April 2012 | Mining University

Gemcom purchased by Dassault Systemes

Dassault Systemes announced on Thursday that it is purchasing Gemcom Software  for a total of about $360 million.  The transaction should be complete in July of 2012.  The inclusion of Dassault in the arena of mine modeling software is a huge upgrade for the mining industry.  Dassault is a major player in the 3D software modeling industry (providers of 'SolidWorks' software).  They represent a modern approach to software development.

Maptek users might recognize the name Dassault from recent graphics issues between Vulcan software and NVIDIA graphics cards.  The custom setting used to mitigate the graphics problems was the Dassault setting.  If Dassault can get special settings from a global hardware provider like NVIDIA what else might they bring to the mining community?

Dassault Systemes intends to keep the current Gemcom leadership in place, including CEO Rick Moignard.  Rick will lead the newly created GEOVIA brand with Gemcom at its heart.

Current providers of mine modeling software began production in the early 1980's with the FORTRAN programming language as the base code.  To a greater or lesser degree, all the major players in the mining software market struggle with this archaic background.  Recent upgrades have been added to the original FORTRAN background but a new base for code has never come to fruition.  The entire mine software industry should be pushed into modern programming techniques including managed software and unit tests.  Failure to upgrade to new methods will leave competitors in Dassault's dust.

In their press release announcing the purchase Dassault stated that the current management at Gemcom will stay in place.  This seems like a poor decision.  Current management has allowed development of the software to lag behind current standards.  It would be a much better idea to push the software into the 21st century.  New programming methods and managed software would force the entire mining software industry forward.    Please, lose the currentt management and replace it with Dassault type managers.  People who understand the software industry, not just the small time mining part of it.

Asteroid Mining

That's right, asteroid mining.  I recently read an article on this topic that I just couldn't believe.  The company, Planetary Resources, Inc. plans to mine near-Earth asteroids with an army of robotic equipment.

Rio Tinto might be using automated trucks in iron mines in Australia but a rock in space is significantly farther away.  Planetary Resources plans to mine platinum and water from these asteroids.  The platinum is to make money when shipped back to earth.  The water is for rocket fuel.  The hydrogen and oxygen will be broken down into their component elements and used for propulsion.  I don't know what methods they intend to use to break down the water or where they are going to get the power to do so but the ability to have reserves of rocket fuel on the asteroid being mined is pretty cool.

The company compares mining in outer space with drilling for oil on the ocean floor.  It is true that complex mechanical activities do go on miles beneath the surface of the ocean, but when something breaks down you have to haul it the two miles to the ocean surface in order to fix it.  What do you do when your haul truck breaks down on an asteroid hundreds of thousands of miles away or which only passes near earth every few years?

Gold Fields Technical Short Form Reports - 2011

Gold Fields Limited has recently released Technical Reports (short form) for their 8 active mines as well as for exploration.  Gold Fields has gold equivalent mineral reserves of 85.1 million ounces.

Copies of the reports can be found at the links below:

Overview

Australasia Region
Agnew Gold Mine
St. Ives Gold Mine

South Africa Region
Beatrix Gold Mine
Kloof-Driefontein Complex
South Deep Gold Mine

South America Region
Cerro Corona Mine

West Africa Region
Tarkwa Gold Mine
Damang Gold Mine

Exploration

Rio Tinto - First Quarter 2012 Operations Review

Rio Tinto recently published the First Quarter 2012 Operations Review.  The review shows increased production in most commodities compared to Q1 2011.  In addition, Rio Tinto also plans to increase its share in Richards Bay Minerals by purchasing the 37 percent stake held by BHP Billiton.  Rio also completed a buyback of 116.9 million shares of stock.

Downside reports come from Kennecott Utah Copper where copper production was down due to lower grades.  The low grade areas were expected but lower is still lower.  Rio Tinto also is looking into selling its diamond mining business including the Diavik Diamond Mine in Northwest Territories Canada.  

Newmont Mining Corporation - Executive and Director Compensation 2011

Executive compensation for Newmont senior leadership is slightly higher than other global mining companies.  This may be due to the size of Newmont Mining Corporation or to their desire to be 'THE' gold mining company.  I did appreciate that the CEO was compensated less in 2011 than in 2010.  People paid so highly for their performance need to be able to accept 'down' years.  Although, if my 'down' year was in the 10 million dollar range I think I could still muddle through.

Two of the board members for Newmont have mining experience (or at least geology degrees).  They are: Joseph A. Carrabba and Simon R. Thompson.  Mr. Carrabba has a geology degree from Capital University.  He was CEO of Cliffs Natural Resources and COO of Diavik Diamond Mines.  Mr. Thompson was CEO of Anglo American and a director of AngloGold Ashanti.  He has a masters degree in geology from Oxford University.  It's good to see two board members have a background and education in mining and earth science.

Newmont CEO Richard T. O'Brien has a bachelor degree in economics and a law degree from Lewis and Clark College.  He has extensive executive experience (mostly with Newmont) but where is his experience with dirt?  Where are the CEO's of mining companies who have experience as mine engineers or geologists?

Executive Compensation 2011

Richard T. O'Brien - President and CEO: $10,084,181
Russell Ball - CFO: $4,580,709
Randy Engel - VP Strategic Development: $4,413,421
Brian Hill - VP Operations: $4,061,138
Guy Lansdown - VP Discovery and Development: $4,821,464

Director Compensation 2011

Glen A. Barton: $244,000
Bruce R. Brook: $147,000
Vincent A. Calarco: $495,000
Joseph A. Carrabba: $238,000
Noreen Doyle: $268,000
Veronica M. Hagen: $242,000
Michael S. Hamson: $235,000
Jane Nelson: $149,000
John B. Prescott: $238,000
Donald C. Roth: $264,000
Simon R. Thompson: $242,000

Executive Compensation for other Mining Companies:


Rio Tinto Executive and Director Compensation 2011
Cameco - Management Proxy Circular
Gold Fields Annual Report 2011
Barrick Annual Shareholder Meeting
Kinross Compensation for Senior Leadership

Maptek Vulcan 64-bit Release Notes

According to their website, Maptek released the 64-bit version of Vulcan on 10 April 2012.  I don't know what they mean by 'released' but I have still not received my installation CD.  I did, however, get a chance to read the release notes for the 64-bit version.

The problem with release notes is that they've got too much information.  They are like the end user license agreement. It's important, but nobody has the time to read the whole thing.  What you really need is somebody to read the release notes and tell you about the important parts.  Don't worry, I'm here to help.

One of the most important things that the release notes tells you is items in Vulcan where the software crashes.  These fixes are hard to find because Maptek doesn't like to admit that their software crashes. They usually call their crashes 'closing unexpectedly' or 'unexpected termination.'  Whatever they want to call it, there were 22 fixes for issues that crashed Vulcan.  I wish they would share the other known, but unfixed, crashes with their users but at least we know about these and can update to the newer version and avoid these 'unexpected terminations.'

The following menu items include fixes for a Maptek Vulcan crash:

  1. Envisage > Colour Palette > Load Colour Palette
  2. File > Import > Micromine
  3. Design > Object Edit > Filter
  4. Design > Polygon Edit > Build
  5. Analyse > Label > Object Label to Text
  6. Analyse > Statistics > Advanced Statistics
  7. Model > Grid Mesh Surfaces > Invert Mask
  8. Model > Triangle Utility > Cut
  9. Model > Triangle Surface > Volume
  10. Model > Triangle Surface > Filter
  11. Block > Viewing > Load Dynamic Model
  12. Block > Manipulation > Index (crashes two different ways)
  13. Block > Grade Estimation > Estimation Editor
  14. Block > Grade Estimation > New Estimation File
  15. Block > Variorgaphy > Directional Variography
  16. Block > Sequence Accumulation Reporting
  17. Geology > Drilling Section > Apply Display Settings
  18. Geotech > Utilities > Edit Structures
  19. Underground > Development > Model Backs/Floors
  20. Chronos > Optimisation > Problem Setup
  21. Isis (copying data to clipboard)

In addition to the above 'crashes' that are fixed in Vulcan 8.1.4, there are also six instances where Maptek 'restored' functionality.  These are menu items that used to work, but stopped working in recent versions.  

'Restored' Maptek Vulcan functionality items include:
  1. File > Import > Datamine Block Models
  2. File > Layers > List
  3. Design > Polygon Edit > Impose
  4. Grid Calc > Integrated Stratigraphic Modelling > Interpolate Drillhole Date - FixDHD
  5. Block > Viewing > Slice
  6. Open Pit > Grade Control > Load Blast

There have also been some additions to the Maptek Vulcan functionality:
  • New external programs to filter large point clouds before importing to Vulcan: point_reduce_nn.exe, aag_reduce.exe and aag_decimate.exe
  • New external program to export dgd layers to dwg
  • Design > Polygon Edit > Boundaries - option to create a boundary around objects or triangulations (this might be the 'rubber band' tool that I have wanted for so long)
  • Analyse > Legend Edit > Legend Editor - more user friendly interface (FINALLY)
  • Block > Transfer > Model to CSV - increased the number of characters allowed in the block model path name (increased to what? they didn't say)
  • Geology > Drilling > Load Drillholes - faster loading of large isis files in edit mode
  • Geology > Sampling > Remove - improved response time
  • Isis - the 512 byte restriction on database record size has been removed, allowing for more fields
The bottom line?

On top of being available as a 64-bit version, Maptek Vulcan 8.1.4 includes some significant fixes and upgrades.  I plan to install it as soon as the disk comes in and would recommend that you do too.

Gold Fields First Quarter Production

Gold Fields Limited has released gold equivalent production for first quarter 2012.  Gold equivalent ounces is reported as 827,000 oz.  This is 22-24% of the annual target of 3.5-3.7 million gold equivalent ounces.  Things seem to be starting out a little slow.

Total cash costs for the quarter are $875/oz.

Full results for first quarter 2012 will be released on Thursday 17 May 2012.

Informal Mining in Peru

The rescue of nine Peruvian miners last week reminds us that mining is, at its heart, a dangerous activity.  Dramatic rescues like this one and the Chilean miners rescued in 2010 make everyone feel happy but distract from the fact that ground control isn't the most dangerous aspect of mining.  The most dangerous aspect of mining is the people involved or, rather, the powered equipment used to haul rock.  Powered haulage is responsible for far more deaths in mining than cave-ins. It also doesn't trap people hundreds of feet underground.

The inherent dangers of ground control and powered haulage should be enough to cause a large amount of caution in any mining activity but the Peruvian miners rescued last week were also breaking the law.  Informal mining is a big deal in Peru.  The Peruvian Times reports that nearly 30,000 people are involved in the Informal mining industry in Peru.  In reality, this is ILLEGAL mining that is going on.

The story of nine miners trapped in a mine in Peru adds to the bad image of the mining industry but these people should not have been there in the first place.  The blast that caved in the mine entrance was set by the illegal miners themselves.  Where is the regulation of mining in this district?  Are the illegal miners receiving fines and prison sentences for breaking the law, or are they still being treated as heroes?


Maptek Vulcan - Triangulation Solid Creation

One of the most fundamental tools in Vulcan is the creation of triangulated solids.  This skill is imperative to mine engineers and geologists who wish to become proficient Vulcan users.  Solid triangulations are used to represent rock and lithology types, oxidation areas, grade shells and planned mine areas.  A valid, closed solid is required to calculate reserves for a non-uniform 3 dimensional volume.

In its most basic sense, creating a solid is simply connecting a series of closed polygons.  Each of these polygons should be in its own plane and each of the planes should be parallel to the others.  Triangulating polygons that don't follow these guidelines is not impossible, just many times harder.



To begin triangulating your polygons select Model > Triangle Solid > Create.  Check the boxes for creating first and last end plate.  If these check boxes are left blank the resulting triangulation will not be closed.


Click 'OK' and select the first two polygons.  These polygons should start at one end or the other of the solid and continue toward the other end.  Do not start in the middle.

After selecting the first two polygons you will be prompted to select a color for the triangulation.  This color is used to display the sections of the triangulation as polygons are added to the selection.  This color can be changed again before saving.


After the last polygon has been selected, click on the save button in the 'Create' panel that has popped up (by default on the left side of the Vulcan screen).  In the 'Save Triangulation' panel type a name for your new triangulation and select a new color if you didn't like the one you have been using to this point.


The saved triangulation should be the newest file in your working directory.  Be sure to check the triangulation for Validity before using it to define an area in advanced reserves.

Maptek to release 64-bit version of Vulcan

Maptek has announced its intention to release a 64-bit version of its Vulcan software (Vulcan 8.1.4) sometime in the month of April 2012.  To Maptek Vulcan users worldwide this is a long anticipated event.  Everyone I have ever talked to about the software has wanted to load a larger dataset than was allowable.  These large datasets are often detailed triangulations, drillhole databases with hundreds of thousands of drillholes or block models with too many blocks.

My most recent encounter with the 'too big data' was over the aerial flyover data of the Hycroft mine.  The data provided by the survey company was beautiful.  The point density was phenomenal and the area covered was huge.  The only problem?  It wouldn't triangulate in Maptek Vulcan.

Don't worry, I am an old hand at Vulcan and managed to triangulate the entire solid using the external executable.  Now the problem is that I can't load the triangulation into Vulcan and use it in a reasonable fashion.  The triangulation loads but has so many points that I can't rotate it smoothly.  The topography moves in such big fits and starts that I can't see what is going on.

Time to filter the triangulation.  I'm pretty good with the Maptek Vulcan software so I can manage this too.  After a few iterations I finally have the triangulation file size filtered down to 10 MB from 100 MB.  Now the triangulation loads, rotates and looks pretty good but I feel cheated.  We paid a lot of money for the point cloud provided by the aerial survey.  Why can't I use all those points?  Hopefully, the 64-bit version of Vulcan will help with that.

The 64-bit version of Maptek Vulcan should allow users to load large datasets like my huge topography triangulation.  This data will still use the same processor but allow more points to be held in memory.  Will this limitation on processing power be the new software limitation?  Now that I can load truly huge datasets will they just be too slow to effectively work with?

64-bit Vulcan is a step in the right direction but is there something more that could be done to create better mine modeling software?

I also worry that, with no actual release date, Maptek means to delay the release of the version because it is not truly complete.  Only time will tell.

Kinross Compensation for Senior Leadership

The Kinross Management Information Circular is an outline for the company's annual meeting.  At this meeting, shareholders vote on key items for the future of the company.  Foremost among these items is the compensation packages for the named executive officers and board of directors.

As with most publicly traded companies there is an attempt to align the compensation of senior leadership with the objectives of the company so that as the company succeeds the senior leadership also succeeds.  The reverse should also be true.  As the company fails the compensation of the senior leadership should also suffer.  This doesn't feel like it really happens.

Over the course of 2011, the Kinross stock price fell from $18.72to $11.40, or 39%.  Senior leadership, and CEO Tye Burt, didn't take a comparable decline in compensation.  Named executive officers made less in 2011 than they did in 2010, but Mr. Burt still received $7.7 million in total compensation.  I wish I had a job where my value to the market could drop 39% and still come away with compensation on the order of $7.7 million.

Total compensation for Kinross named executive officers and board of directors:

Executives
Tye W. Burt - President and CEO: $7,682,639
Thomas M. Boehlert - VP and CFO: $4,744,229
Paul H. Barry - VP and CFO: $4,007,344
Brant E. Hinze - VP and COO: $5,065,722
J. Paul Rollinson - VP Corporate Development: $3,577,709
Geoffrey P. Gold - VP and Chief Legal Officer: $2,895,486

Directors
John A. Brough: $276,000
John K. Carrington: $215,000
R Clark: $60,333
John M.H. Huxley: $231,500
Kenneth C. Irving: $102,000
Jehn A. Keyes: $240,000
L. Lundin: $55,333
Catherine McLeod-Seltzer: $223,000
George F. Michals: $238,000
John E. Oliver: $420,000
Terrence C.W. Reid: $226,000

For further information on the compensation packages for other mining executives see:
Newmont Mining Corporation - Executive and Director Compensation 2011
Rio Tinto Executive and Director Compensation 2011
Cameco - Management Proxy Circular
Gold Fields Annual Report 2011
Barrick Annual Shareholder Meeting

Technical Report ALLIED NEVADA GOLD CORP. - Hycroft Mine, Winnemucca, Nevada, USA

Today I finally got the chance to use my Professional Engineer's Stamp.  I am one of the co-authors of the Technical Report ALLIED NEVADA GOLD CORP. - Hycroft Mine, Winnemucca, Nevada, USA.  This report is currently on file with the SEC.

I am listed as a Qualified Person (QP) along with:
David C. Flint, CPG
Mark Gorman, PE
Donald Harris, CPG
Daniel B. Moore, PE
and
Scott E. Wilson, CPG

 It's so fun (and a little bit scary) to see my work being taken so seriously.




Cameco - Management Proxy Circular

Cameco, a Canadian uranium mining company, has several board members with mining experience.  This experience appears to be on the executive management side with little or no experience in mining activities.  With so much emphasis on executive leadership and accounting experience, is my dream of being a CEO of a mining company being helped or hurt by my time as an actual mine engineer?  Based on the biographical excerpts in the Management Proxy Circular the following board members have some experience with mining companies:

Mr. Donald Deranger once worked as a uranium miner but seems to have spent most of the many years since representing the aboriginal communities in Saskatchewan.

Mr. James Gowans brings considerable mining experience to the Cameco board of directors.  He has a bachelor of applied science in mineral engineering from the University of British Columbia.  Mr. Gowans also has experience as COO of DeBeers SA.

Mr. Oyvind Hushovd has experience as CEO of multiple mining and exploration companies.  His degrees in economics, business administration and law make him an ideal executive, but is there actual mining experience or just CEO experience?

Mr. John Clappison has experience in finance and executive compensation.  His mining experience seems to be derived from his seat on the Inmet Mining Corporation.

Mr. Tim Gitzel (Cameco's president and CEO) has a law degree from the University of Saskatchewan.  All of his mining experience listed is as senior executive level.  Mr. Getzel has served as the president of the Saskatchewan Mining Association.

Also included in the circular are the compensation totals for the named executive officers and board members.


Executives:
Tim Gitzel - President and CEO: $6,651,250
Grant Isaac - Senior Vice President and CFO: $1,622,773
Robert Steane - Senior Vice President and COO: $3,091,550
Ken Seitz - Senior Vice President, Marketing and Business Development: $2,098,440
Gary Chad - Senior Vice President, Governance, Law and Corporate Secretary: $1,536,038
Gerald Grandey - Former CEO: $3,348,190
Kim Goheen - Former Senior Vice President and CFO: $3,451,392


Directors:
Daniel Camus: $138,487
John Clappison: $211,800
Joe Colvin: $199,158
James Curtiss: $212,603
Donald Deranger: $186,200
James Gowans: $201,659
Nancy Hopkins: $196,200
Oyvind Hushovd: $216,111
George Ivany: $84,364
Anne McLellan: $201,700
Neil McMillan: $202,318
Victor Zaleschuk: $341,700

For further information on the compensation packages for other mining executives see:
Newmont Mining Corporation - Executive and Director Compensation 2011
Rio Tinto Executive and Director Compensation 2011
Kinross Compensation for Senior Leadership
Gold Fields Annual Report 2011
Barrick Annual Shareholder Meeting Newmont Mining Corporation - Executive and Director Compensation 2011

Maptek Receives Australian Grant to Increase I-Site Production

Maptek I-Site has received a grant from the Innovation and Investment Fund for South Australia (IIFSA) in the amount of $975,000.  The grant is intended to expand the I-Site production facility in Adelaide and create 27 new jobs.

The expansion of the facility and addition of jobs would imply that production will increase as well.  Does this mean that the price for an I-Site laser scanner will go down?  Demand for the Maptek scanner is high, but at $250,000 each, it is a struggle for most mine sites to justify the expense.

Will the increased production lead to a lower cost per unit or should this task have been outsourced to China?

Gold Fields Annual Report 2011

Gold Fields recently released its 'Integrated Annual Review 2011.'  This document reports on the 12 month period ending December 2011 and includes the 'Annual Financial Report 2011' as well as a report of global reserves and resources.  Gold Fields reports mineral reserves of 80.6 million ounces (p4).

Also included in the annual report are the annual compensation figures of executives and directors.  South African companies seem to follow the trend of generous pension plans for executive officers.  I wonder how their employee pension plans compare to the self funded and matching type 401k plans available to the majority of American employees?

Compensation of Gold Fields Directors and Officers including fees, performance pay, pension contributions and expense allowance (p208).  Table is in U.S. Dollars converted from Rand using a conversion rate of 7.22 R/US$.


Executive directors

 

Nicholas J Holland

 $                         4,528,757

Paul A Schmidt

 $                         1,217,871

Prescribed officers

 

Z Amra

 $                            303,523

NA Chohan

 $                            454,130

J Dowsley

 $                            998,376

MD Fleischer

 $                         1,547,362

JL Kruger

 $                         1,929,697

T Mckeith

 $                         1,661,494

KFL Moabelo

 $                            611,024

TW Rowland

 $                            884,739

PV Schalkwyk

 $                            499,916

PL Turner

 $                         1,412,249

R Weston

 $                         1,037,516

Non-executive directors

 

Kofi Ansah

 $                            125,758

Cheryl A Carolus

 $                            111,908

Roberto DaƱino

 $                            119,987

Alan R Hill

 $                            111,908

Richard P Menell

 $                            151,808

David N Murray

 $                            133,791

Donald MJ Ncube

 $                            138,135

Mamphela Ramphele

 $                            291,183

Rupert L Pennant-Rae

 $                            147,306

Chris van Christierson

 $                               55,961

Gayle M Wilson

 $                            158,271

Delfin L Lazaro

 $                               62,880

Matthews S Moloko

 $                            101,847

Total 

 $                       18,797,395


For further information on the compensation packages for other mining executives see:
Newmont Mining Corporation - Executive and Director Compensation 2011
Rio Tinto Executive and Director Compensation 2011
Kinross Compensation for Senior Leadership
Cameco - Management Proxy Circular
Barrick Annual Shareholder Meeting Newmont Mining Corporation - Executive and Director Compensation 2011