Geo-statistical Ore Reserve Estimation October 01, 2019

University of Engineering and Technology,

Peshawar

Bilal Ahmad
Mining Department
Fifth Semester
17PWMIN0806
Assignment-One
Geo-statistical Ore Reserve Estimation

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Geo-statistical Ore Reserve Estimation October 01, 2019

Table of Contents
Overview of Mineral Resource Estimation and Ore Reserve Estimation: ......................................... 4
Resource: ............................................................................................................................................. 4
Reserve: ............................................................................................................................................... 4
Evaluation Process: ................................................................................................................................ 4
1-Collect Geological Information: ........................................................................................................ 4
1.1-Geophysical Survey: ..................................................................................................................... 4
1.2-Sampling: ...................................................................................................................................... 4
1.3-Splitting and variability: ............................................................................................................. 5
1.4-Compositing: ................................................................................................................................ 5
1.5-Surveying and Leveling: .............................................................................................................. 5
1.6-Density: ......................................................................................................................................... 5
1.7-Contour Maps: .............................................................................................................................. 5
2-Building 3D Geological Model: ......................................................................................................... 5
2.1-Mineralization Envelop: ............................................................................................................. 5
3-Building Block Model and Grade model: ........................................................................................ 6
3.1-Qualified Person: ......................................................................................................................... 6
3.2-Estimation Process: .................................................................................................................... 6
3.3-Polygonal Method: ...................................................................................................................... 7
3.4-Inverse Distance Method: .......................................................................................................... 8
3.5-Kriging: ......................................................................................................................................... 9
4-Determine Resource: ....................................................................................................................... 10
4.1-Reserve Conversion: .................................................................................................................. 10
5-Pre-Feasibility Studies: .................................................................................................................... 10
6-Determine Reserve: .......................................................................................................................... 11
7-Feasibility Studies: ........................................................................................................................... 12
8-Conclusion:........................................................................................................................................ 12

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Geo-statistical Ore Reserve Estimation October 01, 2019

Table Of Figures:
Figure 1 Block Model ------------------------------------------------------------------------------------------------------------ 7
Figure 2 Polygon Method------------------------------------------------------------------------------------------------------- 7
Figure 3 Inverse Distance Method ------------------------------------------------------------------------------------------- 8
Figure 4 Reserve Conversion ------------------------------------------------------------------------------------------------- 11

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Geo-statistical Ore Reserve Estimation October 01, 2019

Overview of Mineral Resource Estimation and Ore Reserve

Estimation:
Ore reserve estimation includes the determination of tonnage of the ore and
average grade or value per ton of the ore body. Since the grade or content of valuable materials
established a difference between rock that may or may not be classified as ore, tonnage cannot
be estimated without considering the question of grade.
Resource:
Resource is a geological identified mineral known to be economically feasible for
extraction. A prospect transforms to resource when exploration phase initiated.
Reserve:
At the end of exploration stage, when tonnage and grade of mineral has been estimated
and which can be economically extracted referred to as reserve. It is a economically proved
deposit.

Evaluation Process:
 Collect geological information
 Build 3D geological model.
 Build block model and extrapolate drill data to produce grade model.
 Determine resource.
 Acquire mining/metallurgical/economic info (Pre-feasibility Study).
 Determine Reserve.
 Feasibility Study.

1-Collect Geological Information:

The first step is to collect all the exploration data to select what can and what cannot be
used in the next step which is the building of the geological model. Most of the data collected
during the long process of exploration is used directly and indirectly in defining the geological
model. Geological mapping, samples, geophysical data and drill log data may all assist with
defining that geological model.
1.1-Geophysical Survey:
Geophysical surveys are ground-based physical sensing techniques that produce a detail
image and map of the area. Ground surveys includes: magnetic surveys, specific gravity surveys,
induced polymerization surveys, resistivity surveys.
1.2-Sampling:
Sampling is carried out for resource estimation. A long cylindrical drill core is taken out
by means of either channel and chip, diamond drilling or reserve circulatory drilling machine
which is taken into laboratory where geochemical analysis of samples are carried out to know
the chemical composition, structure and other aspects of the samples.

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Geo-statistical Ore Reserve Estimation October 01, 2019

1.3-Splitting and variability:

After drilling, sample is split into number of parts to calculate the spatial variability and
short-scale variability (meter-meter variability) of grade throughout whole sample. Spatial
variability can only be determined through samples. Splitting samples at 3m is more reasonable
than at 1m where variability disappeared which leads to poor estimation.
1.4-Compositing:
Process that uses samples of different supports and transform them into a samples of
equal supports. Compositing is done after geochemical analysis. It is carried out to find exact
average grade of the samples of same supports.
1.5-Surveying and Leveling:
Surveying is the techniques, profession, art and science of determining the three
dimensional position of points and the distances and angles between them.
1.6-Density:
Density is the mass per unit volume. Density of the sample is determined to calculate
the tonnage of the ore body.
1.7-Contour Maps:
In contour maps, contour lines joins points of equal elevation above a given level, such
as mean sea level. A contour map is a map illustrated with contour lines, for example a
topographic maps, which thus shows valleys and hills, and steepness and gentleness of slope.

2-Building 3D Geological Model:

Once all the geologic data is compiled and useful data is selected, we can build that
geological model. The geological model reflects geologic understanding of mineralization, its
host rock and its structural deformation.

The geological model is built using 3d soft modeling software. The most important data
comes from geological mapping and drill database but other soft data can also be used and
integrating this requires the modeler to use a both mix of data and geological intuition. His aim
is to define three dimensional and dimensional envelops that reflects characteristics that may
impact on economics. For example, erosion surfaces. One of the most important features he
needs to model is the mineralization envelop. These features will all have direct influence on
either the limits of mineralization or a mining or processing costs such as rock density,
hardness, degree of weathering.
2.1-Mineralization Envelop:
This defines the outer limits of mineralization. It may have hard boundaries where the
mineralization is known to be cut off sharply by say a faults or soft boundaries which defines
their outmost portion of a grading or fading out of the mineralization. In case of soft
boundaries, the ultimate limit of element mineralization will be defined later using statistics to
define where the grade drops below the applied cutoff.

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Geo-statistical Ore Reserve Estimation October 01, 2019

Mineralization envelop is sometimes divided into separate domains that have different
characteristics and needed to be treated separately. If two rock units have same mining content
characteristics they maybe clumped together to simplify the process.

3-Building Block Model and Grade model:

Once the geological model is completed, we move on to produce a grade model. Key to
this process is the so called qualified person or QP.
3.1-Qualified Person:
QP is defined as an approved engineer or geo scientist with atleast five years of
experience who is knowledgeable of the mineral property concerned and who has sufficient
experience and qualifications to make the statements which are made within the report. He
or she also has to be good standing with a professional association and a recognized stature
within that organization.
QP uses his professional judgement on number of calls during the evaluation process
and it’s his professional and ethical reputation that’s on the line when he puts his name to a
resource estimation.
3.2-Estimation Process:
The first step in constructing the grade model is to superimpose a digital 3d mark block
model or framework onto the geological model, selecting block dimensions that allow sufficient
grade separation details. A block model may have thousands or millions of blocks. The
dimension of blocks depends largely on the size and shape of the order envelope and it may
vary within the model. Having established the framework, we take the available data and
extrapolate this to assign an estimated grade to every block in that grade model. Data from RC
drilling and diamond drilling is acceptable. Even underground channel sampling is considered
acceptable in certain cases.
In grade estimation, the process of extrapolating tiny samples to entire ore body is a big
problem. A diamond drill core may have a diameter of say just 48 mm and yet we are trying to
extrapolate that to fill a block that maybe tens of meters at each dimension and into the
adjacent block as well. Drilling might sample 0.00001% of entire ore body. In case of estimating
grade we have a series of statistical tools that can be used to assist.
Estimation is a process using a sample data to predict a most realistic distribution of
grade (or lithology, specific gravity etc ) throughout a mineralized body.

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Geo-statistical Ore Reserve Estimation October 01, 2019

Figure 1 Block Model

Statistical estimation can give us a reasonable idea or grade distribution in 3d hopefully

good enough for us to base our financial calculations on it to allow a sensible decisions. There
are mostly used statistical methods which are
1. Polygonal
2. Inverse distance
3. Kriging
3.3-Polygonal Method:
In polygonal method, there are several variants but basically they take known data
points and then construct area of influence around them assigning the grade of the sample
point to the entire two or three dimensional polygons. Polygonal method is mostly applied to
the planar type deposits.

Figure 2 Polygon Method

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Geo-statistical Ore Reserve Estimation October 01, 2019

Advantages of polygonal method are

 Quick
 Cheap
 Low tech
 Can be done with sparse datasets, minimal geological understandings
Disadvantages are

 They don’t take into geological trends

 Tends to over-emphasize occasional high grade samples
3.4-Inverse Distance Method:
This ID method assumes that the closer together two samples are, the more likely they
are to be related. Using the straight inverse distance area variant, if sample A is half the
distance from block to be estimated than sample B, then sample A will have twice the weight of
sample B. In practice, inverse distance still suffers from the same overemphasis of isolated high-
grade samples that the polygonal method suffer from.
Relationship weighing = 1/d or 1/d^2 or 1/d^3

Figure 3 Inverse Distance Method

Advantages are

 Relatively quick
 Relatively cheap
 Can be done with sparse database

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Geo-statistical Ore Reserve Estimation October 01, 2019

Disadvantages are

 Can over-or under-smooth data.

 Does not take into account spatial aspect i.e. ignores geological trends.
3.5-Kriging:
Kriging is by far away is the most commonly used methodology today. It’s named after
South African Mining Engineer Donna Kripke. Kriging uses the weighted average of
neighboring samples to estimate the unknown value at a given location. But unlike other
methods, it take takes into account directional trends that sampling exhibit so that assays of
samples in certain directions are weighted more heavily than those in other directions.

Kriging is the two stage process.

1. First stage is to established the predictability of sample values by comparing each
sample with every other sample in the dataset to produce a semivariogram. To do this,
computer plots each sample pair in a certain direction on a graph of distance apart on
the x-axis and against the variability of pair on the y-axis. Then the best-fit line is fitted
through the points. The process is repeated for other directions and combination of
these semivariogram defines search ellipse showing how to weight samples in any
particular direction.
2. The second stage of kriging process is to estimate values of un-sampled locations using
the parameters defined by semivariogram. Use the framework of empty blocks on
geological model, apply search ellipse to data and fill empty blocks with estimated
grade.

Note that kriging also provides a standard error to quantify confidence levels which may be
important in classifying box has measured, indicated or inferred.

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Geo-statistical Ore Reserve Estimation October 01, 2019

There are various types of kriging.

 Simple
 Ordinary
 Indicator
 Multiple indicator
The geo-statistician will make a call as to which type of kriging is best suited to data set.
Advantages are

 Uses the spatial relationship to estimate – geological trends.

 Provides measure of confidence.
Disadvantages are

 Time consuming
 Trends to smooth data

4-Determine Resource:
A resource is concentration of minerals that has reasonable prospects for economic
extraction.

 Apply cut-off grade.

 Remove any obviously un-mineable blocks.
 Add up tonnage of blocks and weighted average of their grades.
 QP uses kriging confidence and other factors to differentiate between measured,
indicated and inferred resources.
 Measured and indicated often grouped together. Inferred always reported separately
and not used in economic calculations in feasibility studies.
4.1-Reserve Conversion:
 Are the resources practically and economically mineable under current conditions?
 Economically mineable part of a measured or indicated resource demonstrated by at-
least a PFS that includes adequate information on mining, processing, metallurgical
factors etc that demonstrate that economic extraction can currently be justified.
Reserve includes diluting materials and allow for loses during mining.

5-Pre-Feasibility Studies:
To define reserves and produce feasibility studies, we need more information than we
currently have and will carry out additional studies to collect that necessary data. This data
collection is normally done in three stages of increasing details.
Preliminary Economic Assessment (PEA) or Scoping Study, or Order of Magnitude Study

 If the project makes any economic sense at all

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Geo-statistical Ore Reserve Estimation October 01, 2019

 Inputs are rough usually within 40 or 50 percent

 Give the idea of viability of project
Preliminary Feasibility Study

 Metallurgy (process method, % recovery)

 Rock mechanics (pit slope stability)
 Engineering (mining methods, initial power, water, transport opex)
 20-30% accuracy
Feasibility Study (Full Feasibility Study, Bankable Feasibility Study)

 Metallurgy
 Rock mechanics
 Engineering (mining methods, initial power, water, transport)
 Environmental impact study
 Socio-politic study
 Legal
 Tax, financing
 Within 15% accuracy

6-Determine Reserve:
Once the pre-feasibility study is completed, reserve is estimated.
1. Reserves are mineable at current economic conditions
2. Take into account:
 Practicality of mining
 Economic of extraction
 Mining dilution/recovery
 Metallurgical recovery
3. Overall conversion factor: 40-80% ( general rule of thumb)

Figure 4 Reserve Conversion

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Geo-statistical Ore Reserve Estimation October 01, 2019

In case of Underground Mining,

Define practical stopes based on block model – often hand done on sections then linked in 3D
to form stope plan.
In case of Open Pit,
Use pit optimization software…
Most programs use Lerchs Grossman algorithm or Floating Cone method.
Calculate profit/loss for each block in model, taking into account which other blocks need to be
mined to get to the block in question.

7-Feasibility Studies:
 Cost estimated to within 15%
 Study includes:
 Metallurgy
 Optimize process, recoveries
 Rock Mechanics
 Core RQD
 Rock strength testing
 Engineering
 Mining method
 Power
 Water
 Transport
 Define capex, refine opex
 Environmental Impact Study (EIS)
 Socio-political
 Legal, Tax
 Financing, offtake, power and water

8-Conclusion:
Having a completed positive feasibility study does not automatically mean it is going to
be developed. A feasibility study is simply a tool to assist in the Go / No-Go decision.

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