Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Is grade King in gold mining? - Ulrich et al - Sep 2016 - Centre for Exploration Targeting / The University of Western Australia

1,746 views

Published on

Is grade King in gold mining? - Ulrich et al - Sep 2016 - Centre for Exploration Targeting / The University of Western Australia

Published in: Economy & Finance
  • DOWNLOAD THIS BOOKS INTO AVAILABLE FORMAT (Unlimited) ......................................................................................................................... ......................................................................................................................... Download Full PDF EBOOK here { https://soo.gd/qURD } ......................................................................................................................... Download Full EPUB Ebook here { https://soo.gd/qURD } ......................................................................................................................... Download Full doc Ebook here { https://soo.gd/qURD } ......................................................................................................................... Download PDF EBOOK here { https://soo.gd/qURD } ......................................................................................................................... Download EPUB Ebook here { https://soo.gd/qURD } ......................................................................................................................... Download doc Ebook here { https://soo.gd/qURD } ......................................................................................................................... ......................................................................................................................... ................................................................................................................................... eBook is an electronic version of a traditional print book THIS can be read by using a personal computer or by using an eBook reader. (An eBook reader can be a software application for use on a computer such as Microsoft's free Reader application, or a book-sized computer THIS is used solely as a reading device such as Nuvomedia's Rocket eBook.) Users can purchase an eBook on diskette or CD, but the most popular method of getting an eBook is to purchase a downloadable file of the eBook (or other reading material) from a Web site (such as Barnes and Noble) to be read from the user's computer or reading device. Generally, an eBook can be downloaded in five minutes or less ......................................................................................................................... .............. Browse by Genre Available eBooks .............................................................................................................................. Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, ......................................................................................................................... ......................................................................................................................... .....BEST SELLER FOR EBOOK RECOMMEND............................................................. ......................................................................................................................... Blowout: Corrupted Democracy, Rogue State Russia, and the Richest, Most Destructive Industry on Earth,-- The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company,-- Call Sign Chaos: Learning to Lead,-- StrengthsFinder 2.0,-- Stillness Is the Key,-- She Said: Breaking the Sexual Harassment Story THIS Helped Ignite a Movement,-- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones,-- Everything Is Figureoutable,-- What It Takes: Lessons in the Pursuit of Excellence,-- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money THIS the Poor and Middle Class Do Not!,-- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness,-- Shut Up and Listen!: Hard Business Truths THIS Will Help You Succeed, ......................................................................................................................... .........................................................................................................................
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • DOWNLOAD THIS BOOKS INTO AVAILABLE FORMAT (Unlimited) ......................................................................................................................... ......................................................................................................................... Download Full PDF EBOOK here { https://urlzs.com/UABbn } ......................................................................................................................... Download Full EPUB Ebook here { https://urlzs.com/UABbn } ......................................................................................................................... Download Full doc Ebook here { https://urlzs.com/UABbn } ......................................................................................................................... Download PDF EBOOK here { https://urlzs.com/UABbn } ......................................................................................................................... Download EPUB Ebook here { https://urlzs.com/UABbn } ......................................................................................................................... Download doc Ebook here { https://urlzs.com/UABbn } ......................................................................................................................... ......................................................................................................................... ................................................................................................................................... eBook is an electronic version of a traditional print book THIS can be read by using a personal computer or by using an eBook reader. (An eBook reader can be a software application for use on a computer such as Microsoft's free Reader application, or a book-sized computer THIS is used solely as a reading device such as Nuvomedia's Rocket eBook.) Users can purchase an eBook on diskette or CD, but the most popular method of getting an eBook is to purchase a downloadable file of the eBook (or other reading material) from a Web site (such as Barnes and Noble) to be read from the user's computer or reading device. Generally, an eBook can be downloaded in five minutes or less ......................................................................................................................... .............. Browse by Genre Available eBooks .............................................................................................................................. Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, ......................................................................................................................... ......................................................................................................................... .....BEST SELLER FOR EBOOK RECOMMEND............................................................. ......................................................................................................................... Blowout: Corrupted Democracy, Rogue State Russia, and the Richest, Most Destructive Industry on Earth,-- The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company,-- Call Sign Chaos: Learning to Lead,-- StrengthsFinder 2.0,-- Stillness Is the Key,-- She Said: Breaking the Sexual Harassment Story THIS Helped Ignite a Movement,-- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones,-- Everything Is Figureoutable,-- What It Takes: Lessons in the Pursuit of Excellence,-- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money THIS the Poor and Middle Class Do Not!,-- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness,-- Shut Up and Listen!: Hard Business Truths THIS Will Help You Succeed, ......................................................................................................................... .........................................................................................................................
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Is grade King in gold mining? - Ulrich et al - Sep 2016 - Centre for Exploration Targeting / The University of Western Australia

  1. 1. IS GRADE KING IN GOLD? A preliminary analysis of gold production costs at Australian & New Zealand mines Sam Ulrich, MAusIMM12 Matt Kanakis3† David Groves1 Steffen Hagemann1 John P. Sykes, MAusIMM14 & Allan Trench, FAusIMM156 1. Centre for Exploration Targeting, The University of Western Australia 2. Ravensgate Mining Industry Consultants, Australia 3. KPMG, Australia 4. Greenfields Research, United Kingdom 5. Business School, The University of Western Australia 6. CRU Group, United Kingdom † Today’s presenter AusIMM New Zealand Branch Conference: Wellington, New Zealand: 6 September 2016
  2. 2. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines We need to mine and find better gold ore 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 2 of 33
  3. 3. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines But what is better ore? Higher grade? Costs($AU) Grade (g/t) 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Higher grade = lower cost mines Lower grade = higher cost mines Source: Kanakis (2014) Slide 3 of 33
  4. 4. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines No! It is more complex than that 0 200 400 600 800 1000 1200 1400 1600 1800 2000 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 AllinSustainingCosts($AU) Operating Grade Q4 (g/t) Open Pit Underground 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Kanakis (2014) Slide 4 of 33
  5. 5. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Initial investigation: Gold costs and geology (Kanakis, 2014) Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 5 of 33
  6. 6. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Back in 2013 it was all about ‘costs’ 0 2 4 6 8 10 12 1989 1994 1999 2004 2009 Millionsofounces Australian Production of Gold (1989-2013) 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: USGS and Taggart (2013) 2013 Gold Industry Paradigm • Rising mining costs; • Flat production growth; • Flat or falling prices; • Weak shareholder returns. • Interest was in linking costs and geology at a higher-level than ‘deposit-scale’ so that we could begin making predictive statements about what types of deposit generally are mined with lower costs. 0 200 400 600 800 1000 1200 1400 1600 1800 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 US$/ounce Increases in costs over time Growth Capex Cost All-In-Costs Gold Price Slide 6 of 33
  7. 7. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Study covered all of Australia & NZ 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Kanakis (2014) Slide 7 of 33
  8. 8. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines All the famous gold geological provinces Q4 2013 Australia & NZ gold production by Geological Province 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand % of Total Gold Production No. of Operating Gold Mines Source: Kanakis (2014) Slide 8 of 33
  9. 9. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Initial results: There are gold cost- geology linkages (Kanakis, 2014) Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 9 of 33
  10. 10. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Sedimentary vs. igneous host rock unclear 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Sedimentary Igneous Neither Source: Kanakis (2014) Q4 2013 Australia & NZ % of deposits by host rock in each cost quartile Slide 10 of 33
  11. 11. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines But plutonic over volcanic igneous matters 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Volcanic Plutonic Neither Source: Kanakis (2014) Q4 2013 Australia & NZ % of deposits by host rock in each cost quartile Slide 11 of 33
  12. 12. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Does mineralisation-style matter? 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Increasing dispersion of mineralisation Increasingthicknessofmineralisation Quartz reef / lode / lens Quartz tension vein Uneconomic thin quartz veins Thick laminated quartz veins Ladder quartz veins Thin stockwork vein system Thicker veins in shear zone Dispersed breccia hosted mineralisation LODE / VEIN STYLE MINERALISATION ALTERATION ZONE & DISSEMINATED SULPHIDE HOSTED MINERALISATION Source: Kanakis (2014) Slide 12 of 33
  13. 13. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Disseminated mineralisation is important Q4 2013 Australia & NZ % of deposits by mineralisation style in each cost quartile 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Vein / Reef Style Disseminated Style Source: Kanakis (2014) Slide 13 of 33
  14. 14. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Refractory mineralisation may also matter Q4 2013 Australia & NZ % of deposits by free-milling vs refractory ore in each cost quartile NB: Potentially due to the by- products often found in refractory sulphide ores (e.g. copper). 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Free-milling Refractory Source: Kanakis (2014) Slide 14 of 33
  15. 15. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Does deposit geometry matter? 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Kanakis (2014) Slide 15 of 33 cylindrical equidimensional
  16. 16. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Equidimensional geometry matters too 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Q4 2013 Australia & NZ Cost curve by deposit geometry NB: Gently dipping planar deposits also give lower costs than steeply dipping planar deposits. Source: Kanakis (2014) Planar Deposit Cylindrical Deposit Equidimensional Deposit Slide 16 of 33
  17. 17. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Initial implications: Geology matters! (Kanakis, 2014) Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 17 of 33
  18. 18. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Grade is engineered away; geology is not 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Kanakis (2014) Slide 18 of 33
  19. 19. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Initial study weaknesses: Not big enough… (Kanakis, 2014) Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 19 of 33
  20. 20. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines What about deposit type? We don’t know • Orogenic and epithermal deposits gave variable results; • Porphyries were very low cost except for Boddington; • Not enough data for IOCG deposits; • There is not much to go with here… • This was effectively a study of the economics of orogenic gold deposits. 0 10 20 30 40 50 Orogenic Epithermal Porphyry VHMS IOCG No. mines in the study by deposit type 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Kanakis (2014) Slide 20 of 33
  21. 21. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Mine maturity & cost cycle unconsidered 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Kanakis (2014); Trench & Sykes (2014) Slide 21 of 33
  22. 22. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Correlation not causality • Some hypotheses suggested for link between geological factors and gold production costs, but no causality confirmed: – Grade advantage is engineered away in complex deposits? – Non-equidimensional deposits have greater strip ratios? – Bulk mining more important than ‘high grade’ mining? – Higher bond work index of unmineralised host rock is more costly to process? – Refractory deposits more costly to process but this is overcome by the presence of valuable by-products? – Complex deposits have higher unit labour costs? 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Kanakis (2014) Slide 22 of 33
  23. 23. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Expanded investigation: Gold costs and geology (Ulrich et al., 2016-19) Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 23 of 33
  24. 24. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines In 2016 we’re back to focusing on growth 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: USGS; Perth Mint 2016 Gold Industry Paradigm • Falling costs; • AUD weakening; • Strong returns; • Focus on production growth; • Rise of Northern Star, Evolution etc. • Discovery of Gruyere, Andy Well etc. • But how long can this last? 7 7.5 8 8.5 9 9.5 10 2006200720082009201020112012201320142015 Millionsofounces Australian Production of Gold (2006-2015) 1,000 1,200 1,400 1,600 1,800 2,000 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Millionsofounces Gold Price AUD vs USD (2011-2015) Slide 24 of 33
  25. 25. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines But running short of ‘quality’ ore • Australia & NZ good at growing ‘resources’ (i.e. EDR), now often 5-35 years worth; • But struggle to make dramatic increases in ‘reserves’; • Many of Australia’s best mines are its oldest; • 14% of gold is mined at operations with less than 2 years of reserves… • 38% of gold is mined at operations with less than 5 years reserves… • Average reserve life is 5.4 years. • More high quality (i.e. reserve standard) ore discoveries required – both greenfield and brownfield; • Once again we’re trying to understand ‘high quality’… 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Ulrich et al., (2016) Slide 25 of 33
  26. 26. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Hypothesis remains: grade is not quality 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Q1 2016 Australia & NZ All-in-Sustaining Cost (ASIC) vs Gold Grade Source: Ulrich et al., (2016) Slide 26 of 33
  27. 27. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Causality emerging: Focus on mining 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Grades and costs correlate at the processing stage, but not the mining stage, suggesting that the geological factors influencing processing (e.g. bond work index) are less important than those that influence mining (e.g. geometry). Q1 2016 Australia & NZ ASIC Mining Cost vs Gold Grade Q1 2016 Australia & NZ ASIC Processing Cost vs Gold Grade Source: Ulrich et al., (2016) Slide 27 of 33
  28. 28. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines More analysis to come… • Longer time series of analysis to confirm initial findings; • And account for mine maturity and cost cycle; • Deeper investigation into causality linking geology and cost in gold mining; • Wider consideration of non- technical industry factors that may be important. 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Ulrich et al., (2016) Slide 28 of 33
  29. 29. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Conclusions: How does geology drive costs and why does it matter? Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 29 of 33
  30. 30. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Are we rising or stalling? • The Australia & NZ gold mining industry must remain competitive through the industry cost cycle: – Reducing costs during periods when margins are squeezed (i.e. 2013); – Bringing on new, competitive supply when margins are increasing (i.e. now). • A ‘rise & stall’; or ‘rise & fall’ scenario is a material risk otherwise; – Emerging signs of success in both production growth (Northern Star, Evolution etc.) and recent discoveries (Andy Well, Gruyere, Tropicana etc.) – However whilst ‘resource’ growth is strong, we remain short of mineable ‘reserves’; – A focus on discovering and mining more ‘reserves’ rather than ‘resources’ required. • ‘Grade is king’ over-simplifies the sector’s mine economics; – Geological factors such as mineralisation style, deposit geometry and host rock are at least as important as grade at an industry-level; – Future greenfields and brownfield exploration may have to consider these factors earlier in the exploration process (but how?); – M&A due diligence may need to add greater weight to such factors; – Non-grade geological factors may increase in importance in mine planning. • Clearly more research is required in this important area of study. 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 30 of 33
  31. 31. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines If Grade is KING; Geology is the ACE • Equidimensional deposit; • With disseminated mineralisation; • Hosted in plutonic igneous rocks; • Potentially with by-product rich refractory ore; • And maybe some high grade ore… 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New Zealand Source: Kanakis (2014) Slide 31 of 33
  32. 32. THANK YOU CONTACT DETAILS Sam Ulrich: sam.ulrich@research.uwa.edu.au Matt Kanakis: mkanakis@kpmg.com.au David Groves: di_groves@hotmail.com Steffen Hagemann: steffen.hagemann@uwa.edu.au John P. Sykes: john.sykes@research.uwa.edu.au Allan Trench: allan.trench@uwa.edu.au AusIMM New Zealand Branch Conference Wellington, New Zealand: 4-6 September 2016
  33. 33. Is grade king in gold? A preliminary analysis of gold production costs at Australian and New Zealand mines Further reading • Ulrich, S., Kanakis, M.D., Groves, D., Hagemann, S., Sykes, J.P. & Trench, A. 2016. Is Grade King in Gold? A Preliminary Analysis of Gold Production Costs at Australian and New Zealand Mines. AusIMM New Zealand Branch Conference. Wellington, New Zealand. 4-6 September. • Kanakis, M.D. 2014. Geological Factors that Influence the Cost of Production in Currently Operating Gold Mines within Australia and New Zealand. BSc (Mineral Geoscience) Honours Thesis. The University of Western Australia. 05 Sept 2016AusIMM New Zealand Branch Conference,Wellington, New ZealandSlide 33 of 33

×