PRELIMINARY EVALUATION OF A SURFACE MINING PROSPECT

WHAT IS PRELIMINARY EVALUATION?

Evaluation may be considered as the idea of organizing extant data and judging its
significance especially in the economics sense. It may also evoke the concept of the
physical process of acquiring the data that will characterize the deposit (e.g. geologic
mapping, drilling, etc.). The qualifying adjective “preliminary” is not easily definable.
However, preliminary evaluation may be considered as the first evaluation based on the
available data.
So, the preliminary evaluation of a surface mining prospect may be defined as the process
of appraising a project from the data available at a given point in time from the point of view
of economics, and it includes completion of prospecting, definition of target area and
establishment of a deposit presumed to be mineable by surface mining.
IMPORTANCE OF PRELIMINARY EVALUATION
Preliminary evaluation of early acquired and often inadequate data characterizing a mineral
prospect that is being considered for surface mining is very much significant. As this
evaluation is based on preliminary data (that may be inadequate, scanty or poor) the most
rigorous review must be made and the best judgment be exercised, because the fate of a
project may lie on the appraisal decision.
At the end of the preliminary evaluation, on the basis of the report prepared, a decision has
to be taken by the entrepreneur whether to continue further with detailed exploration
(additional drilling and/or testing works) and subsequently planning and design for the
deposit, or to abandon the prospect.
The decision may be – positive, negative or not sure. If the decision is positive, the work
may be continued to the next stages. If it is negative, the prospect is abandoned. In case of
inconclusive decision, some more data are collected and the prospect is reevaluated and
the process continues till a firm decision is reached at.
The decision, whether positive or negative, should have reasonable degree of reliability.
Because, if a prospect is not really attractive but marked as an attractive one, then a lot of
money will be spent unnecessarily during exploration. On the other hand, if a prospect is
really attractive but marked as not an attractive one, then an opportunity is lost.
PRELIMINARY EVALUATION – THE BASIC PARAMETERS
An evaluation needs to be done in terms of certain parameters. The basic parameters that
are considered in preliminary evaluation of a surface mine prospects are the followings.
1. Geography
2. Legal status of land and mining rights
3. Historical, political and sociological factors
4. Geology
5. Mining conditions
6. Ore treatment requirements
7. Environmental requirements and restrictions
Geography:
Geography of a place defines its (i) location, (ii) topography, (iii) climate and (iv) altitude.
Location: The location of a prospect establishes the conditions of its remoteness from or
proximity to the civilization and its developed facilities – transportation systems, power
supply, labour pool, and other infrastructural facilities.
If a prospect is located near to the civilization and its developed facilities, the infrastructure
development cost for the proposed mine may be reduced considerably. Housing,
recreational, educational, medical and machine maintenance (partly) facilities that are
available near by may be used without much of extra costs. On the other hand, if the
prospect is located remotely from developed areas, the infrastructure development cost for
the proposed mine will be increased considerably. However, too near proximity of a deposit
to a highly developed area can make surface mine development impractical/impossible due
to its too much interference with the civil facilities.
Apart from the infrastructure development cost, the out-of-pit transportation cost for the
mined out mineral (particularly bulk and low valued commodities, such as, coal, iron ore
and some other industrial minerals) is affected significantly by the location of the deposit.
While considering this factor, an exercise on the costs (development, installation, operating,
etc.) of the different transport systems – truck transport, rail road transport, conventional
conveyor transport, cable belt conveyor transport, pipe conveyor transport, pipe line
hydraulic transport, water way transport, etc – that are applicable for the given deposit
should also be done.
Topography: Topography relates to land surface form or the terrain of a deposit location. It
could be of different types – plain, undulating, rolling, hilly, complex, etc.
Topography affects the mine development cost as it relates to general access to the mine
and the terrain influences the ease or difficulty with which a surface mine can be
developed. It also affects the mine operation costs as the type of the mining method to be
adopted depends on the topography and the type of the deposit. The development and
operating costs for the out-of-pit transportation of the mined out mineral is also dependent
on the topography. As the topography dictates the availability of flat land, the infrastructure
development costs are also influenced by it.
Climate: Climate of a place includes mainly three aspects – temperature, rain fall and wind
speed. During preliminary evaluation of a prospect, a careful consideration of climate is of
great importance.
The maximum and minimum temperature, and its seasonal variation affects the capital and
operation costs of a surface mine. If the mine is in a place of extreme temperature, hot or
cold, the machinery to be used must have additional facilities that will increase the capital
costs. Generally the productivity of personnel tends to decrease while working in extreme
temperature conditions, and this is likely to affect the mine productivity and thereby the
operation costs. In extreme cases, it may dictate a requirement for only seasonal operation
of the mine thereby affecting the mine operation costs.
The amount, rate and character of precipitation influence the infrastructure development
costs, and mine development and operation costs. For example, the nature, quality and
maintenance of haul roads required in areas of heavy rainfall are quite different from the
requirements in the scanty rainfall areas. If the mine is located in heavy rainfall areas,
special care needs to be taken regarding construction and maintenance of haul roads,
design and maintenance of slopes (both highwall and waste dumps) and design and
maintenance of effective mine drainage system affecting the mine operation and drainage
costs. On the other hand if the mine is located in scanty rainfall areas, availability of
sufficient quantity of water for personal and process needs has to be ensured (such as,
through building of dams/ water storage) that will affect the infrastructure development
costs.
If the mine is located in an area that experiences high-wind conditions (during the whole
year or a part of it), the structures and the equipment need to be of rugged and heavy
design to withstand such high-winds and the operation downtime may increase
considerably, thereby affecting the capital costs and operation costs of the mine.
Altitude: Altitude – if excessive – will affect the performance of equipment, particularly of
those with IC engines, due to thinning of air. This will affect the mine development and
operation costs.
Legal Status of Land and Mining Rights:
At the time of preliminary evaluation check in respect of the followings should be made as
these are likely to influence the various mining costs directly or indirectly.
(a) Land title both as to mineral and surface rights
(b) Rights to explore and mine
(c) Rights to acquire land for mining
(d) Rights to acquire auxiliary land for plant sites, workshops and other infrastructural
sites, roads, waste emplacement sites, tailing disposal ground, etc
(e) Necessary formalities to be completed regarding forest and environmental
clearances prior to acquiring the necessary land
(f) Rights to use water and electricity
Historical, Political and Sociological Factors:
These factors are probably not evaluable in terms of definite costs unless some operating
examples are available in the same area for comparison, but these are very much
important.
The history and political system of the country of the prospect needs to be reviewed
carefully. Continuance of a project is not warranted if mining rights are obscure or subject to
under legal constraints or subject to variable bureaucratic interpretation. History can
provide the important clues as to whether such problems exist or not. Even when history
shows a favourable trend, it is important to determine the extent and nature of national and
local laws and regulations in respect of mineral conservation, water and electricity uses,
environment pollution (air, water, land, etc.), waste and tailings disposal, reclamation and
closure, handling of explosives, mining safety and health codes, wages and labour
conditions, pension requirements, unions, royalties, cess, taxes, etc as these will influence
the various mining costs directly or indirectly.
Sociological factors include socio-economic, socio-political and socio-cultural factors.
These factors dictate the general development level of the place, availability of skilled work
force, people’s attitude to work, training requirements, etc, and will influence the various
mining costs directly or indirectly.
Geology:
A comprehensive assessment of geology of the deposit and its setting needs to be made in
preliminary evaluation. The steps to be followed are outlined below.
(a) Preparation or reviewing (if already available) of the surface geologic maps and
surface sample data including analyses and test work on samples. In-situ density of
the rocks to be mined should be determined or checked.
(b) Previous exploration maps, reports, assays, well and drill-hole records, and the history
of the prospect if previously explored or exploited to be reviewed. Reasons for
cessation of any previous work are to be ascertained.
(c) Fresh drilling is to be done or reviewing of earlier drill information, if available, is to be
made. Drill-hole pattern is to be examined as to its adequacy of representativeness.
Drill logs and classifications of ore, wall rocks and cover rocks are to be reviewed. An
appraisal of physico-mechanical and physico-chemical properties of the material that
would need to be mined if the prospect becomes a surface mine to be made.
(d) All the geologic data should be plotted on maps and necessary sections should be
prepared. If already available, geological maps and sections should be reviewed.
Geologic interpretations that have established the ore body geometry should be
reviewed. Calculations regarding the volumes of ore and waste under a desired
mining scheme are to be checked followed by estimation of the available ore tonnages
by grade.
(e) All the assay and recovery data are to be reviewed for interpretation of the significance
as to the kind of product that can be produced.
(f) Total reserve of the deposit should be evaluated, and the projected annual production
rate vis-à-vis the life of the proposed venture is to be estimated.
In view of the above, the following questions need to be answered.
(a) Is the reserve large enough to permit a reasonable depreciation of capital investment?
(b) Is more land, if required, available?
(c)Is the deposit open-ended laterally or downward, and could more ore be added through
more exploration?
Positive answers to these questions and favourable results of evaluation of other
parameters, in all probability, will lead to either further exploration or exploitation
development.
Mining Conditions:
During preliminary evaluation the following factors should be considered in an attempt to
arrive at some basic mine parameters, such as, the method/scheme of mining, shape of the
pit, bench height, etc, as these will affect the various mining costs.
Geometry of the ore body
(a) Topography of the land surface of the ore bearing zone
(b) Depth (minimum, maximum and average) of cover rocks and their types
(c) Physico-mechanical and physico-chemical characteristics of ore body
(d) Physico-mechanical characteristics of cover rocks and wall rocks
(e) Safe angle of slopes (bench, berm and pit)
Ore Treatment Requirements:
As per the present day market requirements, almost every potential surface mining venture
must consider some phase of ore beneficiation. This may vary from simply crushing,
screening and sizing operation to a complex operation including multiple stage size
reduction, up-gradation (washing, separation, agglomeration, etc), concentration, etc. The
extent of beneficiation requirement depends on both the run-of-mine ore quality and the
existing and projected market requirements.
The ore treatment requirements are estimated through laboratory testing. Assessment of
ore treatment requirements is necessary as the cost of beneficiation will aid to the cost of
production affecting the overall mining costs.
Environmental Requirements and Restrictions:
Surface mining during its working phase affects the physical environment (Air, Water, Land,
Flora and Fauna) adversely. It is necessary that these effects are restricted to a minimum
during working phase, and to bring back the environment in the post-mining era to such a
condition that is acceptable by nature and society through adoption of suitable mitigating
measures.
During preliminary evaluation an assessment of the environmental measures to be taken
during the mining and the and in the post-mining phase should be made keeping in view
the environmental requirements and restrictions as stipulated by the national and local
laws, as these will affect the mine operation and the mine closure (on-going and final)
costs.
ECONOMIC ANALYSIS
In the broadest sense, economic analysis on a preliminary evaluation of a surface mine
prospect involves the estimation of the cost of production and the market value of the
product, and therefrom the profit or loss.
In an economic evaluation of an industrial mineral project the market is an important factor.
An expanding market provides the most favourable condition and a shrinking market
becomes least favourable. Consideration needs to be given to the possibility of substitute
product coming to the market. Also possibility of improving the market value of the product
through beneficiation should be looked into.
For the purpose of preliminary evaluation estimation of current average prices and average
costs are generally adequate to provide an appraisal.