24-MMP-A4 Mine Valuation and Mineral Resource Estimation
Worked solutions to 8 past sittings (2013–2018), 171 questions. Pick a sitting, or start from a topic below.
Topics across the sittings
Topics that come up in more than one sitting, taken from the headings of our worked solutions. A topic counts once per sitting.
- McKelvey Diagram (5 sittings): December 2018 Q20 · May 2018 Q18 · May 2017 Q5 · December 2014 Q21 · Undated paper Q5
- Anisotropy (4 sittings): December 2018 Q13 · May 2018 Q13 · December 2013 Q9 · Undated paper Q2
- Net Smelter Return (4 sittings): December 2018 Q5 · May 2017 Q18 · May 2016 Q17 · May 2013 Q7
- Commodity Prices (3 sittings): May 2017 Q6 · May 2016 Q1 · December 2014 Q1
- Concentrate Transportation (3 sittings): December 2018 Q14 · May 2017 Q17 · May 2016 Q15
- Eastern Canada (3 sittings): December 2018 Q14 · May 2017 Q17 · May 2016 Q15
- Geologic Setting (3 sittings): December 2018 Q9 · May 2018 Q10 · May 2016 Q29
- Nested Spherical Variogram (3 sittings): December 2018 Q12 · May 2018 Q12 · May 2017 Q7
- NI 43-101 Terminology (3 sittings): December 2018 Q21 · May 2018 Q20 · December 2014 Q22
- Ordinary (3 sittings): May 2017 Q9 · May 2016 Q27 · December 2013 Q11
- Pacific Rim (3 sittings): December 2018 Q14 · May 2017 Q17 · May 2016 Q15
- After-Tax Cash Flows (2 sittings): December 2014 Q26 · December 2013 Q12
- Cash Flow (2 sittings): December 2018 Q7 · May 2018 Q6
- Components (2 sittings): May 2017 Q2 · May 2016 Q3
- Equity (2 sittings): May 2016 Q19 · December 2013 Q4
Questions by sitting
December 2018
- Question 1: Geological Conditions and Controls on Resource Estimation — Vein vs. Porphyry
- Question 2: Evolution of Section, Polygon and Inverse-Distance-Squared Methods to Geostatistics
- Question 3: Ultimate Value of Mined Materials — Market Conditions and Pricing
- Question 4: Capital and Operating Cost Estimation — O'Hara's Method and Mine-Life Rule
- Question 5: Net Smelter Return, Net Smelter Value and Net Profit Interest
- Question 6: Estimation of Revenue Including Smelter Contracts
- Question 7: Taxation, Cash Flow, Sensitivity and Risk Analyses
- Question 8: Extraction Variables Including Cut-off Grade
- Question 9: VMS and SEDEX Deposit Models — Geologic Setting
- Question 10: VMS and SEDEX — Typical Mining Methods and Operating Costs
- Question 11: Porphyry Deposit Model — Canadian Cordillera
- Question 12: Nested Spherical Variogram — Gamma Values
- Question 13: Variograms, Trends and Anisotropy
- Question 14: Concentrate Transportation — Eastern Canada vs. Pacific Rim
- Question 15: Elements of a Copper Smelter Contract
- Question 16: Why Molybdenum Rivals Copper Revenue Despite Lower Grade
- Question 17: NSV and NSR — Definitions and Mine-Engineer Application
- Question 18: Porphyry Copper NSR Chain Calculation
- Question 19: High-Grade/High-Variance vs. Medium-Grade/Low-Variance Deposits
- Question 20: The McKelvey Diagram
- Question 21: NI 43-101 Terminology
- Question 22: IRR, NPV, PV Factors and Profitability Index — Definitions
- Question 23: Crude 5%/50% Interpolated IRR Estimate
- Question 24: Refined IRR via Adjacent 5% Table 6 Brackets
- Question 25: IRR vs. NPV Sketch Graph
- Question 26: NPV of 6A and 6B at the 15% Corporate Minimum Rate
- Question 27: Profitability Index of 6A and 6B
- Question 28: Similar Project Lives — Does This Negate the Case for IRR?
- Question 29: IRR vs. NPV When Lives, Capital Costs or Rates of Return Differ
May 2018
- Question 1: Geological Controls on Resource Estimation – Narrow Vein vs. Epithermal Gold
- Question 2: Conventional vs. Geostatistical Resource Estimation Methods
- Question 3: Mine Valuation – Market Conditions for Copper
- Question 4: O'Hara Capital/Operating Cost Formulation and the Mine-Life Rule
- Question 5: Revenue Estimation – Copper vs. Gold
- Question 6: Cash Flow, Risk/Sensitivity and Taxation Across Jurisdictions
- Question 7: Incremental Financial Analysis in Mine Development
- Question 8: Cut-Off Grade Definitions and Downstream Extraction Variables
- Question 9: Installed-Capacity Utilization, Sequencing and Sizing
- Question 10: Non-Ferrous Deposit Types – Geologic Settings, Models and Resource Estimation
- Question 11: Variogram Model Types, Their Basis, and Terminology
- Question 12: Nested Spherical Variogram – Gamma Values at Four Lags
- Question 13: Variogram Trends – Tolerance, Bandwidth and Anisotropy
- Question 14: Why Kriging and Inverse Distance Squared Often Agree
- Question 15: Simple Kriging – Matrix, Input Vectors, and Weight Sum
- Question 16: Block Ordinary Kriging – Weight Sum, Block Size, and Negative Weights
- Question 17: Block Estimate from Samples A, B, C – Weight Sum and Likely Weights
- Question 18: The McKelvey Diagram
- Question 19: National Instrument 43-101 – Summary
- Question 20: NI 43-101 Terminology – Ten Short Definitions
- Question 21: Standard Smelter Contract Terms
- Question 22: NSV vs. NSR – Definitions and Use
- Question 23: 6.4: NSV and NSR Calculation for a Copper Concentrate
May 2017
- Question 1: Underground vs. Open Pit – the Mine/No-Mine Decision Process
- Question 2: The Semi-Variogram – Components and Sketch
- Question 3: The Ordinary Kriging Matrix
- Question 4: Low-Grade Porphyry Copper – Typical Feasibility-Study Parameters
- Question 5: The McKelvey Diagram – Resource/Reserve Classification
- Question 6: Commodity Prices, May 2017
- Question 7: Nested Spherical Variogram – Numeric Evaluation
- Question 8: Variogram Terminology – Anisotropy Parameters
- Question 9: Kriging Methods – Ordinary, Simple and Indicator
- Question 10: Power-Law Mining Cost Models – Commentary
- Question 11: Component and Total Mining Costs at 50,000 t/day
- Question 12: 4.2: NPV of a 4-Year Cash Flow and Investment Justification
- Question 13: Maximum-NPV Cut-off Grade and Material Categories 1–3
- Question 14: Ownership of Natural Resources and Canadian Ore Deposit Models
- Question 15: Smelter Contract Terms for Copper, Zinc and Molybdenum
- Question 16: A Typical Copper Smelter Contract – Charges, Refining, Lead Effect, Precious Metals
- Question 17: Concentrate Transportation – Eastern Canada vs. Pacific Rim
- Question 18: Net Smelter Return – Simplified Copper-Only Model
May 2016
- Question 1: Commodity Prices
- Question 2: Mine/No-Mine and Open Pit vs. Underground Decision Process
- Question 3: The Semi-Variogram – Components and Sketch
- Question 4: Low-Grade Porphyry Copper – Typical Development Parameters
- Question 5: Project Net Present Value
- Question 6: The Ordinary Kriging Matrix
- Question 7: Oil Sands Geology – Fort McMurray/Fort McKay Area
- Question 8: Depreciation, Depletion and Amortization
- Question 9: Federal/Provincial Taxation and Royalties on Oil Sands
- Question 10: After-Tax NPV, Present Value Ratio and DCF-ROR
- Question 11: Porphyry Deposit of the Canadian Cordillera
- Question 12: 1: Two-Structure Nested Spherical Variogram Model
- Question 13: 2: Pitfalls of One Variogram Across High- and Low-Grade Areas
- Question 14: Typical Copper Smelter Contract Elements
- Question 15: Concentrate Transportation – Eastern Canada vs. Pacific Rim
- Question 16: Why Molybdenum Contributes Almost as Much Revenue as Copper
- Question 17: 4.7: Net Smelter Return – Simplified Copper-Only Model
- Question 18: Smelter Contracts for Copper, Zinc and Molybdenum
- Question 19: DCF Yield vs. Inflation – Equity and Leveraged Financing
- Question 20: Capital Cost Overruns – Causes and Recommendations
- Question 21: Five Approaches to Price Inflation/Deflation Forecasting
- Question 22: Currency Selection by Cost/Revenue Category
- Question 23: Accounting for Inflation Over Project Life
- Question 24: Depreciation, Depletion and Amortization (Revisited)
- Question 25: 1: Epithermal Gold Deposit – Pacific Rim / Rocky Mountain Type
- Question 26: 2: Why Simple Kriging Weights Need Not Sum to One
- Question 27: 3: Ordinary vs. Simple Kriging for Gold Block Estimation
- Question 28: Indicator Kriging for Epithermal Gold
- Question 29: Ore Deposit Models – Geologic Setting, Minerals, Mining and Cost
December 2014
- Question 1: Commodity Prices
- Question 2: Grade Control – Porphyry vs. Vein Deposits
- Question 3: Spherical Variogram Model Sketch
- Question 4: Block Models – Porphyry vs. Vein Application
- Question 5: Mineral Resource vs. Mining Reserve
- Question 6: Smelter Contracts – Small vs. Large Producers
- Question 7: Mine Valuation Methods – NPV and Alternatives
- Question 8: Deposit Type Comparison
- Question 9: Grade Interpretation Complexity
- Question 10: Spherical Variogram – Mathematical Description & Nesting
- Question 11: Why Nested Spherical Models Are Used
- Question 12: Nested Spherical Model – Gamma Values
- Question 13: Variogram-Related Terms
- Question 14: General Form of the Ordinary Kriging Matrix
- Question 15: 1: Pseudo Samples and Their Adequacy
- Question 16: 2: Deriving Sample-Sample Co-Variogram Values
- Question 17: 3: Deriving Sample-Block Co-Variogram Values
- Question 18: 4: Full Kriging Matrix and Output Vector
- Question 19: 5: Grade of the Block
- Question 20: 6: Meaning of the Lagrange Multiplier
- Question 21: McKelvey Diagram
- Question 22: NI 43-101 Terminology
- Question 23: Smelter Contract Terms
- Question 24: NSV vs. NSR Definitions
- Question 25: 6.5: NSV, NSR and Mine NSR Calculation
- Question 26: After-Tax Cash Flows and NPV
- Question 27: Capital Cost Allowance and Class 41
December 2013
- Question 1: Taylor's Rule for Mine Life
- Question 2: Effects of Improper Inflation Handling on Mine Valuation
- Question 3: Building and Interpreting a Semi-Variogram
- Question 4: Financing Methods for a New Mine — Equity, Loan, Contract, Joint Venture, Lease
- Question 5: Compositing Diamond-Drill-Hole Assay Data
- Question 6: Cost of Capital — Geographic Location and Political Stability
- Question 7: Modifying the Net Smelter Return to Value Broken Rock
- Question 8: Financial Statements, Capital Costs and Cost of Capital
- Question 9: Spherical Variogram — Model Terms, Point Calculation and Anisotropy
- Question 10: Power-Law Mine Operating Cost Model — Cost per Day and per Tonne
- Question 11: Ordinary, Simple and Indicator Kriging
- Question 12: After-Tax Cash Flow and NPV of a Non-Core Asset Purchase
- Question 13: Net Smelter Return for Four Metals
May 2013
- Question 1: Canadian Mining Taxation Fundamentals
- Question 2: The Semivariogram – Axes, Nugget and Range
- Question 3: Polygonal, Inverse Power Distance and Ordinary Kriging
- Question 4: Mining Economics/Finance/Accounting Definitions
- Question 5: Smelter Contracts – Price Participation
- Question 6: Drilling Around Ore-Body "Blebs"
- Question 7: Net Smelter Return and Net Smelter Value
- Question 8: Two-Structure Spherical Variogram Model
- Question 9: Kriging Techniques and the Volume–Variance Relationship
- Question 10: NPV of a Simple Annuity and Cut-Off Grade Categories
- Question 11: Smelter Contract Penalties, Payments and Disputes
- Question 12: Stages of Mineral Exploration and Evaluation
- Question 13: Net Smelter Return for a Blast-Hole Sample
Undated paper
- Question 1: Fault Types and Their Effect on Mining
- Question 2: Variogram Fundamentals and Anisotropy
- Question 3: Net Present Value of a Mineral Property
- Question 4: Enterprise Value vs. NPV, and a Published Gold Reserve
- Question 5: The McKelvey Diagram and NI 43-101
- Question 6: 2.2: VMS Deposit Geology and Ore-Outline Interpretation
- Question 7: 2.4: Underground Mining Method Selection and VMS Deposit Significance
- Question 8: Variogram Construction – Fundamentals
- Question 9: Spherical and Nested Spherical Variogram Models
- Question 10: The Volume–Variance Relationship
- Question 11: Geostatistics – Advocates and Detractors
- Question 12: 4.2: Two-Phase Ore and Waste Scheduling
- Question 13: 4.4: Truck-Hour/Cost Trends with Depth and the Stripping Ratio
- Question 14: Extending "Waste Mining" Scheduling Logic to Underground Development
- Question 15: 5.2: Depreciation Methods and Canadian Tax Abbreviations
- Question 16: 5.4: Ontario Provincial Mining Taxation
- Question 17: Ontario Tax Model and the Life-of-Mine Earnings Split
- Question 18: 6.2: Smelter Contract Terms and NSV/NSR Definitions
- Question 19: 6.5: NSV and NSR Calculation for a Copper Concentrate