5/11/2014
Objectives
Fundamentals of open pit mine design and
current developments in planning and design
methodology,
Current industry practices to maximise economic
return.
Open pit mine planning and design process in
theory and practice,
Unit Operations Drill-Blast-Load-Haul
Apply this knowledge to plan/evaluate new
open pit projects and/or existing mines.
Open Pit Mine Planning and Design
5/11/2014
Module 1
Strategic Mine Planning
1. What is strategic planning?
2. Mine planning process
3. Mining strategy
4. Feasibility Studies
5. Exercises
Open Pit Mine Planning and Design
Overview/scope
Big picture mine planning and design process
Big picture decision-making process
Applies to Greenfields as well operating mines
SP takes place at all levels of the company
Corporate level: vision, mission, feasibility, etc
Business unit level: expansion of production
Mine level: medium/long term production strategy
Analogy: military strategy
Open Pit Mine Planning and Design
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Mine Planning
Tactical Mine
Planning
Strategic Mine
Planning
Prospecting
Exploration
Development
Production
Closure
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Business Strategy
Strategic
Planning
DecisionMaking
Behaviour
Economic
Evaluation
Mine Planning
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Decision-Making Behaviour:
Risk Averse seeks other business goals
Risk Neutral seeks maximise NPV
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Resource Model
13
Activity 1:
Work in Groups of 2-4
To plan a new open pit mine in Kerman Province. List all the
data required to perform a feasibility study and where
these data would come from.
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Technical Aspects:
Once the geological features are understood and the
physical characteristics of the ore body are determined,
the main technical decisions that follow are:
Mining method selection
Processing route
Scale of operation (size)
Mining sequence
Selective cut-offs (e.g. cut-off grade at the mine)
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MARKET
Metallurgical
Model
Geological
Model
Mining
Method
Geotechnical
Model
Processing
Route
Scale of
Operation
Mining
Sequence
Environmental
Model
Selective
Cut-offs
MINE PLAN
Open Pit Mine Planning and Design
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Economic considerations
Many decisions concerning the choice of the mining
method are related to the "opportunity cost concept
For example:
In massive, disseminated deposits that are close to
surface, open pit mining is more productive than an
underground
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Markets
The mining method should be flexible enough to
respond to market changes.
When and how to high grade during peak commodity
prices
Changes to mine development schedule
Focus on production of by-products (eg. cobalt in copper
ore)
Mining companies are price takers. What can be done
about this?
Open Pit Mine Planning and Design
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Processing route
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Mineral
Comminution
Liberation
Unacceptable
Classification
Acceptable
Concentration
Separation
Physical
Chemical
25
Factors to consider
Products recovered
Recoveries and achievable grades
Environmental aspects
Market considerations
Capital and operating costs
Cycle times
Mine plan
Cash flow and profitability
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Metallurgical tests
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28
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Size-profitability-risk relationship
Scenario 500 kt/d
NPV
(MUS$)
Scenario 72 kt/d
Risk
3000
2700
2000
1000
Scale of operation
Open Pit Mine Planning and Design
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34
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Minimum Ore
Exposure
yr-1
yr-2
yr-3
yr-4
yr-5
yr-6
Time
35
1
2
100 t (waste)
3
4
5
6
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Partial tonnage
Ore
500
500
500
500
500
500
500
Waste
100
300
500
700
900
1,100
1,300
O/W Ratio
0.2
0.6
1.0
1.4
1.8
2.2
2.6
Cumulative tonnage
Ore
500
1,000
1,500
2,000
2,500
3,000
3,500
Waste
100
400
900
1,600
2,500
3,600
4,900
O/W Ratio
0.2
0.4
0.6
0.8
1.0
1.2
1.4
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yr-1
yr-2
yr-3
yr-4
yr-5
yr-6
Time
2
500
Waste removal
4
1,000
5
6
Open Pit Mine Planning and Design
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yr-1
yr-2
yr-3
yr-4
yr-5
yr-6
Time
- 300
- 800
- 1,000
-225
-546
+706
41
yr-1
yr-2
yr-3
- 400
yr-4
yr-5
yr-6
Time
- 500
- 1,000
-331
-376
+776
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yr-1
yr-2
yr-3
yr-4
yr-5
Time
2
500
3
4
5
1,000
43
yr-1
yr-2
yr-3
- 100
- 1,000
yr-4
yr-5
yr-6
Time
- 800
-83
-601
+776
44
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Economic evaluation
Net Present Value @ r = 10 % ($)
Phase
1
2
3
4
5
6
Case 1 (6 Phases)
Case 2 (5 Phases)
Partial
Cum
Partial
Cum
1,036
733
485
250
70
-65
1,036
1,769
2,254
2,504
2,574
2,509
1,036
733
485
275
92
-
1,036
1,769
2,254
2,529
2,621
-
45
Summary of results
1
2
3
4
5
6
Breakeven final
limit (Phase 6)
Open Pit Mine Planning and Design
Discounted final
limit (Phase 5)
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Considering an underground
alternative
1
2
3
4
5
6
47
1
2
NPV(1)
3
$ 800
4
5
6
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1
2
3
NPV(1)
4
$ 450
$ 200
$ 50
5
6
(1)
49
500
+200
+50
0
3
Lifts
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Economic evaluation
(Open Pit vs Underground)
Net Presente Value @ r = 10 % ($)
Phase
1
2
3
4
5
6
Case 3 (OP/UG)
Case 4 (Optimum)
Partial
Cum
Partial
Cum
1,036
733
485
275
92
50
1,036
1,769
2,254
2,529
2,621
2,671
1,036
733
485
275
150
50
1,036
1,769
2,254
2,529
2,679
2,729
51
Optimum configuration
1
2
3
4
5
6
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Summary of evaluations
Net Present Value @ r = 10 % ($)
Phase
1
2
3
4
5
6
Case 1
Case 2
Case 3
Case 4
1,036
1,769
2,254
2,504
2,574
2,509
1,036
1,769
2,254
2,529
2,621
-
1,036
1,769
2,254
2,529
2,621
2,671
1,036
1,769
2,254
2,529
2,679
2,729
53
Case 1 Case 2
Case 3 Case 4
2,509
2,621
2,671
2,729
1,000
1,000
1,000
1,000
1,509
1,621
1,671
1,729
N Shares
1,500
1,500
1,500
1,500
1.01
1.08
1.11
1.15
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Origin of the FS
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Feasibility Studies
Demonstrate that the project is economically
viable to the satisfaction of the Board, the
shareholders and all other stakeholders.
The FS enable the financing of:
Preliminary earthworks
Engineering construction
Infrastructure
57
Feasibility Studies
Provide a detailed analysis of all the
factors affecting a projects viability.
Enable determination of a go or no
go decision
Have become an aid in obtaining
financial backing
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Phases
Scoping Study
Pre-Feasibility Study
Final Feasibility Study
59
Scoping Study
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Pit
Revenue
Factor
Waste
Tonnes
('000)
Ore
Tonnes
('000)
Recovered
Au (g/t)
0.30
0.38
0.48
0.58
0.68
0.78
0.84
0.86
0.88
1.00
1.14
1.28
1.42
1.60
1.72
2.00
9,763.1
11,922.4
14,631.9
15,704.0
16,357.2
16,697.4
16,765.5
25,403.2
25,370.3
25,725.8
26,977.6
27,120.3
27,163.4
29,865.5
29,983.6
30,555.8
2,083.3
2,580.3
3,111.4
3,580.2
3,941.0
4,143.1
4,247.6
4,547.3
4,581.3
4,750.5
5,016.1
5,110.1
5,199.4
5,363.9
5,422.6
5,536.6
5.30
4.84
4.43
4.06
3.81
3.68
3.61
3.56
3.54
3.45
3.31
3.26
3.22
3.15
3.12
3.07
1
5
10
15
20
25
28
29
30
36
40
45
50
55
60
67
Recovered
Strip Ratio
Ounces
(W:O)
('000)
355.0
401.3
443.6
467.2
482.6
489.8
493.0
520.4
521.2
526.2
534.3
536.3
537.9
543.6
544.6
546.5
4.69
4.62
4.70
4.39
4.15
4.03
3.95
5.59
5.54
5.42
5.38
5.31
5.22
5.57
5.53
5.52
66
Oxide
"Ore"
(000's
Tonnes)
2.4
644.1
670.6
643.1
758.0
1,186.7
279.6
4182.1
Oxide "Ore"
(g/t Au)
2.58
3.05
3.71
4.62
4.39
2.55
4.39
3.59
Mix "Ore"
Mix "Ore"
(000's
(g/t Au)
Tonnes)
28.2
4.7
31.7
89.3
163.3
130.4
447.7
4.00
2.18
3.65
3.45
2.76
2.52
2.96
Totals
(000's
Tonnes)
Totals
(g/t Au)
672.3
675.3
674.9
847.3
1,350.0
410.0
4,629.8
3.09
3.7
4.58
4.29
2.58
3.8
3.53
Waste
(000's
Tonnes)
2,290.7
3,615.3
5,063.0
2,022.2
7,476.7
7,619.7
2,287.7
30,375.3
Strip
Ratio
5.38
7.50
3.00
8.82
5.64
5.58
6.56
Portable Ore
000's Tonnes
672.3
675.3
674.9
847.3
1,350.0
410.0
4,629.8
Eureka
g/t Au
3.09
3.70
4.58
4.29
2.58
3.80
3.53
Portable Ore
000's Tonnes
677.7
674.7
675.1
502.7
2,530.2
g/t Au
g/t Ag
11.54
14.07
12.97
6.69
242.81
258.86
203.05
120.41
11.63
212.16
Portable Ore
000's Tonnes
1,350.0
1,350.0
1,350.0
1,350.0
1,350.0
410.0
7,160.0
g/t Au
g/t Ag
7.33
8.88
8.77
5.18
2.58
3.80
6.39
121.89
129.37
101.55
44.84
0.00
0.00
74.97
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2008
2006
75,000 - 68,000
70,000
83%
87%
82%
83%
83%
87%
81%
83%
8.35
1,156
8.41
1,113
457,000
63
456,000
60
Metallugy Recovery
Plant Recovery - Gold
Plant Recovery - Copper
Net Payable Metal - Gold
Net Payable Metal - Copper
Life of Mine Production (payable metals)
Gold
(million ounces)
Copper (million ounces)
Average Annual Production
Gold
(ounces)
Copper (ounces)
Mine Life (years)
18.25
18.5
2008
$
59.0
314.7
67.8
38.3
63.4
16.7
127.6
43.8
$731.3
2006
$
76.6
241.5
65.8
23.8
55.6
18.3
97.0
59.4
$638.0
Mine
Mill
Infrastructure
Tailings management facility
Owner's Costs
Pre-Stripping
Indirect Costs (includes EPCM and Camp)
Contingency
Total Initial Capital
69
2008
$
2006
$
$600
$2.25
$470
$1.80
$2.68
3.00
0.43
0.43
1.08
$7.62
$2.08
2.59
0.42
0.34
1.02
$6.45
$120
22
135
$277
$268
$126
16
111
$253
$245
20.5%
15.4%
$2.77
$1.29
$1.91
$0.78
Metal Prices
Pre-Tax
Internal Rate of Return
Net Present Value (NPV)
@ 0% discount (billions)
@ 5% discount (billions)
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71
Requirements of a FS to be
bankable
A FS must be;
Credible
Definitive
Relevant
Independent
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Rudenno, 2008
Open Pit Mine Planning and Design
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Actual
Change
1.07g/tAu
84%
8 Mt
0.96g/tAu
74%
6.7 Mt
-10%
-12%
- 16%
Crushing costs
Contract mining
Power costs
$1.36/t
$1.00/t
$0.058/kwh
$2.49/t
$1.15/t
$0.075/kwh
+83%
+15%
+29%
Cyanide usage
Total cash costs
Cash costs per ounce gold
produced
Gold price
0.68kg/t
$11.86/t
US$287/oz
0.86kg/t
$13.58/t
US$415/oz
+26%
+15%
+45%
US$385
US$315
-18%
0.7
0.74
+6%
Reserves grade
Metallurgical recovery of gold
Throughput per year
Open
Pit MineinPlanning
and
Design
MCA
- Risk Assessment
Mine Planning
and Design
77
Scoping
Preliminary
Feasibility
Audience
Internal Technical
Mixed Professional
External
Executives
Boards
Joint venture
Financiers
Extracts to stake
holders
Investors
Exploration Business
Development
Executive
Their Interests
Consultants
Critical factors
Profitability
Potential
Profitability
Costs
Schedule
Risks, etc
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Cost Accuracy
Scoping
Preliminary
Feasibility
Study
Feasibility
Study
Project Control
Estimate
Class 1
Class 2
Class 3
Class IV
(+/- 25%)
(+/- 5% - 10%)
Equipment factor
estimate
Order of
magnitude
Capacity factor
estimate
Definitive;
Fall out detail estimate
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TECHNICAL RISKS
OH&S RISKS
POLITICAL
RISKS
Conclusion
Strategic planning (SP) involves developing a range
of options, carrying out some form of evaluation,
assessing criteria and decision-making.
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Activity 2:
Individual learning
Refer to worksheet 1
Development of a mining strategy: open pit and/or
underground?
83
Module 2
OPEN PIT OPTIMIZATION
What you will learn:
Block Values and Cost calculation
Pit Optimisation techniques
Pit Optimisation Software
Open Pit Mine Planning and Design
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0.3%Cu
-$1.13/t
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Calculating Costs
Must calculate values for:
Mining Cost per Tonne Mined
Processing Cost per Tonne Processed
Rehabilitation Cost per Tonne of Waste
Selling Cost per Unit of Product
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Include
Any cost which is directly proportional to the tonnes
or units of product:
Fuel oil
Wages
Spare parts
Explosives
etc
Include with the appropriate activity
89
Include
Time costs which would stop if mining
stopped:
Site administration
Site infrastructure maintenance
Interest on working capital loan
Fall in resale value of equipment
Capital replacement
Truck purchase (long project)
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91
Dont Include
Time costs which continue whether
you continue mining or not
Up-front/sunk costs
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Activity 3:
Individual learning
Refer to worksheet 2
Block Values and Cost Calculation
93
Resource
Classification
Resource estimate
Measured
Indicated
Inferred
Beneficiation
factors
position in mine
planning flow
sheet
Mine survey
Dilution &
ore losses
Diluted Resource
Process
Parameters
Economic
Parameters
Operating
Costs
Potential Ore
Reserve
Reserve
Classification
Mining production
schedule
Overburden
& sub-grade
Beneficiation
product
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Activity 4 :
Individual learning
Refer to worksheet 3
Pit Optimisation Task 1
95
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etc
Open Pit Mine Planning and Design
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98
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99
-30
-80
+100
-80
+100
100
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101
Lerchs-Grossman Algorithm
Works with block values
Works with block mining precedence
Guarantees to find the three-dimensional
outline with the highest possible value
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Lerchs-Grossman Algorithm
Works with block values
Works with block mining precedence
Guarantees to find the three-dimensional
outline with the highest possible value
103
Lerchs-Grossman Algorithm
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105
106
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Activity 5 :
Individual learning
Refer to worksheet 3
Pit Optimisation Task 2
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110
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4) Blending requirements
There are cases where blocks should be
blended with others to be classified as
ore. But that again requires a mining plan in
advance.
This can also be solved by iterations!
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Data Import
Import
+
3D Borehole
Processing
113
Geological Interpretation
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115
>>>
Value
$$$
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Optimisation/Design
Major optimisation programs based on LerchsGrossman algorithm:
Whittle FX Optimiser (stand alone)
MineMax Planner (stand alone)
Pit Optimizer (Vulcan 3D)
NPV Scheduler (Datamine)
Pit Optimiser (Surpac)
Open Pit Mine Planning and Design
117
Whittle FX
Strategic Mine Planning Software
Pit by Pit Graph
Constrains:
Economical
Geometrical
Operational
No access constrains
No haul road/ramp
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Optimal Pit
119
Mine Design
120
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Mine Design
Geomechanics/Geotechnical
Access constraints
Equipment selection
Rehabilitation
Environmental constraints
Open Pit Mine Planning and Design
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122
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123
124
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Scheduling
125
126
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Optimizing Production
Schedules
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Activity 6 :
Individual learning
Review the following technical paper:
Chanda, E.K., Spencer, E. (1999). Maximising Resource
Utilisation in Open Pit Design, in Proc. 28th International
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131
Yu (2014)
Open Pit Mine Planning and Design
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137 of 10
Waste Dump
Optimisation- how?
MINEMAX Software
Simultaneous pit and waste dump design
Dump modelled as blocks
WHITTLE Software
Dump optimisation as mirror image of open pit
optimisation
XPAC Advanced Destination Scheduler) Software
Module schedules rock placement
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Module 3
PRODUCTION SCHEDULING
What you will learn:
Principles of production scheduling
Scheduling Software
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141
Typical Timeline
Year
-2
-1
Pre-production
(Development
Construction)
+1
+2
Production
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Inputs
The scope of the work to be done from Mining
Layout Designs
Rates at which this work is normally prepared,
from Key Performance Indicators (KPI)
Labour working hours and rosters from
Strategic Planning module
Plant capacities, from the Strategic Planning
modules
Production schedules, Ore reserves, tonnes and
grades, recoveries and dilutions
143
144
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Scheduling Packages
XPAC
iGannt
MS Project
MS Excel
Whittle 4D
In-house
145
XPAC
Developed by Runge Software
Business focussed mine scheduling application
Specifically developed for forecasting, reserve
database and mine scheduling management of all
types of mineral deposits and mining methods
Easy-to-use tools for the adaptation, analysis and
scheduling of mineral resources
Designed for surface/underground coal mining
Has limitations in underground mining or in pits with
complex geometries
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iGantt
Developed by MineMax
Tool for open-pit and underground production
scheduling
147
148
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149
150
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Plant design
Infrastructure (road, power, water, village, etc.)
Equipment selection
Capitals
Operating costs
Royalty
Tax
Revenue
151
Activity 8 :
Individual learning
Refer to worksheet 4
Production Scheduling
Calculate the monthly production figures for a small gold
mine
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Module 4
Cut-off grade optimization
1.
2.
3.
4.
Background
The model
Example 1: an hypothetical case
Example 2: a copper open pit mine
& mill
5. Conclusions
6. References
153
1. Background
This model was developed in the early
1960s by Ken Lane, a mathematician who
made his professional career in the Rio
Tinto Group
At the time, the model was used in various
mines of Rio Tinto including Palabora
mine in South Africa, and Bougainville
mine in PNG.
Open Pit Mine Planning and Design
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2. The model
Final product
Qr
Concentrates
Ore
Qc
C
Cut-off gx
Slag
Qm
Tailings
Waste
M
Open Pit Mine Planning and Design
155
R=
T=
P=
Profit
Open Pit Mine Planning and Design
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m=
c=
r=
f=
s=
y=
157
P s - r Qr c Qc m Qm f T
As
(1)
Q r Q c g y
P s - r g y c Qc m Qm f T
(1a)
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Qm
Qc
V
W
gx
V =
W=
Grade
159
P2
P3
P4
Pn
Time
PW
V
(1 d)T
Open Pit Mine Planning and Design
(2)
160
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If time T is small:
(1 + d)T 1 + dT
(3)
Replacing in (2):
PW
V
(1 d T)
(4)
Re-arranging:
V(1 + dT) = P + W
(5)
161
Re-arranging:
v = V - W = P - dVT
(6)
162
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(7)
163
(7)
164
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Qm
M
Max vm
v m
0
g
Open Pit Mine Planning and Design
165
s - r Qc g y c Qc
Therefore:
gm
c
s r y
166
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In this case,
Qc
C
v c s r Qr c
Q c m Qm
C
Max vc
v c
0
g
Open Pit Mine Planning and Design
167
s - r Qc g y c f d V Qc
Therefore:
gc
f d V
C
s r y
168
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Qr
R
f d V Q c Q m Q
v r s r
c
m
r
R
Max vr
v r
0
g
Open Pit Mine Planning and Design
169
f d V Q g y c Q
c
c
R
Therefore:
gr
c
f d V y
170
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171
Mine-mill example
Qm
gm
gmc gc
Grade
172
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Mine
t/d
Mill
t/d
Grade
% Cu
0.25
450,000
150,000
0.9
0.50
650,000
150,000
1.2
0.65
650,000
120,000
1.3
173
174
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gm
gc
gr
gmc
gmr
grc
175
f d V
v c s r Qr c
Q c m Qm
C
176
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vm
vc
gm
gmc
Gmc = gmc
gc
vc
vm
gmc
gm
Gmc = gm
gc
177
Gmc = gc
vm
gm gc
gmc
vc
g
178
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v
vr
vm
vc
gm grc
gmr gmc
gc
gr
179
= 100
= 50
=1
=5
= 300
= 25
= 100 %
180
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Grade-tonne relationship
f(t)
Grade
interval
Quantity
0.0 0.1
100
0.1 0.2
100
0.2 0.3
100
100
.
0.9 1.0
100
1000
0
0.5
1.0
181
Tonnage
Ratios
Mine
Mill
Grade
Ref.
M/C
M/R
C/R
0.0
1000
1000
0.50
500
1.00
2.00
2.00
0.1
1000
900
0.55
495
1.11
2.02
1.82
0.2
1000
800
0.60
480
1.25
2.08
1.66
0.3
1000
700
0.65
455
1.43
2.20
1.54
0.4
1000
600
0.70
420
1.67
2.38
1.43
0.5
1000
500
0.75
375
2.00
2.67
1.33
0.6
1000
400
0.80
320
2.50
3.13
1.25
0.7
1000
300
0.85
255
3.33
3.92
1.18
0.8
1000
200
0.90
180
5.00
5.56
1.11
0.9
1000
100
0.95
95
10.00
10.53
1.05
gmc = 0.50
gmr = 0.45
grc = 0.60
Balancing
cut-off grades
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gc
gr
c
0.10
s r y
c
f d V
C
s r y
For V = 0
0.40
c
0.16
f d V
s r
y
183
184
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Cut-off
Mine
Mill
Ref.
Profit
0.4
83.3
50
35
216.7
0.4
83.3
50
35
216.7
12
0.4
83.3
50
35
216.7
185
Second iteration
gm
gc
gr
c
0.10
s r y
d V
C
0.58
s r y
For V = 1174
c
0.25
f d V
s r
y
186
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187
188
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189
Cut-off
Mine
Mill
Ref.
Profit
PV
0.50
100
50
37.5
250
1255
0.50
100
50
37.5
250
1194*
0.50
100
50
37.5
250
1123
0.50
100
50
37.5
250
1041
0.50
100
50
37.5
250
947
0.50
100
50
37.5
250
840
0.50
100
50
37.5
250
716
0.49
97
50
37.1
245
573
0.46
93
50
36.5
238
414
10
0.41
89
50
35.9
229
238
11
0.41
21
13
8.8
55
45
1000
513
380.8
2517
* W = V(1+d) - P
W = 1255 1.15 250 = 1194
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= 18.9 Mt/a
= 7.2 Mt/a
= 3.5 M$/a
= 10 %
191
B
C
192
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2
PP
3
1
3
4
Open Pit Mine Planning and Design
193
Period 1
Period 2
Period 3
Period 4
% Cu
Mt
% Cu
Mt
% Cu
Mt
% Cu
Mt
% Cu
0.0
20.3
1.05
36.5
0.79
56.3
0.57
80.1
0.59
0.2
18.7
1.13
30.1
0.92
40.8
0.76
60.4
0.77
0.4
15.3
1.32
24.4
1.08
28.5
0.97
50.2
0.87
0.6
12.9
1.47
19.7
1.22
21.7
1.11
38.3
0.98
0.8
11.0
1.61
13.7
1.45
15.1
1.30
22.7
1.18
1.0
8.6
1.80
10.2
1.64
10.0
1.49
14.6
1.35
1.2
7.1
1.95
7.6
1.83
6.9
1.67
9.0
1.49
1.4
5.9
2.08
5.6
2.02
4.4
1.88
5.0
1.65
1.6
4.4
2.27
4.0
2.24
2.7
2.11
2.9
1.75
194
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Period 1
Cut-off
Mine
(% Cu)
(Mt)
Mill
(Mt)
(% Cu)
Ratio
Profit
PV
(W/O)
(M$)
(M$)
0.85
14.2
7.2
1.67
0.97
110.3
475.5
0.78
6.1
3.4
1.59
0.82
49.6
412.8
0.78
9.8
3.8
1.43
1.56
44.8
412.8
0.72
16.8
7.2
1.37
1.34
81.3
359.6
0.67
9.9
4.7
1.31
1.13
50.4
314.2
0.61
6.7
2.5
1.12
1.62
19.4
314.2
0.61
18.9
7.2
1.12
1.62
56.3
275.8
0.60
18.6
7.2
1.11
1.58
55.8
247.0
0.56
12.1
4.9
1.08
1.45
36.5
215.9
0.56
4.5
2.3
0.96
0.98
14.9
215.9
0.53
13.6
7.2
0.94
0.89
44.5
186.1
0.50
13.1
7.2
0.92
0.82
43.3
160.3
10
0.47
12.6
7.2
0.91
0.75
42.4
132.9
11
0.44
12.1
7.2
0.89
0.68
41.4
103.9
12
0.41
11.6
7.2
0.87
0.61
40.2
72.9
13
0.37
11.2
7.2
0.86
0.55
38.9
39.9
14
0.33
1.5
1.0
0.84
0.50
5.1
5.0
94.6
1.11
1.04
193.2
PV = 475.5
195
Period 1
Cut-off
Mine
(% Cu)
(Mt)
Mill
(Mt)
(% Cu)
Ratio
Profit
PV
(W/O)
(M$)
(M$)
0.78
16.3
9.0
1.59
0.81
131.8
521.2
0.71
4.0
2.3
1.53
0.71
33.1
441.6
0.67
14.0
6.7
1.30
1.10
71.3
441.6
0.65
18.5
9.0
1.29
1.05
95.4
381.3
0.60
4.1
2.2
1.22
0.86
22.1
324.0
0.45
14.2
6.8
1.00
1.10
46.6
324.0
0.45
18.9
9.0
1.00
1.10
62.0
287.7
0.45
18.9
9.0
1.00
1.10
62.0
254.4
0.45
4.2
2.0
1.00
1.10
13.7
217.9
0.51
12.9
7.0
0.93
0.84
43.2
217.9
0.48
15.9
9.0
0.91
0.76
54.1
182.8
0.45
15.2
9.0
0.89
0.69
52.9
146.9
10
0.42
14.6
9.0
0.88
0.62
51.5
108.8
11
0.38
14.1
9.0
0.86
0.56
50.0
68.1
12
0.34
7.4
4.9
0.84
0.51
26.4
25.0
103.9
1.06
0.86
193.2
PV = 521.2
196
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197
5. Concluding remarks
Lanes cut-off grade model is a first attempt to
define economically what material is ore in a
life-of-mine (LOM) plan
It requires a holistic view of mining in that the
optimisation needs a preliminary LOM plan.
That is, a final pit limit, pushbacks design and
scheduling based on a breakeven cut-off - the
mine or plant cut-off grade, for instance
Open Pit Mine Planning and Design
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Activity 8 :
Individual learning
Refer to worksheet 5
Cutoff Grade Optimisation
Follow the calculations to the problems
199
200
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6. References
Kenneth F. Lane - The economic definition of ore, Mining
Journal Books, London 1988
Kenneth F. Lane - Choosing the optimum cut-off grade,
Colorado School of Mines Quarterly. Vol. 59-4, 1964, pp. 811829
Blackwell, M. Some aspects of the evaluation and planning of
the Bougainville copper project, Decision-Making in the
Mineral Industry, CIM Special Vol 12, 1971 pp. 261-269
201
Module 5
Mine Planning Software
Software Packages
Categories
Capabilities
Providers
100
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101
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Mapping Software
102
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Geological Modelling/
Resource Estimation
Geological Modelling/
Resource Estimation
103
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Mine Design
104
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Financial Evaluation
Optimisation/Risk Analysis
105
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Simulators
106
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Virtual Reality
Summary
107
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Module 6
mine to mill optimisation
Concept embraced and practiced by mining
companies
The philosophy is base on:
Characterise
Track
Measure
Model
Potential to save mining companies thousands of
Dollars
218
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219
Systems optimisation:
Degree of fragmentation
Open Pit Mine Planning and Design
220
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Exploration Drilling
Intact rock data
Crushing/grinding
Energy data
Bond's Work Index
Settings
Mineralogy data
Hauling
Payload data
Voids ratio*
LCM
TKPM rating
Autonomy
Routing data
Process
Optimization
Blast design,
Load-Haul
Excavation/Loading
Digability*
Dig rate*
Dipper design
Power consumption
Swing analysis
Autonomy
Blast Design
Pattern layout
VOID
Powder factor
Explosive
S01U264007
120
100
80
S01U264007
35.2Mtpa ROM Target
60
40
20
0
1
10
100
1000
Size (mm)
Muckpile properties
Size distribution*
Voids ratio*
LCM
Visualization
Density
Blasthole Drilling
Bore diameter
Hole deviation monitor
Geophysical data
Real time drilling data
Blast Modelling
Displacement model
Fly rock
Heave mechanics
Optimum Fragmentation
Examine individual components and the whole system
Goal: achieving a prescribed level of fragmentation at
minimum cost
In-situ ore with particle size considered to be very large
and reducing to size in the order microns (eg -80 mesh).
Measuring Fragmentation, how?
Diggability (BCM/HR)
Size distribution of muckpile (WIPFrag Software),
Split-Desktop software
Photographs are taken from muck pile, digging
face, moving truck, etc.
Open Pit Mine Planning and Design
222
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Fragmentation evaluation
223
Case Study
224
111
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Case Study
Modeling Muck Pile Fragment Size to Optimize
Excavator Productivity in Open Pit Mining
Prominent Hill Copper Mine, South Australia
225
Prominent Hill
226
112
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Prominent Hill
Muckpile Image Analysis using SPLIT DESKTOP:
The split desktop system uses digital image
analysis technology to convert an image
captured from a digital camera to a distribution
of defined areas within the photograph.
The software was developed from a system of
manual image analysis where a photographic
image was manually delineated and the diameter
of each particle measured
227
Prominent Hill
Camera
Photo of muckpile
228
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Prominent Hill
229
Prominent Hill
230
114
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Prominent Hill
231
Prominent Hill
Our modelling of the excavator production rates
has suggested that P80 of 800 mm would be the
optimal size to maximise excavator productivity
at 6300 t/hr.
However due to mine machinery and crusher
constraints we believe a revised figure of 600
mm would be more appropriate
232
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Module 7
Equipment Selection
Simulation modelling using GPSS/H Case Study
Cost Estimation (Capital & Operating)
Study Background
Methodology
Results
Discussion
Conclusion
Recommendations
234
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235
Project Development
Development at Wilcherry Hill is proposed in three
phases; stage 1, 2 and 3.
Stage 1 will be the focus of this project
Comprises mining, crushing and export of Direct
Shipping Ore (DSO)
Ore sourced from the upper parts of the mining pits.
236
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Methodology
Aim
Simulation and animation model using the Stage
1 layout of the mine
Determine the optimum number of shovels and
trucks required for this mining scenario
Provide the company with a model they can use
for many what if? scenarios.
237
Programming in GPSS/H
Approximately 1,200 lines of computer code were
used to model this mining scenario
Over 60,000 command lines were used to generate
this animation
238
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Methodology
GPSS/H Simulation Main Commands
239
Methodology
Variables, User Information and Generate
Variables:
REAL
&X,&Y,&Z,&A,&B,&C,&D,&E,&F,&G,&H,&I
User Information:
PUTSTRING
PUTSTRING
PUTSTRING
INTEGER
GETLIST
(' ')
('HOW MANY TRUCKS?')
(' ')
&TRUCKS
&TRUCKS
Generate:
GENERATE
3,,0,&TRUCKS,,12PH,12PL
240
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Methodology
Animation
241
Methodology
Mine Layout (Draw, Class and Paths)
242
120
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Methodology
Run
243
Methodology
Animation
244
121
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Methodology
Animation
245
Results
Assumptions
HD 785
EMPTY:
LOADED:
LOADED SF:
ORE WEIGHT:
STRUCK BODY CAPACITY:
ORE SPECIFIC GRAVITY:
FULL STRUCK LOAD ORE WEIGHT:
HOURS PER SHIFT:
72
164
147.6
75.6
40
4
160
8
t
t
t
t
m3
t
246
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Results
Ore Results
TRUCKS:
ORE DUMPS PER SHIFT:
STOCKPILE DEPOSITION PER SHIFT:
STOCKPILE WITHDRAWAL RATE:
COMPARISON (IRONCLAD):
3
9
1440
180
4
13
2080
260
5
17
2720
340
291
6
20
3200
400
7
23 DUMPS
3680 T
460 T/HR
T/HR
247
Results
Ore Results
248
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Results
Waste Results
TRUCKS:
WASTE DUMPS PER SHIFT:
DUMP DEPOSITION PER SHIFT:
DUMP RATE:
COMPARISON (IRONCLAD):
3
68
5140.8
642.6
4
87
6577.2
822.15
5
104
7862.4
982.8
885
6
123
9298.8
1162.35
7
142 DUMPS
10735.2 T
1341.9 T/HR
T/HR
249
Results
Waste Results
250
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Conclusion
GPSS/H Simulation and Animation
Number of shovels: one shovel
Number of trucks: five trucks and possibly an
extra standby truck
TALPAC simulations
Number of shovels: one shovel
Number of trucks: six trucks
Open Pit Mine Planning and Design
251
Acknowledgements
Postgraduate Students:
Sophie Mellor
Jian Liu
252
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Cost Estimation
Capital Costs
Operating Costs
254 of 10
126
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255
256
127
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257 of 10
128
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259
260
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261
Equipment replacement
Equipment becomes uneconomic when actual owning and
operating cost exceeds that of a new unit
Overhaul or replace?
Cost of overhaul?
Time to overhaul and requirement for temporary
replacement?
How long will economic life be extended?
Other work required during the extension of life?
Rate charged to mining operation to cover cost compared
with cost of new equipment and economics of mine?
Will overhauled equipment have acceptable availability?
262 of 10
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264
131
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265
administration building
laboratories
training facilities
change rooms
crib/lunch rooms
safety and medical facilities
fire station
core storage
security
266 of 10
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267
268
133
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269
270
134
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271
Select Equipment
ore and
waste
Shovels,
trucks,
drills,
excavators
etc.
# of
machines
required
Mine buildings
and costs
associated with
the mine
development
period
Other capital
expenditures
Milling Costs
(ownership and
capital costs)
AAIC=P x AAI
Ownership Cost = Depreciation +
AAIC
Direct operating
costs, total
operating costs,
direct operating
costs +
maintenance Ore and Waste
Mining Costs
# of production &
support employees
salaries
Other Costs
Operating Costs
Productivity
(tonnes/manshift)
Materials,
supplies, power
Total
and labour costs
($/hr or $/m or
$/tonnes)
Ore and waste
separation will be
Open Pit Mine
madePlanning and Design
Mining Cost
272
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Module 8
Financial Technical Modelling
274
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275
REVENUE ASSUMPTIONS - 1
World market prices dominant but hard to
predict
World economic conditions are volatile
Uneven outlook throughout the world
Supply and demand dominates - excess
supply is usual but not now (China!)
Potential for major economic disruptions,
e.g. oil price shocks, Soviet collapse, GFC,
war, China effect, etc.
276
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PROJECT FINANCE
277
SOURCES OF FINANCE
EQUITY:
New Issues (shares, options, hybrids, units)
Asset sales
Retained earnings
Term loans
Securities (bills, bonds, notes, debentures)
Commodity loans-Leases
Project finance
DEBT: security, recourse to borrowing
278
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279
280
139
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281
282
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283
EVALUATION GUIDELINES
Made at a point in time
Sunk costs (dont worry!)
Constant $ or current $
For comparing alternatives, make sure
techniques used permit fair comparisons
Computer financial models (spreadsheet
modeling)
Investment decision versus sale/purchase
evaluation
284
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FRAMEWORK OF EVALUATION
A construction of cash flows - in and out
Express every aspect in terms of cash
Express uncertainty in ranges of values,
creating multiple models of the one project
Cash flows not accounting profits
Evaluate on a stand alone basis
Ignore side issues unless the side issue is the
purpose of the project
285
286
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* Very important!
287
WORKING CAPITAL
Component of initial Cap. ex. - to fund op.
costs until sales revenues arrive - in theory
recovered at end of mine life
Required throughout project life but generally
supplied by sales revenues
Itemised on a period by period basis in
detailed financial models
Avoid double counting in financial model but
must be counted in initial funding
requirement
Open Pit Mine Planning and Design
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CURRENCY
Local currency (A$ for Australian projects in Australia)
Because costs in local currency
Convert revenues to local currency
Forecast exchange rates can dominate the evaluation
Foreign projects in host country currency - limited
conversion to A$ needed
In cases of foreign country hyperinflation, use a stable
currency, e.g. US$, if sales revenues in US$
289
EXCHANGE RATES
$ EXCHANGE RATE IS QUITE VOLATILE
Moves with commodity prices but affected by other
influences as well.
Forex turnover in all currencies in Australian market
represents 4.3% of global turnover, 7th largest forex
market in the world.
A$/US$ pair ~45% of total turnover. Euro/US$ pair ~14%.
A$/JPY only 1%
Aust. forex market grew with world market. Also, helped
by carry trade and hedge fund activity, plus growing funds
under management in Australia seeking to invest
overseas. Bulk of trades with overseas FIs
Aust. banks hedge ~ 100% of forex deals.
290
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CONSTANT VS CURRENT $
$ change in value over time
Constant $ - generally average value of $ of the day
at time of evaluation, preserved throughout project
life.
Current $ - $ of the day for each period in the future
- requires calculation of the change in value from
period to period, i.e. usually inflation rates
Costs affected by local inflation, revenues by world
inflation, up to a point. Mineral commodity
revenues controlled by supply and demand most of
the time.
291
292
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INTEREST RATES
A function of the time value of money
On debt, represent low risk return
Therefore, risky investments offer higher
return
Diversified equity investments offer about
6% above the risk free rate
Government bonds represent risk free rate
Interest rates and discount rates closely
linked
Open Pit Mine Planning and Design
293
294
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295
CURRENT $ TO CONSTANT $
296
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297
R = Rf + B(Rm -Rf)
Where:
R = required rate of return
Rf = risk free interest rate
B =relative risk of particular stock
Rm = average market return
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299
300
149
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PROJECT PERIODS
Equal length periods cover entire life of project
Permits use of standard compound interest
relationships and rules
Periods = years, generally
May be quarters or months for small projects
Project commences with the first period of
investment
Evaluation relates to beginning of first period
301
SUNK COSTS:
Past expenditures have no bearing on the
evaluation,e.g., exploration expenditure.
The evaluation is considering future expenditures
and revenues resulting from a decision yet to be
made.
True of cost of evaluation and confirmatory work
except for tax benefits
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PAUSE REFLECT!
Cost of Capital
WACC
Project periods
Sunk Costs
Lagged revenue
Working Capital
Constant vs Current $
Currency, Exchange rates
Revenue assumptions
Sources of finance
Cash
In- Outflow $
CAPM
Interest rates
Equity vs Debt Financing
Royalties
End of period convention
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DEPRECIATION
Depreciation is the means of recovering capital
expenditure
Depreciation deducted from cash flow to
determine taxable income, and thus tax payable
Depreciation then added back to after tax profit
to determine period cash flow
Dividend payments are not part of the project
evaluation.
Positive NPV of cash flows mean capital has
been serviced at the discount rate while
invested, has been recovered and excess return
has been received
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Capital Expenditure
Expenditure providing for mine operations for
longer than one year
Expenditure for operations within the year are
expensed, not capitalised
Depreciation schedules straight line over life of
asset, life of mine or 10 years; declining balance
depreciation can defer tax but eventually returns to
straight line.
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ROYALTIES
Charge levied by State or Federal Government in
return for permission to mine
Reflects Crown ownership of minerals
Various forms of royalty: ad valorem, pro rata, profit
share, resource rent taxation in different
jurisdictions
Check what applies to specific project and treat as a
reduction in revenues
309
LAGGED REVENUE
Example: Smelter pays to the company based
on the waiting period to produce the expected
amount of product depending to the shipping
capacity.
For gold it is not much time to produce gold from
ore/concentrate to gold bullion, say1 week, but
base metals may take more time, say 2-3 months
lagged.
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Module 9
Dewatering and Pump
Selection
Case Study
Pump & Pipe Selection
Pumping Costs
Introduction
Proposed mine is in the Mudgee area of NSW
Populated towns nearby in every direction
Long history of coal mining in the Central West
NSW with several active coal mines nearby;
deposits of high-grade coking coal are endemic
The old abandoned open cut mine had 4 identical
pits. Water has filled these pits to an average depth
of 50m
Coking coal prices are expected to rise, thus
prompting a review of the feasibility of
recommissioning and extending the abandoned
mine pits
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Mudgee
Sydney
313
Objectives
Design a suitable
system to dewater the
pits ahead of the
mining operation
Determine capital
costs and pump
operating costs per
year
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Methodology
3 methods of water volume estimation:
Volume by Integration
Volume by Parts
Volume by using a modelling program eg
AutoDesk Inventor
Dewatering times, depth of water with time
Calculation of required pump head over water
depth at different velocities/pipe diameters
Pipe system selection and costing
315
Infrastructure setting
In situ density
Waste 2.3t/BCM
Top Overburden
lowwall
highwall
89 m
Bottom
Overburden
=36
=75
Coal 1.4t/BCM
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Method#1
Estimate volume by parts
The dimension of the water in the pit can be
considered as different parts adding together:
Volume/m3
Formula
Rectangle
Low Wall
Edge
2
2
2
2 2
3
2
3
High Wall
Edge
Sides
Corners 1
Corners 2
Paramete Formula
r
x
y
1km-2b
h
a
b
tan 36
tan 75
Value
70
973.21
50
68.82
13.40
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Method #2
Estimate volume by integration
Looking at the model from top, we can evaluate width X and length Y
in terms of the
incremental height Z:
=
()
()
+
2()
+
=
Therefore, the volume is calculated by integrating the area of the cross
section over the height of the model:
=
0
2
3
22
.
0
That is, =
+ 3 + 2 + 2 + +
This confirms the volume by parts. By inputting known variables,
volume of the water in the pit is 5.49x106 m3
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Method #3
Estimate volume by using Inventor
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Method #3
Estimate volume by using
Inventor
321
Dewatering time
The disposal flow rate limit is 200 L/s,
therefore the dewatering time can be
calculated:
Volume of
water per
pit (m3)
Rate of dewatering
(m3/s)
5490065
0.2
Time to
Number of Total time
dewater
pits
taken for
one pit
dewatered dewatering
(days)
per year
(years)
T=V/(Qx24x N=365/T
TT=Nx4
60)
317.7
1.15
3.48
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50.00
Depth of Water
40.00
y = -0.0001837707x2 - 0.0958277546x + 49.5843902089
R = 0.9996479452
30.00
Depth
20.00
10.00
0.00
0
50
100
150
200
250
300
350
323
2
Major head loss:
2
=
2
Minor head loss:
2
=
2
Friction factor: Reynolds number and Moody Chart
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Calculation Example
Dept
h
30
0
1
2
3
4
5
6
Target
Velocity
2
hZ
30
30.5
30.5
30.5
30.5
80
80
hV
0
0.20408
0.20408
0.20408
0.20408
0.20408
0.20408
Pipe Diameter
(m)
0.356825
hP
0
-0.70408
61.75476
61.74711
60.66451
10.08396
0
Pipe Length
(m)
76.25
hLM
0
0
0
0
1.082598
1.070343
10.06611
hLm
0
0
0
0.007653
0
0.010204
0.017857
Reynolds
Number
71364.96
Friction
Factor
0.022
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95
85
2.829421211 0.3
75
0.439714514 0.761
1.123896216 0.476
65
y = -x + 109.53
55
1.390120911 0.428
1.763489674 0.38
2.228982782 0.338
45
y = -x + 96.312
35
y = -x + 89.115
y = -x + 85.056
y = -x + 82.993
y = -x + 80.325
25
0
10
20
30
40
50
60
Water Depth
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Pump selection
Must be capable of meeting largest flow rate
Must be capable of pumping largest pressure head
Relatively acceptable costs
ALLIGHT SYKES-HH220I
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350
300
250
kW
150
100
50
0
20
40
60
80
100
120
140
329
Pump selection
Features:
Diesel, electric or hydraulic drive
Low fuel usage, reduced engine size
Lower maintenance costs
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331
kW Required by Pump
280
0.761
230
0.476
0.428
0.38
180
0.338
0.3
130
80
0
50
100
150
200
250
300
350
Time (Days)
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System Costs
Change in Costs per System with Increasing Pipe Diameter
700000
600000
Cost ($)
500000
400000
Cap cost of pipes
Op cost of system
300000
Total
200000
100000
0
0.25
0.35
0.45
0.55
0.65
0.75
0.85
333
380mm
$115697.7
$81960
Electricity costs
$174935.6
At 10.2 c/kWh
TOTAL
$303301.5
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What Have We
Achieved?
Fundamentals of open pit mine design and
current developments in planning and design
methodology,
Current industry practices to maximise
economic return (technology, operations).
Open pit mine planning and design process in
theory and practice,
Unit Operations Drill-Blast-Load-Haul
Mining Economics
Apply this knowledge to plan/evaluate new open
pit projects and/or existing mines.
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