Mining contracts how to read and understand them

Page 70

Pro​ duc​ tion

re​ v enues it will lose due to de​ creased pro​ duc​ tion, the co​ un​ ty would not want to see its mine pro​ duc​ tion de​ crease in an ot​ herw​ ise be​ nefici​ al mar​ ket for iron ore. Hence the need for pro​ duc​ tion mini​ mums. Dur​ ing ramp-up and then dur​ ing steady state pro​ duc​ tion, it will be in the in​ terest of both the mine op​ erator and the govern​ ment of​ fici​ als char​ ged to monitor the pro​ ject to main​ tain a re​ gular com​ munica​ tion. In​ spec​ tors from the govern​ ment mines in​ spec​ torate or from the Minist​ ry of the En​ v iron​ ment should make re​ gular visits to the site. Re​ lationship main​ tenan​ ce and com​ munica​ tion bet​ ween the mine / com​ p any and the govern​ ment and bet​ ween the mine and sur​ round​ ing com​ munit​ ies will be es​ senti​ al throug​ hout the pro​ duc​ tion per​ iod. The mine de​ sign, pro​ cess​ ing or upgrad​ ing re​ q uire​ ments, and the mar​ ket​ ing approach are also de​ p en​ dent on the type of miner​ al that is being mined and how it is de​ p osited in or on the ground. Wheth​ er it is a fuel miner​ al like coal or uranium; an in​ dustri​ al miner​ al like salt, kaolin, potash, titanium di​ oxide, metal​ lurg​ ical coal; a base metal like co​ p p​ er, zinc, lead, tin; a ferr​ ous metal like iron ore, tungst​ en, man​ ganese; a pre​ ci​ ous miner​ al like gold, silv​ er, platinum, di​ amonds and gemstones: their de​ p osition​ al charac​ teris​ tics will de​ ter​ mine how they are mined, pro​ ces​ sed and mar​ keted. For ex​ am​ p le, al​ luvi​ al gold may be mined using plac​ er or hy​ draulic met​ hods, while gold in quartz veins may need to extra​ cted mech​ anical​ ly from the ground, crus​ hed and then pro​ ces​ sed using grav​ ity re​ cove​ ry, mer​ cu​ ry amal​ gama​ tion or cyanida​ tion met​ hods to strip out the gold. In the case of cer​ tain polymen​ tallic ores, for ex​ am​ p le a nickel-copper-cobalt ore, the ore will have to be mined and con​ centrated, the con​ centrate smel​ ted to re​ cov​ er all of the pay​ able miner​ als. While nic​ kel may be the main pro​ duct, the co​ p p​ er and co​ balt may be value add​ ing co- or by-products, de​ p end​ ing on the ex​ tent to which they con​ tribute to the re​ v enue stream. De​ p end​ ing on the mar​ ket value of the miner​ al, it may be sold as run of mine ore, as con​ centrate, or as a metal matte or re​ fined metal. Whatev​ er the mar​ ket​ able pro​ duct is, and de​ p end​ ing on the ex​ tent of the pro​ cess​ ing oc​ cur​ ing at the mine, the pro​ duct may need to be stockpiled or warehoused until such time as en​ ough materi​ al has been ac​ cumulated to meet the IMC's sales com​ mit​ ments, or til trans​ p ort con​ di​ tions per​ mit it to be sent out. Again de​ p end​ ing on the pro​ duct's

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