Strategic Open Pit Mine Planning and Cutoff Grade Optimisation Dr. Kadri Dagdelen, Professor, Mining Engineering Department, Colorado School of Mines, USA
OBJECTIVE OF THE COURSE Open pit limit analysis, pushback designs, mine sequencing, scheduling and cutoff grade policy are fundamental elements of long and short term mine planning process. Strategic open pit mine planning involves analysis of factors impacting these fundamental elements in an effort to maximise profitability of mining operations. Cutoff Grade is defined as the grade that that is normally used to discriminate between ore and waste when ore is treated using a single metallurgical process. Cutoff grades are defined as the grades that differentiates between different processing options when ore is treated using multiple processing options. Although the definition of cutoff grade(s) is precise, the choice of a cutoff grade policy to be used during the exploitation of a deposit is not. The cutoff grade policy to be used during the exploitation of the deposit that maximises the Net Present Value (NPV) of annual cash flows coming from a mining project not only depends on solutions to pit limits, pushback designs, mine sequencing and scheduling steps but also optimisation of each of these solutions with respect to one another and the processing options. In this short course, assumptions related to fundamental elements of mine planning processes will be critically reviewed and the shortcomings to currently used solution methods will be identified. The concept of optimum cutoff grade policy which maximises the NPV of annual cash flows coming from a mining project is first introduced within the basic framework outlined by K. F. Lane and then extended into problems involving complex operational constraints. Assumptions and limitations to K. F. Lanes cutoff grade optimisation method will be reviewed and a new Mixed Integer Linear Programming (MILP) based method that overcomes shortcomings of Lane’s algorithm is introduced. Several examples coming from large scale open pit mining projects in North and South America, Africa and Europe will be used to demonstrate determination of cutoff grade optimisation policy under complex operational constraints using this new method. The case studies will also provide examples of significant NPV improvements (4% to 60%) obtained from multi time period cutoff grade optimisation for very large projects that deal with multiple open pit and underground mines, multiple plants that process many different ore types through different metallurgical processes and stockpiles. This short course is designed for mine geologists, mine planning engineers, and metallurgists who need to know economic definition ore; mine and plant managers that are responsible in maximising the value of a mining operation; any mining and finance professional who is responsible for mine project feasibility studies.
PROGRAMME Day 1 • • • • • • • • • • • • • • Economic Definition of Ore Cutoff Grade Definition – Breakeven Cutoff Grades for single and multiple process operations Economic Block Model Generation from Resource Model Definition of Ore Reserves – Strip Ratio Analysis and Cone Mining Method Optimisation of Pit Limits - Learchs and Grossmann (LG) Algorithm Mining Sequence – Definition of Nested Pits, Pushbacks and Phases Breakeven Cutoff Grade Policy, Scheduling and Cash Flow Analysis Net Present Value Calculation Traditional Mining Industry Cutoff Grade Optimisation Methods and Stockpiling Cutoff Grade Optimisation for Single Commodity Operations with Single Capacity Constraint – Crusher Optimising Cutoff Grades by Lane’s Approach Relationship between Opportunity Cost and Declining Cutoff Grades Economic Cutoff Grades and Balancing Cutoff Grades Determination of Cutoff Grades When Mill is the Bottleneck
Day 2 • Determination of Cutoff grades When Mine and Mill capacities are limiting • Determination of Optimum Cutoff Grades When Mine, Mill and Refinery/Market Capacity Constraints are limiting the Output. • Case Study 1 - Gold Mine Cutoff Grade Optimisation using Lane’s Approach; • Case Study 2 - Copper Mine Cutoff Grade Optimisation using Lane’s Approach • Optimisation of Cutoff Grades for Multi Commodity Mines; • Optimisation of Cutoff Grades for Multiple Mining Operations • Cutoff Grade Optimisation for Mining Operations with Blending Constraints and Stockpiles • Cutoff Grade Optimisation for Mining Operations with Multi Metallurgical Processes and Stockpiles; • Case Study 1 - Optimisation of cutoff grades for a single open pit mine containing multiple phases (i.e. pushbacks), a single metallurgical process for a single commodity with or without stockpiles. • Case Study 2 - Optimisation of cutoff grades for large gold mining operation with multiple mines and pits having multiple ore types containing multiple commodities and multiple metallurgical processes requiring blending and stockpiling options. • Case Study 3 - Maximising NPV of a large copper project through optimisation of cutoff grades, mining, metallurgical process and stockpile capacities. SPECIAL REQUIREMENTS Standard audio visuals. The course participants need to bring their own laptop computers.
SHORT COURSE NOTES Approximately 80 to 100 pages of power point presentation slides printed in black and white, 2 to a page.