Lec6_EM10 - PMRC and Feasibility Studies PDF

PMRCAND FEASIBILITY STUDIES Copyright © 2018 Christian Arranz. All Rights Reserved.  Learning Outcomes: 1. Understand the significance of the PMRC and its prin...

PMRCAND FEASIBILITY STUDIES Copyright © 2018 Christian Arranz. All Rights Reserved.  Learning Outcomes: 1. Understand the significance of the PMRC and its principles; 2. Differentiate the types of Mineral Resources and Ore Reserves/Mineral Reserves; 3. Recognize the updates/changes from the 2007 to the 2020 proposed PMRC Editions; 4. Differentiate Scoping, Pre-Feasibility and Feasibility Studies; Understand what Engineering Evaluation is and what its steps are; Copyright © 2018 Christian Arranz. All Rights Reserved. Copyright © 2018 Christian Arranz. All Rights Reserved.  PMRC (Philippine Mineral Reporting Code) 2007 Edition adopted by the PSEM, GSP and SMEP; PSE as part of their listing and disclosure rules and MGB, as part of their regulatory and reportorial requirements. “The PMRC requires the (CP) Competent Person(s), on whose work the Public Report of Exploration Results, Mineral Resources or Ore Reserves is based, to be named in the report. The report or attached statement must say that the person consents to the inclusion in the report of the matters based on their information in the form and context in which it appears, and must include the name of the person’s firm or employer.” Copyright © 2018 Christian Arranz. All Rights Reserved.  PMRC (Philippine Mineral Reporting Code) 2007 Edition Main principles: (1) Transparency -requires that the reader of a Public Report is provided with sufficient information, the presentation of which is clear and unambiguous, to understand the report and is not misled. (2) Materiality -requires that a Public Report contains all the relevant information which investors and their professional advisers would reasonably require, and reasonably expect to find in the report for the purpose of making a reasoned and balanced judgement (3) Competence - requires that the Public Report be based on work that is the responsibility of suitably qualified and experienced persons who are subject to an enforceable professional code of ethics. Copyright © 2018 Christian Arranz. All Rights Reserved.  PMRCC (Philippine Mineral Reporting Code Committee) The PMRCC, as a National Reporting Organization (NRO), had been newly formed last 22 November 2018 consisting of three (3) Parent Organizations and three (3) Associate Organizations. The Parent Organizations are: 1. Geological Society of the Philippines (GSP); 2. Society of Metallurgical Engineers of the Philippines (SMEP); and the 3. Philippine Society of Mining Engineers (PSEM) while the Associate Organizations are: 1. Philippine Stock Exchange (PSE); 2. Philippine Mining and Exploration Association (PMEA); and 3. Philippines-Australia Business Council (PABC) Copyright © 2018 Christian Arranz. All Rights Reserved. Copyright © 2018 Christian Arranz. All Rights Reserved.  PMRC (Philippine Mineral Reporting Code) Proposed 2020 Edition an upgrade of the PMRC 2007 Edition and modelled substantially after the International Reporting Template (2019) of the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) and the Australasian Code for Reporting of Exploration Results, Mineral Resources, and Ore Reserves (2012 JORC Code) compatible with the international reporting codes of the CRIRSCO’s members which are National Reporting Organizations (NROs) such as the Australasia (JORC), Canada (CIM), Chile (National Committee), Europe (PERC), South Africa (SAMCODES), and USA (SME). Copyright © 2018 Christian Arranz. All Rights Reserved.  PMRC (Philippine Mineral Reporting Code) Proposed 2020 Edition - endorsed by the Securities and Exchange Commission (SEC), MGB, COMP, PMEA and PABC as a standard that promotes ethical conduct in public reporting in the minerals industry. - has also been adopted by and included in the listing and disclosure rules of the PSE since 2008, and as part of the regulatory and reportorial requirements of MGB since 2010. Copyright © 2018 Christian Arranz. All Rights Reserved.  PMRC (Philippine Mineral Reporting Code) Proposed 2020 Edition Accredited Competent Person (ACP) - a minerals industry professional who is a Member or Fellow of PSEM, GSP and/or SMEP, duly accredited as an ACP by the professional organization in which he/she belongs, or of a ‘Recognized Professional Organization’ (RPO), as included in a list promulgated by PSEM, GSP, and SMEP through the PMRCC, as the need arises. Copyright © 2018 Christian Arranz. All Rights Reserved. Copyright © 2018 Christian Arranz. All Rights Reserved. Copyright © 2018 Christian Arranz. All Rights Reserved.  15 Copyright © 2023 Christian Arranz. All Rights Reserved. Copyright © 2023 Christian Arranz. All Rights Reserved. Copyright © 2023 Christian Arranz. All Rights Reserved.  IRR of the PMRC 2020 2020 Edition Accredited Competent Person (ACP)* - a minerals industry professional who is a Member or Fellow of PSEM, GSP and/or SMEP, duly accredited as an ACP by the professional organization in which he/she belongs, or of a ‘Recognized Professional Organization’ (RPO), as included in a list promulgated by PSEM, GSP, and SMEP through the PMRCC, as the need arises, subject to applicable laws and regulations. These professional organizations have enforceable disciplinary processes including the powers to suspend or expel a member. *synonymous with Competent Person (Australasia) Qualified Person (Canada) Qualified Competent Person (Chile) Copyright © 2023 Christian Arranz. All Rights Reserved.  PMRC (Philippine Mineral Reporting Code) 2007 Edition modelled substantially on the JORC* Code (2004) of Australasia (i.e. Australia) and is also compatible with the international codes from South Africa (SAMREC) , European Union, and Canada (CIM NI 43-101). consistent with the International Reporting Template (2006) established by the Committee for Mineral Reserves International Reporting Standards (CRIRSCO). CRIRSCO The aim of CRIRSCO (Committee for Mineral Reserves International Reporting Standards) is to contribute to earning and maintaining that trust by promoting high standards of reporting of mineral deposit estimates (Mineral Resources and Mineral Reserves) and of exploration progress (Exploration Results). Copyright © 2018 Christian Arranz. All Rights Reserved.  13 MEMBERS Australasia – JORC (2012) Canada – CIM (2014) South Africa – SAMREC (2016) USA – SME (2017) Europe – PERC (2017) Chile – CM (2015) Brazil – CBRR (2016) Russia – NAEN (2011) Kazakhstan – KAZRC (2016) Mongolia – MPIGM (2014) Indonesia – KCMI (2017) Turkey – UMREK (2018) Colombia – CCRR (2015) Copyright © 2018 Christian Arranz. All Rights Reserved.  14 MEMBERS Australasia – JORC (2012) Brazil – CBRR (2016) Canada – CIM (2014) Chile – CM (2015) Colombia – CCRR (2015) Europe – PERC (2017) India – NACRI (2019) Indonesia – KCMI (2017) Kazakhstan – KAZRC (2016) Mongolia – MPIGM (2014) Copyright © 2018 Christian Arranz. All Rights Reserved. Russia – OERN (2011) South Africa – SAMREC (2016) Turkey – UMREK (2018) USA – SME (2017) Copyright © 2023 Christian Arranz. All Rights Reserved.  SAMREC (South African Code for the reporting of Exploration Results, Mineral Resources, and Mineral Reserves) Code Copyright © 2018 Christian Arranz. All Rights Reserved.  JORC (Joint Ore Reserves Committee) Code Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource vs Ore Reserve (PMRC 2007 Edition) Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource vs Mineral* Reserve (PMRC 2020 Edition) Copyright © 2023 Christian Arranz. All Rights Reserved.  Definitions: Mineral MINERAL -N -I -H -D -O ROCK Copyright © 2023 Christian Arranz. All Rights Reserved.  Definitions: Mineral MINERAL -N Naturally occurring, Inorganic, -I Homogenous solid, with -H Definite chemical composition, and -D Ordered internal structure (Crystalline) -O ROCK- any naturally formed aggregate of one or more types of mineral particles Copyright © 2023 Christian Arranz. All Rights Reserved. Definitions: Mineral 29 This Photo by Unknown Author is licensed under CC BY-SA  PMRC (Philippine Mineral Reporting Code) 2020 Edition Definitions: Mineral - any substance, extracted for value, occurring naturally in or on the Earth, in or under water or in tailings, residues or stockpiles, having been formed by or subjected to a geological process but excludes water, oil and gas. Copyright © 2023 Christian Arranz. All Rights Reserved.  Definitions: Mineral PMRC (Philippine Mineral Reporting Code) 2020 Edition The definition of Mineral is broad, and therefore the Code is applicable to a diverse range of commodities for which Public Reporting of Exploration Results, Mineral Resources, and Mineral Reserves is required by a relevant regulatory authority, including but not limited to: metalliferous minerals, mineralized fill, remnants, pillars, low grade mineralization, stockpiles, dumps, and tailings (remnant materials) coal industrial minerals, cement feed materials, and construction raw materials dimension stone, ornamental and decorative stone; and other mineral raw materials. Copyright © 2023 Christian Arranz. All Rights Reserved.  PMRC (Philippine Mineral Reporting Code) 2020 Edition Definitions: Grade (a.k.a. quality) - Any physical or chemical measurement of the characteristics of the material of interest in samples or product. The units of measurement should be stated when figures are reported. Cut-off Grade - The lowest grade, or quality, of mineralized material that qualifies as economically mineable and available in a given mineral deposit. May be defined on the basis of economic evaluation, or on physical or chemical attributes that define an acceptable product. Copyright © 2023 Christian Arranz. All Rights Reserved.  Rules of thumb grades of ore: Disclaimer: This is no standard rule, just estimates (experience context) Gold Silver Copper Open pit: Open pit: Open pit: 0–0.5 g/t gold - low grade 0–30 g/t silver - low grade 0–0.5% copper - low grade 0.5–1.5 g/t gold - average grade 30–150 g/t silver - average grade 0.5–1.0% copper - average grade Over 1.5 g/t gold - high grade Over 150 g/t silver - high grade Over 1.0% copper - high grade Underground: Underground: Underground: 0–5.0 g/t gold - low grade 0–150 g/t silver - low grade 0–1.0% copper - low grade 5.0–8.0 g/t gold - average grade 150–350 g/t silver - average grade 1.0– 3.0% copper - average grade Over 8.0 g/t gold - high grade Over 350 g/t silver - high grade Over 3.0% copper - high grade Copyright © 2023 Christian Arranz. All Rights Reserved.  PMRC (Philippine Mineral Reporting Code) 2020 Edition Definitions: Tonnage (a.k.a. quantity or in volume) - An expression of the amount of material of interest irrespective of the units of measurement (which should be stated when figures are reported). Recovery (%) - The percentage of material of initial interest that is extracted during mining and/or processing. A measure of mining or processing efficiency. Copyright © 2023 Christian Arranz. All Rights Reserved.  Mineral Resource vs Ore Reserve (PMRC 2007 Edition) Mineral Resource Ore Reserve – a concentration or occurrence of – economically mineable part of a material of intrinsic economic interest in Measured and/or Indicated Mineral or on the Earth’s crust in such form, Resource; includes diluting materials quality and quantity that there are and allowances for losses, which may reasonable prospects for eventual occur when the material is mined. (PMRC, economic extraction. (PMRC, 2007) 2007) Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource vs Ore Reserve (Proposed PMRC 2020 Edition) Mineral Resource Mineral* Reserve – a concentration or occurrence of solid – economically mineable part of a material of intrinsic economic interest in Measured and/or Indicated Mineral or on the Earth’s crust in such form, Resource; includes diluting materials grade (or quality) and quantity that and allowances for losses, which may there are reasonable prospects for occur when the material is mined or eventual economic extraction. (PMRC, 2020) extracted and is defined by Pre- feasibility or Feasibility studies. (PMRC, 2020) Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource vs Ore Reserve (Proposed PMRC 2020 Edition) Mineral Resource Mineral* Reserve Used to quantify the grade and tonnage of A converted (more reliable) mineral the orebody resource after more detailed exploration Generally achieved after completing More intensive and technical than drilling on a pre-determined, usually resource evaluation and aims at regular grid pattern statistically grading the orebody and Potentially augmented through additional geometry holes in “areas of interest” being Inclusive of metallurgical testing and rock completed (e.g., major fault zones, etc.) mechanics mine design and support Often extended to incorporate holes for assessments geophysical probing, depending on the Aimed to produce a full bankable orebody (e.g., sulphides) feasibility study proving the economic viability Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource vs Ore Reserve (PMRC 2007 Edition) Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource vs Mineral Reserve (Proposed PMRC 2020 Edition) Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource (PMRC 2007 Edition) Inferred Indicated Measured - part of a Mineral Resource for which tonnage, grade… …and mineral content can …densities, shape, physical …densities, shape, physical be estimated with a low characteristics, and characteristics, and mineral level of confidence. mineral content can be content can be estimated (PMRC, 2007) estimated with a with a high level of reasonable level of confidence. confidence. (PMRC, 2007) (PMRC, 2007) Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource vs Mineral Reserve Copyright © 2023 Christian Arranz. All Rights Reserved.  Mineral Resource (PMRC 2020 Edition) Inferred Indicated Measured - part of a Mineral Resource for which quantity & grade (or quality)… …are estimated on the basis … ,densities, shape, and … ,densities, shape, physical of limited geological physical characteristics are characteristics are estimated evidence and sampling, that estimated with sufficient with confidence sufficient is sufficient to imply but not confidence to allow the to allow the application of verify geological and grade application of Modifying Modifying Factors to support (or quality) continuity. (PMRC, Factors to support mine detailed mine planning and 2020) planning and economic final economic viability viability evaluation (PMRC, 2020) evaluation (PMRC, 2020) Copyright © 2018 Christian Arranz. All Rights Reserved.  Ore Reserve (PMRC 2007 Edition) Probable Proved – economically mineable part of an – economically mineable part of a Indicated, and in some circumstances, a Measured Mineral Resource. (PMRC, 2007) Measured Mineral Resource. (PMRC, 2007) Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral* Reserve (PMRC 2020 Edition) Probable Proved – economically mineable part of an – economically mineable part of a Indicated, and in some circumstances, a Measured Mineral Resource. It implies Measured Mineral Resource. The a high degree of confidence in the confidence in the Modifying Factors Modifying Factors (PMRC, 2020) applying to a Probable Mineral Reserve is lower than applying to a Proved Mineral Reserve (PMRC, 2020) Copyright © 2018 Christian Arranz. All Rights Reserved.  Mineral Resource vs Mineral Reserve Copyright © 2023 Christian Arranz. All Rights Reserved.  Exploration Target (PMRC 2020 Edition) Exploration Target – a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnage and a range of grade (or quality),relates to mineralization for which there has been insufficient exploration to estimate a Mineral Resource. (PMRC, 2020) - It is recognized that it is a common practice for a company to comment on and discuss its exploration strategy in terms of target size and type. Any such information relating to an Exploration Target must not be expressed in a way that could be confused as an estimate of Mineral Resources or Mineral Reserves. Copyright © 2023 Christian Arranz. All Rights Reserved.  Exploration Results (PMRC 2020 Edition) Exploration Results – include data and information generated by mineral exploration programs that might be of use to investors, but which do not form part of a declaration of Mineral Resources or Mineral Reserves. (PMRC, 2020) - common in the early stages of exploration when the quantity of data available is generally not sufficient to allow any reasonable estimates of Mineral Resources. Copyright © 2023 Christian Arranz. All Rights Reserved.  Mineral Resource vs Mineral* Reserve (PMRC 2020 Edition) Copyright © 2023 Christian Arranz. All Rights Reserved. Copyright © 2023 Christian Arranz. All Rights Reserved. Copyright Copyright © 2018 © 2023 Christian Christian Arranz. AllArranz. All Rights Rights Reserved. Reserved. Copyright © 2018 Christian Arranz. All Rights Reserved. Copyright © 2023 Christian Arranz. All Rights Reserved.  Mineral Resource vs Mineral Reserve (Proposed PMRC 2020 Edition) Copyright © 2018 Christian Arranz. All Rights Reserved.  “Metallurgy” (Proposed PMRC 2020 Edition) Copyright © 2018 Christian Arranz. All Rights Reserved.  Scoping → Pre-Feasibility → Feasibility Copyright © 2018 Christian Arranz. All Rights Reserved.  SCOPING STUDY a.k.a. Conceptual Study ◉ an initial appraisal carried out early in the life of a resource project based on initial drilling and informed assumptions, and commonly include an elementary mine plan. ◉ not accurate enough to carry out a meaningful assessment of the economic viability of a project, but should determine key project risks ◉ should establish the probable type of mining operation, assess the potential for the delineation of resources capable of supporting a mine, and, in the case of coal and industrial minerals, confirm likely markets Copyright © 2023 Christian Arranz. All Rights Reserved.  SCOPING STUDY a.k.a. Conceptual Study (PMRC 2020 Edition) ◉ an order of magnitude technical and economic study of the potential viability of Mineral Resources ◉ includes appropriate assessments of realistically assumed Modifying Factors together with any other relevant operational factors that are necessary to demonstrate at the time of reporting that progress to a Pre-Feasibility Study can be reasonably justified. Copyright © 2023 Christian Arranz. All Rights Reserved.  SCOPING STUDY a.k.a. Conceptual Study Typical contents: ◉ Drilling indicative costs ◉ mobilization and demobilization ◉ Nature of the deposit (grade, tonnage, recovery) ◉ CapEx ◉ OpEx Copyright © 2023 Christian Arranz. All Rights Reserved.  PRE-FEASIBILITY STUDY a.k.a. Preliminary Feasibility Study ◉ assessment of the Indicated and/or Measured Mineral Resources to determine if it can be considered as an Ore Reserve that can be mined at a profit taking into consideration relevant parameters such as: a) realistically estimated costs (±15-20%) of mining; ore beneficiation; other relevant engineering activities; management including legal, environmental and social matters to produce the desired element / mineral, and b) taxes / fees as well as c) its realistically assumed market price ◉ Studies preliminary mine planning and ENGINEERING EVALUATIONS based on the likely conversion of the mineral resources delineated into possible ore reserves Copyright © 2023 Christian Arranz. All Rights Reserved.  ENGINEERING EVALUATIONS (1) Conceptual Study Conceptual Study - assessment of physical characteristics and production potentials of a number of mining methods, layouts and systems (2) Engineering Study Engineering Study - methods, layouts, systems are quantified and compared; resulting in firm designs and costs (3) Detailed Design Study Detailed Design - drawings, specifications of preferred methods, Study layouts and systems Copyright © 2023 Christian Arranz. All Rights Reserved.  PRE-FEASIBILITY STUDY a.k.a. Preliminary Feasibility Study Includes: ◉ Assessing ore reserves and saleable product from delineated sources ◉ Generic Mine Design ◉ Non-detailed, staged life of mine planning and production scheduling ◉ Initial Metallurgical studies ◉ Availability of Power, Water, Transportation etc. ◉ Preliminary Financial models ◉ Mine configuration based on geology explored Copyright © 2018 Christian Arranz. All Rights Reserved.  PRE-FEASIBILITY STUDY a.k.a. Preliminary Feasibility Study (PMRC 2020 Edition) ◉ a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method (for underground mining), or the pit configuration, (for open pit), is established and an effective method of mineral processing is determined. ◉ includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for an ACP, acting reasonably, to determine if all or part of the Mineral Resource may be converted a Mineral Reserve at the time of reporting. ◉ has a lower confidence level than a Feasibility Study. Copyright © 2023 Christian Arranz. All Rights Reserved.  FINAL FEASIBILITY STUDY a.k.a. Comprehensive/Definitive/Bankable Feasibility Study ◉ detailed assessment to ascertain the technical reliability and economic viability of a mining project covering the Ore Reserve verified by the Preliminary Feasibility Study to come up with a sound investment decision and realistic financing plan ◉ consists of detailed audit of all geological, engineering, and the other relevant parameters considered in the Preliminary Feasibility Study. ◉ determine whether to proceed with a mining project into the detailed engineering and construction stage. ◉ (±10-15%) cost estimates Copyright © 2023 Christian Arranz. All Rights Reserved.  FINAL FEASIBILITY STUDY a.k.a. Comprehensive/Definitive/Bankable Feasibility Study ◉ comprehensive technical and economic study of the selected development option for a mineral project that includes: ○ appropriately detailed assessment of applicable Modifying Factors; together with ○ any other relevant operational factors; and ○ detailed financial analysis that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). ◉ results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. Copyright © 2023 Christian Arranz. All Rights Reserved.  FINAL FEASIBILITY STUDY a.k.a. Comprehensive/Definitive/Bankable Feasibility Study Typically includes: ◉ establishing the proven and probable reserves ◉ assessing project alternatives and selecting the desired development route ◉ proving the technical viability of the mine and extraction methods ◉ defining the mine’s plant, equipment and infrastructure requirements and capacities ◉ establishing resource consent and other legal/governmental conditions and requirements for approvals to proceed ◉ defining the management control and timing of the project development and construction ◉ defining the commissioning of the project, recruiting and training of the management team and crew and hand over at the conclusion of construction Copyright © 2023 Christian Arranz. All Rights Reserved.  FINAL FEASIBILITY STUDY a.k.a. Comprehensive/Definitive/Bankable Feasibility Study (cont’d) ◉ identifying the market for the commodity ◉ assessing project risk areas, economic sensitivity to those areas completing economic assessments of the selected project configurations ◉ developing financial models ◉ setting a framework for the implementation of the capital investment in the mine development phase. Copyright © 2023 Christian Arranz. All Rights Reserved.  Copyright © 2018 Christian Arranz. All Rights Reserved. Copyright © 2023 Christian Arranz. All Rights Reserved.  70 Copyright © 2023 Christian Arranz. All Rights Reserved.  71 Copyright © 2023 Christian Arranz. All Rights Reserved. Copyright © 2023 Christian Arranz. All Rights Reserved. Copyright © 2023 Christian Arranz. All Rights Reserved. Copyright © 2023 Christian Arranz. All Rights Reserved.  Scoping → Pre-Feasibility → Feasibility Copyright © 2018 Christian Arranz. All Rights Reserved.  SCOPING STUDY a.k.a. Conceptual Study ◉ an initial appraisal carried out early in the life of a resource project based on initial drilling and informed assumptions, and commonly include an elementary mine plan. ◉ not accurate enough to carry out a meaningful assessment of the economic viability of a project, but should determine key project risks ◉ should establish the probable type of mining operation, assess the potential for the delineation of resources capable of supporting a mine, and, in the case of coal and industrial minerals, confirm likely markets Copyright © 2018 Christian Arranz. All Rights Reserved.  SCOPING STUDY a.k.a. Conceptual Study (Proposed PMRC 2020 Edition) ◉ an order of magnitude technical and economic study of the potential viability of Mineral Resources ◉ includes appropriate assessments of realistically assumed Modifying Factors together with any other relevant operational factors that are necessary to demonstrate at the time of reporting that progress to a Pre-Feasibility Study can be reasonably justified. Copyright © 2018 Christian Arranz. All Rights Reserved.  SCOPING STUDY a.k.a. Conceptual Study ◉ Drilling indicative costs ◉ mobilization and demobilization ◉ Nature of the deposit (grade, tonnage, recovery) ◉ CAPEX ◉ OPEX Copyright © 2018 Christian Arranz. All Rights Reserved.  PRE-FEASIBILITY STUDY a.k.a. Preliminary Feasibility Study ◉ assessment of the Indicated and/or Measured Mineral Resources to determine if it can be considered as an Ore Reserve that can be mined at a profit taking into consideration relevant parameters such as: a) realistically estimated costs (± 30% accuracy) of mining; ore beneficiation; other relevant engineering activities; management including legal, environmental and social matters to produce the desired element / mineral, and b) taxes / fees as well as c) its realistically assumed market price Copyright © 2018 Christian Arranz. All Rights Reserved.  PRE-FEASIBILITY STUDY a.k.a. Preliminary Feasibility Study ◉ Studies preliminary mine planning and ENGINEERING EVALUATIONS based on the likely conversion of the mineral resources delineated into possible ore reserves Copyright © 2018 Christian Arranz. All Rights Reserved.  ENGINEERING EVALUATION (1) Conceptual Study - assessment of physical characteristics and production potentials of a number of mining methods, layouts and systems (2) Engineering Study - methods, layouts, systems are quantified and compared; resulting in firm designs and costs (3) Detailed Design Study - drawings, specifications of preferred methods, layouts and systems Copyright © 2018 Christian Arranz. All Rights Reserved.  PRE-FEASIBILITY STUDY a.k.a. Preliminary Feasibility Study Includes: ◉ Assessing ore reserves and saleable product from delineated sources ◉ Generic Mine Design ◉ Non-detailed, staged life of mine planning and production scheduling ◉ Initial Metallurgical studies ◉ Availability of Power, Water, Transportation etc. ◉ Preliminary Financial models ◉ Mine configuration based on geology explored Copyright © 2018 Christian Arranz. All Rights Reserved.  PRE-FEASIBILITY STUDY (Proposed PMRC 2020 Edition) ◉ a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method (for underground mining), or the pit configuration, (for open pit), is established and an effective method of mineral processing is determined. ◉ includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for an ACP, acting reasonably, to determine if all or part of the Mineral Resource may be converted a Mineral Reserve at the time of reporting. Copyright © 2018 Christian Arranz. All Rights Reserved.  FINAL FEASIBILITY STUDY a.k.a. Comprehensive Feasibility Study ◉ detailed assessment to ascertain the technical reliability and economic viability of a mining project covering the Ore Reserve verified by the Preliminary Feasibility Study to come up with a sound investment decision and realistic financing plan ◉ consists of detailed audit of all geological, engineering, and the other relevant parameters considered in the Preliminary Feasibility Study. ◉ determine whether to proceed with a mining project into the detailed engineering and construction stage. ◉ (±20%) cost estimates Copyright © 2018 Christian Arranz. All Rights Reserved.  FINAL FEASIBILITY STUDY a.k.a. Comprehensive Feasibility Study Includes: ◉ establishing the proven and probable reserves ◉ assessing project alternatives and selecting the desired development route ◉ proving the technical viability of the mine and extraction methods ◉ defining the mine’s plant, equipment and infrastructure requirements and capacities ◉ establishing resource consent and other legal/governmental conditions and requirements for approvals to proceed ◉ defining the management control and timing of the project development and construction Copyright © 2018 Christian Arranz. All Rights Reserved.  FINAL FEASIBILITY STUDY a.k.a. Comprehensive Feasibility Study ◉ defining the commissioning of the project, recruiting and training of the management team and crew and hand over at the conclusion of construction ◉ identifying the market for the commodity ◉ assessing project risk areas, economic sensitivity to those areas completing economic assessments of the selected project configurations ◉ developing financial models ◉ setting a framework for the implementation of the capital investment in the mine development phase. Copyright © 2018 Christian Arranz. All Rights Reserved.  FINAL FEASIBILITY STUDY (Proposed PMRC 2020 Edition) ◉ comprehensive technical and economic study of the selected development option for a mineral project that includes: ○ appropriately detailed assessment of applicable Modifying Factors; together with ○ any other relevant operational factors; and ○ detailed financial analysis that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). ◉ results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. Copyright © 2018 Christian Arranz. All Rights Reserved.  TECHNICAL STUDIES (Proposed PMRC 2020 Edition) Copyright © 2018 Christian Arranz. All Rights Reserved.  GROSSVALUE, PROFIT, GRADE, & TONNAGE CALCULATIONS Copyright © 2018 Christian Arranz. All Rights Reserved.  Gross Value and Profit Calculation Gross Value = Grade (% or g/MT) x Recovery (%) x Price ($) Profit = Gross Value – Cost  Value and Profit Calculation Estimate the unit profit in $/ton of mining and processing a copper ore body averaging 0.60% by weight Cu if the selling price of copper in the concentrate is $4.2/lb, assuming that the overall cost of mining and processing is $6.80/ton. Overall recovery, based on metallurgical engineering is expected to be 92% of the copper. Gross Value = Grade x Recovery x Price Profit = Gross Value – Cost Gross Value = Grade x Recovery x Price = 0.006 x 0.92 x $4.2/lb x 2000lbs/ton = $ 46.368/ton Profit = Gross Value – Cost = $46.368/ton - $6.80/ton = $ 39.568/ton  Value and Profit Calculation Estimate the unit profit in $/ton of mining and processing a copper ore body averaging 0.60% by weight Cu if the selling price of copper in the concentrate is $4.2/lb, assuming that the overall cost of mining and processing is $6.80/ton. Overall recovery, based on metallurgical engineering is expected to be 92% of the copper. Gross Value = Grade x Recovery x Price Profit = Gross Value – Cost What is the revenue and profit of the mine if its daily tonnage is 30,000 tons/day? Gross Value = Grade x Recovery x Price = 0.006 x 0.92 x $4.2/lb x 2000lbs/ton = $ 46.368 /t x 30000 t/day = $ 1,391,040 per day Profit = Gross Value – Cost = $46.368/ton - $6.80/ton = $ 39.568 /t x 30000 t/day = $ 1,187,040 per day  Grade/Quality - relative concentration of minerals/metals in the mineral resource/ore reserve Cutoff Grade - artificial boundary demarcating between low-grade mineralization and techno- economically viable ore that can be exploited at a profit - changes with the complexity of mineral distribution, mining method, production rate, metallurgical recovery, cost of production, royalty, taxes and finally the commodity price in international market  Assay ton (AT) – not a unit of measurement but a standard quantity in assaying ores of precious metals Tonnage Short assay ton = 29 1/6 grams Long assay ton – 32 2/3 grams Metric Ton (M.T.) = Tonne = 2204.623 lbs = 1000 kg Long Ton = British/UK/Imperial Ton = 2240 lbs = 1016.047 kg Short Ton = Ton = 2000 lbs  Specific Gravity vs Tonnage Factor → for conversion of volume to mass (of ore) Specific Gravity - unitless → density of material divided by density of water cubic meters x S.G. = tonnage (metric tons) Tonnage Factor – cubic feet per ton of ore (ft3/ton) cubic ft x 1/T.F. = tonnage (short tons) Converting Specific Gravity to Tonnage Factor 2000 𝑙𝑙𝑙𝑙𝑙𝑙 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑡𝑡𝑡𝑡𝑡𝑡 Tonnage Factor = 𝑙𝑙𝑙𝑙𝑙𝑙 𝑆𝑆.𝐺𝐺. 𝑥𝑥 62.4 3 𝑓𝑓𝑡𝑡 Ex. If SG = 4.945, Tonnage Factor? Tonnage of 1200 ft3 of rock? 2000 𝑙𝑙𝑙𝑙𝑙𝑙 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 = 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑡𝑡𝑡𝑡𝑡𝑡 4.945 𝑥𝑥 62.4 𝑙𝑙𝑙𝑙𝑙𝑙3 𝑓𝑓𝑡𝑡 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 =6.48 ft3/ton 1 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 = 1200 𝑓𝑓𝑡𝑡 3 𝑥𝑥 6.48 𝑓𝑓𝑡𝑡 3 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑡𝑡𝑡𝑡𝑡𝑡 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 = 185.185 short tons Calculating the S.G. of ore → calculate an (weighted) average specific gravity using the specific gravities of individual minerals, provided the relative percentages of ore minerals present are accurately known Ex. What is the S.G. of an ore that is comprised of 50% quartz, 25% feldspar (use maximum value), and 25% magnetite? Average Grade of Ore → calculated usually as: a. (weighted) average of grade with the length as weights – if drillholes b. (weighted) average of grade with the tonnages per section as weights – if tonnage is given