2009/2010 Stage 2 Problem Statement - SME

2009-2010 

SME/NSSGA 

Student Design 

Competition 

PHASE TWO 

Risk Assessment and Analysis 

Formulated By: 

Brendan Fisher, Fisher & Strickler Rock Engineering, LLC 

Joe Carnahan, Luck Stone 

Corporation 

Brady Johnson, Granite Construction, Inc. 

Eric Achelpohl, Vulcan Materials Company

2009-2010 SME/NSSGA Student Design Competition 

1. General Background Information 

During a due diligence process, one of the goals of an engineering team is to identify, 

understand, evaluate, and mitigate risk. Risk can be understood and reduced in many ways, 

including site visits, further exploration, analysis of past mining, and personal experience(s). 

This problem is intended to highlight potential real-world issues that arise during a due diligence 

process. How your team reacts to these issues, communicates understanding, and develops 

creative solutions will determine the success of your project. 

This problem focuses on the importance of the structural and engineering geology in regards to 

mine planning and reserve estimation. It also highlights potential maintenance problems that 

may occur if geologic conditions are encountered that were not anticipated during the mine 

planning and feasibility studies. 

This problem uses data from actual mining companies in the United States. This is real data and 

therefore will represent the type of information that you will have as a mining engineer of the 

future. The companies that donated this information have hundreds of thousands of dollars 

invested in the data you will be using and this information is proprietary to those companies. 

Therefore, the data should be respected, not reproduced, and kept confidential-this includes the 

actual location of the quarry, should it be accidentally disclosed. 

1.1. Problem Statement 

From the information in Phase One, further due diligence of the Bev Quarry was required. A 

visit to the quarry and a small drill exploration project were completed. You will be required to 

update the Phase One submission to reflect the results of the further due diligence. Also, the 

board of directors will be interested in a full 20-year financial model so a final decision can be 

made. Because your competitors are also interested in the Bev Quarry, your results and 

recommendations must be presented on February 28, 2010 so that the board of directors can 

make a timely decision. 

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2. Bev Quarry Highwall Stability Concerns 

While driving around the pit during the site visit, your group became concerned about the 

conditions and stability of the highwalls and the associated risk. To further understand the long 

term stability and ensure the mine plan is achievable, your team hired a geotechnical consulting 

company to complete a highwall stability analysis. Unfortunately, your team could only afford 

to pay for the data collection portion of the project, therefore, the analysis must be completed inhouse. 

The following is the collected data and recommended analysis from the consulting 

company. 

2.1. Geology 

The quarry is situated within the piedmont physiographic province of the southeastern United 

States. The rock mass consists of granite and granitic gneiss which is light to dark pinkish gray, 

coarse-grained, very blocky, and strong. 

2.2. Groundwater 

Groundwater was encountered in numerous rock core borings at an elevation of about 375 feet 

m.s.l. 

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2.3. Geologic Structure 

Through hand measurements and remote sensing methods, your geotechnical consultant 

collected structural orientation data in the quarry. There are a total of four prevalent joint sets in 

the rock mass which have the orientations as presented in Table 1. 

Table 1: Dip and dip direction of joint sets at Bev Quarry 

Joint Set Dip (degrees) Dip Direction (degrees) 

J1 60 359 

J2 78 212 

J3 14 132 

J4 78 306 

The average dip and dip directions reported in Table 1 are based on 453 structural measurements 

and the stereonet used to establish the joint sets is shown in Figure 1. It is evident that the 

average dip and dip directions (and also the number of joint sets) is based on the judgment of the 

Engineering Geologist who completed the field mapping and interpreted the stereonets. 

Figure 1: Stereonet from Bev Quarry Rock Mass 

The intersections of Joint Sets J2, J3, and J4 create orthogonal blocks. Joint Set J3 is associated 

with faulting in the region and therefore, in many cases, this joint set is sheared, filled with clay 

gouge, and slightly altered. Joint Sets J1, J2 and J4 are generally ‘clean’ and smooth or slightly 

rough and moderately weathered. 

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2.4. Summary of Rock Mass Properties 

A number of laboratory tests were completed on intact samples of rock recovered during rock 

coring. The testing campaign was completed to supplement the limited data presented in the 

Phase One question. Table 2 is a summary of the testing data completed and the variation of the 

testing results. 

Table 2: Summary of Rock Properties at Bev Quarry 

Lab Testing Units Min. Max. Mean 5 Std. Dev. 

UCS 1 psi 7,000 21,000 14,000 2,350 

Clean Joint Friction Angle 2 degrees 31 47 39 2.5 

Clay Friction Angle 3 degrees 18 27 22 1.5 

Other Rock Mass Properties Units Min. Max. Mean 6 Std. Dev. 

RQD 4 % 0 100 45 15 

Discontinuity Spacing in 2.0 50.0 26 26 

Notes: 

1. UCS is Uniaxial Compressive Strength of intact rock. 

2. Cohesion intercept at low normal stress is zero psi. 

3. Cohesion intercept at residual condition is zero psi. 

4. RQD is Rock Quality Designation. 

5. UCS and friction angle distributions are assumed normal. 

6. Triangular and exponential distributions assumed for RQD and Disc. Spacing, respectively. 

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2.5. Assignment 

As the mining engineer, your responsibility is to specify the inclination of the quarry pit walls 

based on the information given above. For your convenience, the Engineering Geologist who 

collected the discontinuity data has subdivided the quarry into engineering ‘sectors’, as seen 

below in Figure 2. 

According the permit, as presented in Phase One, safety benches are required to be a minimum 

of twenty five feet with a maximum bench height of one hundred feet. The maximum bench face 

slope is 0.2H:1V. The pit floor can be no lower than 250 feet m.s.l. 

Complete an analysis of your mine design and determine the most appropriate final highwall 

design for the data given, for the sectors stated below. The bench angles should be based on 

kinematic analyses while the overall pit slope angle is a function of the strength of the rock mass. 

Inter ramp angles should be based on the results of the overall pit slope angle as appropriate. In 

order to conserve time and so that you can focus on other aspects of the design, your engineering 

manager has completed the kinematic analysis for sectors 1, 3, 5 and 6. The maximum safe 

bench angles are 68, 75, 66, and 90 degrees; respectively. This does not take into account the 

overall slope angle, which needs to be determined by your team. An appropriate safety factor for 

static conditions is 1.3 given the reliability of the geotechnical data available (and the perceived 

risk associated with that safety factor). Seismic loading need not be addressed. 

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Figure 2: Bev Quarry showing Design Sectors. 

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2.6. Questions to Address 

During the last meeting with your engineering department, the following questions were raised. 

Your team needs to answer as many of them as possible before the board of directors meeting. 

1. What are the safe slope angles for the pit slope walls? Disregard any weathered rock or 

soil at the surface for this exercise. 

2. What percent rock fall catchment is expected for the 25-foot safety benches and is this 

catchment acceptable during the mining? Risk cannot be eliminated, but as a mining 

engineer, your job is to assist in establishing the risk that your company is willing to 

accept while the ultimate decision will be made by management and any stakeholders. 

3. If presplit blasting was used to excavate the pit slope walls, or there was a contingency 

for detailed bench geological mapping and reinforcement of potential structural failures 

during mining, would that make a difference in the amount of aggregate available for 

mining? What would be acceptable pit slope inclinations if presplit blasting was chosen 

over production blasting for the final walls and what would be the increase in volume of 

aggregate available for mining? 

4. In general terms, how would you establish the savings or loss of revenue associated with 

pre-split blasting and/or reinforcing unstable rock blocks within benches of the highwall 

with regards to the amount of minable aggregate available while maintaining the safety 

factor required for this quarry? 

5. Do you think that there is value in collecting additional geotechnical data and how would 

the additional data be used to more accurately establish the pit wall inclinations? 

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3. Bev Quarry Additional Drilling 

As part of the continued due diligence, your team was allowed to drill four new holes. The holes 

could be either confirmation holes to validate previous work, or new holes to explore new areas 

or fill in gaps. 

3.1. Hole Type and Location 

You may choose two types of core holes as part of the evaluation drill program: “core holes”, 

which contain the contacts between the major structural elements, or “LA holes’ which are core 

holes that are split and sampled for LA at 10ft intervals. 

A list of the drill locations are located in Table 3 and Table 4. You may also use the map posted 

in the SDC Headquarters room to select your drill locations. 

Table 3: Core Hole Locations 

( ) 

Hole_id easting northing 

NC-001 5194 5237.5 

NC-002 3803 5915 

NC-003 5893 4926.5 

Table 4: LA Hole Locations 

Hole_id easting northing 

NCLA-001 5712.5 3741 

NCLA-002 4673 6178 

NCLA-003 5113 4225 

NCLA-004 3587 4427 

NCLA-005 5273 6807 

NCLA-006 4060 4363 

NCLA-007 4499 4897 

NCLA-008 5307 6183 

NCLA-009 4350 6912 

NCLA-010 5539 4494 

NCLA-011 4736 3911 

3.2. Assignment 

The new drill holes must be compared to your existing core holes and added to the geologic 

model. In doing this, you should address the following questions that were raised in your last 

meeting: 

1. How do the new holes affect your original model? 

2. How does this additional information affect your reserve estimate? 

3. Are there any new concerns regarding this information? 

4. Do the new cores help/hurt the project risk assessment? 

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4. Economic Outlook 

One year ago, the outlook for the economy was bleak, showing no signs of recovery. However, 

recently, economic growth has begun and there are signs of a strong recovery. The board of 

directors is more optimistic than ever about the future and especially the market potential that 

exists around the Bev Quarry. Since your previous work in Phase 1, a competitor analysis has 

been completed. The analysis used information acquired from county permit data and aerial 

photography. A summary of the competitor analysis can be seen in Table 5. 

Table 5: Competitor Analysis 

Yearly Production Reserves 

Producer Site Name (tons) (tons) 

SDC Co all 3,000,000 12,000,000 

SDC Co (potentially) Bev Quarry 1,500,000 ?? 

John's Trucking Gertrude Quarry 200,000 10,000,000 

Construction Aggregates Co Smithville 3,500,000 31,500,000 

Reliable Bob Sampson Quarry 5,000,000 120,000,000 

Happiness Mining Baker St. Sand and Gravel 500,000 150,000,000 

Bic Construction Green Quarry 500,000 6,000,000 

It is apparent that some of the competition in the local market will be running out of reserves in 

the near future and the board of directors would like a recommendation as to whether or not the 

Bev Quarry should try to capture the additional market demand. If so, complete a production 

expansion strategy with financial analysis. If not, describe the reasons. Please assume that the 

local market is “at capacity” and that the market demand will remain constant for the foreseeable 

future. 

The financial constraints are the same as in Phase One--in order for this to be an attractive 

investment for the company, an IRR of 17.5% needs to be achieved. The company traditionally 

uses a Cost of Capital of 8% and the corporate tax rate is 34%. You can refer to Table 6 for 

wage information. 

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Table 6: Wage Information 

Classification 

Salary 

Quarry Foreman 

29.00 $/hr 

Blast Overseer/Driller Overseer 25.00 $/hr 

Driller 

20.00 $/hr 

Haul Truck Operator 

18.00 $/hr 

Over Road Driver 

15.00 $/hr 

Loader Operator 

22.00 $/hr 

Plant Operator 

20.00 $/hr 

Plant Laborer 

15.00 $/hr 

Plant Mechanic 

21.00 $/hr 

Mechanic 

20.10 $/hr 

Electrician 

25.00 $/hr 

Scale operator 

14.00 $/hr 

Engineer 

75,000 $/year 

Site Manager 

95,000 $/year 

Quality Engineer 

65,000 $/year 

Safety Professional 

55,000 $/year 

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5. Presentation Requirements 

The board of directors has asked your team to update your Phase One evaluation and update your 

recommendation considering the further due diligence efforts. The following information will be 

required at your presentation: 

Update your Phase One evaluation of the property, given the feedback from the judges 

and recent due diligence efforts. 

Update your purchase offer, if necessary. 

Perform an economic evaluation of the property to determine operating costs, capital 

requirements, NPV, IRR, etc., for a 20-year period. 

Evaluate risk (highwall safety, reserves, market, financial) associated with the Bev 

Quarry, and give recommendations. 

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2009/2010 Stage 2 Problem Statement - SME

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