Geoscience Canada Volume 18. Number 4 Net Smelter Return Models and Their Use in the Exploration, Evaluation and Exploitation of Polymetailic Deposits Raymond Goldie Richardson Greenshields of Canad Limited Suite 1400, 130 Adelaide St. W. Toronto, Ontario MSH 1TB Poter Tredger Tedgco Mineral Services ‘Suite 1400, 25 Adelaide St. E Toronto, Ontario MBC 1Y2 ABSTRACT Asan aid visualizing a mineral deposit the tive spatial dimensions are often reduced to two, by projection onto plans or sections. Similarly, the concentrations ofiflerent met- alsin the deposit can be represented in a single dimension through the use ofa com- mon denominator, the Net Smelter Return (NSR) per tonne. NSR is defined as the proceeds from the sale of mineral products ater deducting off-site processing and dis- Inibution costs In sulphide deposits in which the econom- iemetals are principally copper, nickel, mo- Iyodenum or platinum group metals, amine’: receipts (the NSR) usualy correspond to about 86%-60% of the gross value of the metals contained inthe ore This figuredrops {toaround 40% for ores with significant quan- tities offead or nc. The presence of old or siver inthe ore wil generally increase these percentages. ‘An NSR model of a deposi is @ represen- tation which atterpts to approximate the ac- tal NSR which would be derved ffom ex- Dlottation of the mineralization being model- led. NSRS are calculated from estimates of ‘grades, recoveries, concentrate treatment schedules and commodity prices. ‘With the adventot cheap, readly availabe ‘computer processing, itis now practicable for geologists to routinely use NSR models. A the exploration stage, NSR models pro- vide a uselul basis for presentation and com parison of dril-hole assays. Atthe evaluation ‘stage ofa project, NSR models are helpful in ‘the estimation of optimum grades, recov- ‘ties, and procuction rates. Al the explota- tion stage, NSR models provide a rigorous basis for grade contr ‘A widely used alternative to the NSR per tonne as acommon denominator the “equit- alent grade” (eg, "gold-equivalent” of “cop- per-equivalent’),is misleading and should be avoided, INTRODUCTION The Net Smetter Return (NSR)is e measure of the value of ore. For example, inthe in- ‘come statements of most Canadian mining ‘companies, the top line (‘sale", “not cals “ravenues" oF "not revenues") is generally the NSR, which is defined ae the proceeds {rom the sale of mineral products after de- ducting all off-mine costs relating to the transportation, treatment and sale of those products In the Preface of Ore Deposit Models, Roberts and Sheahan (1988) noted that “there are two components to an ore deposit ‘modal: the empirical model, whicn consists ofan assemblage of data including observa- tional data. which characterizes the deposit ‘and @ conceptual model tempts 10 Interpret the data through a unifying theory ‘of genesis”. NSR models ae simlar to other ‘ore deposits models: the empirical compo- rent is based on an assemblage of data obtained from operating mines; the cones {ual component provides the economic geo- logist with a ramework forthe evaluation of specific projects, ‘An NSR model of a mineral deposit is a representation which altompls to approx: mate the actuol NSR which would be derived {ror exploitation ofthe mineralization boing modeled. NSRs serve two main purposes forthe economic geologist (a) they provide a ‘common denominator forthe comparison of assays from polymetaic deposits; and (b) ‘thoy instil a heafthy awareness of the ecc- omic factors which determine the value of ‘Comparison of assays. AS an aid in visu- alizng a mineral deposit, the three spatial dimensions are often reduced to two, by projection onto plans or sections. Simtarly, ‘concentrations of aiiarent metals a poly- ‘metallic deposit can be represented in a ‘single dimension through the use ofa com- ‘mon cenomnator. The best such common denominator i the NSR per tonne. ‘A widely used alternative to the NSR per tonne is “equivalent grade’, in which con- ‘centrations of itfereatmetals are converted to one metal equivalent according to the'r {elative prices. This common denominator suffers from two disadvantages: (8) it as- ‘sumes tha treatmentcosts and metallosses in processing are the same for all com rmodities; and (2) despite Mutuating metal 159 prices, the equivalence factors tend to for- fever remain attheirintialycalculatedlevels. ‘Awaronoss of economic factors. The use ‘OINSRS forces geologists to considera wise range of factors which determine whether or rota mineral depositcan bemined profitably. INSRs are determined natonly by ore grades, but also by mill recoveries, concentrate ‘grades, concentrate treatment charges, freight costs and metal prices. In the early ‘exoloration stages of a project, rough as- ‘sumptions are acceptable. However, n more ‘advanced stages of evaluation, careful es timation ofthese factors becomes crtically Important. NSR models highlight questions = patticularly those pertaining to miner- ‘alogy — which must be considered in any project evaluation. This paper outlines the calculation of INSR fora variety of concentrate types de ‘ved from polymetalic ores, and Mustrates ‘applications of the NSR concept in three ‘areas: exploration, evaluation and exploit. tion NOMENCLATURE ‘The grades of metals contained inthe ore fed o.a mi are termed mil hoad grades or mit heads. In the mull, ore is crushed, ground, 1nd then treated by various processes 10 ‘separate and concentrate the valuable min- frais. The end products from the rill are concentrates ang failings. Concentrates ‘coniain economic metals) at grades higher than those in the mil feed; tangs contain the remainder of the treated mill feed. The most important process in producing con- Centratesiecilferential Notation, which takes ‘advantage of the metalic surface properties ‘of most sulphides and native metals. Conso- quently, most oxide, hydroxide, carbonete {and silicate minerals such as chrysocala (copper), gahnite(zino), nickebferous olivine (ickel), and even some suiphides (such as the nickel mineral, violarite) cannot be ce- covered by conventional flotation tech- riques. The miling of apolymetalic ore gen- erally results Inthe production of more than fone concentrate. A buk concontrate is one which contains significant quantities of more than one economic metal. The mil racovery of a metal aqualsthe amount of metal report: ing to the concentrates, as 3 proportion of the total amount n the mill ads. Concentrates are shipped to smelters andlor refineries, where the contained met- als are extracted and pusiled. A smelter wil not pay orallof the metal the concentrates which t treats: metals for which the miner is paid are termed payable or accountable metals ‘As an example, consider alead-zinc-iver Core containing 100 g/t Ag In the mil, 50% of the siver reports to the lead concentrat 30% to the zine concentrate and 20% to tallings. The ead smeiter pays for 85% ofthe siver in the lead concentrate, bul the zine160 rofinery gives no siver credits, Therelore: ‘contained siver = 100 gt Ag recovered silver = 80 g/t Ag (Go. 100 g/t Ag «(50% + 30%)) payable siver = 425 g/t Ag ie. (100 git Ag » 50% = BS%)) ‘The Net Smeitor Raturnofa tonne otorais ‘equal tothe proceeds rom the sale of miner- ‘al products derives trom thal ore, after de- ‘ucting all related charges incurred outside the mine property. Such charges include ‘concentrate transportation costs. smeiting, Felinng, insurance and marketing costs. ‘The gross value of a tome of ore is the value of the economic meta's contained in the ore ‘We define the mine netback of a tonne of ere astheratioo! the NSRiothe gross value NSRs AND MINE NETBACKS FOR TYPICAL CONCENTRATES In terms of total wrid production, the tr ‘oat important types of base metal concer tates are copper ead and zinc concentrates. Because of ther relevance to Canada, butk lead-2ine, molybdenum, nickel, bulk nickel ‘copper, platinum group metais (PGM) an tn ‘concentrates ate also discussed below. Copper in Copper Concentrates ‘The most common copper ore mineral is chalcopyrite, which als 's the major copper mineral in most copper concentrates. The ‘average grace of the 32 Canadian copper ‘concentrates listed in the Mining Source- ‘book (1985 to 1990 editions, published an- wally by the Canadian Mining Journal| was 2.9% Cv. The concentrates ftom the Beth- lenem and Lornex mils at Highland Vatey British Columbia, graced 40% Cu and were the only ones to exceed the 34.6% Cu con tent of stoichometne chaleopyrite. Borne stoichiometrically 63.3% Cu, is an important ‘ore mineral al Highland Valley. ‘A mine shipping copper concentrate to a smelter typically faces a variety of off-site costs or deductions: (@) Payable cooper, usualy 10 fo 14 “units” Jess than the copper contained in the concentrate (A unit’ isone percentage point. Thus, 2 10 Unit deduction in a concentrate grading 23.9% Cu would mean that (23.8-10)23., (0F 05.8% of the contained copper would be ald fo) ‘4.10 unit decuction is characteristic of low ‘grade concentrates (say, 20% Cu}; higher- ‘grade concentrates are usually subject to higher deductions (e.g. Reynard, 1991), (0) Smetting fees, expressed as dollars per ‘ty tonne of concentrate {6) Penattes, imposed by the smelter if the concentrate contains unduly high con- centrations of certain substances. (6) Retning charges, expressed as cenis per ‘pound of payable copper. (©) Freight charges, expressed as dalars per Wet tome of concentrate. (1) Insurance costs, marketing expenses and physical losses of concentrate during trans- portation. ‘Copper concentrate sales contracts may alow smetters to participate in some of the benefits should copper prices nis. n a typ= cal price participation arrangement, the cop- per refining charge increases by a percen tage ofthe amount by which the copper price exceeds @ negotiated trigger price. Ocea sionaly, contracts also provide for lower re- finng charges when the copper price falls below the vigger price (Reynard, 1991), ‘When expressed per pound of payable copper, deductions (a) (b) and e) decine as the grade of the concentrate increases. Thus, all ese being equal, an ore grading 415% Cu containad in Dorrie is more vali- ‘able than an ore with the same grade con- tained in chalcopyrite, because bornite makes alugher rade concentratethan does cchaleopyr Inallof the examples of NSR calculations ‘which flow, dollar amounts are in US dolars ‘and it's assumed that: the deposits ae ree- Sonably accessible, with 9 freight charge of 'S3sitonne of wet concentrate; the concen: trates contain 20% moisture; 9 stondard de- duction of 2.0% of he valve of payable met ‘als cavers item (7) above; and thatthe con- centrates contain fow concentrations of oleterious materials. INSR Calculation for Copper ‘Copper concentrate terms fuctuate depenc- ing on the supplyidemanc balance the ‘concentrate market. A typical 1990 copper ‘schedule was: 100% ofthe contained.copper payable after a1 Ounitdeduction: asmetting fee of $70icry tonne; and a refining fee of 50.090 with price participation of 10% of the ‘amount by which the price of copper ex- ‘ceeded $0.901b, With a copper price al the 1990 average spottevel ($1.21) and agrede Of 239% Cu, a dry tonne of typical copper concentrate contained 22046 = 22.9/100 = ‘5121 = $698 worth of copper. However, pay- fable copper was worth 22046 » (23.910) 100 ~ $121 = $6t1onae. After our 2% al- fowance for ingurance, marketing and metal losses duting transportation, not payablcop- por was $599itonne. Smelting charges were 's70ldry tonne of concentrate, the refining charge was 22046 » (23.9-10} 1100 « {0.09+0.031) = $8titry tonne, and eight charges were S3Bldry tonne, Because some ‘ofthe concentrates osten route, the mine's ‘smelting and reining charges ona net payable basis ware sighlly lower than as shown ‘above: to accourt for this, we assume @ 2% ‘eduction ine refining charge, to S60Htome. INSR. therefore, was $599 - $70 $60 $08 = ‘$43ittonne of concentrate, representing {676% ofthe value of the copper in the copper ‘concentra in the 30 operations cited in the Mining ‘Sourcebook (1985-1990 editions}, an aver ‘age of 84.7% ofthe copper contained in the mil feed was recovered to copper concen- trates. Applying this mil recovery to the above example, the typical mine netbock was 676% » 847% = 57% ofthe gross value ‘ofthe copper contained inthe ore. Column A fof Table 7 summarizes the foregoing terms ‘and calculations. Lead in Lead Concontrates Load treatment charges may be expressed, ‘as in the case of copper as a smelter charge {per tonne of concentrate) plus a refining charge (per pound of payable metal). Alter- natively, a smelter might quote a single charge for treatment (smelting plus refining) per tonne afconcentate. Lead smelters usu- ally particpate In 15%-28% of any upward or donnard moves in lead prices. Price par- Uicipation works as folows: the priceoflead were to rise by 10% above a reference level ‘and ifthe smelters price participation were ‘set af 20%, the smelting charge per tonne ‘would tse by 2% ‘Column Bin Table 1 summarizes the load treatment terms prevalent in 1990 and the NSR calculation. AS shown, a typical nel bbock for @ Canadian lead mine was 35% of the gross value ofthe loadin its oe. Zinc in Zine Concontrates Some facities are able to produce refined zine direcily from concentrates. Hence, ‘weatment fees for zinc ate commonly 1 ported as a singe fure per tonne of con- Centrate, rather than as a separate smelting charge and a tefining charge. AS was the case with copper, treatment fees decine (when expressed per pound of payable zinc) 2 the grade of the concentrate increases, Furthermore, zinc plants penalize zine con- cenitates which ae high ron. Thus, alelse beng equal, an ore grading 10% Zn, with the 2ne conlained iniron-poor ephalerit, s more valuable than an ore grading 10% Zn, wih the ZEne contained in on ich ephaleite Like load smelters, zinc plants generally participate in moves in meatal prices. One ‘such arrangement is shown in Columa G of ‘Table 1. Years ago, zinc plants recovered ‘only 85% of the zinc in the concentrates. In ‘comparison, the recovery at a modern zinc plant is about 939%, However itis stl stan- {ard practice forthe pfantto pay only 85% of the contained zinc: the diference of 8% is ‘considered to be part ofthe smelting fee (Column Cin Table 1 summarizes the 1280 2ing treatment terms and the NSR calcula: tion, Typical Canadian zinc ores yielded a 443% mine netoack Gold and Sliver in ‘Copper, Lead and Zine Concentrates Lemieux of at. (1988) have estimated that ‘only 49% ofthe gold contained in Canadas total reserves of base metal ores wil be acqvered to concentrates. It is diffcul to justify this conclusion — or its extension to ‘silver — because fow operations publish theGeoscience Canada Volume 18 Number 4 diettbuton of precious metals among the diferent mil products. Two operations which do pubishthese data are the Trout Lakemine in Manitoba (Healey and Petruk. 1980; Ming ‘Sourcebook, 1985 0 1990 esitions) and the Brunswick #12 mine in New Brunswick Grunswick Mining and Smelting Lid 1980). ‘The Trout Lake data show hatin 1989, 74.5% ofthe contained gold was recovered: 59.2% to cooper concentrate and 15.3% to zinc Concentrate, Brunswick’ figures show that in 1969, mill heads graced 109.5 g/t Ag, and thet 56.3% of this amount was recovered: 22% to lead concentrate, 264% to copper concentrate and 67% to bulk concentrate. Precious metals in base metal concen- trates are subject o a series of charges and deductions by smelters and refineries. For example, we estimate thal about 87% of the gold recovered at Trout Lake would have been payable, and that god refining charges in 1989 were about 13% of the gold price. Hence, the mine netback onthe gold content Of this ore would have been about 745% x 87% x (100%-13%) = 64%. Similarly, at Brunswick, about 92% ofthe recovered siver \wouichave been payable. Since siverrefning charges in 1869 were about 75% ofthe siver price. themineretbeck on thesivercontentof Brunswick's ore would have been about 158 39% x 92% x (100%-75%) = 48%. ‘Atypical schedule for gold in @ copper or lead concentrate would provide that the miner be paid the lesser of (a) 90% of the Contained gold or (b)the gold content of the concentrate less 10 git Au. A typical ‘iver payment schedule for such concen- Uuates would be 95% ofthe siver content of the concentrate, lass 25 git Ag. For 8 zinc concentrate. payment I usually for the esea of elthor a) B0% ofthe contained gold ‘and 90% of the contained siver, or (b) the precious metal cortent of the concentrate lege 9 deduction of 12 g/t Au and 110 g/t Ag Both gold and siver are subject to refining charges (currently about $0.30-$0.400 for slver and $5.00-88 O0er for gol). ‘These schedules have two important Implications: (() Precious metals are moce valuable ifihey reportto copper ortead concentratesthan to 2ine concentra, (2) A deposttin which the precious metatsall port toa single concentrate is more valu- ‘able than a similar deposit in which the pre cious metals report to several concentrates. Thus, an important task for an economic, geologist is to evaluate the habitat of pre lous metalsin a potential orebody (Beruvé, 1982; Gasparin, 1980, Potruk, 1989). For ‘example, inclusions of gold in chalcopyrite Fe worth more than inclusions of gold in sphaleite. Other Conetituente of ‘Copper, Lead and Zine Concentrates ‘Tho owner of a metallurgially complex ‘erebody must do a lt of comparison shop- ping because smelters vary widely in their ‘treatment terms for other constituents of concentrates. One smelter, for example, ‘may pay forthe lead and zine contained in 2 ‘copper concentrate, minus 3 units. For the ‘same concentrate, another smelter may charge a penalty of $2.50 per unit for the ‘contained lead and zine beyond a deduction ‘f4 units of combined lead and zinc, Further more, when cadmium prices are low (eg. below $100%b), a smeiter might penalize 3 miner for the cadmium in zine concent Yet, when cadmium prices ore high (eg, above $3,00ib), the same smeltor might pay ‘a credit for the seme cadmium in tho same ine concentrate (Other than for some special bulk concen- trates (see below), tis 2 good approximation {0 assume that copper, lead and zinc wil have no value Ifthey report to concentrates ‘other than their respective concentrates. Dirty" constituents — especialy antimony, bismuth, arsenic, furine, cadmium, mercu- 'y, selenium. tellrium an thalium —gener- ally result in penalties, Typcally, such penal- {las are in the order of $10-$40 per tonne per Unit of antimony, arsenic or bismuth. For mercury, penalties are hundreds of dotars per tonne per unit, Minimum concentrations, below which no penalties are charged, range from 0% to 3% for diferent materisis and diferent smelters. High concentrations of Iron, water or silica may also attract penalties, “The Equity Siver and Samatosum opera: tions in British Columbia end the Ok Todi mine in Papua New Guinea ilustrate the importance of considering penally charges in assessing the economic potential of a deposit. Ar Equity ivr, 78% of the ant ‘mony (Sb) and 21% ofthe arsenic (As) inthe Southern Tail zone reported to the copper. siver-gold concentrate. As 2 result thiscon- ‘contrate graded 70% Sb and 4.0% As and ‘was judged to be unsaleatle. Equity Siver ‘consiructedateachplant which. withvarying ‘degrees of success, reduced the grades 10 ‘0.8% Sb and 2.0% As. Although subject to penalties, this material was acceptable to a Japanese smelter which had the right to Teject material containing over 5.0% Sb. Ar ter mining the Southern Tal zone, Equity Sliver moved on tothe Main zone. Concer trates produced from the Main zone aver. ‘aged3.0%-3 5% Sband0.30%-0.35% As. It was more economical to ship unleached ‘concentrates trom the Main zone than to ‘continue operating the leach plant Dayton, 1982; Edwards, 1986. ‘There are lwo main mineralized zones at the Samatosum doposit:the Discovery zone ‘andthe Siver zone. The Discovery zone has. reported recorves of 240,000 tonnes grading 72 git Ag plus other metals. It aiso containe 8.0% As. Altnough such concentrations of arsenicmightbe worth special reatmentin a larger deposit (as was the case with Equity, Siver’s Southern Tal zone), thay wil goner- ally destroy he economies ofa small depos- It Indeed, the Discovery zone has no! been 18 mined. However, the Silver zones in produc- tion because, although the copper-siver ‘gold concentrate is rich in both Sb and As, Ihe ore grade and tonnage are sufficiently high to make tis zone cornmercial Coppergold ores at Ok Tedi are of two main types, porphyry and skarn. All of Ok ‘Ted's ore is rich in fuoring; the skarn ore especially 20 (3,000 ppm F is typical), How- fever, most smelters impose penalties on copper concentrates containing more than 500 ppm F. By carefully blending mil feed, (Ok Teds operators have been generally suc- ‘cossful in maintaining Muorine levels in the concentrates at just below 500 ppm F Bulk Lead-Zine Concentrates: A bulk concentrate is ane contalning signif cant quantities of more than one economic metal. When pelymetalic orebodies are small or when they Nave high grades but complex mineralogy, it may be cheaper to ship a bulk concentrate and suffer 3 lower smelter return than toinstal and operate the ‘equipment necessary to provide a cleaner separation of minerals. A "standard™ butk Concentrate, which would be cited in estab- lishing @ base price in smelter contracts, ‘would contain about 30% Zn and 15% Pb. Only one producer of bulk lead-zinc con- centrates is listed inthe Mining Sourcebook (1985 to 1980 editions): Brunswick Mining ‘and Smelting Ltd, which produces a zinc- lead-liver bulk concentrate in addition to ‘copper, lead and zinc concentrates. In 1989, tho bulk concentrate averaged 33.2% Zn, 19.8% Ph and 390 git Ag (Brunswick Mining ang Smelting Ltd, 1990). This concentrate is soldtea European smelter Payable levels of metals are as folows: 2ine, 85% o less 7 Unite: lead, 95% or less Suns; svar, 95% oF less 100 git (M. Power, Noranda Treasury. pers. comm. 1988), In all cases, the appto- Palate caduction i the one which results in ‘the least amount payable, In recent years, Duk lead-zinc concen- trates have become more marketable. This development nas enhanced the prospects for the McArthur River zinclead-siver pro- ject in Northern Territory. Australia (Gerrard, 1990), and has also benefited the Red Dog tine in Alaska, Red Dog produces zinc ‘concentrate, alead-siver concentrate and a bulk lead-zine-sver concentrate (Millbank 1990), Column D in Tale 1 presents 1990 treat- ‘moat terms and the mine netback fora hypo thetic! producer of abulklead-2inc concen- Irate, assuring arocovery to concantratoof {85% for both lead and zinc. Note that smelt- ing charges (per tonne of concentrate) are similar to those for zine concentrates, In this ‘ca80, the mina netback ss 33% ofthe gross value ofthe lead and zinc in the ore. Molybdenum Concentrates Concentrates are priced on theit contained rmolyodenum, but at @ discount to the price quoted for molyodic oxide. This discount,162 Tablet Concentrate Recovery to ‘concentrate Grode of concentrate Compare with {deal stolchio- metric grades Deduction Propertion of con: tained metal which ts payable after the above deduction Basic treatmentismal- tor charge, S/DMT Escalator in basle troatmont/amelting cchargos, S/OMT of, concentrate Basie refining fee, ‘cents per pound or ‘ounce of refined metal Escalator in refining toes, centsilb of tofined metal Value of metat con- tained in concentrate, S/OMT Not payable metal in ‘concentrate, S/DMT NSR, S/DMT of ‘concentrate Mine netback Notes: * Recoveries and concent ‘Typlcal 1990 treatment terms and NSR calculatlons for representative Canadian concentrat 347% 23.0% Cu chalcopyrite: 34.6% Gu 10 units 100% S70 9.0¢N 10 ¢fb foreach 10¢fb over 90¢ $638 $599 sa3t 51% B Phin lead concentrates" 733% 46.0% PD sgalena: 86.0% Po Aounits one $80 eset 20% of any move from $0.45, sees 420 szi9 38% published annually by the Canadian Mining Journal). * Based on figures for Brunswick Mining and Smelting Lia's buk concentrates excluding its precious metals, and ‘on a hypothetical rate of recovery + Dolla figures are US dollars + The above calculations assume: concent + DMT = dry metric tonne + NA. = not applicable or not available e Znin zine ‘concentrates* 038% 510% Zn lron-ree sphelerite 610% 20 25% s210 SBIOMT for 1 0 move above $0.68/ or -$170/DMT for each 1 68 move below $0.68 00 00 $765 $637 $389 4% > Pb and Zn in bulk fead.zine cconcenirates"* ast 19.8% PD 33.2% Zn ‘galono: 88.0% Pb iror-roe sphalert: 670% 20 3.0 units (P8) TO units (2a) 100% (Pb.Zn) $210 {or Zn, similar to zine concentrates 8.8¢m (PD) 0.048 (2r) for Pb, similar to lead ‘concentrates $509 $552 8279 33% e Moin rmolyodenum concentrates" 10% 53.5% Mo molyodentte: 60.0% Mo 32.561 NA $3361 $3,294 $2,880 60% trades are averages of figures presented inthe Mining Sourcebook (1985 to 1990 editions, les with 7% moisture eight cost $35/WMT (wet metric tonne}; no penalties,Geotcience Canade Volume 18 Number 4 163 Concentrate F Type Nin nickel ‘concentrates"** Recovery to 86.5% Ni concentrate Grade of concentrate 170% Ni Compare with pentlandite: {deal stolchlo- 340%NI metric grades Deduction NA Proportion of con- NA talned metal which Is payable after the above deduction Basle trestmentisme: NA ter charge, S/DMT Escalator in basic treat NA mantiemelting charges, ‘SNOMT of concentrate Basle refining fee, NA conts per pound or ounce of refined metal Escalator In refining NA. fees, contsib of refined metal Value of metal con- $1525 tained In concentrate, sioMT Net payable metalin = NA concentrate, $/DMT NSR, S/DMT of 3067 concentrate ‘Mine netback 56% ‘Notes, contd Load (North American producer price) Nekel (LME spot): $4.07 Zine (European Producer Price) ‘Tablet s Niand Cu in bulk ‘lckel-copper concentrates” 89% Ni 95.5% Cu 8.0% NL 135% Cu NA ‘90% (NCU) ss, Sogo (Ni) ‘2¢!b (Cu) NA 1159 1045 s723 57% ** Based on data in Timmins Nickel Inc. (1988). ‘+ Hypothetical, bul representative, examples. + Metal prices used inthe above calculations ere average price lovee in 1990, as follows: ‘Copper (London Metal Exchange (LME) spol): $1.21 $0.46 Molybdenum (Metals Wosk molyodic oxide price): $2.85/ soar cont! H PGM and Au in ‘bulk rickel-copper ‘concentrates"*"" Alncrementa) 82% Au, Pd, PLBRh 129A 33.9HPt 3agnPa O33 gn Rn NA 62% (Au, Pt, Po, Rh) (corried by Ni, Cu) NA Booger (Av) 2004/02 (Pt & Pa) To0o¢i02 (Rn) NA. sur sr 40% {Gold (London final fix) lladlum (London spol): $t15i0z Platinum (Loncon spot Rhodlum (London spot) 1 (H+G)/0, Ni, cu, PGM and aun ‘buk ricke’-copper concentrates" 89% Ni, 95.5% Cu, 82% Au, Pa, PEAR 8.9% Ni 135% cu 129A 339nPt 34gnPd 0.39g/ Rn NA S04 (hi) 124 (Cu) B00¢oz (Av) 2800g/02 (Pt & Pa) o0dg/ez (Rh) NA 31.276 1116 sva7 58% 38302 sarzbez $3,585i02 a PGM, Au, Niand Guin bulk PGM-sulphide ‘concentrates**** 182% Au, Cu. Ni P4, PLB RH 27% Ni 27% cv 4aghau 24.09 PL 064 g1Pa 48gtRh NA. 90% (Ni, Cu, AU, Pt, Pd, ny s165 NA as ¢fo (N}) 20gM (Cu) ‘1500¢i02 (Pt& Pa) «4500¢/02 (RO) NA 1607 sate $1094 56%‘quoted for molybdie oxide. This discount ‘which reflects treatment charges. averaged '$0.30-$0 35 per pound in 1990. ‘Mes! molybdenum smelters donot pay for ‘ether constituents. However, somemay give Credit for ehenium, and precious metals can 'be teaches trom molybdenum concentrates atthe mine site, as al sland Copper (Last 1986), |AS shown in Column E of Table 1. typical mine netbacks in 1990 for Canadian maty- enum ores were 60% ‘Nickel Concentrates and ‘Bulk Nickel-Copper Concentrates ‘Two nickel concentrates, one from Namew Lake and ane from Thompson, Manitoba, ‘and five bulk nickel-copper concentrates from Sudbury, Ontario and Thompson are listed in the Mining Sourcebook (1985 to 1990 editions), The nickel concentrates average 22% Ni, and millrecovery at Namew Lake is 90%, The bulk concentrates average 18.9% Ni and 13.5% Cu, mil recoveries aver- ‘age 89.0% for Niand 95.5% for Cu. ‘Mest nickel and nickel-copper concen- trates are smelted and refined by the com: panies which produce them. AS a result trade in nickel concentrates and bulk nick: copper conceniratesis limited ané shrouded in secrecy, andtollsmeltevretinery terms are rot publicly availabic. (Operations at the Redstone nickel mine. rear Timmins, Ontario, provide some insight, into the evaluation of nickel concentrates. Redstone was opened in 1989, Between June 1989 and February 1980, fomore grad ing 2.26% Ni (plus minor cobalt), a concen liale grading 17% Ni was produced with @ rll recovery of 86 5% (Tenmins Nickel, In. 1990), The concentrate was sent to Sherr Gordon’ plant at Fort Saskatchowan, Alber ta This plant combines the functions of both 8 smelter and @ refinery, and can accept ‘malta of concentrate as feed. Shorritstreat- rent fees are linked to the nickel orice (Lamphier, 1988). No detated terms have bbeen made publily avaiable, but the mine ‘operator has disclosed its anticinated “real- ‘eation” (or NSR per tonne) for nickel prices between $2 50!b and $6.50/b, based on ts Jong-term refining agreement with Sheritt (Timmins Nickel, nc., 1989), as set out in ‘Table 2. Corresponding calculations of gross valueltone ove and mine netback are also ‘shown ia Table 2 {At the average 1900 nickel price of $4.07) Ib, the netback would have been about 66% ‘ofthe value ofthe nickel contained in the ore {o2e Calum F of Table 1). Because Sherit ‘was short ol faedin the lato 1980s, one can ‘sesume that a concentrate producer would have found it dificult to negotiate contract ‘more favourable than this one, For a hypothetical producer of bulk nickel ‘copper concentrates trom mil-neads of 12% ‘Niand 17% Cu, Colum G of Table 1 presents ‘smelting and refiung terms which are con- sidered tobe 2 reasonable estimate of what rmightbe obtainable. The resultant nethack to the nicke-copper mine is 67%, PGM and Gold in Nickel-Copner Concentrates 'PGM" relers 1 the six platinum group met- als, only three of which have significant mar- kets: platinum (P); palladium (Pd), and rho- dium (Rh). Canadian production of PGM is principally from Sudbury as 8 by-product of Fickel-copper mining 'PGM and gald are recovered, slong with the nickel and copper, in bulk sulphide fota- tion concentrates. In Canada and elsewhere typical recoveries are 80%-85% of the by- product PGM plus gold. The concentrates fare smelted and converted to high-grade rmattes, from which nickel and copper are extracted and refined. The residue is refined into gold ang indvidual PGM constituents in a lengthy and involved chemical process. In the preceding section, @ hypothetical, but representative, Canadian oFe grading 12% Ni and 17% Cu was introduced. Such an ore would also contain about 1.2 gt PCM plus god, comprising about 40% Pt, 41% Pa, 4% Rh and 15% Ag. Column H in Table 1 outlines representative reatmentterms, and the resulting incremental NSR. and netback, for these by-product PGM and gole values. ‘Column | ig the sum of the two preceding columns. Note that, although the inclusion of the PGM plus gols values ennances the ftal INSR. tne overall mine netback is essentially unchanged. Primary PGM Concentrates In Canada, there ace no ines in which PGM are the chief economic metal. n fact, on'y ‘one primary PGMmine, the Stitwatermine in Montana, exists oulsde South Africa Depending on a PGM deposits particular mi of economic metals (usualy the six PGM, plus one or moce ofN, Cu, AU, Agand Co), widely aferent treatment terms are possible, Hence, generalizations are dif ficult. Because of secrecy in the indusi there are no published data. Column J of Table 1 shows simpbfied butrepresentalive, {ol treatment terms which might be obtained for a buk sulphide concentrate that is rela Tob NiPrice NsR (Sib) {Sitenne ore) * 6590 262 550 23 450 166 350 m1 250 73 + Based on an exchange rate of CDN $100 \Nethack of Redstone ore at different nickel prices. 2 Based on Timmins Nickel, Inc's expectation ofa 2.91% Ni mill head grade, tively rch in PGM as compared to the ore- ously discussed by-product PGM concen- trate, Assumed ore grade Is 8.56 g/t POM ‘lus gold (comprising 20% PL. 72% Pa, 4% Rh and 4% Av), 27% Niand 27% Cu. ‘This example ilustrates an important 05- pect of PGM: mine netbacks are more ke those of base metals than gold. The rola- tively low netbacks ia PCM operations (56% inthe above example) as compared to gold ‘operations (where mine netbacks of 80% are typical eesult rom comparatively high metal losses in processing ofthe PGM. paticuariy in the concentrating stage: and trom treat- ment costs ang deductions which are high because of the complexity of PGM refining processes. Ik ig common practice 10 express PGM ‘rade in terms of "gold equivalents" As the example above ilustrates, i is also a mis leading practice! Tin Concentrates In some polymaialic deposits, tin, iin the form of caesterite, may be both recoverable ‘and payable, Since recovery of cassiterite is ‘usualy by simple gravty concentration, the ‘most important consideration in evaluating the tin potential of a polymetalic deposits the size-trequency distribution of the cas- siterite grains, Toemphasize the tin potential ff massive sulphide deposits, note that ‘Sorincors giant Neves Corvo polymetatic ‘massive sulphide deposit in Portugal has become a major producer of tin 96 well as ‘copper, 2n6, load and siver, following the installation of tin circuits inthe mil ‘nCanada, only three mines active in 1990 were (or had bean) producers of tin: Sullvan, Brtish Columbia, Kid Creek, Ontario: anc Ezet Kemptvile, Nova Scot. All are poly- ‘metalic. Tin cecoveries have ranged from 20% 1063% (Hamiton ofa, 1962;Rio Algom Limited, 1990). We have been unable to find ‘smelter terms for tin concentrates, Gross Value Netback {Sonne ore)? a7 63% 353 60% 288 58% 25, 54% ‘61 49%Geoscience Canada Volume 18. Number 4 APPLICATIONS OF NSR MODELS ‘plea! Grades and Recoveries of Copper, Lead and Zine Concentrates ‘Table 3 shows the results of @ statistical analysis of the relationship between mil head grace andl recoveries, and between ‘mil head grade and concentrate grades, for ‘the date on copper, lead and zinc concen trates presented in the Mining Sourcebook (1985 to 1990 editions) The table shows that, for copper, lead and zinc, both mil recoveries and concentrate ‘grades tend to improve with increasing head «grades. Furthermore, the presence of cop- per appears to have an adverse effec onthe ‘metallurgical choracterietis of zine and oad In mil feed, just a8 zinc appears to have an ‘adverse effec onthe characteristics of cop- por in mil feed. However, the prosence of {ead appears to have no significant effect on ‘ither the recovery of copper or on the grades of copper concentrates. Moreover, lead and zine each have mixed inuences on the metallurgical characteristics ofthe othe. ‘The coeticients of determination imply that head grades account for only about 40% of the variationsin recoveries and concentrate ‘grades; other factors account for the remain- Ing 60%. Nevertheless, because the ranges. of vatiation in receveries and concentrate ‘grades are relatively small, Table 3 can pro- Vide a useful fst approximation as to the possible miling characteristics of s deposit ‘wih given mill fd graces, Worksheet for Constructing an NSR Model ‘A.preadsheel NSR model ora typical poly ‘metalic deposits presented in Aopendix 1. ‘The oe grades used inthis model are the oan Cu, Pb, Zn, Ag and Au grades of 432 ‘massive sulphide deposits retated to ma- tine felsic to mafic exrusive rocks" (Cox and Singer, 1986). Where possible, recovery rates and concentrate grades are derived from the relationships shown in Table 3; ‘melting and refining fees are approximate spot levels as of 1990; other smelting and refining terms represent 2 distilation of a large number of smelter schedules; metal prices and exchange rates are at their aver- ‘290 1990 levels. Other figures are arbitrary, Uses of NSR Models ‘As noted n the introductory section, an eco- omic geologist! can make use of NSR cal ‘uiatons a the exploration stage, a the eval- ation stage and atthe expotation stage. Exploration. The major use of NSR ‘models inexploration|s toprovideacommon ‘basis for comparison o the relative merits of diferent polymetaticcril-nole intersections. For example, on September 20, 1968, Aur Resources Inc. published results fom holes 165 '59B and 58 on the Louvicourt project, ‘Quebec. Two of the intersections wore: Hale: aaa wisn 56.2 215 cum) 238 oar Zn(%) 002 8.92 ‘Aufozton) 0.03.02 ‘Ag{azton) 003 «0.02 ‘The relative merits ofthese two dri intr cepts are not immediately evident. It would De helpfulto those exploring the deposit, and those attempting to evaluate It, to use a common denominator to compare the as- says. Based on the NSR modelin Append, ‘and metal prices a8 at September 20, 1989, the NOR of the intersection rom hole 538 wes $5727 per tonne and that from hole 58 was $64.55 pertonne.Ingeneral, we suggest ‘that companies presenting assays rompoly- metalic deposits show the estimated NSR. per tonne for each assay interval, and note the assumptions behind these estimates. Even inthe initial stages of an exploration project, itis useful to estimate NSRs per {tonne for polymatalic assays. The NSR ‘model used at this stage wil, of necessiy, contain many “ballpark” assumptions. However, the process of making thesa as- ‘sumptions wilforce the geotogstto consider ‘economic factors which might otherwise be overiooked. Table Copper Concentrates Concentrate grade (%) Lead Concentrates Concentrate grade (%) Zinc Concentrates Concentrate grade (%) Recovery of copper to concentrate (%) Recovery of lead to concentrate (%) Recovery of zinc to concentrate (%6) 18 _humber of operations cited Relationships betwoon millbeads, recoveries, and concentrate grades. These figures are based fon regression analysis of figures complied from the Mining Sourcebook (1985 to 1990 editlons, published annually by the Canadian Mining Journa). For operations listed in more then one Iseue of the Mining ‘Sourcebook, the figures used are those from the most recent entry. 035 =239 +764 2224 2792 +490 72 Coaticient of Determination, a measure of the degree to which the above equations explain the variations in recovery or grade. For example, if 7#=0.20, 20% ofthe variation is explained and 80% is unexplained, + (2.92 » Cu head grad (%)) ~ (107 « Zn headsiCu heads) + (0.38 » head grade (%)) ~ (019 » Zn heads/Cu heads) + (2.94 Pb head grade (%)) (0777 x 2n head grade (%)) (6.81 x Cu head grade (4) + (8.84 «Ph hoad grade (%)) + (260% Zn head grade (%4)) = (288 » Cu head grado (%)) + (119 x Zn head grade (%)) + (116 x Pb heads/Zn heads) (6:82 » Cuheade/Zn heads) + (0.85 » Zn head grado (%)) = (12:4 + Pb heade/Zn heads) = (042 » Cu headsiZn heads) (#048; n=30) 20.03, 2) (2042; n=13) (2-048; n=13) ((=0.57, #22) (7-098, 3)166 Evaluation. NSR models are an essen tlalcomponentof an economic evaluation of mineral deposit. NSRs are also usely intech- ‘ical evaluations and in mine planning and design. For example, in evaluating the Grevet BMY depost in Quebec, VSM Exploration Ine. has defined cutofl grades in terms of [NGRs (VSM Exploration Inc., 1990). One ob- jection to VSM's approach is thal too many ‘accumptions are required. Our response is that this is precisoly why the oxercse is 50 valuable: it highights exactly not only where ‘one’s knowledge is defciont, but also how ‘sensitive the results are to the assumptions ‘one makes. Furthermore, by estimating ow operating profits (Je, total NSRS minus all ‘operating and development costs) vary atat- ferent cut-af grades, an evaluator can est- ‘mate optimum cutof grades and production rates fora project. A similar use of NSRS i in determining the optimum mil recovery rate. Given that when the mil recovery increases, there is generally a deckne inthe grade ofthe resulting concentrate “The use of NER models encourages close co-operation between geologists and meta |uxgits in choosing representative ore sam ples for metallurgical test work in assessing ‘copper, ead and zine may repoxtto other than ther respective concen- rates, andin detecting the presence of dele- terlous materials. According te John Car fington, then Senior Vice-President of Min ova Ine. (ers. comm, 1090), such basic ‘evaluations are “essentialbutevon today are often overiooked" Exploltation. As pointed out by Lane (1988), mining companies commonly define the limits of thelt ore bodies according to arpitrary unchanging cut off grades. Typical |stifications for this approach include: “We have aways wotked to 0.3%oF ‘Head Ofce decided 2% combed eetals some years 090 or “Think sovra utes were examined inthe {wosibiy study and 1% seemed Dest NSR models help provide @ more realistic ‘approach to determining cut-off grades, The ‘boundary ofan ore deposit is defined as the surface which separates material which ‘could be extracted at a profit from materia ‘whose value (NSR) would exceed the cash ‘expenditures required to develop, extract ‘and process this material. Because prices ‘and costs are continually changing, this sur foce is aiveys moving. As Laffeur (1988) pointed out, “a service raise was developed In waste in 1985 at Mobrun. Its now in ore” ‘A good example ofthe use of NSR models ‘at the explitation love is given by Audrey Resources Inc. In 1988, the company de- ‘cided that the best approach to grade contol atts polymatallic Mobrun mine was to con. vert assays into NSRe (Lafleur, 1988). All ‘material with an NSR greater than the ex pected cost of production is treated as ore {As Latleur stated, “its standard practice in ppolymatalic mines to convert grades into ‘one metal equivalent. the problem that ‘once the transformations done, peopietend to forget that the conversion is based on ‘tuctuating metal prices and recoveries, and {thatthe doliar isthe only true common de- ‘nominator for any grade conversion” ‘Audrey Resoutces’ approach, and that of VSM (as outlined previously), have been ci ‘cized as being 10 unstable, requiring con: ‘stant revisions of mine plans. Border (1891) thas addressed this objection: “industry re sistance to the optimisationot cutoff grades ‘emMiner Magazine, November 1088p. 2529. Larphion G, 1988, Los of no retinay del “no ‘isaster” for Sherr Gordon: The Gabe and Mak. Toronto, Ontario, August 2p. BS. Lane. KF, 1962. The Economie Detation of re: ‘Ning Jourral Becks Ud, London. 1499 Lasts MR. 1985, Recoverng gol om mayo ‘denum concenrate a land Copper Canad an nate of Ming and Metalurgy, Bullet 79, duly 1088.32 Lemieux, A. Jen, LS, Bouchard. 6. and ‘Canstone. DA. 1989. Canadian mnes: per spectve trom 1888; Eneray. Mines and Re- soureas Canade, Mineral Butotin MR 22, bank, ®, 1960, "Top Dog’: Metal Bulletin Monty, une 190, 9. ‘0 Ming SovrceD00%, 1988 to 1980 eation, Cana fan Mining Journal annua: Souther Business Purkeations elev, W198, "Recent progressinminerslogcat Iavestigaion related io goidracovery" Cane- dian astute ot ning and Mela, Buen, 82, November 1983, 3740 Reynard, GF. 1991 Concenrates — the over- Tooked mathe: naperpreseied to COPPER ‘9, August 191, Otawa, Ona, 1p io Algom Limite, 1990, 1989 Annual Repor. Roberts, RG. ané Sneahan, PA. 1988, eds, Pro- "ace, in Om Deposit Nadel: Geciogical ASSO tintonof Canada, Geoscence Canada Rept ‘Sees 3. ¥ “Tina Wick Ine, 1889, Final Prospects: Au vet 16, 1989p. 7 Timmins Nihal, In, 7900. Inform report. ine ‘months ended February 28, 1980, \vSit Exploration he, 290, 1989 Annual Report Accepted, a reviced, 16 December 1981 ‘Appendix 4 ‘COPPER: ‘ore grade, % ‘Se recovery (o Cu concentrate ‘sh racovery to Pb concentrate LEAD: ore grade, % "recovery to Cu concentrate ‘% recovery to Pb concentrate recovery to Zn concentrate awe: ‘oFe grade, % ‘recovery to Po concentrate recovery to Zn concertcate GoLD: ‘oFe grade, oziehort ton ‘% recovery to gravity creuit ‘recovery to Cu concentrate ‘recovery to Po concentrate ‘recovery to Zn concentrate ‘SILVER: ‘ore grade, o2ishort ton ‘% recovery to Cu concentrate 1% recovery to Pb concentrate ‘% recovery to Zn concentrate Characteristics of Cu concentrate: Cu grade of ary concentrate, % DMT of concentratet of ore processed Deduction (units of Cu) Payable Cu. Int of ore Lead deduction (units of Po) Ph payable after deduction. % Payable Pp, Ii of ore [Net Smelter Return Model for atypical polymetalie ore. Figures to be input figures g oa» omr 150 679 100 oqme 2207 40 803 ocr 0.023 m0 wo 40 ozsrx 0.840 310 Bo 50 ono» 0 onset 106 2230 2.50 50.00 (Ox EVU) Calculated Labels (A~BrTyH00 1B 22088 « (T-VYTGeoscience Canada Volume 18 Number 4 169 Appendix contd Figures to Calculated Labels be input figures Gold contained in ore, gt 0788 ksoo2a2 git Av indry concentrate 5.895 Aax MIU ‘Minimum gold deduction o7 {@ AUIDMT of concentrate) Payable Au, % 881 |AD = minimum of (AB ~ ACYAB and 95%: zero if (AC> AB) Payable Au, oz! of ore 0.007 AE =AAx AD = Mx 0,03215 ‘iver contained in ore, git 208 AF = Pi0.0282 it Ag in dry concentrate 2022 AG = AF x QIU ‘Silver decuction 260 An (g Ag/DMT of concentrate) ‘Aq payable after deduction, % 950 a Payable Ag, % 333, ‘AJ = Alx(AG~ AH)NG: zroif (AH > AG) Payable Ag, ozit of ore 0.239 [AK = Ad» PQ » 2204612000 ‘Smelter charge, /DMT of concentrate sates AL ito, of ore $3.60 AMM ALU Refining charges, unit of payable metal $0.09, Base charge, /b = Cu (tb) soxat AN = (60.094 maximum of (DU ~ 0.9) « 01) and 2eroyDZ +P (nb) soro1 0 Au (lz) $583 ae + Ag (loz) $0.35 4a Reining charge, it ore $3.28 [AR = (AN x W) + (AO 2) + (AP x AE) + (RQ AK) Ponaltes, (OMT of concentrate $3.50 aS. Total treatment charge, ore ‘$703 AT = AM + AR (ASU) Freight, WMT of concentrate 40.83 au Moisture content of concentrate, % 10 Freight, Nore st94 AV AU «Ux 1075" Characteristics of Pb concentra Lead grade of dry concentrate, % 289 awe DMT of concentratet of ore processed 0176 AK = (0 FIANY100 Deduction (units of Pb) 10 av Pb payable after deduction, % 940 AZ Payable Pb It of ove 1015 BA= AZ = (JAW-AVVAW) = D » F « 2204.6) ‘Copper grade of dry concentrate, % 22 BB=AxCIAK Payable Cu, % 200 Bc Payobio Cu, Int of ore om BD = BC « AX «BA « 22086 ‘Zne grade of dry concentrate, % 64 BE = Hx 1AX Payable Zn. % 500 BF Payable Zn, Ist of ore 128 BG = BF «BE « AX « 2204.6 Gold contained inora, git o7es AA ‘it Auin ary concentrate 5.388 BH = (Ax N)AX Minmum geld deduction or Br (@ AU/DMT of concentrate) Payable Au, % 870 BJ = minimum of (BH — BIVBH and 95%, zero (81> BH) Payable Au, ozit of ore 0.003 BK = AA BJ N= 0.09215, ‘iver contained in ore, git 208 ar lt Ag in dry concentrate 2184 BL = (AF » RYAX ‘Siver deduction 25.0 BM (Gof AQIDMT of concentrate) ‘Ag payable after deduction, % 95.0 BN Payable Ag, % 83.9 BO = (BN « (BL - BMYBM); zero if(BM > BL) Payable Ag, c2it of oro 010 BP = BO x BL « X » 0.03215170 ‘Appendix? cont Figuresto Calculated Labels be Input figures ‘Smelter charge, /OMT of concentrate $03.38. 80 Participation in ead prices, % 20 BR ‘Base price for participation, SUSMIb $0425 8s. Participation, (OMT of concentrate si79 BT = BR ((OVIBS) - 1) «BR « BO Total smelter charge, /OMT of concentrate $9512 dito, of ore sts7 Relining charges, unit of payable metal: = Pb (Nb) soro1 ew + cu (fb) sort ax + Au (loz) 3583 ay Ag (loz) $0.35 BZ Refining charge, /t oro si CA=(BW x BA) + (BX » BD) + (BY « BK) + (BZ x BP) Penalties? of concentrate $000 B Ponalies, (OMT of ore $0.00 CC = 08 «AX ‘otal treatment charges, of ore $273 b= cc+cB+BV Freight, WMT of concentrate 40.83 ce Freight, of ore sorr CF = CE xAX 1.075, Characteristics of Zn concentrate: Zine grade of concentrate, % 479 cst DMT of concentratel of ore processed oor CH =H wooyt00 Znin Zn concentrate, tut ore 4969 Gls HJ» 22046 Payable Zn. % 850 co Payable Zn, tt of re 4228 cK= Cc! Lead grade of cry concentrate, % 16 cL=0 ICH Deduction (units of Pb) 200 cn Pb payable after deduction, % 650 cN Payable Po, tt of ore 0.00 CO = CN ~ CH + ((0L - CMYCL) « CL ero (CM > CL) Gold contained in ore, ot 0788 Aa git Au in ory concentrate 90870 CP =AAxOICH Minimum gold deduction 1200 ca {(g of goldIOMT of concentrate) Payable Au, % 00 CCR = minerum of (CP - COVCP and 80%: zero (CO> CP) Payable Au, oz/ of ore 0.000 CS=CR «AA + 0 x003215 Siver contained in oro, gt 288 ar g/t Ag in dry concentrate 306 CT=AF » SICH Minium siver deduction 1100 cu (@ AGIDMT of concentrate) Payable Ag. % 00 CV = minimum of (CT - CUVCT) and 90%, zeroil (CU > CT) Payable Ag. ozit of ore 0.000 OW = CV x AF x $ x 003215, ‘Smelting charge, {OMT of concentrate $244.98 x Base zinc price, SUSMb $0.68 cy Escalator, SUS/OMT for $500 cz ‘ach 1 move above the base Devescalator, SUS/DMT tor 170 pA ‘each 1¢ move below the base Escalator charge/DMT concentrate $0.00 D6 = (DW - CY) 100 » C2/02); 2070 if (CY < DW) De-escalator charge/DNT concentrate $0.08 DG = (OW - GY) « 100 « DAIDZ): zeroit (CY > OW) Penalties/DMT of concentrate usr Do Talal smetting charges, (DMT of concentrate $250.48 DE +00 +0¢ +08 + 0x Refining charges /unt of payable meta: *Pb (ib) $0101 oF ‘Au (loz) $5633 6 + Ag (oz) '$0.350 oH Refining charge, ot ore $0.00 DI= (OF ~CO}+ (D608) +(0H « Cw) “otal teatment charges, ft ore $1207 DJ=D1+ (CH DE Freight, WNT of concentrate 40.83 0K Freight tot ore $207 OL = DK « CH 1075 ""Geoscience Canada Volume 18 Number 4 a Notes: ONT = dry metric tonne SOT= short dry ton WMT = wetmetrictonne Dar amounts are Canadian dollars unless otherwise specified ‘Appendix contd Figuresto _Caleulated be input figures ‘Treatment and Freight charges: Total treatment of oe s2t89 Tal eight Moore sa77 Teal, os ore $2868 Payable Metals, tot ore: Coober (b) 2247 Lead (b) ‘or Zire) 4340 Gale (oz) coro Siver(o2) 0340 Commodity Prices, $US: Copper (to) siz, Lead (6) s04s 2ine (fb) $0.86 Gold oz) $983 ‘iver (2) $482 Canaan olor 30857 Revonuee, of oe: copper $5171 405%) Lead $5.46 70%) Ze $3449 48.2%) Gata $447 (7%) siver S191 (24%) “ola Reverues $78.04 (100.0%) Marketing ard insurance costs, and 20 losses during transportation, 235.2% of total revenues Net Revenues, Not ore srea0 Treatment and Distribution Charges, Hof ore sos Not Smelter Return of ere s4982 Gross value of ore, tof ore sttaee Netback (NSR as proportion of gross value) 430% * In the absence of any detaled metallurgical data, one can use the relationships of Table 3, Le, 1B (%) = 83.5 + (2.92 ASE) - (107 = (HAN) F (2) 764 (2.94 » DI) ~ (0.77 » HI%)) ~ (6.81 » A(%)) (56) = 79.2 (149 = H(%)) + (118 x (DIM) ~ (5.62 » (APN) T (6) = 23.8 + (0.96 » A(%)) ~ (019 = (HIA)) AW (%) © 224 + (3.84 » D(%)) + (2.60 «1456)) (0G (94) = 49.0 + 0.86 « H(%))~ (1214 » (OH) — (0.42 » (AH) * ageumes that the concentrate i 7% moisture, in which case 1075 WMT would yield 1.000 DMT (2.66 » A(%)) Labels OM=DJ+CD + AT DN=DL+CF + Ay DO=DN+DM EA =0P « DUDZ EB = 00x DVIDZ EC = DR x DWIDZ ED =DS x DX/OZ EE = DT xDYIDZ EF =EA+EB+EC+ED+EE EG EH = EF x ((100- EGy100) po El= EH - D0. Ed (((Ax DU) + (0 x DV) + (Hx DW) = 22046) + ((K DX) + (P « DY) = (2204.6/2000))y07 Ek = EVEH