Risk based mine planning price uncertainty

Abstract

Production scheduling of an open pit mine is a process of assigning mining blocks to different production periods so that the total profit from the mine can be maximized over the life of the mine. Long term mine plans are based on a single price value, but by the time development is put in place, production plan may have been proved wrong and production plan may not achieve the desired objective. So, the production plan is changed again which results in inefficient use of capital with low returns to investors.
The proposed stochastic version of the conventional (deterministic) network flow algorithm is based on the use of multiple simulated realizations of metal selling price uncertainties. In comparison to the conventional pit optimization methods, where only one estimated or average type model of the deposit are used, the use of multiple scenario results in the ability to generate greater risk profiles in terms of metal price for pit design and production scheduling for greater profit making throughout the entire life of mine.
The method is applied for optimizing the annual production scheduling at an Iron ore mine, and compared against a traditional scheduling method using the traditional single “average type” assessment of the mineral resources. In the case study presented here in, the schedule generated using the proposed SIP model resulted in approximately 5% higher NPV than the schedule derived from the traditional approach.