24-MMP-B8 Rock Slope Engineering · Undated paper
Nivaar worked solution (AI-drafted; not reviewed by a licensed engineer)
09-MMP-B8, Mine Management & Systems Analysis — May 2019 sitting. 3-hour closed-book exam, answer all 5 questions for a total of 100 marks, Appendix A (discounted cash-flow factor tables) attached.
Reference texts. Hustrulid, Kuchta & Martin, Open Pit Mine Planning and Design (pit optimization, truck/shovel matching, mine scheduling); Hartman & Mutmansky (eds.), SME Mining Engineering Handbook (mine life-cycle, project economics, haulage systems); Blank & Tarquin, Engineering Economy (DCF/NPV/IRR/payback); Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK Guide) (Critical Path Method).
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 mining project passes through five broad stages between initial discovery and final walk-away. 1 — Exploration. Regional prospecting followed by progressively more targeted geological mapping, geochemical sampling, geophysical surveys and diamond drilling, aimed at discovering and then delineating a mineralized zone well enough to estimate a resource. 2 — Development (Evaluation and Feasibility). The resource is converted to a mineable reserve through pre-feasibility and feasibility studies (geotechnical, metallurgical, environmental and economic work); permits are obtained and project financing is arranged. 3 — Construction. The bulk of the capital program is spent building mine access, the pit or underground workings, the processing plant, tailings/heap-leach facilities, and power/water infrastructure, and completing pre-production stripping/development. 4 — Operation (Production). Ore is extracted, processed and sold on a sustained basis; this is the only stage that generates revenue, and it is where the capital invested in stages 1–3 is recovered and, if the project is economic, turned into profit. 5 — Closure and Reclamation. Once reserves are exhausted, infrastructure is decommissioned, pit/waste-dump/tailings landforms are re-graded and re-vegetated, water treatment and long-term monitoring commitments are established, and the site is eventually relinquished to a stable, walk-away condition.
Each stage has a characteristic cash-flow signature. Exploration is a small, sustained cash outflow spread over the years it takes to find and delineate a deposit — most exploration projects never reach a discovery, so this spend is high-risk with no assurance of return. Development is a larger outflow: feasibility studies, detailed engineering and permitting are expensive but still produce no revenue. Construction is the single largest cash outflow, concentrated into a relatively short, capital-intensive window as the mine and plant are built (analogous to the Year 0 pre-production capital spend of $80.8 million analyzed for the Gold Bar Mine in Question 2). Operation is the only stage with net cash inflow — revenue less operating cost, sustained for the whole production life — and must be large enough, for long enough, to repay the preceding three stages of outflow and still return a profit. Closure is a final outflow (decommissioning and reclamation cost) with no offsetting revenue. The resulting cash-flow diagram is a deep, widening valley (exploration → development → construction) followed by a sustained plateau of positive cash flow during production, ending in a small terminal dip at closure.
