Mining Engineering Aspects

Contents
World driving force Costs Methods Design principles Risk concepts Project stage aims

World Driving Force

Cave mining is the lowest cost underground mining method (DH Laubscher, 1994)

Total Mining Costs

Block caving AUD$ 24-35 /tonne Hybrid caving AUD$ 35-40/tonne SLC AUD$ 41-60/tonne Open cut AUD$ 29/tonne ( Deep pit > 300m) KNO type stoping AUD$ 70-120/tonne

Strong World Driving Force

Since 1995, the application of cave mining methods has forced a re-think in terms of mining methods Re-think driven by: - Increase pit cut-back capital costs forcing operations underground - The need to produce high tonnages from underground operations - The need to attempt to reproduce open-cut working costs from an underground mine - Pit to underground transition at low grade operations - Block cave sequencing

Additional Driving Forces

North Parkes Palaborwa Mining workings costs as low as AUD$ 3.8/tonne + 200m high lift cave Super cave (> 11 million tonnes per year) Better mine design processes

Operating Cost (AUD$/t)

0.00
North Parkes Target Lutopan North Parkes MKO Optimisation Philex Andina Palabora El Teniente Regimento El Salvador El Teniente South Freeport San Manuel MKO Viability

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Block cave OPEX

ECCONOMIC FORCES
NPVS AUD$ 300- 400 Million Possible NPVS 600- 800 Million IRR 11- 25% 15% IRR realistic number Project life 20 years Total opex US $ 9/ton for block caves

Cut-off grade
40 35 Revenue Open Stoping Sub Level Cave 25 20 15 10 5 0 0.00 Panel Cave Block Cave

Revenue and Operating Costs ($/t)

30

0.10

0.20 Grade (%Ni)

0.30

0.40

0.50

Cave Mine Classification

0 to 0.25 2.5 to 7 7 to 11 >11 Mt/yr Mt/yr Mt/yr Mt/yr Small Medium Large Super

Need For Balance

Cave mining has many advantages A good understanding of the method is required The mining method can not be applied to every orebody Requirements: - High up-front capital - Longer production ramp-in times - Grade high enough to pay off capital - Higher levels of design work - Construction of an underground factory Caves are the largest underground mines

A paradigm shift is required for implementation

Caving methods
underground mining methods

naturally supported

artificially supported

unsupported

room & pillar

sublevel & longhole open

cut & fill stoping

shrink stoping

VCR stoping

longwall mining

sublevel caving

block caving

Caving Methods
Pre-break , SLC or core & Shell Free caving methods, Block caving Hybrid methods (Block caving/SLC)

PRE BREAK/ SLC

Pre-break Characteristics
SLC most common method Production by drilling and blasting Quicker to bring into production than Block Caving Typical mine size 2 to 5 million/tonnes year

Free Caving Methods

Block caving most common method Lowest working cost per tonne Long ramp-in periods High up-front capital Pit or Hybrid gearing 91m lowest block height Cave de-stressing

Types of block cave

Grizzly Slusher LHD/panel Front cave Inclined draw point

Grizzly (Pillar 1981)

SLUSHER (HARTLEY 1981)

SLUSHER (Hartley 1981)

Front cave

Inclined draw point

Inclined drawpoint

Block caving -LHD

Hybrid Caving Methods

Mixture of methods Fluctuating block heights or geometries SLC/ Block Caving/ Front Cave Start with SLC, earlier tonnages Ramp-in block caving Working costs - Lower than SLC - Higher than Block Caving

Method selection
CAPEX, pre break less up front OPEX, block caving lower Corporate risk, block caving 70% up front Cavability, pre-break less risk Slusher/grizzly, softer rock. Lower stress LHD, coarse fragmentation, high stress Geology, geometry, geotech etc

Open cut interaction

Pit Gearing
Cave mining seen as a natural transition from open-cut Very few mines can ramp straight into large scale block caving Block caving costs similar to deep level open cut costs Trend- block caving removes last two pit cutbacks Solution- Hybrid or shared infrastructure

Cave Risk
Caving is one shot mining Get it wrong major problems Hard to fix High levels capex

Large project CAPEX

10 million ton block cave Total project AUD$ 1 to 1.5 Billion Mine costs AUD$ 350 to 600 million Shaft/ decline system AUD$ 60 -90 million 60% CAPEX infrastructure US$ 200 Million rule

RISK IMPACTS
30-40% Capital blow out AUD$ 250-300 Million 30-40% recovered grade 30-50% less production in yr 1 5 years longer to achieve full production

Types of Cave Risk

Implementation times Design detail Mining engineering risks
- Geological - Geotechnical - Management

Implementation times
Slow - 15 years Fast track - 7 years (super team) Highly aggressive - 6 years Average 10 years Super team personnel exist in the world Small SLC type operations 3 years Brownfield's FC 5 years

Design Detail
Rock factory concept High levels of detail required in every aspect Specialist studies

Mining Engineering Risks

Geological- high block lift, bottom-up method Geotechnical- extraction level crushing, dilution, water/mud ingresses Work force skills

Risk Amelioration
Caving risks can be mitigated by:
- The use of the super team - Understanding that high levels of design detail are req. - Sanity checks (implementation times) - Hybrid system - Correct modelling techniques - Risk analysis

Cave projects
Critical mistakes Spend too little time on concepts -Mining method selection -Mining geometry - Block attack - Corporate risk profile Unrealistic expectations

Desktop Study Aims

Is cave mining possible? Could it be seen as an alternative to open cut methods? Deep level ore bodies ? Project configuration Could the studies be advanced beyond to scoping stage Is the project viable 50% accuracy (Reynolds) Best possible input values Block caves best after 250m lift if not 400m

Scoping study
General features of project
- Caving footprint - Caving block height - Bottom of open cut - Mining method selection

Best parameters 30-35% accuracy Dont worry about cavability Experiential, empirical input parameters
Well over hurdles, IRR can drop by 10% to DEFS

Wrong- too much detail

Micro design: Extraction level layout

Scoping study concepts

Work on experience, does it feel right If someone has not caved it. It will not work/ or is high risk URAD / Philex Design from books (MASSMIN 92 & 2000) Confidence with concepts Geotechnical design with rock mass ratings Do not use rating values passed scoping stage. Ramp tonnage assessments with BCF/Hang-up model What needs to be done for next stage Geotechnical domain models, for holes and sense

STUDY CONCEPTS
No gurus Use methods with a track history What is the study basis: - Negative experience - Everything done right - Balance of the above

Basics of Block Cave Design

Macro design - Block height- as large as possible higher tonnage - Footprint- big as possible - Overall block geometry must be sized to payoff capital - Ni 0.5-0.7% or AUD$35 to 40/ton cut-off Micro design - Extraction level layout - Undercut layout design - Design implementation

Basics of SLC Design

Mentioned concepts ,(e.g. block attack) Maximum tonnage vs sustaining sub level dev - 1.5 million/ton/yr = 6 km/yr dev - 10 million/ton/yr = 16 to 25 km/y dev Metal/Grade recovered vs sustaining dev capital Draw strategy vs sustaining Dev/capital Transition to block caving @ 4-5 million/ton /yr
Soft cave cut-off depth (about 8001000m)