7
value creation (5.3%) being greater than the sum of the
three individual parts (4.9%). With the higher mine ton-
nage, the higher mill tonnage can be provided without low-
ering the operating cutoff grade significantly in any year
and generally maintaining (years 1 to 7) or increasing mill
grades (years 8 to 14) (Figure 8c) with a net result of higher
net present value (Figure 8d).
Cost and Revenue Improvements
The cost and revenue improvements have higher lever-
age to value creation than the capacity increases (Table 2,
bottom section). A 5% reduction in mining cost per ton
increases value by 1.3% a 5% reduction in milling cost
per ton increases value by 4.1% and a 1% increase in cop-
per price increases value by 2.5%. The cost and revenue
improvements were small enough that they created little
impact to the optimal production schedule however, larger
improvements could be enough to raise operating cutoffs
and reduce stockpiling breakeven cutoffs and even make
new laybacks profitable.
In this example, lowering mining cost/ton created sig-
nificantly more value than expanding mining capacity at a
constant cost/ton. The author is looking forward to testing
a high strip ratio gold deposit case study where the relative
impacts may be different. Depending on the improvement
project, increasing tons per year may be an effective way to
reduce cost per ton.
EVALUATING MINE PLANNING
IMPROVEMENT OPPORTUNITIES
To provide additional perspective, the Peakfinder MILP
production scheduling workflow was also used to dem-
onstrate the importance of several mine planning levers.
By necessity, the analyses demonstrate the value lost if
not using several mine planning techniques incorporated
into the base plan: subdivision of large laybacks, stockpil-
ing, and dynamic cutoff grades. Results are presented in
Table 3. Note that, although the stockpiling lever does not
show a significant increase in Net Present Value, stockpiling
does preserve significant resource tonnage and can provide
significant option value.
8a) Yearly tons mined comparison
8b) Yearly tons milled comparison
8c) Yearly mill grade comparison
8d) Discounted cash flow profile comparison
Figure 8. Continuous Improvement comparison highlights:
solid lines=+10% mining tons, milling tons and panels per
year dashed lines=base case plan
Table 3. Value Creation vs Mine Planning
Mine Planning Levers NPV
Layback Design
Don't subdivide large laybacks 3,966 (114) -2.8%
-2 .8 %Stockpiling
No stockpile 3,978 (101) -2.5%
-2 .5 %Max stockpile 40Mt 4,043 (37) -0.9%
-0.9 %Cutoff Grade Optimization
Breakeven fixed cutoff (0.4%) 3,648 (431) -10.6%
-1 0.6 %Best fixed cutoff (0.6%) 3,840 (240) -5.9%
-5 .9 %
Diff vs Base Case
value creation (5.3%) being greater than the sum of the
three individual parts (4.9%). With the higher mine ton-
nage, the higher mill tonnage can be provided without low-
ering the operating cutoff grade significantly in any year
and generally maintaining (years 1 to 7) or increasing mill
grades (years 8 to 14) (Figure 8c) with a net result of higher
net present value (Figure 8d).
Cost and Revenue Improvements
The cost and revenue improvements have higher lever-
age to value creation than the capacity increases (Table 2,
bottom section). A 5% reduction in mining cost per ton
increases value by 1.3% a 5% reduction in milling cost
per ton increases value by 4.1% and a 1% increase in cop-
per price increases value by 2.5%. The cost and revenue
improvements were small enough that they created little
impact to the optimal production schedule however, larger
improvements could be enough to raise operating cutoffs
and reduce stockpiling breakeven cutoffs and even make
new laybacks profitable.
In this example, lowering mining cost/ton created sig-
nificantly more value than expanding mining capacity at a
constant cost/ton. The author is looking forward to testing
a high strip ratio gold deposit case study where the relative
impacts may be different. Depending on the improvement
project, increasing tons per year may be an effective way to
reduce cost per ton.
EVALUATING MINE PLANNING
IMPROVEMENT OPPORTUNITIES
To provide additional perspective, the Peakfinder MILP
production scheduling workflow was also used to dem-
onstrate the importance of several mine planning levers.
By necessity, the analyses demonstrate the value lost if
not using several mine planning techniques incorporated
into the base plan: subdivision of large laybacks, stockpil-
ing, and dynamic cutoff grades. Results are presented in
Table 3. Note that, although the stockpiling lever does not
show a significant increase in Net Present Value, stockpiling
does preserve significant resource tonnage and can provide
significant option value.
8a) Yearly tons mined comparison
8b) Yearly tons milled comparison
8c) Yearly mill grade comparison
8d) Discounted cash flow profile comparison
Figure 8. Continuous Improvement comparison highlights:
solid lines=+10% mining tons, milling tons and panels per
year dashed lines=base case plan
Table 3. Value Creation vs Mine Planning
Mine Planning Levers NPV
Layback Design
Don't subdivide large laybacks 3,966 (114) -2.8%
-2 .8 %Stockpiling
No stockpile 3,978 (101) -2.5%
-2 .5 %Max stockpile 40Mt 4,043 (37) -0.9%
-0.9 %Cutoff Grade Optimization
Breakeven fixed cutoff (0.4%) 3,648 (431) -10.6%
-1 0.6 %Best fixed cutoff (0.6%) 3,840 (240) -5.9%
-5 .9 %
Diff vs Base Case