1. 2008 Sr. Design Project ©Jan 2008 Dr. B. C. Paul Plans were made by the Author. MineSight® is proprietary software of Mintec Inc., Maps are taken from the MapQuest Web Site.

2. What is Sr. Design Project Oriented Class where a team attempts to do a design a mining operation to about Feasibility or Pre-Feasibility level Different than other classes –No tests assignments or quizes –Project is your grade –Does not have fixed lecture material Topics may be triggered by issues that come up

3. What Are We Trying to Accomplish Provide a team comprehensive design experience Achieve basic MineSight ® proficiency Work with tools from long term planning down to day to day production with an understanding of the relationships and tools Build cost estimating and economic evaluation skills Improve oral and written communication

4. The Format Do you get to pick your project? –Heck No! Monday’s – lecture on the weeks objective and tools to help you accomplish it Wednesday – Lab – do work – ask questions make design decisions –(will this get your work done – Heck No!) Friday – Present oral reports of your findings, plans and methodologies

5. Commentary Sr. Design is a vastly inordinate amount of work for 3 credits –My experience 15 credits with 3 of them Sr. Design –Half work to Sr. Design – Half to the other 12 Plan to push hard on design for 11 weeks and then go into reporting and finalizing work –Very hard at first with a little lighten-up at the end –(if you don’t hit intermediate targets the end could be down right brutal) We will be using new MineSight ® tools for the first time (for all of us) – it should be quite a ride

6. Porphyry Co Mo Orebody Near Silver City New Mexico Appears Large in size and probably surface minable

7. More Geography

8. Closer Geograpy

9. And Zooming in Again

10. Mines Developed by Progressive Design + Economics Interaction First need to define likely prices and costs for large scale surface mining First generation data is used for looking at drilling and defining what is likely to be an Ore body Your First tasks – Week #1 –Determine likely prices for Cu and Mo –Identify how Cu and Mo are Processed –Get general costs for mining and processing of Cu/Mo ore

11. Ore Body Definition Import project data into MineSight® Calculate estimated COVs Display Drill Hole Data Outline Orebody Estimate Reserves Composite Samples –Check Variograms with MSDATA analyst (Week 2 activities)

12. Build Block Models Set Surfaces and Block Models Interpolate block models Evaluate Ore Reserves Evaluate Local resources and situation Draft Estimate Production Rate –Refine mining and milling costs for use in design (Week 3 work)

13. Stage Pits Use Floating Cones and Learch Grossman to guide in 3 year mine stage plans –Use MineSight Economic Planner Define Minable tonnages on each phase (Week 4 work)

14. Produce An Optimized Grade Schedule Develop Conceptual Equipment Fleets Estimate Economics Run MSVALP to get cov. And grade schedule (Week 5)

15. Begin Setting Up Mine For Production Begin matching mining equipment to likely production tasks Use Pit Expansion tool in MineSight to design haul roads for each phase Calculate tonnage by phase –Check equipment fit (Week 6 work)

16. Set Up Mine Support Structure Design waste and stock pile dumps Design connecting roads Locate Mills Plan haulage of concentrate (Week 7 work)

17. Catch Up Week Probably also SME (Week 8)

18. Work up Haulage and Cycle Times Calculate Haulage Times on each route at each stage Measure adjustments for each bench Begin Entering data into Strategic Planner (Week 9)

19. Work the Strategic Plan Prepare Reserves for Strategic Planner Calculate Reclaim and Stockpile costs Run the Strategic Planner Check Output and Assumptions (Week 10)

20. Weeks 11 to 15 Run Activities Planner Do Write-Ups on project

21. How Will I Grade this Thing Active participation and work 25% –13% assigned by instructor –12% assigned by peers Intermediate Oral Reports – 25% –(its also a heck of a good way to enforce intermediate goals) Final Oral Report – 10% Final Written Project Feasibility Study –30% –10% to project work-book Points go together for a fixed 90, 80, 70, 60 grading scale

22. What is a Project Work Book? Project Work book is copies of input data Notes on what decisions were made and why MineSight ® can output the input data sets –Print them out –Offer explanations of the choices in the file

23. Resources for Week #1 Your First tasks – Week #1 –Determine likely prices for Cu and Mo –Identify how Cu and Mo are Processed –Get general costs for mining and processing of Cu/Mo ore USGS has a long term price history –Other internet sources have shorter term for specific market SME Minerals Processing Handbook excellent overview (in reading room on line) Western Mine Cost Service –On line inquires and looking a Mining Engineering project summaries

24. Avoiding Misunderstandings What Data Must We Have By Friday? You Need to be able to calculate break-even cut-off grades with your data –The example that follows may not have the right numeric values but the process should show what is needed –The numbers shown in RED are ones you need to have correct values for (don’t assume my values are correct) –Obviously you need to know the process to get a Break-Even COV

25. Copper Break Even Cut-Off Let us suppose Cu sells for $1.45 per lb. To refine smelted Cu to market grade costs $0.10 per lb –Thus at the end of the smelter stage it is worth $1.35 per lb. A Custom Smelter charges $80 per ton of concentrate –It also costs $5/ton to transport the concentrates to the smelter –We assume our copper ore is Chalcopyrite which yields a concentrate of about 28% Cu

26. Continuing Calculation If a tons of concentrates contains 28% copper –2000*0.28 = 560 lbs –$85 dollars to transport and smelt a ton of concentrates costs $85/ 560 lbs = 15.2 cents per lb Therefore Cu at the end of a flotation mill is worth $1.198 per lb.

27. Continuing Calculation To Surface Mine a ton of Cu ore costs $2/ton To run that ton of Cu ore through the concentrator costs $3.50/ton Thus to mine and concentrate a ton of ore costs $5.50/ton –The Cu contained and recovered must be worth no less than $5.50 –At $1.198 per lb this requires 5.50/1.198 = 4.59 lbs of recovered copper At 88% recovery in concentrates the rock must contain –4.59/0.88 = 5.22 lbs 5.22 lbs per 2000 lbs is –5.22/2,000 *100 = 0.261% The Break-Even Cut-Off Grade is 0.261% Cu

28. Copper Can Also Be Recovered in a Leach with low grade feed ore Market Cu is worth $1.45/lb Electrowinning Cu is costs $0.10 per lb –Thus Cu in a concentrated solution is worth $1.35/lb Solvent Extraction of Cu from a weak leach solution costs $0.25 per lb –Thus copper in a weak solution is worth $1.10 per lb

29. Leach Copper Cut-Off Grade To Mine a Ton of Copper Ore costs $2.00 per ton To Crush low Grade Copper Ore for Leach pads costs $1.00 per ton To Rehandle and Stack the Crushed Ore On Pads costs and then remove it following leaching costs $1.00 per ton To build pads and circulate and recover leach solution costs $0.75 per ton Thus a ton of low grade copper ore must contain enough recoverable copper to pay $4.75 per ton

30. Continuing Leach Copper Calculation The recovery of copper from a controlled leach is 65% The Cut-Off Grade is thus –$4.75/$1.10 = 4.32 lbs recovered –4.32/0.65 = 6.64 lbs in the rock –This this is more than is required for regular milling no one will mine copper ore just to leach it on a pad BUT!

31. Some Overburden Has to Be Removed to Mine Copper Ore Whether we leach it or through it away is a matter of economics –If its overburden it had to be mined –Thus the $2/ton mining cost would be incurred whether the ore was leached or not Eliminate it from the calculation The Leaching Waste Cut-Off Grade is –$2.75/1.10 = 2.5 lbs recovered –2.5/0.65 = 3.85 lbs in ore –3.85/2000 * 100 = 0.1923% Cu

32. BUT there is more Not all waste is necessarily crushed and revolved off and onto leach pads Some Copper Ore is Simply put on a dump and then leached It costs $.50 per ton to leach a dump and recover solution Recovery under these conditions is 25% There must be 50 cents per ton of recoverable copper to justify a leach

33. Getting Another Break-Even COV $0.50/$1.10 = 0.455 lbs of Cu recovery needed 0.455/0.25 = 1.82 lbs in rock 1.82/2,000 * 100 = 0.091% Cu

34. Thus For Cu To Target Ore for Mining we need 0.261% Copper –We would not target mining ore for a leach If Overburden that had to be removed contains copper –If the grade is 0.1923% or better we will take it to crushing and leach pads –If the grade is less than that but more than 0.091% Cu we will try to leach it on the dump

35. But We Also Have Molybdenum How Much Molybdenum do we need to run an extra recovery in our Mill? Molybdenum sells for $7.00 per lb contained in Moly oxide Since the Process has not been identified we will use a made up one for now –Moly concentrates (moly sulfides) are Roasted to convert them to oxides and are then leached to remove impurities – roast/leach costs $1.10 per pound of Moly in a sulfide concentrate –Thus Moly in sulfide concentrate is worth $5.90 per lb.

36. Considerations If Moly is strictly a byproduct we would not mine ore for moly content – thus mining cost would not be considered (it would only be incurred if we had already mined the rock for copper) A two product flotation is more expensive than a single product flotation –Cu only is $3.50/ton –Cu/Mo is $4.00/ton –Thus the incremental flotation cost is 50 cents To Justify a Two Product Float we need at least 50 cents worth or recoverable moly in the ore

37. Calculating a By-Product COV $0.50/$5.9 = 0.085 lbs Recovery in a two product float is about 70% 0.085/.7 = 0.121 lbs Mo in rock 0.121/ 2000 * 100 = 0.0061% is the COV

38. Other Mo Considerations Moly recovery in a leach is pretty close to non- existent (unless Tim finds out otherwise) so leaching for moly is off the table Sometimes Cu and Mo are coproducts which means ore cut-offs are determined based on both metals being present –Equivalent Cu is often used to consider this –The moly is converted to an equal amount of Cu

39. Doing the Calculation Copper in a floatation concentrate is worth $1.198 per lb Moly in floatation concentrate is worth $5.90 per lb Recoveries are not equal –Cu with 88% recovery $1.198*0.88 = $1.05 –Mo with 70% recovery $5.9*.7 = $4.13 Value Ratio –$4.13/$1.05 = 3.92 ie 1 pound moly is equal to 3.92 lbs of copper

40. Applying for Coproduct Economics For each ton of ore take the lbs of contained copper Take the lbs of contained Moly Multiply the Moly by 3.92 Add the resulting number to the copper –The result is the equivalent copper grade of the ore

41. Getting A COV for the Coproduct Mill A two product mill costs $4.00 per ton to run The Ore costs $2.00 per ton to mine We need $6.00 per ton in equivalent copper recovered. –$6.00/$1.198 = 5 lbs of equivalent copper –At 88% Recovery 5/0.88 = 5.69 lbs –5.69/ 2000 * 100 = 0.285% equivalent Cu

42. So What Do We Do? Will – You get the Copper and Moly Price you believe is realistic for design looking at an inflation adjusted price history and your read of any reason long term future markets should be considered fundamentally different. Tim – You identify the processing routes and expected recoveries and concentrate grades for Cu and Mo Dan – You need a mining cost per ton and the cost for the processes that Tim identifies as important. You costs should be based on the same unit size and years dollars as Will’s costs. No we’ll deal with Cut-Off Values on Friday – just have the data we need ready to go