Risk assessment using Minesight software & Python scripting

Presentation aim

• To highlight the risks present in resource and reserve estimation and give an insight into some of the tools available in Minesight that can be used to determine grade risk.

Presentation Summary

• • • • • • •

Snowden overview Risk factors in mining Simulation for grade risk Confidence limits and probability above cutoff Case Study: Grade risk – python scripting. Handy hints Questions

Snowden overview
• Downer EDI • Snowden (160+ people worldwide) • Resource Evaluation Group • Mining Engineering Group • Geotechnical Engineering Group • Corporate Services Group (Audits, Valuations) • Business Improvement Group (Six Sigma) • Risk Management Group • Mentoring and Training • Technologies (Supervisor, Reconcilor)

• Offices in Perth, Brisbane, Johannesburg, Vancouver and London.

For further details refer to www.snowdengroup.com

Minesight experience / training
• 12+ years experience using Minesight in grade control, geological modelling, stockpile modelling, resource estimation, resource classification, statistical and spatial analysis, mine planning, scheduling and pit optimisation • Snowden also deliver in depth training courses and detailed training manuals are also available: • Snowden resource estimation guide using Minesight software* • Statistical and spatial analysis using MSDA* • Kriging and block model validation • Resource estimation and classification • Simulation and risk analysis

Involvement in Minesight Software Development
• Boddington Gold Mine, Western Australia
• Inclined benches

• Lihir Gold Mine, Papua New Guinea
• Stockpile Modelling

• Mt Isa Copper Mine and George Fisher Mine, Queensland
• • • • • • • • • Data Security System Multirun tool Drillhole design tool Compositing weighting Kriging engine Easting offset (unfolding) Geomap tool Minesight Data Analyst (MSDA) Block modelling & resource evaluation

Risk?

Risk = Likelihood x Consequence
What is the likelihood that you will be injured? How severe will be your injuries? Is the risk acceptable?

If you understand the risks present then you can mitigate the impact of these risks with good management and decisions.

Poor Risk Management!

Risk factors in mining
Mother Nature Risk Human Nature Risk
INTEREST RATES INFLATION LABOUR COSTS

Economic Uncertainty Dynamic Constantly Changing

PROCESS CAPCOSTS

COMMODITY PRICES

Cultural Features

Topography

Geotechnics

Geological Uncertainty More difficult to quantify
Mineralisation Limits

Lithology

Mineral Types

Resource and Reserve risk
Resource and Reserve estimates
Ore Geological Resource definition interpretation estimate Reserve estimate Mine planning

RISK is commonly not quantified at any of the technical stages

UNCERTAINTY inherent in each stage

The greater the uncertainty the greater the risk!

**Uncertainty associated with geological interpretation and grade estimation is usually the largest source of potential error in the resource and reserve estimate**

What is grade risk?
Grade Risk: The risk of not meeting estimated grade
• Grade risk is a function of the grade variability present within the selected mining unit (panel) and the probability that the grade present within that panel exceeds the economic cutoff grade • High risk blocks would have a high probability that the grade mined from that block would be less than the economic cutoff grade • The greater the grade variability present  The greater the risk that the estimated grade is not achieved • Low risk blocks would be in areas of consistent grade and the probability that the estimated grade of the block exceeding the economic cutoff grade would be high

How to determine grade risk? Simulation is the answer
Conditional Simulation
Reality Multiple realisations

• •

Conditional Simulation gives the user numerous equi probable results for any panel. (A minimum of 100 realisations is recommended) Simulation is typically completed external to Minesight due to the current limitation of items in the block model

Confidence limits and probability above cutoffs
9

8

7

6

SiO2 Grade (%)

5

4

3

2

1

0 1 2 5 10 15 19 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 99 Mean Ranked Simulations

Distribution of simulated grades
1

Cumulative Frequency

• The greater the spread of simulated grades for a panel  The greater the risk • Low confidence
• • • •

0

Spread of grades

large variance wide spread large range of potential values Potentially high risk region.

1

Cumulative Frequency

• High confidence
• • • •
0

low variance narrow spread small range of potential values Potentially low grade risk region

Spread of grades

Example of calculation of error by confidence limit (c.l.)
Simulation Mean Rank 1 5 10 25 50 75 90 95 100 Mean

Absolute error
SiO2 Grade (%) 1.75 2.45 5th percentile 2.71 3.53 4.13 5.10 5.60 5.90 95th percentile 7.70 4.29

95th  5th  error at 90% c.l. 2

5.90 - 2.45 = 2 1.73

Absolute error for a given 10m x 10m panel is: 4.29% SiO2  1.73% S at 90% c.l.

Relative error
Absolute Error Mean x 100

1.73 4.29

=

40%

Relative error for the same 10m x 10m block is: 4.29% SiO2  40.0% at 90% c.l.

Simulation grade range map (90% Confidence)

• •

Blue regions show low grade variation and are potentially low risk areas Yellow regions show high grade variation and are potentially high risk areas

Probability above cutoff maps
• • Probability map of SiO2 grade being above 4.0% High probability / high risk areas are red

Probability Calculation 90% c.l.
Number of realisations above cutoff grade within 90% CI x 100 90

(82 / 90) x 100  91%

• •

Probability map of SiO2 grade being above 6.0% High probability / High risk areas are red

Panel error investigation
Average relative error at different panel sizes and at different confidence limits
80.00%

Average Relative Error (%)

70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

10 0m

20 0m

30 0m

40 0m x 50 0m

Co m po s

x

x

x

x

x

x

x

x

10 m

20 m

30 m

40 m

50 m

10 0m

20 0m

30 0m

Panel Size 90% Confidence 80% Confidence 50% Confidence

40 0m

x

50 0m

ite s

10 m

20 m

30 m

40 m

50 m

Probability and risk analysis
Analysis of first three years production
12.00

11.00

Maximum grade simulation Minimum grade simulation
5

10.00

9.00
Grade

Median grade simulation
4

8.00

Range in tonnage at a given grade
7.00 3

Range in grade for a fixed tonnage
6.00 2 1

5.00

0

4.00 2,500,000

3,500,000

4,500,000

5,500,000 Tonnage

6,500,000

7,500,000

8,500,000

Schedule risk
Grade Variation by Scheduled Year

12.0 11.0 10.0 9.0

Grade

8.0 7.0 6.0 5.0 4.0 3.0 2.0 Sim maximum Sim minimum Sim median Kriged estimate

0

2

4 Year

6

8

10

Case Study: Risk calculation - python scripting

Python scripts are easily developed by Mintec personnel and save significant time and effort Python scripts are commonly stored under c:\medexe\site\ scripts

Load simulations into Minesight

Load mean ranked simulations to the block model. Due to the limitation of the number of items in the block model it is not possible to load all the simulations to a single block model. Only load the minimum, 5th, 10th, 25th, 50th, 75th, 90th, 95th and maximum ranked simulation values to the block model In addition it is good practice to also load the mean, variance, standard deviation and coefficient of variation of the simulations to the block model

Load probability above specified cutoff’s into Minesight

Load probability values above specific cutoffs into the Minesight block model. The example above shows probability values for SiO2 exceeding 2.0%, 4.0%, 6.0%, 8.0%, 10.0%, 12.0% and 14.0% being loaded to block model items SIP02, SIP04, SIP06, SIP08, SIP10, SIP12 and SIP14 respectively

Calculate grade range at different confidence limits for each panel

Using block model  ‘User Calcs’ the grade range between the 50% confidence limit (25th to 75th ranked simulation), 80% confidence limit (10th to 90th ranked simulation), 90% confidence limit (5th to 95th ranked simulation) and all simulations were calculated for each panel and stored in the block model items S2575, S1090, S0595 and S1100 respectively

Calculate the relative error at different confidence limits

For each panel the relative error for each of the confidence limits is calculated and stored to the block model. The relative error is calculated by dividing the simulation grade range for each confidence limit by the simulation mean and multiplying by 100

Calculation of grade risk

Simulation grade risk matrix
1.00

Probability the Block Grade is below the Resource Cutoff Grade (90% c.l.)

0.95 0.90 0.85 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00

20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 10

21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 0 20

22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 0 30

23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 0 40

24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 0 50

25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 0 60

26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 0 70

27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 0 80

28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 0 90

29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 0 100

30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 0 110

31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 0 120

32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 0 130

33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 0 140

34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 0 150

35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 0 160

36 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 0 170

37 36 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 0 180

38 37 36 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 0 190

39 38 37 36 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 0 200

% Grade Variance from Mean (Risk 95 = Grade Variance of PCU05 to PCU95). Other Risk Options - Risk 90, Risk 75.

Very Low Risk (1 to 5) Low Risk (5 to 8)

Moderate Risk (9 to 10) High Risk (11 to 15)

Very High Risk (16 to 20) Extreme Risk (>20)

Risk maps

Risk maps are a powerful design tool for engineers and geologists

Handy hints
• Use MSDA custom reports to report risk for multiple domains at multiple confidence limits • Use MSDA custom reports to complete statistical comparisons of simulation data against the original composite data • Import simulation and composite variograms into Minesight and compare visually using Import  Variograms (ASCII) file • Block model statistical summaries by northing and easting can be completed easily in MSDA via custom reports. Setup a filter tab based on easting or northing and input bins based on appropriate spacing. • Use MSDART to manage large ASCII and CSV files.

Minesight grade risk analysis

procedure summary
1. 2. 3. Define area(s) of interest.
a. Area of interest should be larger than range of variogram

Extract data within domains
a. Code drillholes and block model to geological, structural, weathering and density domains

Statistics and variography per domain for each element.
a. b. c. Complete statistical analysis of raw and declustered drillhole data using MSDA custom reports Complete statistical analysis of composite data using MSDA custom reports Complete statistical analysis of composite by easting, northing and RL using MSDA custom reports

4.

Kriging Search Optimisation.
a. b. Use kriging debug tool to evaluate kriging weights Summarise regression slope values, simple kriging weights and kriging variance via MSDA custom reports

5.

Conditional Simulation
a. b. Run sequential Gaussian simulation (Minimum of 100 simulations per node recommended) Select a node spacing which divides into panel / standard mining unit (SMU) evenly. (A minimum of 25 nodes per panel is recommended)

6.

Simulation Validation
a. b. c. d. Visual Checks Statistical checks using MSDA. QQ-plots Simulation variogram checks against composite variogram model

Minesight grade risk analysis procedure summary
7. 8. 9. Reblock simulations to appropriate panel size or standard mining unit (SMU). Sort simulations per panel by grade and calculate grade range and probabilities above cutoff at selected confidence limits. Calculate grade risk using python scripts
a. b. Ensure simulation risk matrix is correct and within Minesight project Complete statistical analysis of risk by domain and by northing, easting and RL using MSDA

10. Develop risk maps 11. Calculate risk per mining period, stope or region and evaluate mine plan with respect to risk.

Questions

Bring on the bulls! Pamplona here I come!

Risk Management? – Snowden can help.
For further details refer to www.snowdengroup.com