Auditing Long Term and Short Term Plans

Auditing Long and Short Term Plans

Introduction
Mining plans are typically reviewed by third-party auditors appointed by either banking
institutions or the mining company itself. These auditors are usually consulting firms
and they may use Minesight® or some other software tools to assist them in their work.
The auditor’s work will likely include checking the input data and results for correctness,
reasonability, etc., by either duplicating the client’s Minesight results with their use of
Minesight or producing a similar result using other software tools.
When properly used, it is probably safe to say that any of the commercially available
mine planning software packages will provide correct results. The results from different
software packages may not be exactly the same because of data handling techniques
internal to the programs, rounding issues, etc. For example, Lerchs-Grossmann (LG)
results can be slightly different just from the way slope data is handled in the different
programs. Regardless of which software is used to produce the mining plan, the auditor
will focus on verifying that the data inputs are reasonable and correct; and the mining plan
presented is the best feasible plan in terms of economics and operational viability.
The purpose of this workshop is to show you how to use Minesight to audit your own
work as you go through the sequential tasks required to develop a complete Life-of-Mine
mining plan containing phase designs, annual cash flows, net present value (NPV) results,
capital expenditures, etc. By following these auditing type checks along the way, you will
be doing some of the same things the auditors do in verifying mining plans. The checks
presented in this workshop are based on the standard things we do here at Mintec when
we are either doing a mining plan for a client or checking a client’s use of Minesight® mine
planning tools. Some of the checks being presented you may already be familiar with,
some not. In any event, we have tried to compile everything we typically do in the area of
checking and present it in this one paper.
The paper is organized along the lines of the following questions that typically come up in
the use of the Minesight suite of planning tools
1. How do you know that the various representations of the starting topography are all
showing the same surface?
2. How do you know that your block value calculations are correct?
3. How do you know that your LG shell wall slopes are correct?
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4. How do you know the LG ultimate pit shell is actually showing you the break-even
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limit?
Mining
Software 5. How do you know that the mathematically correct cutoff grade strategy produced by
Solutions MSVALP can be achieved in an operational environment?
Since 6. How can you check your phases to prove that they start in the most profitable areas
1970 and progress to less profitable areas?
7. How can you check your reserve class coding logic prior to building the reserve files
for Minesight Strategic Planner (MSSP) scheduling?
8. How do you know if the MSSP schedule is the best you can do?
9. How do you know if the final phases in the mining plan are worthwhile to start? Can
the discounted value of the ore in the phase pay for the stripping?

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Auditing Long Term and Short Term Plans

10. How do you know you have ramp access to all mining areas scheduled each year?
Have you mined out a ramp connection too early?

Audit Step 1: Checking Starting Topography

There are three different digital representations of the starting topography that are used at
various stages in the Minesight mine planning process:
 Topography represented by the surveyed pit surface in the form of a triangulated
surface file (Minesight geometry file).
 Gridded topography value in the Minesight Gridded Surface File (e.g., TOPOG).
 An item storing % of block below the surface in the 3D block model (3DBM) file (e.g.,
TOPO%).
Minesight programs exist for taking the Minesight geometry file of the topography and
creating the other two representations. The Geometry and Grid Surface tabs in the Model
View Editor dialog are used to make the gridded representation of the topography. The
Minesight Compass™ (MSCompass) procedure Add TOPO% to Model (p63301.dat)
is run to use the gridded representation (TOPOG) for assignment of values to the TOPO%
item in the 3DBM. Once created, these three topo representations can be displayed in‑ cross-
sections (Figure 1) to check that the same surface is being represented.
For Minesight Economic Planner (MSEP) usage in long term planning, it is recommended
that the 3DBM TOPO% be assigned directly from the gridded surface value (TOPOG) using
the MSCompass procedure. For shorter term planning, a more accurate TOPO% value can
be assigned based on 3D partials from the Minesight triangulated surface geometry file.
Two items in the block model can be used to store results from the two different methods
and have both available when needed.

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Software
Figure 1. Comparing different representations of the same topographic surface.
Solutions
Audit Step 2: Checking Block Value Calculations Since
MSEP programs MSOPIT and MSVALP are used to calculate block values for use in pit 1970
optimization by either the Floating Cone or Lerchs-Grossmann method. Enter prices, costs
and recoveries, and the programs will calculate block values for each valid destination,
compare them, and select the highest block value and the corresponding destination for
storage back to the block model.

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 Auditing Long Term and Short Term Plans

An audit file is created by these programs containing the block value calculation
input assumptions and calculation details for each valid destination for a pre-selected
vertical column of blocks in the block model. This file is named either workmsopit or
workmsvalp. It is worthwhile to check this file to verify that the input data is correct and
that the block value calculations are being done the way you anticipated.

Audit Step 3: Checking Wall Angles on Optimization Shells

MSEP program MSOPIT can generate pit shells using constant slopes, slopes that vary
by wall sector, and slopes that vary both by wall sector and vertically within the sector.
Regardless of which slope option you use the results can be checked by:
 Using Minesight®3-D (MS3D) graphics tools or
 Using MSCompass procedure Compute Pit Slopes (pslope.dat)
A good way to check slopes with MS3D graphics tools is to contour the pit shell, overlay the
sector boundaries, and measure wall angles by snapping to contour lines within the sector
(Figure 2):

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Global
Mining
Software
Solutions
Since
1970

Figure 2. Checking wall angles using MS3D.

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Auditing Long Term and Short Term Plans

MSCompass procedure Compute Pit Slopes (pslope.dat) will determine the slope at
each exposed (x,y) grid location by evaluating its shell elevation and elevations at nearby or
adjacent grid points. The computed slope is stored in a gridded surface file item and can be
displayed as a model view for another type of visual check of slopes (Figure 2a).

Figure 2. Wall angle display from Compute Pit Slopes procedure.

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Audit Step 4: Checking the Break-even Limit of the LG Ultimate Pit Shell Global
Pit optimization algorithms expand a pit out to its marginal or break-even limit defined by Mining
zero profit. The previous block width expansion increment just inside this break-even limit Software
should be positive and the next block width expansion increment just outside the break- Solutions
even limit should be negative. Since
MSCompass procedure Surface Operations (pspsuf.dat) has options to generate pit 1970
shells one block above and one block below the ultimate pit shell. These shells are used in
conjunction with procedure PITRES and a stored block value item to determine the value of
the skin inside the ultimate pit and the value of the skin outside the ultimate pit.

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 Auditing Long Term and Short Term Plans

Audit Step 5: Checking the Viability of Cutoff Grade Strategy

MSEP program MSVALP will calculate annual cutoff grades for the life of the mine for all
ore processes (mill, leach, etc.). The cutoff grades determined each year will maximize the
NPV of the project. They are presented in chart form using MSEP Charting tool (Figure 3)

Figure 3. Optimal cutoff grades from program MSVALP.

Prior to reporting these cutoffs as part of your life-of-mine scheduling results, you can
check their operational viability by using them in Minesight’s more detailed scheduling
program MSSP. Reserve classes using the optimal cutoff values as grade bins are created by
MSCompass procedure Modcls.
Reserve classes are then mapped to stockpile or mill each year to duplicate the cutoff grade
strategy provided by MSVALP. MSSP is then run to confirm their viability.

Audit Step 6: Checking Phase Economic Order

MSEP is used to produce shells in economic order defining a mine sequence that progresses
Mintec, Inc. from highest value areas to lowest value areas for use in phase design. The shells have
Global both economic and size conditions imposed on them to make them emulate detailed phase
Mining designs as much as possible. Nevertheless, the phase designs created using the shells as
Software guidelines will usually not exactly follow the shells. Ramp layouts and multiple ramp
Solutions connections may cover up some ore or increase stripping such that the phase design value
becomes less than the value of the guiding shell. Therefore, the economic order of the phases
Since
should also be checked to ensure that it is the same as the economic order of the guiding
1970 shells. This can be done at the same time that the phase reserves are being computed by
including the value/tonne block model item as a grade item in the setup of MSCompass
procedure PITRES.

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Auditing Long Term and Short Term Plans

Audit Step 7: Checking Reserve Class Coding Logic

Minesight® model statistics procedure (p60801.dat) is very useful for checking any
reserve class coding logic performed with either the Modcls or Model User-calcs
procedure (p61201.dat). Minesight Data Analyst (MSDA) could also be used, but the
ability to quickly present non-accumulated statistics by reserve class bin makes the model
statistics procedure (p60801.dat) preferable for checking in this case. For each reserve
class, any number of additional model items such as metal grades, value/tonne, resource
code can be included in the report for checking purposes.

Audit Step 8: Checking the MSSP Schedule

MSSP uses enumeration and integer programming to produce a best feasible mining
schedule where “best” is usually based on ranking the scheduling solutions for each period
and selecting the one with the highest NPV. Since MSSP does this on a period-by-period
basis, it is essential that the phases are being mined in their economic order. If they are not,
then the schedule determined by MSSP will not be the best one. There are situations where
phase geometric constraints and ore body grade distributions prevent a strict economic
order from being followed. This just becomes an additional reality constraint in the
scheduling process that is accounted for in the MSSP best feasible solution.
MSSP provides several report files defining which phases are being mined in which periods
in the best feasible mining solution. These period-by-period results should be checked
thoroughly to verify the phase mining order in the schedule. Other items to check via the
report files to ensure the solution is the best feasible solution include:
 period cutoff grade used
 stripping schedule
 maximum mining rate
 annual equipment requirements

Audit Step 9: Checking the Scheduled Mining of the Final Phases at the
Ultimate Pit Limit
The final phases in a mining schedule will be the lowest valued phases as they mine out
to the break-even limit of the deposit. In the schedule, the stripping of these final phases
is being done in periods when ore is being mined in preceding phases. In other words, the
stripping of the final phase is being paid for by ore in the previous phase when looking
at the annual cash flows in the schedule. Once the final phase is stripped, the stripping
requirements drop off dramatically and the mine finishes up by mining the ore benches in
the final phase.
A question that is usually raised regarding the final phases is whether or not the phase is Mintec, Inc.
economic on a stand-alone basis . Rather than the ore from a previous phase paying for the Global
stripping (as per the schedule), can the ore in the final phase pay for its own stripping based Mining
on the scheduled stripping and ore release and the inherent discounting that this entails (ore
Software
being mined later in time than the waste)?
Solutions
This question can be answered by using MSSP to do a stand-alone phase evaluation. The Since
bench-by-bench mining schedule for the phase being evaluated is specified in the program,
1970
all constraints are relaxed, and all other phases are locked out. MSSP will then compute
the NPV for the phase based on its scheduled mining. If it is negative, then the discounted
value of the ore in the phase cannot pay for its stripping and this phase is removed from
the schedule.
Another method for applying discounting considerations and their effects on final phase
economic viability is to consider discounting effects earlier in the process when determining

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 Auditing Long Term and Short Term Plans

the LG ultimate pit limit. This can be done using MSEP vertical discounting option. The final
phases are then designed inside the discounted ultimate pit limit and, in theory, should then
be economic on a stand-alone scheduling basis.

Audit Step 10: Checking Mine Access at the End of Each Scheduling Period
Phase ramp access/design typically involves relocating existing ramps on to the pushed
back wall of the new phase design. This process can become complicated when phases only
push back a portion of the wall and connections have to be maintained between the old
ramp system and the relocated ramp system. A good way to verify that access is maintained
to all working areas over time is to create end-of-year maps of the status of the mine. These
maps will show the position of each active phase at these points in time and the positions
of the ramp systems designed for each phase. One can use these maps to trace the haulage
route from each active phase to the pit exit point and ensure that access to each active phase
is maintained throughout the schedule. An example of an end-of-year map is shown in
Figure 4 with a trace of the haulage route out of the mine shown in orange. These maps are
made using the MSSP Period Map tool in MS3D.

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Global
Mining
Software
Solutions
Since
1970

Figure 4. End–of-year map with mine access ramp positions at this point in time.

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Auditing Long Term and Short Term Plans

Conclusion
This paper has presented a list of auditing steps that are typically done at Mintec when we
are either making a long term plan for a client or reviewing a client’s work at their request.
The paper has attempted to show most of the ways Minesight can be used to audit or check
your work as you do it in order to verify the schedule you present to management and,
sometimes, to third party auditors for their review. The auditing steps presented here have
focused on the long term planning tasks. Similar auditing work can be done with short term
plans using similar MS3D graphics tools and MSCompass procedures.

Mintec, Inc.
Global
Mining
Software
Solutions
Since
1970

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