Mining resources and asset management
Business and development plan
Codelco prepares an annual Business and Development Plan that has short, medium and long-term projections.
The Plan includes cost, expenditure and income flows, investments and funding generated during the period that, based on the Mining Plan, are required to extract all the mineral resources and reserves that sustain the business during the period covered.
A Triennial Plan is prepared based on the above plan, which is then put to the consideration of the Ministries of Mining and Finance under the terms specified by the new Corporate Governance in effect since 1 March 2010.
Mine resources and reserves
In conformity with standard industrial practices, Codelco divides its mineral inventory into geological resources, mineral resources and ore reserves.
Geological Resources (measured, indicated and inferred) are mineral concentrations identified and estimated through exploration, geological evidence and sampling. If the resources are of economic interest and present reasonable prospects for eventual extraction, then they are known as mineral resources.
Reserves represent the measured and indicated mineral resources that are economically feasible for extraction, based on a productive, technological and sustainable scenario included in a mining plan.
In 2005, Codelco established a new criterion to divide Geological Resources, Mineral Resources and Ore Reserves for its deposits, through the Codelco Corporate Standard no. 31 revision 1 (NCC31). This standard is based on three main pillars: data quality, geological continuity and confidence in resource estimate.
This classification provides global measures, consistent across Corporate Divisions; a comprehensive and auditable monitoring of the classification process, and a control tool to determine the quality of the geological modelling and estimation process. The classification criterion for Codelco resources requires at least one sample drilling to define it as an inferred resource.
Therefore, Codelco has the same classification scheme at all divisions. This scheme is in line with the definitions in the Australasian Joint Ore Reserves Committee Code – JORC – (adopted by Codelco as referent), for mineral resources, proven and probable ore reserves and artificial deposits (ore stockpile and broken ore).
Codelco also reports a geological resource inventory at a cut-off grade of 0.2% copper.
2010 geological resources were up 5.3% in fine copper compared to 2009, due to the incorporation of resources from explorations and joint ventures (Puntillas-Galenosa and Inca de Oro) and from increased resources at Andina, Radomiro Tomic and Miranda deposit in Chuquicamata Division. Demonstrated resources increased by 8.2%.
Resources from artificial deposits were down by 9.9% because inventory was measured and updated at practically all divisions.
The Business and Development Plan is based on the mining plan for the entire life of mine. Therefore, it consider´s all of the mineral resources, i.e., proven and probable reserves, and also measured, indicated and inferred geological resources found during the studies in progress to confirm reserves.
The need to transform resources into reserves occurs gradually and increasingly over time, always preceded by proven and probable reserves (sustainability matrix). Hence, meeting the criteria set in the classification codes.
Codelco defined as sustainability matrix the reserve quality requirements that have to be complied by the Mining Plan of both the Exploration Plan and the Business and Development Plan throughout its scheduled timeline. The objective is to define a corporate development strategy, with a global and comprehensive outlook for all the available resources and an adequate balance between the plan’s risk and profitability, by backing
the quality of information obtained and quality of analyses, criteria and assumptions used in establishing the parameters for resources, reserves, designs, processes and technologies.
The matrix defines the maximum risk or uncertainty in the Mining Plan of the Business and Development Plan. As the start-up stage gets closer, less risk is accepted and production during the early stage is mainly based on ore reserves (proven + probable).
The mining plan of the Business and Development Plan has to meet the ore reserve classification stated below:
Mineral resources (2011 Business and Development Plan), that include identified mineral resources and stockpile/ broken ore, had a positive variation of 1.4% in fine copper compared to the 2008 Plan after the mining plans were updated at all Divisions.
Output during the first 12 years is sustained nearly exclusively on proven and probable reserves; even though broken ore or stockpile are accepted in the mining plans, at maximum percentage of 20-25%, prior analysis of material origin and characteristics.
Ore reserves (proven and probable) in the 2011 Business and Development Plan was up 8.4% in fine copper content compared to the 2010 Plan, in spite of consuming approximately 1.7 Mt Fine Cu in the 2010 annual production.
The above indicates that Codelco has been able to replace the reserve consumption corresponding to its annual production plan (approximately 1,900,000 tonnes of fine copper on site), through an adequate exploration programme to transform resources into reserves.
This plan includes drill holes, analysis, interpretation and geological, mining and metallurgical modelling, as well as engineering and environmental impact studies.
