Mining and Mine Appraisal

In its most basic definition, the "mine" is the site for extraction of minerals underground, dug above ground. Mining is an invention that has been made for thousands of years, and the activity of minerals or resource extraction. "Mining Engineering" is the fulfillment of the science, art and feasibility studies undertaken to realize these activities, both in line with the technological and economic requirements of the era.

Examples of underground resources needed in mining include metallic mines, energy raw materials, and industrial raw materials. Quarries of Stone and marble are also a separate branch of mining, and are usually found not underground, but on the ground. In some cases, minerals are found directly on the ground, and the top cover should not be removed, which is called “outcrop” in the literature. So mining is actually implemented in two ways as surface mining and underground mining. In some mines, both methods can be applied in a hybrid fashion.

Here's how we can describe the life cycle of a mine:

• Prospecting: These studies can last 1-3 years and are used to model the location and extensions of the underground resource using geological techniques.

• Exploration: At this stage, which can take up to 2-5 years, samples from the underworld are extracted and analyzed in detail the source's physical properties and mineral content. It can also be estimated how many tons of minerals there are. In the event of a possible opening of a stove, it is roughly calculated whether the total expenditures can be covered by the sale of the mineral minerals mined (Hoskold Formula). If it's found economically worth extracting, it's called "ore."

• Mine Development: Once the underground resource is determined to be economically extractable, construction will begin, with necessary legal permits and environmental assessments. It makes roads, auxiliary buildings and facilities. The tunnels for the underground mines need to be opened. For surface mining, there is the removal of the top cover called "stripping”. The process can take, on average, two to five years.

• Exploitation: Admittedly, mineral resources are non-renewable and have limited lifespan. It may be that the process, although changing from mine to mine, will likely correspond to periods of 20 to 30 to 50 years. Seam formations (such as salt, coal, etc.) can be operated for centuries.

• Process: Sources such as coal or marble are available as extracted, while minerals and metals in particular are subject to a process called ore enrichment or “process”. This process involves both physical and chemical decomposition in laboratories and factories set up right next to the mines. For example, a series of enrichment studies shall be conducted to allow the use of bauxite in the industry in aluminum form.

  
  

Mine Appraisal

Mine appraisal is one of the main components of mining engineering science that occurs dynamically, both before the opening of the mine and while mining production activities continue.

Mine appraisal is a much longer and more vibrant process than real estate appraisal.

First, each mine is assessed to determine whether it will be feasible before the action plan is made. Mine appraisal depends mainly on how much ore will cover all of the production costs. This depends on the market equivalent of the underlying position of the ore and its useful content (grade). For example, while gold is a very valuable metal, if it is located 10 kilometers underground, it may not be feasible to remove it. But when the conjuncture changes, and the price of gold rises, or if the technology builds devices that can go deeper down and make it affordable to extract this kind of material, then it's worth taking the gold 10 km downstream. Thus, mine appraisal is a dynamic process, and it depends on external factors.

In mine appraisal, the net present value approach to the years is followed, and the market value of the ore as a discount is cited as the essential components for all expenses to be made during the life of the mine. However, it is agreed in advance where the ore to be sold (e.g., the boxite extracted in Eskisehir is taken directly by a hubby factory in Germany). If necessary, it is possible to make use of national or international credits, based on this agreement. In the first few years of the mine, it is usually only investment. Once the ore is extracted and sold, that is to say, once the production begins, the annual income-expense begins to balance.

Income of Mines: Mines have only one income; the extracted ore. The ore is often calculated in annual tons. However, the market value of the extracted ore varies over the years. That takes into account revenues at a certain risk premium.

Expenses for Mines: Costs for mines contain more items than revenues. These are divided into ownership expenses (CapEx) and operational expenses (OpEx). CapEx consists of facilities and buildings costs, loan installments and interests, machinery and equipment, and depreciations. There can also be expenses such as environmental impact, expropriation, and reclamation. OpEx includes items such as labor costs, fuel, energy, tires, and spare parts replacements. Whether it's CapEx or OpEx, the total of these costs is to balance the revenue.

In order to reach the ore, it is necessary to dig slopes in surface mines and tunnels in underground mines. A large, horizontal angle of the slopes is preferable for safety reasons but this means more digging and increased costs. So, depending on the value of the ore to be mined, the slope of the angle of the stripping; the design of the mine takes its form. The stripping ratio, which is how many cubic meters of topsoil or rock to be extracted, actually shapes the design of the mine.

The same is true for the size of the tunnels in underground mining. Wide and comfortable ventilation of the tunnels is preferable. In underground mining, additionally the cost of ventilation and air conditioning systems comes into play.

For mining businesses, highly sophisticated and high-capacity machinery are needed. The largest machinery in the world is used in mining industry; conveyors, excavators, draglines and mining trucks. The trucks used in the mines are so huge to be allowed to move on roads and can carry up to 200 tons of load - for comparison, standard trucks on roads have the capacity to carry 10-40 tons of cargo depending on the number of axles. So when mining feasibility is done, the costs of these machinery are the essential part of the costs. These are among the costs that need to be put up with.

Mining site

So, how should the "value" a mine?

Based on what we've described here; depending on what stage the mine in its life cycle, this value is calculated by the NPV technique (net present value) compared to the total annualexpenditures and revenues that we just described. The "time" factor of the money and the inflation rate, if needed, are taken into account.

Among the important items to note here is the remaining ore tonnage the mine has. Additionally, the accumulated depreciations of the machinery and equipment the mining operation uses and its remaining useful life are of great importance. Finally, the material value of the structures and facilities in the mining site is determined and added to the cost method. If there will be e reclamation program, it should be written in payables section.

Of course, out of all of those things, we would calculate the net present value of the mine, taking the operational costs of the remaining life of the mine back out according to the NPV method.

As it turns out, because mining operations are entities that depend on a live process, their values vary, both in what phase they are in the lifeline and in the up-to-date market value of the ore that is extracted.