24-MMP-A4 Mine Valuation and Mineral Resource Estimation · May 2016
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, 2016-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 1.1–1.6); candidates then select THREE of the six optional Questions 2–7 (20 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); Gentry & O'Neil, Mine Investment Analysis (Canadian mining taxation, inflation and financing effects on DCF yield, smelter/refining contract terms, net smelter return); SME Mining Engineering Handbook, 3rd ed. (mineral exploration/evaluation stages, ore reserve classification, ore deposit models); CIM Best Practice Guidelines and NI 43-101 (Canadian Securities Administrators).
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.
4.1.a) Charges and deductions. A copper smelter contract sets a treatment charge (TC, $/dry tonne of concentrate, covering the smelter's cost of processing) and separately a per-pound-payable refining charge (RC), plus a fixed unit deduction (here 1.1 units, i.e. 1.1% of concentrate mass, deducted from the assayed grade before any metal is paid for – compensating the smelter for unavoidable metallurgical losses in its own furnace), and transport/logistics charges for moving concentrate from mine to smelter.
4.1.b) Refining accounting. Refining is charged per pound of PAYABLE copper (after the unit deduction), not per pound of gross contained copper – RC$ = refining rate ($/lb) × payable lb Cu – so the deduction and the refining charge compound against the mine's net revenue rather than applying independently to the gross assay.
4.1.c) Effect of lead. Lead is a penalty (deleterious) element in copper concentrate above a contractual threshold (commonly ≈1–3% Pb) because it degrades smelter furnace performance and refined-copper quality; above threshold the smelter levies a $/tonne-of-concentrate penalty per percentage point of excess lead, directly reducing net smelter return, and severe lead content can trigger outright rejection or steep discounting of the concentrate.
4.1.d) Gold and silver accounting. Au and Ag riding in the copper concentrate are paid as by-products under their own payable-percentage and minimum-deduction schedule (commonly a higher payable % than copper itself, e.g. 90–95%+ above a small minimum ounce deduction), valued at their own quotational-period price fixes, with a separate (usually much smaller, $/oz) refining charge – settled in the same overall concentrate invoice as the copper payment rather than as a separate shipment.
