21 Junio 2010

Estimación de Recursos y Reservas:Problemas Frecuentes

Jean-Michel Rendu

Executive Consultant

jmrendu@snowdengroup.com

General Outline

Estimation Process

Drilling, Sampling, and Sample Preparation

Mining, Metallurgical and Economic

Factors

The Human Factor and Quality Control

More Challenges for Competent Person

Relationship between Exploration Results, Mineral Resources and Mineral Reserves

3

EXPLORATION

RESULTS

MINERAL RESOURCES

MINERAL RESERVES

INFERRED

INDICATED PROBABLE

Increasing level of

geoscientific knowledge

and confidence

MEASURED PROVEN

Consideration of mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors

(the "Modifying Factors")

4

Estimation Process: Resources

Sampling and

Deposit

Characterization

Deposit

Modeling

Need for More

Geologic

Information

Preliminary

Technical and

Economic

Parameters

Resource Estimation

Reasonable Prospects for

Eventual Economic

Extraction?

Resource

Reporting

Abandon or

Sell Project

5

Estimation Process: Reserves

Resource

Model

Need for more geologic,

metallurgical, geotechnical,

environmental information

Modifying Factors: Mining,

metallurgical, economic, marketing,

legal, environmental, social and

governmental factors

Mine Design

and

Production

Scheduling

Reserve

ReportingCashflow

and Risk

Analysis

Need for more economic,

marketing, legal, social,

governmental information

Abandon or

Sell Project

6

SAMPLING METHODS

7

Exploration and Data CollectionDrill Hole Sampling

•Core Holes

•Normal (Direct) Circulation

•Reverse Circulation

8

CORE HOLES

9

High Core Recovery = No Grade Bias?

Problems with Core Sampling

•Poor Recovery

•Selective Recovery

•Loss of Fines during: Core Washing Core Cutting Core Splitting Crushing and Pulverizing

10

11

Is a core sample representative of what is in the ground?

•What percentage recovery is acceptable?

•Is 98% acceptable?• Recovered: 98% at 0.30% Cu• Lost: 2% at 3% CuShould be: 100% at 0.35% Cu (+18%)

• Recovered: 98% at 0.30% Cu• Lost: 2% at 0% CuShould be: 100% at 0.29% Cu (-2%)

Loss of Fines During Core SplittingWhere does it Happen? (Guillotine; Saw)

12

Size Distribution in Porphyry Copper Deposit

Rock Type 1

0

10

20

30

40

3/4" 1/2" 1/4" 10# 32# 65# - 65#

Weig

ht

%

%C

u

Size fraction

%Cu Weight %

Rock Type 2

0

10

20

30

40

3/4" 1/2" 1/4" 10# 32# 65# - 65#

Weig

ht

%

%C

u

Size fraction

%Cu Weight %

13

14

Core Splitting Problem

•Broken core in box

•Splitting method 1

•Splitting method 2

Comparison of Blast Hole and Drill Hole Grades•Old Method:

Take broken material from top of core box

Fines are left inside box

Blast holes are much higher grade than core samples

•New Method: Split core evenly Blast holes are

slightly higher grade than core samples

15

Old Method

New Method

0,00

0,10

0,20

0,30

0,0 0,5 1,0 1,5 2,0

Bla

st

Ho

le

-D

rill

Ho

le G

rad

e

Drill Hole Grade

Normal and Reverse

Circulation

17

Problems with Normal Circulation Rotary Drilling

•Is Normal (Direct) Circulatrion Rotary Drilling as “Bad” as Claimed? YES!

•Water is the Enemy, whether Injected or from Underground

•Can it Ever be Used? Yes, to Determine Whether there is

Mineralization But Not to Characterize Mineralization

(Depth, Thickness, Grade)

18

Problems with

Reverse Circulation Drilling

•Is Reverse Circulation Really Much Better than Normal Circulation?

Usually Yes Bypass Contamination Face Sampling Bits Water is the Enemy, whether Injected

or from the Ground

19

Problems with Reverse Circulation Drilling

Face Sampling Bits

Water is the Enemy

Water inflow can

result in sample

contamination

20

Problems with Reverse Circulation Drilling

•Sample Splitting

Too Much Water Bag Overflowing Loss of Fines Use of Micropores Speed or Quality?

21

SAMPLING IN

UNDERGROUND

MINES

22

Some Underground Sampling Methods

•Core Samples: Location, Orientation, Deflection

•Blast Hole Samples: Water, Sample Collection

•Chip Samples

•Channel Samples

•Muck Samples

23

Channel Sampling

How do I Sample This?

24

Chip Sampling

25

Channel SamplingChannel Sampling

26

Chip SamplingSampling of

Broken Muck

27

Stockpile Sampling:

Is this a Good Sample?

28

Compare Size of Scoop with Size of Material

Sampled

Sampling of Individual Loads

Sample (10 kg) Loader (1 tonne)

29

Comparison of Bucket and Drum Samples

30

0%

5%

10%

15%

20%

25%

30%

4 2 1 1/2 1/4 6 12 20 45 100

Weig

ht

%

Size Fraction (inch/mesh)

Size Distributions

DRUM SCOOP

4 2 1 1/2 1/4 6 12 20 45 100

Gold

Gra

de

Size Fraction (inch/mesh)

Grade Distributions

DRUM SCOOP

Material > 4

inches very

high grade

In Drum,

20% > 4 inches

31

ESTIMATION OF MINERAL RESOURCES

32

Deposit Modeling and Estimation of Mineral Resources

A Deposit Model is not a Resource

• A Resource must show Reasonable Prospects for Eventual Economic Extraction

• Technical, Economic and Other Assumptions must be Made, Albeit at a Preliminary Level.

33

DEPOSIT MODEL AND MINING METHOD

34

- Deposit Model and Mining Method -

•Different Models for Different Mining Methods

Open Pit or Underground

Bulk Mining or Selective Mining

High or Low Cutoff Grades

35

DEPOSIT MODEL AND METALLURGICAL PROCESS

36

- Deposit Model and Processing Method -

•Different Models for Different Processing Methods

Copper Oxide, Sulfide, Transition

Gold Cyanide Amenability

Mill Throughput, Power Consumption, Acid Consumption

Recovery

37

What is a Representative

Geometallurgical Sample

•From Laboratory Test to Semi-Industrial Test to Full Scale Operation

Many Small Samples Few Large Samples According to Geology High Grade, Low Grade, Near Surface, At Depth

38

Resource and Reserve Estimation

Economic Considerations

39

Estimation of Mineral ReservesEconomic Analysis

•Which Commodity Price Should be Used?

Who Decides and Who Signs the Competent Person’s Report?

Beware of External Pressures• Use a High Price to Report Higher Reserves• Use a Low Price for Tax or Other Reasons

40

THE HUMAN FACTOR

ESTIMATION IS BY PEOPLE FOR PEOPLE

41

Resource Estimation Quality Control

•Maintain Effective Communications with:

Those Generating the Data (Geologist, Driller, Laboratory, Surveyor, etc.)

Those who will Use the Model (Mining Engineer, Metallurgist, Project Engineer, Environmentalist, Management)

42

Resource Estimation Quality Control

•Have Regular Meetings throughout the Entire Modeling Process with Detailed Review at Beginning and End

•Ask for and Compare Geologic Interpretations from Different Geologists

•Use More than One Modeling Method. Compare Results. Explain Differences

•Consider Outside Reviews.

43

Crocodiles Lurking in the Murky Waters

- Warnings to Competent Person -

44

Challenges for the Competent Person

•Corporate Objectives:

Raise Funds for Continuous Project Development

Grow the Company by Bringing a New Mine to Production

Sell the Deposit

45

Challenges for the Competent Person

•Competent Person Objectives: To Do the Best Technical and Ethical Job he/she

Knows How to Do To Answer Management’s Questions The Answer May Differ from Management’s

Expectations

•Maximizing Personal Bonus (or the Boss’s Bonus) must NOT be a Competent Person’s Objective.

46

Blast Hole Sampling Methods

1 - Rocket Sampler

•Where to take the sample? Too close: underestimation Too far: Overestimation

•How deep should the sampler go?

•What should be the diameter of the sampler? Too large: hard to push through Too small: not representative

•Now many samples per blast hole?

Rocket Sampler

FINAL OBJECTIVE:

A TECHNICALLY AND

ECONOMICALLY SUCCESSFUL

MINING OPERATION

47

THE

END