3/9/23, 5:34 PM Module 3: Prospecting and Exploration

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Module 3: Prospecting and Exploration

Module 3 Overview
Module 3 Overview

Prospecting and exploration are the first two stages in the life cycle of a mine. The first lesson in Module 2 gave us a good overview of these
stages. Prospecting is really the domain of the geoscientists with minimal input from the mining engineers, and as such we are not going to go into
any additional detail on prospecting. While geoscientists, and particularly geologists, are an important part of the exploration effort, mining
engineers are heavily involved as well. Consequently, we’ll examine a few more topics within exploration.

Learning Outcomes
At the successful completion of this module, you should be able to:

explain the difference between prospecting and exploration;

explain the goals and methods of and the most important outcomes from an exploration program
describe the difference between the two types of exploration drills, and the advantages of each;
describe the importance and considerations for establishing a sampling plan that guides the exploration-drilling program;
describe the importance of the geologic and grade continuity;
define resource and reserve, and the categories of each;
explain the area-of-influence concept and weighted averages and why they are necessary;
calculate the weighted average of a deposit parameter;
describe the difference between the polygon, triangle, and inverse distance methods of reserve estimation and use these methods to estimate
a characteristic of the deposit.;
describe what the stripping ratio and the breakeven or maximum stripping ratio means for a tabular and flat-lying deposit; and calculate these
quantities;
describe what the instantaneous stripping ratio and the maximum allowable stripping ratio mean for a non-tabular and non-flat-lying deposit;
and calculate these quantities;
explain the impact of pit expansion on the stripping ratio for a non-flat-lying deposit;
calculate the cutoff grade.

Lesson 3.1: General Concepts of Exploration

Lesson 3.1: General Concepts of Exploration

You’ll recall the goals of exploration from Lesson 2.1 of Module 2. From a successful prospecting effort, we believe that we have found an
economic concentration of a mineral. In the exploration stage, we will want to define this deposit in as much detail as practicable. We want to know
its shape, its size, its orientation, its depth below the surface, the grade and perhaps chemical composition of the ore, and several geotechnical
parameters for the deposit and the surrounding rock. That’s a lot of information, and the acquisition of information is rarely cheap! Hence, the
previous discussion about managing risks. One of the sure ways of increasing the certainty about the characteristics of the deposit is sampling. We
can use a variety of techniques to estimate the characteristics of the deposit, including geophysical imaging and structural geology. Above all, data
obtained from samples can be definitive, and generally the more samples that we can take, the better.

For near-surface deposits, we may use trench samples, which literally entails digging a ditch, and then observing and sampling the exposed
material. Similarly, we could take pit samples where we dig a larger hole. And there are other methods. The most commonly used technique for
shallow and deep deposits is drilling. There are two types of exploration drills in service: one that produces cores and the other that produces chips
or cuttings. Both drill holes of a relatively small diameter of approximately 1.5” to 4”. The difference in the “product” from these drills is illustrated in
Figure 3.1.1.

Figure 3.1.1: products of exploration drilling. Shown are chips, or cuttings (left) and a core (right).
Source: Atlas Copco Handbook, 2007 [1]

The core is obtained with a drill that has an outer barrel with diamond cutting bits. As the drilling progresses the rock core is undamaged and
provides a detailed record of the rock layers. Information on structural features such as joints is preserved. Normally, a field geologist is conducting
or supervising the core drilling and will keep detailed records or “logs” of the cores as they are collected and carefully placed into core boxes.

Photos of a drill and associated components are found on Atlas Copco's Conventional Core Drilling page [2]. Take a look at the core bits, core
barrels, and drilling rods. You can see a few examples of core boxes and the cores being placed into them.

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In contrast to core drilling, chips are obtained with a traditional rotary-percussion drill bit, in which the bits are the same diameter as the hole. The
cuttings are collected in a tube inside of the drill rod. This process and the drills are often known as reverse circulation. Cuttings provide information
on the type of material and its composition, but structural information is lost. Coring cost per length of the hole is several times more than for
cuttings. Both are valuable as we endeavor to define the deposit at a justifiable cost. The difference in the bits that produce the chips versus cores
is evident in this picture (Figure 3.1.2).

Figure 3.1.2: Chips-cutting bit (left) and core-cutting bit (right)

Source: LJ Hughes & Sons, Inc.

Characteristics of a typical drill rig for surface application are found in this brochure: Atlas Copco Surface Exploration Drill [3]. Later we’ll talk briefly
about conducting an exploration program during underground mining. Doing so requires a different configuration of the drill rig, due to the more
confined space of the underground mine. Pictures and characteristics of a rig for use in an underground mine are found in this brochure: Atlas
Copco UG Exploration Drill [4]

Regardless of which type of drill is used to sample the deposit, it is important to develop a sampling plan, i.e., how many holes will be drilled, and
where will these holes be drilled? Will they be spaced uniformly on a grid for example, or perhaps located at irregular intervals? What is the
maximum spacing between holes? Practical limitations may limit where we can place our holes. We may not have the surface rights at some points
on the pattern, which means we can’t drill from that location. Or other points may be inaccessible due to rugged terrain, the absence of roads to
access the area, or maybe there is a shopping mall at the location where we would like to place a hole. Thus, our drilling program may have fewer
holes than we’d like due to cost consideration, and the holes may not be placed exactly where we’d prefer to locate them. These are considerations
that will keep you awake at night! Why?

Simply put, if we do not take a sufficient number of samples, and we have:

a large deposit of irregular shape, it is possible that we can completely miss parts of it and grossly underestimate the size of the deposit,
a small deposit of irregular shape, it is possible that most of our holes will intersect the deposit, leading us to conclude incorrectly that the
deposit is massive in size,
a deposit with a grade or other chemical characteristic that is highly variable, it is possible that we will grossly under or overestimate the value
of the deposit.

These are not abstractions! There are real-world examples where these events have transpired, and with very bad consequences for the company.
So, how do we know how to locate our drill holes to reduce the likelihood of reaching incorrect conclusions about the deposit? First, knowledge of
the geology associated with the target mineral is useful. If we are exploring a coal deposit in western Pennsylvania, we know that it will be a
relatively flat lying and tabular deposit. On the other hand, if we’re exploring a gold deposit in Nevada, we can consider that the orebody is likely to
consist of veins of varying thickness. Clearly, this geologic knowledge, and the help of a geologist will help us to design an effective sampling
program.

There are a few guidelines that have developed over the years.

A regularly spaced pattern will generally yield more information at a reduced cost.
The maximum spacing of the holes should be less than the minimum dimension of a deposit that would be mineable with a given mining
method.
Non-vertical holes may be better for steeply dipping veins or lenses. (see Figure 3.6 of the text)
Data from widely spaced patterns can be evaluated, and then additional holes can be added as appropriate. (see Figure 3.7 of the text)
Experience gained from other exploration programs is useful. For example,
A Bureau of Mines study found that holes placed on 1200’ centers would yield sufficient information on the Pittsburgh coal seam
Patterns for bituminous coal deposits, in general, range from 500’ x 500’ to 3000’ x 3000’
Typical patterns for porphyry copper deposits are 150’ x 250’ to 200’ x 400’
Typical patterns for taconite deposits are 100’ x 200’ to 200’ x 300’

It is important that our spacing be such that we can ensure geologic and grade continuity of the ore between holes.

The number of holes and the drilling pattern will help us to accurately estimate the size, shape, and attitude of the orebody, and this is critical. In
most cases, we are equally concerned with the grade of the ore or perhaps some other characteristic. Suppose that we’ve done a calculation and
we know that the minimum grade at which we can make a profit is 5%, i.e., for each ton of ore, we have 100 lbs. of the mineral of interest; and
further, suppose that the grade found in the drill holes ranges from 3% to 7%. Will it be profitable to mine this deposit? Or we may be looking at the
CaCO3 content of the limestone, and there will be a minimum concentration that is acceptable for our market. Sometimes it is an impurity in the
deposit, which is of greater concern. For example, if the impurities in our salt deposit exceed 2%, we will be unable to sell our product into the more
lucrative market for chemical-grade salt, and instead will have to sell it for deicing of roads. In each of these three examples, the value of the
deposit will be estimated by analyzing the samples obtained from the drilling program.

Let’s think about this for a case in which the holes are spaced on a regular grid of 1000’, and the diameter of the drill holes is 3”. Suppose we
analyze the core for a grade. Think about this: based on a sample of less than 0.1 ft2, we will estimate the grade of the ore over an area of
1,000,000 ft2. This may seem crazy, but if we have prior knowledge about the typical variability of a characteristic in a certain type of deposit, and
we have chosen our hole spacing based on that knowledge, then we can be reasonably confident in the estimate.

Fortunately, it is unlikely that you will have to design a sampling program, on your own, in the early years of your career. Nonetheless, you should
understand the goals and challenges of the exploration program.

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Important outcomes from the exploration program are estimates on the size and value of the deposit. Some of you may have heard terms like
"proven" and "probable" or "inferred" to describe the resource or the reserve. These words have a specific meaning and are not to be confused. Not
only is this important so that we can understand each other when we talk, but the terms have legal significance so that someone who is considering
investing in your mining project is not misled, or worse, deceived. Let’s look at the definitions, and then this will become even more clear.

Resource: a mineral resource is a concentration of naturally occurring solid, liquid, or gaseous material in or on the earth’s crust, in such form and
amount that economic extraction of the commodity is potentially feasible.

Resources are further categorized based on the certainty of our estimates.

Measured Mineral Resource: that part of the resource for which tonnage, mineral content, grade, and physical characteristics can be estimated
with a high level of confidence. The data must be based on detailed and reliable physical evidence, e.g., drill holes, trenches, outcrops, etc., and
sample locations must be spaced sufficiently close to confirm geologic and grade continuity.

Indicated Mineral Resource: similar to a measured mineral resource, but with a reasonable, not a high-level of confidence. Typically, this is
because the spacing of the physical samples, e.g., boreholes, is too widely spaced to confirm continuity, but close enough to reasonably assume
continuity.

Inferred Mineral Resource: that part of the resource for which tonnage, mineral content, grade, and physical characteristics are known with a low
level of confidence because the estimate is inferred from geologic evidence that has not been verified with physical data, e.g., boreholes.

While the mineral resource is an important parameter to determine, investors and mining companies gain little benefit from minerals in the ground.
They become valuable if they can be mined. This distinction is accounted for in the definition of a reserve.

Reserve: a mineral reserve is that portion of the mineral resource that can be mined economically at a point in time.

Reserves are further categorized as follows:

Proved Mineral Reserve: that part of a measured mineral resource that can be economically mined at a point in time.

Probable Mineral Reserve: that part of an indicated mineral resource that can be economically mined at a point in time.

Figure 3.1.3: The categories of resources and reserves

Credit: © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

The real value in a potential mining project is in the proved mineral reserve, rather than the probable part of the reserve. The distinction between
these two is the degree of certainty in the resource estimate. This further underscores the importance of designing a sampling program and
assembling a team of geologists to ensure and confirm geologic and grade continuity.

We have talked about using:

the drill hole information to define the spatial characteristics of the deposit;
cores to determine geotechnical features of the orebody and the surrounding rock; and
cores and cuttings to establish grade and chemical composition, among others, by analyzing the samples in the lab.

I did not mention it earlier, but we will normally conduct metallurgical or process testing on the core or cutting samples too. This information is used
to establish certain market qualities of the ore, and to better understand the mineral processing that will be required to beneficiate the ore.

It should also be noted that we can lower instruments down the drill holes, assuming the holes are of sufficient diameter, to “log” the holes. The
logging may be done visually using a camera, or with geophysical instruments including gamma-ray and acoustic devices. These logs help to better
define the lithology and other characteristics.

A quality exploration program is essential to establish the feasibility of mining the resource, as well as to determine the value of the reserve. While
the major exploration work is normally completed to support the feasibility study and subsequently the engineering design of the mine, exploration
may continue throughout the life of the mine. In complex ore bodies, exploration drilling will continue in advance of mining throughout the mine’s
life. Even in the case of fairly predictable deposits, e.g., a coal seam, conditions may be encountered that require exploratory drilling to define the

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size of a want area, i.e., an area where the coal has been displaced with a shale or a sandstone, for example. Other than learning a bit more about
the methodology for reserve estimation, we are ready to move into the next module where we focus on the development stage.

Lesson 3.2: Reserve Estimation

Lesson 3.2: Reserve Estimation

Reserve estimation can be addressed in two steps.

The first is to calculate the tonnage of the orebody, along with other characteristics of the resource. For a coal deposit, for example, we would
calculate the average value for the following parameters: seam thickness, % ash, % sulfur, and BTU (calorific value); and for a metal deposit, we’d
calculate the grade. There are other characteristics that would be of interest, depending on the commodity and its market. The calculations are
similar regardless of the specific characteristic.

The second is to determine how much of the resource can be mined economically at a point in time. By the way, “at a point in time” usually means
using today’s technologies and practices.

Let’s take these in order, starting with the first step.

3.2.1: Step 1 -- Preparing the Data for Estimating the Reserve

3.2.1: Step 1 -- Preparing the Data for Estimating the Reserve

As a starting point, you’re likely to have the following:

a table of the coordinates of each drill hole,

the drill log for each hole, and
analytical results from each hole.

Here are examples of each of these.

The table of coordinates may look like this:

Coordinates for each drill hole

Corehole Northing Easting Surface Elevation
EM0402 200701.67 1331172.00 1265.26
EM0403 201757.90 1334065.09 1325.60
EM0404 199503.09 1339026.61 1177.98
EM0405 199089.71 1340085.64 1380.07
EM0406 198331.70 1342255.76 1348.82
EM0407 198603.62 1342968.52 1151.73
EM0408 197813.63 1343153.43 1328.48
EM0409 200507.09 1332119.20 1155.50
EM0410 199622.88 1333356.05 1286.98
EM0411 197512.23 1341681.96 1331.86
EM0412 198870.72 1332353.55 1108.05
EM0413 198461.45 1339504.49 1394.94
EM0414 197758.15 1338897.31 1333.38
EM0415 198971.83 1338532.48 1162.52
EM0416 198192.38 1337999.37 1097.55
EM0417 198754.13 1337377.32 1115.72
EM0418 199260.00 1336708.65 1239.12
EM0418A 198346.95 1337042.98 1139.57
EM0419 198830.00 1335962.78 1173.48
EM0420 199610.69 1335682.11 1354.33
EM0421 199762.29 1334786.93 1491.54
EM0422 199175.87 1334493.64 1484.68
EM0423 200162.85 1334193.59 1504.45
EM0432 197051.92 1335828.19 1269.23
EM0433 197654.10 1335366.00 1403.45
EM0436 197025.92 1337879.87 1089.72
EM0438 196709.76 1338854.59 1282.14
EM0439 196553.37 1339724.73 1144.93
EM0441 198178.28 1333567.06 1216.20
EM0442 195466.82 1341429.29 1224.64
EMO443 195512.30 1341984.05 1221.25

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Here is a section for a typical drill log. The complete drill log for this hole can be viewed here: Driller’s Log.pdf [6], and you should look at the full
log.

Continuation of drill hole no. EM-04-05

Total depth of hole = 910.00 Feet
Formation Strata Thickness Depth from Surface
BLACK SHALE 0.30 878.07
COAL 0.30 878.37
GRAY SHALE 0.90 879.27
COAL 3.37 882.64
DARK GRAY SHALE 0.02 882.66
COAL 0.10 882.76
DARK GRAY SHALE 0.02 882.78
COAL 3.56 886.34
DARK GRAY SHALE 0.16 886.50
LIMESTONE 0.20 886.70
GRAY SHALE 1.10 887.80
LIMESTONE 2.10 889.90
GRAY SHALE 0.70 890.60
LIMESTONE 0.80 891.40
GRAY SHALE 9.10 900.50
BLACK SHALE 0.30 900.80
COAL 0.40 901.20
GRAY CALCAREOUS SHALE 1.20 902.40
GRAY SHALE 6.00 908.40
GRAY SANDY SHALE 0.70 909.10
GRAY SANDSTONE 0.40 909.50
GRAY SHALE 0.50 910.00

The analytical results will come from laboratory studies to determine the aforementioned parameters of interest. Here is an example taken from
the lab results for the sample obtained from one drill hole.

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Figure 3.2.1: Example of analytical results

SGS North America, Inc.

The complete lab report for this hole can be viewed here: Reserve Estimation.pdf [7]

There may be multiple lab reports. The example here focuses on the chemical characteristics of the coal. In many cases, we'll conduct physical
tests on the cores to determine geotechnical parameters, e.g. compressive strength, on the ore as well as the rock around the orebody.

We will want to build a database that contains the parameters of interest for each of the holes. If we are interested in determining the average
grade, then our table will begin with two columns: drill hole number and the grade for the sample from that hole. Let's suppose that we have a
property with 9 holes:

Parameters of
interest for each hole
Hole # Grade, %
1 2
2 3
3 4
4 3
5 4
6 5

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Hole # Grade, %
7 2
8 3
9 4

We want the average grade for the deposit. Is the average grade equal to the arithmetic average, which is 3.33%?

Are the holes spaced uniformly on a grid, like this?

Figure 3.2.2: Boundary and holes

Credit: J. Kohler, © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

If so, it will be easy to define an area around each hole and then to say that everything within that area has the same properties as those found in
the drill hole. Let's draw a box around hole number 5 to illustrate this. Shortly we'll refer to this area as an area of influence.

Figure 3.2.3: Boundary showing center hole.

Credit: J. Kohler, © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

If the area around each hole were identical, then it would seem reasonable to say that the average grade of this orebody equals the arithmetic
average of 3.33%. But wait a minute! We've said nothing about the thickness of the orebody at each hole. Assuming the thickness is identical at
each hole, then each hole will represent an identical volume of ore, and computing the arithmetic average yields the correct average grade for the
orebody.

However, it's rare that the orebody thickness would be the same at each hole. For the purposes of this example, let's assume a more realistic case
in which the thicknesses vary from hole-to-hole. Logically then, a hole through a thicker section of the orebody will represent a greater volume of
ore than a hole through a thinner section. If we simply average the two holes together, we will arrive at an incorrect average grade because we
have not accounted for the larger contribution of the one hole into the total. We can correct this by using a weighted average, in which the grade of
the hole is increased or decreased to reflect the volume that it represents.

3.2.2: The Concept of an Area or Volume of Influence

3.2.2: The Concept of an Area or Volume of Influence

Procedurally, we do this by calculating an area and volume of influence for each hole. The weighted average for the grade, or whatever
characteristic is of interest, is obtained by multiplying the value of that characteristic by the volume of influence; and then summing the products
and dividing the sum by the sum of the weighted volumes.

Mathematically, this is expressed as:

𝑁

∑ 𝐺𝑛 * 𝑉𝑛
𝑛=1
Avg.Grade = 𝑁

∑ 𝑉𝑛
𝑛=1
(Equation 3.2.1)

where 𝐺𝑛 = the % grade for the nth hole, and 𝑉𝑛 = volume of influence for the nth hole.

Let’s continue with the example by adding the thickness at each hole and inserting columns for the calculated values.The area of influence is the
area surrounding each hole, and if the holes are spaced at 400’ intervals, then the area represented by each hole is 1.6x 105ft2.

Table or Spreadsheet Layout for Calculating Resource Estimates For the Example
Hole # Area of Influence, ft2 z 103 Thickness, ft Volume of Influence, ft3 x 106 Grade, % Weighted Grade, %-ft3 x 106
1 1600 40 64 2 128
2 1600 45 72 3 216
3 1600 70 112 4 448

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Hole # Area of Influence, ft2 z 103 Thickness, ft Volume of Influence, ft3 x 106 Grade, % Weighted Grade, %-ft3 x 106
4 1600 54 86.4 3 259.2
5 1600 58 92.8 4 371.2
6 1600 70 112 5 560
7 1600 42 67.2 2 134.4
8 1600 56 89.6 3 268.8
9 1600 65 104 4 416
Sum 14400 800 2801.6

The average grade of the orebody is the weighted grade, 2801 x 106 %-ft3 divided by the volume of influence, 800 x 106 ft3, which equals 3.5%.

Note that the average grade is NOT the arithmetic average of 3.33%. A tenth of a percent error in the grade is quite meaningful. It is important to
calculate weighted rather than arithmetic averages in all cases.

In the foregoing example, we had a convenient simplification: the area of influence was the same for each of the holes. In practice, this would rarely
be true because the property boundaries are generally irregular and the holes are most likely not spaced evenly. In these common situations, we
need a way to determine the influence that a given hole should have in our estimation of the reserve.

Defining an Area or Volume of Influence for a Drill Hole

Consider the following property.

Figure 3.2.4: Property with 12 holes.

Credit: J. Kohler, © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

The new challenge here is to determine the area of influence for each hole. Once we have done that, we can continue by using the same
procedure that we followed for the previous example.

Each hole is likely to have a different value for the characteristics of interest, and for this discussion let’s say that we are looking at grade. How far
from the hole should we assume that the grade of that hole applies? Halfway to an adjacent hole? What if the grade in the adjacent hole is
significantly different? Should that alter where we draw the area of influence? Perhaps, we should use a scheme that says the value at the hole
decreases inversely as we go further from the hole? In fact, many deterministic and statistical methods have been developed over the years, and
some provide better results than others for certain types of ore bodies. Let's take a look at a few methods for determining an area of influence for
each drill hole.

3.2.3: Overview of Reserve Estimation Methods

3.2.3: Overview of Reserve Estimation Methods

The polygon method is an old and established approach based on a simple geometric algorithm, in which we construct a polygon around each hole
to determine an area of influence for that hole; and then the total volume directly beneath the polygon is assigned the same values as the drill hole
from which we constructed the polygon. We’ll take a closer look at his method shortly.

Another method, known as the triangle method, requires that we connect adjacent holes into triangles. The included area of each triangle is
assigned the characteristic not of a single hole, but of the weighted average of the three holes forming the triangle. The weighting of the three holes
is based on the length of the drill holes.

The inverse distance method is a more complex scheme in which the contribution of a given hole is weighted according to its distance from the
block in which the estimate is to be made. The closer a hole is, the more weight is given to its value compared to the values of other holes in the
region.

Geostatistical methods employed for ore reserve estimation utilize three-dimensional spatial statistics to improve the quality of the estimate.
Classical statistics requires use of a particular distribution model, e.g., the data are normally distributed, and that the samples be independent of
one another. Generally, we have insufficient samples of the orebody to assign a distribution, and moreover, the samples are often correlated, i.e.,
they do not satisfy the independence requirement of classical statistics. Given that the samples, i.e., the drillholes, are limited in number because
they are expensive to acquire, often biased, and nearly always smaller in number than is desired, geostatistics is a powerful tool for improving the
quality of the estimation.

A prerequisite to a reasonable prediction of the grade of the orebody is a good prediction of the spatial distribution of the grade, or whatever
characteristic is of interest. This spatial estimation is accomplished using the sample data and a model known as a variogram, which is used to

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represent the correlation between the samples. This estimation is often accomplished using a technique known as kriging. Kriging provides an
optimal interpolation using the variogram; and the technique is similar to simple interpolation, as we would use in say the inverse distance
algorithm, but is different, because it allows us to take into account information that we know about the geology and attendant properties. Based on
geologic knowledge of the presence of a certain feature, we will know that the characteristics of all points contained in that feature should be the
same or similar. This is an instance where samples are correlated. With geostatistical methods, we can use this knowledge to improve the estimate
of grade, or whatever, at points where we have not sampled. The science of geostatistics continues to evolve, becoming more accurate. You will
learn the common geostatistical techniques, their strengths, and limitations in MNG 412.

Today, you can enter your exploration data into a computer program and then within minutes, you can have estimates of the resource from several
different methods. Then, you will choose which estimate to use. That choice may be based on experience or a heuristic such as selecting the
estimate that has the smallest variance. The commercially available mine planning software programs, such as the Carlson software that we
use, allow you to employ several different techniques. We are not going to look into these methods in any greater details in this course, with one
exception --the polygon method. This method is useful to illustrate the concepts and is a reasonable estimation method in its own right.

The Polygon Method

We begin with a map showing the surface location of the drill holes, and our task is to construct polygons around each hole. The relevant
characteristic, say grade, inside of that entire polygon will be the same as the value of that characteristic in the drill hole sample.

We start our work by arbitrarily selecting a drill hole, and then drawing lines between that hole and all the adjacent holes, as shown here.

Figure 3.2.5: Left (1): drill hole, and Right: (2) lines drawn between the hole and all adjacent holes
From p. 78 of Introductory Mining Engineering, 2nd Ed., Hartman, H.L, and J.M. Mutmansky

Next, we draw perpendicular bisectors though each of these lines, drawing the bisector line long enough to intersect the other perpendicular
bisectors, as shown.

Figure 3.2.6: Bisector lines are long enough to intersect other perpendicular bisectors
From p.78 of Introductory Mining Engineering, 2nd Ed., Hartman, H.L, and J.M. Mutmansky

The corners of the polygon are defined by the intersection of the perpendicular bisectors, as shown.

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Figure 3.2.7: Polygon with corners defined by perpendicular bisectors

From p. 78 of Introductory Mining Engineering, 2nd Ed., Hartman, H.L, and J.M. Mutmansky

Watch this video (2:59) of a demonstration of using the Polygon Method.

MNG 230 - Lesson 3 - The Polygon Method

The Polygon Method

Penn State/Dutton Institute [8]

We repeat the process for each hole. Note that if the hole is adjacent to the property boundary, then that boundary line will form a side of the
polygon. The result will be a property containing as many polygons as holes, as illustrated here.

Figure 3.2.8: The result is a property with as many polygons as holes

From p. 78 of Introductory Mining Engineering, 2nd Ed., Hartman, H.L, and J.M. Mutmansky

Next, we need to determine the area of each polygon. This can be done manually using a planimeter, or digitally. The result will be an area of
influence, i.e., the area of the polygon, for each hole. Then, we can calculate the volume of influence of each polygon, by multiplying the area of
influence by the thickness of the ore, or overburden. The next step is to build a table or spreadsheet to facilitate the calculations. We actually did
that earlier, in Lesson 3.2.2, and will not repeat it again. At that time, we only calculated the average grade. We could have added any number of
other characteristics to the table, and calculated their average value. Examples would include thickness of the deposit and overburden, as well as
other characteristics of interest.

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3.2.4: Step 2 -- How Much of the Resource is a Reserve?

3.2.4: Step 2 -- How Much of the Resource is a Reserve?

We started this lesson by noting that reserve estimation is completed in two steps. The first is to estimate the size of the resource, which we have
now done. The second step is to determine how much of the resource can be mined economically at a point in time.

We’ll need to learn more about mining methods to tackle that question completely, and we will do so in the coming weeks. Notwithstanding, there
are two metrics that can be computed very early in this second step. The first metric is known as the cutoff grade, which is basically the lowest
grade that can be mined at a profit. The second metric is applicable to shallower deposits that are being evaluated for surface rather than
underground mining, and it is known as the stripping ratio. Let’s start with stripping ratios, and let’s use a shallow coal seam for our example.

Stripping Ratios

The coal seam will be underneath layers of soil and rock. The material overlying the seam is known as the overburden. Before we can extract the
coal, we first have to remove, i.e., strip, this overburden. It costs money to remove the overburden, and in the simplest terms, the cost of removing
the overburden cannot exceed the value of the coal that is exposed.

The stripping ratio is usually taken as the volume of the overburden that must be removed to the weight of the coal that is exposed when this
volume of overburden is removed. Thus the units for the stripping ratio will be yd3/ton. Two stripping ratios are used in the prefeasibility or feasibility
analyses: overall stripping ratio and the maximum stripping ratio. As mine planning advances beyond the prefeasibility stage, stripping ratios at
different cross sections will be calculated as well.

The overall stripping ratio is calculated using the average values for the volume of the overburden and the average value for the weight of the coal
(ore). This number is a key indicator for the potential of the project to be profitable. Please remember that these averages are weighted averages.

The maximum stripping ratio, which is also known as the breakeven stripping ratio, is an economic calculation based on the cost of removing the
overburden and the value of the coal or ore that is exposed when the overburden is removed. Thus, given the stripping cost and the value of the
exposed ore, we can calculate the breakeven or maximum stripping ratio. Stripping costs can be estimated reasonably well, based on the method
of overburden removal and the region in which the mining is being conducted. We can find tables of data in handbooks to help us with this
estimation. The value of the coal or exposed ore is usually taken to be its selling price. The selling price must account for the mining and
processing costs, and the minimum profit that the company requires.

Stripping cost = Value of the exposed coal

SC ∗ Vob =Vc ∗ TF ∗ SP
(Equation 3.2.2)

where:

SC = stripping cost, $/yd3

Vob= volume of overburden that will be removed at breakeven
Vc= volume of coal that will be exposed by the removal of Vob
t = thickness of the coal seam
TF = tonnage factor (density) of the coal, tons/yd3
SP = selling price of the coal, $/ton

The breakeven or maximum stripping ratio, SRmax, is, therefore:

SRmax = ( SC ∗ Vob ) / ( Vc ∗ TF ∗ SP )
(Equation 3.2.3)

The value and use of SRmax is illustrated in two examples. Consider the situation represented in the following figure of a coal stripping operation.

Figure 3.2.9: Coal Stripping Operation

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Figure 7.9 from Introductory Mining Engineering, 2nd Ed., Hartman, H.L, and J.M. Mutmansky

The coal seam is under a hill. Most likely mining started at the edge of the hill where the coal seam outcropped, i.e., intersected the surface. As
mining progresses back into the hill, it will be necessary to remove increasing amounts of overburden to expose and mine the coal. At what point
does it become uneconomical to remove the overburden to access the coal? Correct –at SRmax! And how do we find SRmax? Correct –using
Equation 3.2.3. And therefore, at the point where we are at this maximum stripping ratio, SRmax we will stop mining.

The calculation of stripping ration is slightly more complicated for deposits that are not flat lying, i.e., they are dipping at angle greater than a few
degrees; although, conceptually, the process is the same regardless of the spatial characteristics of the deposit. As you'll see, the math is slightly
more involved to complete the calculation of the stripping ratio. Let's take a look.

3.2.5: Instantaneous Stripping Ratio

3.2.5: Instantaneous Stripping Ratio

The stripping ratio (SR) refers to the amount of waste material that must be removed for a given amount of ore. The Instantaneous Stripping Ratio
(ISR) is the stripping ratio for a given push back, where a tiny slice of material, i.e., ore and/or waste, is removed from a pit wall. This section
presents the ISR calculation for a steeply pitching deposit.

Assume an idealized tabular and steeply pitching orebody that outcrops at the surface and dips to the left at ϴ degrees (Figure 3.2.10). Assume
that the ore extends down to considerable depth, and that open-pit mining will be used to extract ore. When open-pit mining is no
longer economical, an underground mining method will be used to recover the ore. Therefore, we will need to calculate the point at which we will
cease surface mining and either go underground or close the mine.

The over-lying waste, i.e., the non-mineral-bearing rock must be removed to uncover and mine the ore. The shape and size of the pit depends upon
economic, engineering, and production factors. Assuming all other factors to be constant, as the selling price of the ore increases, the pit size will
increase.

Figure 3.2.10: An idealized tabular and steeply pitching orebody

Source: A. Lashgari. © Penn State University, is licensed under CC BY-NC-SA 4.0 [5].

If you were going to calculate the ISR for a “real” orebody for which you had drillhole data, you would utilize one of the computer software
packages, such as Carlson. Here the purpose is to teach you the principles, so we are going to make some assumptions to simplify the
calculations, and to better illuminate the procedure without getting buried in the math. The assumptions are as follows.

The seam thickness is constant. The orebody thickness is represented by the length of the ore section (Lo) in the previous diagram. Note that
the length of the waste section (Lw) increases as our pit advances deeper. Therefore, as we advance, more of waste will have to be removed
to expose a unit of ore, as shown in the next diagram.
The density of ore and waste are the same.
All slices have the same strip width (Ws).
We are looking at a two-diminsional slice of the Earth’s crust. Obviously, the ore and overburden continue into the page and go on for some
distance. For our purposes here, we will assume that they go into the page for a distance of 1 unit.
The slices of the material are mined out perpendicular to the orebody.

Watch this video (3:11) on an explanation of the instantaneous stripping ratio.

MNG 230 - Lesson 3 - Instantaneous Stripping Ratio

Instantaneous Stripping Ratio

Penn State/Dutton Institute [9]

Later in this section, I will explain how each of these assumptions affects the calculations. However, it would be instructive for you to pause for a
moment and think about each assumption.

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Figure 3.2.11:
Source: A. Lashgari © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

Now, let’s calculate the ISR for strip 1:

Tonsw 𝑇𝑤 × 𝐿 𝑤 × 𝑊𝑤 × 𝜌𝑤
ISRS1 = =
Tono 𝑇𝑜 × 𝐿 𝑜 × 𝑊𝑜 × 𝜌𝑜
(Equation 3.2.4)

where T is strip thickness, L is strip length, W is strip width and 𝜌 is material density.

Since the density, width, and thickness of the ore and waste are assumed to be equal, this equation reduces to:
𝐿𝑤
ISR𝑆1 =
𝐿𝑜
(Equation 3.2.5)

Assume that the ore seam thickness is 40 ft and the length of the waste slice on top of the ore in strips 1, 2 and 3 is 45, 50 and 55, respectively.
The ISR for these three strips is calculated as:
45
ISRS1 = = 1.125
40
50
ISRS1 = 40
= 1.250
55
ISRS1 = 40
= 1.375

This simplified example has illustrated how the length of waste and ore sections will impact the ISR. In a mine, there will be differences in the
density of the ore and waste materials. However, the difference can be trivial in some cases. In fact, a real-world example is where there are
several waste types in the slice, and the waste materials have densities that are each different from the ore. Therefore, the calculation of ISR using
the length ratio does not work. Instead, a generalized IRS calculation must be defined as:

∑ (𝑇𝑤𝑖 × 𝐿 𝑤𝑖 × 𝑊𝑤𝑖 × 𝜌𝑤𝑖 )

Tonsw 1
ISRS1 = =
Tono 𝑇𝑜 × 𝐿 𝑜 × 𝑊𝑜 × 𝜌𝑜
(Equation 3.2.6)

where there are 𝑖 different waste material types in the strip.

If the density differences are not drastic, the simplified form of the calculation will give you a rough estimate of the ISR. If you need more accurate
values with higher accuracy level, then you should consider all other parameters in your calculations. Of course, as I mentioned earlier, if you are
doing a complex and “real-world” case, you will probably be using a software package; and then, accounting for the myriad of details becomes
easier.

By the way, please note that the ISR is independent of the deposit's dip angle.

For this discussion, we have used an orebody of uniform shape and plunging at some angle θ. But what of a deposit with an irregular shape? The
same process applies. Therefore, regardless of the shape of the orebody, the above equation can be used to determine ISR for a strip extracted
from the side wall of the pit. It should be also noted that different units can be used to express the ISR.

The most popular units for the ISR are tons of waste removed/ton of ore exposed, ft of waste removed/ft of ore exposed, and yd3 of waste
removed/ton of ore exposed. The latter is the most common unit in many types of nonmetal operations because there is no value to know the
weight of the waste, unless it poses a limit to the trucks. Therefore, the density of waste material does not come into play in the calculations. If there
is an issue with a weight limit in the haul trucks, then the tons of waste/ton of ore is an appropriate unit for the ISR or SR.

3.2.6: Maximum Allowable Stripping Ratio (SRmax)

3.2.6: Maximum Allowable Stripping Ratio (SRmax)

Earlier in this lesson, we looked at the maximum stripping ratio, and we did it for coal seam. You will recall that the maximum allowable stripping
ratio, SRmax, also called break-even stripping ratio, is the maximum amount of overburden/waste that can be extracted per unit of ore at the
economic pit limit. The SRmax is determined solely by economics, to establish the ultimate boundary of the pit, where break even occurs, i.e. the
profit margin is zero. As we defined it before,

3 Ore Revenue ($/ton)-Production Cost ($/ton)

SRmax (yd /ton) =
Stripping Cost ($/yd3 )
(Equation 3.2.7)

So, it is a physical quantity that is determined by economics. This value can be simply converted to the unit of tonsw/tono, considering the density of
the waste material. If the ISR exceeds the SRmax , then the operation will be uneconomical as the income generated by the ore will be insufficient
to offset the costs incurred in mining.

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Now, let’s imagine a massive irregular deposit, where copper ore is the only ore that is desired to be mined out. Unlike coal deposits, metals are not
extracted in their native form, except in rare cases. Instead, the rock has a small percentage of valuable minerals in it. A copper deposit contains
rock that can be profitably mined and processed to extract the copper. However, the amount of copper contained within the rock, i.e. the grade,
varies by location. We’ll need to account for this in our calculation of the break-even stripping ratio.

The only difference is that ore grade variation should be taken into account in the calculation. In order to determine the SRmax for such a deposit,
the orebody is divided into different blocks of ore. The average ore grade for each block is determined, and then the overall grade of the ore in the
slice is calculated as follows:

∑ 𝐿 𝑜𝑖 × 𝑔𝑜𝑖
𝑔¯ =
∑ 𝐿 𝑜𝑖
(Equation 3.2.8)

where 𝑔¯ is the average ore grade in the slice, 𝐿 𝑜𝑖 is the length of the ore section that has a grade equal to 𝑔𝑜𝑖 .

After you calculate the average ore grade for the slice, you can use a grade - stripping ratio (g-SR) plot to determine the SRmax associated with the
determined average ore grade. Here is an example of a g-SR plot.

Figure 3.2.12: Grade-stripping ratio (g-SR) plot

Source: A. Lashgari © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

Imagine a copper deposit in which the average copper grade for a strip is 1.05%. Checking the g-SR plot for that deposit, suppose we find out that
the SRmax for 𝑔¯ = 1.05 is equal to 8.5. This means that 8.5 units of waste can be economically removed per unit of ore. If the ISR for the strip is
smaller than the SRmax , then the pit could be extended and more strips could be mined profitably. If the ISR and SRmax are equal, then this is a
good place for the pit limit. If the ISR is larger than SRmax, then we have passed the economic location for the pit limit.

In MNG 441, you will learn how to determine break-even cutoff grade and draw a g-SR plot using economic parameters. Here, I simply want you to
know about this plot and what it is representing.

3.2.7: Impact of Pit Expansion on Stripping Ratio

3.2.7: Impact of Pit Expansion on Stripping Ratio

Imagine a steeply pitching orebody, as shown below. We would like to extract this tabular deposit using open pit mining method. Let’s assume that
two pits with different sizes are being considered for this mining operation. We would like to study the impact of pit expansion on stripping ratio by
comparing the overall stripping ratios for these two pits.

This figure shows the pit areas as a block model. The smaller pit (Pit A) includes 32 blocks. 16 blocks are ore and the other 16 are waste blocks.
Therefore, the stripping ratio is 16/16 = 1. The larger pit includes 437 blocks in total. Using Pit 2, 76 blocks of ore can be extracted. Therefore, the
stripping ratio is: (437-76)/76 = 4.75. This example shows that as we expand the pit in a steeply pitching orebody, overall stripping ratio dramatically
increases. Therefore, more waste blocks have to be mined out to uncover one block of ore. It should be noted that as we go deeper in an open pit,
the unit cost of mining will increase. Because the material will be transported for a longer distance, which takes more time, and which may
necessitate that we add additional trucks to the fleet.

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Figure 3.2.13: A block model of the pit areas
Source: A. Lashgari © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

Now, you should be able to:

1. Determine ISR for given pit dimensions

2. Find the pit limit when the pit dimensions, average ore grade of the strip and g-SR plot are given.

3.2.8: The Concept of a Cutoff Grade

3.2.8: The Concept of a Cutoff Grade

We know that orebody characteristics such as the grade vary spatially within the orebody, and as we approach the boundaries of the deposit, the
grade will begin to decrease to zero. Eventually, the cost to mine and process a ton of ore will exceed the value that we can obtain by selling the
commodity found in that ton of ore. Mining companies, like other businesses, do not stay in business by selling their product at a loss!

Thus, when we are estimating the amount of the resource that can be mined economically, we’ll have to calculate a cutoff grade; and any ore with a
grade lower than the cutoff cannot be counted in the estimate of the reserve. The cutoff grade is the grade at which the cost of mining and
processing the ore is equal to the desired selling price of the commodity extracted from the ore.

The cutoff grade is influenced by a few external factors that you can control to a certain extent, and these will be considered in the prefeasibility
analysis when the cutoff grade is determined.

Let’s imagine that we have a deposit of copper that we are evaluating. It is a large resource with a grade of 1%. The block below represents 1 ton
(T) of in-place ore. We know that the grade is 1%, so we have 20 lb. of copper distributed in that ton of ore. Let’s represent that 20 pounds of
copper as a small (not-to-scale) block inside of the larger block.

Figure 3.2.14: Figure 6 from the text

Credit: J. Kohler, © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

When we mine this ton of ore, it is likely that we will get some dilution, which occurs when we extract some of the rock surrounding the orebody. In
other words we are diluting our ore with this host rock. Why would we do that? We don’t do it on purpose, generally, but, it is a consequence of the
mining method and equipment that we select to mine the ore. Imagine that you have a chocolate cake, and this cake has a thin band of raspberry
filling in the middle of the cake. Suppose that you are tasked with removing the raspberry layer, and that you do not want to have any of the
chocolate layers mixed with the raspberry layer that you are extracting. Further, I will give you a tiny, baby-sized spoon to complete the task on your
cake, and I will give your classmate a large serving-size scoop to complete the task on his cake. You both have ten minutes to complete the job,
with a goal of minimizing the dilution of the raspberry layer with the chocolate cake..

The outcome of this experiment is evident. The use of the tiny, rather than large spoon will allow the competitor to be more exacting in the removal
of the raspberry layer, resulting in far less contamination, i.e. dilution, of the product. In mining terms, we refer to this as the selectivity of the mining
method, and some methods are much more selective than others, resulting in far less dilution. Of course, there are tradeoffs between selectivity
and other important metrics such as mining cost and productivity. We’ll look closely at this when we study the mining methods. Now, we can
continue with our example.

We extract one ton of material, and now we know that this one-ton of material will be diluted with non-ore bearing material, based on how selective
our mining method is estimated to be. We can represent this as shown in Figure 3.2.15 by including the waste within the one ton of mined ore. This
waste material effectively reduces the copper in the block by the amount of the dilution. Let’s assume an average dilution of 5%. The copper
present in the mined block of ore is reduced by 5%, to 19 lb of copper.

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Figure 3.2.15: Figure 7 from the text

Credit: J. Kohler, © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

Next, our one-ton block of mined material will be routed into the mineral processing plant, where the ore will be separated and concentrated into a
saleable product. There will be two output streams from the plant: one containing the saleable product and the other, the tailings, or waste. The
physical and chemical methods used to beneficiate the ore are not perfect, and while we can invest more money to improve them, there is a point
of diminishing return. Consequently, some saleable product will report to the waste stream, and as such represents a loss. Let’s assume a plant
recovery of 90%, meaning that all but 10% of the product in the plant feed will be recovered and report to the product stream. In our example, there
is 19 lb. of copper in the feed to the plant and the plant will recover all but 1.9 lb. Thus, the one ton of material that we mined will yield 17.1 lb of
copper for sale.

Figure 3.2.16: Figure 8 from the text

Credit: J. Kohler, © Penn State University, is licensed under CC BY-NC-SA 4.0 [5]

Mathematically, the minimum acceptable grade to mine, i.e. the cutoff grade, occurs when the cost to mine and process the material, (M&P cost), is
equal to the value of the product, i.e. its selling price, SP.
M & P cost = SP
(Equation 3.2.9)

We will account for the dilution and recovery losses in the right side of the equation, as these losses are reducing the value of the in-place ore.
M&P cost = SP * (1-D) * (R) * G
(Equation 3.2.10)

where:

M&P cost = mining & processing cost, $/T

SP = selling price of the copper, $/lb
D = dilution
R = plant recovery
G = grade

Let’s use some numbers. Assume the following: we have a dilution of 5%, a plant recovery of 92%, a mining and processing cost of $6.80/ton and a
selling price of $0.74/lb. Be careful with the units!

Solving the equation for grade, we have:

G = (M&P cost) / {SP * (1-D) * R}
(Equation 3.2.11)

And substituting our values,

G = ($6.80 / T){$0.74 / lb * (1 - 0.05) * (0.92) * (2000lb / T)}
G = 0.499 ≅ 0.5 = .5%
Therefore for this example, the grade of the ore that we choose to mine must have a grade of 0.5% of greater. In other words, the cutoff grade has
been determined to be 0.5%, and when you report the size of your reserve, you will include only the tonnage at or greater than 0.5%. Do you
understand why you must report it in that way?

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Imagine a situation in which your resource contains significant tonnage at slightly less than 0.5%. Likely you will reexamine your dilution and plant
recovery assumptions, and explore options for improving both so that you can economically mine the lower grade ore.

We didn’t say much about the selling price itself. Presumable, it is the maximum price that we believe we can reasonably expect to sell our product
into the market. The price will need to cover not only our mining and processing costs, but also whatever profit we require. When companies
evaluate the merits of opening a new mine they will have certain criteria for establishing the financial merits of the project. They might, for example,
require a certain return on their invested capital, a payback within so many years, and so forth. This can all be bundled, at least conceptually, into
the required selling price.

Sometimes we will talk about the gross value of the mined ore. The gross value is equal to:
= (G) * (1 - D) * (R) * (SP)
(Equation 3.2.12)

The unit profit is then defined as: Gross Value – Mining & Processing Cost.

To illustrate, assume that we are mining an orebody with a grade of 1.2%, dilution is negligible, and the selling price is $0.74/lb. The gross value is
calculated to be $16.34/T and the unit profit is $9.54.

Module 3 Summary
Module 3 Summary

The goal of the exploration stage is to define the resource and estimate the reserve. We’ve learned the basic concepts of resource estimation, and
we’ve learned how to estimate a resource using the polygon method. Once we have the resource estimate, we can move on to the reserve
estimate.

There are two metrics that can be used to start the determination of how much of the resource is mineable with today’s technologies and practices:
cutoff grade and stripping ratio. The former can be used for either surface or underground mining, whereas the latter is applicable only to surface
mining. We learned how to calculate both of these metrics in this lesson. In many cases, the reserve will be less than the resource after we subtract
off the part of the resource that cannot be economically mined based on the cutoff grade or the stripping ratio.

It may turn out that there are other constraints and problems with mining the resource, and if so, we will have to subtract out those parts that can’t
be mined for technical or other reasons. These constraints and problems will become clear as we progress through the remainder of this course,
and in the next Module, we’ll identify these “other” factors that will affect the reserve estimate and also consider the merits of the overall project.

Source URL:https://www.e-education.psu.edu/geog000/node/517

Links
[1] http://www.atlascopco.com [2] http://www.atlascopco.us/en-us/mrba/products/rock-drilling-tools/core-drilling-tools/Conventional-Core-Drilling [3] https://www.e-
education.psu.edu/geog000/sites/www.e-education.psu.edu.geog000/files/Lesson_03/Atlas%20Copco%20Surface%20Exploration%20Drill.pdf [4] https://www.e-
education.psu.edu/geog000/sites/www.e-education.psu.edu.geog000/files/Lesson_03/Atlas%20Copco%20UG%20Exploration%20Drill.pdf [5]
https://creativecommons.org/licenses/by-nc-sa/4.0 [6] https://www.e-education.psu.edu/geog000/sites/www.e-
education.psu.edu.geog000/files/Lesson_03/M3L2%20EM0405_Driller%27s%20Log.pdf [7] https://www.e-education.psu.edu/geog000/sites/www.e-
education.psu.edu.geog000/files/Lesson_03/ReserveEstimation.pdf [8] https://www.youtube.com/watch?v=2IlkRITXgqA [9] https://www.youtube.com/watch?
time_continue=1&v=P8Z37dEc60g

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