24-MMP-A4 Mine Valuation and Mineral Resource Estimation · December 2018
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, 2018-Dec. 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 1.1–1.8); 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, anisotropy); Hustrulid, Kuchta & Martin, Open Pit Mine Planning and Design (mine valuation, NPV/IRR and cut-off grade methodology); Gentry & O'Neil, Mine Investment Analysis (smelter/refining contract terms, net smelter return, taxation and risk); Guilbert & Park, The Geology of Ore Deposits, and Evans, Ore Geology and Industrial Minerals (VMS/SEDEX and porphyry deposit models); SME Mining Engineering Handbook, 3rd ed. (mineral exploration/evaluation stages, ore reserve classification); 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.
Deposit (a)'s nominally HIGHER average grade is undermined by its sparse drilling and correspondingly large estimation variance: with a lognormally-skewed grade distribution (typical of most metal deposits), sparse high-variance sampling tends to produce a CONDITIONALLY BIASED, over-optimistic estimate of recoverable grade above cut-off (the well-known "information effect" / smoothing-and-selection bias in resource estimation), and its resource classification would likely be held at Inferred or low Indicated confidence, carrying real risk of negative grade reconciliation once mined. Deposit (b), despite a lower nominal average grade, has been de-risked by concentrated drilling — its low estimation variance supports a higher-confidence Measured/Indicated classification and a resource figure a lender or investor can rely on with much less downside surprise. For project financing and feasibility purposes, deposit (b)'s LOWER but well-constrained grade is often the more BANKABLE asset, while deposit (a) requires substantial additional infill drilling before its nominal grade advantage can be trusted or reported at reserve-level confidence.
