Open Pit are very complex. This complexity coupled with high mining rates has required significant technical input into the design and optimisations of the pit slopes, accesses, cutbacks and scheduling. A multi-discipline team of NML engineers, geologists and external consultants has been conducting comprehensive geological and geotechnical programs in order to achieve an optimum design of the pit slopes. Extensive data collection, analysis and interpretation has led to the formation of working geotechnical models of large structures, rock masses, and back-analysed slope performance charts. The current Cadia Pit Optimisation Project focuses on the risk-and-return principle for pit design and on the integration of geotechnical, hydrogeological, mining engineering and scheduling. The risk management for pit design has also been incorporated into the short term and long-term operation of the pit mining to ensure safety and production.

Jan 1, 2003

By Porter I

Rock mass classification systems have emerged as a powerful tool which can be used for assessing ground conditions and determining support requirements in underground mines. They should not be used as a substitute for complete engineering design, but rather as a supplement to observational methods and analytical study. In general, the use of rock mass classification is attractive, but each classification system has various deficiencies. Use of any particular system should be made only with knowledge of that systems limitations. It is desirable to employ a number of systems and design methods which will allow for comparison and lead to a better understanding of the rock mass condition.The Rock Mass Quality system (Q-System), developed by the Norwegian Geotechnical Institute, and the Rock Mass Rating (RMR) System, Bieniawski, were designed primarily for civil engineering structures. Laubscher et al (1978) further developed the RMR-system specifically for rock mechanics engineering in the mining industry. A method of stope design, which introduces a stability factor for the rock mass and compares this with hydraulic radius, was developed by Mathews et al (1981). This paper reviews the above systems by applying them to stability assessment of crown pillars in two Australian metal mines and provides a critical analysis of the various approaches. In particular each system will be analysed to determine its suitability for use in crown pillar design. The most suitable system(s) will form the basis for future development in crown pillar stability analysis.

Jan 1, 1994

Financial theory often takes some time to penetrate industry and when it does it can result in a paradigm shift in valuations and mental models. The Black Scholes option valuation was first published in 1973, although the authors were only awarded a Nobel Prize in 1997. The valuation of real options has been applied to the oil and gas industry for some time, however it has only recently been more widely applied to the non-oil, mineral resource sector. The use of real option valuation (ROV) for the valuation of marginal and short mine life resource projects is a more useful valuation tool than the conventional DCF, NPV valuation tool. The application of ROV has major implications for corporate strategy. It generally favours equity over debt funding and non-hedging over hedging. A retrospective assessment of the successful development of the Lennard Shelf Operations demonstrates the concepts of implementing real options and the value destruction of limiting operational flexibility through debt and hedging activities.

Jan 1, 2003