Life of Mine scheduling takes mine planning beyond Pit Optimisation

Mark Kelly & Tony Cram

Mining Manager & Advanced Systems Manager
ECS International Pty. Ltd,
PO Box 160, Bowral, NSW. Australia.
Phone +61 248 612122 Fax + 61 248 613902
URL:www.ecsi.com.au

Surface mine planning techniques are reasonably sequential and consist of geological modelling, deposit
ranking, pit design and scheduling. In all deposits a pre-requisite is a sound geological model. Ranking
uses such a model to find the economic pit limits and a broad mining path. The mine is then designed and
scheduled. Normally this involves a number of iterations to generate a correct ore blend and to smooth ore
and waste mining within a reasonably stable fleet capacity. In some cases these iterations are unsuccessful
because the original ranking was flawed.

Reducing commodity prices have driven the search for new planning techniques. Life of Mine (LOM)
scheduling considers the planning, not as separate periods, but by simultaneously examining multiple
periods over the project life. These LOM planning systems use mixed integer linear programming
techniques to optimise the mine schedule, including blending. By considering multiple periods, future
profits and future capital spending can be discounted. Hence a LOM plan maximises project NPV.

Pit Optimisation

Pit optimisation is used in open pit mine planning to generate a pit, which is break-even at its limits. For a
set of cost assumptions, the optimum pit is the maximum revenue pit. A slightly smaller pit will leave
revenue on the pit walls, while a slightly bigger pit is unprofitable at its limit.

Pit optimisation is also used to generate nested pits, which are optimum pits for incremental metal values
(e.g. in gold $50/oz, $100, $150…). Of these nested pits, the smallest (e.g. $50/oz) is the most profitable
and to maximize NPV, and mitigate risk, should be mined first. Mining through the nested pits provides an
initial schedule path.

Because optimizers assist in defining the pit limits and the scheduling path, they are well accepted.
However, an inherent difficulty with using optimum pit shells as the basis for scheduling is that block
values must be pre-defined for pit optimisation, when in reality some costs vary with the mining schedule
and mining rate. These difficulties increase the number of iterations required to verify pit opimtisation cost
assumptions and achieve acceptable accuracy. In some cases this can result in totally missing the
“optimum pit”.

Life of Mine Scheduling

LOM scheduling software, like MINEX Maximiser, is based on block volumes and grades. LOM
scheduling then uses fleet and plant capacities, fixed and operating costs, product prices and specifications,
market targets (e.g. tonnes per annum), and discount factors to determine the schedule that maximises
NPV.

Ref: -1-
It is the ability of LOM scheduling to consider multiple periods, and examine all issues simultaneously,
that makes it such a powerful technique.

Limits of Pit Optimisation and the role of LOM Scheduling

Pit optimisation suffers limitations, particularly in relation to ore blending, generating a smooth schedule
and trucking (Table 1). LOM scheduling has evolved in response to these limitations.

However LOM scheduling does not necessarily replace pit optimisation. In some deposits the limitations
are insignificant and often an optimistic optimum pit is used as a limit for a LOM analysis (to reduce
computing time). The limits and differences between the two techniques are discussed below.

Table 1: Comparison of Pit Optimisation and LOM Scheduling

Pit Optimisation LOM Scheduling
Time based Analysis ✘ ✔
Time based limit on plant and equipment resources ✘ ✔
Blending of ore to meet product quality constraints. Difficult on time basis ✔
Limit on product tonnage on a time basis. ✘ ✔
Variable waste haulage costs depending on in-pit dump space. Difficult ✔
Pre-stripping ✘ ✔
Computer Time Low to Medium Medium to High

Blending: Pit Optimisation values blocks using sale price, metal content and mill recovery. For gold or
copper this is correct as mineralisation and dollar value are directly related. However, for commodities
that require blending, such as coal and iron ore, block valuation by grade is difficult. The value of high-
grade or low-grade ore depends on the availability of suitable blending material at the correct time. This
leads to a problem in defining the block values and the subsequent economic pit limit. If low-grade
material is devalued and high-grade is overvalued, then the optimum pit limit may be incorrect. Blending
may, and probably will, change the pit limit.

LOM scheduling considers blending options by testing different schedule paths. Mining, processing and
stockpiling costs are used to compare blend options. Multi-element and multi-pit blending is also handled,
providing a valuable tool for strategic mine or corporate planning.

Smooth scheduling of ore and waste: Pit optimisation is often used as a schedule guide. Optimisation and
scheduling are, however, quite different. Optimisation defines pit boundaries, while scheduling provides a
path and timing to get from one boundary to another. Nested optimisation of a dipping orebody may
provide a set of advances as shown in Figure 1. These nested pits are related to the orebody geology, and
their volume and strip ratio increments are frequently irregular and impractical.

As LOM scheduling is restrained by a fleet capacity and a market tonnage (both of which can vary over
time), the resultant schedule is practical. Waste will be prestripped so ore is available, production is

Ref: -2-
 Figure 1: Nested optimized pits

2
3
4

Ore body

Figure 2: Actual mine progression using available equipment

1 2 3

smoothed and the mining fleet remains stable (Figure 2). Wild variations in production are neither practical
nor allowed in the LOM schedule.

Waste Trucking: In most deep open pits, waste backfill is not possible and truck haulage costs can be
determined from the mine and dump locations. In backfill mines, particularly coal, waste can be dumped
on the mine floor after the coal is removed, with substantial reductions in waste haulage costs. Waste
dumping management in mines with high strip ratios, via early backfill and correct dump strategies, is
critical to project value. Pit optimisation struggles with this problem, as the availability of dump
destinations and hence the ore and waste removal can only be determined by scheduling.

Some LOM schedulers use two block volume models, one for the mine and one for the dumps. By linking
these models, mining creates dump floor space, and connecting roads provide truck travel times and costs.
LOM scheduling can then compare options based on total mining and haulage costs.

Ref: -3-
Life of Mine Scheduling - Beyond Pit Optimisation

LOM scheduling addresses the limitations of pit optimisation. LOM scheduling controls ore blending,
schedule smoothing and waste haulage costs. All these issues are integrally related and thus effect the
project NPV. Blending, for example, may require extra waste stripping to find suitable ore and this extra
waste will require additional dump space. The mining of a higher strip ratio material may create in-pit
dump space that substantially reduces waste haul costs. Similarly, given a processing plant limit and
operating costs, a declining cut-off grade policy is a natural outcome of LOM scheduling. Because of the
holistic LOM process, the current revenue from high-grade ore can be compared to stockpiling and future
period rehandling of marginal ore.

LOM scheduling, by simultaneously examining multiple periods and all the cost/benefit issues, “finds” the
mining sequence that maximises LOM NPV.

Ref: -4-