24-MMP-A4 Mine Valuation and Mineral Resource Estimation · May 2017
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, 2017-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 five optional Questions 2–6 (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, smelter/refining contract terms, net smelter return, transportation logistics); SME Mining Engineering Handbook, 3rd ed. (cost-estimating relationships, mineral exploration/evaluation stages, ore reserve classification); Evans, An Introduction to Ore Geology and Guilbert & Park, The Geology of Ore Deposits (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.
The choice is made through a staged sequence of studies of increasing precision – conceptual/scoping study, preliminary economic assessment (PEA), pre-feasibility study (PFS), and finally a bankable feasibility study (FS) – each stage spending more capital to narrow the geological, cost and geometric uncertainty before the next commitment. At every stage the underlying test is economic: does the resource, mined by a given method, deliver an NSR per tonne above the all-in cost (mining + milling + G&A + capital recovery + taxes/royalties) at the assumed price deck, with an NPV and IRR that clear the corporate hurdle rate, using a resource classified (measured/indicated/inferred under NI 43-101) to a confidence appropriate for that stage's spend.
Once the deposit is established as economic, open pit vs. underground turns primarily on geometry, depth and the resulting break-even stripping ratio. Open pit is favoured for near-surface, large, tabular/blanket or bulk-disseminated deposits (e.g. a porphyry) because high-volume, low-selectivity shovel/truck extraction achieves the lowest unit cost, at the price of removing overburden and waste rock up to the pit's economic limit – generated numerically by a Lerchs–Grossmann graph-theoretic optimizer or an incremental Whittle-style sweep across a range of revenue factors. Underground mining takes over once the deposit becomes too deep, too steeply dipping, too narrow, or too discontinuous for pit slopes to stay economic; the crossover depth depends on the strip-ratio economics, achievable pit slope angle (itself governed by rock-mass geotechnical strength), and the deposit's own grade/geometry, but commonly falls in the 200–500 m range for a moderate-grade deposit. Underground method selection then follows the ore body's own geometry, dip, ground competency and grade continuity – block/panel caving for large low-grade bulk deposits, cut-and-fill or long-hole open stoping for narrower higher-grade veins.
Overlaying the technical/economic analysis, permitting timelines, Indigenous consultation and social licence, financing availability, and commodity price-cycle timing all influence the final go/no-go and method decision – a technically superior but unpermittable or unfinanceable project will not proceed regardless of its calculated NPV.
