Mining Project Evaluations

Issue #42: Mining Project Evaluations
 

Santa Rita project financing

In January 2008 SRK took on the role of Independent Engineer (IE) for the project financing for Mirabela Nickel’s Santa Rita project located in Bahia state, Brazil. The Santa Rita project is an open pit mine with a conventional nickel sulfide concentrator. Initially, it was based on a proven and probable reserve of 84Mt with a grade of 0.61% Ni, mining 4.6Mt of ore a year and producing 17,000t of Ni concentrate, with a Ni grade of 13% plus Cu and Co by-products. read full article…

Due diligence study on a complex mining operation in Southern Africa

SRK recently completed a comprehensive Due Diligence (DD) study on a complex mining operation in Southern Africa. The copper mining operation consists of a complex array of surface and underground ore production operations together with primary and secondary beneficiation facilities. SRK’s approach to DD studies is to involve professional staff in an integrated multi-discipline approach. The presence of water affects the geotechnical design, both surface and underground, and further complexity is added if several end products require different process routes and different markets. read full article…

Mining Project Evaluation in Brazil

In Brazil mining is energised by a supportive economic and political environment. As South America’s leading economy, Brazil is rich in history and culture, with a combination of geography, population and economy that only a few countries such as the USA and China share. Brazil ranks among the world’s top-five producers of agricultural goods and mineral commodities. Having controlled inflation, the country has a stable political system, high employment and falling risk ratings. Foreign investments are welcomed and mining will reach US$25 billion in 2010. read full article…

Environment and closure due diligence

Over the last 15 years, the importance of environmental, social and closure issues in the evaluation of mineral properties (MPE) has significantly changed. While once these issues were generally considered insignificant, they have evolved into an integral component of most MPEs. Many investors have specific environmental, social and closure standards that are as important as the resources, mine design and technical feasibility, due to their potential to increase the predevelopment costs and slow the return on investment. read full article…

Palladon’s Iron Mountain project, Utah

The Iron Mountain project is located near Cedar City, Utah. The District was discovered in 1849 by Mormon Pioneers, and the iron deposits were mined almost continuously from 1851 to 1995, producing an estimated 88.2Mt. The new board of Palladon Ventures Ltd, the current owner, commissioned SRK to review the project and comment on its merits. read full article…

Technical review of a polymetallic project in East Africa

SRK was commissioned by a Chinese company to review a copper project located in East Africa. The objectives of the review were to use the data provided to analyse and provide summaries of the results for the client, and comment on any material flaws detected in the project. The SRK team visited the project site in 2009, reviewed the materials and held discussions with the current owner. read full article…

A geological risk approach to valuing early-stage exploration projects

The valuation of exploration projects that do not contain defined resources is complex, as consideration must be made of both technical and market factors. Technical factors include the level of geological understanding of the project area, the targeted mineralisation style, and the distribution and magnitude of mineralisation indicators defined by previous exploration (e.g. geochemistry or geophysics). Market factors may include recent comparable transactions, geography, infrastructure costs and commodity prices. read full article…

Trekkopje

Trekkopje is the site of a green fields project, consisting of a very large, lowgrade, shallow uranium resource hosted in calcium carbonate cemented (calcrete) conglomerates. It rests in the arid desert region of western Namibia, in southwestern Africa, situated in gently sloping terrain. Trekkopje will be an open pit operation, primarily using large hydraulic excavators loading haul trucks. read full article…

Partnering with Polymetal: from IPOs to Compliance Audits for ongoing reporting

Since 2003 to the present, SRK has partnered with JSC Polymetal in its annual declarations of Mineral Resources and Ore Reserves. The declarations meet the terms and definitions in the 2004 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore reserves – the JORC Code, an internationally recognised reporting code as defined by the Combined Reserves International Reporting Standards Committee (CRIRSCO). read full article…

Project evaluation course

Mike Warren and Paul Hodkiewicz, Principals at SRK Australia, presented a training course on Project Evaluation in Singapore in May 2009. The course, entitled “Valuation and Financial Assessment of Mining Projects - a complete guide to due diligence in mining,” attracted 18 attendees who came from mining and exploration companies, as well as accounting and finance firms. read full article…

Due diligence in coal – do SRK clients get good value for their money?

The short answer to this important question is Yes – SRK brings value to clients, licence holders and advisers during the due diligence process, whether it involves an IPO, purchase, sale, or borrowing. We are able to do this because of the experience, breadth of knowledge, and communication skills of our multidisciplined coal teams. read full article…

Re-evaluation of the base and precious metal potential south of the Kalimantan Arc

SRK has been evaluating minerals projects in southern West Kalimantan Indonesia for the past four years. This work has been focussed primarily on advising various clients on exploration and development programs for iron ore. Iron mineralisation in this region is hosted predominantly within shales which have been hydrothermally altered and selectively replaced by massive hematite. read full article…

Red Mountain gold project located in British Columbia, Canada

The Red Mountain Project near Stewart, British Columbia has been the subject of extensive exploration and development activities since 1989. Seabridge Gold Inc. (“Seabridge”) acquired the Red Mountain Project in February 2002 to provide exceptional returns to shareholders by maximising leverage to the gold price that was expected to rise. Seabridge’s business plan was to find, evaluate, acquire, explore and develop gold deposits. Management decided that Seabridge would not build or operate mines, but would look to partner or sell assets that were ready for production. read full article…

El Chanate gold project, Mexico

With the significant increase in the gold price over the last several years, some smaller mines have had the opportunity to become bigger mines. Capital Gold Corporation’s El Chanate heap leach gold mine, located in the Sonoran desert of Mexico is one such operation. Subsequent to completion of SRK’s Independent Engineer role for the lending banks, SRK was retained by and worked closely with Capital Gold personnel to help define potential corporate and operational strategies to maximise shareholder value and the growth of the company. read full article…

Independent review of worldwide exploration portfolio

In connection with the acquisition of Falconbridge Ltd., the integration planning team of Xstrata plc commissioned SRK to provide technical guidance for the evaluation of Falconbridge’s exploration assets. SRK’s assignment was to complete a desktop review of Falconbridge’s greenfield exploration assets with a view towards summarising the characteristics of the portfolio, providing an independent assessment of their realisable value and commenting on the capabilities of the exploration team. read full article…

Marwa Wahau coal project–preliminary feasibility study

PT Indo Rak Resources (RAK), a subsidiary of Middle East Coal and a joint owner of the Marwa Wahau deposit along with PT TOP, commissioned SRK to undertake a feasibility study of the property. The thermal coal greenfield project, sitting over a large resource, is poised to be one of the biggest open-cast projects in Kalimantan. read full article…

Talvivaara

Talvivaara is a Greenfield mine development, located in eastern Finland. It is the first application of the bio-heap leaching process for the economic exploitation of lowgrade, nickel-zinc sulphide ore bodies. Although not yet in full production, Talvivaara already stands out for using new, innovative technology and for the speed at which the project has been implemented. Pekka Pera, the CEO of Talvivaara Mining Company Plc, initiated the project after acquiring the mining rights and historical research from Outokumpu in 2004. read full article…

SRK involvement

SRK has been involved with the Talvivaara project since 2006. SRK was appointed by Talvivaara to prepare a Mineral Experts Report for listing on the London Stock Exchange, and subsequently by Standard Bank Plc to prepare a Technical Audit Report for debt finance. Additionally SRK has prepared a revised JORC compliant resource estimate and has provided assistance during additional financing. read full article…

Capstone Mining Corp’s Minto Mine

SRK began its relationship with Minto Exploration Ltd. (a 100%-owned subsidiary of Capstone Mining Corp.) in 2006, when it conducted a due diligence review of the Minto copper-gold-silver mine project for a major bank. At that time, the company had just completed a feasibility study and was fast-tracking construction at the mine. SRK’s favorable review assisted  he bank in making a decision to invest in the project and, with funding in place, Minto was constructed and commissioned within a very aggressive timeline and budget. read full article…

Taking a holistic view in mining reviews and audits

During 2009, SRK took on several compliance audits for project funders. Through this work, SRK witnessed mines move from merely aiming for compliance with in-country environmental legislation to adopting good practice as outlined in the Equator Principles and other guidelines. Mining companies and financial organisations are working to achieve international best practices. Several projects have focussed on refurbishing mining and processing activities in Zambia and the DRC, where new players address complex environmental and social legacy issues. read full article…

Growing up with a gold mine – SRK’s multi-level project support at Hycroft

Allied Nevada Gold Corp. was formed in 2006 after purchasing a portfolio of over 100 precious metal prospects in Nevada (NV). Their flagship property, Hycroft, located 60 miles west of Winnemucca, NV, was reactivated after a 10-year dormancy period to establish cash flow to fund on-site exploration and to develop advanced projects in other parts of the State. Since 2006, as the price of gold has risen from US$700 to US$1,100 per ounce, interest in historic Nevada mines has been rekindled and some sites are coming back on line with new development strategies. Though the Carlin Trend is Nevada’s “headliner” mining district, the state’s “supporting cast” of gold producers over the last two decades have been shallow, openpit oxide operations receptive to bulk mining and low-cost heap leaching. The underlying sulfide zones of these deposits that are not heap-leachable have been largely ignored and often undrilled. read full article…

Site visit could be critical for identifying the potential fatal flaws

The picturesque Serra da Canastra Kimberlite Province in southwest Minas Gerais is one of several diamondiferous locations in Brazil. The kimberlite bodies are mostly buried along the extensive valley floors and beneath scree deposits. The region has produced approximately 2 million carats of diamonds since the mid-1930s. SRK and Mineral Services jointly completed a technical audit of the Canastra 1 kimberlite pipe. A small team of diamond mining specialists flew in to value the Canastra project in preparation for a possible bid. read full article…

Evaluating CIS projects

When evaluating projects in Russia, Kazakhstan and other CIS countries, a key challenge is that their data and technical studies have been developed following resource reporting guidelines that differ from the standards many international investors or consultants use. SRK has been involved in CIS projects for many years and has developed approaches to help clients evaluate and optimise projects. read full article…

Sino Gold

In 2006, Sino Gold Limited commissioned SRK to provide an Independent Expert Report on the mines and exploration assets of the company, with the report intended to be submitted to the Stock Exchange of Hong Kong Limited (HKEx). Sino Gold was already listed on the Australian Stock Exchange but wanted to have a dual listing in Hong Kong. The SRK team inspected and reported on the Jinfeng gold mine and exploration tenements in China, which were owned by the company or were in Joint Venture (JV) with Chinese partners. read full article…

Geology beyond the resource

A fundamental part of SRK’s approach to project evaluation is the recognition that many of the risk areas associated with mining projects are driven by lack of understanding of the geology of the deposit in question. Typically, there is significant focus on the impact of geology on the resource. This is justifiable, since the resource is the key asset of a mining project and a long list of project failures can be attributed to poor resource estimates. However, from a number of project reviews over recent years, it is apparent that the key geological risks are often associated with other aspects, such as geo-metallurgy and environmental impact. In these specific examples, key assumptions are dependent on mineralogy and the representivity of sampling campaigns, which are often limited in scope and breadth. Assessing the geological representivity of the data, which underpin downstream assumptions for other disciplines, is therefore a key part of the geologist’s role in any project evaluation. read full article…

Kinsevere Copper Project: due diligence in the DRC

Anvil Mining Limited, a public company listed on the Toronto and Australian Stock Exchanges, is engaged in exploring and developing base metals mineral properties in Southern Africa. Anvil’s principal development asset, the Kinsevere Copper Project, is located in the Democratic Republic of Congo and is managed via its 95% interest in a local joint venture. Relying on input from various technical teams located on three continents, the company completed a Feasibility Study in 2007. Additional exploration drilling and technical updates led to a further update following which, the company sought access to the debt capital markets to fund construction and commissioning of an SX-EW plant with rated capacity of 60ktpa of LME grade A quality electrolytic copper cathode. read full article…

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