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.
Revenue per tonne of ore is grade × price, not grade alone, and molybdenum's price per unit of metal is dramatically higher than copper's – historically often 5–15× copper's price per pound (both trade in $/lb, but Mo has periodically spiked to $30–40/lb against Cu at roughly $2–4.5/lb) because Mo has no comparably abundant substitute for its principal uses (alloy/stainless-steel strengthening, high-temperature and corrosion-resistant applications) and mine supply is small and concentrated relative to demand. A grade ratio of roughly 4:1 in copper's favour is therefore comfortably overcome by a price ratio that can run into the double digits in Mo's favour, so the two revenue streams (grade × price for each metal) end up comparable in magnitude even though the ore contains vastly more copper than molybdenum by mass.
