Page 273 - Introduction to Mineral Exploration

256 B. SCOTT & M.K.G. WHATELEY

Obviously there is an upper limit to this gen- 11.2.4 Market conditions
eral principle otherwise most mines would be
worked out in their first year of production! The sale of minerals extracted from a mine is
usually its only income. From this revenue the
mining company has to pay back the capital
Accessibility of the mineralisation
How accessible is the mineralisation? There borrowed to develop the mine and pay the re-
are limitations on open pit and shaft depths, lated interest, production and processing costs,
and shaft size, which restrict output. What type transport of the product to market, product
of mining extraction is to be followed? Under- marketing, dividends to shareholders, and local
ground methods vary considerably in their and national taxes (Fig. 11.4).
nature and scope depending upon the geology Can the product be sold and at what price?
of the mineralisation and the host rocks. Some It cannot be assumed that demand is growing
methods are suitable for large-scale production sufficiently fast to absorb all feasible new pro-
in wide zones of mineralisation whilst others duction. There has to be a reasonable assess-
are designed for small workings in narrow veins. ment of future demand and price over the life
of the mine, or at least its first 10 years, which-
ever is the shorter. The product price (see
Capital expenditure limitations
There may well be restrictions on the availabil- section 1.2.3) is the most important single
ity of capital for developing and equipping the variable in a feasibility study and yet the most
mine. Consequently, it may not be possible to difficult to predict. Historic price trends (Kelly
achieve the maximum desirable rate of annual et al. 2001, LME 2003) over the last 20 years
production despite the presence of adequate show a declining market price for most base
and accessible ore reserves. metals and energy materials (Fig. 11.5; see
Figs 1.4–1.6, 1.8).
Many mineral products are sold on commod-
11.2.2 Quality of mineralisation ity exchanges, in London and New York, where
a price is set each working day and considerable
Grade is but one facet of quality, albeit an
important one. Other factors such as mineral- fluctuations occur (Figs 1.4–1.6). Most mine
ogy and grain size enter into the definition (see owners have little or no control over these
section 2.2). Commodities like coal, iron ore, prices, which are vital for the well being of pro-
bulk materials, etc., can often be sold as a run- ducing mines. Market principles suggest that
of-mine (ROM) product that does not require during a period of low prices production costs
processing. However, most base and precious should be minimized and revenue maximized.
metal ores usually require some method of One way of achieving this would be to adjust
processing to separate waste rock and gangue the cut-off grade to extract the maximum pos-
from the valuable constituents (Wills 1997). sible tonnage of easily accessible mineralisa-
Concentration plants vary from low cost (sep- tion at the highest grade. Alternatively during
arating sand from gravel) to high cost, complex periods of higher price, lower grade material
plants as in the separation of lead and zinc could be extracted.
sulfides (Fig. 11.3). Present day mineral and metal prices are
available in publications such as the Mining
Journal, Engineering and Mining Journal, and
11.2.3 Location of the mineralisation Industrial Minerals, and websites such as the
London Metal Exchange (LME 2003) which
The valuable products have to be taken to
market for sale, and supplies for the mining summarize average weekly and monthly com-
operation follow the same route in reverse. modity prices, as well as providing annual
Local availability of power, water supply, and reviews.
skilled labor must be considered, and local
housing, educational and recreational facilities 11.2.5 Economic climate
for the workforce. Clearly mineralisation adja-
cent to existing facilities has greater value than The prediction of general business sentiment,
that in a remote, inhospitable location. the demand for products, and inflation and