mining methods

TT92, you?ve pre-empted my follow up post. This is where it gets complicated, and I'm glad you've picked up on it. As I said in the original post, a mining operation is a complex 'beast'. My statement regarding grade applies to two identical deposits, in terms of location, mining style, metallurgy, etc.

You?re opening ?Pandora?s Box? here because I assume you would like me to comment on the pro?s and con?s of the potential mining scenario at Hillside versus other potential operations? While it is getting a little ahead of where the boy?s and girl?s at Rex are up to, but it's interesting to nut these things out! If you?d like me to start speculating on that, I can in time, mean while I?ll try to give you a ?quick? answer to your question.

Your question is probably not as straight forward as you may think, as it has several parts:

1. Ore Position & Mining Method

A deep, higher grade, ore position is going to be mined by underground methods, which although more expensive are also more efficient. You tend to have a smaller work force and the operation will have a smaller ?foot print? (take up less space) than a surface mining operation. It?s also easier to decommission at the end of the mine?s life, as most of the mine waste ends up back ?down the hole? to back fill stopes, etc.

In addition you have to mine less ore, to get more product! IMO where this style of mine is expensive is from the ?upfront? capital cost of getting it up and running. The restriction on this type of mining is that (unless you go Olympic Dam scale) you can?t extract the same quantities of ore as you would in open pitting, hence it requires higher grades to make it viable.

A surface or open pit operation is initially a lot cheaper to get up and running, however in the case of a big copper ore body, you have all sorts of fun issues like:

- Strip ratios - For every tonne of ore you mine you have to mine X tonnes of waste (you insert the number, but in the case of Hillside I think its reported to be between 5-7??) and then you have to put that waste somewhere.

- You need a lot of space to put everything because it is a big operation! Big pit, waste dumps, tailings ponds, plant, etc

- The lower grade material means you have to mine a lot more ore to get the same amount of product as the higher grade operation and this adds to your costs.

- When you have sulphide mines you end up with sulphide in the waste, which then oxidises and causes ?acid mine drainage? problems, which in this day & age have to be addressed.

- When you finish mining, the government wants you to rehab the site, which can be an enormous job undertaken over many years.

A lot of the time this is where porphyry copper deposits (as discussed in a previous post) come into their own, as they have the low strip ratios in the open pitting. These can initially be as low as 0 where a ?mountain? is being mined as a whole! Hence all you end up with a big tailings dam, but it?s unusual not to end up with some pretty significant waste dumps.

If you want to see a big porphyry copper-gold operation, type Grasberg, Indonesia or Bingham Canyon into the search engine in Google Earth! You can also find info on these deposits in Wikipedia. Just to be clear, this is NOT the type of deposit that Hillside is but are examples of really big, open pit copper mining operations. A potentially more comparable size of deposit is Equinox?s Lumwana deposit in Zambia.

I?m a fan of underground mining (having done both at various times over the years), so I?m a bit biased, but from what I?ve read I?d envisage Rex would like to start Hillside as an open pit and later move it to underground operations?

2. Concentrate Manufacture

In the case of a base metal operation, regardless of the mining method you use, you?re going to have to create a concentrate (con) or product, to sell into the market. If you have higher grade ore, you have to process less material to create your product so there are cost savings there.

In addition higher grade feed generally also means it is simpler to make the con to 'spec' or end user requirements.

This whole process can get complicated too, but for the point of argument I?m assuming that the hypothetical ore bodies have the same metallurgical and mineralogical characteristics (just different grades).

3. Transport

If you can essentially convey your con to port and put on a bulk carrier, that?s ideal!

Trucking con, especially if there?s a lot of it, can be quite expensive, so moving your product long distances is not desirable. Having said that, Jabiru (JML) move their con over 400 km from Teutonic Bore (Leonora) to Geraldton and seem to do quite well out of it?

The other thing to take into account is the location of the port in relation to the end user or purchaser of your con, which is why the iron ore producers in the Pilbara ask for a premium to the Brazilian producers. Much shorter shipping distance to China!


TT92 I hope this helps answer your queries? Or at least gives you something to research further?

A mine that starts 500 m below surface is going to have to be pretty good to even pass the starting line, but if your using Doolgunna as an example? It appears to have the goods. And I don?t think it?s that far down? The cross sections I?ve seen indicate it starts around 90-100 metres below surface.

A near surface mine at lower grades? Probably easier to get going, but might cost you more in the long run? But to be really rude, hopefully by then it?s someone else?s problem as the Company has been taken over by a big multi-national like Xstrata?

Anyway, go the Saints and have a good weekend!