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Workshop_on_Mine_Planning_and_Valuation_.pptx
- 1. Workshop on Opencast Mine Planning andValuation DMT Consulting Private Limited Kolkata
- 2. Mining Methods • Twomethods – – Surface/ Opencast Mining Method – Underground Mining Method • Criteria of Selection – Geological characteristics of the deposit (geological disposition, strike, dip, faults, etc.) – Depth of the deposit – Availability of skill sets – Economics
- 3. Few Basic Terminology •Dip = Acute angle that a seam/ deposit makes with horizontal plane • Strike = Direction of the line formed by the intersection of the seam/ deposit with a horizontal plane • Stripping Ratio = Amount of overburden/ waste which is required to be removed for extraction of 1 tonne of mineral (volume of waste removed/ quantity of ore/ coal excavated)
- 4. Contents – MinePlanning & Valuation Geology • Type of Deposit • Geological Characteristic • Resource Details Mining • Mining Technology • Production Schedule • Mining Equipment • Waste Management Infrastructure • Beneficiation Plant • Onsite Infrastructure • Offsite Infrastructure • Logistic Arrangement Economic Aspects • Capital Expenditure • Operating Expenditure • Cash Flow Mine Planning & Valuation
- 5. Different Stages ofMine Planning Conceptual Study • Data Accuracy: +/- 50% • Mostly assumed parameters Pre-feasibility Study • Data Accuracy: +/- 25% • Some engineering basis Feasibility Study/ Detailed Project Report • Data Accuracy: +/- 10% • Sound engineering basis Detailed Designing • Data Accuracy: +/-5% • Sound engineering basis Operational Planning • Data Accuracy: N/A • Based on actual filed result data • Cyclic process, the successive studies are dependent on result of previous studies • Mine planning is refined and finalized as the study progresses towards operational planning
- 6. Steps – MinePlanning Study of Geological Report Geotechnical/ Hydrogeological Study Pit Optimization/ Final Pit Limit Pit Progression/ Development Pit Layout/ Haul Road Design Mine Capacity/ Production Schedule Equipment Selection & Schedule Waste Management/ Dumping Strategy Beneficiation Requirement Infrastructure & Logistic Planning Manpower Selection Financial Aspects
- 7. Study of GeologicalReport • Exploration Details - Drilling density, Lithology, Quality analysis, mineralogical composition • Geological succession, Bed Rocks & sequence • Deposit Characteristics – Dip/ Strike, Thickness, Sequence, Partings • Regional Structure – Number of Faults, Throw • Reserves – Quality wise/ Seam wise/depth-wise etc • O.B. volumes & S.R. – Sector-wise, depth-wise etc. • Others – Topography – Climate and Vegetation
- 8. Geotechnical/ Hydrogeological • GeotechnicalStudy – Slope geometry for Pit slope stability – Spoil pile configuration for external dump/ internal dump – Rock strength test – Diggability of material, blasting impacts • Ground Water Hydrology – Dewatering – Impact on water quality – Impact of dewatering on surrounding area • Surface Hydrology – Water quality – Mine flood protection – Options for discharge of water
- 9. Pit Optimization/ FinalPit Limit • Pit Optimization is a process to determine pit limit considering economic factor – Geological nature (dip, strike, occurrence, depth) – Quality aspects of the deposit – Costs (Mining, Beneficiation, Logistics, Selling) – Market price of the finished product • Other influential factors – Surface constraints such as water body, roads, electric lines, railway lines, buildings, monuments, etc. – Statutory requirement (barrier between two blocks) – Stripping ratio – Geotechnical/ hydrogeological factors
- 10. Pit Progression/ Development •Location of first cut - Box cut/ Access trench – Minimum time to touch ore/ coal seam – Near to incrop/ outcrop location – Lowest stripping ratio – Accommodate planned equipment – Land availability • Factors influencing pit progression – Revenue generation by accessing easily available ore/ coal – Stripping ratio – natural against average, advanced stripping – Lead distance from the external dump – Production schedule/ Quality Schedule
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- 12. Pit Layout/ HaulRoad Design • Pit Layout – Bench layout (working/ final benches) & level – Main haul road/ Access ramp (permanent/ temporary) – Space for working equipment – In-pit infra location, if applicable (IPCC system, sump, dewatering pipelines, etc.) – Layout required (1st to 5th year and then of every 5th year) • Haul Road Design – Should be designed to reduce lead distance – Width should cater to two way traffic (Thumb rule - 3- 4 times width of largest deployed dumper) – Should consider drainage & windrows width – Gradient should be aligned to equipment capability – Avoid too much of turns, curves unless necessary – Preferably in highwall side
- 13. Mine Capacity/ ProductionSchedule • Annual Capacity – Available coal reserves – End usage requirement – Structure of the deposit – Pit Geometry & space available – Mining equipment configuration & utilization – Any other constraints • Production Schedule – Year wise ore/ waste schedule, Stripping ratio – Year wise quality parameters
- 14. Equipment Selection &Schedule Shovel – Dumper • Most popular • Two variants – Rope and Hydraulic • Shovel – excavation & loading, Dumper – hauling • Selection as per thickness of coal/ bench configuration Dragline • Side casting of overburden above coal seam • Requires large capital investment • Suitable for large size open pit mine with minimal geological disturbances Inpit Crushing & Conveying (IPCC) • Crushing inside pit by small & strategically placed crushers • Hauling by conveyor • Suitable for deep mines with large size operation Bucket Wheel Excavator • Large opencast mine with soft strata • Cutting by BWE and hauling by conveyor • Require large capital investment Surface Miner • Does not require D&B • Large strike length (>500 – 600m), gradient less than 7-8 degrees • Cuts coal and loads into truck/ conveyor
- 15. Equipment Selection &Schedule • Equipment schedule – Yearwise production requirement – Equipment productivity Available working time Utilization Operator skill Blasting performance/ Fragmentation Rock strength Life of equipment and replacement Lead time between order and equipment delivery
- 16. Waste Management • Twotype of dumps – External dumping – Stacking of waste outside pit area – Internal dumping – stacking of waste inside pit area – Geotechncial rock study required for deciding slope angle – Dumping is carried out in multiple lifts and slope of individual lifts should not exceed natural angle of repose • External Dumping – Dumping level above the ground level – High lead distance – Land availability may be an issue – Not environment friendly • Internal Dumping – Dumpling level above/ below the ground level – Low lead distance – Land availability not an issue – Part of land reclamation – Depends on steepness of seam/ deposit – Safety distance required between internal dump and working benches
- 17. Beneficiation • ROM Productnot always qualify as sellable product as it may not stipulate end usage requirement, Product quality improvement required before selling as final product • Financial feasibility of a product depends on beneficiation viability • Statutory Requirement (MoEF restriction of transportation of coal with > 34% ash over 1,000 km and above) • Beneficiation Plan set up may be done near pit mouth or away from pit area • Setting up of Beneficiation plant near pit head reduces logistics costs
- 18. Infrastructure & Logistics •Infrastructure Planning – Primary Crusher – Road Accessibility (access road connectivity to mine site, haul roads) – Electric power (DC Genset/ Captive Power Plant/ State Power Company) – Water Supply (River/ Borewells/ etc.) – Civil Buildings (offices/ laboratories/ stores/ stackyards/ colony/ prayer room/ etc.) – Workshops for HEMM equipment and Surface Electric Arrangement – Fuel Supply Arrangement/ Magazine • Logistics – Truck – Long Distance Conveyors – Open/ Closed – Railway Siding
- 19. Manpower • Required forvarious services – Administration (Project Head, Finance, Commercial, HR, IT, Environment, Civil, Store, CSR, Others, etc.) – Mining (Mines Manager, Safety Manger, Mining Enggs, Geologists, Geotechnical, Foreman, Overman, Sirdar, Equipment Operators, Blast Crew, Surveyor, Samplers, etc.) – Mining Equipment Maintenance (Mechanical Engg, Foreman, Mechanics, etc) – Electrical Maintenance (Electrical Engg, Electrical Foreman, Crew, etc) – Crusher (Operators, Maintenance Crew) – Logistics (Drivers/ Conveyor Operator & Maint Crew)
- 20. Financial Aspects Capital Expenditure(Capex) – Pre-production/ Development Stage (exploration, studies, approvals, etc.) – Mining Equipment – Beneficiation Plant – Infrastructure & Logistics – Land & R &R Activities – Mine Closure Operating Expenditure (Opex) – Consumables (Diesel, Lubs, Tyres, Spares, Explosives) – Electric Power – Infrastructure Maintenance costs – Salary – Logistics expenses – Overhead – Statutory Duties (Royalty, DMF, NMET) Cash Flow – Net Present Value (NPV) – Internal Rate of Return (IRR)
- 21. Mine Valuation • Aprocess of estimation of worth of a mineral deposit/ Operating mine • As per VALMIN code, Value is defined as “… the fair market value of a mineral or petroleum asset or security. It is the amount of money (or the cash equivalent of some other consideration) determined by the expert in accordance with the provisions of the VALMIN Code for which the mineral or petroleum asset or security should change hands on the valuation date in an open and unrestricted market between a willing buyer and a willing seller in an “arm’s length” transaction, with each party acting knowledgeably, prudently and without compulsion.’ • Valuations is done for – Investment Analysis – Capital Budgeting – Merger and Acquisition transaction – Financial Reporting – Statutory Purpose (Taxation, Litigation cases, etc.)
- 22. Methods of Valuation •Appraisal Value Method • Multiple of Exploration Expenditure Method (MEE) • Geoscience Factor Method • Expenditure for Last 10 Years Method • Geological Risk Method • Probability Weighted Discounted Cash Flow Method • Discounted Cash Flow Method • Real Options/ Dynamic Discounted Cash Flow Method • Joint Venture Terms Method • Benchmark Method Discounted Cash Flow Method
- 23. Cash Flow Definition Netamount of Cash and Cash Equivalents moving into and out of a business in a certain time period. Difference in amount of cash/ cash equivalent at the beginning of the a period (i.e. opening balance) and at the end of that period. or Discounted cash flow (DCF) is obtained after discounting the net cash flow for change in value of money over the period.
- 24. Factors - CashFlow • Three factors are important CASH INFLOW CASH OUTFLOW TIME PERIOD
- 25. MEANS OF CASHFLOW Cash Pool Investing Activities • Sale of property, plant and equipment • Sale of debt/ equity securities of other entities • Collections of loans to other entities Financing Activities • Issuance of equity securities • Issuance of debt (bonds and notes) Operating Activities • When cash receipts (revenues) exceed cash expenditures (expenses). Investing Activities • Purchase of property, plant and equipment • Purchase of debt/ equity securities of other entities • Loans to other entities Financing Activities • Payment of dividends • Redemption of debt • Reacquisition of capital stocks Operating Activities • When cash expenditure (expenses) exceed cash receipts (revenues). Cash Inflow Cash Outflow
- 26. Financial Cash FlowModel – Mining Perspective Capital Investment (Capex) • Pre-operatives • Mining Equipment • Processing Plant • Onsite Infrastructure • Logistics • Land, R&R Operating Expenses (Opex) • Consumables • Electricity • Wages • Maintenance • Logistics • Royalty, Taxes and Other Statutory Duties • Overhead Revenue • Sale of final product • Comparison with alternative options Cash Inflow Cash Outflow `
- 27. Process of DCFMethod
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- 29. Guidelines • Cost Model(DCF method) is prepared for Bidding of a coal block • Bidder have to submit the price they are willing to pay to secure the coal block. • Presently, bidders are securing coal from e-Auction at an effective price of 2,500 rs/tonne of coal. • Bidders have to submit the bid based on Net Present Value (i.e. project valuation) achieved in the model. • Successful bidders will be decided on the basis of final bidding price • Final Winner will be decided on the basis of followings: – Final bidding price i.e. successful bidder – Net Present Value
- 30. Guidelines • Bidders areallowed to modify followings: – Coal Production Quantity (cell E6, PrSch worksheet): Condition – Project life can not be less than 25 years – Equipment Selection (cell B14 to B17, EqCap worksheet): Conditions - Change followings depending on selected equipment: (Select required details from Input WorksheetSheet) – Equipment productivity (cell A14 to A17, EqCap worksheet) – Equipment cost (cell F70 to F73, EqCap worksheet) – Diesel consumption (cell E9 to E12, EqOp worksheet) – Lub consumption (cell E38 to E41, EqOp worksheet) – Spares requirement (cell E67 to E70, EqOp worksheet) – Tyres requirement (cell E96 to E99, EqOp worksheet) – Change Debt on total Initial Capex (cell D8, DCF worksheet) – Change Bidding Price (Cell D4, DCF worksheet)
- 31.
- 32. Explanation of ValuationMethodology Appraisal Value Method Uses meaningful past exploration expenditure plus warranted future costs to test remaining exploration potential Multiples of Exploration Expenditure Method (MEE) Similar to the appraised method but a prospectivity enhancement multiplier (PEM) is applied. Geoscience Factor Method Uses ratings of the main characteristics of mineral properties to determine the overall project value. Expenditure for Last 10 Years The sum of expenditure over the previous 10 years may be used as a proxy for the market value of tenements other than a production right. Geological Risk Method Based on estimating the value of a target resource and reflects the costs associated with completing each stage of exploration and the probability of progressing to each subsequent state
- 33. Explanation of ValuationMethodology Probability Weighted Discounted Cash Flow A DCF incorporating measures of technical risk into probable cash flow by factoring in the probability of success Discounted Cash Flow (DCF) Net Present Value (NPV) performed on expected free cash flows over a project’s life Real Options/ Dynamic DCF Method The valuation of the scenarios encountered by management using technique applied to financial options. Joint Venture Terms Method Based on the required participation expenditure in proving up or developing a property by the incoming party. Benchmark Method The value of a project is estimated through comparisons with previous transactions involving similar project
- 34. Explanation of ValuationMethodology Method Exploration & advanced Exploration Pre- development Development/ Production Appraised Primary method May be suitable Not Suitable Multiple of exploration expenditure Primary method May be suitable Not Suitable Geoscience Factor Primary method May be suitable Not Suitable Expenditure for last 10 Years Primary method May be suitable Not Suitable Geological Risk Primary method May be suitable Not Suitable Probability weighted DCF May be suitable Primary method Primary method Discounted Cash Flow Not Suitable Primary method Primary method Real options/ Dynamic DCF Not Suitable Primary method Primary method Joint Venture Terms May be suitable as a cross check May be suitable as a cross check May be suitable as a cross check Benchmark May be suitable as a cross check May be suitable as a cross check May be suitable as a cross check
Editor's Notes
- #8 Plate – Surface Map, Topo Map, Incrop, Fault, Roof plan, Floor plan, Grade Plan, etc. , Seam folio plans of all seams (seam out cop, floor contours, faults, isograde, isochore, iso depth).
- #21 Net present value (NPV) or net present worth (NPW) is a measurement of profit calculated by subtracting the present values (PV) of cash outflows (including initial cost) from the present values of cash inflows over a period of time. Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero.
- #22 The committee was established to develop and maintain the "Australasian Code for Public Reporting of technical assessments and valuations of mineral assets", commonly known as the VALMIN Code. The VALMIN Code was first published in 1995, with subsequent editions published in 1997, 2005 and 2015.
- #23 The committee was established to develop and maintain the "Australasian Code for Public Reporting of technical assessments and valuations of mineral assets", commonly known as the VALMIN Code. The VALMIN Code was first published in 1995, with subsequent editions published in 1997, 2005 and 2015.