24-MMP-A4 Mine Valuation and Mineral Resource Estimation · May 2013
Nivaar worked solution (AI-drafted; not reviewed by a licensed engineer)
EGBC National Exam — Mining and Mineral Processing Engineering, 09-Mmp-A4 Mine Valuation and Mineral Resource Estimation, 2013-May. 3 hours duration; one handwritten 8.5×11 in reference sheet permitted (not an open-book exam); only approved Sharp or Casio calculators allowed. Question 1 is compulsory (40 marks, parts 1.1–1.7); candidates then select FOUR of the six optional Questions 2–7 (15 marks each) to complete the paper.
Reference texts: Isaaks & Srivastava, An Introduction to Applied Geostatistics (variogram modelling, kriging estimators, volume–variance relations); Hustrulid, Kuchta & Martin, Open Pit Mine Planning and Design (mine valuation, NPV and cut-off grade methodology, mineable reserves, selective mining units); Gentry & O'Neil, Mine Investment Analysis (Canadian mining taxation, smelter/refining contract terms, net smelter return); SME Mining Engineering Handbook, 3rd ed. (mineral exploration and evaluation stages, ore reserve classification).
Question text not reproduced: the examination questions are © Engineers and Geoscientists BC. Open the official past paper (linked at the top of this page) to read the question, then follow the worked solution below.
1. Discovery. Work: regional prospecting, geological mapping, geochemical/geophysical surveying, and follow-up of anomalies, government airborne survey data, or a prospector's showing, to identify a mineralized occurrence worth further attention. Possible outcomes: the occurrence is a genuine mineral showing warranting staking and further work; or it is barren/sub-economic and the target is dropped.
2. Preliminary surface evaluation. Work: detailed property-scale mapping and sampling (grab and chip samples), prospecting the showing's extent, ground geophysics/geochemistry to define anomaly limits, and a first-pass literature/historical-data review. Possible outcomes: the showing is confirmed as a coherent, sizeable target justifying trenching/stripping and possibly drilling; or the anomaly proves to be narrow, discontinuous or unrelated to economic mineralization and is dropped or deprioritized.
3. Detailed surface evaluation. Work: systematic trenching and stripping, channel sampling on a defined grid, detailed structural and lithological mapping to establish geological controls, and construction of a preliminary geological model. Possible outcomes: enough continuity and grade are demonstrated on surface to justify the capital cost of a drilling program; or surface work reveals the mineralization is too erratic, low-grade, or structurally complex to proceed further at this stage.
4. Subsurface evaluation. Work: phased diamond and/or reverse-circulation drilling on a widening then infilling grid, systematic core logging and assay, and construction of a 3-D geological/grade model culminating in a variogram-supported (kriged) resource estimate classified as Inferred, Indicated and/or Measured under NI 43-101. Possible outcomes: a resource of sufficient size, grade and confidence to justify a feasibility study is defined; or drilling fails to confirm continuity/grade at depth and the project is abandoned or scaled back.
5. Feasibility. Work: engineering and economic studies (Preliminary Economic Assessment, then Pre-Feasibility, then Feasibility Study) covering mine design, metallurgical testwork and flowsheet selection, capital and operating cost estimation, environmental baseline studies and permitting requirements, and a full NPV/IRR cash-flow model. Possible outcomes: the study demonstrates a positive NPV at an acceptable discount rate and risk profile, supporting a construction decision; or the economics are marginal/negative and the project is shelved, or returned to exploration to seek additional higher-grade resource.
6. Development. Work: securing project financing and permits, then physical pre-production construction – shaft sinking or decline development, waste stripping in an open pit, mill and infrastructure construction, and workforce hiring/training. Possible outcomes: the mine reaches the "commercial production" milestone (the 60%-capacity test of Question 1.1) on schedule and budget; or construction cost overruns, permitting delays, or commodity price collapse impair project economics before production is reached.
7. Production. Work: ongoing mining and processing to the design mine plan, continuous grade-control drilling and blast-hole sampling (feeding back into the resource/reserve model), and ongoing reconciliation of actual mined grade/tonnage against the model. Possible outcomes: the mine performs to or better than the feasibility study, generating the projected cash flow, potentially extending life through further exploration/reserve conversion; or reconciliation reveals systematic over- or under-estimation requiring re-optimization of the mine plan, cut-off grade, or, in the worst case, early closure.
8. Reclamation. Work: progressive reclamation during operations where practical (regrading, revegetation of completed waste dumps), and final closure reclamation at the end of mine life – pit backfilling or stabilization, tailings facility closure and long-term water treatment where required, and site revegetation/monitoring against the approved closure plan. Possible outcomes: the site meets the regulator's closure criteria and reclamation security is released back to the company; or residual environmental liabilities (acid rock drainage, long-term water treatment) persist and require ongoing (sometimes perpetual) care-and-maintenance funded from the reclamation trust established during operations.
