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24-MMP-A4 Mine Valuation and Mineral Resource Estimation · May 2016

Question 15 of 29: Concentrate Transportation – Eastern Canada vs. Pacific Rim

Nivaar worked solution (AI-drafted; not reviewed by a licensed engineer)

Notes on this paper

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 4.2: Concentrate Transportation – Eastern Canada vs. Pacific Rim (1.5 marks)

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.

BC PorphyryMine SiteTruck haul torail/portUnit train(BC -> ON/QC)Eastern Canadasmelter (Cu)Deep-sea port(Vancouver / Prince Rupert)Ocean vessel toPacific Rim smelterrail sidingport terminal
Fig. 4.2 – Two concentrate logistics chains from a central-BC mine: truck–rail overland to an eastern Canadian smelter, or truck–ocean-vessel via a BC deep-sea port to a Pacific Rim smelter.

Eastern Canada route. Truck haul from the mine to the nearest rail siding, then unit-train (CN/CP) roughly 3,000–4,500 km to a smelter in Ontario or Quebec – overland rail freight for concentrate typically runs on the order of $40–70/tonne over that distance, plus mine-to-rail trucking of roughly $10–20/tonne, for an all-in landed transport cost commonly in the $50–90/tonne range (consistent in order of magnitude with the $39/tonne "transport, loading and representation" charge given in Question 4.5).

Pacific Rim route. Truck haul to a BC deep-sea port (Vancouver or Prince Rupert), typically a shorter overland leg ($10–20/tonne), followed by bulk/break-bulk ocean freight to a Japanese, Korean or Chinese custom smelter – ocean freight for concentrate is comparatively cheap per tonne-km (bulk shipping economies of scale) but port handling, storage and demurrage risk add cost, for an all-in cost also commonly in the $30–60/tonne range depending on vessel size/utilization and contract terms.

Destination choice. For a central-BC mine, the Pacific Rim route is usually favoured on pure logistics economics (shorter overland leg to tidewater, cheap bulk ocean freight, and proximity to Asian custom-smelter demand, which has historically offered competitive treatment/refining terms because Asian smelters compete aggressively for concentrate feed); the eastern Canada route becomes preferable when a producer wants to diversify counterparty/country risk, secure a long-term domestic offtake relationship, or when rail capacity/pricing to the coast is constrained relative to eastbound rail availability. In practice many BC producers split shipments across both routes to manage exactly this risk.