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.

Optimum utilisation of rolling stocks for iron ore mining industries

In this paper, a generic and flexible optimisation methodology is developed to represent, model, solve and analyse the iron ore supply chain system by integrating of iron ore shipment, stockpiles and railing within a whole system. As a result, an integrated train-stockpile-ship timetable is created and optimised for improving efficiency of overall supply chain system. The proposed methodology provides better decision making on how to significantly improve rolling stock utilisation with the best cost-effectiveness ratio. Based on extensive computational experiments and analysis, insightful and quantitative advices are suggested for iron ore mine industry practitioners. The proposed methodology contributes to the sustainability of the environment by reducing pollution due to better utilisation of transportation resources and fuel.

Operations research for mining : a classification and literature review

In this paper, we describe the main processes and operations in mining industries and present a comprehensive survey of operations research methodologies that have been applied over the last several decades. The literature review is classified into four main categories: mine design; mine production; mine transportation; and mine evaluation. Mining design models are further separated according to two main mining methods: open-pit and underground. Moreover, mine production models are subcategorised into two groups: ore mining and coal mining. Mine transportation models are further partitioned in accordance with fleet management, truck haulage and train scheduling. Mine evaluation models are further subdivided into four clusters in terms of mining method selection, quality control, financial risks and environmental protection. The main characteristics of four Australian commercial mining software are addressed and compared. This paper bridges the gaps in the literature and motivates researchers to develop more applicable, realistic and comprehensive operations research models and solution techniques that are directly linked with mining industries.

Sustaining a healthy workforce

The changing demographics of the mining workforce and the increasing demand for skilled workers increases the importance of sustaining a healthy workforce now and for the future. Although health is strongly related to safety, the two areas are not well integrated and the relationship is poorly understood. As such there is an important need to raise the profile of health within the Occupational Health and Safety (OH&S) domain. The mining industry carries health and safety risks, often greater than other occupations. Whilst the mining industry is regulated by stringent OH&S controls, the very nature of the work and environmental influences expose employees to a greater number of injury risk factors than many other industries. In contrast to its excellent safety record, compared to most other industries, the mining workforce has a high proportion of chronic health problems. These problems can be exacerbated by the ageing of the workforce, regional location of sites and organisational issues influencing work demands. A major focus has been on the treatment of these conditions with relatively limited attention to prevention strategies. An important prevention strategy is the raising of awareness among the workforce of health issues and the significant increase in the volume of health related information has provided an excellent opportunity to access relevant information. Unfortunately, this information is of varying quality, may not be evidence based, and may provide the wrong guidance to the development of interventions designed to improve health. Limited time of most employees and potential lack of knowledge of ability to differentiate quality information presents additional problems or barriers to increasing awareness of health issues...

Roll the dice, rational agent : should extra-curial punishment mitigate an offender's sentence?

It was rugby league State of Origin night 2008 and a group of adults had descended upon a house in Eagleby, Brisbane to have some drinks and to celebrate the game. At 11pm that evening, Shane Thomas Davidson entered the bedroom of the homeowner’s 10-year-old son, TC. Davidson approached the bed and began to massage the boy’s penis under his clothing, which caused TC to wake. Davidson stated, ‘Show me how big your willy is and I’ll show you how big mine is’. TC refused the request and after a small period of time, left the bedroom and told his father what had happened...

Corporate social responsibility and the parameters of dialogue with vulnerable others

This article presents a case study of corporate dialogue with vulnerable others. Dialogue with marginalized external groups is increasingly presented in the business literature as the key to making corporate social responsibility possible in particular through corporate learning. Corporate public communications at the same time promote community engagement as a core aspect of corporate social responsibility. This article examines the possibilities for and conditions underpinning corporate dialogue with marginalized stakeholders as occurred around the unexpected and sudden closure in January 2009 of the AU$2.2 billion BHP Billiton Ravensthorpe Nickel mine in rural Western Australia. In doing so we draw on John Roberts’ notion of dialogue with vulnerable others, and apply a discourse analysis approach to data spanning corporate public communications and interviews with residents affected by the decision to close the mine. In presenting this case study we contribute to the as yet limited organizational research concerned directly with marginalized stakeholders and argue that corporate social responsibility discourse and vulnerable other dialogue not only affirms the primacy of business interests but also co-opts vulnerable others in the pursuit of these interests. In conclusion we consider case study implications for critical understandings of corporate dialogue with vulnerable others.

Coal seam gas waters - their geochemical signature and potential environmental implications

Coal Seam Gas (CSG) is a form of natural gas (mainly methane) sorbed in underground coal beds. To mine this gas, wells are drilled directly into an underground coal seam and groundwater (CSG water) is pumped out to the surface. This lowers the downhole piezometric pressure and enables gas desporption from the coal matrix. In the United States, this gas has been extracted commercially since the 1980s. The economic success of US CSG projects has inspired exploration and development in Australia and New Zealand. In Australia, Queensland’s Bowen and Surat basins have been the subject of increased CSG development over the last decade. CSG growth in other Australian basins has not matured to the same level but exploration and development are taking place at an accelerated pace in the Sydney Basin (Illawarra and the Hunter Valley, NSW) and in the Gunnedah Basin. Similarly, CSG exploration in New Zealand has focused in the Waikato region (Maramarua and Huntly), in the West Coast region (Buller, Reefton, and Greymouth), and in Southland (Kaitangata, Mataura, and Ohai). Figure 1 shows a Shcoeller diagram with CSG samples from selected basins in Australia, New Zealand, and the USA. CSG water from all of these basins exhibit the same geochemical signature – low calcium, low magnesium, high bicarbonate, low sulphate and, sometimes, high chloride. This water quality is a direct result of specific biological and geological processes that have taken part in the formation of CSG. In general, these processes include the weathering of rocks (carbonates, dolomite, and halite), cation exchange with clays (responsible for enhanced sodium and depleted calcium and magnesium), and biogenic processes (accounting for the presence of high bicarbonate concentrations). The salinity of CSG waters tends to be brackish (TDS < 30000 mg/l) with a fairly neutral pH. These particular characteristics need to be taken into consideration when assessing water management and disposal alternatives. Environmental issues associated with CSG water disposal have been prominent in developed basins such as the Powder River Basin (PRB) in the United States. When disposed on the land or used for irrigation, water having a high dissolved salts content may reduce water availability to crops thus affecting crop yield. In addition, the high sodium, low calcium and low magnesium concentrations increase the potential to disperse soils and significantly reduce the water infiltration rate. Therefore, CSG waters need to be properly characterised, treated, and disposed to safeguard the environment without compromising other natural resources.

Challenging Mining Workforce Practices : Implications for Frontline Rural Communities

Global demand for minerals and energy products has fuelled Australia’s recent ‘resources boom’ and led to the rapid expansion of mining projects not solely in remote regions but increasingly in long-settled traditionally agriculture-dependent rural areas. Not only has this activity radically changed the economic geography of the nation but a fundamental shift has also occurred to accommodate the acceleration in industry labour demands. In particular, the rush to mine has seen the entrenchment of workforce arrangements largely dependent on fly-in, fly-out (FIFO) and drive–in, drive–out (DIDO) workers. This form of employment has been highly contentious in rural communities at the frontline of resource sector activities. In the context of structural sweeping changes, the selection of study locations informed by a range of indices of violence. Serendipitously we carried out fieldwork in communities undergoing rapid change as a result of expanding resource sector activities. The presence of large numbers of non-resident FIFO and DIDO workers was transforming these frontline communities. This chapter highlights some implications of these changes, drawing upon one particular location, which historically depended on agriculture but has undergone redefinition through mining.

One night stand : only you

Technical: This looped video work is made up from a number of still images animated in a sequence, not intended to be a smooth action, but syncopated. The gaps in real time suggest blinking, lapses in technology, warps in time and distance. The still images have been manipulated in photoshop and imported into an animation software program, showing subtle emphasis on various aspects of the features of the face and location from the screen shots. Content: Obsession is one of the most constant expressions of love, whether it is a negative attribute, such as stalking, or the need to see or stroke the beloved, or telling and re-telling the story of first meeting. “like the beat, beat, beat of the tom tom when the jungle shadows fall like the tick, tick, tock of the stately clock as it stands against the wall like the drip, drip drip of the rain drops when the summer shower’s through a voice within me keeps repeating you, you, you… only you...” (Cole Porter, Night and Day) My desire to immerse myself in my newly-met adult daughter as a reality is as obsessive as any new parent. The primary means of contact is video cam, which has become a kind of surveillance for me. I stare at her mouth as it moves, her ear as she moves her head, her smile, her grimaces, her high cheekbones, her eyes that are like mine, the shape of her head, her teeth that are like her father’s… hundreds of candid pictures screen shot over a year and a half were the source of the video images.

NELR Editorial Federal Updates Issue 2012:3

Despite opposition from environmentalists, farmers and parts of the fishing industry, on 23 August 2012, the $6.4bn Alpha Coal mine and rail project in Queensland was approved under the EPBC Act, subject to 19 conditions.1 The approval relates to the proposed construction and operation of an open-cut coal mine and 495km railway line to Abbott Point...

Value added products from modified kaolins : new chemical routes to new markets

Chemical treatments of kaolins to produce nanocrystalline or "X-ray amorphous", stable aluminosilicates with variable - but reproducible - types of micro- and meso-porosity have been developed. These materials show cation exchange capacities and surface area values significantly higher (ranging from 10x to 100x) than kaolin and show good acid resistance to pH~3.0. The combination of these properties offers strong potential for many new applications of kaolin-derived materials in large worldwide markets such as environmental remediation and catalysis. Kaolin amorphous derivative (KAD) is well-suited to removal of many toxic metals down to ppb range from acid mine drainage. Engineering development trials of the KAD manufacturing process and the utilisation of KAD in polluted waters such as acid mine drainage indicates that scale-up from bench-scale is not a barrier to market entry.

Systematics and biology of the iconic Australian scribbly gum moths Ogmograptis Meyrick (Lepidoptera: Bucculatricidae) and their unique insect-plant interaction

The larvae of particular Ogmograptis spp. produce distinctive scribbles on some smooth-barked Eucalyptus spp. which are a common feature on many ornamental and forest trees in Australia. However, although they are conspicuous in the environment the systematics and biology of the genus has been poorly studied. This has been addressed through detailed field and laboratory studies of their biology of three species (O. racemosa Horak sp. nov., O. fraxinoides Horak sp. nov., O. scribula Meyrick), in conjunction with a comprehensive taxonomic revision support by a molecular phylogeny utilising the mitochondrial Cox1 and nuclear 18S genes. In brief, eggs are laid in bark depressions and the first instar larvae bore into the bark to the level where the future cork cambium forms (the phellegen). Early instar larvae bore wide, arcing tracks in this layer before forming a tighter zig-zag shaped pattern. The second last instar turns and bores either closely parallel to the initial mine or doubles its width, along the zig-zag shaped mine. The final instar possesses legs and a spinneret (unlike the earlier instars) and feeds exclusively on callus tissue which forms within the zig-zag shaped mine formed by the previous instar, before emerging from the bark to pupate at the base of the tree. The scars of mines them become visible scribble following the shedding of bark. Sequence data confirm the placement of Ogmograptis within the Bucculatricidae, suggest that the larvae responsible for the ‘ghost scribbles’ (unpigmented, raised scars found on smooth-barked eucalypts) are members of the genus Tritymba, and support the morphology-based species groups proposed for Ogmograptis. The formerly monotypic genus Ogmograptis Meyrick is revised and divided into three species groups. Eleven new species are described: Ogmograptis fraxinoides Horak sp. nov., Ogmograptis racemosa Horak sp. nov. and Ogmograptis pilularis Horak sp. nov. forming the scribula group with Ogmograptis scribula Meyrick; Ogmograptis maxdayi Horak sp. nov., Ogmograptis barloworum Horak sp. nov., Ogmograptis paucidentatus Horak sp. nov., Ogmograptis rodens Horak sp. nov., Ogmograptis bignathifer Horak sp. nov. and Ogmograptis inornatus Horak sp. nov. as the maxdayi group; Ogmograptis bipunctatus Horak sp. nov., Ogmograptis pulcher Horak sp. nov., Ogmograptis triradiata (Turner) comb. nov. and Ogmograptis centrospila (Turner) comb. nov. as the triradiata group. Ogmograptis notosema (Meyrick) cannot be assigned to a species group as the holotype has not been located. Three unique synapomorphies, all derived from immatures, redefine the family Bucculatricidae, uniting Ogmograptis, Tritymba Meyrick (both Australian) and Leucoedemia Scoble & Scholtz (African) with Bucculatrix Zeller, which is the sister group of the southern hemisphere genera. The systematic history of Ogmograptis and the Bucculatricidae is discussed.

Chemistry, Raman and infrared spectroscopic characterization of the phosphate mineral reddingite: (MnFe)3(PO4)2(H2O,OH)3, a mineral found in lithium-bearing pegmatite

Detailed investigation of an intermediate member of the reddingite–phosphoferrite series, using infrared and Raman spectroscopy, scanning electron microcopy and electron microprobe analysis, has been carried out on a homogeneous sample from a lithium-bearing pegmatite named Cigana mine, near Conselheiro Pena, Minas Gerais, Brazil. The determined formula is (Mn1.60Fe1.21Ca0.01Mg0.01)∑2.83(PO4)2.12⋅(H2O2.85F0.01)∑2.86 indicating predominance in the reddingite member. Raman spectroscopy coupled with infrared spectroscopy supports the concept of phosphate, hydrogen phosphate and dihydrogen phosphate units in the structure of reddingite-phosphoferrite. Infrared and Raman bands attributed to water and hydroxyl stretching modes are identified. Vibrational spectroscopy adds useful information to the molecular structure of reddingite–phosphoferrite.

Electron paramagnetic resonance, optical absorption and Raman spectral studies on a pyrite/chalcopyrite mineral

Pyrite and chalcopyrite mineral samples from Mangampet barite mine, Kadapa, Andhra Pradesh, India are used in the present study. XRD data indicate that the pyrite mineral has a face centered cubic lattice structure with lattice constant 5.4179 Å. Also it possesses an average particle size of 91.9 nm. An EPR study on the powdered samples confirms the presence of iron in pyrite and iron and Mn(II) in chalcopyrite. The optical absorption spectrum of chalcopyrite indicates presence of copper which is in a distorted octahedral environment. NIR results confirm the presence of water fundamentals and Raman spectrum reveals the presence of water and sulfate ions.

Vibrational spectroscopy of the borate mineral henmilite Ca2Cu[B(OH)4]2(OH)4

Henmilite is a triclinic mineral with the crystal structure consisting of isolated B(OH)4 tetrahedra, planar Cu(OH)4 groups and Ca(OH)3 polyhedra. The structure can also be viewed as having dimers of Ca polyhedra connected to each other through 2B(OH) tetrahedra to form chains parallel to the C axis. The structure of the mineral has been assessed by the combination of Raman and infrared spectra. Raman bands at 902, 922, 951, and 984 cm−1 and infrared bands at 912, 955 and 998 cm−1 are assigned to stretching vibrations of tetragonal boron. The Raman band at 758 cm−1 is assigned to the symmetric stretching mode of tetrahedral boron. The series of bands in the 400–600 cm−1 region are due to the out-of-plane bending modes of tetrahedral boron. Two very sharp Raman bands are observed at 3559 and 3609 cm−1. Two infrared bands are found at 3558 and 3607 cm−1. These bands are assigned to the OH stretching vibrations of the OH units in henmilite. A series of Raman bands are observed at 3195, 3269, 3328, 3396, 3424 and 3501 cm−1 are assigned to water stretching modes. Infrared spectroscopy also identified water and OH units in the henmilite structure. It is proposed that water is involved in the structure of henmilite. Hydrogen bond distances based upon the OH stretching vibrations using a Libowitzky equation were calculated. The number and variation of water hydrogen bond distances are important for the stability off the mineral.