Strategic project evaluation for open pit mining ventures using real options and allied econometric techniques

Open pit mine operations are complex businesses that demand a constant assessment of risk. This is because the value of a mine project is typically influenced by many underlying economic and physical uncertainties, such as metal prices, metal grades, costs, schedules, quantities, and environmental issues, among others, which are not known with much certainty at the beginning of the project. Hence, mining projects present a considerable challenge to those involved in associated investment decisions, such as the owners of the mine and other stakeholders. In general terms, when an option exists to acquire a new or operating mining project, , the owners and stock holders of the mine project need to know the value of the mining project, which is the fundamental criterion for making final decisions about going ahead with the venture capital. However, obtaining the mine project’s value is not an easy task. The reason for this is that sophisticated valuation and mine optimisation techniques, which combine advanced theories in geostatistics, statistics, engineering, economics and finance, among others, need to be used by the mine analyst or mine planner in order to assess and quantify the existing uncertainty and, consequently, the risk involved in the project investment. Furthermore, current valuation and mine optimisation techniques do not complement each other. That is valuation techniques based on real options (RO) analysis assume an expected (constant) metal grade and ore tonnage during a specified period, while mine optimisation (MO) techniques assume expected (constant) metal prices and mining costs. These assumptions are not totally correct since both sources of uncertainty—that of the orebody (metal grade and reserves of mineral), and that about the future behaviour of metal prices and mining costs—are the ones that have great impact on the value of any mining project. Consequently, the key objective of this thesis is twofold. The first objective consists of analysing and understanding the main sources of uncertainty in an open pit mining project, such as the orebody (in situ metal grade), mining costs and metal price uncertainties, and their effect on the final project value. The second objective consists of breaking down the wall of isolation between economic valuation and mine optimisation techniques in order to generate a novel open pit mine evaluation framework called the ―Integrated Valuation / Optimisation Framework (IVOF)‖. One important characteristic of this new framework is that it incorporates the RO and MO valuation techniques into a single integrated process that quantifies and describes uncertainty and risk in a mine project evaluation process, giving a more realistic estimate of the project’s value. To achieve this, novel and advanced engineering and econometric methods are used to integrate financial and geological uncertainty into dynamic risk forecasting measures. The proposed mine valuation/optimisation technique is then applied to a real gold disseminated open pit mine deposit to estimate its value in the face of orebody, mining costs and metal price uncertainties.

The valuation of long life mines : current issues and methodologies

The past decade has seen an increasing focus on the mining and extractive industries in Australia. The significant increases in both new mines, commodity prices and employment opportunities has lead to considerable discussion on the value of this industry and the contribution that the industry makes to exports, GDP and the public in general. This debate has resulted in the introduction of the Mineral Resources Rent Tax being introduced in 2012. An issue that follows from the introduction of these taxes is the current exposure of property valuers to mine and extractive industry valuations and the most appropriate method that should be employed for valuing long life mines for rating and taxing purposes, finance and accounting purposes. This paper will provide a detailed review of past and current valuation methods for long life mines and will highlight the current issues and problem facing valuers who are currently working in or intend to carry out valuation work in this industry.

A Literature Review of Wellness, Wellbeing and Quality of Life Issues as they impact upon the Australian Mining Sector

Australia’s mining boom Global demand for minerals and energy products has fuelled Australia’s recent resources boom and has led to the rapid expansion of mining projects not only in remote locations but increasingly in settled traditionally agricultural rural areas. A fundamental shift has also occurred in the provisioning of skilled and semi-skilled workers. The huge acceleration in industry demand for labour has been accompanied by the entrenchment of workforce arrangements largely dependent on fly-in, fly-out (FIFO) and drive–in, drive–out (DIDO) non-resident workers (NRWs). While NRWs are working away from their homes, they are usually accommodated in work camps or ‘villages’ for the duration of their work cycle which are normally comprised of many consecutive days of 12-hour day- and night-shifts. The health effects of this form of employment and the accompanying lifestyle is increasingly becoming contentious. Impacts on personal wellness, wellbeing and quality of life essentially remain under-researched and thus misunderstood. Sodexo in Australia Sodexo began operations in Australia in 1982, and has since become a leader in providing Quality of Life (QOL) services to businesses across the country. The 6,000 Australian employees are part of a global Sodexo team of 413,000 people. Sodexo in Australia designs, delivers and manages on-site their QOL services at 320 diverse site locations, including remote sites. Sodexo operates in a range of sectors, including the mining industry. Service plans are tailored to suit the individual needs of organisations. Sodexo Remote Sites has previously conducted unpublished research among mining workers in Australia. The results highlighted needs and expectations of Australian mining workers. Main insights about workers’ requirements were directed towards: • contacts with closest; • warm rest time around proper and varied meals; • additional services to help them better enjoy their life onsite and/or make the most of it; • organise their transportation; • promote community living; and • finding balance between professional and personal life. The brief for this current research is aimed at building upon this knowledge. Research brief Expectations for quality of life and wellness and wellbeing services are increasing dramatically. It's getting costlier and more difficult to retain valuable employees. This is particularly the case in the Australian mining sector. Given the level of interest in ensuring healthy workplaces in Australia, Sodexo has commissioned QUT to conduct a literature review. The objectives as specified by Sodexo are: Objective 1: To define the concepts of wellness and wellbeing and quality of life in Australia Objective 2: To examine how wellness and wellbeing are developed within organisations in Australia and how they impact on employee and organizational performance. More specifically, to review the literature that could be sourced about: • challenges of the mining environment; • the mining lifestyle – implications for health, wellness and daily life; • personal health and wellness of Australian mining workers; • factors affecting health in mines and perceived support for health and wellness; and • the impact of employer investment in health on perceptions and behaviour of employees. Objective 3: To determine what impact employee wellness and well-being has on the performance of mining workers. More specifically, to review the literature that could be sourced about: • impact of obesity, alcohol, tobacco use on companies; and • links between employee engagement and satisfaction and company productivity. Accordingly this review has attempted to ascertain what factors an organisation should focus on in order to reduce absenteeism and turnover and increase commitment, satisfaction, safety and productivity, with specific reference to the mining industry in Australia. The structure of the report aligns with the stated objectives in that each of the first three parts address an objective. Part IV summarises prominent issues that have arisen and offers some concluding observations and comments.

Social licence to operate and the coal seam gas industry : lessons from social issues in established mining operations?

The recent growth of the coal seam gas industry has increased pressure on regional communities. Debate surrounding the industry is intense and a social licence to operate has yet to be granted to the industry in its entirety. This article presents an analysis of social issues surrounding the coal seam gas industry, making comparisons between two case studies: the Ranger and Jabiluka mines and the Yandicoogina mine. It presents the results of a desktop study, focussed on three topics: community identity; procedural justice and distributive justice, which provides a means for comparison and draws attention to central concerns. It is found that: power imbalances; changing community identities; potentially inequitable distributions of long term benefits and the process to distribute those benefits and negative perceptions of the industry as a whole serve to undermine the provision of a social licence to operate by communities and has the potential to impose significant negative impacts on companies within the industry.

Bang and bust: almost everything you wanted to know about sex and the mining boom (but were afraid to ask)

Recent growth and expansion of the fly-in/fly-out (FIFO) model of mining in remote rural Australia has led to concerns about the health and well-being of those employed by the mines and those in the small rural communities where they are based. A particular concern has been the potential disruption to sexual norms in mining towns and increases in sexually transmitted infections (STIs) and HIV.

Land Use & Public Transport Accessibility Index (LUPTAI) tool : the development and pilot application of LUPTAI for the Gold Coast

LUPTAI is a decision-aiding tool to enable local and state governments to optimise land use and transport integration. In contrast to mobility between land uses (typically via road), accessibility represents opportunity and choice to reach common land use destinations by public transport and/or walking. LUPTAI uses a GIS-based methodology to quantify and map accessibility to common land use destinations by walking and/or public transport. The tool can be applied to small or large study areas. It can be applied to the current situation in a study area or to future scenarios (such as scenarios involving changes to public transport services, public transport corridors or stations, population density or land use). The tool has been piloted on the Gold Coast and the results are encouraging. This paper outlines the GIS-based methodology and the findings related to this pilot study. The paper demonstrates benefits and possible application of LUPTAI to other urbanised local government areas in Queensland. It also discusses how this accessibility indexing approach could be developed into a decision-support tool to assist local and state government agencies in a range of transport and land-use planning activities.

Finding and matching communities in social networks using data mining

The rapid growth in the number of users using social networks and the information that a social network requires about their users make the traditional matching systems insufficiently adept at matching users within social networks. This paper introduces the use of clustering to form communities of users and, then, uses these communities to generate matches. Forming communities within a social network helps to reduce the number of users that the matching system needs to consider, and helps to overcome other problems from which social networks suffer, such as the absence of user activities' information about a new user. The proposed system has been evaluated on a dataset obtained from an online dating website. Empirical analysis shows that accuracy of the matching process is increased using the community information.

Corporate, risk, mining camps and knowledge/power

Australia is currently in the midst of a major resources boom. However the benefits from the boom are unevenly distributed, with state governments collecting billions in royalties, and mining companies billions in profits. The costs are borne mostly at a local level by regional communities on the frontier of the mining boom, surrounded by thousands of men housed in work camps. The escalating reliance on non–resident workers housed in camps carries significant risks for individual workers, host communities and the provision of human services and infrastructure. These include rising rates of fatigue–related death and injuries, rising levels of alcohol–fuelled violence, illegally erected and unregulated work camps, soaring housing costs and other costs of living, and stretched basic infrastructure undermining the sustainability of these towns. But these costs have generally escaped industry, government and academic scrutiny. This chapter directs a critical gaze at the hopelessly compromised industry–funded research vital to legitimating the resource sector’s self–serving knowledge claims that it is committed to social sustainability and corporate responsibility. The chapter divides into two parts. The first argues that post–industrial mining regimes mask and privatise these harms and risks, shifting them on to workers, families and communities. The second part links the privatisation of these risks with the political economy of privatised knowledge embedded in the approvals process for major resource sector projects.

Gold coating of silica and zinc oxide nanoparticles by the surface reduction of gold(I) chloride

The possibility of a surface inner sphere electron transfer mechanism leading to the coating of gold via the surface reduction of gold(I) chloride on metal and semi-metal oxide nanoparticles was investigated. Silica and zinc oxide nanoparticles are known to have very different surface chemistry, potentially leading to a new class of gold coated nanoparticles. Monodisperse silica nanoparticles were synthesised by the well known Stöber protocol in conjunction with sonication. The nanoparticle size was regulated solely by varying the amount of ammonia solution added. The presence of surface hydroxyl groups was investigated by liquid proton NMR. The resultant nanoparticle size was directly measured by the use of TEM. The synthesised silica nanoparticles were dispersed in acetonitrile (MeCN) and added to a bis acetonitrile gold(I) co-ordination complex [Au(MeCN)2]+ in MeCN. The silica hydroxyl groups were deprotonated in the presence of MeCN generating a formal negative charge on the siloxy groups. This allowed the [Au(MeCN)2]+ complex to undergo ligand exchange with the silica nanoparticles, which formed a surface co-ordination complex with reduction to gold(0), that proceeded by a surface inner sphere electron transfer mechanism. The residual [Au(MeCN)2]+ complex was allowed to react with water, disproportionating into gold(0) and gold(III) respectively, with gold(0) being added to the reduced gold already bound on the silica surface. The so-formed metallic gold seed surface was found to be suitable for the conventional reduction of gold(III) to gold(0) by ascorbic acid. This process generated a thin and uniform gold coating on the silica nanoparticles. This process was modified to include uniformly gold coated composite zinc oxide nanoparticles (Au@ZnO NPs) using surface co-ordination chemistry. AuCl dissolved in acetonitrile (MeCN) supplied chloride ions which were adsorbed onto ZnO NPs. The co-ordinated gold(I) was reduced on the ZnO surface to gold(0) by the inner sphere electron transfer mechanism. Addition of water disproportionated the remaining gold(I) to gold(0) and gold(III). Gold(0) bonded to gold(0) on the NP surface with gold(III) was reduced to gold(0) by ascorbic acid (ASC), which completed the gold coating process. This gold coating process of Au@ZnO NPs was modified to incorporate iodide instead of chloride. ZnO NPs were synthesised by the use of sodium oxide, zinc iodide and potassium iodide in refluxing basic ethanol with iodide controlling the presence of chemisorbed oxygen. These ZnO NPs were treated by the addition of gold(I) chloride dissolved in acetonitrile leaving chloride anions co-ordinated on the ZnO NP surface. This allowed acetonitrile ligands in the added [Au(MeCN)2]+ complex to surface exchange with adsorbed chloride from the dissolved AuCl on the ZnO NP surface. Gold(I) was then reduced by the surface inner sphere electron transfer mechanism. The presence of the reduced gold on the ZnO NPs allowed adsorption of iodide to generate a uniform deposition of gold onto the ZnO NP surface without the use of additional reducing agents or heat.

Photocatalysis on supported gold and silver nanoparticles under ultraviolet and visible light irradiation

Studies of the optical properties and catalytic capabilities of noble metal nanoparticles (NPs), such as gold (Au) and silver (Ag), have formed the basis for the very recent fast expansion of the field of green photocatalysis: photocatalysis utilizing visible and ultraviolet light, a major part of the solar spectrum. The reason for this growth is the recognition that the localised surface plasmon resonance (LSPR) effect of Au NPs and Ag NPs can couple the light flux to the conduction electrons of metal NPs, and the excited electrons and enhanced electric fields in close proximity to the NPs can contribute to converting the solar energy to chemical energy by photon-driven photocatalytic reactions. Previously the LSPR effect of noble metal NPs was utilized almost exclusively to improve the performance of semiconductor photocatalysts (for example, TiO2 and Ag halides), but recently, a conceptual breakthrough was made: studies on light driven reactions catalysed by NPs of Au or Ag on photocatalytically inactive supports (insulating solids with a very wide band gap) have demonstrated that these materials are a class of efficient photocatalysts working by mechanisms distinct from those of semiconducting photocatalysts. There are several reasons for the significant photocatalytic activity of Au and Ag NPs. (1) The conduction electrons of the particles gain the irradiation energy, resulting in high energy electrons at the NP surface which is desirable for activating molecules on the particles for chemical reactions. (2) In such a photocatalysis system, both light harvesting and the catalysing reaction take place on the nanoparticle, and so charge transfer between the NPs and support is not a prerequisite. (3) The density of the conduction electrons at the NP surface is much higher than that at the surface of any semiconductor, and these electrons can drive the reactions on the catalysts. (4) The metal NPs have much better affinity than semiconductors to many reactants, especially organic molecules. Recent progress in photocatalysis using Au and Ag NPs on insulator supports is reviewed. We focus on the mechanism differences between insulator and semiconductor-supported Au and Ag NPs when applied in photocatalytic processes, and the influence of important factors, light intensity and wavelength, in particular estimations of light irradiation contribution, by calculating the apparent activation energies of photo reactions and thermal reactions.

Gender, sexuality, and rurality in the mining industry

Sexuality is a subject that has been, at best, marginal in the significant body of literature that has examined gender and mining in contemporary Western nations. This is despite the fact that academics have circled, if not almost bumped into the topic in closely related discussions of hegemonic masculinity and mining work, and of patriarchal familial relations and mining communities. This scholarship has documented what has been and remains women’s primary relationship to mining—that is, as a “mining wife.” How patriarchal relations are manifest in and emerge from this state of affairs has been critiqued with research on the gendered implications of housing arrangements in mining towns, the division of household labor, changing shift-work mining rosters, and the gendered consequences of strikes and mine closures (Williams 1981; Gibson 1992; Gibson-Graham 1996; Rhodes 2005; McDonald, Mayes, and Pini 2012). Despite the centrality of the heterosexual relationship—and indeed heteronormativity—to these discussions, scholars of gender and mining have had little to say on the subject of sexuality. In response to this lacuna, this chapter takes an exploratory lens to the subject of sexuality and the mining industry. We approach the task from the perspective that the mining industry is gendered as masculine. That is, definitions of mining mobilize around masculinized notions of physicality, technical competence with machinery, and strength, as well as emphasize the harshness and dirtiness of the work (Mayes and Pini 2010).

Correlations and volatility spillovers across commodity and stock markets: Linking energies, food, and gold

This paper employs a VAR-GARCH model to investigate the return links and volatility transmission between the S&P 500 and commodity price indices for energy, food, gold and beverages over the turbulent period from 2000 to 2011. Understanding the price behavior of commodity prices and the volatility transmission mechanism between these markets and the stock exchanges are crucial for each participant, including governments, traders, portfolio managers, consumers, and producers. For return and volatility spillover, the results show significant transmission among the S&P 500 and commodity markets. The past shocks and volatility of the S&P 500 strongly influenced the oil and gold markets. This study finds that the highest conditional correlations are between the S&P 500 and gold index and the S&P 500 and WTI index. We also analyze the optimal weights and hedge ratios for commodities/S&P 500 portfolio holdings using the estimates for each index. Overall, our findings illustrate several important implications for portfolio hedgers for making optimal portfolio allocations, engaging in risk management and forecasting future volatility in equity and commodity markets. © 2013 Elsevier B.V.

Molecular recognition of 2,4,6-trinitrotoluene by 6-aminohexanethiol and surface-enhanced Raman scattering sensor

2,4,6-trinitrotoluene (TNT) is one of the most commonly used nitro aromatic explosives in landmine, military and mining industry. This article demonstrates rapid and selective identification of TNT by surface-enhanced Raman spectroscopy (SERS) using 6-aminohexanethiol (AHT) as a new recognition molecule. First, Meisenheimer complex formation between AHT and TNT is confirmed by the development of pink colour and appearance of new band around 500 nm in UV-visible spectrum. Solution Raman spectroscopy study also supported the AHT:TNT complex formation by demonstrating changes in the vibrational stretching of AHT molecule between 2800-3000 cm−1. For surface enhanced Raman spectroscopy analysis, a self-assembled monolayer (SAM) of AHT is formed over the gold nanostructure (AuNS) SERS substrate in order to selectively capture TNT onto the surface. Electrochemical desorption and X-ray photoelectron studies are performed over AHT SAM modified surface to examine the presence of free amine groups with appropriate orientation for complex formation. Further, AHT and butanethiol (BT) mixed monolayer system is explored to improve the AHT:TNT complex formation efficiency. Using a 9:1 AHT:BT mixed monolayer, a very low detection limit (LOD) of 100 fM TNT was realized. The new method delivers high selectivity towards TNT over 2,4 DNT and picric acid. Finally, real sample analysis is demonstrated by the extraction and SERS detection of 302 pM of TNT from spiked.

A new open-pit multi-stage mine production timetabling model for drilling, blasting and excavating operations

This paper proposes a new multi-resource multi-stage mine production timetabling problem for optimising the open-pit drilling, blasting and excavating operations under equipment capacity constraints. The flow process is analysed based on the real-life data from an Australian iron ore mine site. The objective of the model is to maximise the throughput and minimise the total idle times of equipment at each stage. The following comprehensive mining attributes and constraints are considered: types of equipment; operating capacities of equipment; ready times of equipment; speeds of equipment; block-sequence-dependent movement times; equipment-assignment-dependent operational times; etc. The model also provides the availability and usage of equipment units at multiple operational stages such as drilling, blasting and excavating stages. The problem is formulated by mixed integer programming and solved by ILOG-CPLEX optimiser. The proposed model is validated with extensive computational experiments to improve mine production efficiency at the operational level.

Safety impacts of alcohol and other drugs in the construction industry : a research methodology

Anecdotal evidence from the infrastructure and building sectors highlights issues of drugs and alcohol and its association with safety risk on construction sites. Operating machinery and mobile equipment, proximity to live traffic together with congested sites, electrical equipment and operating at heights conspire to accentuate the potential adverse impact of drugs and alcohol in the workplace. While most Australian jurisdictions have identified this as a critical safety issue, information is limited regarding the prevalence of alcohol and other drugs in the workplace and there is limited evidential guidance regarding how to effectively and efficiently address such an issue. No known study has scientifically evaluated the relationship between the use of drugs and alcohol and safety impacts in construction, and there has been only limited adoption of nationally coordinated strategies, supported by employers and employees to render it socially unacceptable to arrive at a construction workplace with impaired judgement from drugs and alcohol. A nationally consistent collaborative approach across the construction workforce - involving employers and employees; clients; unions; contractors and sub-contractors is required to engender a cultural change in the construction workforce – in a similar manner to the on-going initiative in securing a cultural change to drink-driving in our society where peer intervention and support is encouraged. This study has four key objectives. Firstly, using the standard World Health Organisation AUDIT, a national qualitative and quantitative assessment of the use of drugs and alcohol will be carried out. This will build upon similar studies carried out in the Australian energy and mining sectors. Secondly, the development of an appropriate industry policy will adopt a non-punitive and rehabilitative approach developed in consultation with employers and employees across the infrastructure and building sectors, with the aim it be adopted nationally for adoption at the construction workplace. Thirdly, an industry-specific cultural change management program will be developed through a nationally collaborative approach to reducing the risk of impaired performance on construction sites and increasing workers’ commitment to drugs and alcohol safety. Finally, an implementation plan will be developed from data gathered from both managers and construction employees. Such an approach stands to benefit not only occupational health and safety, through a greater understanding of the safety impacts of alcohol and other drugs at work, but also alcohol and drug use as a wider community health issue. This paper will provide an overview of the background and significance of the study as well as outlining the proposed methodology that will be used to evaluate the safety impacts of alcohol and other drugs in the construction industry.