Photo by Ian Wollff
MGEI Brunch Talk “How to turn allegedly small / marginal deposits into Mine / Production” was held in Jakarta on the 29 August 2019. The half day event was attended by about 100 people, including 9 women. The event was held in Bahasa Indonesia. I apologize for any errors or omissions in these notes.
Dr. Lukas Dony (from MGEI think tank) as moderator introduced the speakers and some background to the topic. The object of this conference is to target legal IUP’s with apparently small/ marginal deposits. The option to develop many small mines will bring employment and opportunities to many regions throughout Indonesia. This conference excludes illegal / artisan mining operations.
· Dony has experience to bring investors to a project, but the project owners rarely prepare a good presentation.
· General industry promotion is well supported by some companies, being active in conferences and research.
· There is much unrealized mineral potential in Indonesia, particularly in the gold, base metal & rare earth sectors.
· Need both theory and good management to make the exploration business & industry work.
Iwan Munajat – Independent Consulting Geoscientist. Presentation “Small but not that small” in gold mining.
· General distinction between small scale and illegal/ artisan mining is in the application of good – mining practice, environment, taxpayer and SHE. Small scale is now considered less than 100,000 Oz / year of gold production.
· These deposits to be approached in a standard manner to consider ore type, mine plan, metallurgy, and non-technical matters.
It is recommended that smaller mines need friendlier mining rules, simplified forestry permits, and improved access to funding.
Ridho Lestari – GM Metallurgy Projects & Development, J. Resources Nusantara. “Give it a go”.
· Formal Feasibility Studies (FS) for a gold project may take 5-7 years, and cost $5-10 million for drilling, $2-5 million for technical studies, plus a further $30-100 million capital development budget. Not every company can afford the time & cost to undertake a risk reducing Feasibility Study.
· One option is to install a small-scale cheap vat leaching plant, to generate positive cash flow to fund more complete studies and a larger operation. Various examples from Peru, Tanzania, China given. One key element is to pre wash the ore to extract readily soluble elements that may result in less cyanide consumption.
Lufi Rachmad – Principal GEOMINE Indonesia. “Nothing is impossible”.
· Defines small gold deposits as being barely able to make a profit at current commodity prices, particularly for low grades of ore.
· Review marginal deposit from mine planning / financial modelling perspective. Look at prospects from the concept of mining efficiency, potential exploration upside, spatial arrangement within the lease and other factors.
· Gives a number of indicative technical criteria on minimum ore grades, cost of power, labour cost, contractor & process options etc.
· Predicting gold price is one of the more difficult aspects of a FS.
· Finding a good mine owner is a critical factor.
Adi Maryono – VP. Exploration, PT. J. Resources Nusantara. “Small is beautiful….geopreneurs wanted’
· Brief global look at exploration and deposit size. Indonesia should not just look for the global 4% of giant deposits, but also look for the global 70% of small deposits.
· Brief look at gold ore genesis, particularly from Indonesian’s potential deposits. Outline fundamental steps for an exploration to feasibility study work program. Examples of ore petrology that impact on project direction.
· Recommend to look for small gold deposits, say 5 – 100 million ton with grade 0.3- 10 g/t. It may be a suitable exploration strategy to not drill out a life of mine deposit, but to do sufficient exploration work to get started with production.
· Lessons learnt include: – holistic exploration approach, select right mining district, discover & delineate multiple small deposits, small scale production simultaneous as ongoing exploration, good mining practices.
· There is no fixed definition of small / marginal deposits, wherein this conference reflects the considerable experience of the speakers.
· The IDX needs to protect investors against unreasonable risk / loss, wherein small deposits represent increased project risk. A large deposit can more readily withstand some unexpected shortfalls before a profit is reached. Owners need to identify good & reliable geologist / miners – hence the introduction of the KCMI – CPI system.
· In the past, some giant global exploration companies identified a number of Indonesian gold deposits that turned out to be too small for their business / risk model. However, many of these “passed over’ deposits are now considered as good small mine targets.
Overview by Ian Wollff.
1. Geologists looking to take the next step from this conference, and wish to look at potential small-scale deposits, are advised to purchase the MEGI published book by Theo Van Leeuwen “25 More years of mineral exploration and discovery in Indonesia 1993 – 2017”.
2. The Indonesia Governments policy to award new exploration tenements in relatively small areas with excessive “data fee” (more than $10 million) is a significant starting barrier for new exploration for small deposits.
3. The presenters tend to be well experienced, and some nearing retirement. The audience tends to be moderately experienced geologists and engineers. There is a clear “experience gap” that has developed as a consequence of the extended new tenement / grass roots exploration moratorium. Most geologists are currently working in an active mine, and may be conducting some brownfield exploration. A very few may be engaged by mining companies or consultants to undertake limited exploration for project acquisition. There is a significant skill gap in the area of basic greenfield exploration and related exploration management. These presentations are a first small step towards rectifying such industry skill gaps.
Principal Geologist. Independent Consultant