24-MMP-A4 Mine Valuation and Mineral Resource Estimation · May 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-May. 3 hours duration; closed book, with one handwritten 8.5×11 in. reference sheet (both sides) permitted; only an approved Sharp or Casio calculator allowed. Question 1 is compulsory (40 marks, parts 1.1–1.9); 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); Hustrulid, Kuchta & Martin, Open Pit Mine Planning and Design (mine valuation, cut-off grade theory, incremental analysis); Gentry & O'Neil, Mine Investment Analysis (Canadian mining taxation, cash flow/risk, smelter contract terms, NSV/NSR); SME Mining Engineering Handbook, 3rd ed. (ore deposit models, mineral exploration/evaluation stages, equipment utilization); O'Hara, T.A., “Quick Guides to the Evaluation of Orebodies,” CIM Bulletin, Feb. 1980 (parametric capital-cost estimating); CIM Definition Standards for Mineral Resources and Mineral Reserves / National Instrument 43-101 (resource/reserve classification and reporting).
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.
(a) Net Smelter Value (NSV) is the GROSS value of the payable metal content of a shipment of concentrate — payable metal quantity multiplied by the market price — BEFORE any treatment, refining, transport or penalty deductions are subtracted. (b) Net Smelter Return (NSR) is what the mine actually RECEIVES: NSV less every applicable deduction (treatment charge, refining charge, transport/freight, impurity penalties). NSR is therefore always less than or equal to NSV for the same shipment, and the two are conventionally expressed as currency per dry tonne of concentrate.
Engineering use. The mining engineer uses NSR (not the headline metal price, and not NSV alone) as the true per-tonne-of-CONCENTRATE revenue input to every downstream economic calculation — cut-off grade, mine/mill scheduling, and project cash flow — because it is the figure that actually reaches the mine's bank account. NSV alone overstates realizable revenue by ignoring the processing and logistics chain; comparing NSV to NSR for a given shipment also directly quantifies how much value the smelter-contract terms and transport logistics are consuming, which is a key lever for contract negotiation and for choosing among competing smelter offers or transport routes.
Essential variables. Concentrate grade (M), unit deduction (D), metal price (P), treatment charge (T), refining charge (r, where applicable), any precious-metal credits, impurity penalties, and transport/freight cost together determine NSV (from M, D, P) and NSR (NSV less T, r, penalties and freight, as applicable to the specific contract).
