MINING & SOCIAL ISSUES with Ignatius Kamwanje
An overview of Mineral Exploration activities prior to commencement of mining an Ore body
Exploration ﬁeld activities take place as part of a strategy to locate and deﬁne a particular economically viable/mineable mineral (ore) in a mineral locality zone. Large exploration activities are broken down into individual projects (referred to as tenements) and each project may contain one or more prospects. A prospect is a restricted volume of ground that is considered to have the possibility of directly hosting an ore body and is usually a named geographical location. The prospect could be outcropping mineralization, an old abandoned mine, an area selected on the basis of some geological idea, or some anomaly as a result of geophysical or geochemical surveys that can be interpreted as having a close spatial link with ore. Prospects are the basic units with which exploration geologists or prospectors work. A prospectors’ job is to generate new prospects and then to explore them in order to locate and deﬁne any ore body that might lie within them.
(a) Activity 1
This involves choosing of potential target, study of demand, supply and commodity price trends, available markets, exploration cost, draw up budgets.
(b) Activity 2
This involves what is called Reconnaissance Survey. In this exercise, desk studies are involved i.e. collation and collection of already existing geological data for information interpretation. These studies also include literature reviews of selected areas of similar geological formations to correlate with the area of study, any exploration work in adjacent areas previously carried out is also of fundamental importance, regional geochemical studies, and aerial photographs. It also starts with a literature search and progress to a review of available remote sensing and photogeological data leading to selection of favourable areas, initial ﬁeld reconnaissance, and land acquisition, probably followed by airborne surveys, geological mapping and prospecting, geochemical and geophysical surveys, and limited drilling.
(c) Activity 3
This involves detailed geological mapping and detailed geochemical and geophysical surveys, trenching and pitting, drilling usually called Exploration targeting/Invasive Work. Detailed geological mapping of the area is done to understand the real geology and this forms the basis for identification of areas prior to drilling, also the structure and deformation patterns of the area will be recognized. Geophysical survey /investigation involves surveying the ground to know the subsurface geology of underlying rocks with reference to their physical properties/characteristics. This process is very important because it comes out with potential areas for target identification that are usually ‘hotspots’ for mineral prospecting before any geological mapping commences. It can either be airborne or ground survey. In the absence of geophysical equipment, there are current updated airborne geophysical maps which can be sourced from the government at a fee and shall be interpreted by a geophysicist. Geochemical surveys analyze the composition of the rock/ soil sample through known chemical elements that are present using the sophisticated equipment of a chosen type.
Pitting and trenching is also done in selected areas to identify the vertical and lateral extent of mineralization respectively and to get an overview picture of the subsurface geology. The next process is called exploration drilling/targeting and this will be done to give a bigger picture of the mineralization of the area, to determine the vertical extent in a perspective view at depth, formation history, core recovery, deformation patterns and structure of the core samples for geotechnical purposes. Before drilling commences, potential areas (collars) will be identified with the use of a GPS and pegs are staked into the ground. Access roads and drill pads are constructed possibly using a Bulldozer before the arrival of the drill rigs ready for drilling.
(d) Activity 4
During this phase, another geological mapping exercise will be carried out in detail but in a reconnaissance way in order to update the already existing geological map from the first exercise because new information has now been collected from the drilling exercise that include visual examination of vertical mineralization. The type of drilling here will be considered as core/diamond drilling where the recommended drill spacing is chosen. Core drilling is very important at this stage because it determines the geology and structure of the rocks and recovers the rock using cores and during such an exercise, logging, bulk sampling, laboratory testing, analytical sample tests are carried out.
Another drilling exercise called Infill drilling (whose drilling spacing will depend on extent of mineralization of resource estimation) is also carried out. This gives the geology and resource base in detail because the drilling space is being reduced to have a representative sample analysis. This second phase of drilling will be carried out after it is determined that there is good probability that an ore body is present and will largely be aimed at establishing economic (grade and tonnage) and engineering parameters. Based on the mineralization model the type of drilling is also determined so as to have a Conceptual model of the area under study because drilling plans change with the previous drilling results /findings.
The process defines the Resource base and drilling will be concentrated in areas where mineralization is highly indicated and forms the most crucial phase because data collected will provide the basis for updating the database and evaluation of the geological model, conceptual mine planning, market study, costing and defines the resource base and modelling will be required to have an expected geological model that will give the Resource estimation/evaluation/definition and if successful this will lead to an order of magnitude study which will establish whether there could be a viable project that would justify the cost of progressing to a prefeasibility study.
(e) Activity 5
Feasibility study is the final phase of target evaluation based on sound basic data with much greater detail analysis of the property toward development of mine and plant leading to production. All previous estimates are modified and finalized with the availability of every detail on geology, engineering, and economics. The majority of the ore reserves and grade is in the Proven category.
Detailed engineering on mining and beneficiation plant is made. Capital and operating costs are set.
Cash flow analysis with NPV (Net Present Value) and IRR (Internal Rate of Return) and sensitivity to different assumptions regarding revenues, costs, discount rates, and inflation are realistic and more authentic. Environmental and social impacts with possible mitigation measures, and government formalities are expected to be cleared. Economic viability of the project is assured.
Feasibility report acts as a “bankable” document for sources funding from potential financial institutions, equity, and joint venture.
(i) Scoping Studies
A Scoping Study may be carried out very early in the exploration phase, as a basis for acquiring exploration areas or making a commitment for exploration funding. At this stage the investment risk may be relatively small but it is obviously undesirable to expend further funds on something that has no chance of being economic.
The major risk at this stage is that a viable mining project is relinquished due to an inadequate assessment. As there is a very low probability of an exploration project proceeding to become a mine it is evident that this risk is quite a serious one at the Scoping Study stage. For this reason it is essential that experienced people are involved in the Scoping Study. The intended estimation accuracy is usually 30 to 35 %, though some companies accept +/- 50%.
It is acceptable for Scoping Studies to be based on very limited information or speculative assumptions in the absence of hard data. The study is directed at the potential of the property rather than a conservative view based on limited information. A sensitivity analysis, however, should present the likely range of possible outcomes so that decision making, including investment decisions that may follow a public release of the study results, is not biased to the optimistic end of the range.
The results of a Prefeasibility Study may be the first hard project information which is seen by corporate decision makers and investors. Usually the findings are announced publicly so that it becomes difficult to change perceptions with subsequent information. In such cases, the Prefeasibility Study becomes the real decision point, with the subsequent Feasibility Study being seen by management and investors as a necessary step along a path which has already been irrevocably committed. While undesirable, this sequence of events may occur due to modern reporting requirements.
For these reasons the feasibility Study must be prepared with great care by experienced people, and its conclusions should be heavily qualified wherever necessary. Assumptions should be realistic rather than optimistic because it is very difficult to bring management and markets back to reality in the event that the final Feasibility Study is significantly less favourable.
(ii) Final Feasibility Studies
The final Feasibility Study is usually based on the most attractive alternative for the project as previously determined. The aim of the study is to remove all significant uncertainties and to present the relevant information with back up material in a concise and accessible way. The final Feasibility Study has a number of key objectives:
- to demonstrate within a reasonable confidence that the project can be constructed and operated in a – technically sound and economically viable manner
- to provide a basis for detailed design and construction
- to enable the raising of finance for the project from banks or other sources.
Whether the project design has been optimised in the feasibility study will depend on the time and budget allowed. An acceptable design is used as the basis of the feasibility study with further optimisation undertaken (or not) once the project has been approved. When all these processes are followed and done, it appears that commissioning ramp up production and mining follows.
This piece was initially published in Malawi’s Mining & Trade Review Issue Number 66 (October 2018).
The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.