6
increments with stockpile reclaim shown as a hatched bar).
With both mining and milling as bottlenecks, the operat-
ing cutoff becomes a function of the grade tonnage distri-
bution mined during each year. The operating cutoff starts
at 0.8% Cu in year 1 and bounces between 0.6% and 0.7%
through year 12 (Figure 6b). Through year 8, the operating
cutoff balances mine and mill capacity without any need
for stockpile reclaim, except when the 0.7% to 0.8% incre-
ment stockpiled in year 1 is milled in year 2. Some interme-
diate grade increments are also reclaimed from stockpile in
years 9, 10 and 11 before the operating cutoff grade drops
to 0.5% Cu in year 13. Throughout the 21 years of mining,
any material between the operating cutoff and the 0.4%
stockpile cutoff is stockpiled for processing at the end of
the mine life. Stockpile inventory peaks just below 120Mt
in year 12 as layback 7 nears completion (Figure 6c).
Dashboard graphs are best viewed simultaneously on
a large screen monitor which also allows easy comparison
and highlighting of differences between plans. Note that
the operating cutoff terminology is useful for explaining
the schedule results even though the MILP model does not
explicitly solve for a cutoff, but instead chooses an opti-
mum destination for each increment in each time period.
The cashflow schedule (Figure 7a) shows significant
drop-offs in yearly cash flow after years 1, 5 and 9 corre-
sponding to depletion of laybacks 1, 4 and 5. With a 10%
per year discount rate, discounted cash flow drop-offs are
further accentuated (Figure 7b).
EVALUATING CAPACITY AND COST/
REVENUE CONTINUOUS IMPROVEMENT
OPPORTUNITIES
Starting from the base case schedule, alternate production
schedules were optimized, and corresponding incremental
value creation numbers were evaluated for various com-
binations of 10% increases in mining capacity, sink rate
and milling capacity (Table 2). For perspective, incremen-
tal value creation was also computed for 5% reductions in
mining and milling costs per ton, a 1% increase in Cu price
and a 10% reduction in Cu metal lost to tailings (equiva-
lent to increasing direct mill feed recovery from 85% to
86.5% and stockpile mill feed recovery from 80% to 82%).
Capacity Improvements
A 10% increase in mining capacity alone improved value
by 1.0% by allowing higher grade ore to be mined and
milled sooner at the expense of higher yearly ore and waste
mining costs and more stockpiling of ore at the operating
cutoff margin. A 10% increase in sink rate only yielded a
0.1% increase in value as sink rate was only a bottleneck
for a small number of layback/time period combinations.
A 10% increase in milling rate improved value by 3.8% by
allowing ore with grade just below the operating cutoff to
be milled in the same period mined instead of being stock-
piled this benefit is only partially offset at the end of the
mine life when the mill shuts down earlier.
Figure 8 shows how the plan changes with simultane-
ous 10% increases to mining, sinking and milling capac-
ity. The mining capacity increase is fully utilized through
year 9 (Figure 8a). With higher mining, higher mill capac-
ity can be fully filled from direct pit feed through year 8
(Figure 8b).
With simultaneous increases to mining, sinking and
milling constraints, some synergy is seen with the total
7a) Undiscounted cash flow by year
7b) Discounted cash flow by year and cumulative
Figure 7. Base case cash flow dashboard graphs
Table 2. Value Creation from Continuous Improvement
Base Case NPV
40Mt/yr mining 20Mt/yr milling 4,080 -0.0%
0.0% Continuous Improvement Levers NPV
CI -Physicals
Mine t/yr +10% 4,122 42 1.0%
1 .0% Panels/yr +10% 4,083 4 0.1%
0.1 %Mill t/yr +10% 4,235 155 3.8%
3 .8 %Mill t/y, Mine t/yr &Panels/yr +10% 4,295 215 5.3%
5 .3 %Tails grade -10% 4,283 204 5.0%
5 .0% CI -Costs/Revenue
Mine cost/t -5% 4,131 51 1.3%
1 .3 %Mill cost/t -5% 4,249 169 4.1%
4 .1 %Copper price/t +1% 4,183 104 2.5%
2 .5 %
Diff vs Base Case
Diff vs Base Case
increments with stockpile reclaim shown as a hatched bar).
With both mining and milling as bottlenecks, the operat-
ing cutoff becomes a function of the grade tonnage distri-
bution mined during each year. The operating cutoff starts
at 0.8% Cu in year 1 and bounces between 0.6% and 0.7%
through year 12 (Figure 6b). Through year 8, the operating
cutoff balances mine and mill capacity without any need
for stockpile reclaim, except when the 0.7% to 0.8% incre-
ment stockpiled in year 1 is milled in year 2. Some interme-
diate grade increments are also reclaimed from stockpile in
years 9, 10 and 11 before the operating cutoff grade drops
to 0.5% Cu in year 13. Throughout the 21 years of mining,
any material between the operating cutoff and the 0.4%
stockpile cutoff is stockpiled for processing at the end of
the mine life. Stockpile inventory peaks just below 120Mt
in year 12 as layback 7 nears completion (Figure 6c).
Dashboard graphs are best viewed simultaneously on
a large screen monitor which also allows easy comparison
and highlighting of differences between plans. Note that
the operating cutoff terminology is useful for explaining
the schedule results even though the MILP model does not
explicitly solve for a cutoff, but instead chooses an opti-
mum destination for each increment in each time period.
The cashflow schedule (Figure 7a) shows significant
drop-offs in yearly cash flow after years 1, 5 and 9 corre-
sponding to depletion of laybacks 1, 4 and 5. With a 10%
per year discount rate, discounted cash flow drop-offs are
further accentuated (Figure 7b).
EVALUATING CAPACITY AND COST/
REVENUE CONTINUOUS IMPROVEMENT
OPPORTUNITIES
Starting from the base case schedule, alternate production
schedules were optimized, and corresponding incremental
value creation numbers were evaluated for various com-
binations of 10% increases in mining capacity, sink rate
and milling capacity (Table 2). For perspective, incremen-
tal value creation was also computed for 5% reductions in
mining and milling costs per ton, a 1% increase in Cu price
and a 10% reduction in Cu metal lost to tailings (equiva-
lent to increasing direct mill feed recovery from 85% to
86.5% and stockpile mill feed recovery from 80% to 82%).
Capacity Improvements
A 10% increase in mining capacity alone improved value
by 1.0% by allowing higher grade ore to be mined and
milled sooner at the expense of higher yearly ore and waste
mining costs and more stockpiling of ore at the operating
cutoff margin. A 10% increase in sink rate only yielded a
0.1% increase in value as sink rate was only a bottleneck
for a small number of layback/time period combinations.
A 10% increase in milling rate improved value by 3.8% by
allowing ore with grade just below the operating cutoff to
be milled in the same period mined instead of being stock-
piled this benefit is only partially offset at the end of the
mine life when the mill shuts down earlier.
Figure 8 shows how the plan changes with simultane-
ous 10% increases to mining, sinking and milling capac-
ity. The mining capacity increase is fully utilized through
year 9 (Figure 8a). With higher mining, higher mill capac-
ity can be fully filled from direct pit feed through year 8
(Figure 8b).
With simultaneous increases to mining, sinking and
milling constraints, some synergy is seen with the total
7a) Undiscounted cash flow by year
7b) Discounted cash flow by year and cumulative
Figure 7. Base case cash flow dashboard graphs
Table 2. Value Creation from Continuous Improvement
Base Case NPV
40Mt/yr mining 20Mt/yr milling 4,080 -0.0%
0.0% Continuous Improvement Levers NPV
CI -Physicals
Mine t/yr +10% 4,122 42 1.0%
1 .0% Panels/yr +10% 4,083 4 0.1%
0.1 %Mill t/yr +10% 4,235 155 3.8%
3 .8 %Mill t/y, Mine t/yr &Panels/yr +10% 4,295 215 5.3%
5 .3 %Tails grade -10% 4,283 204 5.0%
5 .0% CI -Costs/Revenue
Mine cost/t -5% 4,131 51 1.3%
1 .3 %Mill cost/t -5% 4,249 169 4.1%
4 .1 %Copper price/t +1% 4,183 104 2.5%
2 .5 %
Diff vs Base Case
Diff vs Base Case