FIG 1- - uploaded by Julian Poniewierski
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Distribution of tonnage by value in an ore reserve for a real and typical copper-gold open pit mine.
Source publication
Recognising that the mining industry is wedded to the break-even cut-off grade rather than a cut-off grade that optimises value, the author examines some perils and pitfalls in the use of break-even grades that lead to what the author calls “negatively geared ore reserves”.
Negatively geared ore reserves occur when a portion of the ore reserves act...
Contexts in source publication
Context 1
... this is well known and understood by mining engineers heavily involved in the preparation of ore reserve estimates and strategic long-term planning, it has become apparent to the author that the vast majority of mining executives do not understand how marginal much of their company's ore reserves actually are, especially those executives from a fi nancial or legal background. Figure 1 presents an example of the distribution of an ore reserve tonnage by value for an open pit copper-gold mine (Mine A). The distribution shown is typical of many stockwork-style orebodies when a break-even cut-off value (grade) is used to estimate the ore reserves. ...
Context 2
... the error is equivalent to $5/t in value (be it a cost or revenue error, or a combination of both), the distribution shown in Figure 1 would be modifi ed to a value distribution as shown in Figure 3. In total, 27 per cent of the ore reserve tonnage is now in the -$5/t to $0/t value bin and a similar tonnage is in the $0/t to +$5/t value bin. ...
Context 3
... the ore reserves estimate for Mine B had a value distribution similar to that shown in Figure 1, approximately 20 to 30 per cent of the ore reserves estimate would have negative value due to the fi xed processing recovery error in the calculation. ...
Context 4
... all that is needed to suspect negatively geared ore reserves is an examination of cost performance against grade. Figure 10 shows the total cost versus the head grade for a current operating gold mine (Mine E) based on publicly available data. ...
Context 5
... Figure 10, it can be seen that there is a general relationship, though not statistically strong, between the total cost and the mine's head grade. The most recently published ore reserves for Mine E (as at the end of December 2014) had a grade of 1.7 g/t at a gold price of A$1470/oz. ...
Context 6
... most recently published ore reserves for Mine E (as at the end of December 2014) had a grade of 1.7 g/t at a gold price of A$1470/oz. The relationship in Figure 10 suggests that the most likely total cost for an ore reserve at such a grade is closer to A$1900/oz, although the range could vary from A$1300/oz to A$2250/oz. It can be dently said that Mine E has a signifi cant portion of negative value ore reserves (if in fact it isn't close to 100 per cent). ...
