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.
Apportion the overrun by cause: (1) estimate-class error – sanctioning off a PFS-level (AACE Class 4/5, typically ±30–50% accuracy) estimate rather than a full feasibility-level (Class 2/3, ±10–15%) estimate; (2) scope growth between sanction and construction (added infrastructure, tailings redesign, permitting-driven scope changes); (3) owner's-cost omissions (spares, first fills, commissioning, owner's team, financing costs during construction) frequently under-scoped at PFS stage; (4) market/EPC cost escalation beyond general CPI inflation, from a tight construction labour/equipment market at the time of building; (5) schedule slippage, which compounds financing (interest-during-construction) cost. Recommendations: sanction only on a Class 2/3 (feasibility-grade) estimate with a properly quantified contingency (not a flat 10–15% rule-of-thumb) and explicit escalation allowance; commission an independent owner's-engineer review before sanction; benchmark against recent comparable, similarly remote projects; and lock key long-lead equipment/EPC pricing early via staged/phased contracting rather than a single lump-sum bid late in the process.
