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.
Stoppage clauses. Contracts specify force-majeure and stoppage provisions on BOTH sides – a MINE-side stoppage (strike, equipment failure, permit suspension) excuses delivery obligations for a defined period without penalty; a SMELTER-side stoppage (furnace rebuild, labour action) similarly excuses acceptance, with concentrate typically re-routed to an alternate smelter under a standby arrangement or stockpiled at the mine/port.
Assaying rules. Both parties sample and assay every lot (commonly by an agreed sampling protocol at loading and again at the smelter); where mine and smelter assays disagree beyond an agreed tolerance (a "split"), an independent UMPIRE ASSAYER, pre-agreed in the contract, arbitrates and their result is final and binding – this umpire-assay mechanism is the standard resolution path for grade disputes industry-wide.
Price fixes. The contract specifies the exact exchange, time and location of the metal price fix used for settlement – e.g. LME official cash settlement at London close, or COMEX/LBMA fixes – over an agreed QUOTATIONAL PERIOD (commonly the month of/following arrival), removing ambiguity over which of many daily quotes applies.
Applicable courts/law. Contracts name a governing law and dispute-resolution forum (commonly commercial arbitration, e.g. ICC or LCIA rules, given the cross-border nature of most concentrate trade) rather than leaving jurisdiction to be litigated after a dispute arises.
Transportation and containers. Concentrate typically moves as bulk or bagged/breakbulk cargo by rail hopper car or truck to port, then by bulk carrier or, increasingly for smaller/higher-value lots, sealed shipping containers (reducing moisture loss/contamination risk and easing multi-mine consolidation) for the ocean leg.
Mixing concentrates to avoid demurrage. Smelters often accept and blend concentrate from several mines into a single vessel shipment (a "combined lot") purely for logistics efficiency – this lets several smaller producers, none of whom individually fills a vessel economically, share sailing schedules and avoid DEMURRAGE (the substantial per-day cost of a vessel waiting idle at port for a full cargo), with each mine's payment still settled against its own individually assayed sub-lot.
