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GeoE 498Introduction to Mining and Mineral Processing Engineering
Lecture Notes
Fall2010
Geological EngineeringCivil & Geological Engineering
University of Saskatchewan
University of SaskatchewanUniversity of Saskatchewan
Geological EngineeringGeological EngineeringGEOE 498.3GEOE 498.3
Introduction to Mineral EngineeringIntroduction to Mineral Engineering
Lecture 8 – Mineral Processing 1Lecture 8 – Mineral Processing 1
Lorne SchwartzLorne Schwartz
Chief MetallurgistChief MetallurgistTechnical ServicesTechnical Services
Cameco CorporationCameco Corporation
Course StructureCourse StructurePart A (7 Lectures) Mine EngineeringPart A (7 Lectures) Mine EngineeringPart B (6 Lectures) Metallurgical Part B (6 Lectures) Metallurgical
EngineeringEngineering
GradingAssignments – 20%Assignments – 20%Mid – term – 35%Mid – term – 35%Final – 45%Final – 45%
These course notes are a compilation of work conducted by many people.
Notes have been taken from the following Edumine courses:
The Mill Operating Resource 1&2
Process Mineralogy for Metals
Extractive Metallurgy 1 & 2
Hydrometallurgy 1,2,3,4
Economic Evaluation and Optimization of Mineral Projects
Mineral Processing OverviewMineral Processing Overview
Mineral Processing Terminology, Mineral Processing Terminology, EconomicsEconomics
Comminution and ClassificationComminution and Classification
Physical processing methodsPhysical processing methods
Chemical processing methodsChemical processing methods
Waste products Waste products treatment and treatment and disposaldisposal
Process plant Process plant flow sheets: flow sheets: uranium and potashuranium and potash
Importance of Mineral ProcessingImportance of Mineral Processing
““No substance has been as important as metal in No substance has been as important as metal in the story of man's control of his environment. the story of man's control of his environment.
Advances in agriculture, warfare, transport, even Advances in agriculture, warfare, transport, even cookery are impossible without metal. So is the cookery are impossible without metal. So is the
entire Industrial Revolution, from steam to entire Industrial Revolution, from steam to electricity.”electricity.”
Read more: Read more: http://www.historyworld.net/wrldhis/PlainTextHishttp://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyidtories.asp?historyid
=ab16#ixzz13XSEyvNz=ab16#ixzz13XSEyvNz
Importance of Mineral ProcessingImportance of Mineral Processing
Bronze Age-Bronze Age- Bronze is in use Bronze is in use in Sumer, at Ur, in around in Sumer, at Ur, in around 2800 BC2800 BC
Iron Age - from the 11th century - from the 11th century BC onwards, steel replaces bronze BC onwards, steel replaces bronze weapons. It becomes essential, weapons. It becomes essential, from now on, to have a good steel from now on, to have a good steel blade rather than a soft and blade rather than a soft and indifferent one.indifferent one.
Lecture 8Lecture 8
Mineral Processing Overview:Mineral Processing Overview:
Geology-Mining-Processing RelationshipGeology-Mining-Processing Relationship
Mineral Processing TermsMineral Processing Terms DefinitionsDefinitions
Mineral Economics reviewMineral Economics review
Project StagesProject Stages
Lecture 9Lecture 9
Comminution & classification circuitsComminution & classification circuits
Comminution MethodsComminution Methods PrinciplesPrinciples CrushingCrushing GrindingGrinding
Classification MethodsClassification Methods PrinciplesPrinciples HydrocycloneHydrocyclone ScreeningScreening
AssignmentAssignment
Lecture # 10Lecture # 10
Physical Processing MethodsPhysical Processing MethodsGravityGravityMagneticMagneticElectrostaticElectrostaticRadiometricRadiometricFroth FlotationFroth FlotationSolid/liquid separationSolid/liquid separation
AssignmentAssignment
Lecture 11Lecture 11
Chemical ProcessingChemical ProcessingBasic CircuitsBasic CircuitsLeachingLeachingSolvent ExtractionSolvent ExtractionPrecipitationPrecipitationDryingDrying
Downstream – Purified ProductDownstream – Purified ProductElectrowinningElectrowinningSmeltingSmelting
AssignmentAssignment
Lecture #12Lecture #12
Waste Stream Management:Waste Stream Management:
Tailings DisposalTailings DisposalSurfaceSurfaceUndergroundUnderground
Effluent TreatmentEffluent TreatmentChemical PrecipitationChemical PrecipitationMembrane TechnologyMembrane Technology
Assignment Assignment
Lecture # 13 Lecture # 13
Saskatchewan Mill Saskatchewan Mill Process FlowsheetsProcess Flowsheets
UraniumUranium
PotashPotash
AssignmentAssignment
Geology – Mining – ProcessingGeology – Mining – Processing
•All 3 aspects must be favorable to make a deposit All 3 aspects must be favorable to make a deposit economically viableeconomically viable
• Geology: Find it. Is it big enough to be economic?Geology: Find it. Is it big enough to be economic?•Mining: Dig it. Is it economically recoverable from the Mining: Dig it. Is it economically recoverable from the ground?ground?•Processing: Extract it. Is it economically separable Processing: Extract it. Is it economically separable from the host rock?from the host rock?
Prevalence of mineral processingPrevalence of mineral processing
In Saskatchewan as of 2009 there were: In Saskatchewan as of 2009 there were: 3 uranium mills3 uranium mills8 potash mine/mills8 potash mine/mills1 gold mine/mill1 gold mine/mill coal mines (thermal)coal mines (thermal)Salt mineSalt mineAn identified diamond deposit (Fort a la An identified diamond deposit (Fort a la
Corne)Corne)An identified rare earth element deposit An identified rare earth element deposit
(Hoidas Lake)(Hoidas Lake)
Prevalence of mineral processingPrevalence of mineral processing
Mining is all around us!Mining is all around us! In Alberta there are: In Alberta there are:
Oil sands process plants (uses mining and mineral Oil sands process plants (uses mining and mineral processing techniques)processing techniques)
Coal plantsCoal plants Industrial minerals (limestone)Industrial minerals (limestone) Nickel/cobalt metallurgical complexNickel/cobalt metallurgical complex
In Manitoba there are:In Manitoba there are: Many copper/zinc mines and mills, feeding the Flin Many copper/zinc mines and mills, feeding the Flin
Flon metallurgical complexFlon metallurgical complex Nickel mines nearby Thompson smelterNickel mines nearby Thompson smelter
In the Northwest Territories there are:In the Northwest Territories there are: 3 operating diamond mines3 operating diamond mines Gold minesGold mines
Scope of mineral Scope of mineral
processingprocessing
Definitions Definitions
EconomicsEconomics
Project StagesProject Stages
Introduction to Mineral ProcessingIntroduction to Mineral Processing
Mining Terminology - Mining Terminology - Review Review
Miners send their products to their customer – the mill.Miners send their products to their customer – the mill. Ore :Ore : Rock that contains a mineral or minerals in sufficient Rock that contains a mineral or minerals in sufficient
quantities as to make commercial extraction (mining – quantities as to make commercial extraction (mining – milling) profitable.milling) profitable.
Grade :Grade : A measure of concentration of a mineral/metal contained A measure of concentration of a mineral/metal contained in rock (or ore). Gold and other precious metals – g/t or oz/t, base in rock (or ore). Gold and other precious metals – g/t or oz/t, base metals - %, uranium – kg/tonne, rare earth elements – ppm…metals - %, uranium – kg/tonne, rare earth elements – ppm…
Cut off Grade :Cut off Grade : The minimum concentration or grade of The minimum concentration or grade of mineral that is required for rock to be considered ore.mineral that is required for rock to be considered ore.
Waste :Waste : Not Ore. Not Ore.
Ore Body:Ore Body: A mineralized deposit (resource) whose A mineralized deposit (resource) whose characteristics have been examined and found to be characteristics have been examined and found to be commercially viable. The extents of the ore body are commercially viable. The extents of the ore body are determined by the cut-off grade.determined by the cut-off grade.
Host Rock:Host Rock: The rock containing an ore deposit. Typically The rock containing an ore deposit. Typically composed of 2 or more minerals.composed of 2 or more minerals.
Gangue:Gangue: Minerals in the ore body that are not of economic Minerals in the ore body that are not of economic interest interest
Mineral ProcessingMineral Processing
Is the recovery of valuable minerals from oreIs the recovery of valuable minerals from ore
Takes place in a mill, aka concentrator - because it Takes place in a mill, aka concentrator - because it concentrates valuable minerals by removing unwanted concentrates valuable minerals by removing unwanted material. material.
The two main products are the concentrate streams The two main products are the concentrate streams (valuable minerals) and the tailings streams (rejects).(valuable minerals) and the tailings streams (rejects).
Fields of Metallurgical EngineeringFields of Metallurgical EngineeringField
Description Example of topics
Mineral Processing
Beneficiation or Mineral Dressing
Theory and practice of liberation of minerals from ores and their separation by physical methods at ambient conditions
Crushing and grinding, magnetic and electrical methods, flotation, etc.
Extractive metallurgy
Chemical methods sometimes at high temperature and pressure for treating ores to recover their metal values in a pure form
Leaching, precipitation, electrolysis, oxidation, reduction, etc.
Metal Processing
Physical metallurgy
Study of physical properties of metals and alloys, preparation of alloys
Crystal structure, effect of impurities, metallography, heat treatment, etc.
Engineering metallurgyProcessing of metals in the molten state
Casting, welding, etc.
Mechanical metallurgyProcessing of metals in the solid state
Forging, rolling, extrusion, piercing
Powder metallurgyProcessing of metal powders into finished products
Preparation of metals in powder form, hot pressing, etc.
Engineering Terminology in Mineral Engineering Terminology in Mineral ProcessingProcessing
Circuit:Circuit: The path that the ore that is being The path that the ore that is being processed takes as it proceeds from one processed takes as it proceeds from one processing point to another.processing point to another.
Flow SheetFlow Sheet - Drawing that indicates the path - Drawing that indicates the path that the mineral takes within a process. that the mineral takes within a process. Several circuits are often contained within a Several circuits are often contained within a flow sheetflow sheet
RecoveryRecovery Rate Rate – The percentage of valuable – The percentage of valuable metal/mineral, by mass, in the concentrate metal/mineral, by mass, in the concentrate from the feed from the feed
Mineral ProcessingMineral Processing
The goals of mineral processing are to:The goals of mineral processing are to:
separate economic mineral particles from separate economic mineral particles from waste or ganguewaste or gangue
subject minerals to processes in order to subject minerals to processes in order to concentrate them or to extract metals from concentrate them or to extract metals from themthem
Mineral Processing Mineral Processing Terminology Terminology
Concentration:Concentration: Another word for grade Another word for grade Heads:Heads: A term that is used to denote the mineral A term that is used to denote the mineral
found in the FEED to a circuit.found in the FEED to a circuit. Head Grade:Head Grade: aka feed concentration aka feed concentration Concentrate:Concentrate: a purified mineral. May require a purified mineral. May require
further downstream processing to convert for end further downstream processing to convert for end uses. Examples: Copper and nickel sulfidesuses. Examples: Copper and nickel sulfides
TailingsTailings - Material rejected from a mill after - Material rejected from a mill after the recoverable valuable minerals have been the recoverable valuable minerals have been extracted.extracted.
Industrial mineral:Industrial mineral: is used for end purpose is used for end purpose without chemical alteration. Examples: gravel, coalwithout chemical alteration. Examples: gravel, coal
Mineralogy: Mineralogy: Description of mineral contentsDescription of mineral contents
What is mineral processing?What is mineral processing?
Mineral: Mineral:
a)a)A solid naturally-occurring compound having A solid naturally-occurring compound having a definite chemical composition.a definite chemical composition.
b) b) Inorganic substance that are extracted from Inorganic substance that are extracted from the earth for use by man. the earth for use by man.
c) A naturally occurring inorganic element or c) A naturally occurring inorganic element or compound having an orderly internal structure compound having an orderly internal structure and characteristic chemical composition, and characteristic chemical composition, crystal form, and physical properties.crystal form, and physical properties.
Mineral classificationMineral classification
Nonmetallic processing has some commonalities with metal processing, but lots of differences
Impact of mineralogyImpact of mineralogy
We mine rocks but we concentrate minerals.
Gangue minerals also important
Understanding mineralogy allows design of processes
Important for feasibility studies
What is mineral processing?What is mineral processing?
Processing – Processing –
Extract values, reject wasteExtract values, reject waste
Conversion of mined ore into usable productConversion of mined ore into usable product
More expensive/challenging with lower More expensive/challenging with lower grade oresgrade ores
Numerous processing methodsNumerous processing methods
Mineral Processing Methods = Mineral Processing Methods = beneficiation + extractive metallurgybeneficiation + extractive metallurgy
Beneficiation aka Mineral DressingOverlap of physical and chemical methods, depending on productWhere extractive metallurgy leaves off, metal processing begins
Mineral Processing Mineral Processing Terminology Terminology
BeneficiationBeneficiation: : enrichment of ores and separation of unwanted gangue enrichment of ores and separation of unwanted gangue mineralsminerals
subsequent metals extraction more efficient. subsequent metals extraction more efficient. Can be divided into two distinct steps:Can be divided into two distinct steps: LiberationLiberation: the rock is broken down by mechanical means, mineral : the rock is broken down by mechanical means, mineral
components become independent of each other, detached components become independent of each other, detached SeparationSeparation: valuable minerals are separated by means of physical : valuable minerals are separated by means of physical and physico-chemical methods making use of differences in specific and physico-chemical methods making use of differences in specific gravity, magnetic properties, etc.gravity, magnetic properties, etc.
Extractive metallurgyExtractive metallurgy:: Chemical reactions of the processes Chemical reactions of the processes equipment where reactions take placeequipment where reactions take place Flowsheets – combinations of processesFlowsheets – combinations of processes
Beneficiation Terminology Beneficiation Terminology
Comminution:Comminution: Reduction of particle size Reduction of particle size
Starts at mine with blastingStarts at mine with blasting
Two basic types of equipment used:Two basic types of equipment used:
Crushing – breakage by compressionCrushing – breakage by compression
Grinding – breakage by abrasion and Grinding – breakage by abrasion and impactimpact
Beneficiation Terminology Beneficiation Terminology
ClassificationClassification : Separation based mainly on : Separation based mainly on particle sizeparticle size
Behavior affected by size, shape, and Behavior affected by size, shape, and density of the particlesdensity of the particles
Two common types of classifiers:Two common types of classifiers:
Screens – dry method, coarser particlesScreens – dry method, coarser particles
Hydrocyclones – wet method, finer Hydrocyclones – wet method, finer particlesparticles
Beneficiation Terminology Beneficiation Terminology
Separation Techniques Separation Techniques take advantage of the take advantage of the
differences in characteristics between mineralsdifferences in characteristics between minerals::Flotation: Flotation: Attachment of minerals to air Attachment of minerals to air
bubbles - hydrophibicitybubbles - hydrophibicityMagnetic Separation: Magnetic Separation: Apply magnetic Apply magnetic
fieldfieldGravity Separation:Gravity Separation: differences in specific differences in specific
gravity of materialsgravity of materials
Electrostatic Separation:Electrostatic Separation: Apply Apply electrostatic polarityelectrostatic polarity
Particle size distribution has large influence on Particle size distribution has large influence on resultsresults
Beneficiation Terminology Beneficiation Terminology
Dewatering:Dewatering: To remove water from a substance. To remove water from a substance. Also refers to the circuit where this takes place. Also refers to the circuit where this takes place.
Dewatering Techniques:Dewatering Techniques:Thickener: Thickener: Allow gravity settlingAllow gravity settlingFilter: Filter: Apply air pressure to draw water Apply air pressure to draw water
outoutCentrifuge: Centrifuge: Apply centrifugal forceApply centrifugal forceDryer: Dryer: Apply heat to evaporateApply heat to evaporate
Slurry Density:Slurry Density: The amount of solids in a slurry, The amount of solids in a slurry, expressed as a percentage by weight.expressed as a percentage by weight.
Beneficiation Terminology Beneficiation Terminology
Waste Disposal - Waste Disposal - "Mining is waste management ..." "Mining is waste management ..." The majority of tonnage mined must be disposed of The majority of tonnage mined must be disposed of
as tailingsas tailings Water used must be treated and released Water used must be treated and released
Tailings Dam:Tailings Dam: Built from ground waste rock discharged after Built from ground waste rock discharged after processing from the mill processing from the mill
Acid Mine Drainage: Acid Mine Drainage: produced by exposing sulfide minerals to produced by exposing sulfide minerals to air and water, resulting in oxidation that generates acid.air and water, resulting in oxidation that generates acid.
Waste Rock: Waste Rock: Unprocessed non-mineralized / low grade Unprocessed non-mineralized / low grade mined materialmined material
Water Balance: Water Balance: Accounting of water inputs and outputs Accounting of water inputs and outputs from a mine/mill site.from a mine/mill site.
Water Treatment:Water Treatment: The removal of harmful contaminants from The removal of harmful contaminants from waterwater
Mineral Processing Methods = Mineral Processing Methods = beneficiation + extractive metallurgybeneficiation + extractive metallurgy
Beneficiation aka Mineral DressingOverlap of physical and chemical methods, depending on productWhere extractive metallurgy leaves off, metal processing begins
Extractive Metallurgy Extractive Metallurgy Terminology Terminology
HydrometallurgyHydrometallurgy Leaching - the process of extracting a soluble Leaching - the process of extracting a soluble
constituent from a solid by means of a (water based) constituent from a solid by means of a (water based) solventsolvent
• Water changes solubility, by making it acidic or basic, oxidizing or reducing
Solvent Extraction – transfer between immiscible Solvent Extraction – transfer between immiscible fluidsfluids
Ion Exchange – solid resins that adsorb/desorb Ion Exchange – solid resins that adsorb/desorb dissolved chemical speciesdissolved chemical species
Precipitation – convert dissolved into solidPrecipitation – convert dissolved into solid• Crystallization via evaporation• Ionic precipitation - addition of a reagent to a
solution creates a metal compound whose solubility is so low that precipitation takes place immediately
Hydrometallurgy EquipmentHydrometallurgy Equipment
Solvent extraction mixer-settlersSolvent extraction mixer-settlers
Extractive Metallurgy Extractive Metallurgy Terminology Terminology
Pyrometallurgy – use of heat to induce a Pyrometallurgy – use of heat to induce a chemical transformationchemical transformation
Roasting – convert to oxide form. Roasting – convert to oxide form. Example: 2 CuS2 + 5 O2 → 2 CuO + 4 Example: 2 CuS2 + 5 O2 → 2 CuO + 4 SO2SO2
Smelting - uses reducing substances Smelting - uses reducing substances that will combine with those oxidized that will combine with those oxidized elements to free the metal. Example: elements to free the metal. Example: 2 Fe2O3 + 3 C → 4 Fe + 3 CO2 2 Fe2O3 + 3 C → 4 Fe + 3 CO2
Extractive Metallurgy Extractive Metallurgy Terminology Terminology
Electrometallurgy – use of electrical Electrometallurgy – use of electrical energy to induce a chemical energy to induce a chemical transformationtransformation
Electrowinning – to precipitate a metal Electrowinning – to precipitate a metal from solution using electric potentialfrom solution using electric potential
Electrorefining – to purify a metal by Electrorefining – to purify a metal by dissolving it, then re-precipitating it dissolving it, then re-precipitating it
Electrometallurgy EquipmentElectrometallurgy Equipment
Alternating anodes and cathodes in a Alternating anodes and cathodes in a tankhouse for electrowinningtankhouse for electrowinning
Flowsheet examplesFlowsheet examples
Aluminum:Aluminum: from bauxitefrom bauxite
Copper:Copper: from chalcopyritefrom chalcopyrite
Iron:Iron: from hematitefrom hematite
GoldGold – – Placer, sulphide and oxide Placer, sulphide and oxide
Oil SandsOil Sands – – Fort McMurrayFort McMurray
Mineral Processing Mineral Processing Recovery Recovery
Recovery : Recovery : Potential for loss every step of the way, Potential for loss every step of the way, in each circuit!in each circuit!
Tonnage vs. Recovery: Tonnage vs. Recovery: A processing circuit pushed A processing circuit pushed beyond its capacity will induce recovery lossbeyond its capacity will induce recovery loss
Feed Grade vs. Recovery Feed Grade vs. Recovery : : A higher feed grade tends A higher feed grade tends to have higher processing recoveryto have higher processing recovery
Concentrate Grade vs. Recovery: Concentrate Grade vs. Recovery: A higher A higher concentrate grade tends to result in lower processing concentrate grade tends to result in lower processing recovery (= rejection of lower quality minerals to recovery (= rejection of lower quality minerals to tailings)tailings)
Concentrate Grade vs. Price:Concentrate Grade vs. Price: A higher quality A higher quality concentrate will fetch a higher price (have lower concentrate will fetch a higher price (have lower impurity penalties) impurity penalties)
Revenue = Production (tonnes) x grade x recovery Revenue = Production (tonnes) x grade x recovery x pricex price
Mining EconomicsMining Economics
Typical product grade vs. recovery Typical product grade vs. recovery curve for a Cu sulphide flotation millcurve for a Cu sulphide flotation mill
Mining EconomicsMining Economics
Relation between cost and particle size Relation between cost and particle size
Mineral Economics - ReviewMineral Economics - Review
Discounted Cash Flow (DCF)Discounted Cash Flow (DCF) NPV (net present value) is a means of comparing a NPV (net present value) is a means of comparing a
dollar today to the value of the same dollar in the dollar today to the value of the same dollar in the future. For mining projects, we apply NPV to future. For mining projects, we apply NPV to determine if a project is worth more than it costs.determine if a project is worth more than it costs.
Free Cash Flow (FCF) is the operating cash flow minus Free Cash Flow (FCF) is the operating cash flow minus capital includes Taxes, Dividends, Royalties, capital includes Taxes, Dividends, Royalties, Depreciation and Amortization. I.e. the amount of Depreciation and Amortization. I.e. the amount of money left after the bills are paidmoney left after the bills are paid
Discount Rate is rate that future cash flows are Discount Rate is rate that future cash flows are discounted to determine present value. This is discounted to determine present value. This is different than interest. different than interest.
IRR (internal rate of return) is the discount rate that IRR (internal rate of return) is the discount rate that results in an NPV of 0.results in an NPV of 0.
Mineral Economics - ReviewMineral Economics - Review
Net Present Value is common way to evaluate a project
Value = Free Cash Flow
Rate = Discount Rate
n=Total number of periods
i=Period
Payback period - the time required for the operating revenue to pay back all the costs, including the initial capital investment used to construct the project.
Mineral EconomicsMineral Economics
Typical mining project annual cash flow patternTypical mining project annual cash flow pattern
R = revenue, C = costs, T = taxes, A = annual R = revenue, C = costs, T = taxes, A = annual loan payment (principal + interest), F = cash loan payment (principal + interest), F = cash flow and K= capital costs.flow and K= capital costs.
Mining Project Economics Mining Project Economics
What happens when project parameters are What happens when project parameters are changed?changed?
Must start with a reasonable base case scenario Must start with a reasonable base case scenario (technically feasible) before economic (technically feasible) before economic optimization (fine tuning) optimization (fine tuning)
Strong inter-relationships between:Strong inter-relationships between: TonnageTonnage GradeGrade Capital costsCapital costs Operating costsOperating costs
Has effects on:Has effects on: Mine lifeMine life Cutoff gradeCutoff grade
Capital and Operating Cost Estimation vs. TonnageCapital and Operating Cost Estimation vs. Tonnage
Work by OHara (1980), OHara and Suboleski (1992) and Work by OHara (1980), OHara and Suboleski (1992) and USBM (1987) suggest that the curves for capital and USBM (1987) suggest that the curves for capital and operating costs can be reasonably approximated by operating costs can be reasonably approximated by exponential equations, with the general form:exponential equations, with the general form:
Cost = K tCost = K txx
Where:Where:K = a constant specific to the particular costK = a constant specific to the particular costt = production rate in tonnes per dayt = production rate in tonnes per dayx = an exponentx = an exponent
Capital costs typical range: 0.5 to 0.7Capital costs typical range: 0.5 to 0.7 0.6 is a reasonable first estimate0.6 is a reasonable first estimate
Operating costs in $/t typical range -.3 to -.1Operating costs in $/t typical range -.3 to -.1 -0.2 -0.2 is a reasonable first estimateis a reasonable first estimate
WARNING: These equations should not be used for WARNING: These equations should not be used for detailed estimating, although they can give guidance for detailed estimating, although they can give guidance for order of magnitude estimating.order of magnitude estimating.
If a cost is known accurately, this relationship can be used to factor the cost up or If a cost is known accurately, this relationship can be used to factor the cost up or down for differing production rates, within reasonable limits:down for differing production rates, within reasonable limits:
Cost at t1 = C1 = K t1xCost at t1 = C1 = K t1xCost at t2 = C2 = K t2xCost at t2 = C2 = K t2x
Then:Then:
C1 / C2 = (K t1x) / (K t2x)C1 / C2 = (K t1x) / (K t2x) = t1x / t2x (because K is common it can be eliminated) = t1x / t2x (because K is common it can be eliminated) = (t1 / t2)x = (t1 / t2)x
Simplified:Simplified:C1 / C2 = (t1 / t2)xC1 / C2 = (t1 / t2)x
Then:Then: C2 = C1 (t2 / t1)x C2 = C1 (t2 / t1)x For a capital cost or annual operating cost, if C1 and t1 are known, and x can be For a capital cost or annual operating cost, if C1 and t1 are known, and x can be
estimated from experience then C2 can be estimated for a given t2. estimated from experience then C2 can be estimated for a given t2. Example: Example: For capital cost at 20,000 t/d is $30 million, then at 25,000 t/d can be estimated at:For capital cost at 20,000 t/d is $30 million, then at 25,000 t/d can be estimated at: C2 = $30000000 (25000 / 20000)0.6C2 = $30000000 (25000 / 20000)0.6
= $30000000 (1.1433) = $30000000 (1.1433) = $34,298,000 = $34,298,000
For operating cost of $10.00/tonne, and an exponent of -.2 the unit cost at the For operating cost of $10.00/tonne, and an exponent of -.2 the unit cost at the higher tonnage will be:higher tonnage will be:C2 = $10.00 (25000 / 20000)-0.2C2 = $10.00 (25000 / 20000)-0.2 = $10.00 (0.9564) = $9.56 = $10.00 (0.9564) = $9.56
Capital and Operating Costs vs. TonnageCapital and Operating Costs vs. Tonnage
NPV CurveNPV Curve
An NPV curve is theoretical, always check An NPV curve is theoretical, always check that the inputs are realistic!that the inputs are realistic!
Mineral Economics – Operating CostsMineral Economics – Operating Costs
Overall operating costs are broken down into 3 basic Overall operating costs are broken down into 3 basic areas for economic analysis:areas for economic analysis:
MiningMining – determine mine plan input costs, production – determine mine plan input costs, production rate and fully diluted (Run-of-Mine = ROM) grade rate and fully diluted (Run-of-Mine = ROM) grade
MillingMilling – determine process flowsheet input costs, – determine process flowsheet input costs, recovery rate, product qualityrecovery rate, product quality
General and AdministrativeGeneral and Administrative (G & A) – determine (G & A) – determine overhead costs :overhead costs :
• Administration (HR, payroll)• Management (site + head office)• Safety & Health• Environment• Quality ManagementG&A tends to be fixed REGARDLESS of
production rate!
Milling Operating CostsMilling Operating Costs
Typical relative cost of beneficiating an ore
Operation%
Crushing 5 - 20
Grinding 25 - 75
Flotation 25 -45
Dewatering and drying
10 -20
Other operations 5 - 10
Project StagesProject Stages
Idea stageIdea stage
Conceptual stageConceptual stage
Pre-feasibility stagePre-feasibility stage
Market StudiesMarket Studies
Feasibility studiesFeasibility studies
Financial analysisFinancial analysis
Preliminary designPreliminary design
Final design and construction Final design and construction
Commissioning and start up Commissioning and start up
Closing reportsClosing reports
Typical Project StagesTypical Project Stages
Idea StageIdea Stage :: identify the need for a project to be started or identify the need for a project to be started or conceptualized conceptualized
philosophic - decide whether this is the type of project that philosophic - decide whether this is the type of project that they would like to pursue they would like to pursue
Discussions of cost and schedule at the idea stage are Discussions of cost and schedule at the idea stage are normally limited to a broad definition normally limited to a broad definition
Informal - sometimes mentioned to get a reaction Informal - sometimes mentioned to get a reaction Ideas can begin with anyone in the organization Ideas can begin with anyone in the organization
Conceptual StudyConceptual Study: : establish the shape of the project, and get a establish the shape of the project, and get a better feel for its scope and size better feel for its scope and size
Costs can be put to a concept. However, the accuracy of Costs can be put to a concept. However, the accuracy of investment costs may be wildly out, probably +/-50%.investment costs may be wildly out, probably +/-50%.
Rough estimate based on experience and judgment Rough estimate based on experience and judgment Estimate's usefulness is in establishing an idea of the costs Estimate's usefulness is in establishing an idea of the costs
commensurate with the aims of the projectcommensurate with the aims of the project
Resource and Reserve CategorizationResource and Reserve Categorization
Mineral Reserve: This is where things start to get Mineral Reserve: This is where things start to get realreal
Typical Project StagesTypical Project Stages
Pre-feasibility StudyPre-feasibility Study :: comprehensive study of viability of a comprehensive study of viability of a mineral project mineral project
mining method has been establishedmining method has been established effective method of mineral processing has been determinedeffective method of mineral processing has been determined financial analysis based on financial analysis based on reasonable assumptionsreasonable assumptions of of
technical, engineering, legal, operating, economic, social, and technical, engineering, legal, operating, economic, social, and environmental factors environmental factors
determine if all or part of the mineral resource may be determine if all or part of the mineral resource may be classified as a mineral reserve classified as a mineral reserve
Feasibility StudyFeasibility Study: : comprehensive study of a mineral depositcomprehensive study of a mineral deposit all geological, engineering, legal, operating, economic, social, all geological, engineering, legal, operating, economic, social,
environmental and other relevant factors are considered environmental and other relevant factors are considered in in sufficient detailsufficient detail
could reasonably serve as the basis for a final decision by a could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit financial institution to finance the development of the deposit for mineral production.for mineral production.
Typical Project StagesTypical Project Stages
Detailed design and construction:Detailed design and construction: Engineering design and Engineering design and construction are inseparable, even though two distinct groups construction are inseparable, even though two distinct groups normally perform the work. normally perform the work.
Preliminary design - establish a definite time frame for Preliminary design - establish a definite time frame for freezing the process and plant designs so that cost and freezing the process and plant designs so that cost and schedule upsets are minimized effective method of mineral schedule upsets are minimized effective method of mineral processing has been determinedprocessing has been determined
definitive estimate to an accuracy of 10 to 15% to control the definitive estimate to an accuracy of 10 to 15% to control the job – requires about 20 percent of the total engineering must job – requires about 20 percent of the total engineering must be done, as measured by completion of drawings. be done, as measured by completion of drawings.
be leery of both steam-rolling a design freeze prematurely, vs. be leery of both steam-rolling a design freeze prematurely, vs. allowing people to continuously change their minds allowing people to continuously change their minds
Commissioning: Commissioning: checkout period prior to starting the plant checkout period prior to starting the plant Sometimes the entire plant is run for a period of time without Sometimes the entire plant is run for a period of time without
material material Startup usually begins on a reduced output basis, gradually Startup usually begins on a reduced output basis, gradually
increasing until planned output capacity is reached increasing until planned output capacity is reached
Typical Project StagesTypical Project Stages
Project emotional stages:Project emotional stages:EuphoriaEuphoriaWandering off trackWandering off trackCatch up and controlCatch up and controlThe BoggsThe BoggsProject Manager panicProject Manager panicFrantic catch up and controlFrantic catch up and controlLoose endsLoose endsSign offSign off