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Great information on How to Read Mining Assay Results, a must if you are doing research into mining companies.This is well worth saving for future reference.
Because it is so long the article will have to posted in installments.
This was contributed by “Perdant”a professional trader who is also one of the popular contributors to “Topstocks.”
Topstocks are still offering a “Free Pro “account for one month with no strings attached. 35,000 Plus members can’t be wrong. So do yourself a favour and see for yourself. You can get there by clicking on the link provided at the right hand side of this page.:-
PART TWO
Various types of drilling
The cost per metre of drilling given here is a ballpark figure. Drilling costs are highly variable and can be affected by depth, terrain, rock type, time the rig will stay in the one area, demand for drilling etc.
There are three main drilling techniques used when searching for minerals:
Rotary air blast [or RAB] drilling is the cheapest and least penetrative type of drilling used. It makes use of compressed air [or a mixture of compressed air and water] to ‘break’ the ground. Compressed air is pumped down the hole through a drill pipe, and the cuttings are blown up the hole along the space between the drill pipe and the wall of the hole. The cuttings are laid in distinct mounds [each representing 1 or 2m of drilling], and then described, identified, and analysed.
RAB drilling only penetrates the weathered cover above fresh [or unweathered] rocks, and generally extends for only some tens of metres [60–70 m on average]. This form of drilling is the cheapest but the accuracy is the lowest as the drill cuttings arrive at the surface with a low level of confidence of their true location down the drill hole.
Typically, the cost of RAB drilling is in the order of about $6/m.
Reverse circulation [or RC] drilling penetrates deeper than RAB drilling and can usually
reach depths of 70–200 m. The system makes use of a dual-wall pipe. High-pressure air or water is forced down the outer pipe to the drill bit, and is then directed to the centre of the pipe. The air returns the cuttings to the surface via the inner pipe. RC chips are typically stored in plastic bags, each representing 1 m of drilling.
Typically, the cost of RC drilling is in the order of $30–35/m for the first 100 m of drilling, and $42–44/m from 100 to 200 m in depth.
Diamond drilling is the most expensive type of drilling [of the order of $75–100/m, depending on the diameter of the core], but it also allows the greatest penetration and recovery of whole samples of rocks not just chips. Diamond drilling can reach depths of several kilometres especially in sedimentary basins in the search for oil.
Diamond drilling allows clear identification of rock types and their relationships as a solid rock core is cut rather than drilled, as well as providing samples for analyses. Diamond drilling also allows 3-dimensional assessment of the lateral extent and depth of an orebody. Diamond cores can have variable diameters.
Investors should be wary of reserves based on RAB drilling alone, due to the low order of accuracy. For continuous bulk commodity orebodies, such as coal, it is not such a major issue. RAB drilling is the more common drilling method, but it is important that there is strong correlation between RAB results and any nearby diamond drilling results.
Oil and Gas Drilling
The method employed in the drilling of an exploration well is on a much larger scale due to the very large depths that this type of exploration requires [from hundreds to many thousands of metres]. A diamond drill bit, which might start with a diameter of one metre, turns and grinds away the rock. Drilling muds are set down the centre of the drill string and the bit, to lubricate cutting and place pressure on the bottom of the hole to prevent any blow out of high pressure gasses that may be encountered on the way. The drill cuttings return to the surface with the mud where they can be analysed.
Other tools for mineral exploration
Remote sensing tools:
Ground exploration:
This resource from http://www.doir.wa.gov.au/documents/... explains all of these terms and gives examples of each.
Ballpark figures for other exploration types
These figures are taken from the 2004 edition of Mining Valuation Handbook – For Projects, Companies and Shares by Dr Victor Rudenno and were supplied to me by fellow member Verdi. Once again, these costs are highly variable and the following information should be used as a guide only. Remember they are already four years old!
How assays are reported
Generally assay results for metals are reported in one of the following ways:
Grams per tonne – g/t
The total sample of the assay will be reported as Xg/t of material targeted, where X is the number reported by your company. This material may be rock or soil. The higher the number of g/t, the better the assay result.
Parts per million – ppm
One part per million equals one gram per tonne. That is, there are one million grams to the tonne. As above, the higher the grade the better the assay result you have to investigate.
Not so long back some companies were reporting ppb [parts per billion]! Unless metals prices have gone through the roof by the time you are reading this i’d suggest you have a chuckle and move on. Uranium may be the only metal worth looking at but this is generally reported as a percentage.
Percentages
Some metals may be reported as a percentage of the material mined. It may be time to get the calculator out and convert these back to grams per tonne.
Uranium results are usually reported as a percentage and despite what may appear to be very low levels you need to look closely at the commodity profile related to this metal.
Cubic Metres
Mining by dredging – such as alluvial mining of tin, may be reported in cubic metres. There should be some percentage or gramage mentioned within these results. If not, be aware that metals have varying degrees of specific gravity; i.e some weigh more than others by ‘volume’ and therefore you may have to look more closely at the results.
Note:
Whatever the reporting method, you need to be aware that whatever is reported in the assay may not necessarily be what will be available for sale. This is because there is a difference between the reported assay grade [head grade], the concentrate grade and the concentrate recovery. You will need to look carefully at these grades in your analysis, try to identify reasons for any large discrepancies and possibly factor in any positive or negative by product[s] to the final sales your company receives.
Some of the costs associated with mining
Indicative Capital Costs in Mining
The capital cost to develop a mine is dependent on a range of issues. These issues include but are not limited to:
The estimation of capital costs is thus a complex issue, that requires adequate and detailed information about a particular deposit. This level of information is often not available to the market, and approximate values or rule of thumb estimates are used in placing a value on a resource project.
A gauge of the order of magnitude of capital costs can be obtained from published information as listed in the tables below. For those commodities such as coal and oil where there is little secondary processing the cost is in units of mine production. For those commodities where there is considerable secondary processing such as base metals etc, the cost is shown on a per tonne milled or processed. For gold mines it is not uncommon for the cost to be quoted on a per ounce basis.
Indicative Operating Costs in Mining
Operating costs, as with capital costs, will vary from project to project dependent on location, mining and metallurgical factors. Two mines producing identical quantities of a resource product, can have quite different operating costs, however, the order of magnitude of operating costs will often be related to the size of the operation. Additionally, there is often an economy of scale [exponent] so that the larger the operation the higher the absolute cost but the lower the relative cost on a unit basis.
For oil and gas the economies of scale are not so apparent, while the cost of oil production is a relatively small part of the overall costs.
Some of the costs involved in various types of mining include: Wages; on costs; materials; maintenance power; administration; transportation – rail and port; excise [coal] sampling; exploration, maintaining mining leases and royalties.
Royalty costs
One cost that you may not associate with mining a resource is a royalty cost. Mineral resources are vested in the Crown and therefore State Governments charge royalties for the right to use their mineral resource. The Federal Government has jurisdiction over most of offshore Australia and charges royalties on oil and gas production. The royalties generally take the form of either unit royalties which are a fixed cost per unit of production, or ad valorem royalties which are charges based on the value of the commodity. Profit based royalties are rare, with the Federal Government applying a resource rent tax for newer offshore oil and gas discoveries and the Tasmanian Government including a profit based element. A brief summary of the current royalty rates can be found in the resource i have used below or you can obtain more recent information from the Government Mineral Resource Bodies i have listed in the weblinks section at the end of this post..
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