The paper first outlines the conceptual basis for evaluating and
controlling geological risk. Geological risk, the economic reflection of
the uncertainties associated with tonnage, grade, and other pertinent
deposit parameters, is evaluated in terms of economic risk criteria.
Delineation provides the deposit information required to appraise and
control this risk. The improved reliability of geological estimates
resulting from additional delineation reduces the economic risk associated
with mine development and production decisions. However, the benefits
of delineation, subject to diminishing returns, have to be weighed up
against the direct and time costs involved. These costs decrease base case
economic values and shift the probability distributions of possible
outcomes towards, lower values. The optimum amount of delineation
normally is achieved short of the point where economic risk is minimised,
depending on the mining company's relative preference for a higher base
case value or a lower economic risk. Then, two open pit copper mine examples, based on actual situations,
are analysed to illustrate the application of the concepts presented. The
first case concerns the extension of ore reserves at an operating mine.
Finally, a new mine development opportunity is considered.