Defining the Canadian-Class Gold Mine

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Defining the Canadian-Class Gold Mine. Michael Doggett Department of Geological Sciences and Geological Engineering, Queen’s University Jianping Zhang Minerals, Oil and Gas Sector Resources, Wildlife and Economic Development Government of the Northwest Territories PDAC Toronto 9 March 2004.
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Defining the Canadian-Class Gold MineMichael DoggettDepartment of Geological Sciences and Geological Engineering, Queen’s UniversityJianping ZhangMinerals, Oil and Gas Sector Resources, Wildlife and Economic DevelopmentGovernment of the Northwest TerritoriesPDACToronto9 March 2004Case Study: Canadian Gold Mining
  • 228 gold mines operating in Canada from 1946-2000
  • Production profile for each mine
  • Annual tonnage processed
  • Annual average grade processed
  • Annual processing recoveries
  • Annual gold production
  • Annual production costs
  • Canadian Gold Mining
  • Production profiles include entire mine life plus reserves as of January 2001
  • Total ore processed – 1.1 billion tonnes
  • Total gold produced – 7,700 tonnes
  • Total production years – 3,500 years
  • Geological Attributes of Canadian Gold Mines
  • Composite year-over-year statistics
  • Totals and averages
  • Mine-by-mine comparisons
  • Geological size considerations
  • Year-over-Year Geological Attributes
  • Number of mines
  • Ore processed
  • Total and average
  • Grade of ore processed
  • Gold Production
  • Total and average
  • Trend in Number of Gold Mines, 1946-2000Trend in Total Ore Milled, 1946-2000Trend in Average Ore Milled, 1946-2000Trend in Average Grade of Ore Milled, 1946-2000Trend in Total Gold Production, 1946-2000Trend in Average Gold Production, 1946-2000Relationship Among Geologic Attributes
  • Tonnage - grade
  • Tonnage - gold
  • Grade - gold
  • Tonnage-Grade Distribution of the 228 MinesTotal Ore Milled vs. Total Gold ProductionTotal Gold Production vs. Ore GradeGeological Size Considerations
  • Giant mines – containing more than 100 tonnes of recoverable gold
  • Large mines – containing less than 100 tonnes and more than 10 tonnes of recoverable gold
  • Small mines – containing less than 10 tonnes of recoverable gold
  • Cumulative Production and Number of MinesCumulative Coverage of Production by Number of MinesGeologically Giant Mines
  • 22 mines (10% of total)
  • 605 million tonnes of ore (55% of total)
  • Average size of 30 million tonnes
  • 4,845 tonnes of gold (63% of total)
  • Average gold production 220 tonnes
  • 8.58 grams per tonne average grade
  • Average mine life of 50 years
  • Geologically Large Mines
  • 78 mines (34% of total)
  • 420 million tonnes of ore (39% of total)
  • Average size of 5.4 million tonnes
  • 2,494 tonnes of gold (32% of total)
  • Average gold production 32 tonnes
  • 6.27 grams per tonne average grade
  • Average mine life of 25 years
  • Geologically Small Mines
  • 128 mines (56% of total)
  • 65 million tonnes of ore (6% of total)
  • Average size of 0.6 million tonnes
  • 371 tonnes of gold (5% of total)
  • Average gold production 2.9 tonnes
  • 6.23 grams per tonne average grade
  • Average mine life of 6.2 years
  • Geological Attributes of the Giant, Large, and Small MinesComparison of Total Geological Attributes among Giant, Large, and Small MinesTime Trends in Geological Size Attributes
  • Number of mines
  • Ore processed
  • Annual Capacity
  • Gold produced
  • Trend in Number of Giant, Large, and Small MinesTrend of Ore Milled by Giant, Large, and Small MinesTrend of Average Mine Capacity of Giant, Large, and Small MinesTrend of Gold Production of Giant, Large, and Small MinesTrend in Gold Production Share by Giant, Large, and Small MinesEconomic Quality of Canadian Gold Mines
  • Which of the historical mines would be economic if found today
  • Current technological and market outlook conditions
  • Base case gold price - $325 US
  • Base case exchange rate – 0.65
  • Base case cost of capital – 8%
  • Economic Attributes
  • On a before-tax basis, 102 of the 228 historical mines in Canada would be economic to develop today
  • These mines would generate approximately:
  • $100 billion in total sales revenue
  • $15 billion in net present value
  • 45% average rate of return
  • Tonnage-Grade Relationship between Economic and Uneconomic MinesEconomic Size Considerations
  • Giant mines – top 10% of mines based on NPV. Minimum size of $440 million
  • Large mines – generate less than $440 million and more than $44 million in NPV
  • Small mines – generate less than $44 million in NPV (1 to 10 ratio with giants)
  • Cumulative Net Present Value by Number of MinesCumulative Coverage of Net Present Value by Number of MinesEconomic Giant Mines
  • 10 mines (10% of total)
  • $47 billion total revenue (43% of total)
  • Average revenue of $4.7 billion
  • $7.1 billion in NPV (49% of total)
  • Average rate of return of 50%
  • Economic Large Mines
  • 42 mines (41% of total)
  • $43 billion total revenue (40% of total)
  • Average revenue of $1.02 billion
  • $6.4 billion in NPV (44% of total)
  • Average rate of return of 45%
  • Economic Small Mines
  • 50 mines (49% of total)
  • $18 billion total revenue (17% of total)
  • Average revenue of $0.4 billion
  • $1.0 billion in NPV (7% of total)
  • Average rate of return of 27%
  • Comparison among the Giant, Large, and Small MinesSUMMARYBreakdown of Economic and Uneconomic Mines by Recoverable Gold
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