Bull/Bear Markets and Mine Plans

Gold bullion

This week, I read several articles on gold’s bear run on the markets (you can find my favorite here). Several news outlets noted that gold dipped below $1,500/oz., which takes it below 20% of its peak price (the official definition of a bear market). This made me wonder how this trend, if it were to continue (not that I think it will), affects the current mine plans at gold mines. If the trend continues, those of you in long-range mine planning are going to be getting calls from your boss (or the corporate office) asking for revisions to the current plan using different gold prices. In this post, I intend to share my thoughts on how mine engineers account for market volatility in long-range mine plans.

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Assessing uncertainty: What is the most important variable?

Dice

Many mine engineering analyses involve uncertainty due to variability in input variables. Examples include mine production planning analyses with uncertainty surrounding production rates and other production parameters and geomechanics analyses with uncertainty around rock properties. Simple methods can be effective in some cases but can be limiting in others. Regardless of what approach one takes it is important to focus such analyses on the most important variable(s) (i.e. those that cause the most uncertainty). In this post, I will attempt to show the relationship between input variables and uncertainty, which might help you to focus on the key variables the next time you have to do such analyses.

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