International Nickel Indonesia Mines & Exploration
PT. INTERNATIONAL NICKEL INDONESIA LATERITE GEOLOGICAL BLOCK MODELING AND RESOURCE ESTIMATION Mineral Resources & Mineral Reserves Group PT.INCO, August 2010 PT. International Nickel Indonesia Mines & Exploration Presentation Outlines 1. Regional & Local Geology 2. Introduction: Block Modeling & Resource Estimation 3. Data Validation and Geological Validation 4. Geological Domaining and EDA 5. Wireframing, Sample Selection and Compositing 6. Variography 7. Estimation Parameters 8. Block Model Check 9. Volume Variance Correction 10.Ore definition 11.Resource Classification PT. International Nickel Indonesia Mines & Exploration Regional & Local Geology J akarta Makassar peridotites that have been serpentinised to varying degrees. In Sorowako and Petea the rocks are dominantly harzburgite and lherzolite with lesser dunite and rare pyroxenite. PT. International Nickel Indonesia Mines & Exploration Regional & Local Geology Geomorphology Sorowako Petea Matano Lake Towuti Lake PT. International Nickel Indonesia Mines & Exploration Regional & Local Geology West Type Deposit - Profile PT. International Nickel Indonesia Mines & Exploration Regional & Local Geology West Type Deposit Bedrock Pinnacle PT. International Nickel Indonesia Mines & Exploration Regional & Local Geology East Type Deposit - Profile PT. International Nickel Indonesia Mines & Exploration Regional & Local Geology Ore Type Classification CLASS PARAMETERS WEST BLOCK ORE TYPES EAST BLOCK & PETEA ORE TYPES Main ore types -1Type-1 -1Type-2 -1Type-3 -1Hi Olivine -1Lo Olivine -6 -18 Ultramafic rock Generally harzburgite with some dunite Generally lherzolite at Sorowako East Block; generally harzburgite at Petea. Level of serpentinisation Nil <5% Low5-10% Low10-15% Low10-15% Medium15-25% High 30-60% V.High >60% Magnetic susceptibility Very low Generally low Very high SiO 2 /MgO ratio 2.2 2.6 1.8 2.0 1.6 1.8 1.4 1.6 Iron content High: 20-24% High: 20-24% Low: 15-18% Optimum screen size -1 -1 -1 -6 -18 Screen rec. ROM to DKP 25-30% 35% 35% 50% 60% Alternate screen size No alternate size available No alternate size -6 -18 Entire ROM Screen recovery at alternate size No alternate size available No alternate size 50% 60% 67% Hardness of boulders Extremely hard Very hard Medium hard Medium hard Soft Soft Fracture density Very low Medium Medium Medium High Very high Very high Difficulty of mining High Medium(+) Medium(-) Low Low Low Low Saprolite thickness (auger) <1.5m 1.54.5 m >4.5m Note used for classifying East Block ore types Olivine content in the benf. ore Medium Medium Medium Low Low Low Low Olivine content in the rocky frc. High High Low Low Low OB thickness Medium Generally high except at Petea Ore thickness High Medium PT. International Nickel Indonesia Mines & Exploration Geological Block Modeling and Resource Estimation PT. International Nickel Indonesia Mines & Exploration PT.INCO Strategic Mineral Resources & Mineral Reserves Exploration PTI MRMR Mine Planning / Design Public Reporting (Stock Exchanges) Project Development Expansion Projects LOM PTI Strategic Planning PT. International Nickel Indonesia Mines & Exploration Introduction The following slides summarized the geological block modeling and resources estimation activity at PT International Nickel Indonesia. Improvement and development are conducted continuously based on: 1. The yearly MRMR readiness assessment and review 2. An external audit findings and recommendations; AMEC (2005, 2007, 2008) and Golder (2010) 3. Continuous studies to support the operation and to improve resources estimation best practices. PT. International Nickel Indonesia Mines & Exploration PT.INCO Block Models Block model production increases as the exploration, drilling activities, and project development increase in all PTI concession area. PT. INCO Block Models 29 21 23 40 69 33 20 14 12 24 25 35 3 3 3 3 6 6 0 10 20 30 40 50 60 70 80 2004 2005 2006 2007 2008 2009 Year F r e q u e n c y block model week manpower Block Modeling duration increases as there are improvements in best practice protocols and raising of major and trace elements Notes: 2004-2005 Sorowako Project Area (SPA) 2006 SPA and Bahodopi 2007 SPA, Bahodopi, and Pomalaa 2008 SPA, Bahodopi, Pomalaa, SOA, and SCD PT. International Nickel Indonesia Mines & Exploration Introduction Key Factors: 1. The quality of the interpretation (geological domaining) and subsequent modelling is predicated by a thorough validation of the drill hole data with emphasis on chemistry. 2. The quality of the geologic interpretations/wire frames will reflect on the quality of the block model and any conclusions derived from it. 3. There is no sophisticated geostatistic technique to correct for a poor interpretation. Be rigorous in validating the resultant models as mistakes are easy to make but at times hard to detect. PT. International Nickel Indonesia Mines & Exploration PT.INCO Resource Estimation General Flow Exploration Project (geological interpretation, mapping, sampling, drilling, logging) Sample House (sample preparation, acquire assays data, sample QAQC) Geo-Evaluation & Validation (acquire drill hole data, geological domains & validation) 3D Modeling & Estimation (peer review & technical report) Lab. Process & Technology Reporting & Classification (Mineral Resources and Mineral Reserves) Pit Designing & Planning Reconciliation PT. International Nickel Indonesia Mines & Exploration PT. INCO Block Modeling General Flow Grade Estimation (OK) Assays & Collars Ore Definition Ni Volume Variance Correction Data Preparation Create Drillhole Wireframing Sample Selection & Compositing Block Model Prototype Unfold Composite Samples Output: Final Block Model with Grade and Product Parameters: Cut-off Grade, Ore and Waste Thickness Prepare Block Model to Vulcan format Output: Block Model Ready to be Imported to Vulcan Geo-Evaluation & Data Validation Geological Domaining & Exploratory data analysis Yes No Variography and Estimation Parameters Technical Report & Peer Review Automatic Check Visual Check Check using tool Validation F a t a l
F l a w Grade Estimation (NN) PT. International Nickel Indonesia Mines & Exploration Drill hole Database & Data Validation Create Assays Data Definition Create Collars Data Definition Read Assays Input: Assays Input: Collars Set Grades value < 0.001 to blanks Output: Assays.dm Output: Collars.dm Create Drill holes Database Output: Drill holes Database (Holes.dm); Drill Holes summary; Drill Holes Errors Statistics Univariate Statistics of Assays V e r i f i c a t i o n Visual Check Read Collars HQ3 ~ 2.406 -1" FRAC -6" FRAC TOT FRAC REC1 REC6 RECTOT DW1 DW6 DWTOT NI1 NI6 NITOT CO1 CO6 COTOT FE1 FE6 FETOT SIO21 SIO26 SIO2TOT MGO1 MGO6 MGOTOT CR1 CR6 CRTOT AL1 AL6 ALTOT MN1 MN6 MNTOT CA1 CA6 CATOT H2O1 H2O6 H2OTOT PT. International Nickel Indonesia Mines & Exploration Geo Validation - geological error. - collars error against topography. Topography Fe-MgO PT. International Nickel Indonesia Mines & Exploration Geological Domain & EDA What do we look for? - Does volume properly isolate the domain being evaluated? - Is it consistent with the geological control rule? Only related sample should be used and dont want to mix population PT. International Nickel Indonesia Mines & Exploration Geological Domain & EDA What do we look for: Outliers, trends, mixed population, bias of any sort & systematic Why it is important: Garbage in Garbage out PT. International Nickel Indonesia Mines & Exploration Geological Domain & EDA indication of misclassification PT. International Nickel Indonesia Mines & Exploration Geological Model - topography as top of limonite - topography as reference for underlying layers PT. International Nickel Indonesia Mines & Exploration Wireframing Use GPR (Development) GPR testing at Songko, J anuary 2010 GPR testing at Songko Quary, J anuary 2010 Drillhole only for Wireframing Drillhole & GPR for Wireframing slagc Bloulder Soft material Limonite Saprolite Bedrock PT. International Nickel Indonesia Mines & Exploration Sample Composite Drill holes Database Capture samples in layer limonite, saprolite and bedrock Parameters: composite length, minimum gap, maximum gap, minimum composite length Limonite samples Saprolite samples Bedrock samples Composite Drill holes samples Composited Limonite Composited Saprolite Composited Bedrock Check compositing Sample regularization PT. International Nickel Indonesia Mines & Exploration Unfolding Truncated Proportional Unfolding illustrations Transforms a set of Cartesian Coordinate System into Unfolded Coordinate System [UCS] as defined by a stratified geological unit. Unfold make a spatial correlation in a proportional space and geometry. PT. International Nickel Indonesia Mines & Exploration Variography - 11 elements of experimental variogram in each layer. - Variogram map to evaluate degree of anisotropy. - Zonal anisotropy treatment . What do we look for? - Quality of the experimental variograms - Sill vs sample variance - Appropriate model(s) used - Appropriate Ranges Why is it important? - Variogram is foundation of geostatistics - Used as a critical input to Kriging - Used to determine weights in estimation - Process is Data driven PT. International Nickel Indonesia Mines & Exploration Estimation Parameters Estimation parameter Search strategy Search ellipsoid The search strategy should be honored the drillhole spacing PT. International Nickel Indonesia Mines & Exploration Block Model Check What do we look for: - Does the model honor the sample data? - Does the model honor the search ranges? - Do all the blocks have been estimated? Why is it important: - Verify that the estimation parameters were appropriate? - Verify that the correct data was used? PT. International Nickel Indonesia Mines & Exploration Block Model Check Nave QQ Plot Parallel Modeling: Regardless of the method, the global mean should still be the same. Global Descriptive Statistics PT. International Nickel Indonesia Mines & Exploration Block Model Check NN Model OK Model Visual Inspection Plan View Plan view visual inspection. Compare the grade distribution in NN and OK model. Make sure the estimation run correctly PT. International Nickel Indonesia Mines & Exploration Block Model Check Visual Inspection Section View Compare the grade distribution in NN and OK model. Make sure the estimation run correctly. NN Model OK Model PT. International Nickel Indonesia Mines & Exploration Volume Variance Correction Regression methods such as Kriging may result in an over-smoothing or under-smoothing of the grade variability producing a block grade distribution with a variance that is lower or higher than expected. This expected variance can be calculated using Kriges relationship which states that the dispersion variance for the samples within the deposit is the sum of the dispersion variance of samples within the blocks and the dispersion variance of the blocks within the deposit To capture the variability within short range (distance), the close space drilling is needed. Also regarding the SMU, the variability within the sort range is needed as the references for the variance inside the SMU. PT. International Nickel Indonesia Mines & Exploration Volume Variance Correction volume variance calculation OK NN COR Limonite Saprolite OK NN COR PT. International Nickel Indonesia Mines & Exploration Block Model Ore Definition Estimated Block Model Create Simulated Drill holes Composite Simulated Drill holes in zone LIMONITE and SAPROLITE Using ORE and WASTE criteria Parameters: Cut-off Grade (cog), Minimum Ore Thickness, Maximum Waste Thickness Assign ORE and WASTE products to composite using cog Merge with original simulated Drill holes Reclassify WASTE above ORE became OB and WASTE below ORE became BZ Assign BZ product to all bedrock composite Create Block Model Product PRODUCT Block Model PT. International Nickel Indonesia Mines & Exploration Block Model Transfer Datamine Block Model Block Model converted to Vulcan The block model ready for external peer review by: - Long-term plan mine engineer - Grade control geologist If there is no serious findings, the block model approved by MRMR geologist, Mine engineers and Grade Control geologist as valid block model. Peer review MRMR, LTP, GC PT. International Nickel Indonesia Mines & Exploration Resource Classification Current resource classification criteria: Current resource classification criteria: +/ +/- -15% on tonnes and grade on a quarterly basis for measured, on 15% on tonnes and grade on a quarterly basis for measured, on an annual basis for indicated and on a global basis for inferred an annual basis for indicated and on a global basis for inferred (90% (90% level of confidence) level of confidence) PTI criteria: 25 or 50m for measured, 100m for indicated PTI criteria: 25 or 50m for measured, 100m for indicated Measured Indicated Inferred Drill spacing (m) 25 or 50 100 200 Sampling type Core drill Core drill Core and/or Auger drill Other improvement in resource classification: Other improvement in resource classification: Geostatistical drilling Geostatistical drilling Steep slope denser drilling Steep slope denser drilling PT. International Nickel Indonesia Mines & Exploration PT.INCO Mineral Resources & Mineral Reserves Mineral Reserves 0 100 200 300 400 500 600 D K P
( M t ) 2001 2002 2003 2004 2005 2006 2007 2008 2009 MRMR (year) PTI Mineral Resources Measured Indicated Inferred 0 10 20 30 40 50 60 70 80 90 100 D K P
( M t ) 2001 2002 2003 2004 2005 2006 2007 2008 2009 MRMR (year ) PTI Mineral Reserves Proven Probable Mineral Resources PT. International Nickel Indonesia Mines & Exploration THANK YOU THANK YOU