June 2012 | Mining University

Mining News 29 June 2012: AngloGold Ashanti, Goldcorp and Teck


AngloGold Ashanti releases Q1 Income Statement

The statements of income (Condensed Consolidated Statementsof Income) released by AngloGold Thursday for the quarter ended March 31, 2012 shows net income of $397 million, up from $237 from Q1 2011.  This included a dividend per share of $0.26 per ordinary share and $0.13 per E ordinary share (I don’t know what this is).

AngloGold Ashanti completes acquisition of Serra Grande Mine

As of June 28, 2012 AngloGold’s purchase of 50% interest in the Serra Grande Mine (Press Release) from Kinross is complete. The sale was for a total of $220 million cash. AngloGold now owns 100% of the Serra Grande Mine.

Goldcorp Wins Decision Against Barrick over El Morro Acquisition

An Ontario court dismissed the case by Barrick GoldCorporation alleging unlawful transactions between Goldcorp and New Gold over the sale of the El Morro project in Chile. The lawsuit was filed way back in January of 2010. It’s amazing how long these court proceedings can drag out.  El Morro is a copper and gold project in the Atacama region of Chile.

It did seem like this press release was intended to overshadow the fact that the project is currently being delayed by environmental concerns. The Chilean permitting authority is currently investigating deficiencies at the site.

Teck Resources Donates $1 Million to Trans Canada Trail

The Trans Canada Trail is the world’s longest network of recreational trails and will eventually connect the Atlantic and Pacific oceans across Canada. Teck Resources Limited has announced that it is donating $1million toward the section connecting communities in the Kootenays (near the Kootenay river in southern British Columbia).

Teck seems to be donating a lot of money lately. I am always glad to hear about a mining company giving back to the communities where it operates.

Maptek Vulcan Chronos Crashes on Startup - Update 28 June 2012

video

This video, though low in quality, is an example of exactly what I was saying about Chronos crashing on initial startup on a new machine. The method I used to get Chronos to work (turning off the user account control settings) has modified something more than just the firewall settings because I can no longer replicate this issue. I have no idea what Vulcan changed on my machine because the UAC was disabled in order to run Chronos.

Maptek has, at least, recognized that this is an issue. The internal ticket VUL-13912 has been created to record the bug and any steps being taken to improve the initial customer experience. I appreciate that there are some people at Maptek who want the user to have a good experience running the software.

*****Other posts about this bug*****

Maptek Vulcan Chronos Crashes on Startup

Maptek Vulcan Chronos Crashes on Startup - Update 25 June 2012

Maptek Vulcan Chronos Crashes on Startup - Update 25 June 2012

Yesterday I posted about a method to get Chronos running on a new computer that had never run Chronos before. It appears that the process to make that happen is slightly more involved than I had previously thought and also more disturbing.


To run Chronos for the first time on a new machine you must:
  1. Turn User Account Control (UAC) Settings completely off. I explain the particulars of this in yesterday's post 'Maptek Vulcan Chronos Crashes on Startup'. This will require a restart of your machine.
  2. Now that the UAC Settings are completely inactive (not protecting your computer) you can start Chronos without crashing Maptek Vulcan.
  3. Once Chronos has been run once without the protection of UAC you can return your settings to the default level (this will require another restart).
This process worries me. I don't know what was changed on my machine (because UAC was turned off when Chronos was finally, successfully started) but I know that something was definitely changed (because Chronos runs fine with the default UAC Settings). This is a change in addition to granting Vulcan access through the firewall to communicate with Excel while running Chronos.

I asked the Maptek folks what they were changing while my UAC Settings were disabled so I can keep everyone posted when I hear back.

*****Other posts on this topic*****

Maptek Vulcan Chronos Crashes on Startup

Maptek Vulcan Chronos Crashes on Startup


Chronos is the Maptek Vulcan scheduling package. It includes block by block scheduling as well as an optional schedule optimizer. In Windows 7, new installations of Chronos require special settings in order to open scheduling files.

I got a new computer today. I was pretty excited. Between the i7 processor, solid state hard drive and 16 GB of RAM I couldn’t wait to see what it did to my Chronos schedule. The initial answer was nothing. Chronos froze when attempting to open a new workbook. I couldn't believe it. It wouldn't open a new workbook, an old workbook or anything else. It just crashed Vulcan every time I tried to open Chronos.

The problem turned out to be with the way Maptek Chronos interacts with the Microsoft User Account Control Settings. These are the settings that dim your computer screen and pop up a panel to warn you that changes are being made to your computer (you remember the commercials with Mac and PC don’t you? The one where PC had a secret service agent protecting him? “Mac has issued you a salutation, cancel or allow?” This is that functionality). When Windows attempts to dim the screen and give you a warning, it interrupts Chronos and crashes Vulcan.

To avoid this problem you just need to turn the User Account Control Settings down a notch. Don’t turn them off (unless you really want to). Vulcan will work with just slightly fewer restrictions.
  1. Go to the Control Panel
  2. Select ‘User Accounts’
  3. Select ‘User Accounts’ (yes, you have to select the same option twice on consecutive panels if you are displaying the Control Panel by category. How dumb is that?)
  4. Select ‘User Account Control Settings’
  5. Lower the setting one notch to ‘Don’t notify me when I make changes to Windows settings’
  6. Click ‘OK’


Next time you start Chronos (you must restart Vulcan for changes to take effect) Vulcan should not crash. You can get this same result by right clicking on the Vulcan icon and selecting ‘Run as Administrator’ but you have to remember to do this every time you start Vulcan and want to open a Chronos schedule too and really, who wants to do that?

Having to modify the operating system in order to run software is not a best practice for expensive software. I asked Maptek support to log this as an upgrade and was informed that it is part of the ‘Development Roadmap.’ They wouldn’t give any more details than that so I’m not sure how serious they are about it. Saying that an upgrade is on the ‘Development Roadmap’ sounds a lot like working to ‘Make the Software Better.’ By which I mean to say that it is a good goal, but without any actual targets it is unlikely that anything will actually get done.

Next time you talk to Maptek support be sure to ask them about the ‘Development Roadmap’ and how the work on User Account Control Settings is coming.

*****New information about User Account Control Settings*****

Maptek Vulcan Chronos Crashes on Startup - Update 25 June 2012

Gold Fields Limited Grants Shares to Directors

Gold Fields Limited has recently announced that it has granted shares to directors T. McKeith and M.D. Fleischer. The share awards are for performance and bonus grants in the amounts of 62,963 and 45,456 shares respectively. The shares vest over the next three years. At current Gold Fields stock prices these shares represent a cash value of $865,741US for Mr. McKeith and $625,020US for Mr. Fleischer.

These awards represent a significant payday for these two directors. I hope the services rendered were of the same magnitude. Congratulations on the big payday gentlemen.

Chronos > Reserve Sheet > Import Dump File - Float Variable Accuracy

I really have an issue with how Chronos is importing my grade variables from the Maptek Vulcan dmp file into the Maptek Vulcan Chronos workbook. My gold and silver grades are stored in a ‘float’ type variable in the block model. The advanced reserves editor reports out sixteen decimal places for the weighted average metal grade. I know this because I can see it when I open the dmp file with a text editor or the csv file with Microsoft Excel. What happens when I import this data into Chronos is, it throws away twelve of the decimal places and only carries four decimal places for the gold and silver grades.

Chronos > Reserve Sheet > Import Dump File

I’m sure that someone, ‘back in the day,’ thought that four decimal places would be more than enough. If we were working with tonnage or volume or dollars or any other sum type variable, four decimal places would work fine, but we’re not. We’re working with grades, and now we have lost twelve significant figures.

It should be easy to point to differences between the dmp or csv advanced reserves output and the final schedule from Chronos, but it’s not.

Let me tell you what happens to me when I import ounces into Chronos:

The first thing I do after importing data into a new Chronos workbook (Chronos > Reserve Sheet > Import Dump File) is multiply the ore tons by the metal grade to show contained ounces in its own column. These contained ounces are used to calculate recovered ounces and reported out in the period summary of the completed schedule. I also compare them to the same column in the csv output from advanced reserves.

Now I have some explaining to do because they don't match. If I have a million ounces of metal in my schedule only the first four significant figures will be correct (1,000,???). That means that I am hundreds of ounces different from the csv file that is my quality control check. The total tons and volume are correct to four decimals but all of the grades are only sort of close. It took a long time to explain to my boss why the grades have a rounding error of several hundred, while the ore and waste tons had a rounding error of several ten-thousandths.

Can we please increase the accuracy of imported data in Maptek Vulcan Chronos? Vulcan is already exporting the data. The csv and dmp files can contain all the significant figures why can’t we import this same level of detail into Chronos?

View > Windows > Fit Layer...

From time to time I run into the frustrating scenario where I import data into Maptek Vulcan and nothing appears on the screen. If you run into the scenario where what you imported doesn't appear in Vulcan you need to use the View > Windows > Fit Layer... menu option.  There is always the chance that the file, either dxf or arch_d, didn't have any data in it but I have never seen that instance. Another instance of the same problem is where your imported data appears as a straight line at the side of the screen.

View > Windows > Fit Layer... menu option

Maptek Vulcan uses a Start-up Parameters file to define the 3D extents of the data displayed in Envisage. When you use the Zoom Data Extents option Vulcan searches a certain percent outside these extents (I think it is 10%) and if it doesn't find any data in that volume, it doesn't display anything. I don't know why Maptek Vulcan isn't searching the design database for CAD data or extents settings. This simple change would seem to fix all the problems that we are talking about in this post.

When you open the View > Windows > Fit Layer... menu option it is clear that this little panel has several options. Let's go through the options one by one:

  • Select by picking - This radio button will let you re-size the window to fit specific data.  Not helpful in the present scenario. In fact, I have never even thought of a scenario where I would want to do this but it is there just in case you come up with a psychotic case where you want to use it.
  • Select by name - This is the default option for the simple reason that you always want to choose this method, don't change it.
  • Layer name - You need to select a layer to use for fitting the window. This is obnoxious because I usually want to fit more data and can't. What ends up happening is I fit one layer and then reload the others. I wish Maptek would update the user friendliness of this method.
  • Object name - You have the option of selecting specific objects for fitting the window. I never use this option. Leave the asterisk in the field and everything in your layer will be selected.
  • Coordinate details only - This check-box seems to be out of place in this panel. It reports the x, y, z coordinates of the object extents. It's neat but doesn't fit the window to your data so I don't know why it is included with this option.
  • Name of window to fit - Give this field a unique name. If you attempt to re-use a window name and have data loaded nothing will happen. Once you have used the 'temp' name once, I suggest using 'temp1' or 'temp2' for subsequent window names.
  • Edit window parameters - This option will open the Edit Window panel and give you the opportunity to edit the settings for your new window. You don't want to do this, leave the check-box alone.
  • Transfer layer to window - This is the whole point of the panel, I don't know why you are given the option to not do this.

When you click 'OK' your layer will be opened in a new window. Now that you can see your data, you can edit your data. You might have to translate to your usual coordinate area or increase the coordinate range in your dg1 file in order to avoid this exercise next time.

Why is Kinross Tasiast Gold Mine back in Business?

Kinross Gold Corp announced today that its Tasiast Gold Mine has returned to normal after a strike that began June 5th.  The announcement said little else either when announcing its commencement or its conclusion.  I hope I'm not the only one who thinks that Kinross is doing an extremely lazy job of reporting the facts. Other people care that production was halted and want real answers about why it happened, don't they?

We all know that Kinross is going through some hard economic times and that most of its mines have been asked to cut back on expenses.  It is not unusual for a company in this position to impose austerity measures, but how much do you have to cut back for your African mine to go on strike?  I haven't ever been to Mauritania but if people are as poor there as they were in South Africa I hate to think how much you would have to cut back in order to prefer no income to what a gold mine could pay.

I'm also curious as to what was promised to get everyone back to work after only four days on strike? Did it really take such a little bit to make all the workers happy or did the mine realize that they had Kinross over a barrel and squeezed them for significant returns? Either way I'm disappointed that more outrage about the lack of transparency isn't being displayed.

File > Import > AutoCAD > Design Strings (dxf) - Beware Units

It has recently come to my attention that not everyone is using AutoCAD the same way.  In cases like this any way that is not 'my way' is automatically considered the 'wrong way' but this time I think 'my way' and the 'right way' are the same thing.  This past week I was using the Maptek Vulcan menu option: File > Import > AutoCAD > Design Strings (dxf) to import a dxf file from a reputable consulting firm.  I have imported lots of dxf files in my career and never had any problem with them.  Imagine my confusion, then, when this file imported in the completely wrong space.

Sometimes data comes into Maptek Vulcan in the wrong coordinate units and it is necessary to use the View > Window > Fit Layer... option to see the data on screen.  I am familiar with this error but this data was MY data and drawn in MINE COORDINATES. What was the problem?  I was even more confused when the data imported back into AutoCAD in the correct units.

The coordinates in Vulcan were much larger than the mine coordinates should have been, about 12 times larger.  After some back and forth with the consulting company it finally came to light that they do all their drafting in inches. The fix, after getting this information, was a simple scaling of the dxf file data but INCHES?  Who designs in inches?

Alright, I understand that AutoCAD was originally created for mechanical engineers and that drawings for machined parts could, legitimately, be drawn in inches. But we aren't in the machined parts business and neither are the mining consultants. I can't believe that anyone would be designing mine plans in anything other than feet or meters (maybe in yards if you work in coal). Inches are right out!

The other thing that bothers me here is that AutoCAD recognizes the coordinate units as inches and will convert them back to feet for you.  Why doesn't Maptek Vulcan do this? The coordinate units are a flag in the dxf file.  I think this is something my $50,000 software should take into account.

I requested an upgrade be logged for this improvement by the Mine Engineers at Maptek.  I haven't received a JIRA reference number for this yet but I will update this post when (if?) it arrives.

Kinross Tasiast Gold Mine on Strike

The Kinross Tasiast mine is reportedly having labor issues.  The gold company announced in a press release Wednesday that employees at their gold mine is Mauritania have gone on strike.  Tasiast was part of the disastrous Red Back purchase that caused Kinross to write off more than $3 billion in losses.  The company stock has taken a serious hit (~60%) since that time and this work stoppage is just one more strike against the company.

Kinross officials expect discussions to be complete quickly and for the mine to return to normal operations.  That is a good thing because the Tasiast mine produced around 200,000 gold equivalent ounces in 2011.  This production is needed to keep a positive outlook for 2012.

Proven and Probable Mineral Reserves - Defined

I was working with one of our accountants the other day when he asked me a funny question.  He said that he'd already received the schedule for the Proven and Probable (P&P) reserves but was wondering if we were going to do a schedule with Measured and Indicated (M&I) resources?

"Well no," I told him. "By the time we've run the Lerchs-Grossman algorithm on the data, designed the pits and scheduled the results all the M&I material in the schedule will have been converted to P&P."

This kind of miscommunication happens all the time.  Not just between mine engineers and accountants but between mine engineers and geologists.  Sometimes, it even happens between two professional mine engineers.

To help with this confusion I started looking online for some definition of P&P vs M&I material.  This proved to be surprisingly hard to find.  I expected to find specific definitions in Canada's National Instrument (NI) 43-101 but was surprised to find this was not the case.  In fact, I had a hard time finding the 43-101 document in the first place.  The listing for NI 43-101 is maintained by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM).  Their web page was so confusing that I still cannot find a way to navigate there through links on their site.  I finally found the actual link on Wikipedia.  Please find below the links to both NI 43-101 and the CIM website.

NI 43-101
Canadian Institute of Mining, Metallurgy and Petroleum (CIM)

Now that I finally found the document for NI 43-101 I was terribly distressed to discover that the definitions for P&P and M&I were not included with the document.  These definitions were included by reference to the CIM definition standards.  Here is the link:

CIM DEFINITION STANDARDS - For Mineral Resources and Mineral Reserves

The other place I thought to look was on the JORC website.  This is the Australasian equivalent of NI 43-101. The JORC website looks like it is 100 years old and designed by a third grader but it was much easier to navigate than the CIM website.  The JORC code includes the definitions right in the code, not by reference to another document.  I did notice that the JORC definition and the NI 43-101 definitions were suspiciously similar.  It seems that the mining industry has taken the concept of a global economy to heart.  The JORC and JORC Code can be found at the links below:

JORC
JORC Code

The majority of the world uses Canada's NI 43-101 or the JORC code as the defining guidelines for mineral deposit reporting.  They are much more robust than the American guidelines.  There are specific guidelines in the SEC code but in my search today I found this document from the Bureau of Mines and the US Geological Survey published in 1980.  The circular is five pages long and is about what most standards looked like before Bre-X came along.

USBM/USGS Principles of a Resource/Reserve Classification for Minerals

By the way, here are the definitions of Proven and Probable reserves from the CIM definition standards:

Probable Mineral Reserve
 A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated and, in
some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary
Feasibility Study.   This Study must include adequate information on mining, processing,
metallurgical, economic, and other relevant factors that demonstrate, at the time of
reporting, that economic extraction can be justified.

Proven Mineral Reserve
 A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral
Resource demonstrated by at least a Preliminary Feasibility Study. This Study must
include adequate information on mining, processing, metallurgical, economic, and other
relevant factors that demonstrate, at the time of reporting,  that economic extraction is
justified.  


Me Like Hockey?

It may come as a bit of a surprise to some of my Canadian friends, but I don't like hockey.  I realize that I may have misrepresented my affection for the sport on occasion, like when I wanted to get out of a restaurant without getting into a fistfight or at the beginning of a week on a mine site so I didn't have to have an argument with everyone, every time I saw them.



The part about 'got own real teeth' is probably my favorite part about this song.  The Arrogant Worms have lots of great songs.  Not all of them make fun of hockey.

Allied Nevada Gold Corp. Director Carl Pescio - Richer this week, Poorer this month

 In late May, Forbes.com published a story about Allied Nevada director Carl Pescio.  The article, Who Got Rich This Week, increased his net worth by $12.9 million in the week preceding 25 May 2012.  The article is completely factual, but also not quite fair.  The article states in part:
In addition to serving on the board of Allied Nevada Gold Corp., he (Carl Pescio) also holds 5.3 million shares of the gold mining company. Though the price of gold has receded from its fall 2011 highs, recent market volatility and general economic instability seems to have inspired enough fear to drive gold producers higher in anticipation of a flight to the yellow metal in the coming months. On the week Allied Nevada is up nearly 10%, with shares changing hands at $27.58 in early trading on Friday. As for Mr. Pescio’s shares, they are now worth $146.2 million, $12.9 million more than a week ago.
 It is true that Carl has 5.3 million shares of Allied Nevada stock and that the price jumped 10% that week.  What is not stated is that the stock price at the beginning of May was above $29 a share.  This means that, while Carl Pescio made $12.9 million in one week, he lost $7.5 million over the first 25 days of May.

I imagine that all big gainers feel this same way.  That their big gains are really just recouping some of the value they have built up over time.  Allied Nevada stock has a 52 week high of $45.54.  Carl has a long way to go to get back to that point.  I hope that the readers of this, if not Forbes.com, will forgive him for making some money this week after losing so much this year.

AngloGold Ashanti Purchases Serra Grande Mine from Struggling Kinross

AngloGold Ashanti has purchased the remaining 50% share in the Serra Grande mine from partner Kinross.  This gives AngloGold Ashanti 100% ownership of the mine.  The transaction increases Anglo's annual production by 70,000 gold ounces per year, ore reserve by 375,000 gold ounces and mineral resource by 1.186 million ounces of gold.

In 2011 the Serra Grande mine produced 134,000 gold ounces for a cash cost of $767 an ounce.  Given this cost and the additional 70,000 ounces of gold production, AngloGold Ashanti stands to profit about $50 million in the first year at a property that they were already operating (70,000 * (1500-767)).  Taking the selling price of $220 million and the increase to mineral reserves one can't help but speculate on the great deal that AngloGold Ashanti got from Kinross.

Kinross gold corp has been struggling since the acquisition of the Red Back property in 2011.  Earlier this year Kinross wrote off approximately $3 billion in goodwill following the purchase.  How many more great deals can Kinross offer to the market in order to stay solvent?

Goldcorp Monthly Dividend

Goldcorp announced yesterday that it will pay a monthly dividend for June of 4.5 cents per share.  Goldcorp has paid monthly dividends to shareholders since 2003. Shareholders are on par for a $0.54 per share dividend for all of 2012.  At about $40 per share that is 1.35 percent in dividends.

I like the idea of monthly dividends from a shareholder perspective, but isn't it more hassle than it's worth? How much paperwork needs to be filed by shareholders and by Goldcorp to have monthly dividends? How much time and effort and money is this costing? Wouldn't an annual $0.54 dividend do the same thing at a smaller expense?

Exercise Causes Heart Damage

An article by Jenny Heart at Mail Online says that researchers have found a negative connection between exercise and heart damage.  Alright, it is referring to marathoners and iron man contestants but this might be the excuse I need to finally avoid exercise for any significant amount of time. 

I know several people who are into the marathon and extreme endurance sports.  They are definitely damaging their bodies.  Mostly in reference to their feet.  I've never seen so much toe damage on someone who didn't have frostbite. 

The research claims that extreme endurance activities cause scarring of heart tissue which can lead to abnormal heart rhythm.  The condition is called Phidippides cardiomyopathy after the original marathoner who, ironically, died after completing the first marathon.

So, a word to the wise: stop exercising so much.

Maptek Vulcan - Triangulation Validity Check


In the Maptek Vulcan software, triangulation validity is an important aspect of the three dimensional shape.  The volume of a closed solid and the block model reserves are both dependent on the triangulation being valid.  Invalid triangulations may not return accurate volume or reserve information.

Escalante Silver Vein


Triangle validity in Maptek Vulcan consists of three tests: Closure, Consistency and Self-Intersection.  Two of the tests are fairly self-explanatory.  A closed triangulation is like a basketball, it has no holes in it through which air might escape.  A self-intersecting triangulation has triangle facets that intersect one another.  Consistent triangulations are a little less intuitive.

Triangulations which pass the test for consistency have no triangle side that is shared by more than two triangle facets.  The closure test has a similar requirement that each triangle side be shared by no less than two facets.  Inconsistent triangulations usually happen when two triangulations have been clipped (or booleaned) against one another.  The intersection has pinched out and then opened up again. The side where everything intersects is now shared by four triangle facets.  Fortunately, these inconsistencies are usually found at the edges of the triangulation and are easily ‘cut’ out of the solid using the Model > Triangle Utility > Cut tool.

To test a triangulation for validity you can use one of three menu options: Model > Triangle Utility > Check, Model > Triangle Solid > Check or Model > Triangle Edit > Check.  Interestingly, the Model > Triangle Surface sub-menu has no Check tool.  Depending on the context menu settings you may also right click on the triangulation and select Check.

In the ‘Check Triangulation Validity’ panel you may select which tests to perform and, subsequently, whether to save the boundary of the failure.  All three tests are selected by default.  When I save the boundary of the error I always select to save to a layer.  The layer is easier to work with than an underlay even though you have to remember to delete the layer later or have a lingering layer in your database.

Maptek Vulcan - Check Triangulation Validity


After clicking ‘Next’ the ‘Check Triangulation Stability’ panel is displayed.  Stability tests are not required to calculate an accurate volume or reserve.  If you look at the test, the stability tests intlude a tolerance value.  Presumably, you could set the tolerance to something so small that each of the tests (small surface area, small angles and coincident points) would pass.  Also included in this panel is the option to select triangulations on the screen or by name.  If by name is selected you will be prompted to browse for the triangulations to test.  That’s it, by clicking ‘Finish’ you can test all the selected triangulations for validity and stability.

Maptek Vulcan - Check Triangulation Stability


Just a quick tip.  When I test a large number of triangulations for validity I always de-select the stability tests.  These tests are not required for validity and this way I won’t get a long list of failed stability tests, just any validity failures.