TWO-DIMENSIONAL WEIGHTED MOVING AVERAGE TREND SURFACES FOR ORE VALUATION by D. G. KRIGE, D.Sc.(Eng)(Rand) Reprinted from the Proceedings of the Symposium on Mathematical Statistics and Computer Applications in Ore Valuation, Johannesburg, March, 1966Joumal of the South AVrican Institute of Mining and Metallursy 13 TWO-DIMENSIONAL WEIGHTED MOVING AVERAGE TREND SURFACES FOR ORE VALUATION By D. G. Krige, D.Sc.(Eng)(Rand)* (Member) SYNOPSIS “The basic concept ofa trend surface for gold values is discussed and the technique for a weighted moving average trend surface based on a lognormal multiple regression model is developed. Practical examples are given illustrating the improved efficiency obtained in ore reserve valuations over ortho= dox and other approaches, IC shown how practical limits of error can be estimated and how the relevant computer programme is being expanded to eater for the complete determination, calculation fand up-dating al short notice of a mine's reserves and of the ore reserve plans, INTRODUCTION The need for improved ore valuation techniques is not yet fully recognised throughout the gold mining industry probably because the order of errors committed in the valuation of ore blocks and/or working stope faces and the overall effect of such errors on the mine's profits are not appreciated. This is particularly the case on the higher grade mines where unpayable ore represents an insignificant or small percentage of the total and little or no selective mining is therefore practised, Even in such mines, however, other considerations such as grade control and advance ‘mine planning call for a reasonably accurate knowledge of high and low-grade areas, Such considerations are today becoming gradually more critical with concentrated mining from a limited number of stope faces. If these faces are not correctly selected and controlled, serious fluctuations in grade could occur. Furthermore, with steadily increasing costs and pay limits, no mine can or will be able to continue to disregard the problems associated with selective mining practices. Such problems are faced daily by the medium and lower-grade mines in decisions as to whether a working face should be stopped and how in general to select those faces or areas which should be worked. Considerable progress has been made since 1952 in improving ore valuation techniques on our gold mines!, the latest being the weighted moving average technique for ore reserve determinations now in routine use on four of the Anglovaal gold mines. The practical significance of these improvements on the selection of payable ore for mining is illustrated in Table I in which are presented data for a theoretical mine containing « total of 40 million tons of ore with an average (pay ~ unpay) recovery grade of between 4 and 8 dit/ton, costs (and pay limit) at 4-8 dwt/ton and a gold variability pattern similar to that of a section of the Virginia mine covered by the author in previous papers':*, It is assumed that selection of ore is based on develop- ment results only but that the effect of selective mining decisions can be gauged from the results of subsequent stope sampling. The detailed assumptions and calculations are set out in Annexure 1 In actual practice selection is normally carried out not on development values only but also on current stope sampling results so that the figures for the profits shown against techniques (ii) to (v) in the table will all be closer to the theoretical optimum figures against (vi), and the progressive improvements from the orthodox techniques ‘Financial Engineer, Anglo-Transvaal Consolidated Investment Company, Limited,4 Journal of the South African Institute of Mining and Metallursy ‘simensonal weed moving arrape end surface far ov uation D. Gite (i to the one covered in this paper (¥) will be smaller. Nevertheless, the example serves to illustrate the extent to which Valuation techniques could be used to overall profits, particularly for the lower-arade mines, and provides some justification for continued expenditure and efforts in the search for further improvements. Actual examples of improvements in efficiencies will be discussed in more detail after the basic concept of an ore value contour or trend surface and the development of the Weighted moving average technique for estimating such a surface have been dealt TARLE | Average grade: dtiton (nay — unpay) “Total profit—R millions Block valuation techniques: (0 Al ore mined : wo 140-0 Geen sstive ining) 72S do) (i) Orthodox perioheral valuation ery Marek Gi Straight regression of ore reserve blocks 26 100-0 Gx) Regression sed on (i) and regional contour © ate > 60 100-4 (©) Weighted moving average contours 1606 (2) Theoretical optimum if all internal. stope ‘os were Krown in advance 165-2 GENERAL BACKGROUND, ‘The concept of a topographic ‘surface’ for a mountainous area with the pattern of elevations above sea level depicted by a contour map requires no clarification. Such a surface is readily defined in practice from a limited number of height observa: tions, as these are relatively accurate, and the surface is continuous with small changes in location corresponding to small changes in elevation. In the case of gold in, dwt values representing as they do the intensities of gold ‘concentrations per unit area of reefs? ?, the concept of a smooth ‘surface’ with height ‘af any point being representative of the gold concentration at that point, is certainly far from straightforward. An immediate practical and pertinent objection to this ‘concept is that values for ore samples cut in or immediately adjacent to the same groove are known to differ substantially even where virtually perfect samples are available (e.g, from a mechanical disc cutter, or from two halves of a borehole core) and, in addition, assaying errors are reduced to an insignificant level, Nevertheless, the tendency for gold values of a similar grade to show some degree of clustering has’ been recognised since the early days of the Witwatersrand and accounts for the development of various practices of arbitrarily grouping together values which appear to belong together, e.g (@ development stretches used in the classification for publication of develop- ment results into payable and unpayable categories,Journal of the South AMican Institute of Mining and Metallursy 13 Teena wie ng verge ten sfc for oe raletion D.C, rie (ii) the so-called ‘spotted dogs’, on which individual sample values in stoped-out, areas are grouped visually into various grade categories, and (iii) the delimitation and grading of unmined blocks of ore ‘These practices all have the inherent weakness of a very large human element in the decisions on grouping and are based on the concept of discrete and sudden changes in grade, changes which, on grouping by a diflerent individual or on re- sampling of the same exposed reef faces often take on a completely diferent pattern. It is against this general background that the concept of a relatively smooth trend surface for gold values has to be developed and its validity and significance tested. BASIC CONCEPT OF A GOLD TREND SURFACE In all statistical interpretations of ore values the basic aim is to form an estimate of the ultimate complete data (or population) pattern from the presently available limited data (or statistical sample). In its simplest form, with sampling and assaying errors ignored, the complete data pattern for a reef horizon would be known if the whole horizon could be completely extracted by ore samples cut next to one another, Accepting such ore samples as the equivalent of square or rectangular borehole ‘cores* each with a cross-sectional atea of say 6 sq.in. the data could be represented in the form. of a ‘surface’ if these “borehole cores’ were stacked upright im their relative positions and with heights proportional to their in. dwt values. Experience gained from Check samples cut in the same or adjacent grooves.and from split borehole cores confirms that such a surface would not be smooth and would in fact have the appear- ance of a stack of needles of variable height and confusing pattern. From the limited data normally available along development ends and in stoped-out areas, such a surface could hardly be estimated over the remaining unmined areas and even so ould serve no practical purpose in that form, The reason for ths fact ean be found in the nature of the distribution and sizes of individual gold particles in the ore body. If the ore samples could be so small as to include not more than one gold particle pet sample, a large proportion of the samples would be barren and those containing. gold could ‘vary greatly in value, The value distribution would, therefore, be discrete and discontinuous and could certainly not be represented by & smooth surface. Common sense dictates that if, in practice, ore samples could be gradually increased in size from 6 sq.in., the extreme variation in the heights of the necdles of the stack visualized above would decrease, and that at some stage an ‘optimum’ size of ore sample would be reached at which a reasonably smooth surface would be obtained. With further increases in sample size the surface will remain smooth but will gradually lose more and more detail 1f, for practical mining reasons, the ‘optimum’ size of ore unit is smaller than the minimum size of ore unit which needs to be con- sidered for selective mining and valuation, the loss (or even relative distortion) of detail in the surface in going beyond the ‘optimum size up to the minimum practical size is of little or no consequence. If, therefore, as experience in South African gold ‘mines has shown, the minimum practical size of ore unit results in a reasonably smooth, ‘rend surface, no purpose would be served in endeavouring to determine the ‘optimum’ Accepting for the moment that the minimum practical size for such an ore unit is 100 R= 100 ft, the borehole ‘cores’ or needles representing individual sample values could be grouped into such block units and an average height determined for each block. In this way the extreme variation in values of the small individual ore samples would be eliminated and the stack of 100 ft » 100 ft blocks with height6 Journal of the South Alcan Insitute of Mining and Me Teostimeniond oles mening strate tend safes Jor or vauain—D. G.Kige proportional to value would now represent a reasonably regular pattern similar to a three-dimensional histogram (but with height representing value and location deter~ ‘mined by the two horizontal dimensions in the plane of the ore body). If the 100 ft 100 ft grid for grouping the original values is now shifted sideways & new set of 100 ft % 100 fi blocks with different average values would be obtained: the steps between blocks would change position (in the same way as @ histogram would ehange with Changes in category limits), but the overall pattern would remain essentially the same. If this process is repeated until a series of block averages are obtained on a close grid (say 10ft > 10 ft) and these are now represented by upright rods at the block centre points and with heights proportional to value, the tops of such. rods would represent smooth surface, being based on a straightforward two-dimensional moving average. Such a “surface” now has a very practical significance as the height of any pofnt on it represents directly the average gold content of an area of 100 ft x 100 ft around that point. It does mot necessarily have any direct practical significance in respect of ore units of a size smaller than 100 ft > 100 f. ‘The only alternative in changing from_ the concept of the three-dimensional histogram to that of a smooth surface is to fit such a surface to the histogram so a5 to ensure that the average heights of the surface and the histogram for every 100 ft » 100 fe area are identical. This is then no longer strictly a moving average surface as the average values For areas of 100 ft = 100 It (or larger areas) will now be correctly represented by the average heights of the surface over such areas, The distinction between these, although possibly somewhat academic in most practical situations, is nevertheless basic (0 the concept of such surfaces and again stresses the need for defining specifically on what basis a trend surface represents ore values. Its, therefore, contended that any smooth trend surface representing gold valueS from reefs with contents as variable as those in the South African gold mines, has a practical significance only iFit ean be related directly to some basic ote unit of specified Size. This is the case in contrast (0 the position for a topographic surface where height measurements are accurate and change reasonably gradually from point to point So that the height of the surface at any point is truly representative (within narrow qimits of error) of the height above sea level at that poi At the risk of labouring this coneept, consider the ease where, by some mathe- matical means (high-order polynomials, Fourier analysis, et.) a smooth trend surface is fitted to the individual closely-spaced gold values over an area as visualized above. The valuc indicated by the level of the surface at a specific point will not be represent tive of an individual ore sample value (over 6 sq.in.) at that point. In fact, a large number of the individual values will project above the surface or fall short of the Surface. Nor is a point value on the surface representative of the average of a large number of ore samples waich could theoretically be obtained at that point by a process ‘of replacing the sampled material in sitw and resampling and reassaying so as to reduce sampling and assay errors to a negligible level. However by averaging adjacent values over areas of gradually increasing size, a size of area could possibly be reached at ‘which these average values will correspond to the point values indicated by the mathe ‘matical surface, Alternatively, the surface could be accepted as representing not point estimates, but area estimates in terms of the average height over or total volume under a specified unit area of the surface. Again the surface will have to be such that a5 this size of unit is increased, a point will be reached where the average heights of Stich units agree exactly with the averages of the populations of ore samples within these units. If neither of the above alternatives is satisfied, it is contended that stich a surface does not necessarily have any practical significance.Jouinal of the South Afican Institute of Mining and Metallurgy ” Toondimonina wiht mon average ren tcf oevluationD. 6. Kege From the strictest statistical point of view a mathematical trend surface would be analogous to a regression surface fitted to the observed data with the specific require- ‘ment that it is representative of the surface which would be found by obtaining a large number of such sets of observations and plotting the averages of individual observations occurring together within infinitesimally small areas. This requirement in turn will be met only if, inter alia, the deviations of individual observations from this surface are entirely rindom in occurrence, i.e. they show no autocorrelation’ In the case of gold values such a requirement can be met, not in relation to individual gold ore sample values, but only when individual ore Sample values are combined fo represent larger ore units of a size such that the mathematical model concerned can fully define the actual values of such ore units. Where such a model does not define these values fully the deviations from the model must exhibit autocorrelation, thus introducing biasses in the expected values for local reef arcas, and in addition resulting in misleading confidence intervals for the surface. Apart from the above considerations, the author's experience’ of the com- plicated nature of gold distribution patterns even after considerable smoothing, and the dangers of introducing into high order polynomial surfaces artificial, or even impossible features over local areas where no data are available, c.g. in the centre of large unmined blocks of ore (see also Nordeng’), emphasize the substantial obstacles to be overcome in endeavouring to represent gold values for purposes of detailed ‘ore reserve determinations on our mines by means of mathematically defined trend surfaces. In contrast, the weighted moving average approach is relatively straightforward and clear in its basic concepts, is at present more efficient! and does not depend on a mathematical function for definition of the surface. The surface is, in fact, estimated point by point on any required grid spacing DEVELOPMENTS TOWARDS THE USE OF A WEIGHTED MOVING AVERAGE The concept of a straightforward moving average contour surface for ore values ‘was introduced by the author and Ueckermannt three years ago and the use of these contour values in a regression formula led directly to the development of the present ‘weighted moving average technique. The first ste, however, was taken 15 years ago when the author’ correlated peripheral block values with the corresponding internal values disclosed by subsequent stope sampling and recommended the use of regression factors for all block values. These regression adjustments now in use on most South African gold mines can be expressed mathematically in a formula of the type log (regressed in. dwt + a) — b -- c log (unregressed in. dwt ja) ....0...(1) where a, b and c are constants determined for each mine or mine section. The constant ‘6 is proportional to the logarithms of the mean value for tae mine or section as a whole, and the regressed value can therefore be regarded as a (logarith- ‘mic) Form of weighted average of the unregressed value and the overall mean value. The second major step forward was the introduetion of the regional moving average contour surface®, with the regression formula (1) now modified to the following form Log (regressed in, dwt + a) = h + clog (unregressed in. dwt + a) = dog (contour in. dt) eeeeeeseeese vee ceeee (2) ‘The regressed value now becomes a (logarithmic) form of weighted average of the unregressed value (on the periphery of the ore block), a regional contour value (representative of all values within a radius of 500 ft from the orz block) and the overall mean value,2 Jounal of the South Atican naitute of Mining and Metallay Taodinemioelwrhed mning ae ond ces or ae ain ae In a typical case the order of the weights (on a logarithmic basis in formula 2) attaching (o the peripheral, regional contour and overall mean values would be 60, 35 und 5 per cent respectively. This confirms the common sense knowledge of the ‘mine valuator that values close to the point of interest should carry maximum weight and values further away progressively less weight, a 60 per cent weight in this case applying to values on the block periphery, 35 per cent to all values outside the peti= Dhery up to $00 ft away, and 5 per cent to ail other values Further away, This immedi ately raises the question of whether a further improvement ean be made possible by providing more gradual steps in the diminishing weights from the block periphery outwards, ie by subdividing the available data around an ore block into concentrie zones or rings with maximum weight for the inside zone and decreasing weights for the further outer zones, The development of this approach involves the following steps: (]) Decision on sizes and configuration of basic data units to be used, (i) Size of basic valuation unit ii) Determination of multiple regression formulae based on transformed values Gs) Conversion of (ii) into a simple weighted moving average applied to the ‘untransformed data, (9) Estimation of confidence limits for (iv). Basie data and valuation units ‘On the gold mines individual ore samples are obtained on an extremely isregular arid. The intensity of sampling varies from a 5 f linear interval in development to a arid spacing of between 10 ft = 10 f to 40 A » 20/tin stoping areas, ie. the range is {rom one sample per 40 sq.fr to one per 800 sq.ft with @ probable average of some 300 to 400 sqit- Accepting that ore values are significantly correlated with one another at distances of up to some 400 ft apart allowance should be made in any weighted moving average model for using at any one point estimate vales up to 400 Teaway (or a possible total number of 400 to 00 individual values on average. To use this number of independent variables in a multiple regression, or even in a straightforward weighted moving average formula, is clearly impractical even withthe use of « modern large high, speed computer. Furthermore the collection of these values with co- ordinates for each value would present a formidable task, The averaging of individual values into squares of 25 ft x 25 ft was thus accepted as the best practical compromise. Such 2 unit is small enough to provide Whatever detail is needed for ore reserve estimates and also for any possible future evelopment of 1 mathematically defined trend surface, Before considering the configuration in which these basic data units are to be used, the size of the basie valuation unit hus to be decided upon. Where mining is fended on the lone te wi selection of payable ore ona very broad ask Only, it is obvious that basic valuation units much larger than 25 ft > 25 ft could be considered. Even where stoping is done from fairly short panels it seems that litle Purpose is verved in endeavouring to select payable ore on a smaller basic unit than about 100 ft 100 ft. In completely stoped-out areas with the maximum available sample data, valuations for areas of this size (on the straight arithmetic average) are Stil subject to substantial errors *, and the valuation errors for smaller units are of such an onder as largely to obscure any actual variations in grade from unit (0 unit ‘The optimum size of the basic valuation unit depends obviously on the inherent variability of the ore, the sampling intensity and the system of stoping, but these could vary considerabiy even within a mine and the need for standardization dictates 2 practical compromise on a unit of, say, 100M > 100 AJournal f the South Afcan Institute of Mining and Matalluey ~ ovina ght nese tnd cs orate ‘The suggested data configuration for estimating the values of such units is shown in Fig. | and was based on the following considerations (i) an overall square configuration of 800 ft» 800 ft to allow for the use, ‘apart from the overall mean value, of data up to 400 ft away: (Gi) & limited total number of data units (40 in the suggested configuration) to limit the effort involved in calculating a weighted average and i) units increasing ia size outwards to allow for the fact that the correlation between similar size data units changes rapidly at first and more slowly as the distance apart increases. ‘The configuration on Fig. 1 is not necessarily the ideal and further analysis into this aspect might be warranted at a later stage, ort 0 ” B oe co | a foo | om ae « 8 fla |s |e on | es rafar fe] | sagt if pe | ow wo as | as] a7 0 a fio a 0 00 os o ” WHOLE MINE SECTION '20 Journal of the Seuth Acen Institute of Mining and Metallasy ‘Teodionional weg mo weg md nat fr ation, Ko VALUATION OF 100 FT» 100 FF MINED-OUT AREAS “The first estimate of the actual gold value ofa 100 ft » 100 ft area which suggests, itself, isthe arithmetic average of the 16 basic data units (of 25 ft 251) within the ‘area. To arrive at a reasonable estimate of the error variance of such an average results from a large number of such arcas are required. For each area the basic 16 1001 okJoumal of the South Atican Institute of Mining and Metaigy 2 weston eget avig mae el es force ran Ke TABLE 1 ‘ora 100 yt 100" ARE ‘Natural logaithne Data nis avalable ‘orev varhne of| ‘Central square known: onl (i) and, i) Sam 20 : | oon Uy) andy : ane = = Geel square not Know i) a unly om | = AS) Ean = (a) 3 xy 0-055 (tan : = es Only squares i second peripheral Known en ‘The following conclusions can be drawn from the data in Table IV: (@) Trend: Comparing Nos. (i), (¥) and (ii) and particularly Nos. (vi (vit) and (vii), it Is evident that considerable advantage is gained by recognising. ‘rend fully by having variable weights in the first peripheral, e-e. error vari- ance when this ring only is known, improves from 0-100 (No. (vi)--uniform ‘weights within ring] to 0-055 [No. (vii)—variable weights} tis interesting to note also from Annexure 2 that in the final regression formulae negative coefficients appear in & direction (NW to SE) at right angles to the general trend, which also confirms the logical expectation of a gentle slope in the surface along the (ead and a relatively steep slope actoss this trend. (®) Advantage from ‘outside’ data: Comparing (i) with (ii, (ii) and (v) and also (vii) with (ix), iis clear that advantage is gained by taking aecount of Sequence of two sets of data squares in moving outwards from the centre, This is confirmed by similar analyses for the Virginia, Loraine and Harte. beestfontein Mines. The one case No. (iv) where three sets were used showed ‘a possible sight further advantage, but the analyses for other mines and reefs have not confirmed this and for practical reasons the use of up to two sets only is advocated A SIMPLE WEIGHTING TABLE BASED ON REGRESSION COEFFICUNTS ‘The need for the conversion of the multiple regression solutions into a simple wcighted moving average. approdch should be obvious, With up to 40 data units in the pattern used for valuing one 100 ft x 100 ft square (see Fig. 1), the complete le regression solution for every square throughout the mine will require: (@ A multiple correlation analysis ofall available data within the mine or section {establish the complete variance table and a 41 ~ 41 correlation coefficientPy Journal of the South Alvan latte of Mining and Mallar Padme wighed nig send rae for tne. Ke (or eo-variance) matrix for all 40 independent variables and the one depen- ‘dent variable; and (i) the multiple regression solution based on the variances and co-variances From (i) for the specific data pattern known for each 100 ft» 100.7 square to be valued, ic. a solution for up to 24 independent variables (if only two data blocks are used for each of 12 segments in Fig. 1). Ifthe solutions are Timited to a 100 ft 100 fe grid over a mined-out and/or developed mine section of only 5.000 fe» ‘3,000 Te this will mean 2,500 such multiple Fegression solutions involving the simultaneous solution of between say 4 ‘and 24 equations in each case. This may have to be done independently for ‘gold, uranium and also reef channel width values. Such a programme is clearly outside the scope of any manual effort by desk calculator, and is too ambitious and expensive even if attempted on a modern large computer. Examination was consequently directed at developing a simple weighted moving average system with 4 standardized weighting table which would operate directly on the untransformed variables but which would sacrifice little in overall efficiency and hence serve as an eMicient first approximation of the complete multiple fegression solution, In such circumstances, close estimates should also be possible for the errors of valuation, particularly if these could be related to the sum of weights used for the weighted average caleulated for any 100 fe > 100 ft square ‘The first attempts at testing the feasibility of « weighted moving averspe were made more than two years ago" on the basis of a somewhat arbitrary set of Weights. Resuls were so encouraging that a more sophisticated approach to a suitable weighting lable was soon developed, and the latest procedure is explained in Annexure 3 Further improvements are’ bound to follow as a suitable computer programme is doveloped for establishing the regression cocffiients (and hence the weights for the Weighting table) corresponding to the most commonly encountered dats patterns. ‘The weighting table used for the December, 1965 ore reserve determination for the cold Merriespruit section of the Virginia mine is shown on Fig. 4, The figure in each Square isthe weight attaching to the average value for that square if data are present and the bracketed figure the weight used, if that square happens to be the second Square encountered with data in each of the 1 segments (e.g. A,B,C, and D, in Fig. 1) in moving outwards from the centre point Example Data present in squares—see Figs. | and 4 (in, dwt values in brackets): (300) By (200), B,(250), By(180), Cy, Cy, Ce. Dy De, Dyno used, By3S0), B (400), C35), C1500). C650}, B30}, B, and, ot "used, B00), "C,(400}. Dy, not used, D180), Mean Value — 348 Estimated value of central 100 ft » 100 1 square: (300, » 120) ++ (200 >» —4) + (250 4) + 180% 4) + G50 28) = (400 >< 10) FPS 52) 4 (500 % —2) + (550 <8) + (150 0) + (600 28) — (400 2) (180 0) 4 48 = 12) 75.486 Sum of weights = 212 Weighted average — 7542s ee sort a ° 4 z @ @ @ o 2 4 ta 3 . oO 5 ® ‘ ‘ a o ° o «fs ]o fa o em | | | er 2 ‘ ‘ ° @ @ 0 1 WEIGHT FOR WEIN VALUE= 1 PER SEGWENE i. _Wolgtng table or old Merreprai section of Visinia Mine Fig, 5 shows the weighted moving average contour surface (in. dwt) obtained on this basis for a small area on the old Merriespruit section. The calculation of the roving averages was performed on the Leo TIT computer with «programme developed by the Mathematical Statistical Division of the Transvaal and Orange Free State Chamber of Mines. RELATIVE ADVANTAGE GAINED TROM MOVING AVERAGE TREND SURFACE ‘The routine use of such trend surfaces for ore reserve valuations will be justified only if adequate evidence is available to support the advantages claimed over orthodox ‘and other more advanced techniques of the type indicated in Table I for a theoretical mine. In other words, a number of ore blocks should be valued completely by all the different techniques using the same basic data, and the individual block valuations Should then be compared with the ‘internal’ block values subsequently disclosed by Stope sampling, The most efficient technique should obviously yield individual block Valuations which agree on average more closely with the subsequent “internal” values than any of the other techniques. ‘The well-known block factor determined monthly on the mines, ie. the ratio of the average internal in. dw value and the corresponding average block value for all ‘ore blocks stoped, does not provide the required criterion for efficiency because itis ‘merely a measure of the overall bias between stope and block valuations. This bias is only one of the two components of error in block valuations, the second being theJournal of the South Abican Institute of Mining and Metallaney 2 Twente thd ning eras tnd fr re ation Bs ie Loraine, Zandpan and Hartebeestfontein mines on selected ore reserve blocks in ‘which sufficient stoping was done during the year to provide reasonable internal block Yalues. The results of al these analyses ace reflected in Table V and, bearing in mind that the initial weighting tables used in all these instances were somewhat arbitrary a they were based on very few. if any, correlation analyses as oullined above, the improvements shown should be bettered in future. This fechnique is mow in routine Use for ore reserve determinations on the Harteheestfontein, Zandpan, Loraine and Virginia mines of the Anglovaal group. ‘TALE v Cciterion: Natura lgattne vee t) of ates of ore Block tales fn, dwt constant) Sulthekrespexie internal alge nde) eoastand bused on stope sampling avalible “er the bioeks ia been mined ur Values Tor uranioms here available, shown in brackets Vai No.of reblocks | oof ration Gacisin wine TION (Fine Wal data fom old workad:aat section of mine oe blocks valued ‘on original development selues on) Oninedox Hocking ) oat Orthodox Bioking plat sraigh vesvesion 00 books ot ‘Oninodox blocking Plus Feesion on seston oe "comour wus _ 100 4 100.0 ona \Weahted moving vege cinta 010 Lomanse sive (Ore reserve blocks mined out tap extent of more than $0 per cent during the Sear 19856) sw reals Oxthodox block : 28 blocks oa ‘Orined blocking + fears’ | tom | 038 ‘Weigel maving average officio eserves | O38 FAL ree Sripaonteking 24 Mocks os ined tucking + regain rom om Weaghted moving erage mci Grereserves | O-IT ZaNDPAS MINE (Ore reserve Blocks stoped to an exent of more than 50 percent during 1954) Oxthodox blocking .. 33 blocks 0-05 ‘Orthodox blocking pls rediession i ecional Teor sntours oficial oe reserves | 0-05 weighted moving average 004 ‘nanromusstroNTEIN MINE (Oe seve block stoped more than SO percent during the year 1964/68) Orthodox blocking o1001n (etnodox Sleking plik eeesion 77 ocks 0-09 01) ‘Ontnodox Blocking plus regression on region ror contours oficial re reserves 9-09 41 Weighted moving Sverige 0:08 (0:09)28 Journal of the South Ahan Institute of Mining and Mataturay oontmentonal elhied moving erage em uae ore raluaton DG. Rego COMPARISON OF WEIGHTED AVERAGE AND MULTIPLE REGRESSION ESTIMATES, Before discussing confidence limits for the weighted moving average trend surface it is necessary to enamine the extent of the loss in efficiency by using this, approximation rather than the complete multiple regression solution for each 100 ft x 100 f¢ block. For this purpose the 99 sets of basic data used in the multiple regression solution No. (viil) in Table TV (Ge. squares xy to xq in Fig, 3 used to estimate 1) were used with the weighting table shown in Fig, 4 to calculate the corresponding 99 weighted moving averages. These were correlated with the 99 x, values and after correcting for the error variance of xy, the natural logarithmic error variance for these ‘weighted averages was determined at 0-056 compared with 0-055 for the correspond- ing estimates calculated on the complete logarithmic regression formula (see Table IY). The loss of efficiency is, therefore, negligible and similar comparisons effected on data from the Hartebeestfontein mine has confirmed this conclusion. The use of the weighted moving average in preference to a logarithmic regression formula (with different coeflicients for each 100 ft x 100 ft area to be valued) is, therefore, justified as a very substantial saving in effort is achieved and the loss in cfficiency is negligible. Rough estimates show that if a mine is valued by both tech- niques using a large computer, the cost by the weighted moving average technique will be less than one-eighth of that of the regression technique. CONFIDENCE LIMITS FOR THE WEIGHTED MOVING AVERAGE In Annexure 2 the conditional variance S$, i.e. the error variance of the regres- sion estimate, is reflected for each of several data patterns assumed, as well as the gorresponding sum of weighs if the weighted moving average based on the data in Fig. 4. is used. I it is now accepted that these error variances will also apply within ‘lose timits to the corresponding weighted moving averages, confidence intervals for he latter can be based on these variances provided they can be correlated with the sums of weights used. Fig. 6 shows the high correlation for the example given in Annexure 2.and confirms that a trend established as in Fig. 6 can be used as a practical ‘approximation for the required confidence intervals of the surface. \ ie &Shonrgralonhip btwn sm of mig fr moving steage snd th cael anual leptin vince 135 of the cocrpondag mle esteonslaonJournal of the South Afican Institute of Mining end Metalrsy 2» eodmenioa wrghed moi oar endef tiorD. Cr Example ‘The weighted moving average estimate for # particular 100 ft x 100 ft area was 400 in, dwt and the sum of weights 320, From Fig. 6 the corresponding natural logarithmic variance is estimated at 0-023. Variance — 0-023 Standard ear ~ 0°1517 terete fone pouon 40) = 3.918 Mesh of transformed population ~ loge (geometric mean = loge (mean) —4 variance * 35-9915 —0-O115 5.9800 5-9800—1:645 20-1517 55-7305 (transformed): ‘untransformed — antiloge 308 in, dwt Upper limit = 5-9800 -} 1-645 50-1317 ‘equivalent to S08 in. dwt 90 per cent Confidence interval: Lower limit i.e. 90 per cent confidence interval lies between 0-77 and 1-27 times the estimated value of 400, In practice these confidence intervals are used mainly for demarcating areas falling in the following categories: ‘Certain’ payable (95 per cent confidence) ‘Uncertain’ payable, ‘Uncertain’ unpayable, and “Cortain’ unpayable (95 per cent confidence. For the conditional variance } of 0-023 in the above example, that is for a sum ‘of weights of 320, ‘certain’ payable ore will ie above the limit determined by (0-77 % limit = pay limit, ie. limit = pay limit = 0-77 pay limit 1-30 “unpayable ore will lie below a limit = pay limit = 1-27 pay limit 0-79 (On this basis ‘certain’ and ‘uncertain’ zones can be demarcated as shown on Fig. 7 to enable the weighted average as calculated for any 100 ft » 100 ft square area to be classified accordingly. and similarly ‘certai tot ‘ate salsa So ERR ee fu oF wei ESTIMATED GRADE RELATE 10 PY ode (Bt igs i. 7— Groh fr mci eit eran en ater30 Joumal of the Scuth Aten Insite of Mining and Metallonay ‘Tessin weed moving seat nd snare fr atin De DETERMINATION OF LIMITS FOR ORF RISERVE BLOCKING. Apart from providing a direct measure of confidence in the weighted moving average estimates, the sums of weights are also inversely related to the distance from Known ore values. For the example covered by Annexure 2 the maximum sum of weights, ie. 632, corresponds to 2 fully mined-out area, whereas an area more than 400 ft away from any known ore values will carry the minimum sum of weights of 12, Bearing in mind that on most gold mines the main eriterion for determining the size and shape of an ore block is to allow some specified distance from the sampled pportion(s) ofthe block periphery, its obvious that a sum of weights could be specified as a criterion which would automatically determine black limits to correspond to current practice on a particular mine. This criterion will not, of course, eliminate all areas which are not immediately available for stoping, such as ateas either side of raises not yet holed, and of drives well ahead of the last raise-winze connection, The policy of the mine can therefore either be adjusted to follow the suggested new criterion throughout or such areas can be specifically excluded from ore reserves. PRESENT COMPUTER PROGRAMME Details of the development of the computer programme at present operating on the Leo III computer are presented fully im a paper by Pizow and others at this symposium. The mine is divided into sections to take account of major displace: ments along faults and any other convenient divisions and the final output of the programme isa printout ofthe weighed moving averages for gold in. du, uraniom in, Ib (if applicable) and channel width inches on a grid of 100 ft » 100 ff for each of the mine sections. From these print-outs value contour plans are prepared manually on the mines and these are then used ) asa guide in the delimitation of individual ore blocks in ensuring that the block boundaries follow roughly the contour directions, that individual blocks do not include too wide a range of estimated grades and that the block limits agree with the sum of weights criterion discussed above, (Gi to provide a weighted moving average contour value for each ore block For ore reserve valuation purposes in respect of gold, uranium and channel width, Gi) to demarcate areas of “uncertain* payat the best use of available sampling fa operations, (Gv) for long term forecasting of ore grades by the visual extrapolation of obvious, value trends, and (9) for establishing correlations hetween gold, uranium and channel width surfaces and between these and any geological features such as pebble sizes, flow directions, ete. which may further improve ore valuations and long term forecasting, ‘The computer programme is at present being expanded to cover in addition: (@) Acceptance of additional basic data to record: (i) mined-out ground, oF unpayablity so as to ensue ies in controling future sloping (iv) ground covered by erosion channels, raised footwall, ete,Jeunal of the South Alcan Insitute of Mining and Metallasy 3 (9 ground outside mine or section boundaries, (vi) ground covering ‘unavailable’ ore in shaft or boundary pillars, ete, (vil) the mine's pay limit, (ili) the sum of Weights criterion for limiting the extent of ore blocks, Gx) the sum of weights eriterion for classifying values as ‘uncertain’ or ‘certain’, (3) a spec widths, (xi) the rock density, and (i) the average dip of the reet (#) Additional calculations to be performed interpolation between averages calculated on a 100 ft x 100 ft grid to give results on a 25 ft » 25 ft grid, i) calculation of stoping widths from channel widths, (ii) caleulation of dvjton and Ibjton values from in. dwt, in. Ib and stoping width values, (iv) classification of all 25 ft 25 ft areas into ground covering: ‘dykes, faults, erosion channels, etc outside boundaries, mmined-out areas, “unavailable” areas, areas not in reserve, “uncertain’ areas (6) classification of all remaining 25 ft x 25 f areas into payable and lunpayable ore reserve grade categories, caleulation of tonnuges (fom stoping width, dip and number of 25 ft» 25 ft areas), and the accumu lation of all relevant figures to give a complete ore reserve analysis with totals for all mine sections, (vi a similar analysis forall ‘unavailable ore reserves, (© Final print-outs (choice optional): A print-out to.a seale of almost 1 in 1,000 showing in coded form for ‘cach 25 fx 25 fh area the dwi/ton, in. dwt, stoping width and feature listed under (6) (iv) above, Gi) A similar print-out showing Ib/ton, in, 1b, channel width and feature as above, (Gil) a printout of in. dt, in. Ib oF channel width values as calculated on a 200 ft > 10 gid, together withthe corresponding sums of weights, (Gy) a.data map print-out, for checking purposes, of the original data in 254 x 25 N squares, for in. dwt, in. 1b oF channel width values, Specimens of these print-outs are reproduced in the paper by Pirow and others, Asa practical test of the possible effect of not averaging expected values over ore reserve blocks as manually demarcated, but in effect blocking on a 25 ft 25 ft area basis as proposed by the above complete automatization of ore reserve calculations, calculations were made manually on both bases for two large sections of the Zandpan and Hartebeestfontein mines with the following results cation for converting channel widths to the expected stoping.4 ommancat blocking anh averaging af cantor ¥ ion grade eategorics determined iretly Tom the Jeurnal of the South Abcam lnaitute of Minin TABLE VI oF sntour values for indinial ore blocks, and ated moving average contours ony sede! ] See gr jst | SSR ge cow mene w | me | ww | am Moca ef [om fom wa wo | a: | we | a ee wo fas | | oe eee sew fone [ony | on staan wefan | os | a It is clear from Table VI that the differences are negligible. Apart from the very considerable effort and time spent on the mines at present in manually demaeating every individual or, Mosk. plaiting of arts and calculating {computerized on some mines) peripheral averages, tonnages and grades, which would be eliminated on the expanded computer programme, the print-outs could be used to serve as ore reserve plans with a minimum of additional manual effort, e. (G) grade and width contours and the other required features such as dykes, Faults, N.LR., ‘unavailable’ areas ete. could be dravsn in manually on the printout by simple visual inspection, and the whole print-out photographed, for reproduction to any required seale to serve as ore reserve plans. If required, the underground plan could be photographed separately and Superimposed on the print-out negative before reproduction; or i) if warranted, the programme could be further expanded to cover the manval ‘operations under (i) above as well, through the use of a digital plotter. “The main advantage to be gained from such a programme however, will be the fact that # revision of the ore reserves in complete detail would be possible at short notice as frequently as possible, say every quarter. This should reduce to a minimum the stoping of unpayable ore and further improve the efficieney of grade control, forecasting and planning. ACKNOWLEDGEMENT. “The author js indebted to Anglo-Transvaal Consolidated Investment Company, Limited for the facilities and research opportunities which made it possible to develop snd test the techniques covered in this paper and for the permission to publish. TheJournal of the South Afican Insitute of Mining and Metallrey 3 women weed mong aurae end ocr oo aan. Kat acceptance of this project by the Transvaal and Orange Free State Chamber of Mines fas one oF its research projects some 24 years ago, and the subsequent efforts by its ‘Mathematical Statistics Division in co-operation with English Electrie—Leo Com- puter Services (Ply.) Limited led to the development of the present computer pro- Bramme and to the broadening of the scope of the whole project. 1. Pow, P. C. and Knot, D.G. “The ue of mathemati state and computer fox olnning Bae Sanit tthe ga mics a th Teas and Grange Free Sat Lag CoM Ma Congres rats Newest, 9 2. Kann, D.G.-A sal apreah ose Bese mine valuation problers o te Witate= Fai Chm Mer Min SoS 3TH pT Son p38 368 an 8 3. Kroct, D. G. ‘Statistical applications in mine valuation.’ Parts I and I. J. last, Min. Surveyors Sg Ra ean BE 4. Aamaget, FP Mths of tend suse ani, Quarter of Cla, Sheol of Mines, Vol. 59, No. 4, Oct. 1964, pp. 111-130. Comedy o ” 5. Nemorko, 8, G."Anlkaion of tend sufae anasto sem-quanttae geochemical Tie taal tic Symon on Compute pnd Conpelr Appian Me ero UAC ot Ass Wa Mar 165 pp 36, 6. KovotsD, 6. and Uscianiann H,.-Valu ont an ngrved eres echalgus for ‘ore reserve valuations.” J. S.Afr. Inst. Min. Metall. Vol. 63, 1962/63, p. 429. “ 1. Kc, D. G. A satsteal approach fo some mine valation ant alld poblas the WitSicneand. Masters hese enpbisbed Unni of the Witeatenra (881) 4 KngoD.G,"A reve ofthe impact of atic on mine ation in the gold ining indy Rie i. Nt ea 68 Parti. pp. 313-380 Be 9. Yaga "Sunaing etal or esta sures Che Glin and Co, Landon 3 10, Kot, D. G, one malts for sl mining” J SAP: feat Mit Metal, Vol, 62, {Betas Gist ted talon apts of sine teusk onpoable ore". Sanath Mott, Voi 63, 1561/68. 3k 11, Phaow, P Cu ef “Canute programmes for moving average eed) Simin om Manse Sentai and Computer Appliaton in Ore Valu Mae Sy nh itt sures! io, March ANNEXURE I THHORETICAL EXAMPLE SHOWING TFFECT OF VARIOUS ORE VALUATION TECHNIQUES ON MINE PROFTTS Assumptions Total mill tonnage (pay 4+ unpay) ~ 40,000,000 Recovery grade (2) with no selective mining: 4 to 8 dwi/ton range Costs (and pay limit) = 4:8 dwijton Gold revenue R25 per o7 Logarithmic variance (4) of distribution of ore block values (100 ft > 100 ft) throughout mine: ‘On orthodox block values = 0-21 Internal’ stope values for blocks = a}! — 0-16 Correlation coefficients between ‘internal’ block values (3) and orthodox block values (sy) block values regressed on regional contours (rx), and weighted moving average block values (x) Fay = 04S tay 0°55 tay = 0-65Py Jeumal ef the South Atican insite of Mining and Metalery meio weed vig wee nd efor ation De Ri No selective mining Revenue = 40,000,000 zdwtjton = R4Qz x 1-25 million = R50: million 000,000 > 4-8 dutjton = R240 million = R(S0z—240) million Selective mining on orthodox blocking In correlating ‘internal’ block values (j) with orthodox block values (x), line of regression of yor, will be! lea? les 2115 ee — Oy) 8 Gop is gay O18 0539 ogy rz ion Blocks valued at the pay limit of 4:8 dwt/ton will therefore have an actual av rage “internal” value determined by this regression Yormula, eg. for: = 6, average ‘internal’ value — 5-64 dwvt/ton, Also for of = 0-16, and $3 = 0° 128, the variance (cof points on the regression, line (i.e. means of y arrays) will be ~ 0-032, and this will determine the selectivity of ‘mining. For a lognormal distribution with mean 6 dwt/ton, and o! — 0-032, the average value and percentage above 5°64 dwi/ton will be 6-6 dui/ton and 61 per cent respectively i.e. 61 per cent will be mined at a recovery of 6-6 dwt|ton, givin Revenue = R40 x 6°6 x 1:25 x 0-61 = R201-3 million Costs = RAB 1-25 x 40 0-61 = R146-3 million Profit = R.55:0 million Similarly for 2 values of 4, 5,and 8 dwy/ton the estimated profits (millions) are R1-0, R20-4, and R147°8 respectively, as shown in Table L Selective mining on orthodox blocking plus straight regression Selection will now be the same as above but will be on the basis of an ‘effective’ block pay limit corresponding to the correct actual pay limit of 4-8 dwt/ton, which at a o* of 0-032 will give the following results Mean (no selection) dwt/ton . 4 5 8 Pay limit (4°8 dvt/ton)/mean 12 0:96 0-6 ‘Pay’ value/mean 13 Lie 1-00 Recovery, Le. ‘Pay’ value (dwijton) 5:24 5.58 8-00 ‘%Mined above pay limit 1% 56% 100% Profits ate estimated as above and are reflected in Table I. Selective mining on orthodox blocking plus regression on regional contours Conditional variance S} = (10-538) 0-16 ‘Variance (o*) of means of'y’ arrays along line of regression Selection on this o# above an actual pay limit of 4-8 dwt ‘Mean grade (no selection) dwtjton 4 Percentage mined 16 Recovery grade or ‘Pay’ value) dwtjion 5:43 ‘See graph GRL 216 in Ret. 3,Journal ofthe South Afican lsitte of Mining and Matallury Fe ToedneonalwriMed moving arate end afc foot atin. 0. Kie ‘Selective mining on weighted moving average Conditional variance 5} = (10-658) 0-16 0-092 = Variance (c#) of means of arrays along line of regression — 0-16 0-092 = 0-068 Selection on this o# above an actual pay limit of 4:8 dwt/ton will yield Mean grade (no selection) dwijton 4 3 6 8 Percentage mined 19% 51% TT 96% Recovery grade (or ‘Pay’ value) dwijton 5-$8 6-03 68H Bid ANNEXURE 2 DETAILS OF MULTIPLE REGRESSION SOLUTIONS FOR ‘OLD MERRIESPRUTT SECTION OF VIRGINIA MINE Correlations were effected on 99 sets of data conforming to the configurations shown on Fig, 3, after normalizing on a straight logarithmic transformation. Multiple {regression solutjons for the estimate of the dependent variable y based on various Combinations of the independent variables x, 10 Nip Were obtained on the standard hhasis covered by most textbooks on Mathematical Statistics, with the following results: Logarithmic variances (28): oh = 0-316 of = 0-215 of, = 0-258 of, = 0-361 oh, = 0-320 chy = 0-289 hy = 0243 08, = 0-231 Note: ab of = error variance for x, = 0-016. Correlation covefficients ‘0-692 | 0-403 | 0-901 | 0-€27 | 0-689 | 0-359 0-674 | 0-392 | o-sne | o-ats | o-682 | 0-350 048 | om ome, 1-000 T-ao0 | 0-672 | O-TRH | 0-896 1-000 | 0-732 | 0-668, 1-000 | 0-640 ‘Estimated from the coresponding x covtelation co-fiints eb ray = rao» 4/1 + BOB ose x 1-026 = 0-9016 Joumal of the South Ata Ins te of Mining and Matellorgy ‘vowing srg ad mre fr or aaton DC ee Regression co-eficients and S$ “Configuration (a) Fig. 1 | 0-950 0-080 | 0-016 2 \o-8s9) 0-136 0-005 | 0-014 3 0963 0-037 | 0-100) ‘Contigaraton () Fig — 4 |o-710) 0.175) 0-034) 0.029} 0-015 0-007 | 0-013 s 0-765] 0-145 |0-127-0-055 0-030 | 0-085 ‘ 0968 0-022 | 0-058 1 ons 0-278 | 0-108 8 0-768 0235 | 0156 ‘Configuration (¢) Fig. 3: 7 7 9 lors (0-240 0-048 -0-031 [0-089 | 0-041 | 0-012 0 0-964] 0-191 0-128 |.0.197 | 0-167 | 0-098 a1 | o-774 o-201 [0.010 0-015 | 0013 2 0-990 | 0-044 0-066 | 0-056 a 0-426 |-0:128 | 0-308 | 0-167 The population means of al the independent x va bes a5 well as of the dependent variable » axe all Rental over large ring afea with no consistent dowostaré tend in any drcton. Tn ‘Stcia ease the constant in he regression formula can be regarded a Being = (1~sum of regresion oeticeas) overall mean valeJournal of the South Abican Insitute of Mining and Metalury ” Tadinentonal wid mig ante en ces or ee eal. Rie ANNEXURE 3 FKAMPLE OF THE PROCEDURE FOLLOWED IN ESTABLISHING 'S WHGHTING TABLE Using the data from Annexure 2and assuming that in a weighted moving average bsed on the untransformed data units the weights would be proportional to the regression coefficients determined in Annexure 2, the following example will serve to illustrate the procedure followed in determining part of the weighting table shown fon Fig. 4, The procedure is also aimed at using the sum ofall the weights for deter- ‘mining confidence intervals and hence itis also accepted that the sum of weights for tach data configuration should ideally be inversely proportional to the error variance (Sp) of the multiple regression solution, Crterion ‘Valuation of central 100 f > 100 ft area on ‘internal’ stope values (No. 1 in Annexure 2): Regresion co-ett. | Weient | SF (Cental square, . 0980 a - Mes value 00% 2s Tol 1-000 | seyanz | 0-016 ‘Central square (1) and frst peripheral (xx) ally known (See No. dia Anaoeute 2) Central square 0-710 467 4 Squares xy coe ors ans 2 Squares x4 0-04 a 4 Squares 0.0 18 2 Squares xe -o-is 10 Mesn value 0-007 4 Total a 1-000 ase | 008 *(-0160-013) » 492 = 605ae Joumal ef the Seuth Atican Insitute of Mining and Metaloey women ech mating oe endear for elation Ds ie First peripheral (xr) squares only (No. $ Annexe 2) Regression cot. | weient | 53 4 Squares x; 7 -[ 073 [to 2 Squares x oss 2 4 Squares x, i on 8 2squares.se 0-085 10 Mean value a 0-030 4 Total . 1000 we | 008s (016-055 492 = 143) nse) Squares, only (No. in Annexure 2) Squares, . 0968 ry Mean value st on i 0-032 4 Tol 000 nr | ose ‘Squares x, only (No. Din Anmexure 2) 2Squares mo. ons s Mean value q om 2s Tol | __F0%0 7 ‘Squares, only (No. 8 in Annexure 2) 4 Squares wae al 0-765 » Mean os 2 Tol : 000 st | One This procedure is continued with other data patterns, e.g. , x; and x, known, 2a and xy only etc, and the weights established for the different squates are averaged 10 give the weights to be used: eg. For x, known: x, = 480 or 120 per $0. x $0 ft square x4 — 112 or 28 per individual square X_= 20 or 10 per individual square ‘Mean = 12 or I per segment.