Mining & Geology for Idiots

Equity | South Africa | Mining
Mining & geology for idiots

(like accountants, actuaries, BA and
BCom
. graduates, politicians, bankers,
fund managers and DMR employees)
5th Edition | 2011

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Mining & Geology for Idiots | 5th Edition | 2011 2

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Author
René Hochreiter
BSc mining geology (honours)
BSc mining engineering
MSc Geology
Fellow of the Geological Society of South Africa
Member of the South African Institute of Stockbrokers
Why did I write this book?
All of us live in a two-dimensional world on the surface of the earth. Yet beneath the
surface of the land and sea there is another world of mineral riches, molten lava, colliding
continents, faults, new growing minerals, thrusts and many more processes that have
given rise to what we see in our two-dimensional world today. I, as a geologist, am always
aware of why we see what we see. I want to impart that knowledge to the layman and
propagate the study of the earth and its processes in a way that is easily understood and
benefits the science of geology for the many.
The assistance of
in producing this booklet is gratefully acknowledged.

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Contents
Part I: Overview ................................................................................................................. 5

Overview ............................................................................................................................ 5
Introduction ................................................................................................................... 6
Glossary of terms .......................................................................................................... 8
Part II: Geology and genesis of SA’s main economic orebodies ................................ 14
Metals and minerals exploited in South Africa ............................................................. 15
The Witwatersrand system.......................................................................................... 22
The Bushveld Complex (BC) ....................................................................................... 25
The Karoo system ....................................................................................................... 28
The Transvaal system ................................................................................................. 31
The Waterberg system ................................................................................................ 32
Greenstone belts......................................................................................................... 33
Granite basement ....................................................................................................... 38
Diamonds.................................................................................................................... 40
Part III: Mineral resources and reserves ....................................................................... 44
A short (and sad) case study of why resources are important ..................................... 45
Interpretation of borehole drill results .......................................................................... 47
Part IV: Mining methods and exploitation ..................................................................... 52
Mining methods .......................................................................................................... 53
Part V: Metallurgical recovery and refining .................................................................. 72
Metallurgical recovery circuits ..................................................................................... 73
Refining ...................................................................................................................... 73
Part VI: The evaluation process for investment divisions ........................................... 88
Exploration studies and sampling (including drilling) ................................................... 89
Orebody evaluation ..................................................................................................... 90
Feasibility study and investment decision ................................................................... 92
Our contribution – cash flow analysis, the final step .................................................... 92
Part VII: Financial analysis of orebodies ...................................................................... 95
Mining the stock exchanges of the world .................................................................... 96
Net present value calculation ...................................................................................... 96
Conclusion .................................................................................................................. 98
Acknowledgements ..................................................................................................... 99

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Part I : Over view
Overview

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Introduction
This simple reference book is published to assist fund managers and inexperienced
investors in understanding the general geology, resource statements, mining methods,
metallurgical circuits and cash flow statements used by South African mining companies
and, as such, used to value their shares. A request by a fund manager with no mining
background, who will remain anonymous, generated this work of art and of necessity. A
request for numerous copies of this book, from the world’s largest mining company, which
will also remain anonymous to save it embarrassment (!), has been a real eye-opener.
The reference book is kept as brief and simple as possible, and consists of seven parts:
Part I Overview
Part II Geology and genesis of South Africa’s main economic orebodies
Part III Mineral resources and reserves
Part IV Mining methods and exploitation
Part V Metallurgical recovery and refining
Part VI The evaluation process for investment decisions
Part VII Financial analysis of orebodies
During your cover-to-cover read, you will come across topics such as the fakawee mining
method which is used mostly to mine fubarites, made famous by South African mine
managers (see glossary). This mining method, although not described in detail, runs like a
golden thread through the different aspects of this book. We hope you enjoy scanning it.
For some background, the earth was formed 4.6 billion years ago. Most mineral resources
mined in South Africa were formed in the age range of 2.7 billion (for the Wits gold
deposits) to 85 million (Kimberley diamond deposits) years ago. South Africa has some of
the richest ore deposits in the world. It dominates global platinum, gold and manganese
resources and is right up there with many other metal and mineral resources. The last 70
years have seen exploitation of these resources through a variety of mining methods not
generally understood by the layman nor the generalist fund manager, accountant or lawyer
who always seem to be involved in a mining venture. This book describes the geology, the
genesis, and the mining and processing of these ore deposits as simply as possible. The
following text is with deference to Prof M Hrebar of the Colorado School of Mines:
“Why do we do it? All this nonsense of digging, drilling, sweating and milling. All for a little
bit of something shiny and sparkly. The expense. The sweat. The planning. The headaches
and heartaches. It takes billions of rands, even dollars and about 7-8 years from the initial
surveys to get a mine into full operation.”

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Is the geologist right? Is he a one-handed or two-handed geologist? Will the market back
us? Will we get a permit from the central or local government authorities? Will it pass the
black empowerment bandwagon test? Are there any environmental problems? Can we get
at it? Can we get power/water/people and machines there or do we have to build our own
power station, pump our own water from miles away, build our own town, road, railway,
airport? Why do it? What a headache!
If you are producing gold at, say, $700/oz and churning out 1 million ounces a year from
your mine, and if you happen to own a few of these little babies … that’s a lot of money at
the current ~$1,300/oz gold price! The cash from one mine pays for the next operation, the
reclamation of the old project, and for all those lovely little dwarves, digging, drilling,
sweating and milling away… hi-ho-hi-ho, it’s off to work we go.
“Looking – finding – testing – evaluating – building – mining – processing – cleaning” … no

wonder there are few left in the industry with nerves not shot through. No wonder the
capacity for bull-gnittihs (see Digital Fortress by Dan Brown for code) naïve fund managers
and accountants and lawyers and the layman is unending. So to get a slightly better handle
of the most important components of a mine/mineral project… read on.

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Glossary of terms
General terms
Carat A carat is a unit of mass equal to 200mg, used for measuring gemstones and
pearls
cm/g.t Centimetre grams per tonne
DMR Department of Mineral Resources (DMR)
g/t Grams per tonne (32.151g = 1 ounce)
Geology terms
Au Chemical symbol for gold
Craton Large stable block of undisturbed ‘plate’ of rock millions of years old
Cu Chemical symbol for copper
Dip The steepest part of a dipping or slanting plane
Dolerite Same as granite, but formed when lava erupts and cools on earth
Dyke A vertically/sub-vertically intrusive body of magma
Fm Formation
Genesis Creation
Granite Formed when magma cools in earth
Greenstone Very old rocks, the first rocks to be formed after the earth cooled
Heavy mineral sands Titanium, rutile and ilmenite
Igneous rocks Rocks formed deep inside the earth from magma or on surface from lava
Magma Lava inside the earth
Lava Magma after it has erupted from the earth
Metamorphic rocks Pre-existing rocks (ie sedimentary, metamorphic and igneous) deformed by
pressure and temperature
My Million years
Ni Chemical symbol for nickel
Pd Chemical symbol for palladium
Pegmatite Rock which melted and squeezed its way into pre-existing solid rocks
PGMs Platinum group metals (platinum, palladium, rhodium, gold, iridium, ruthenium)
Pt Chemical symbol for platinum
Qte Quartzite
Sb Chemical symbol for antimony
Sedimentary rocks Rocks formed by the erosion of other rocks and deposition of this eroded rock in
water or on land
Strike The horizontal line on a slanting plane
Supergroup A sequence of rocks defined by geologists to have been formed together
Zn Chemical symbol for zinc
Source: R Hochreiter

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Mining terms
A fatal Death in a mine
Adit A horizontal tunnel entering a mine from the side of a hill
Aykona No
Aziko sper Finger lost through LTI (below)
Cage The ‘lift’ in the shaft used for hoisting men and material
CIP Carbon in pulp; carbon in a pulp solution attracts gold to the carbon
Cross-cut A tunnel from the haulage to raise/winze (below)
Developing (development) Blasting an excavation horizontally underground; also referred to as ‘boor-en-
blaas’, a miner’s sole purpose no matter if it’s on-reef or not
Fakawee Confused. Generally used in the context of ‘where the fak-ah-wee’ mining
method
Fubarites The name for a rock (fubar) that has been ‘fu**** up beyond all recognition’
Haulage A tunnel from shaft to cross-cut
Haulage truck Large tippler truck (biggest now 500-tonne load) used to haul rock
Hoisting Moving men, material and rock up and down a shaft
Jou gat Your hole
Jou moer You are wrong!
Ledging The first ‘cut’ of reef on either side of a raise which begins the stoping process
LHD Load-haul-dump vehicle
LTI Lost-time injury
Milling Grinding rock to powder
Mining Breaking rock
On-reef Where the miners are supposed to ‘boor en blaas’ as opposed to ‘off-reef”,
where there is no value
Raise Upwards-inclined tunnel on reef
Ramp Inclined, helical tunnel used to gain depth using rubber-tyre equipment
Reef The rock that contains the minerals
Reef An orebody containing gold/platinum, usually thin and tabular
Refining Removing the valuable part of the broken and ground-up rock
Seam ‘Reef’ but used when talking about coal
Shaft A vertical or inclined tunnel used for transporting men, materials and rock; the
top of the shaft can be on surface or deep underground
Shaft sinking Blasting an excavation vertically downwards, usually to 2,000m (or the weight
of the rope becomes too great)
Skip The ‘elevator’ used in the shaft to hoist rock
Stoping The act of mining in a confined space
Waste Any rock not containing value
Winze Downwards-inclined tunnel on reef

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Periodic table of elements

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Alphabetical list of elements

Ac Actinium Ge Germanium Pr Praseodymium
Ag Silver H Hydrogen Pt Platinum
Al Aluminium He Helium Pu Plutonium
Am Americium Hf Hafnium Ra Radium
Ar Argon Hg Mercury Rb Rubidium
As Arsenic Ho Holmium Re Rhenium
At Astatine I Iodine Rf Rutherfordium
Au Gold In Indium Rh Rhodium
B Boron Ir Iridium Rn Radon
Ba Barium K Potassium Ru Ruthenium
Be Beryllium Kr Krypton S Sulphur
Bi Bismuth La Lanthanum Sb Antimony
Bk Berkelium Li Lithium Sc Scandium
Br Bromine Lr Lawrencium Se Selenium
C Carbon Lu Lutetium Si Silicon
Ca Calcium Md Mendelevium Sm Samarium
Cd Cadmium Mg Magnesium Sn Tin
Ce Cerium Mn Manganese Sr Strontium
Cf Californium Mo Molybdenum Ta Tantalum
Cl Chlorine N Nitrogen Tb Terbium
Cm Curium Na Sodium Tc Technetium
Co Cobalt Nb Niobium Te Tellurium
Cr Chromium Nd Neodymium Th Thorium
Cs Cesium Ne Neon Ti Titanium
Cu Copper Ni Nickel Tl Thallium
Dy Dysprosium No Nobelium Tm Thulium
Er Erbium Np Neptunium U Uranium
Es Einsteinium O Oxygen V Vanadium
Eu Europium Os Osmium W Tungsten
F Fluorine P Phosphorus Xe Xenon
Fe Iron Pa Protactinium Y Yttrium
Fm Fermium Pb Lead Yb Ytterbium
Fr Francium Pd Palladium Zn Zinc
Ga Gallium Po Polonium

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Part II : Geol og y and g enesis of SA’s main ec onomic orebodi es
Geology and genesis of SA’s

main economic orebodies
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Metals and minerals exploited in South Africa
Let’s begin with geology (miners often tend to skip this

Four major STEPS to
part!). This planet we live on may seem smooth and
making minerals PAY
shiny, but underneath the surface there is super-hot
liquid churning away. The earth’s plates shift, causing  Geology
cracks to form, and these provide conduits for the  Mining
super-hot liquid or magma to move up through the  Metallurgy/refining
cracks. This cools and deposits the metals and minerals
 The market and
we are after. Pressure. Heat. Cracks. Fractures.
selling the product
Upsurges. Folds. Anomalous situations. That’s the
pointer. Something out of the ordinary (Prof Hrebar).
Geologists use various techniques to look for and find correct locations most suitable for
the deposition/emplacement of minerals. Walking the land, picking up and examining rocks
is still ALL necessary. But today’s techniques incorporate methods from physics, chemistry,
materials technology, mathematics and computers to help geologists find their way.
The starting point is rock structure. ‘Hard rock’ geology is the area of most significance.
The main rock groups are igneous, sedimentary and metamorphic.
 Igneous: This is when magma from the earth’s core

rises and cools below the earth’s surface, or erupts in Three major rock groups
the form of a volcano and spews overland; two main  Igneous
types of orebodies are associated with igneous rocks.  Metamorphic
 Magmatic (layered intrusions): Ore crystallises in  Sedimentary
magma in layers: Ni, Pt, Cr, Fe, etc.
 Hydrothermal: Magma heats water. Water dissolves minerals and deposits them
elsewhere.
 Sedimentary: Result of weathering/erosion and deposition (of any pre-existing rocks).

Host to mineral aggregates, coal, sandstone, uranium, limestone, etc.
 Metamorphic: Any type of rock that has changed, usually due to pressure or
temperature. Affects grade, tonnage and size, but not deposit type.
Igneous Metamorphic Sedimentary
(rocks initially liquid) (folded rocks) (flat rocks)
eg South Africa’s Bushveld Complex eg The Cape folded mountains, Himalayas eg The Karoo, Witwatersrand (gold)
and Alps supergroup

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Genesis and uses of some of SA’s more important minerals

Chemical
Metal symbol Genesis Uses
Antimony Sb Very similar to copper, it occurs in the geologically Fire retardant
complex greenstone belt rocks where it finds areas of
lowest stress
Coal C Coal occurs in shallow, flat rocks which were plants and Power
forests only a few 100 million years ago
Copper Cu Copper occurs mainly in shattered rocks near the east Cables, wire,
side of the Pacific where the ocean floor is moving under motors
the Americas, causing remelting and fractioning of rocks.
Again (like gold) because of its low melting point, it finds
its way into any breaks or shattered rock
Diamonds Dm Diamonds originate in pipe-like features called Kimberlite For women
pipes. They also occur in rivers, beaches and shallow (aphrodisiac)
continental shelf deposits as erosion takes diamonds to
the oceans
Gold Au Gold occurs mainly in sedimentary (flat rocks) deposits. It For women
also occurs in greenstone belts (geologically complex (aphrodisiac)
rocks) and in shattered rocks. Gold has a low melting
point and will always be first to melt and find the zone of
least stress or least resistance
Heavy mineral Zr Found on beaches (or where beaches used to be millions Paint
sands of years ago)
Manganese Mn Manganese occurs in sedimentary rocks (formed in Steel making
water) along with iron ore deposits
Nickel Ni Nickel occurs mainly in igneous rocks (rocks from deep Stainless steel
down in the earth) which cooled millions of years ago
Palladium Pd Occurs in igneous rocks Cars, teeth and
electronics
Platinum Pt Occurs in igneous rocks For women, fast
cars and fuel cells
Rhodium Rh Occurs in igneous rocks Cars + cufflinks +
plating white gold
Ruthenium Ru Occurs in igneous rocks Fuel cells
Tantalum/ Ta/ Occurs in pegmatite rocks Metallurgy
Beryllium Be
Uranium U Found in sedimentary rocks, i.e. coal in Karoo in SA and Power (when
associated with gold in Wits used responsibly)
Zinc Zn Zinc deposits occur in high-grade metamorphic zones Galvanising
(very altered rocks – altered by temperature and
pressure.)

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Genesis and geometry of ore bodies – a pictorial illustration

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Simplified geological map of South Africa
Source: Geological and Mining Heritage (MJ Viljoen and WU Reimold)

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The geology of South Africa is shown on the map as the systems of rock outcrops on the
surface of the region.
Structurally, however, the rock systems (actually called supergroups) show large stable
areas called cratons and deformed areas called mobile belts.
One finds diamonds only (with one exception to the rule in Australia) in cratons and base
metals in mobile belts.
The diagram below shows the simplified structural framework of SA geology with cover
rocks removed.
Ancient cratonic nuclei and surrounding metamorphic provinces

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Seven main geological systems* in Southern Africa

Age (billion Simple South African
years) System Mineral geological column
1 0.6 Karoo system Thermal coal, uranium
2 1.5 Waterberg system Coking coal (actually in the

Karoo system)
3 2.1 Bushveld Complex PGMs
4 2.3 Transvaal system Iron ore, manganese, base

metals
5 2.7 Witwatersrand system Gold, uranium
6 3.7 Greenstone belts Gold, antimony
7 4 Granite basement Copper, mica
* Real geologists prefer the term supergroup
Localities of South Africa’s major mineral deposits

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Geological column of South Africa

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The Witwatersrand system
Arguably, South Africa’s most important geological system, the Wits basin contains the
world’s largest gold resources and has been producing gold since the metal was
discovered in 1886 (the basin is older than 2,700 million years). The gold-bearing reefs
outcrop along the edges of the basin (Evander, Springs, Germiston, Randfontein,
Carletonville, disappear until Klerksdorp, then disappear again until Welkom). They dip
towards the centre of the basin. No outcrop of this basin has yet been found on the eastern
side.
Simplified geology of the Witwatersrand basin (younger cover rocks removed)
The geological map shown above (note, covering rocks of the Wits supergroup removed)
shows the West Rand group of rocks where gold mineralisation occurs. Gold deposits only
occur on the north, west and south sides of the basin.

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The whole area was once a large inland sea with gold-rich rocks (mountains) around its
edges (north, west and south).
Massively violent storms around 3 billion years ago smashed up the mountains and
deposited the boulders, grit, sand, mud and of course the gold into the inland sea (well, if
you are a placerist, this is what you believe). Over time, the sea was buried by further
eroded material and Ventersdorp lavas. It was cracked and broken up by movements in the
earth’s crust, but kept its shape.
Around 2 billion years ago, a massive (estimated 40km diameter) asteroid hit the basin at
Vredefort (see map above) from the south-east of the basin and slammed around 100km
into the earth. This could have triggered the genesis of the Bushveld Complex (see next
section on geology). Hydrothermatists believe this incident melted and mobilised the gold
deep within the earth’s crust. This hydrothermal fluid moved upwards and deposited the
gold in the conglomerate beds where it is found today.
Simplified section of the Witwatersrand basin
Source: R Hochreiter and D le Roux

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There are eight reefs that have been mined in various areas of South Africa at various
times over the last 120 years, as well as large quantities of uranium, silver and osmiridium.
The whole sequence is about 5km thick from bottom (Dominion Reef) to top (Black Reef).
Witwatersrand supergroup – anyone see the impact craters?
The supergroup is estimated to

be between 2300-2800my
making it older than the
Bushveld Complex and younger
than the Barberton greenstones.
It is classified as Achaean in age
(very very old!).
Source: Mineral Deposits of Southern Africa. Modified after Brock and Pretorius, 1964, showing the location of main cities and
towns around the largest goldfield in the world if cover rocks are stripped off.
Genesis
Violent storms in a pre-existing greenstone belt-like mountain land eroded the rocks and
deposited them on the shores of a large inland sea. No oxygen existed at the time and very
violent electric storms occurred, with lightning striking the iron pyrites (with which gold is
associated), breaking the rocks and assisting erosion. These were ground to pebbles by
storm-flooded rivers, together with the quartz and volcanic ash/lava, and deposited with the
gold on shores covered in algae (algae, like carbon, attracts gold particles, almost like
electroplating) which also trapped gold particles out of the highly acidic mush/water into
large tidal flats, until the next storm covered the gold concentrations. This probably went on
for 200 million years before the final (last) reef (the Ventersdorp Contact Reef – VCR) was
laid down by very violent volcano-induced storms, which finally covered the whole
sequence with thick lava, marking the end of the genesis of the world’s most-famous and
biggest gold deposit. Deep burial and low-grade metamorphism resulted in today’s deep,
hard gold deposits in the Witwatersrand system.

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The Bushveld Complex (BC)
The Bushveld Complex is host to the world’s largest platinum field. Possibly initiated by the
Vredefort asteroid impact, the Bushveld Complex rivals the Wits Basin as the most
important (economically) geological unit in South Africa. It was emplaced about 2,000
million years ago.
The occurrence of platinum reefs (marked as Pt) in the Mafic zone in the Bushveld
Complex is shown below.
Geological features – major mineral occurrences of the Bushveld Complex
The Bushveld Complex contains 90% of the world’s platinum, palladium and rhodium
resources. The two main platinum-bearing reefs are the Merensky and UG2 reefs. The
whole sequence of Bushveld Complex rocks is around 8km thick.

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Geological column of the Bushveld Complex – main platinum-bearing reefs
Genesis
Two possible theories on how PGMs came into being in SA The cause of the molten
are discussed below. The classical theory is the mode of rock injection could have
formation of the world’s greatest treasure trove of PGMs via been an asteroid impact
a molten rock injection into the earth’s crust. Several 200km south at Vredefort.
injection phases occurred and the whole gambit then took

40 million years to cool (and still cooling), plenty of time for very distinct layers to form and
crystallise out the platinum minerals when the chemistry was right.
PGMs are found in three different lobes or limbs: the classical Western Bushveld
(Rustenburg/Northam); the Eastern Bushveld (Maandagshoek/Dwarsrivier) and the ‘half
lobe’, the Northern Bushveld (Mokopane), are separated into distinct areas on surface and
may be connected to each other at depth, again depending on your belief.

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Their sequence of layers is similar, yet different. It is possible that three different vents
injected lava (magma) from the same source at depth. The three different vents could have
been feeder dykes as the grade of PGMs, for example, increases with depth to a maximum
at 3,000m.
Secondly, a theory gaining credibility is that a massive asteroid hit the earth at the site of
the Bushveld Complex, smashed 100km into the earth’s surface and caused the genesis of
the Bushveld, the Zimbabwean Dyke, the major faults and lineation of South Africa’s
geological terrain and remelting and refreezing over a very long time. The nub of the theory
is that the moon has 300,000 impact craters – the earth should have even more; platinum
is 18 times heavier than water (gold only 16x, rhodium 20x, palladium 14x) – so what are
all these heavy precious metals doing at the surface of earth if the earth was red-hot
4.6 billion years ago and some of the heaviest elements (rhodium and platinum) sank to
the centre of the earth, 6,400km below surface. The asteroid (if this theory is true) was
probably from the asteroid belt, a planet that broke apart and which may contain solid
chunks of PGMs/nickel/copper and so on.
Take your pick; there are several other possibilities but, for now, these two should suffice.
Localities of South African meteorite impact structures ( )
The map shows the known

impact craters of South Africa.
Personally, I believe there are
many more, but these are now
covered by Karoo and younger
rocks. It is possible the Vredefort
asteroid impact had a
cataclysmic subcontinent-wide
shattering effect, which allowed
the penetration of deep, heavy,
liquids containing platinum group
metals to come to the surface
through the shattered crust and
resulted in the platinum deposits
we see today in the Bushveld
Complex.

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The Karoo system
The Karoo system, other than being famous for hosting South Africa’s vast fossil wealth, is
also host to all our coal deposits. These were formed when SA was still part of the larger
Gondwanaland and our coalfields are related to those found in the Americas and Australia.
Geological distribution of the Karoo supergroup
Source: Mineral Deposits of Southern Africa – Major coalfields of Southern Africa

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South Africa has 19 coalfields, with the Highveld, Witbank and Ermelo coalfields supplying
most of the coal required for power in the last decade.
The Karoo and Cape supergroups are primarily sedimentary sequences of rocks – the
main economic value in the Karoo supergroup is in its coal. The whole sequence is
probably 10-15km thick.
Geological column of the Karoo and Cape supergroups

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Geological map of the Karoo supergroup
The Karoo supergroup is widespread, the youngest rocks in South Africa and mainly
sandstones, shales (mudstones) and some grits
Genesis
This is the youngest system, formed about 600 million years ago, and is the only one to
develop in the presence of oxygen. A large inland sea was responsible for a less violent
deposition of sandstones, shales, muds and coal. Life started on earth around 600 million
years ago and plants, animals and other life forms proliferated, were buried and over time
became fossilised or became coal. The clays exploited in this geological region are
younger alteration products that formed through weathering.

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The Transvaal system
Host to the world’s largest manganese field, this system is around 2,300 million years old.
Geological column of the Transvaal supergroup
Source: R Hochreiter and D. Le Roux
The Transvaal supergroup contains some minerals of economic value.

The whole sequence is probably 3km thick.
Genesis
This system started where the Witwatersrand left off. A large inland sea facilitated the
formation of large deposits of dolomite (calcium/magnesium rocks) and an environment
conducive to forming iron and manganese deposits (in the Northern Cape). Base metals
were deposited among the dolomites of the old Transvaal area, although not to any great
extent. Gases from the Bushveld Complex under the Transvaal system formed fluorite,
lead and vanadium deposits in the Transvaal system.

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The Waterberg system
The world’s largest field of nothing. This system is around 1,700 million years old.
Geological column of the Waterberg system
Source: R Hochreiter and D Le Roux
The Waterberg system contains few minerals of economic value.

The whole sequence is probably 2-3km thick.
Genesis
The Waterberg geological system also formed in a large inland sea but has few, if any,
associated economic minerals.

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Greenstone belts
The world’s most-interesting geology and oldest rocks on earth are to be found at
Barberton in the Mpumalanga province of South Africa. These are between 3,000 to 3,600
million years old.
The main greenstone belts of South Africa
Source: Mineral Deposits of Southern Africa
The earliest life forms (algae) were discovered in the Barberton greenstone belt. They are
3.6bn years old and were studied by NASA before Neil Armstrong went to the moon.
The map above illustrates the setting of the Murchison greenstone belt relative to other
greenstone belts and the younger cover rocks.
The greenstone belt contains gold, antimony and smaller amounts of other minerals – very
old and deformed rocks. Oldest-known life form (algae) occurs in the pillow lavas at 3.6bn
years of age.

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Geological map of Barberton greenstone belt (New Consort, Sheba, Agnes gold
mines)
The Barberton greenstone belt – correlation to three other belts

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Geological sketch of Pietersburg greenstone belt (Eersteling goldfield)
Geology of the Murchison greenstone belt (see mineral occurrences)

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Genesis
Greenstone belts contain the oldest rocks on earth, >3.5 billion years old. The sun is
4.5 billion years old (and will probably burn for another 5 billion years), to put the age of the
earth in perspective. Greenstone belts are highly complex geological occurrences; they
were probably islands of lava and volcanic debris on which volcanoes spewed out all sorts
of metal. Subsequent folding, fracturing and squeezing of rocks in these islands caused
gold, antimony, etc to start moving again and find their way into areas of least pressure.
Hence, any arch, fault, fold nose, space (anything where there was no or little pressure)
was filled with the low-melting point gold/antimony, mercury, etc.
The earth, 3.5 billion years ago, was highly unstable and all sorts of minerals were spewed
out from deep down and mixed in with the islands that were trying to form the first
continents. The earth was probably smaller (higher gravitational constant than today’s
9.8m/s/s) and hotter, and much more prone to earthquakes and violent storms than we see
today. Hence, the geological processes epitomised in today’s remnants of these early
continents, ie the greenstone belts, are absolutely fascinating in their geology and the
contained minerals.
Below is a schematic diagram of an Archaean volcano-sedimentary complex showing the

possible relation of mineralisation (gold and sulphides) to various parts of the volcanogenic
model (modified after Goodwin and Ridler, 1970; Hutchinson et al, 1971; Karvinen, 1981).
Schematic diagram of an Archaean volcano-sedimentary complex
Source: CR Anhaeusser

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A simplified structural map of the Jamestown and Sheba Hills area of the Barberton
mountain land shows the positions of the more-important folds, faults and fractures in the
region. Some 75% of all gold mined in the Barberton area has come from the area shown,
which also has the three largest gold mines in the district.
Barberton mountain land
Source: CR Anhaeusser

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Granite basement
Host to the world’s largest diamond deposits (although they also seem to be associated
with cratonic areas that have extensive outflows of basaltic lavas), these rocks are 2,500 to
4,500 million years old.
The map illustrates the exposed Archaean granite-greenstone terrain of the Zimbabwe and
Kaapvaal cratons in southern Africa. The cratonic areas are enveloped by high-grade
metamorphic belts and were intruded during the Proterozoic era by the Great Dyke in
Zimbabwe and the Bushveld Complex in South Africa (after Anhaeusser, 1976a, b).
The granite basement rocks of southern Africa

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Distribution of granite basement rocks in southern Africa and the greenstone belts
Genesis
Generally, the granites have few minerals of economic value in South Africa (other than
some esoteric minerals such as tantalite, beryl, lepidolite (lithium mineral), emeralds,
sapphires, mica, etc). In Limpopo Province, mica is mined at a town called Mica, near
Phalaborwa. In Zimbabwe, near a town called Bikita, Bikita Minerals mines a pegmatite (a
remelted granite due to some disturbance in the crust containing rare minerals and
elements) for lepodilite (lithium). In the Filabusi area, beryl, a type of emerald, and
emeralds themselves are mined from a highly metamorphic granite/greenstone contact.

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Diamonds
Diamonds are formed deep in the earth if there is elemental carbon present. The diagram
below shows the depth (150-300km) where carbon becomes diamond as a stable form at
very high pressures. On surface, where there is no pressure, carbon’s stable form is coal.
For diamonds to remain in diamond form, they must be brought up to surface at very high
speed with an instantaneous drop of pressure and rapid cooling. If this does not happen (ie
pressure drops slowly and temperatures remain high), the diamonds ‘burn’ and become
CO2 gas, or frizzle into nothing. Hence, for a diamond to come to surface, there must be a
volcano which ensures zero pressure and low temperatures. That is why so many
kimberlites are barren of diamonds. Kimberlites are rocks that invariably host diamonds
and have been brought to surface from the deep lithosphere.
Where diamonds are formed
Source: Elkedra NL

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Kimberlites
The volcano that transports diamonds from Morphology of a kimberlite pipe
deep below the earth’s surface finds its
way to surface through deep cracks and
fissures called dykes. On reaching the
surface, the volcano erupts, often leaving
behind a carrot-shaped body of magma,
known as a diatreme. The diatreme is
topped by a pyroclastic tuff (a real mish-
mash of rocks), which is the detritus from
the explosion that falls back to earth. The
‘pipe’ left behind containing volcanic rock,
mantle fragments, others minerals and,
rarely, diamonds is called a kimberlite,
after the town in South Africa where these
pipes were first discovered in the 1870s.
The other rock type that hosts diamonds is
called a lamproite. Generally, kimberlites
are found in clusters with up to 100
sometimes found close to each other. Source: J Bristow
However, not all tend to be of the same
age and even within a single occurrence, several different volcanic events over different
times may be present, adding to the complexity of sampling and proving the economic
potential of the orebody (a kimberlite’s neighbour generally doesn’t tell one anything about
its grade or age).
Ages of southern African kimberlites

Million years Examples Country
65-85 Kimberley group 1 pipes and dykes RSA
Orapa and Tswabong clusters Botswana
115-205 Finsch, Swartruggens, Dullstroom RSA
Group 2 pipes and dykes Swaziland
240 Twaneng cluster Botswana
550-600 Venetia and River Ranch RSA
Kimberlites Zimbabwe
1,200 Cullinan cluster (Premier Mine) RSA
Martins Drift cluster Botswana
1,700 Kuruman kimberlites RSA
>2,700 Wits supergroup RSA
Source: J Bristow

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Alluvial diamonds
More than 70% of mined diamonds come from primary sources – kimberlites and
sometimes lamproites. Over long periods, however, most kimberlites have been eroded –
some by one or two kilometres – with the contained diamonds liberated and transported by
glacial movement, water and wind to find their way into rivers, and ultimately the ocean.
Mining alluvial gravels produced all the world’s diamonds until the discovery of the
Kimberley kimberlite field in the 1870s.
Distribution of South African alluvial diamond deposits
Source: Redrawn from the Mineral Resources of South Africa

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Open-pit mining for alluvial diamonds
Tonnes (sometimes over

hundreds of tonnes) of rock
have to be moved to get down
to the bedrock (old river beds)
where diamonds are located.
A small pit (70m deep) just to

sample diamonds (in an
attempt to estimate a
resource).
Soil and sand being moved

almost to the horizon

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Part III : Mineral r es ourc es and r es er ves
Mineral resources and reserves

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“I know that most men, including those at ease with problems of the greatest complexity,
can seldom accept the simplest and most obvious truth if it be such as would oblige them
to admit the falsity of conclusions which they have proudly thought to others…”
Count Leo Nicolaivithch Tolstoy
A short (and sad) case study of why resources are

important
 In mid-1995, an unknown Canadian exploration company announced a gold find in

Indonesia. On the basis of a single borehole and sampling over one week, the
geologist claimed and estimated “geologic potential” of… 8 million ounces (Moz) of gold
(a sizable deposit!).
 Within months, the ‘measured, indicated and inferred resource’ was 2.6Moz and the
‘total resource’ was 20Moz, with analysts stating that “to calculate a resource based on
a few cross-sections is a speculative exercise”; however the market capitalisation of the
share rose from $100m to $2bn (measured+ indicated + inferred and total resource
should be one and the same).
 July 1996, with four borehole samples, the “total resource is a massive 47Moz”. The
share’s market capitalisation rose to $4.2bn.
 February 1997, the ‘total resource’ is 71Moz. Market capitalisation of $5bn.
 April 1997, there is no gold resource. Probably less than 20 ounces of alluvial gold and
cheap jewellery had been purchased to ‘salt’ the drill samples. Bre-X goes into
liquidation shortly thereafter. The geologist mysteriously falls out of the plane
somewhere over the forests, never to be seen again.
This and numerous other mining scandals over the years have forced regulatory and
professional bodies to set strict definitions of resources and reserves that must be used by
mining and exploration companies in reporting. These codes (JORC – Australia, SAMREC
– South Africa, CIM standards – Canada, IMMM reporting code – UK and SME reporting
guide – USA) set out the following definitions:
 a mineral resource is a concentration of naturally-occurring material in or on the

earth’s crust that is of economic interest due to its potentially profitable extraction.
 a mineral reserve is the portion of the mineral resource, including dilution of waste
material that would occur in the mining process, which can be economically mined at
current price, cost and regulatory conditions.

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As geological information increases, mineral resources can be subdivided into the following
categories (with geologists’ terminology shown in italics):
 Inferred (ie thumbsuck) – the resource is assumed from projections of geological
information. Mining stock promoters like to use this classification!
 Indicated (ie connect the dots) – resource tonnage, grade and quality are estimated
with reasonable confidence from exploration, but at sampling intervals that are too wide
to confirm the resource continuity.
 Measured (ie very sure, sort of) – resource tonnage, grade and quality can be
estimated with a high level of confidence.
Likewise, mineral reserves are split into the following:
 Probable reserves (ie connect the profitable dots) – the economically mineable part of
the indicated and measured resources.
 Proven reserve (ie there is so much information at this stage that even a geologist will
use the term!) – the economically mineable part of a measured resource.
Relationship between mineral resources and mineral reserves
Source: SAMREC
It is important to understand that the grade of the resource is that measured in-situ. To be
classified as a reserve, the in-situ ore grade must be sufficiently high to be mined at a
profit, including all waste material that would be extracted along with the ore-bearing rock.
Reserves and resources are dynamic and can increase or decrease with time and
information. Mineral resource estimates are not precise and depend on the amount of
geological information available. Reserves will vary depending on mostly external factors,
such as long-term commodity price trends, that would determine whether further resources
become profitable to mine or whether previously determined reserves are no longer
profitable. Exchange rates and costs (capex and opex) also impact on these categories.

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Interpretation of borehole drill results
Let us consider a set of

drilling intersections.
A very conservative
geologist’s interpretation.

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A conservative geologist’s
interpretation.
An optimistic geologist’s
interpretation.

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A very optimistic geologist’s

interpretation.
An extremely optimistic
geologist’s interpretation.

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A geophysicist’s
interpretation.
The mining engineer’s

interpretation, used to bluff
fund managers, accountants,
BEEs, etc.
Source: Prof M Hrebar

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Part IV: Mini ng methods and exploi tati on
Mining methods and

exploitation
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Mining methods
Mining and exploitation of mineral deposits is an exercise in THREE-dimensional

geometry. Many people have difficulty thinking in THREE dimensions (never mind FOUR
dimensions!), because we live in a TWO-dimensional world. Most inhabitants of planet
earth have a ONE-dimensional thought process as evidenced by the human breeding
programme that has led to the current state of global over-population!
All orebodies have some three-dimensional shape. The trick is how to get tunnels (access)
into and around them to get the valuable portion (the ore of the orebody) back to the
surface, if it’s not already on surface, and into an extraction plant.
Orebodies come in ANY shape or size; from ball shaped, to pear shaped, from balloon
shaped to rod shaped, from flat shaped to curve shaped – the one-dimensional thought
process shows clearly! Mostly what miners think about every 30 seconds on average is
breast stoping, the most-common mining method in South Africa.
Exploiting these shapes is fairly easy when the orebody is of high quality, money is no
obstacle and bodies are available to do the mining. Problems arise when the orebody is not
that attractive and profitability is marginal. Ingenious methods of access then need to be
employed, with the help of, where possible, new technology.
Whatever the shape of the orebody, a shaft needs to be sunk into the orebody, usually with
long lead times. Access to the orebody from the shaft is via drives, haulages and cross-
cuts (tunnels). Finally, the valuable part of the orebody is exploited using different mining
methods that are described in the following pages. Read on.

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Underground mining
Study the next two diagrams carefully. These are the two main methods used in South
African underground mining (nearly all SA gold and platinum mines use this method).
Thin tabular reef type
Description of method:
Panels are blasted daily in the
direction shown. The blasted
ore is scraped down to the next
gully and then scraped to a
centre gully from where it is
scraped into ore passes. The
ore passes lead to loading
‘boxes’ that disgorge the ore
into small trains which carry ore
to the shaft ore passes. These
lead to the shaft bottom from
where ore is hoisted to the
surface.
Application: Thin, tabular reef

mining of widths of 0.8-1.5m.
Advantages: Few, but no new

alternatives yet to the labour -
intensiveness of this method.
Disadvantages: Narrow, hot,

uncomfortable, very labour-
intensive, can’t really use
machines. Dangerous working
conditions.
Mines: Most SA Wits gold

mines.

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‘Massive’ orebody type
Description of method: Holes

are drilled in ‘fans’ in the
orebody. These fans are blasted
in slices. The ore is loaded by
LHD and transported to the ore
passes where it gravitates down
to the bottom of the shaft. From
there it is loaded into skips
which hoist ore to the surface.
Application: Large, vertical

massive, rounded orebodies.
Advantages: Low-cost, no fill

required, can be highly
mechanised.
Disadvantages: Safety – LHDs

and workers are exposed to
rock falls.
Mines: Palabora.

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Shrinkage

are drilled in fans in the
orebody. These fans are blasted
in slices. Holes are drilled in the
solid rock above the broken
rock. After blasting, enough
broken rock is drawn out of the
bottom cross-cuts to allow
space for the next holes to be
drilled and blasted. Rock drawn
out of the bottom drawpoints is
taken to surface.
Application: Only a certain

amount of broken rock is drawn
out of the bottom of the stope to
allow drilling crews to drill and
blast the next slice above their
heads.
Advantages: Low-cost, no fill

required. Safe mining method,
relatively speaking.
Disadvantages: Ore tied up

until stope totally drilled out and
blasted.
Mine: Barberton, Galaxy Gold

Mine, Pan African Resources,
Vantage Gold.
Source: Atlas Copco Handbook

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Sub-level stoping
Tunnels are developed in the
orebody. From these tunnels, a
series of ring holes are drilled
and blasted. The broken ore
falls to the drawpoints and is
taken out to surface.
Application: Rock (ore) is

blasted into an open space and
collected by machines at the
cleaning level.
Advantages: Safe, remote

blasting.
Disadvantages: Dilution
control is difficult.
Mine: Consolidated Murchison.

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Sub-level caving
Tunnels are developed in the
orebody. Holes are drilled
vertically upwards and blasted.
Using trucks and LHDs, the ore
is transported to ore passes
where it gravitates to the bottom
of the mine shaft and is hoisted
out to surface.
Application: This method is

used when the rock does not
break by itself, for example at
Palabora, where the undercut
area is large enough to break
under its own weight.
Advantages: Highly
mechanised, safe.
Disadvantages: High-cost,
dilution control difficult.
Mine: Kiruna mine in Finland
Source: R Hochreiter modified after Atlas Copco Handbook

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Cut-and-fill

are drilled and blasted on the
top level. The broken rock is
channelled down through the
ore passes to the transport drift
and taken to surface via shafts.
Application: This is the main

mining method used in the
Sudbury nickel-mining area, but
not used much in South Africa.
The great advantage of this
method is that the orebody can
be mined out accurately without
much waste material diluting the
ore. It is also safer filling a cavity
underground than leaving it
open with all the concomitant
safety problems of things falling
on people or machinery.
Advantages: Low dilution,

good safety.
Disadvantages: Expensive as
concrete is used to fill mined-out
areas.
Mines: Barberton/Norilsk,
Stillwater, Inco/Falconbridge.

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Block caving
Description of method: The

ore ‘hanging’ above the slot,
which is blasted above the
draw-bells (finger raises),
breaks up under its own weight
and falls into the draw-bells.
This ore breaks up further with
secondary blasting if necessary,
and is transported to
underground crushers from the
loading level.
Application: Palabora, where

the orebody breaks due to
gravitational forces being
sufficient to fracture rock.
Advantages: Very cheap, no

explosives needed in primary
breaking.
Disadvantages: Large rocks

can block drawpoints as has
happened in Palabora, delaying
full production (by almost two
years!)
Mines: Palabora.

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Longhole stoping

are drilled from tunnels
alongside the orebody (tunnels
can be inside the orebody and
holes are drilled down parallel to
the ore) and blasted. Small
loading cross-cuts from the
tunnels are used to load ore and
transport it to the nearest ore
pass. From the ore passes, it is
loaded into hoists in the shafts
which take the ore to surface.
Application: Holes are drilled

inside the orebody on dip. Ore is
blasted and collected on the
level below by an LHD vehicle.
Advantages: Large tonnage

generator. Lower-cost than cut-
and-fill.
Disadvantages: Dilution more

difficult to control; accurate
drilling necessary.
Mines: Stillwater, Limpopo

Platinum.

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Breast stoping

are drilled as shown (in the
direction of advance) and
blasted sequentially into the
strike gully. Scrapers then pull
the remaining broken ore into
the strike gullies, where other
scrapers pull ore into a centre
gully; from there the centre gully
scraper pulls ore into ore
passes. Note how inefficient this
all is.
Application: Breast stoping is

used extensively in narrow
tabular orebodies. Hence,
panels are blasted sequentially
more or less in the direction of
strike while cleaning is done via
scrapers.
Advantages: Flexible at
shallow depths (<1,000m).
Disadvantages: High-cost,
dangerous at +1,500m depth
due to high induced rock
pressures, inefficient, highly
labour-intensive.
Mines: Beatrix, Harmony,

Driefontein, Implats, AngloPlat.

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Longwall stoping
Description of method: A long,

long length of face (hence the
name) is drilled and blasted.
Broken ore is scraped down to
the transport gully and scraped
back to the centre gully ore
passes. From there, ore is
transported via tunnels and
shafts to surface.
Application: Useful in high-

stress (deep) thin tabular
orebodies such as SA gold
mines.
Advantages: Best for

destressing underlying tunnels.
Disadvantages: Very high

cost, stress-induced rock falls
and pressure bursts can occur if
not carefully controlled.
Mines: Western Deeps, Vaal

Reefs, AngloPlats.

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Bord-and-pillar

are drilled and blasted in such a
way to leave pillars in the ore at
regular intervals. Using a
scraper or LHD vehicle, broken
ore is moved to transport drifts
and sent to surface via shafts.
Application: Used in low stree

(shallow) thick tabular orebodies
such as coal mines or platinum
mines with thick reefs.
Advantages: Highly
mechanised, very low cost, very
efficient, very safe.
Disadvantages: Many LHD

vehicles need skilled labour for
maintenance. Difficult to remove
pillars after the area is mined
out – low extraction rates.
Mines: Kroondal, AngloPlats,

most underground South African
coal/manganese mines.

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Up-dip (and down-dip) stoping

are drilled in an up-dip direction
and blasted. Broken rock is
scraped to gullies, down to the
ore passes and out to surface.
Down-dip stoping is the reverse
of up-dip stoping, ie in down-dip
stoping, the face is pushed in a
down-dip direction, the opposite
direction to the diagram.
Application: Used in shallow,

thin tabular orebodies.
Advantages: Most-effective
method of mining shallow
tabular reefs.
Disadvantages: Development
and stope preparation more
costly than breast or longwall
stoping.
Mines: Lonrho Platinum and

AngloPlats.

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Surface mining
The two main methods used in South African surface mining are shown on the next two
diagrams (nearly all South African coal mines use this method).
Open-pit mining
Description of method: Vast

benches of ore are drilled,
blasted, loaded on gigantic
trucks and transported to
surface. This is a schematic of
the massive Palabora pit over
1km deep, 5km across and
11km to drive to the bottom of
the pit.
Application: Two new shafts go

down vertically next to the pit to
access the new underground
mine which is mined using the
block-caving method, 500m
below the bottom of the pit.
Advantages: Cheaper than

underground mining.
Disadvantages: Large amounts

of waste generally need to be
mined in getting to the ore.
Mines: North American

Palladium, AngloPlats,
Palabora.

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Opencast (strip mining)
Description of method: Most

South African coal mines, if less
than 80m deep, use massive
machines called draglines which
strip large tracts of countryside
to expose the coal bed
underneath.
Application: Large, shallow

(less than 80m), thick
orebodies, extremely well-suited
to shallow coal seams in the
eastern part of South Africa.
Advantages: Very cheap.
Disadvantages: High capital

cost; if a dragline (very large
automated shovel) which has a
bucket (as large as a medium-
sized swimming pool) capsizes,
you can imagine the
consequences!
Mines: All large opencast coal

mines in SA.

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Examples of underground mining methods
Drilling at face in a stope, after

which explosives are placed in
the hole, the face blasted and
broken rock removed from the
stope.
Broken ore is transported

underground using a load haul
dump vehicle (LHD).
Ore is hoisted up the shaft and

transported to the
metallurgical plant.
Source: Russell & Associates

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Examples of open-pit mining
Operations at an open-pit mine

with drilled holes ready for
blasting.
The orebody is blasted using,

at times, thousands of
kilograms of explosives.
Broken ore is loaded using

large shovels and trucks and
transported to the
metallurgical plant.
Source: Metorex, Chromex and R Hochreiter

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Mining in shallow water

Diamonds and heavy mineral sands are recovered through mining methods in shallow
water (up to 15 metres in depth).
Description of method: Large floating dredges suck up vast quantities of sand from man-
made ‘ponds’. These are sent through a plant on the dredge that extracts diamond or
titanium, ilmenite and rutile (heavy mineral sands) and the rest is dumped overboard.
Application: Sucking up gravels by vacuum machines on the continental shelf off the
west coast of South Africa to recover diamonds transported to the sea by the Orange River
and others that changed course over many millions of years. Crawler vehicles or man-held
vacuum pipes are lowered to the seabed and gravels are systematically sucked up, with
barren gravels pumped back overboard.
Advantages: No real alternative to this method.
Disadvantages: Expensive, at the mercy of bad weather, environmentally devastating.
Mines: Diamond mining on ‘drowned’ beaches off the west coast of South Africa.
Dredging sands for titanium and heavy mineral sands in St Lucia and the Cape west coast.
Seabed crawler – used in recovering diamonds from the floor of the seabed
Source: MMP

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Part V : M etallurgical r ecover y and refi ning
Metallurgical recovery and

refining
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Metallurgical recovery circuits
Ore from the mine is transported to a central ‘factory’ or processing plant where the
valuable part of the ore is removed. Usually, the valuable part of the ore is in very low
concentrate, ie in parts per million. For example, a grade of gold from a gold mine may be
around 5 grams per tonne (5g/t). This is equivalent to five parts per million (5ppm). Alluvial
diamond mining is usually carried out at grades of 0.5 carats per 100 tonnes (cpht).
This valuable 5ppm is what the metallurgical circuit attempts to remove. I say attempt,
because very often metallurgists will throw away a large portion of the hard-won valuable
content of the ore and blame it on the miner underground for mining waste (and vice
versa)!. The battle between miner and metallurgist continues even today. It has however
created opportunities for those willing to reprocess ‘waste’ mine dumps, an exercise easily
evident in and around Johannesburg (these dumps run at grades of ~0.3g/t, and are still
economically viable to some).
Essentially, in a metallurgical plant, the ore is crushed, ground down to much less than
1mm in diameter then thrown in a tank with chemicals that extract the valuable part. This is
called the concentrate.
Refining
Refining the concentrate takes place through hot (melting the concentrate) or cold (electric
or electrolysis) methods of treating the melted material.
Many different types of circuits exist. A few of these have been selected and some typical
metallurgical circuits are shown in the next few pages:
 Antimony  Heavy minerals

 Coal  Platinum and PGMs
 Copper  Zinc/lead
 Diamonds  Zinc
 Gold

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Antimony
Antimony recovery plants are finicky and temperamental! The antimony refinery uses heat treatment and
chemical means to upgrade it to saleable product. Gold is a by-product of antimony mining in South Africa
(eg Cons Murch)

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Coal
Wash it and sell – that’s what you get for $90/tonne of coal.

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Copper
Copper recovery plants always remind me of a ‘factory’, they are so huge. The copper recovery circuit
(shown here is a schematic of the huge Palabora plant) is relatively simple, but needs to be able to process
large volumes of ore and concentrate.

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Diamond circuit
Breathtakingly simple plant. Sometimes, actually quite often, grease tables recover very few diamonds and
most are in tailing dumps all around South Africa.

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Gold
The gold recovery circuit is blindingly simple. The furnace is small (1m diameter) and the bars are poured
straight out of the furnace and sold to Rand Refinery.

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Heavy minerals
Incredibly complicated and finicky plants – I will not even try to explain!
Platinum and PGMs

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Recovery of PGMs is simple, except at the refinery level. The precious metals refinery (PMR) resembles a
gigantic chemistry set with colourful tubes of glass. The main methods used in the PMR are either solvent
extraction or ion exchange liquid methods, both involve flowing in a counter-flow direction and metals
jumping from one liquid to the other.

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Actual metallurgical process at Zimplats (platinum)
The Zimplats process is a good, simple, example of a concentrator plant. Essentially it comprises milling,
three-stage floating and thickening. The concentrate is bagged and transported to a smelter.

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Actual metallurgical process at Zimplats (platinum) cont’d
Zimplats smelter and converter plant is an industry standard. Essentially the concentrate is dried, fed into
the smelter, poured into a ladle, transferred to a converter (where oxygen is blown through the matte to
eradicate the sulphur) and then poured into ingots.

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Zinc circuit
Straightforward base metal recovery plant as installed at Exxaro’s zincor plant.

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Examples of metallurgical processes
View of Cullinan diamond

recovery plant.
Platinum group metals

smelter at Implats.
Bio-Oxidation plant at Galaxy

Gold.
Source: Russell & Associates

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Examples of metallurgical processing
Smelter – liquid metal and

rock is poured from a furnace.
First comes the liquid rock,
then the liquid metal below.
Flotation bubbles being

scooped off the top – these
‘bubbles’ contain the valuable
metals.
Flotation cell – lots of tiny
bubbles lift the metal that is
wanted to the surface and
overflows into troughs.
View of platinum recovery

plant at Marula mine (Implats).
Source: R Hochreiter and Russell & Associates

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Examples of metallurgical processes
After crushing comes milling.

A ball mill used to grind rock
to powder.
Carbon-in-leach tanks where

gold is leached out of a pulp of
mud that has gone through a
mill shown above.
A slimes dam – the waste

product of the recovery plant.
Today, most slimes are

pumped back underground to
support underground
workings.
Source: R Hochreiter and Russell & Associates

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Part VI : T he eval uation proc ess for investment di visions
The evaluation process for

investment decisions
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Prof M Hrebar of the Colorado School of Mines gave a brilliant discourse on the evaluation
process for investment decisions at a conference hosted by Scotia McLeod in June 1997 at
a Mining for Dummies conference.
We think it valuable for investment managers to be aware of what work goes into a new
project and how long it takes before it becomes a new mine (Prof M Hrebar).
When a mineral deposit is located, a sequence of evaluation is initiated.
Exploration studies and sampling (including drilling)
This is used to get an initial 3-D picture of the orebody mineralisation, in terms of size,
characteristics, grade, quality, etc. There are many different types of exploration, but
usually follow the sequence below:
Reconnaissance work
This involves regional exploration, consultants’ views, geological map interpretation,
purchasing an existing operation, using information from old annual reports, geological
surveys, friends and others.
No licence or permit is needed for this type of exploration (where the surface of the soil is
not broken), but if something of interest is found and drilling, trenching or soil sampling is
going to be done, then a prospecting right (in terms of South Africa’s new MPRDA or
Mineral and Petroleum Resource Development Act) needs to be applied for.
Like Prof Hrebar, we think it valuable for investment managers and laymen to be aware of
what work goes into a new project and how long it takes before it becomes a new mine.
Geological exploration
Use of the geologist’s tools such as satellite imaging, geophysical surveys, geochemical
surveys and plain old geology detective work now takes place. As soon as an area of
potential is identified, it will have to be sampled to get an understanding of whether it is
economically exciting or not.
Sampling
There are several steps and different methods in sampling. What method is used depends
on the type of deposit:

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Underground sampling
 Channel sampling using hammer/drill on face, back and ribs. Only use the floor as a
last resort.
 Chip-channel sample is less costly but less representative.
 Rock drills. 200ft long but usually only for up holes and the angle used is critical (20-30º
is optimal). Low cost but problems with hole deviation and discrete cut off.
 Underground diamond drill. Headroom and directional drilling.
 Bulk sampling for metallurgical testing.
Core drilling and analysis (underground and surface)

 Solid sample at any inclination for different sizes. However, it is costly, requires
directional surveying due to hole deflection.
 Core analysis – Wash, box, log and slit core. It then needs assaying, geochemical and
geophysical, and metallurgical testing. Careful which lab you use. Core is usually split
up and sent to more than one lab.
 Minimum hole-size determination. Remote sensing, hydrology and reduction through

bad ground.
Other drill methods

 Rotary – This type of drilling method results in sludge and rock chips coming up the drill
hole via the mechanical action of the drill. Cheap and fast doesn’t reveal the same level
of information as a core sample does.
 Reverse circulation – This type of drilling method results in rock chips coming back up
the hole due to water pressure. Cheap and fast and gives better data than rotary.
However samples are still small and wet conditions require special procedures.
 Combinations of the above samples and drill methods are used to test the geological
structure, outline of mineralisation and the quality and quantity parameters of the area.
Orebody evaluation
Once all the exploration has been carried out (to very strict exploration guidelines, mind
you, otherwise it has just been a complete waste of time and money), the information, if it is
of good-enough quality (ie boreholes have collar positions at least), is uploaded onto
computers (these days), and evaluated to see if they meet those essential criteria found in
the definition of a mineral resource – are there reasonable and realistic prospects for
eventual economic extraction??

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If there are, it can be defined as a resource, and this resource (once it has a social/
environmental/mine/process plan attached to it and is legally held by the owner and is
economically viable) is then defined as a reserve. These are some of the issues that will
need to be considered while evaluating the orebody…
 The evaluation defines the reserves, tonnage, mining processes to use, cut-off grade
and the investment decisions required.
 Process estimation – consider geology (shape and trends), sampling and process
considerations.
 Polygons/squares/triangles (irregular deposits) – this procedure involves drilling holes

at regular spaces. Then, using maths and computers, a map of the area is built in
polygon/triangular/square blocks. Grades and tonnage in the different sections can give
a map of the overall orebody.
 Block model (massive deposits) – block size is a function of mining method and
geology. Use distance weighting or kriging (geostatistics).
 We use statistics to create reserve estimation. Classical statistics assumes

independence of samples. Geostatistics recognises the variability in samples due to
distance and direction.
 Recoverable reserves – mining method, dilution, recovery, tonnage and grade and
significant estimation should be considered. Methods used are geometric, cross
sections, distance weighting, statistical and geostatistical.
 Grade – usually 10-20% difference between estimate and actual. Inaccuracy due to
sampling, assaying, evaluation and imprecision and uncertainty of methods.
 Density and tonnage factor – estimate volume of ore and use a tonnage factor to
convert to density. Proper tonnage calculation helps in accurate reserves estimation,
equipment selection and capital and operating costs.
Many economic and technical problems at operations relate to inadequate sampling of

density. The objective is to forecast the grade that is sent to the mill (the head grade.)
 Chip channel (vein deposits) – this traditional method samples all block faces to
determine thickness and grade. Orebody separated into blocks by drifts and raises.
Four points to note:
 Minimum mining width – depends on mining method. Samples are adjusted to

account for this. Grade decrease and tonnage will increase as width increases.

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 Dilution – result of drilling and blasting or scaling. Samples may be adjusted or

dilution may be based on average width of rock or empirical data. Dilution = 0 grade
if no sample data available.
 Mining recovery – the amount of ore actually mined as a function of geology and
mining method. Use either engineering calculations or empirical formulae.
 Cut-off grade – used to estimate the minimum grade required to produce a profit.
Feasibility study and investment decision
Many studies are undertaken to evaluate a project, including a desktop study, scoping
study, pre-feasibility study, feasibility study, definitive feasibility study, bankable feasibility
study (careful, can’t use that word in some jurisdictions) and others. Essentially, once a
feasibility study is complete, you ‘rest assured’ that enough money has been spent on the
deposit to know most there is to know about it (until it has been mined out).
 Feasibility study is the first time a 3D picture of ore is known. Study after outline drilling,
sample drilling and every year. Then the real financial manipulation can begin…
 Investment decision is to maximise future wealth of shareholders. Need to know

minimum return, internal rate of return, discounted cash flow-real rate of return, net
present value.
 Capital can be debt, equity, preferred shares, etc. Cost of capital is a function of WACC
for all capital.
 Mining method – rate of return – capex and opex – cut-off and tonnage – cash flow and
return.
 Don’t forget pre- and post- production periods in cash flow.
Our contribution – cash flow analysis, the final step
 The final decision depends on the rate of return required by the investor (eg mining
company or private financier). If the value of the project is sufficiently high at the
required rate of return, the go-ahead is given.
 From here, for a mine to reach full production can take anywhere between two years
(open-pit mine) to 12 years (a deep, mega-bucks mine in South Africa – the deepest
mines in the world, by far).

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Part VII : Fi nancial anal ysis of orebodi es
Financial analysis of orebodies

(Mining the stock exchanges of the world)
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Mining the stock exchanges of the world
The only way to value a mine is through the real DCF (discounted cash flow) method. This
method does not lie, it makes the least number of estimates possible and indicates cash
available after all costs, taxes and capital expenditure.
It is the most honest and best estimate of value possible (earnings, price:earnings ratios,
dollar per ounce in the ground, etc have no credibility whatsoever in mining
company valuations. This is my conclusion after 20 years in the industry).
Financial valuation of mining project X (do NOT escalate anything) – fill in the
numbers for yourself and be honest!
Year end 1 2 3 4 …30
Tonnes
Grade
Cost
Capex (all)
Income
Working cost (all)
Profit
Taxable income
Tax
Cash flow
Net present value calculation
This is where you discount the cash flow that you calculated in the table above.
If the life of the mine is 30 years, then your model should run for 30 years. If the mine has a
life of 80 years, then your model should run for 80 years. Computers can do 80-year
models, you know! That’s why we discovered computers!
The rationale for making the computer do long-life cash flows is because the stock market
values all available information in determining a share price. The life of mine is the most-
important single piece of information available to the investor (even for a mining house (eg
Anglo plc) valuation, each mine’s life should be in the valuation).
The cash flows should be discounted at a range of rates from 0% to 25% real.

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Gold investors will accept a discount rate of 0% (in North America) and 3% in South
Africa).
If gold shares are discounting 5% real, they are cheap.
Mining houses (investment companies that build new mines or purchase and sell mines)
are generally discounted around 5%.
Platinum mines are also discounted around 5%.
Base metal mines tend to follow economic cycles and are riskier. Hence the market tends
to hit them with a higher discount rate of around 7.5% to 10%.
Very high-risk shares, like exploration companies, will be discounted by the South African
market by up to 15% and even 25% in some cases. In North America and the UK, where
there is an investor type with a very high-risk profile (if-one-in-20-projects-comes-off-that’s-
acceptable-investment philosophy) who is prepared to lose a small percentage of his
wealth, exploration and high-risk shares are bought up to an equivalent 5% level. Hence
the much better rating of the Toronto and London stock markets for speculative shares.
If you follow the template of the DCF calculation shown above, make your calculations for
X number of years of life of mine, then discount the cash flows at the rate indicated for the
mining investment given above (eg gold 3%), and you should get the best idea of the value
of your project.
Be honest, if the DCF is negative at 5%, walk away, find another project.

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Conclusion
Extracting the earth’s minerals is an essential activity for humankind, and it will remain
essential for many years to come as we consume more and more of the earth’s raw
materials.
With China, India, Russia, Brazil and South Africa climbing up the curve to become
‘sophisticated’ consumers and with a population of close on 3 billion people in this set of
countries, consumption of metals and minerals will probably continue for another 20-50
years.
We are still very far from being a green planet and meeting all our needs from recycled
consumer products. The responsibility of the mining industry to future generations is huge.
Demands from consumers for mineral products should place some of the burden for
rehabilitation and environmental responsibility on consumers themselves.
Unfortunately, homo sapiens (us) are not wired to give much of a damn, as long as we get
our new car or house or apartment or dishwasher or… or… or. Mining companies therefore
need to lead through environmental awareness and limiting the cost of extraction on the
environment.
The consumer is, of course, the ultimate culprit in the environmental degradation of the
world and is equally in denial. It means that mining companies need to work all the harder
to protect and benefit the environment, for all our sakes.

Nedbank | Capital
Acknowledgements
 Atlas Copco Mining, this company produced a wonderfully simple booklet on the main
mining methods used in the industry (published in 1980).
 David le Roux, fellow geologist. Thank you for assisting with constructing (from
memory) the South African geological columns, while sitting in the shade of a tree on
your farm in the Karoo.
 Heidi Sternberg, for editing and perceptive comments.
 James Allan, for his contribution on the diamond section.
 Dr John Bristow, for editing and correcting some of my slightly off-the-mark facts.
 Prof M Hrebar, extracts of his talk Mining for Dummies are used and acknowledged.
 Minerals Deposits of South Africa, two books every South African geologist should
have.
 Prof Morris Viljoen and W Reimold for allowing me to use their colourful maps from
their book Geological and Mining Heritage of South Africa.
 Roxy Hoosen, for design and layout and hours of changing and slogging away at the
drawings and text.

NEDBANK CAPITAL RESEARCH
Tel +27 (0)11 295 8218 | Fax +27 (0)11 294 8218
th
7 Floor | Block F | 135 Rivonia Road | Sandown | 2196
P O Box 1144 | Johannesburg | 2000
www.nedbankcapitalresearch.co.za
About this report
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Equity | South Africa | Mining

5th Edition | 2011

Mining & Geology for Idiots | 5th Edition | 2011 2

BSc mining geology (honours)

BSc mining engineering

Fellow of the Geological Society of South Africa

Member of the South African Institute of Stockbrokers

Why did I write this book?

in producing this booklet is gratefully acknowledged.

Mining & Geology for Idiots | 5th Edition | 2011 3

Part I: Overview ................................................................................................................. 5

Mining & Geology for Idiots | 5th Edition | 2011 4

Part I : Over view

Mining & Geology for Idiots | 5th Edition | 2011 5

Mining & Geology for Idiots | 5th Edition | 2011 6

“Looking – finding – testing – evaluating – building – mining – processing – cleaning” … no

Mining & Geology for Idiots | 5th Edition | 2011 7

Mining & Geology for Idiots | 5th Edition | 2011 8

Mining & Geology for Idiots | 5th Edition | 2011 9

Periodic table of elements

Mining & Geology for Idiots | 5th Edition | 2011 10

Alphabetical list of elements

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Mining & Geology for Idiots | 5th Edition | 2011 12

This page has been left blank intentionally.

Mining & Geology for Idiots | 5th Edition | 2011 13

Part II : Geol og y and g enesis of SA’s main ec onomic orebodi es

Geology and genesis of SA’s

Metals and minerals exploited in South Africa

Let’s begin with geology (miners often tend to skip this

 Igneous: This is when magma from the earth’s core

 Sedimentary: Result of weathering/erosion and deposition (of any pre-existing rocks).

Mining & Geology for Idiots | 5th Edition | 2011 15

Genesis and uses of some of SA’s more important minerals

Mining & Geology for Idiots | 5th Edition | 2011 16

Genesis and geometry of ore bodies – a pictorial illustration

Mining & Geology for Idiots | 5th Edition | 2011 17

Simplified geological map of South Africa

Source: Geological and Mining Heritage (MJ Viljoen and WU Reimold)

Mining & Geology for Idiots | 5th Edition | 2011 18

Ancient cratonic nuclei and surrounding metamorphic provinces

Source: Geological and Mining Heritage (MJ Viljoen and WU Reimold)

Mining & Geology for Idiots | 5th Edition | 2011 19

Seven main geological systems* in Southern Africa

2 1.5 Waterberg system Coking coal (actually in the

4 2.3 Transvaal system Iron ore, manganese, base

6 3.7 Greenstone belts Gold, antimony

7 4 Granite basement Copper, mica

* Real geologists prefer the term supergroup

Localities of South Africa’s major mineral deposits

Source: Geological and Mining Heritage (MJ Viljoen and WU Reimold)

Mining & Geology for Idiots | 5th Edition | 2011 20

Geological column of South Africa

Mining & Geology for Idiots | 5th Edition | 2011 21

The Witwatersrand system

Simplified geology of the Witwatersrand basin (younger cover rocks removed)

Source: Geological and Mining Heritage (MJ Viljoen and WU Reimold)

Mining & Geology for Idiots | 5th Edition | 2011 22

Simplified section of the Witwatersrand basin

Source: R Hochreiter and D le Roux

Mining & Geology for Idiots | 5th Edition | 2011 23

Witwatersrand supergroup – anyone see the impact craters?