Coronavirus
Coronavirus Is Apparently Much Worse Than We Thought
February 10, 2020
Impact Silver
Impact Silver: Rising Silver Prices and Potential Gold Finds Should Revalue Stock
February 24, 2020

NexGen Technology Will Drive Precious Metals Mining Into the Future

The mining industry is badly in need of innovation. The quality of new deposits discovered in the precious metals is going down, and reserves in the industry are being depleted.

Declining Gold Reserves

Declining Gold Reserves

Because the reserves are getting harder to replace, companies are turning to other methods for obtaining more metal. After a flurry of M&A activity in 2019, including mergers of the largest tier gold miners at very low premiums, companies have to try more organic solutions for finding the metals.

Silver Reserves Declining

Silver Reserves Also Declining

In a climate of declining reserves and grades for gold and silver, miners only have one option to maintain their supply. Miners are starting to implement new technologies to locate, extract, and refine the metals from the ground and get them to market at lower overall costs. A fine example we documented in 2018 for First Majestic was the installation of a roaster at La Encatada , micro-bubble flotation, and high-intensity grinding to improve ore grades going through the mill.

Ore Processing Improvements

These advancements reduce expensive processing of waste rock and increases metal recovery rates per ton of ore. First Majestic exceeded their goal of increasing recovery rates for silver by 5% using these technologies. McKinsey Metals and Mining notes that improving at the 5% level is basically the equivalent of opening a new mine, without the additional capital expenditure costs. Miners will need the improvements to offset falling mine productivity.

Mining Productivity Falling

Falling Mine Productivity

One very promising technology uses plasma to super heat the ore and separate out the metal deposits, yielding an improvement of up to 1000% over conventional mechanical mining methods. Mining technology notes that:

Complex ores such as zinc, nickel , copper and lead often conceal ‘latent’ precious metals, which conventional metallurgy cannot uncover or extract in any significant quantity, as they are ‘encapsulated’ by the ores’ complex structures. But this may not prove to be a problem for much longer – if technology created by US-based Toss Plasma Technologies (TPT) is as effective as recent assays carried out by the company have suggested.

Optimizing Maintenance and Reduce OPEX

Another way miners can reduce costs is to optimize maintenance of their plant and equipment. McKinsey outlines an example one miner users to reduce system down time.

One company used sensors and machine learning to implement predictive maintenance in very large (20-ton) heat exchangers. The model was able to predict when the exchangers would fail, reducing maintenance from once every 70 days to as long as once every 160 to 200 days. Given that there were dozens of heat exchangers, the cost savings have been substantial.

Another way to reduce operating costs is to implement robotic automation. An example would but autonomous vehicle haulers that move payload from mine to processing plant. A second example would be automated blast hole drilling, which also increases safety for workers. A third method is networking systems within the mine to communicate data real time, such as output from operations into a central view for operations management to oversee production. The implications of advanced wireless networking within mines are nearly unlimited.

Five Areas Digitization

Five Areas Digitization

Mapping the Resources

Perhaps the single biggest challenge in mining comes from finding and mapping where the good stuff is in the ground. Technology development in the area is helping geologists not only locate the resource, but mapping highest concentrations of resource within a field for prioritizing the mine plan.

Understanding the Resource Base

The biggest advancements in mapping have come through the use of satellite imagery, gravity density measurement, 3d laser mapping, and radar. Abhishek Nagaraj, a professor at UC Berkeley’s Haas School of Business, determined that Landsat satellite imagery could double the success of finding ore bodies while controlling for variables like the price of gold and the level of financial support for mining in each country. The University of Western Australia, in partnership with Rio Tinto, have developed an advanced gradiometer that measures density of ore bodies in the earth, helping scientists locate new metal deposits.

Rio Tinto Gradiometer

Rio Tinto Gradiometer

Companies are also using drones to revisit old mines that may not be safe for people to traverse. The old mines are becoming more economic as precious metals prices rise, along with the technology improvements companies are coming up with to improve their mining recovery rates.

Drone Prep Gold Mine

Drone Prep Gold Mine

Logistic Improvements

Companies are also finding ways to become more operationally efficient, reducing costs from truck to market for their products. This includes use of technology along the mining operations chain, which include exploration and mapping, mining and processing, supply chain and logistics, and marketing and trading. The following chart shows how technology is used throughout the mining process.

BCG Analysis on Efficiency

BCG Analysis on Efficiency

For example, companies are using artificial intelligence to take advantage of market intelligence and exploit arbitrage opportunities in the commodities markets. This helps companies realize the best prices for their products. While the commodity products are typically the same across miners (gold is gold, silver is silver), these opportunities offer an price advantage to smart companies using market data.

Conclusion

Value at Stake Mining Tech

Gone are the days of the old miners prospecting the ground for resource. Now, resources are harder to find, extract, and more expensive to get to market allowing companies to make a profit. More technology will be implemented to improve cost efficiencies as well as production rates. The successful miners will implement these technologies to increase their profits. In addition, we expect the wide implementation of these technologies to increase re-mining of old projects, extracting more resource from the ground over time than previously thought. These solutions should sooth precious metals investors worried about the lack of big project discoveries. Instead, the smart investor will look for companies that integrate technology to squeeze more production from existing deposits than traditional methods allow. As in most areas of life these days, the geeks will rule the mining industry as well.