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FindIT Group.org • View topic - Mine Financing

Mine Financing

Discussion on Gold, Silver, Platinum, Palladium, Rhodium, Lanthanides, Cobalt miners and physical metals investing. Energy miners are uranium & oil sands.

Any market discussion, recommendations, news related to contra investments, conspiracies to defraud general stock market participants especially PM investors are welcome as well.

Mine Financing

Postby mxsquid » 29 Nov 2008, 17:47



A layman's guide to understanding NI43-101 and the differences between indicated, inferred, proven, probable mineable reserves as opposed to geological reserves.

Excerpt:

At the point a company decides to begin mine development and wishes to convince lending institutions that the proposed operation will return their borrowed funds, plus interest, over the terms of the loan, communications between lender and borrower are crucial. The importance of the mine feasibility presentation should not be underplayed, especially as new projects continue to increase in size, complexity, and cost. While the content and emphasis of a report to the lender will vary according to the particular project and type of debt financing sought, there is a general base of information upon which all such studies are built. THE PROJECT'S TECHNICAL ASPECTS Here, the object is to satisfy the lender that he will not be unduly exposed to technical risks as a result of the physical scope of the project. Reserves The feasibility report submitted to financial institutions should include an adequate description of the geologic setting, mineralogy, ore types, and reserves broken down into such recognized categories as proven/probable/possible or measured/indicated/inferred. Rather than a bald statement of reserves, lenders prefer to have detailed information on: History of exploration Drilling, both percussion and core, with core recovery, drill hole spacing, analyses, and continuity of mineralization Bulk sampling, with core assay comparisons Overburden, with stripping ratios Specific methodology of reserve calculation, and Geologic reserves vs. mineable reserves. As a rule of thumb, a lender would prefer to see that reserves in the proven class alone are sufficient to support operations at the design rates until the borrowed funds are repaid. (See also Schreiber above in this Chapter.) Mining The rationale for adoption of a particular mining technique should be presented as well as descriptions and justifications for: Preproduction development Preliminary mine plan, with forecasts of grades and material movements Geotechnical test work which influenced decisions Mining recoveries and efficiencies Major equipment, with type, model, rating life, spares, replacement schedules, utilization, and productivity Manpower requirements and work schedules Design assumptions Ore stockpiling and blending Environmental requirements, and Waste disposal Processing If a new ore body is to be developed or a new process used, it is important to provide details of test work, scale up, and extrapolation factors. A basic process description with a summary of the studies which justify the intended processing route should be included...

http://www.onemine.org/search/index.cfm ... -indicated



http://www.cim.org

Standards Defined

http://www.cim.org/committees/CIMDefStds_Dec11_05.pdf


An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral Resource estimate is of sufficient quality to support a Preliminary Feasibility Study which can serve as the basis for major development decisions.
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Re: Mine Financing

Postby mxsquid » 29 Nov 2008, 18:04

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Re: Mine Financing

Postby mxsquid » 01 Dec 2008, 15:10



The thickness, grade (in grams of gold per ton of host rock), distribution and extent of the deposit is "fully" known, or at least with great statistical confidence. Where the ore starts and stops in every direction should be "known." Many, many drill holes and assays are completed and analyzed. Relative concentrations of gold ore to host rock and overburden are "known."

Only a "few" drill core samples and assays of those cores may be completed and sufficient to calculate tonnage and grade. Inferred projection of the "goodies in the ground" at a measurable distance away from the drill holes is permissible with limitations. It is very expensive to drill every few feet, so you have to make reasonable assumptions about what is hidden between the drill holes; it may be a bonanza, it may be nothing.

Usually only crude, high level ground survey or statistical "sampling" of the area has been performed. Not enough actual testing has been performed. "Gee, it kind of looks like that outcropping way over there has some gold in it too; it looks like it starts here and continues all the way."

The term is used only for mines that are actually producing or very near that point. Much more is known about the richness, depth and expanse of the ore body. Drilling is complete and assays have been verified.

The actual entire ore reserves are stated explicitly in terms of the mineable tons. The chemical and metallurgical properties of the mineralization are very well known and documented. The mining method is clearly identified and optimized. The estimate of the "mine life" before resources are exhausted is extrapolated.

Only the mineable ore grades and tonnage are stated. The vein thickness is known and the way the gold ore lies in the ground is also known fairly well. Where mineralization starts and stops is reasonably estimated. This is often estimated from following industry accepted and permissible "ethical" procedures after drill results.

This is a big estimate of how much gold might be here; it is sometimes referred to as "potential" How many of us know people that never lived up to their "potential" for one reason or another? Same thing here. It may be no more than some geo-pseudo-scientific guess based on little more than review of earth mapping satellite imagery or surface surveys.

The ore can migrate from one category to another over time as the deposit is better measured and understood after more drilling and extraction is completed. Any given "zone of occurrence" can have only one classification at any given time. Lodes can turn out to be either richer or leaner than initially "guesstimated." It is NEVER an exact science, errors are inevitable. A simple decimal point higher or lower in any mathematical measurement can be the difference between profit and failure.
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Re: Mine Financing

Postby mxsquid » 15 Dec 2008, 16:55

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Re: Mine Financing

Postby mxsquid » 15 Feb 2009, 20:47



Author: Barry Sergeant
Friday , 13 Feb 2009


Here's the Mineweb article:




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Re: Mine Financing

Postby mxsquid » 25 Mar 2009, 21:11



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