PT INCO Ni Laterite Block Modeling 2010 08 23 PDF

PT.
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

Presentation Outlines
PT. International Nickel Indonesia Mines & Exploration
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
Regional & Local Geology
Jakarta 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.
Geomorphology
Matano Lake
Petea
Sorowako
Towuti Lake
West Type Deposit - Profile

West Type Deposit Bedrock Pinnacle

East Type Deposit - Profile

Ore Type Classification

CLASS PARAMETERS WEST BLOCK ORE TYPES EAST BLOCK & PETEA ORE TYPES
Main ore types -1 Type-1 -1 Type-2 -1 Type-3 -1 Hi Olivine -1 Lo 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% Low 5-10% Low 10-15% Low 10-15% Medium 15-25% High 30-60% V.High >60%
Magnetic susceptibility Very low Generally low Very high
SiO2/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
Geological Block Modeling

and
Resource Estimation
PT.INCO Strategic Mineral Resources &
Mineral Reserves
PTI Strategic Planning
Exploration
PTI MRMR
Public Reporting
Project Development Mine Planning / Design Expansion Projects
(Stock Exchanges)
LOM
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.INCO Block Models
PT. INCO Block Models

80
70 Block model production

block model week manpower
60 increases as the
exploration, drilling
Frequency
50
40
activities, and project
30
69 development increase in
20
all PTI concession area.
40
29 33 35
21 23 24 25 6 6
10 20
3 14 3 12 3 3
0
2004 2005 2006 2007 2008 2009
Year
Notes: Block Modeling duration increases as

2004-2005 Sorowako Project Area (SPA)
there are improvements in best practice
2006 SPA and Bahodopi
2007 SPA, Bahodopi, and Pomalaa
protocols and raising of major and trace
2008 SPA, Bahodopi, Pomalaa, SOA, and SCD elements
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.INCO Resource Estimation General Flow
Exploration Project
(geological interpretation, mapping, sampling, drilling, logging)
Sample House
Lab. Process & Technology
(sample preparation, acquire assays data, sample QAQC)
Geo-Evaluation & Validation

(acquire drill hole data, geological domains & validation)
3D Modeling & Estimation

(peer review & technical report)
Reconciliation
Pit Designing & Planning
Reporting & Classification

(Mineral Resources and Mineral Reserves)
PT. INCO Block Modeling General Flow
Geo-Evaluation &
Data Validation
No
Data Preparation Assays & Collars Create Drillhole
Yes Geological Domaining &

Wireframing
Exploratory data analysis
Block Model Prototype Sample Selection & Compositing
Unfold Composite Samples
Variography and
Estimation Parameters
Fatal Flaw
Parameters: Cut-off Grade,
Ore and Waste Thickness Grade Estimation (OK) Grade Estimation (NN)
Ore Definition Ni Volume Variance Correction
Output: Final Block Model with Grade and Product

Technical Report
& Peer Review
Validation
Prepare Block Model to Vulcan format
Automatic Check
Visual Check
Output: Block Model Ready to be Imported to Vulcan Check using tool
Drill hole Database & Data Validation
HQ3 ~ 2.406
Input: Assays Input: Collars
-1" FRAC -6" FRAC TOT FRAC
REC1 REC6 RECTOT
Create Assays Data Definition Create Collars Data Definition
DW1 DW6 DWTOT
NI1 NI6 NITOT
Verification
Read Assays Read Collars

CO1 CO6 COTOT
FE1 FE6 FETOT
SIO21 SIO26 SIO2TOT Set Grades value < 0.001 to blanks
MGO1 MGO6 MGOTOT

CR1 CR6 CRTOT
Output: Assays.dm Output: Collars.dm
AL1 AL6 ALTOT
MN1 MN6 MNTOT
CA1 CA6 CATOT
H2O1 H2O6 H2OTOT Statistics Create Drill holes Database Visual
Check
Univariate Statistics of Assays Output: Drill holes Database (Holes.dm);

Drill Holes summary; Drill Holes Errors
Geo Validation
Topography
Fe-MgO
- geological error.
- collars error against topography.
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
What do we look for: Outliers, trends, mixed population, bias of any sort & systematic
Why it is important: Garbage in Garbage out
indication of misclassification
Geological Model
- topography as top of limonite

- topography as reference for underlying layers
Wireframing Use GPR (Development)
Drillhole only for Wireframing
GPR testing at Songko, January 2010
Limonite
Saprolite
Bedrock
GPR testing at Songko Quary, January 2010

slagc
Drillhole & GPR for Wireframing
Bloulder
Soft material
Sample Composite
Parameters: composite length,

Drill holes Database minimum gap, maximum gap,
minimum composite length
Capture samples in layer limonite, saprolite and bedrock
Limonite samples Saprolite samples Bedrock samples
Sample regularization
Composite Drill holes samples
Composited Limonite Composited Saprolite Composited Bedrock Check compositing

Unfolding
Unfolding illustrations
Transforms a set of
Cartesian Coordinate
System into Unfolded
Coordinate System [UCS] as
Truncated defined by a stratified
geological unit.
Unfold make a spatial

correlation in a proportional
space and geometry.
Proportional
Variography
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
- 11 elements of experimental variogram in each layer.

- Variogram map to evaluate degree of anisotropy.
- Zonal anisotropy treatment .
Estimation Parameters
Estimation parameter Search strategy
Search ellipsoid
The search strategy should

be honored the drillhole
spacing
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?
Block Model Check
Nave QQ Plot
Parallel Modeling: Regardless of

Global Descriptive Statistics the method, the global mean should
still be the same.
Block Model Check
NN Model
Visual Inspection Plan View
Plan view visual inspection.

Compare the grade distribution
in NN and OK model. Make
sure the estimation run
correctly
OK Model
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
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.
Volume Variance Correction
volume variance
calculation
Limonite NN Saprolite NN
OK OK
COR COR
Block Model Ore Definition
Estimated
Block Model
Parameters:
Cut-off Grade (cog),
Create Simulated Drill holes Minimum Ore Thickness,
Maximum Waste Thickness
Composite Simulated Drill holes in zone LIMONITE and SAPROLITE

Using ORE and WASTE criteria
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
PRODUCT
Create Block Model Product
Block Model
Block Model Transfer
Datamine Block Model

The block model ready for external peer
review by:
- Long-term plan mine engineer
- Grade control geologist
Block Model converted to Vulcan
If there is no serious findings, the block

model approved by MRMR geologist,
Mine engineers and Grade Control
Peer review MRMR, LTP, GC geologist as valid block model.
Resource Classification
Current resource classification criteria:
+/-15% on tonnes and grade on a quarterly basis for measured, on

an annual basis for indicated and on a global basis for inferred (90%
level of confidence)
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:
Geostatistical drilling
Steep slope denser drilling
PT.INCO Mineral Resources & Mineral Reserves
Mineral Reserves
PTI Mineral Reserves
100 Proven Probable
90
80
70
DKP (Mt)
60
Mineral Resources 50
PTI Mineral Resources 40
600 30
Measured Indicated Inferred 20
500 10
0
400
2001 2002 2003 2004 2005 2006 2007 2008 2009
DKP (Mt)
300
MRMR (year)
200
100
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
MRMR (year)
THANK YOU

PT INCO Ni Laterite Block Modeling 2010 08 23 PDF

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PT.

International Nickel Indonesia Mines & Exploration

PT. INTERNATIONAL NICKEL INDONESIA

Mineral Resources & Mineral Reserves Group PT.INCO, August 2010

1. Regional & Local Geology

peridotites that have been

In Sorowako and Petea

West Type Deposit - Profile

West Type Deposit Bedrock Pinnacle

East Type Deposit - Profile

Ore Type Classification

Magnetic susceptibility Very low Generally low Very high

Difficulty of mining High Medium(+) Medium(-) Low Low Low Low

OB thickness Medium Generally high except at Petea

Geological Block Modeling

PTI Strategic Planning

The following slides summarized the geological block modeling and

1. The yearly MRMR readiness assessment and review

PT. INCO Block Models

70 Block model production

Notes: Block Modeling duration increases as

1. The quality of the interpretation (geological domaining) and

2. The quality of the geologic interpretations/wire frames will

3. There is no sophisticated geostatistic technique to correct for

Geo-Evaluation & Validation

3D Modeling & Estimation

Pit Designing & Planning

Reporting & Classification

Yes Geological Domaining &

Block Model Prototype Sample Selection & Compositing

Unfold Composite Samples

Ore Definition Ni Volume Variance Correction

Output: Final Block Model with Grade and Product

Read Assays Read Collars

MGO1 MGO6 MGOTOT

Univariate Statistics of Assays Output: Drill holes Database (Holes.dm);

What do we look for?

Only related sample should be used

- topography as top of limonite

GPR testing at Songko Quary, January 2010

Parameters: composite length,

Capture samples in layer limonite, saprolite and bedrock

Limonite samples Saprolite samples Bedrock samples

Composite Drill holes samples

Composited Limonite Composited Saprolite Composited Bedrock Check compositing

Unfold make a spatial

What do we look for?

- 11 elements of experimental variogram in each layer.

Estimation parameter Search strategy

The search strategy should

What do we look for:

Parallel Modeling: Regardless of

Plan view visual inspection.

Visual Inspection Section View

Regression methods such as Kriging may result in an over-smoothing or under-smoothing of

Composite Simulated Drill holes in zone LIMONITE and SAPROLITE

Assign ORE and WASTE products to composite using cog

Merge with original simulated Drill holes

Reclassify WASTE above ORE became OB and

Assign BZ product to all bedrock composite

Datamine Block Model

If there is no serious findings, the block

Current resource classification criteria: