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Strategic Open Pit Mine Planning - Generate Minable Mine Plans while Maximizing NPV

General steps for carrying out a near-optimal minable long-term open pit mine plan – this is not an
exhaustive list or detailed technical document – just some thoughts on the topic.

Inputs
 Classified resource model - measured, indicated, and inferred blocks in a block model.
 The resource block-model should be reblocked into a representative block size based on the
equipment size, suitable for reserve estimation and long-term planning.
 Retaining the details of the resource block model at a sub-block or parcel level representing
the selective mining unit that could be sent to different processing destinations (heap -leach vs
mill)
 Activity-based costing for mining, processing, selling, and rehabilitation – assign overheads
to the activities.
 Processing recovery models – non-linear recoveries as a function of the grade of elements of
interest.
 Inputs from the geotechnical team regarding the overall safe slopes in different regions of the
pit and different rock types and the maximum acceptable face-angle for each bench; also the
maximum acceptable overall slope error.
 Expected final product price and cost of selling.
 An appropriate discount rate to be used as a function of commodity and representing the
technical and geopolitical risk of the project (usually gold starts at 5% and copper at 8%).

Strategic Open Pit Mine Planning

Hooman Askari, PhD, PEng

1. Pit limits optimization (LG or Pseudoflow) with a series of revenue factors generating nested
pit shells maximizing the profit.
2. Push-back selection - choose the push-backs from the nested pit shells with a minimum
mining width with practical push-backs honouring minimum pit bottom width and minimum
mining width required between push-backs as a function of the equipment, working-bench
design, and ramp design.
3. Generate the life-of-mine plan - what should be mined? When should it be mined? and where
should it go? This is in conjunction with the push-back selection and definition of ore using
cut-off grade (usually marginal cut-off at this stage).
4. The objective at this stage is to maximize NPV while feeding the mill to its capacity and
honouring all operational constraints such as max/min lead/lag between push -backs,
maximum feasible number of bench drops in each period, keeping a reasonable variation in
the stripping ratio as a function of mining capacity, honouring trucks and shovels hours
constraints, etc.
5. Explore various techniques based on the commodity type to improve the base-case schedule
in terms of NPV.
 Mining direction control – this is a constraint that needs to be met in many mining
operations
 and different commodities.
 Use stockpiles - buffer stockpiles or strategic stockpiles to meet head grade or maximize
NPV.
 Blending and bulk blending – control head grade (ex. bulk material, iron ore)
 Carry out cut-off optimization using strategic stockpiles, establishing a dynamic cut-off
grade over the life of mine to improve NPV (mainly precious metals)
 Simultaneous optimization – integrate steps 1 to 5 to increase NPV
 CAPEX optimization
 Use various techniques such as Design of Experiments and Monte Carlo simulation to
quantify the impact of different sources of uncertainty on the pit limits, long -term mine
plan, and expected NPV (Hill of value climbing concepts).
 Historically mine planning has addressed and dealt with different sources of uncertainty
by its iterative process. New data and information comes in the mine plans are updated
based on the new updated information. Life-of-mine plans get updated yearly, and short-
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term mine plans get updated quarterly and monthly, operational plans get updated
weekly. There is no stochastic model that will replace this.
 However, stochastic modeling and quantifying the uncertainty in the reserves are
extremely important and valuable at each stage.

6. Carry out a minable pit and waste dump design around the year-end surfaces generated in the
strategic mine plan, starting from the pit limits and working your way back towards initial
push-backs. You aim at a design as close as possible to the optimal LG or Pseudoflow pit, but
this is usually impossible. Keep the difference between the optimal pit-shell and the designed
pit to less than 5% tonnage difference (do not exceed 10%).
7. Rerun life-of-mine plans (steps 2 to 5) within the designed final pit and push-backs; explore
all details in step 5 again.

🔸 Here is what I learned through time in the strategic mine planning domain: “The constraints are far
more important than the objective function!”

🔹 A practical, designable, and minable life-of-mine plan is way more important than how many
percent improvements you are promising on the NPV of the project. The estimated NPV at the
feasibility study stage 90% of the time will not materialize!

🔹 Constraints that are usually over-simplified or relaxed too much at the strategic mine planning
level are:

✔ Blocks do not exist in a real-mining setup; blocks are just modelling tools – one cannot create a
life-of-mine plan using block sizes used in the resource modelling stage.

✔ Selective mining units need to be representative of the mine's blast sizes – mining polygons are
reasonable units for this purpose.
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✔ Push-backs and the bottom of the pits must honour the minimum mining width derived from the
equipment specifications and the working bench size, ensuring the safe overall slopes and inter -ramp
angles as per design.

✔ Reports on Reserves and expected annual cash-flow estimates must be carried out on designed
pits, push-backs, and year-end designed surfaces, not on pit shells and strategic mine planning
software sequence out-puts. I have never seen a designed pit that will have the same waste tonnage as
a pit shell.

✔ Safety in haul-road design is paramount; sufficient ramp width, reasonable gradients, and
meaningful rolling resistance should be considered in estimating the truck cycle times through the
mine life.

✔ Truck-hours and shovel-hours constraints based on historical performances of similar equipment in

✔ The number of strategic stockpiles in dynamic cut-off optimization in must be manageable at the
operational level. Increasing the number of stockpiles will increase the NPV on paper, but is it really
manageable in practice.?

✔ The list goes on …..

✔ I would love to hear your thoughts.

Hooman Askari, PhD, PEng